Discovery,Inc. false 0001437107 --12-31 0001437107 2022-04-07 2022-04-07

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 12, 2022 (April 7, 2022)

 

 

Warner Bros. Discovery, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-34177   35-2333914

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

230 Park Avenue South
New York, New York 10003
(Address of principal executive offices, including zip code)

212-548-5555

(Registrant’s telephone number, including area code)

Discovery, Inc.

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

symbol(s)

 

Name of each exchange

on which registered

Series A Common Stock   WBD   Nasdaq

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Introductory Note

On April 8, 2022 (the “Closing Date”), Warner Bros. Discovery, Inc. (“WBD” or the “Company”), formerly known as Discovery, Inc. (“Discovery”), and AT&T Inc. (“AT&T”) completed the previously disclosed transactions contemplated by (1) that certain Agreement and Plan of Merger, dated as of May 17, 2021 (as amended, the “Merger Agreement”), by and among Discovery, Drake Subsidiary, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Discovery (“Merger Sub”), AT&T and Magallanes, Inc., a Delaware corporation and formerly a wholly owned subsidiary of AT&T (“Spinco”), (2) that certain Separation and Distribution Agreement, dated as of May 17, 2021 (as amended, the “Separation Agreement”), by and among Discovery, AT&T and Spinco, and (3) certain other agreements in connection with the transactions contemplated by the Merger Agreement and the Separation Agreement. Specifically, (1) AT&T transferred the business, operations and activities that constitute the WarnerMedia segment of AT&T (the “WarnerMedia Business”), subject to certain exceptions as set forth in the Separation Agreement, to Spinco (the “Separation”), (2) thereafter, on the Closing Date, AT&T distributed to its stockholders all of the shares of common stock, par value $0.01 per share, of Spinco (“Spinco common stock”) held by AT&T by way of a pro rata dividend such that each holder of shares of common stock, par value $1.00 per share, of AT&T (“AT&T common stock”) was entitled to receive one share of Spinco common stock for each share of AT&T common stock held as of the record date, April 5, 2022 (the “Distribution”), and (3) following the Distribution, Merger Sub merged with and into Spinco, with Spinco surviving as a wholly owned subsidiary of the Company (the “Merger” and together with the Separation and the Distribution, the “Transactions”). Pursuant to the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of Spinco common stock on the Closing Date was automatically converted into the right to receive 0.241917 shares of Series A common stock, par value $0.01 per share, of WBD (“WBD common stock”). In addition, pursuant to the Separation Agreement and prior to the Distribution, on the Closing Date, Spinco made a cash payment to AT&T of approximately $28.9 billion (the “Special Cash Payment”), which is subject to certain post-closing adjustments pursuant to the terms of the Separation Agreement.

In connection with the completion of the Transactions, on the Closing Date and prior to the effective time of the Merger, the Company amended and restated its restated certificate of incorporation, as amended (the “Discovery Charter” and as amended and restated, the “WBD Charter”), to, among other things, (1) change its name to Warner Bros. Discovery, Inc. and (2) automatically reclassify and convert each share of Discovery’s Series A common stock, par value $0.01 per share (“Discovery Series A common stock”), Discovery’s Series B common stock, par value $0.01 per share (“Discovery Series B common stock”), Discovery’s Series C common stock, par value $0.01 per share (“Discovery Series C common stock”), Discovery’s Series A-1 convertible participating preferred stock, par value $0.01 per share, and Discovery’s Series C-1 convertible participating preferred stock, par value $0.01 per share, into such number of shares of WBD common stock as set forth in the Merger Agreement (the “Reclassification”).

 

Item 1.01.

Entry into a Material Definitive Agreement.

Transaction Documents

In connection with the Transactions, on the Closing Date, the Company, AT&T and Spinco and certain of their subsidiaries, as applicable, entered into additional agreements, including:

 

   

a Transition Services Agreement (the “TSA”) by and between AT&T Services, Inc. and Spinco, which governs the parties’ respective rights and obligations with respect to the provision of certain transition services. The scope of services to be provided under the TSA, and the applicable term and fees for each such service, are set forth in the TSA schedules, which were finalized prior to the completion of the Transactions. The fees for the TSA services are no greater than fully-loaded cost without a profit margin (including employee costs related thereto) and include any additional reasonable, documented out-of-pocket costs or expenses incurred by the applicable service provider or its affiliates and directly related to the provision of such service; and

 

   

an Intellectual Property Matters Agreement (the “IPMA”) by and among AT&T, Spinco and certain of their affiliates, pursuant to which, among other things, AT&T and Spinco and certain of their affiliates granted each other non-exclusive, royalty-free, irrevocable and perpetual cross-licenses (1) to use technology


 

owned by or, to the extent sublicensable, licensed to either AT&T or Spinco, and used in the other party’s business in the 12-month period prior to the Closing Date, in substantially the same manner as such technology was used prior to the Closing Date, (2) under certain scheduled patents for which the named inventors include at least one Spinco Group (as defined in the IPMA) employee and one AT&T employee, and the relevant invention was conceived or reduced to practice during such employees’ period of employment, for any and all purposes and (3) to use business information and data generated by AT&T prior to the Closing Date, for or on behalf of Spinco, for use in the operation of the Spinco Business (as defined in the IPMA) (excluding personal information and information and data regarding customers or subscribers of products or services of AT&T) in substantially the same manner as such information or data was used prior to the Closing Date.

Each of the foregoing descriptions does not purport to be complete and is qualified in its entirety by reference to each of the TSA and the IPMA, respectively, copies of which are attached hereto as Exhibits 10.1 and 10.2, respectively, and incorporated by reference into this Item 1.01.

Financing Matters

Spinco Term Loan Credit Agreement

As previously disclosed, on June 4, 2021, Spinco entered into a $10.0 billion term loan credit agreement (the “Spinco Term Loan Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders. On April 7, 2022 (the “Spinco Term Loan Closing Date”), Spinco borrowed $10.0 billion under the Spinco Term Loan Credit Agreement (consisting of a $3.0 billion tranche term loan (“TL Tranche 1”) and a $7.0 billion tranche term loan (“TL Tranche 2”)), and a portion of such funds were used by Spinco on the Closing Date to finance, in part, the Special Cash Payment.

On the Closing Date, the Company, Scripps Networks Interactive, Inc. (“Scripps”) and Discovery Communications, LLC (“DCL”) were joined as guarantors under the Spinco Term Loan Credit Agreement.

Loans will bear interest, at Spinco’s option, either:

 

   

at a variable annual rate equal to: (1) the highest of (a) 0.5% per annum above the federal funds rate, (b) the prime rate quoted by The Wall Street Journal and (c) the London interbank offered rate applicable to dollars for an interest period of one month plus 1.00%, plus (2) an applicable margin, as set forth in the Spinco Term Loan Credit Agreement (the “Applicable Margin for Base Rate Advances”); or

 

   

at a rate equal to: (i) the London interbank offered rate applicable to dollars for an interest period of one, three or six months, as applicable (the “LIBO Screen Rate”), or, if the LIBO Screen Rate is not available, an interpolated rate determined by the agent pursuant to the Spinco Term Loan Credit Agreement (the “LIBO Interpolated Rate” and, together with the LIBO Screen Rate, as applicable, the “LIBO Rate”) for the applicable interest period, plus (ii) an applicable margin, as set forth in the Spinco Term Loan Credit Agreement (the “Applicable Margin for Eurocurrency Rate Advances”).

The Applicable Margin for Eurocurrency Rate Advances of the TL Tranche 1 loans will range from 0.750% to 1.500% per annum depending on the senior unsecured long-term debt ratings of the Company (the “Debt Ratings”). The Applicable Margin for Eurocurrency Rate Advances of the TL Tranche 2 loans will range from 0.875% to 1.625% per annum depending on the Debt Ratings. The Applicable Margin for Base Rate Advances will be equal to the greater of (x) 0.00% and (y) the relevant Applicable Margin for Eurocurrency Rate Advances minus 1.00% per annum, depending on the Debt Ratings.

The outstanding aggregate principal amount of any TL Tranche 1 loans made to Spinco will be due and payable 18 months after the Spinco Term Loan Closing Date. The outstanding aggregate principal amount of any TL Tranche 2 loans made to Spinco will be due and payable three years after the Spinco Term Loan Closing Date.


The Spinco Term Loan Credit Agreement contains certain representations and warranties and covenants, including limitations on liens, investments, indebtedness, dispositions, transactions with affiliates, dividends and other restricted payments and certain burdensome agreements and financial maintenance covenants providing that the Company will be required to maintain (commencing with the last day of the first full fiscal quarter following the Spinco Term Loan Closing Date) (i) a Consolidated Interest Coverage Ratio (as defined in the Spinco Term Loan Credit Agreement) of no less than 3.00 to 1.00 and (ii) a Consolidated Leverage Ratio (as defined in the Spinco Term Loan Credit Agreement) of (a) from and after the last day of the first full fiscal quarter following the Spinco Term Loan Closing Date to the Measurement Period (as defined the Spinco Term Loan Credit Agreement) ending on the last day of the first full fiscal quarter after the first anniversary of the Spinco Term Loan Closing Date, no more than 5.75 to 1.00, (b) from and after the Measurement Period ending on the last day of the first full fiscal quarter after the first anniversary of the Spinco Term Loan Closing Date to the Measurement Period ending on the last day of the first full quarter after the second anniversary of the Spinco Term Loan Closing Date, 5.00 to 1.00 and (c) thereafter, 4.50 to 1.00.

Events of default under the Spinco Term Loan Credit Agreement, which, if occurring after the loans are made, would result in the acceleration of or permit the lenders to accelerate, as applicable, required payment under the Spinco Term Loan Credit Agreement, include, among others, nonpayment of principal, interest or other amounts, failure to perform covenants, inaccuracy of representations or warranties in any material respect, cross-defaults with other material indebtedness, certain undischarged judgments, the occurrence of certain ERISA or bankruptcy or insolvency events, inability to pay debts or attachments or the occurrence of a Change in Control (as defined in the Spinco Term Loan Credit Agreement) or a material provision of the Spinco Term Loan Credit Agreement ceases to be in effect.

The foregoing description of the Spinco Term Loan Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the Spinco Term Loan Credit Agreement, a copy of which is attached hereto as Exhibit 10.3 and incorporated by reference into this Item 1.01.

DCL Revolving Credit Agreement

As previously disclosed, on June 9, 2021, DCL entered into a multicurrency revolving credit agreement (as amended on July 30, 2021, the “DCL Revolving Credit Agreement”) among DCL, certain wholly owned subsidiaries of DCL, the Company, Scripps, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent.

On the Closing Date, the available revolving commitments under the DCL Revolving Credit Agreement increased by $3.5 billion from $2.5 billion to $6.0 billion. In addition, on the Closing Date, Spinco was joined as a guarantor under the DCL Revolving Credit Agreement.

The foregoing description of the DCL Revolving Credit Agreement does not purport to be complete statement and is qualified in its entirety by reference to the DCL Revolving Credit Agreement, a copy of which is attached hereto as Exhibit 10.4 and incorporated by reference into this Item 1.01.

Twentieth Supplemental Indenture and Twenty-First Supplemental Indenture

On the Closing Date, each of DCL, the Company, Spinco and U.S. Bank Trust Company, National Association, as trustee, entered into (1) a twentieth supplemental indenture (the “Twentieth Supplemental Indenture”) to the indenture, dated as of August 19, 2009, by and among DCL, Discovery, Scripps and U.S. Bank National Association, as trustee (the “Base Indenture”), and (2) a twenty-first supplemental indenture (the “Twenty-First Supplemental Indenture”) to the Base Indenture.

Pursuant to the Twentieth Supplemental Indenture, Spinco became a guarantor under DCL’s 2.950% Senior Notes due 2023, 3.950% Senior Notes due 2028, 5.000% Senior Notes due 2037, 5.200% Senior Notes due 2047, 2.500% Senior Notes due 2024, 3.900% Senior Notes due 2024, 3.950% Senior Notes due 2025, 4.125% Senior Notes due 2029, 5.300% Senior Notes due 2049, 3.625% Senior Notes due 2030, 4.650% Senior Notes due 2050 and 4.000% Senior Notes due 2055.


Pursuant to the Twenty-First Supplemental Indenture, Spinco became a guarantor under DCL’s 3.250% Senior Notes due 2023, 3.800% Senior Notes due 2024, 3.450% Senior Notes due 2025, 4.900% Senior Notes due 2026, 1.900% Senior Notes due 2027, 6.350% Senior Notes due 2040, 4.950% Senior Notes due 2042 and 4.875% Senior Notes due 2043.

Each of the foregoing descriptions of the Twentieth Supplemental Indenture and the Twenty-First Supplemental Indenture does not purport to be complete and is qualified in its entirety by reference to each of the Twentieth Supplemental Indenture and the Twenty-First Supplemental Indenture, respectively, copies of which are attached hereto as Exhibits 4.1 and 4.2, respectively, and incorporated by reference into this Item 1.01.

Receivables Purchase Agreement and Performance Guaranty

On April 7, 2022, Turner Broadcasting System, Inc., a former subsidiary of AT&T (“Turner”), as servicer, and AT&T Receivables Funding II, LLC, a former subsidiary of AT&T (the “Receivables Seller”), as seller, entered into a second amended and restated receivables purchase agreement, dated as of April 7, 2022 (the “RPA”), with PNC Bank, National Association (“PNC”), as administrative agent and as purchaser, and the other parties thereto, pursuant to which the Receivables Seller sold and transferred, and will continue to sell and transfer, certain receivables to PNC, as purchaser, and to other purchasers under the RPA. The RPA has a facility limit of $6.0 billion.

On April 7, 2022, the Company entered into a performance guaranty (the “Performance Guaranty”) in favor of PNC, as administrative agent under the RPA, pursuant to which the Company provided, on and from the Closing Date, a performance guarantee of certain obligations of Turner, as servicer and originator, and certain other subsidiaries of the Company, as originators.

On the Closing Date, PNC, as administrative agent, released liens over certain of AT&T’s mobility receivables, and AT&T was released (and the Company was substituted) as performance guarantor. In addition, on the Closing Date, approximately $1.3 billion of funds of the Company and its affiliates were contributed to the Receivables Seller to be held in certain pledged accounts of the Receivables Seller with PNC and/or its affiliates as replacement collateral for the Receivables Seller’s obligations under the RPA.

Each of the foregoing descriptions of the RPA and the Performance Guaranty does not purport to be complete and is qualified in its entirety by reference to the RPA and the Performance Guaranty, respectively, copies of which are attached hereto as Exhibits 10.5 and 10.6, and incorporated by reference into this Item 1.01.

Existing WarnerMedia Business Debt

In connection with the completion of the Transactions, approximately $1.6 billion of existing debt of the WarnerMedia Business was transferred to Spinco and assumed by the Company. At issuance, the maturities of the WarnerMedia Business’s outstanding debt securities ranged from eight to forty years and the interest rates on its debt securities with fixed interest rates ranged from 1.95% to 9.15%.

Guarantees of Spinco Notes

As previously disclosed, on March 15, 2022, Spinco issued $30.0 billion in aggregate principal amount of Spinco Notes, comprised of the following tranches: (1) $1.75 billion aggregate principal amount of its 3.428% Senior Notes due 2024 (the “2024 Notes”), (2) $500.0 million aggregate principal amount of its 3.528% Senior Notes due 2024 (the “2024 NC1 Notes”), (3) $1.75 billion aggregate principal amount of its 3.638% Senior Notes due 2025 (the “2025 Notes”), (4) $500.0 million aggregate principal amount of its 3.788% Senior Notes due 2025 (the “2025 NC1 Notes”), (5) $4.0 billion aggregate principal amount of its 3.755% Senior Notes due 2027 (the “2027 Notes”), (6) $1.5 billion aggregate principal amount of its 4.054% Senior Notes due 2029 (the “2029 Notes”), (7) $5.0 billion aggregate principal amount of its 4.279% Senior Notes due 2032 (the “2032 Notes”), (8) $4.5 billion aggregate principal amount of its 5.050% Senior Notes due 2042 (the “2042 Notes”), (9) $7.0 billion aggregate principal amount of its 5.141% Senior Notes due 2052 (the “2052 Notes”), (10) $3.0 billion aggregate principal amount of its 5.391% Senior Notes due 2062 (the “2062 Notes” and, together with the 2024 Notes, the 2024 NC1 Notes, the 2025 Notes, the 2025 NC1 Notes, the 2027 Notes, the 2029 Notes, the 2032 Notes, the 2042 Notes and the 2052 Notes, the “Fixed Rate Notes”) and (11) $500.0 million aggregate principal amount of its Floating Rate Senior Notes due 2024 (the “Floating Rate Notes”). The Spinco Notes included $10.0 billion in aggregate principal amount issued to AT&T, comprised of the following tranches: (1) $5.0 billion aggregate principal amount of its 2032 Notes, (2) $2.0 billion aggregate principal amount of its 2052 Notes and (3) $3.0 billion aggregate principal amount of its 2062 Notes (collectively, the “Spinco Debt Securities”), which were transferred to two investment banks in exchange for a short-term loan of AT&T held by affiliates of such investment banks as principal for their own account (the “Securities Exchange”). The Spinco Notes (including the Spinco Debt Securities) were resold to third-party


investors in a private placement exempt from registration in accordance with Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). Spinco used the net proceeds from the sale of the Spinco Notes (other than the Spinco Debt Securities) to fund in part the Special Cash Payment and for other expenses relating to the Transactions, and AT&T used the Spinco Debt Securities to complete the Securities Exchange.

The Spinco Notes were issued pursuant to an Indenture (the “Indenture”) among Spinco, AT&T and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). Immediately following the consummation of the Merger, the Company, DCL and Scripps (collectively, the “Discovery Guarantors”) became party to the Indenture pursuant to a Supplemental Indenture (the “Supplemental Indenture”) among Spinco, the Discovery Guarantors and the Trustee, whereby the Discovery Guarantors provided, among other things, a full and unconditional guarantee of the Spinco Notes. Upon consummation of the Merger, AT&T was automatically, unconditionally and irrevocably released as a guarantor of the Spinco Notes. The Indenture contains customary events of default for similar debt securities, which if triggered may accelerate payment of principal and accrued but unpaid interest on the Spinco Notes. Such events of default include non-payment of principal and interest, non-performance of covenants and obligations, default on other material debt, and bankruptcy or insolvency. If a change of control repurchase event as defined in the Indenture occurs, Spinco may be required to offer to purchase the Spinco Notes from the holders thereof.

The 2024 Notes bear interest at a rate of 3.428% per year and will mature on March 15, 2024. The 2024 NC1 Notes bear interest at a rate of 3.528% per year and will mature on March 15, 2024. The 2025 Notes bear interest at a rate of 3.638% per year and will mature on March 15, 2025. The 2025 NC1 Notes bear interest at a rate of 3.788% per year and will mature on March 15, 2025. The 2027 Notes bear interest at a rate of 3.755% per year and will mature on March 15, 2027. The 2029 Notes bear interest at a rate of 4.054% per year and will mature on March 15, 2029. The 2032 Notes bear interest at a rate of 4.279% per year and will mature on March 15, 2032. The 2042 Notes bear interest at a rate of 5.050% per year and will mature on March 15, 2042. The 2052 Notes bear interest at a rate of 5.141% per year and will mature on March 15, 2052. The 2062 Notes bear interest at a rate of 5.391% per year and will mature on March 15, 2062. The Floating Rate Notes bear interest at a floating rate equal to Compounded SOFR (a compounded Secured Overnight Financing Rate as specified in the Indenture) plus 1.78%, reset quarterly, and will mature on March 15, 2024.

Interest on the Fixed Rate Notes is payable on March 15 and September 15 of each year, beginning September 15, 2022. Interest on the Floating Rate Notes is payable on March 15, June 15, September 15 and December 15 of each year, beginning June 15, 2022.

The Floating Rate Notes will not be redeemable at Spinco’s option. The 2032 Notes, 2052 Notes and 2062 Notes are not redeemable at Spinco’s option prior to March 15, 2027.

Prior to the applicable par call date (or prior to the applicable maturity date, in the case of the 2024 Notes and the 2025 Notes, and, in the case of the 2032 Notes, 2052 Notes and 2062 Notes, on or after March 15, 2027), Spinco may, at its option, redeem some or all of the Fixed Rate Notes at any time and from time to time by paying a make-whole premium, plus accrued and unpaid interest, if any, to the date of redemption. On and after the applicable par call date, Spinco may redeem the Fixed Rate Notes at its option, in whole at any time or in part, from time to time, at a redemption price equal to 100% of the principal amount of the applicable series of Fixed Rate Notes to be redeemed, plus accrued and unpaid interest on the principal amount being redeemed to the date of redemption.

The par call date for the 2024 NC1 Notes is March 15, 2023. The par call date for the 2025 NC1 Notes is March 15, 2023. The par call date for the 2027 Notes is February 15, 2027. The par call date for the 2029 Notes is January 15, 2029. The par call date for the 2032 Notes is December 15, 2031. The par call date for the 2042 Notes is September 15, 2041. The par call date for the 2052 Notes is September 15, 2051. The par call date for the 2062 Notes is September 15, 2061.

The Spinco Notes are unsecured and rank equally in right of payment with all of the Company’s other unsecured senior indebtedness. The Spinco Notes will be fully and unconditionally guaranteed on an unsecured and unsubordinated basis by all of the Company’s future domestic subsidiaries that are borrowers or that guarantee the payment of any debt under the DCL Revolving Credit Agreement, the Spinco Term Loan Credit Agreement or any material debt, equal to or greater than $400 million, of Spinco, the Company or certain subsidiaries of the Company.


The foregoing description of the Spinco Notes and the other documents referred to above does not purport to be complete and is qualified in its entirety by reference to each of the Indenture and the Supplemental Indenture, copies of which are attached hereto as Exhibits 4.3 and 4.4, respectively, and incorporated by reference into this Item 1.01.

Spinco Registration Rights Agreement

In connection with the issuance of the Spinco Notes, Spinco entered into a Registration Rights Agreement, dated as of March 15, 2022 (the “Spinco Registration Rights Agreement”), with J.P. Morgan Securities LLC and Goldman Sachs & Co. LLC. Immediately following the consummation of the Merger, the Company entered into a joinder to the Spinco Registration Rights Agreement together with DCL and Scripps.

Pursuant to the Spinco Registration Rights Agreement, Spinco and the Discovery Guarantors have agreed to use commercially reasonable efforts to file a registration statement with respect to a registered offer to exchange the Spinco Notes for new notes with terms substantially identical in all material respects to the Spinco Notes (the “Exchange Securities”), except that the Exchange Securities will not contain terms with respect to transfer restrictions or any increase in annual interest rate for failure to comply with the Spinco Registration Rights Agreement. Spinco and the Discovery Guarantors have also agreed to use commercially reasonable efforts to consummate the registered offer to exchange by July 15, 2023. Spinco may be required to provide a shelf registration statement to cover resales of the Spinco Notes under certain circumstances. If Spinco or the Discovery Guarantors fail to satisfy these obligations, Spinco may be required to pay holders of the Spinco Notes additional interest.

The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Spinco Registration Rights Agreement, a copy of which is attached hereto as Exhibit 4.5 and incorporated by reference into this Item 1.01.

Advance/Newhouse Registration Rights Agreement

In connection with the completion of the Transactions, the Company entered into an Amended and Restated Registration Rights Agreement (the “Advance/Newhouse Registration Rights Agreement”), dated as of April 11, 2022, by and among the Company, Advance/Newhouse Partnership and Advance/Newhouse Programming Partnership (collectively, “Advance/Newhouse”). Pursuant to the Advance/Newhouse Registration Rights Agreement, subject to certain limitations and restrictions, Advance/Newhouse has the right to require the Company to use its reasonable efforts to register the shares of WBD common stock now held or thereafter acquired by Advance/Newhouse.

The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Advance/Newhouse Registration Rights Agreement, a copy of which is attached hereto as Exhibit 4.6 and incorporated by reference into this Item 1.01.


Item 2.01.

Completion of Acquisition or Disposition of Assets.

On the Closing Date, the Transactions, including the Merger, were completed pursuant to the Merger Agreement and the Separation Agreement. At the effective time of the Merger, each issued and outstanding share of Spinco common stock (except for shares of Spinco common stock held by Spinco as treasury stock or by any subsidiary of Spinco after giving effect to the Separation, which were canceled and ceased to exist and no consideration was delivered in exchange therefor) was automatically converted into the right to receive 0.241917 shares of WBD common stock (or cash payment in lieu of fractional shares), based on the exchange ratio set forth in the Merger Agreement. Under the Merger Agreement, exchange ratio means (1)(a) the number of shares WBD common stock outstanding as of immediately prior to the effective time of the Merger on a fully diluted, as-converted (including as a result of the Reclassification) and as-exercised basis in accordance with the treasury stock method multiplied by (b) the quotient of 71 divided by 29 divided by (2) the number of shares of Spinco common stock outstanding immediately prior to the effective time of the Merger, subject to the adjustments set forth in the Merger Agreement. The calculation of the number of shares of WBD common stock to be issued to holders of record of shares of Spinco common stock immediately prior to the effective time of the Merger (the “Share Issuance”), as set forth in the Merger Agreement, resulted in Spinco stockholders immediately prior to the Merger collectively holding approximately 71% of the outstanding shares of WBD common stock on a fully diluted basis immediately following the Merger. The Company determined that there were approximately 707 million shares of WBD common stock outstanding immediately prior to the effective time of the Merger on a fully diluted, as-converted and as-exercised basis (including as a result of the Reclassification). The total shares of WBD common stock issued in the Share Issuance therefore equaled the product of (1) approximately 707 million multiplied by (2) a fraction, the numerator of which is 71% and the denominator of which is 29%, which equals approximately 1.7 billion shares of WBD common stock. Immediately prior to the effective time of the Merger, the number of shares of Spinco common stock issued and outstanding equaled approximately 7.2 billion. As a result, the exchange ratio in the Merger was equal to 0.241917. Immediately after the completion of the Transactions, giving effect to the Reclassification and the Merger, the Company had a total of 2,426,605,846 shares of WBD common stock outstanding.

Discovery’s Registration Statement on Form S-4 (Reg. No. 333-261188), as amended, which was declared effective by the Securities and Exchange Commission (the “SEC”) on February 10, 2022 (the “Discovery Registration Statement”), sets forth certain additional information regarding the Transactions in the section titled “The Transactions” and is incorporated by reference into this Item 2.01. The foregoing description of the Transactions does not purport to be complete and is qualified in its entirety by reference to each of the Merger Agreement and the Separation Agreement, copies of which are attached hereto as Exhibits 2.1 and 2.2, respectively, and incorporated by reference into this Item 2.01.

 

Item 2.03.

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangements or Registrant.

The information set forth in Item 1.01 of this Current Report on Form 8-K under the heading “Financing Matters” is incorporated by reference into this Item 2.03.

 

Item 3.01.

Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On the Closing Date, in connection with the completion of the Transactions, the Company notified the Nasdaq Global Select Market (“Nasdaq”) of the completion of the Transactions and requested that Discovery Series A common stock, Discovery Series B common stock and Discovery Series C common stock be withdrawn from listing on Nasdaq. On the Closing Date, Nasdaq filed notifications of removal from listing on Form 25 with the SEC to report the delisting of Discovery Series A common stock, Discovery Series B common stock and Discovery Series C common stock from Nasdaq and suspended trading of such series of Discovery stock on Nasdaq prior to the opening of trading on April 11, 2022. The delisting of such series of Discovery stock will become effective on April 18, 2022, ten days after the filing date of the Form 25. On April 11, 2022, WBD common stock commenced trading on Nasdaq.

 

Item 3.03.

Material Modifications to Rights of Security Holders.

On the Closing Date, prior to the effective time of the Merger, the Company amended and restated the Discovery Charter to effect the Reclassification and the other changes approved by Discovery’s stockholders at a special meeting of stockholders on March 11, 2022. At the effective time of the WBD Charter, (1) each share of Discovery


Series A common stock issued and outstanding or held by Discovery as treasury stock immediately prior to such effective time was automatically reclassified and converted into one share of WBD common stock, (2) each share of Discovery Series B common stock issued and outstanding or held by Discovery as treasury stock immediately prior to such effective time was automatically reclassified and converted into one share of WBD common stock, (3) each share of Discovery Series C common stock issued and outstanding or held by Discovery as treasury stock immediately prior to such effective time was automatically reclassified and converted into one share of WBD common stock, (4) each share of Discovery Series A-1 preferred stock issued and outstanding or held by Discovery as treasury stock immediately prior to such effective time was automatically reclassified and converted into 13.11346315 shares of WBD common stock and (5) each share of Discovery Series C-1 preferred stock issued and outstanding or held by Discovery as treasury stock immediately prior to such effective time was automatically reclassified and converted into such number of shares of WBD common stock as the number of shares of Discovery Series C common stock such share of Discovery Series C-1 preferred stock would have been convertible into immediately prior to such effective time, which as of immediately prior to such effective time would have been 19.3648 shares of WBD common stock.

The information set forth in Item 5.03 of this Current Report on Form 8-K is incorporated by reference into this Item 3.03. In addition, the Discovery Registration Statement sets forth certain additional information regarding the rights of the Company’s stockholders before and after the completion of the Transactions in the sections titled “Description of Capital Stock of Discovery and WBD” and “Comparison of Stockholders’ Rights” and is incorporated by reference into this Item 3.03.

The foregoing description does not purport to be complete and is qualified in its entirety by reference to each of the WBD Charter and the WBD Bylaws (as defined below), copies of which are attached hereto as Exhibits 3.1 and 3.2, respectively, and incorporated by reference into this Item 3.03.

 

Item 5.02.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Departure and Election of Directors

In accordance with the terms of the Merger Agreement, the WBD Charter and the Consent Agreement (as defined in the Merger Agreement), as of the effective time of the Merger, (1) the board of directors of the Company (the “Board”) increased the size of the Board to 13 directors, (2) the directors on the Board immediately prior to the completion of the Merger resigned from the Board and from all committees of the Board on which each such resigning director served and (3) David M. Zaslav, Robert R. Bennett, John C. Malone, Paul A. Gould, Steven A. Miron and Steven O. Newhouse, Discovery’s designees pursuant to its rights under the Merger Agreement, and Samuel A. Di Piazza, Jr., Li Haslett Chen, Paula A. Price, Richard W. Fisher, Fazal Merchant, Debra L. Lee and Geoffrey Y. Yang, AT&T’s designees pursuant to its rights under the Merger Agreement, were elected to the Board.

Pursuant to the WBD Charter, the Board is divided into three classes, designated Class I, Class II and Class III. Effective as of the effective time of the Merger, the directors identified below were designated to the following classes:

Class I: David M. Zaslav, Robert R. Bennett, Li Haslett Chen and Paula A. Price

Class II: John C. Malone, Paul A. Gould, Richard W. Fisher and Fazal Merchant

Class III: Samuel A. Di Piazza, Jr. (Chair), Steven A. Miron, Steven O. Newhouse, Debra L. Lee and Geoffrey Y. Yang

Effective as of the effective time of the Merger, the directors identified below were appointed and designated to the following committees of the Board:

Audit Committee: Paula A. Price (Chair), Robert R. Bennett and Fazal Merchant


Compensation Committee: Paul A. Gould (Chair), Richard W. Fisher, Steven A. Miron and Geoffrey Y. Yang

Nominating and Corporate Governance Committee: John C. Malone (Chair), Li Haslett Chen, Paul A. Gould, Debra L. Lee, Fazal Merchant and Steven O. Newhouse

Biographical information and other arrangements of the Company’s directors are included in the Discovery Registration Statement in the section titled “The Transactions—Board of Directors and Management of WBD Following the Transactions”, which is incorporated by reference into this Item 5.02.

Appointment of Officers

In connection with the completion of the Transactions, on April 11, 2022, the following individuals were elected as officers of the Company as set forth in the table below:

 

     Name    Title

David M. Zaslav

   President and Chief Executive Officer

Adria Alpert Romm

   Chief People and Culture Officer

Bruce L. Campbell

   Chief Revenue and Strategy Officer

Gunnar Wiedenfels

   Chief Financial Officer

David Leavy

   Chief Corporate Affairs Officer

Jean-Briac Perrette

   Chief Executive Officer and President, Warner Bros. Discovery Global Streaming and Interactive Entertainment

Gerhard Zeiler

   President, International

Savalle Sims

   Executive Vice President, General Counsel

Lori Locke

   Executive Vice President, Chief Accounting Officer

Warner Bros. Discovery, Inc. Stock Incentive Plan

Effective on the Closing Date and prior to the effective time of the WBD Charter and the Merger, the Company adopted the Warner Bros. Discovery, Inc. Stock Incentive Plan (the “Omnibus Incentive Plan”). The Omnibus Incentive Plan was approved by stockholders at the 2022 Annual Meeting of Stockholders of the Company (the “Annual Meeting”), which occurred prior to the effective time of the Merger on the Closing Date. The material terms of the Omnibus Incentive Plan are described in Discovery’s 2022 Proxy Statement in the section titled “Proposal 3Approval of Warner Bros. Discovery, Inc. Stock Incentive Plan”, which is incorporated by reference into this Item 5.02.

The foregoing description of the Omnibus Incentive Plan, including the description in Discovery’s 2022 Proxy Statement referenced above, does not purport to be complete and is qualified in its entirety by reference to the Omnibus Incentive Plan, a copy of which is attached hereto as Exhibit 10.7 and incorporated by reference into this Item 5.02.


Item 5.03.

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On the Closing Date and prior to the effective time of the Merger, the Company amended and restated the Discovery Charter to, among other things, (1) change its name to Warner Bros. Discovery, Inc., (2) effect the Reclassification and (3) effect the other changes approved by Discovery’s stockholders at a special meeting of stockholders on March 11, 2022. Information about the other amendments to the Discovery Charter is included in the Discovery Registration Statement in the section titled “Information about the Discovery Special Meeting—Charter Amendment, Share Issuance and “Golden Parachute” Compensation Proposals”, which is incorporated by reference into this Item 5.03.

On the Closing Date, the Company also amended and restated its amended and restated bylaws (as amended and restated, the “WBD Bylaws”) to, among other things, reflect the WBD Charter.

Each of the foregoing descriptions does not purport to be complete and is qualified in its entirety by reference to each of the WBD Charter and the WBD Bylaws, respectively, copies of which are attached hereto as Exhibits 3.1 and 3.2, respectively, and incorporated by reference into this Item 5.03.

 

Item 5.07.

Submission of Matters to a Vote of Security Holders.

On April 8, 2022, the Annual Meeting was held by means of remote communication. The following are the results of the voting on the proposals submitted to stockholders at the Annual Meeting.

1.    Stockholders elected each of the Company’s six nominees for director, three elected by the holders of shares of Discovery Series A common stock and Discovery Series B common stock voting together as a single class, and three elected by the holders of shares of Discovery Series A-1 preferred stock voting separately as a class, as set forth below:

Director Nominees Elected by Holders of Shares of Discovery Series A Common Stock and Discovery Series B Common Stock as Class I Directors

 

Name

 

Votes For

 

Votes Withheld

 

Broker Non-Votes

Paul A. Gould

  94,257,501   80,660,981   25,294,359

Kenneth W. Lowe

  97,315,254   77,603,228   25,294,359

Daniel E. Sanchez

  133,117,848   41,800,634   25,294,359

Director Nominees Elected by Holders of Discovery Series A-1 Preferred Stock

 

Name

 

Votes For

 

Votes Withheld

 

Broker Non-Votes

Robert J. Miron

  70,673,242   0   0

Steven A. Miron

  70,673,242   0   0

Susan M. Swain

  70,673,242   0   0

2.    Stockholders ratified the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022, as set forth below:

 

Votes For

 

Votes Against

 

Abstentions

269,323,577

  1,475,894   86,612

3.    Stockholders approved the Omnibus Incentive Plan as set forth below:

 

Votes For

 

Votes Against

 

Abstentions

 

Broker Non-Votes

217,578,321

  27,761,840   251,563   25,294,359


Item 7.01.

Regulation FD Disclosure.

On the Closing Date, the Company and AT&T issued a joint press release announcing the completion of the Transactions, furnished as Exhibit 99.1 hereto.

The information in this Item 7.01, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing by the Company under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 8.01.

Other Events.

Change of Ticker Symbol

In connection with the completion of the Transactions, Discovery Series A common stock, Discovery Series B common stock and Discovery Series C common stock ceased trading on Nasdaq under the ticker symbols “DISCA”, “DISCB” and “DISCK”, respectively, after the close of trading on the Closing Date. On April 11, 2022, WBD common stock commenced trading on Nasdaq under the ticker symbol “WBD”.

 

Item 9.01.

Financial Statements and Exhibits.

(a) Financial statements of business acquired.

The financial statements required by this item will be filed by amendment to this Current Report on Form 8-K no later than 71 calendar days after the date on which this Current Report on Form 8-K must be filed.

(b) Pro forma financial information.

The financial statements required by this item will be filed by amendment to this Current Report on Form 8-K no later than 71 calendar days after the date on which this Current Report on Form 8-K must be filed.

 

(d)

Exhibits

 

Exhibit
Number

  

Description

                 
  2.1    Agreement and Plan of Merger, dated as of May 17, 2021, by and among AT&T Inc., Magallanes, Inc., Discovery, Inc. and Drake Subsidiary, Inc. (incorporated by reference to Exhibit 2.1 of Discovery, Inc.’s Current Report on Form 8-K filed on May 20, 2021).
  2.2    Separation and Distribution Agreement, dated as of May 17, 2021, by and among AT&T Inc., Magallanes, Inc. and Discovery, Inc. (incorporated by reference to Exhibit 2.2 of Discovery, Inc.’s Current Report on Form 8-K filed on May 20, 2021).
  3.1    Second Restated Certificate of Incorporation of Warner Bros. Discovery, Inc.
  3.2    Amended and Restated Bylaws of Warner Bros. Discovery, Inc.
  4.1    Twentieth Supplemental Indenture, dated as of April 8, 2022, by and among Discovery Communications, LLC, Warner Bros. Discovery, Inc., Magallanes, Inc. and U.S. Bank Trust Company, National Association, as trustee.
  4.2    Twenty-First Supplemental Indenture, dated as of April 8, 2022, by and among Discovery Communications, LLC, Warner Bros. Discovery, Inc., Magallanes, Inc. and U.S. Bank Trust Company, National Association, as trustee.


  4.3    Indenture, dated as of March 15, 2022, by and among Magallanes, Inc., AT&T Inc. and U.S. Bank Trust Company, National Association, as Trustee.
  4.4    First Supplemental Indenture, dated as of April 8, 2022, by and among Magallanes, Inc., Warner Bros. Discovery, Inc., Discovery Communications, LLC, Scripps Networks Interactive, Inc., and U.S. Bank Trust Company, National Association, as Trustee.
  4.5    Registration Rights Agreement, dated as of March 15, 2022, by and among Magallanes, Inc., J.P. Morgan Securities LLC and Goldman Sachs & Co. LLC.
  4.6    Amended and Restated Registration Rights Agreement, dated as of April 11, 2022, by and among Discovery, Inc., Advance/Newhouse Partnership and Advance/Newhouse Programming Partnership.
10.1    Transition Services Agreement, dated as of April 8, 2022, by and between AT&T Services, Inc. and Magallanes, Inc.*
10.2    Intellectual Property Matters Agreement, dated as of April 8, 2022, by and among AT&T Inc., AT&T Intellectual Property LLC and Magallanes, Inc.*†
10.3    Credit Agreement, dated as of June 4, 2021, by and among Magallanes, Inc., the lenders named therein and JPMorgan Chase Bank, N.A., as agent.
10.4    Credit Agreement, dated as of June 9, 2021, by and among Discovery Communications, LLC, certain wholly owned subsidiaries of Discovery Communications, LLC, Discovery, Inc., as facility guarantor, Scripps Networks Interactive, Inc., as subsidiary guarantor, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent, swing line lender and L/C issuer (incorporated by reference to Exhibit 4.1 of Discovery, Inc.’s Current Report on Form 8-K filed on June 10, 2021).
10.5    Second Amended and Restated Receivables Purchase Agreement, dated as of April 7, 2022, by and among AT&T Receivables Funding II, LLC, the persons from time to time party thereto, PNC Bank, National Association, Turner Broadcasting System, Inc. and PNC Capital Markets LLC.*
10.6    Performance Guaranty, dated as of April 7, 2022, by Discovery, Inc.
10.7    Warner Bros. Discovery, Inc. Stock Incentive Plan.
99.1    Joint Press Release of AT&T Inc. and Discovery, Inc., dated April 8, 2022.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

*

Exhibits, schedules and annexes have been omitted pursuant to Item 601(a)(5) of Regulation S-K and will be supplementally provided to the SEC upon request.

Certain provisions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K and will be supplementally provided to the SEC upon request.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: April 12, 2022     WARNER BROS. DISCOVERY, INC.
    By:  

/s/ Gunnar Wiedenfels

    Name:   Gunnar Wiedenfels
    Title:   Chief Financial Officer

Exhibit 3.1

SECOND RESTATED

CERTIFICATE OF INCORPORATION

OF

DISCOVERY, INC.

Discovery, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:

1. The present name of the corporation is Discovery, Inc. (the “Corporation”).

2. The Corporation was originally formed with the name Discovery Communications, Inc. by means of a Certificate of Incorporation filed with the Secretary of State of the State of Delaware on April 28, 2008.

3. The Corporation’s Certificate of Incorporation was amended and restated by the Restated Certificate of Incorporation filed on September 17, 2008.

4. The Corporation’s Restated Certificate of Incorporation is hereby amended and restated pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware (as amended from time to time, the “DGCL”), effective as of 5:00 p.m. Eastern Time on April 8, 2022, so as to read in its entirety in the form attached hereto as Exhibit A and incorporated herein by this reference.

5. This amendment and restatement of the Restated Certificate of Incorporation of the Corporation has been duly adopted in accordance with the provisions of Sections 228, 242 and 245 of the DGCL.


IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed this Second Restated Certificate of Incorporation on the 8th day of April, 2022.

 

By:

 

/s/ Bruce Campbell

 

Name: Bruce Campbell

 

Title: Chief Development, Distribution & Legal Officer

[Second Restated Certificate of Incorporation]


EXHIBIT A

SECOND RESTATED CERTIFICATE OF INCORPORATION

(attached)


FIRST. Name. The name of the corporation is Warner Bros. Discovery, Inc. (the “Corporation”).

SECOND. Registered Office. The Corporation’s registered office in the State of Delaware is at Corporation Service Company, 251 Little Falls Drive in the City of Wilmington, County of New Castle 19808. The name of its registered agent at such address is Corporation Service Company.

THIRD. Purpose. The nature of the business of the Corporation and its purpose is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”).

FOURTH. Capital Stock. The total number of shares of stock which the Corporation shall have authority to issue is 12,000,000,000, consisting of: (x) 10,800,000,000 shares of common stock, par value $0.01 per share, all of which shall be of a single class designated as Series A Common Stock (the “Common Stock”), and (y) 1,200,000,000 shares of preferred stock, par value $0.01 per share (the “Preferred Stock”), issuable in one or more series as hereinafter provided. The number of authorized shares of the Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of at least a majority of the voting power of the stock of the Corporation entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the DGCL or any corresponding provision hereinafter enacted, and no vote of the holders of any of the Preferred Stock or the Common Stock voting separately as a class shall be required thereon.

Immediately upon the filing and effectiveness of this Second Restated Certificate of Incorporation with the Secretary of State of the State of Delaware (the “Effective Time”), automatically and without further action on the part of holders of capital stock of the Corporation, each share of (i) Series A Common Stock, par value $0.01 per share (the “Former Series A Common Stock”), of the Corporation issued and outstanding or held by the Corporation as treasury stock as of immediately prior to the Effective Time shall be reclassified as, and be converted into, one (1) validly issued, fully paid and non-assessable share of Common Stock (the “Series A Common Reclassification”), (ii) Series B Common Stock, par value $0.01 per share, (the “Former Series B Common Stock”) of the Corporation issued and outstanding or held by the Corporation as treasury stock as of immediately prior to the Effective Time shall be reclassified as, and be converted into, one (1) validly issued, fully paid and non-assessable share of Common Stock (the “Series B Common Reclassification”), (iii) Series C Common Stock, par value $0.01 per share, (the “Former Series C Common Stock”) of the Corporation issued and outstanding or held by the Corporation as treasury stock as of immediately prior to the Effective Time shall be reclassified

 

2


as, and be converted into, one (1) validly issued, fully paid and non-assessable share of Common Stock (the “Series C Common Reclassification”), (iv) Series A-1 Convertible Participating Preferred Stock, par value $0.01 per share, (the “Preferred A Stock”) of the Corporation issued and outstanding or held by the Corporation as treasury stock as of immediately prior to the Effective Time shall be reclassified as, and be converted into 13.11346315 validly issued, fully paid and non-assessable shares of Common Stock (the “Preferred A Reclassification”) and (v) Series C-1 Convertible Participating Preferred Stock, par value $0.01 per share, (the “Preferred C Stock”, and the Preferred C Stock together with the Former Series A Common Stock, the Former Series B Common Stock, Former Series C Common Stock and the Preferred A Stock, the “Former Stock”) of the Corporation issued and outstanding or held by the Corporation as treasury stock as of immediately prior to the Effective Time shall be reclassified as, and be converted into, such number of validly issued, fully paid and non-assessable shares of Common Stock as the number of shares of Former Series C Common Stock each such share of Preferred C Stock would have been convertible into under the Certificate of Incorporation of the Corporation (including, the Certificate of Designation of Series C-1 Convertible Participating Preferred Stock of RMT Partner) in effect immediately prior to the Effective Time (the “Preferred C Reclassification” and the Preferred C Reclassification together with the Series A Common Reclassification, the Series B Common Reclassification, Series C Common Reclassification and the Preferred A Reclassification, the “Reclassification”). The Reclassification shall occur automatically as of the Effective Time without any further action by the Corporation or the holders of the shares affected thereby and whether or not any certificates representing such shares are surrendered to the Corporation. Upon the Effective Time, each certificate that as of immediately prior to the Effective Time represented shares of Former Stock shall be deemed to represent such number of shares of Common Stock as the Former Stock such certificate represented immediately prior to the Effective Time was reclassified as in the Reclassification. The Reclassification shall also apply to any outstanding securities or rights convertible into, or exchangeable or exercisable for, Former Stock of the Corporation and all references to the Former Stock in agreements, arrangements, documents and plans relating thereto or any option or right to purchase or acquire shares of Former Stock shall be deemed to be references to Common Stock or options or rights to purchase or acquire shares of Common Stock, as the case may be, provided that with respect to the foregoing matters in this sentence, any reference to a number of shares of Former Stock shall be adjusted to instead refer to the number of shares of Common Stock equal to the number of shares of Common Stock such shares of Former Stock were, or would have been if outstanding at the Effective Time, reclassified as in connection with the Reclassification.

 

3


1. Provisions Relating to the Common Stock.

(a) Except as otherwise provided in this Second Restated Certificate of Incorporation or by the DGCL, each holder of shares of Common Stock shall be entitled, with respect to each share of Common Stock held by such holder, to one vote in person or by proxy on all matters submitted to a vote of the holders of Common Stock, whether voting separately as a class or otherwise.

(b) Subject to the preferences and rights, if any, applicable to shares of Preferred Stock or any series thereof, the holders of shares of Common Stock shall be entitled to receive such dividends and other distributions in cash, property, stock or otherwise as may be declared thereon by the Board of Directors at any time and from time to time out of assets or funds of the Corporation legally available therefor and shall share equally on a per share basis in such dividends and distributions.

(c) In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation, and subject to the preferences and rights, if any, applicable to shares of Preferred Stock or any series thereof, the holders of shares of Common Stock shall be entitled to receive all of the remaining assets of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares of Common Stock held by them.

2. Provisions Relating to the Preferred Stock.

(a) The Preferred Stock may be issued at any time and from time to time in one or more series. The Board of Directors is hereby authorized to provide for the issuance of shares of Preferred Stock in one or more series and, by filing a certificate of designation pursuant to the applicable provisions of the DGCL (hereinafter referred to as a “Preferred Stock Certificate of Designation”), to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and the relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof, of shares of each such series, including, without limitation, dividend rights, dividend rates, conversion rights, voting rights, terms of redemption and liquidation preferences.

(b) The Common Stock shall be subject to the express rights, powers and preferences, and the qualifications limitations and restrictions thereof, of the Preferred Stock and any series thereof as set forth in a Preferred Stock Certificate of Designation.

(c) Except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Second Restated Certificate of Incorporation or on a Preferred Stock Certificate of Designation that relates solely to the rights, powers, preferences, or other terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other series of Preferred Stock, to vote thereon pursuant to this Second Restated Certificate of Incorporation or a Preferred Stock Certificate of Designation or pursuant to the DGCL as in effect at the time of such amendment.

 

4


3. Voting in Election of Directors. Except as may be required by the DGCL or as provided in this Second Restated Certificate of Incorporation or in a Preferred Stock Certificate of Designation, holders of Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes, and holders of Preferred Stock shall not be entitled to vote on any matter or receive notice of any meeting of stockholders.

FIFTH. Classification and Terms of Directors. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors consisting of not less than three directors nor, prior to the third annual meeting of stockholders (each annual meeting of stockholders, an “Annual Meeting”) following the Effective Time, more than thirteen directors, the exact number of directors to be determined from time to time by resolution adopted by the Board of Directors. Until the election of directors at the third Annual Meeting following the Effective Time, pursuant to Section 141(d) of the DGCL, the Board shall be divided into three classes of directors, Class I, Class II and Class III (with Class I consisting of four directors, Class II consisting of four directors and Class III consisting of five directors), with the directors in Class I having a term expiring at the first Annual Meeting following the Effective Time, the directors in Class II having a term expiring at the second Annual Meeting following the Effective Time and the directors in Class III having a term expiring at the third Annual Meeting following the Effective Time; provided, that the term of each director shall continue until the election and qualification of a successor and be subject to such director’s earlier death, resignation or removal. At the first Annual Meeting following the Effective Time, successors to the Class I Directors whose terms expire at the first Annual Meeting following the Effective Time shall be elected for a term expiring at the second Annual Meeting following the Effective Time. At the second Annual Meeting following the Effective Time, successors to the Class I Directors whose term expires at the second Annual Meeting following the Effective Time and successors to the Class II Directors whose term expires at the second Annual Meeting following the Effective Time shall be elected for a term expiring at the next Annual Meeting. Commencing with the election of directors at the third Annual Meeting following the Effective Time (at which the terms of the Class I, Class II and Class III directors will expire), the Board shall cease to be classified pursuant to Section 141(d) of the DGCL, and all directors shall have terms that expire at the next Annual Meeting. Any vacancy prior to the first Annual Meeting following the Effective Time resulting from the death, resignation or removal of any director designated by AT&T Inc. or the Corporation pursuant to the Agreement and Plan of Merger dated as of May 17, 2021 among AT&T Inc., Magallanes, Inc., the Corporation and Drake Subsidiary, Inc. shall be filled solely by a majority of the directors designated by the entity that designated the director who died, resigned or was removed, even if less than a quorum. Any other vacancy on the Board of Directors or any newly created directorships may be filled by a majority of the

 

5


directors then in office, even if less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy or newly created directorship shall hold office for a term that shall coincide with the term of the class in which such director shall have been chosen or, following the termination of the classification of the Board of Directors, each director so chosen shall hold office for a term expiring at the next Annual Meeting held after his or her election as director and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Prior to the third Annual Meeting following the Effective Time, directors may be removed only for cause by the affirmative vote of the holders of at least two-thirds (66 2/3%) of the outstanding shares of Common Stock then entitled to vote at any annual or special meeting of stockholders.

SIXTH. Director Exculpation. No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of his or her fiduciary duty as a director, provided that nothing contained in this Article SIXTH shall eliminate or limit the liability of a director (a) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (c) under Section 174 of the DGCL or (d) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

SEVENTH. Stockholder Action by Written Consent. Any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken only upon the vote of the stockholders at an annual or special meeting duly called and may not be taken by written consent of the stockholders.

EIGHTH. Special Meetings. Except as otherwise required by law and subject to any rights granted to holders of shares of any then outstanding class or series of Preferred Stock in a Preferred Stock Certificate of Designation, special meetings of the stockholders of the Corporation for any purpose or purposes may be called only by the Chairperson of the Board of Directors or the Chief Executive Officer or pursuant to a resolution of the Board of Directors adopted by at least a majority of the directors then in office. The stockholders of the Corporation shall not have the power to call a special meeting of the stockholders of the Corporation.

 

6


NINTH. Amendment of the Certificate of Incorporation. The Corporation reserves the right to amend, alter or repeal any provision contained in this Second Restated Certificate of Incorporation in the manner now or hereafter prescribed by the DGCL, and all rights herein conferred upon stockholders or directors are granted subject to this reservation; provided, however, that any amendment, alteration or repeal of Article SIXTH shall not adversely affect any right or protection existing under this Second Restated Certificate of Incorporation immediately prior to such amendment, alteration or repeal, including any right or protection of a director thereunder in respect of any act or omission occurring prior to the time of such amendment, alteration or repeal. Notwithstanding anything to the contrary contained in this Second Restated Certificate of Incorporation, and notwithstanding that a lesser percentage may be permitted from time to time by applicable law, no provision of Articles FIFTH, SEVENTH, EIGHTH, this Article NINTH and Articles TENTH and ELEVENTH may be amended, altered or repealed in any respect, nor may any provision or bylaw inconsistent therewith be adopted, unless in addition to any other vote required by this Second Restated Certificate of Incorporation or otherwise required by law, an amendment, alteration or repeal of Articles FIFTH, SEVENTH, EIGHTH, this Article NINTH and Articles TENTH and ELEVENTH is approved at a meeting of the stockholders called for that purpose by the affirmative vote of the holders of at least a majority of the outstanding shares of Common Stock then entitled to vote at any annual or special meeting of stockholders.

TENTH. Amendment of the By-Laws. In furtherance and not in limitation of the powers conferred by law, the Board of Directors is expressly authorized to amend, alter or repeal the By-Laws of the Corporation, without the assent or vote of stockholders of the Corporation. Any amendment, alteration or repeal of the By-Laws of the Corporation by the Board of Directors shall require the affirmative vote of at least a majority of the directors then in office.

ELEVENTH. Exclusive Jurisdiction for Certain Actions. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall to the fullest extent permitted by law be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, employee, stockholder or agent of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action or proceeding asserting a claim arising out of or pursuant to, or seeking to enforce any right, obligation or remedy under, any provision of the DGCL, or as to which the DGCL confers jurisdiction on the Court of Chancery (including, without limitation, any action asserting a claim arising out of or pursuant to this Second Restated Certificate of Incorporation or the By-Laws of the Corporation) or (d) any action or proceeding asserting a claim governed by the internal affairs doctrine. Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article ELEVENTH.

 

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Exhibit 3.2

AMENDED AND RESTATED

BYLAWS

OF

WARNER BROS. DISCOVERY, INC.

a Delaware corporation

(hereinafter called, the “Corporation”)

Amended and restated as of April 8, 2022


ARTICLE I

STOCKHOLDERS

Section 1.1 Place of Meetings.

All meetings of stockholders shall be held at such place, if any, as may be designated from time to time by the Board of Directors, the Chair of the Board (as defined below) or the President or, if not so designated, at the principal executive office of the Corporation. The Board of Directors may, in its sole discretion, determine that a meeting shall not be held at any place, but shall instead be held solely by means of remote communication in a manner consistent with the General Corporation Law of the State of Delaware.

Section 1.2 Annual Meeting.

The annual meeting of stockholders for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly be brought before the meeting shall be held on a date and at a time designated by the Board of Directors, the Chair of the Board or the President.

Section 1.3 Special Meetings.

Special meetings of the stockholders of the Corporation may be called only in the manner set forth in the Corporation’s second restated certificate of incorporation, as the same may be amended and/or restated from time to time (as so amended and/or restated, the “Certificate of Incorporation”). Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. The Board of Directors shall have the sole power to determine the time and date for any special meeting of stockholders, except that the President shall have the sole power to determine the

 

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time and date for any special meetings of stockholders called by the President. Following such determination, it shall be the duty of the Secretary to cause notice to be given to the stockholders entitled to vote at such meeting that a meeting will be held at the time, date and place and in accordance with the record date determined by the Board of Directors.

Section 1.4 Record Date.

In order for the Corporation to determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date: (i) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by the laws of the State of Delaware, not be more than sixty (60) nor less than ten (10) days before the date of such meeting, and (ii) in the case of any other lawful action, shall not be more than sixty (60) days prior to such other action. If no record date is fixed by the Board of Directors: (i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and (ii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of

 

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Directors may fix a new record date for the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.

Section 1.5 Notice of Meetings.

Notice of all stockholders meetings, stating the place, if any, date and hour thereof; the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting; the place within the city, other municipality or community or electronic network at which the list of stockholders may be examined; and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered in accordance with applicable law and applicable stock exchange rules and regulations by the Chair of the Board, the President, any Vice President, the Secretary or an Assistant Secretary, to each stockholder entitled to vote thereat at least ten (10) days but not more than sixty (60) days before the date of the meeting, unless a different period is prescribed by law, or the lapse of the prescribed period of time shall have been waived. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to such stockholder’s address as it appears on the records of the Corporation.

Section 1.6 Notice of Stockholder Business and Nominations.

(a) Annual Meetings of Stockholders. (1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders only (i) pursuant to the Corporation’s notice of meeting (or any supplement thereto), (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a

 

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stockholder of record of the Corporation at the time the notice provided for in this Section 1.6 is delivered to the Secretary of the Corporation, who (x) in the case of nominations of persons for election to the Board of Directors, was a holder of record as of such date of shares of the class or series of capital stock of the Corporation entitled to vote upon such election, and (y) in the case of all other matters, was a holder of record as of such date of shares of the class or series of capital stock of the Corporation entitled to vote on such matter, and, in each case, who complies with the notice procedures set forth in this Section 1.6.

(2) In addition to any other requirements under applicable law and the Certificate of Incorporation, no nomination by any stockholder or stockholders of a person or persons for election to the Board of Directors, and no other proposal by any stockholder or stockholders, shall be considered properly brought before an annual meeting, unless the stockholder shall have given timely notice thereof in writing to the Secretary of the Corporation and any such proposed business, other than the nominations of persons for election to the Board of Directors, constitutes a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the sixtieth (60th) day nor earlier than the close of business on the ninetieth (90th) day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the one hundredth (100th) day prior to such annual meeting and not later than the close of business on the later of the seventieth (70th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event

 

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shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth: (i) as to each person whom the stockholder proposes to nominate for election as a director (x) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (y) such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (ii) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the bylaws of the Corporation, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (v) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (w) the class or series and number of shares of capital stock of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner, (x) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote on the matter to which its proposal relates at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, (y) a representation (A) whether any such person or such stockholder has received any financial assistance, funding

 

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or other consideration from any other person in respect of the nomination (and the details thereof) (a “Stockholder Associated Person”) and (B) whether and the extent to which any hedging, derivative or other transaction has been entered into with respect to the Corporation within the past six months by, or is in effect with respect to, such stockholder, any person to be nominated by such stockholder or any Stockholder Associated Person, the effect or intent of which transaction is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such stockholder, nominee or any such Stockholder Associated Person, and (z) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (A) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the class or series of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (B) otherwise to solicit proxies from stockholders in support of such proposal or nomination. The foregoing notice requirements of clauses (a)(2)(ii) and (iii) of this Section 1.6 shall not apply to any proposal made pursuant to Rule 14a-8 (or any successor thereof) promulgated under the Exchange Act. A proposal to be made pursuant to Rule 14a-8 (or any successor thereof) promulgated under the Exchange Act shall be deemed satisfied if the stockholder making such proposal complies with the provisions of Rule 14a-8 and has notified the Corporation of their intention to present a proposal at an annual meeting in compliance with Rule 14a-8 and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine (x) the eligibility of such proposed nominee to serve as a director of the Corporation and (y) whether the nominee would be considered “independent” under the independence requirements set forth in the Corporate Governance Requirements of Nasdaq (or the rules and regulations of the principal securities exchange on which the Corporation’s equity securities are then listed) in effect from time to time.

 

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(3) Notwithstanding anything in the second sentence of paragraph (a)(2) of this Section 1.6 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation at an annual meeting is increased and there is no public announcement by the Corporation naming the nominees for the additional directorships at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section 1.6 shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.

(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Subject to the rights of the holders of any series of preferred stock, nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board of Directors or (2) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a holder of record of the class or series of capital stock of the Corporation entitled to vote upon such election at the time the notice provided for in this Section 1.6 is delivered to the Secretary of the Corporation, and who complies with the notice procedures set

 

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forth in this Section 1.6. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by paragraph (a)(2) of this Section 1.6 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the ninetieth (90th) day prior to such special meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

(c) General. (1) Only such persons who are nominated in accordance with the procedures set forth in this Section 1.6 shall be eligible to be elected at an annual or special meeting of stockholders of the Corporation to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 1.6. Except as otherwise provided by law, the chair of the meeting shall have the power and duty (i) to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 1.6 (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination or proposal is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be,

 

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proxies in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by clause (a)(2)(iii)(z) of this Section 1.6) and (ii) if any proposed nomination or business was not made or proposed in compliance with this Section 1.6, to declare that such nomination shall be disregarded or that such proposed business shall not be transacted. Notwithstanding the foregoing provisions of this Section 1.6, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 1.6, to be considered a qualified representative of the stockholder, a person must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of such writing or electronic transmission, at the meeting of stockholders.

(2) For purposes of this Section 1.6, “public announcement” shall include disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(3) Notwithstanding the foregoing provisions of this Section 1.6, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 1.6. Nothing in this Section 1.6 shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of preferred stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation.

 

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Section 1.7 Quorum.

Subject to the rights of the holders of any series of preferred stock and except as otherwise provided by law or in the Certificate of Incorporation or these Bylaws, at any meeting of stockholders, the holders of a majority in total voting power of the outstanding shares of stock entitled to vote at the meeting shall be present or represented by proxy in order to constitute a quorum for the transaction of any business. Where a separate vote by one or more classes or series of capital stock is required by law or by the Certificate of Incorporation with respect to a particular matter to be presented at any such meeting, a majority in total voting power of the outstanding shares of such class or classes or series present in person or represented by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter. The chair of the meeting shall have the power and duty to determine whether a quorum is present at any meeting of the stockholders or for any matter to be voted on. Shares of its own stock belonging to the Corporation or to another corporation, if a majority in total voting power of the outstanding shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation or any subsidiary of the Corporation to vote stock, including, but not limited to, its own stock, held by it in a fiduciary capacity. In the absence of a quorum, the chair of the meeting may adjourn the meeting from time to time in the manner provided in Section 1.8 hereof until a quorum shall be present.

 

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Section 1.8 Adjournment.

Any meeting of stockholders, annual or special, may be adjourned from time to time solely by the chair of the meeting because of the absence of a quorum or for any other reason and to reconvene at the same or some other time, date and place, if any. Notice need not be given of any such adjourned meeting if the time, date and place thereof are announced at the meeting at which the adjournment is taken. The chair of the meeting shall have full power and authority to adjourn a stockholder meeting in their sole discretion even over stockholder opposition to such adjournment. The stockholders present at a meeting shall not have the authority to adjourn the meeting. If the time, date and place, if any, thereof, and the means of remote communication, if any, by which the stockholders and the proxy holders may be deemed to be present and in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken and the adjournment is for less than thirty (30) days, no notice need be given of any such adjourned meeting. If the adjournment is for more than thirty (30) days or the time, date and place, if any, and the means of remote communication, if any, by which the stockholders and the proxy holders may be deemed to be present and in person and vote are not announced at the meeting at which the adjournment is taken, or if after the adjournment a new record date is fixed for the adjourned meeting, then notice shall be given by the Secretary as required for the original meeting. At the adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting.

 

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Section 1.9 Organization.

The Chair of the Board, or in their absence the President, or in their absence any Vice President, shall call to order meetings of stockholders and preside over and act as chair of such meetings, except that the President shall call to order any special meeting of stockholders called by the President and shall preside over and act as chair of such meeting. The Board of Directors or, if the Board of Directors fails to act, the stockholders, may appoint any stockholder, director or officer of the Corporation to act as chair of any meeting in the absence of the Chair of the Board, the President and all Vice Presidents. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at a meeting shall be determined by the chair of the meeting and announced at the meeting. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate, except in the case of a special meeting of stockholders called by the President. Unless otherwise determined by the Board of Directors, the chair of the meeting shall have the exclusive right to determine the order of business and to prescribe other such rules, regulations and procedures and shall have the authority in their discretion to regulate the conduct of any such meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chair of the meeting, may include, without limitation, the following: (i) rules and procedures for maintaining order at the meeting and the safety of those present; (ii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chair of the meeting shall determine; (iii) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (iv) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the chair of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

 

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The Secretary shall act as secretary of all meetings of stockholders, but, in the absence of the Secretary, the Board of Directors or the chair of the meeting may appoint any other person to act as secretary of the meeting.

Section 1.10 Postponement or Cancellation of Meeting.

Any previously scheduled annual or special meeting of the stockholders may be postponed or canceled by the Chair of the Board, the President or resolution of the Board of Directors upon public notice given prior to the time previously scheduled for such meeting of stockholders.

Section 1.11 Voting.

Subject to the rights of the holders of any series of preferred stock and except as otherwise provided by law, the Certificate of Incorporation or these Bylaws and except for the election of directors, at any meeting duly called and held at which a quorum is present, the affirmative vote of a majority of the combined voting power of the outstanding shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Subject to the rights of the holders of any series of preferred stock to elect a specified number of directors in certain circumstances, at any meeting duly called and held for the election of directors at which a quorum is present, directors shall be elected by a plurality of the combined voting power of the outstanding shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors as provided in the Certificate of Incorporation.

 

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ARTICLE II

BOARD OF DIRECTORS

Section 2.1 Number and Term of Office.

The governing body of this Corporation shall be a board of directors (the “Board of Directors”). Subject to the Certificate of Incorporation and any rights of the holders of any series of preferred stock to elect additional directors, the Board of Directors shall be comprised of not less than three (3) members nor more than fifteen (15) members and the exact number of directors will be fixed from time to time by resolution adopted by the affirmative vote of not less than 75% of the members of the Board of Directors then in office. Directors need not be stockholders of the Corporation. Each director shall hold office for such time as set forth in the Certificate of Incorporation. The Board of Directors shall elect from its own members, at its first meeting after each annual meeting of stockholders, a Chairperson of the Board of Directors (the “Chair of the Board”). The Chair of the Board shall be a non-executive chairman and not an officer of the Corporation and will preside over all meetings of the stockholders and the Board of Directors, at which they are present, and shall perform such other duties consistent with the role of non-executive chairman as may be assigned to them from time to time by the Board of Directors.

Section 2.2 Resignations.

Any director of the Corporation, or any member of any committee, may resign at any time by giving written notice to the Board of Directors, the Chair of the Board or the President or Secretary of the Corporation. Any such resignation shall take effect at the time specified therein or, if the time be not specified therein, then upon receipt thereof. The acceptance of such resignation shall not be necessary to make it effective unless otherwise stated therein.

 

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Section 2.3 Removal of Directors.

Subject to the Certificate of Incorporation, directors may be removed as permitted by applicable law. For the purposes of any removal for cause, “cause” means (1) commission of an act of fraud, misappropriation, embezzlement or similar conduct against the Corporation, (2) conviction of, or plea of guilty or nolo contendere to, any crime (whether or not involving the Corporation) constituting a felony, or (3) the willful engaging by the director in misconduct that is materially injurious to the Corporation or its subsidiaries, monetarily or otherwise; provided that, for purposes of this subclause (3), no action or failure to act on a director’s part shall be considered “willful” unless done, or omitted to be done, by the director in bad faith and without reasonable belief that such action or omission was in the best interests of the Corporation.

Section 2.4 Vacancies.

Any vacancy on the Board of Directors shall be filled as provided for in the Certificate of Incorporation.

Section 2.5 Meetings.

The annual meeting of the Board of Directors may be held on such date and at such time and place as the Chair of the Board, the President or the Board of Directors determines. The annual meeting of the Board of Directors may be held immediately following the annual meeting of stockholders, and if so held, no notice of such meeting shall be necessary to the directors in order to hold the meeting legally, provided that a quorum shall be present thereat. Regular meetings of the Board of Directors shall be held on such dates, and at such times and places, as are determined from time to time by the Board. A notice of regular

 

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meetings of the Board of Directors shall not be required. Special meetings of the Board of Directors shall be held at such time and place as shall be designated in the notice of the meeting. Special meetings of the Board of Directors may be called by the Chair of the Board or the President, and shall be called by the President or Secretary of the Corporation upon the written request of not less than 75% of the members of the Board of Directors then in office.

Section 2.6 Notice of Special Meetings.

The Secretary, or in their absence any other officer of the Corporation, shall give each director notice of the time and place of holding of special meetings of the Board of Directors by mail at least five (5) days before the meeting, or by electronic transmission or personal service at least twenty-four (24) hours before the meeting. Only business specified in the notice of any special meeting may be transacted at such special meeting.

Section 2.7 Meetings by Remote Communications.

Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of conference telephone, videoconference, or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

Section 2.8 Quorum and Organization of Meetings.

A majority of the total number of members of the Board of Directors as constituted from time to time shall constitute a quorum for the transaction of business. If at any meeting of the Board of Directors (whether or not adjourned from a previous meeting) there shall be less than a quorum present, a majority of those present may adjourn the meeting to another

 

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time, date and place. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, a majority of the directors present at any meeting at which a quorum is present may decide any question brought before such meeting. Meetings shall be presided over by the Chair of the Board or in their absence by the President, or in the absence of both the Chair of the Board and the President by such other person as the directors may select. The Board of Directors shall keep written minutes of its meetings. The Secretary of the Corporation shall act as secretary of the meeting. In their absence, the chair of the meeting shall appoint another person to act as secretary of the meeting.

Section 2.9 Indemnification.

To the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, the Corporation shall indemnify and hold harmless any person who is or was made, or threatened to be made, a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding (a “Proceeding”), whether civil, criminal, administrative or investigative, including, without limitation, an action by or in the right of the Corporation to procure a judgment in its favor, by reason of the fact that such person, or a person of whom such person is the legal representative, is or was a director or officer of the Corporation, or while a director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprises including non-profit enterprises (an “Other Entity”), against all liabilities and losses, judgments, fines, penalties, excise taxes, amounts paid in settlement and costs, charges and expenses (including attorneys’ fees and disbursements). Persons who are not directors or officers of the Corporation may be similarly indemnified in respect of service to the Corporation or to an Other

 

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Entity at the request of the Corporation to the extent the Board of Directors at any time specifies that such persons are entitled to the benefits of this Section 2.9. Except as otherwise provided in Section 2.11 hereof, the Corporation shall be required to indemnify a person in connection with a Proceeding (or part thereof) commenced by such person only if the commencement of such Proceeding (or part thereof) by the person was authorized in the specific case by the Board of Directors. For the purposes of the indemnification and advancement rights provided in this Article II, the term “officer” shall mean the President, other officers of the Corporation that may be elected by the Board of Directors from time to time, and such other officers or employees of the Corporation or directors, officers or employees of its subsidiaries as the Board of Directors shall designate in writing.

Section 2.10 Advancement of Expenses.

The Corporation shall, from time to time, reimburse or advance to any director or officer or other person entitled to indemnification hereunder the funds necessary for payment of expenses, including attorneys’ fees and disbursements, incurred in connection with any Proceeding in advance of the final disposition of such Proceeding; provided, however, that, if required by the laws of the State of Delaware, such expenses incurred by or on behalf of any director or officer or other person may be paid in advance of the final disposition of a Proceeding only upon receipt by the Corporation of an undertaking, by or on behalf of such director or officer (or other person indemnified hereunder), to repay any such amount so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal that such director, officer or other person is not entitled to be indemnified for such expenses. Except as otherwise provided in Section 2.11 hereof, the Corporation shall be required to reimburse or advance expenses incurred by a person in connection with a Proceeding (or part thereof) commenced by such person only if the commencement of such Proceeding (or part thereof) by the person was authorized by the Board of Directors.

 

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Section 2.11 Claims.

If a claim for indemnification or advancement of expenses under this Article II is not paid in full within thirty (30) days after a written claim therefor by the person seeking indemnification or reimbursement or advancement of expenses has been received by the Corporation, the person may file suit to recover the unpaid amount of such claim and, if successful, in whole or in part, shall be entitled to be paid the reasonable expenses of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the person seeking indemnification or reimbursement or advancement of expenses is not entitled to the requested indemnification, reimbursement or advancement of expenses under applicable law.

Section 2.12 Amendment, Modification or Repeal.

Any amendment, modification or repeal of the foregoing provisions of this Article II shall not adversely affect any right or protection hereunder of any person entitled to indemnification under Section 2.9 hereof in respect of any act or omission occurring prior to the time of such repeal or modification.

Section 2.13 Nonexclusivity of Rights.

The rights conferred on any person by this Article II shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

 

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Section 2.14 Other Sources.

The Corporation’s obligation, if any, to indemnify or to advance expenses to any person who was or is serving at its request as a director, officer, employee or agent of an Other Entity shall be reduced by any amount such person may collect as indemnification or advancement of expenses from such Other Entity.

Section 2.15 Other Indemnification and Prepayment of Expenses.

This Article II shall not limit the right of the Corporation, to the extent and in the manner permitted by law, to indemnify and to advance expenses to additional persons when and as authorized by appropriate corporate action.

Section 2.16 Committees of the Board of Directors.

The Board of Directors may create, appoint the members of, authorize and empower one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors shall have power at any time to fill vacancies in, to change the membership of, or to dissolve, any such committee. A majority of any such committee may determine its action and fix the time and place of its meetings, unless the Board of Directors shall otherwise provide.

Section 2.17 Directors’ Compensation.

Directors shall receive such compensation for attendance at any meetings of the Board of Directors and any expenses incidental to the performance of their duties as the Board of Directors shall determine by resolution. Such compensation may be in addition to any compensation received by the members of the Board of Directors in any other capacity.

 

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Section 2.18 Action Without Meeting.

Nothing contained in these Bylaws shall be deemed to restrict the power of members of the Board of Directors or any committee designated by the Board of Directors to take any action required or permitted to be taken by them at any meeting of the Board of Directors or of any committee thereof, without a meeting, if all members of the Board of Directors or of such committee, as the case may be, consent thereto in writing or by electronic transmission and the writings or transmissions are filed with the minutes of proceedings of the Board of Directors or the applicable committee.

ARTICLE III

OFFICERS

Section 3.1 Officers.

The Board of Directors shall elect a President of the Corporation. The Board of Directors may also elect such Vice Presidents as in the opinion of the Board of Directors the business of the Corporation requires, a Treasurer and a Secretary, each of which will be officers, and any of whom may or may not be directors. The Board of Directors may also elect, from time to time, such other or additional officers as in its opinion are desirable for the conduct of business of the Corporation. Any person may hold at one time two or more offices.

Unless otherwise provided in the resolution of the Board of Directors electing any officer, each officer shall hold office until their successor is elected and qualified or until their earlier resignation or removal. Any officer may resign at any time upon written notice to the Board of Directors or the President or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective. The Board of Directors may remove any

 

22


officer with or without cause at any time. Any such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation, but the election of an officer shall not of itself create contractual rights. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled by the Board of Directors at any regular or special meeting.

Section 3.2 Powers and Duties of Officers.

The President shall also be the Chief Executive Officer of the Corporation and shall have overall responsibility for the management and direction of the business and affairs of the Corporation and its subsidiaries and shall exercise the general duties of supervision and management which customarily pertain to a chief executive officer and the office of the president and such other duties as may be prescribed from time to time by the Board of Directors. The President shall be the senior officer of the Corporation and in the absence or disability of the Chair of the Board, the President shall perform the duties and exercise the powers of the office of Chair of the Board. The President may sign, execute and deliver, in the name of the Corporation, powers of attorney, contracts, bonds and other obligations.

Vice Presidents shall have such powers and perform such duties as may be assigned to them by the President or the Board of Directors. A Vice President may sign and execute contracts and other obligations pertaining to the regular course of their duties which implement policies established by the Board of Directors.

The Treasurer may also serve as the chief financial officer of the Corporation. Unless the Board of Directors otherwise declares by resolution, the Treasurer shall have general custody of all the funds and securities of the Corporation and general supervision of the collection and disbursement of funds of the Corporation. The Treasurer shall endorse for

 

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collection on behalf of the Corporation checks, notes and other obligations, and shall deposit the same to the credit of the Corporation in such bank or banks or depository as the Board of Directors may designate. The Treasurer may sign, with the President or such other person or persons as may be designated for the purpose by the Board of Directors, all bills of exchange or promissory notes of the Corporation. The Treasurer shall enter or cause to be entered regularly in the books of the Corporation a full and accurate account of all moneys received and paid by them on account of the Corporation, shall at all reasonable times exhibit their books and accounts to any director of the Corporation upon application at the office of the Corporation during business hours and, whenever required by the Board of Directors or the President, shall render a statement of their accounts. The Treasurer shall perform such other duties as may be prescribed from time to time by the Board of Directors, the President or by these Bylaws. Any Assistant Treasurer shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors or the President may from time to time prescribe.

The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors. The Secretary shall cause notice to be given of meetings of stockholders, of the Board of Directors, and of any committee appointed by the Board of Directors. The Secretary shall have custody of the corporate seal, minutes and records relating to the conduct and acts of the stockholders and Board of Directors, which shall, at all reasonable times, be open to the examination of any director. The Secretary or any Assistant Secretary may certify the record of proceedings of the meetings of the stockholders or of the Board of Directors or resolutions adopted at such meetings, may sign or attest certificates, statements or reports required to be filed with governmental bodies or officials, may sign acknowledgments of instruments, may give notices of meetings and shall perform such other duties and have such other powers as the Board of Directors, the Chair of the Board or the President may from time to time prescribe.

 

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Section 3.3 Bank Accounts.

In addition to such bank accounts as may be authorized in the usual manner by resolution of the Board of Directors, the Treasurer, with approval of the President, may authorize such bank accounts to be opened or maintained in the name and on behalf of the Corporation as they may deem necessary or appropriate, provided payments from such bank accounts are to be made upon and according to the check of the Corporation, which may be signed jointly or singularly by either the manual or facsimile signature or signatures of such officers or employees of the Corporation as shall be specified in the written instructions of the Treasurer or Assistant Treasurer of the Corporation with the approval of the President of the Corporation.

Section 3.4 Proxies; Stock Transfers.

Unless otherwise provided in the Certificate of Incorporation or directed by the Board of Directors, the Chair of the Board or the President or any Vice President or their designees shall have full power and authority on behalf of the Corporation to attend and to vote upon all matters and resolutions at any meeting of stockholders of any corporation in which this Corporation may hold stock, and may exercise on behalf of this Corporation any and all of the rights and powers incident to the ownership of such stock at any such meeting, whether regular or special, and at all adjournments thereof, and shall have power and authority to execute and deliver proxies and consents on behalf of this Corporation in connection with the exercise by this Corporation of the rights and powers incident to the ownership of such stock, with full power of substitution or revocation.

 

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ARTICLE IV

CAPITAL STOCK

Section 4.1 Shares.

The shares of the Corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by the Chair of the Board or the President and by the Secretary or the Treasurer, and sealed with the seal of the Corporation. Such seal may be a facsimile, engraved or printed. Within a reasonable time after the issuance or transfer of uncertificated shares, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the Delaware General Corporation Law or a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights.

Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such an officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such officer, transfer agent or registrar had not ceased to hold such position at the time of its issuance.

Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.

 

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Section 4.2 Transfer of Shares.

(a) Upon surrender to the Corporation or the transfer agent of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled, and the issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the Corporation.

(b) The person in whose name shares of stock stand on the books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes, and the Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.

Section 4.3 Lost Certificates.

The Board of Directors or any transfer agent of the Corporation may direct a new certificate or certificates or uncertificated shares representing stock of the Corporation to be issued in place of any certificate or certificates theretofore issued by the Corporation, alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the Board of Directors (or any transfer agent of the Corporation authorized to do so by a resolution of the Board of Directors) may, in its

 

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discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or their legal representative, to give the Corporation a bond in such sum as the Board of Directors (or any transfer agent so authorized) shall direct to indemnify the Corporation and the transfer agent against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed or the issuance of such new certificates or uncertificated shares, and such requirement may be general or confined to specific instances.

Section 4.4 Transfer Agent and Registrar.

The Board of Directors may appoint one or more transfer agents and one or more registrars, and may require all certificates for shares to bear the manual or facsimile signature or signatures of any of them.

Section 4.5 Regulations.

The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer, registration, cancellation and replacement of certificates representing stock of the Corporation or uncertificated shares, which rules and regulations shall comply in all respects with the rules and regulations of the transfer agent.

ARTICLE V

GENERAL PROVISIONS

Section 5.1 Offices.

The Corporation shall maintain a registered office in the State of Delaware as required by the laws of the State of Delaware. The Corporation may also have offices in such other places, either within or without the State of Delaware, as the Board of Directors may from time to time designate or as the business of the Corporation may require.

 

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Section 5.2 Corporate Seal.

The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization, and the words “Corporate Seal” and “Delaware.”

Section 5.3 Fiscal Year.

The fiscal year of the Corporation shall be determined by resolution of the Board of Directors.

Section 5.4 Notices and Waivers Thereof.

Whenever any notice is required by the laws of the State of Delaware, the Certificate of Incorporation or these Bylaws to be given to any stockholder, director or officer, such notice, except as otherwise provided by law, may be given personally, or by mail, or, in the case of directors or officers, by electronic mail or facsimile transmission, addressed to such address as appears on the books of the Corporation. Any notice given by electronic mail or facsimile transmission shall be deemed to have been given when it shall have been transmitted and any notice given by mail shall be deemed to have been given three (3) business days after it shall have been deposited in the United States mail with postage thereon prepaid.

Whenever any notice is required to be given by law, the Certificate of Incorporation, or these Bylaws, a written waiver thereof, signed by the person entitled to such notice, whether before or after the meeting or the time stated therein, shall be deemed equivalent in all respects to such notice to the full extent permitted by law.

 

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Section 5.5 Saving Clause.

These Bylaws are subject to the provisions of the Certificate of Incorporation and applicable law. In the event any provision of these Bylaws is inconsistent with the Certificate of Incorporation or the corporate laws of the State of Delaware, such provision shall be invalid to the extent only of such conflict, and such conflict shall not affect the validity of any other provision of these Bylaws.

Section 5.6 Amendments.

As provided in Article Tenth of the Certificate of Incorporation, in furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, subject to the rights of the holders of any series of preferred stock, the Board of Directors, by action taken by the affirmative vote of a majority of the members of the Board of Directors then in office, is hereby expressly authorized and empowered to adopt, amend or repeal any provision of the Bylaws of this Corporation.

Subject to the rights of the holders of any series of preferred stock, these Bylaws may be adopted, amended or repealed by the affirmative vote of the holders of not less than two-thirds (66 2/3%) of the total voting power of the then outstanding capital stock of the Corporation entitled to vote thereon; provided, however, that this paragraph shall not apply to, and no vote of the stockholders of the Corporation shall be required to authorize, the adoption, amendment or repeal of any provision of the Bylaws by the Board of Directors in accordance with the preceding paragraph.

 

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Exhibit 4.1

EXECUTION VERSION

DISCOVERY COMMUNICATIONS, LLC,

Issuer

WARNER BROS. DISCOVERY, INC.,

Parent Guarantor

MAGALLANES, INC.,

Subsidiary Guarantor

and

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,

Trustee

TWENTIETH SUPPLEMENTAL INDENTURE

DATED AS OF APRIL 8, 2022

TO

INDENTURE

DATED AS OF AUGUST 19, 2009

Relating To

$1,200,000,000 2.950% Senior Notes due 2023

£400,000,000 2.500% Senior Notes due 2024

$476,725,000 3.900% Senior Notes due 2024

$488,512,000 3.950% Senior Notes due 2025

$1,700,000,000 3.950% Senior Notes due 2028

$750,000,000 4.125% Senior Notes due 2029

$1,000,000,000 3.625% Senior Notes due 2030

$1,250,000,000 5.000% Senior Notes due 2037

$1,250,000,000 5.200% Senior Notes due 2047

$750,000,000 5.300% Senior Notes due 2049

$1,000,000,000 4.650% Senior Notes due 2050

$1,732,036,000 4.000% Senior Notes due 2055


TWENTIETH SUPPLEMENTAL INDENTURE

TWENTIETH SUPPLEMENTAL INDENTURE, dated as of April 8, 2022 (the “Supplemental Indenture”), to the Base Indenture (defined below) among Discovery Communications, LLC, a Delaware limited liability company (the “Company”), Warner Bros. Discovery, Inc. (f/k/a Discovery, Inc.), a Delaware corporation (the “Parent Guarantor”), Magallanes, Inc., a Delaware corporation (the “Subsidiary Guarantor”) and U.S. Bank Trust Company, National Association, as Trustee (the “Trustee”).

RECITALS

WHEREAS, the Company has executed and delivered to the Trustee the Indenture, dated as of August 19, 2009 (the “Base Indenture” and, together with this Supplemental Indenture, the “Indenture”), providing for the issuance from time to time of its Securities;

WHEREAS, the Company has previously established (i) a series of its Securities designated as the “2.950% Senior Notes due 2023” (the “2023 Notes”) and issued $1,200,000,000 aggregate principal amount of the 2023 Notes, (ii) a series of its Securities designated as the “3.950% Senior Notes due 2028” (the “2028 Notes”) and issued $1,700,000,000 aggregate principal amount of the 2028 Notes, (iii) a series of its Securities designated as the “5.000% Senior Notes due 2037” (the “2037 Notes”) and issued $1,250,000,000 aggregate principal amount of the 2037 Notes and (iv) a series of its Securities designated as the “5.200% Senior Notes due 2047” (the “2047 Notes”) and issued $1,250,000,000 aggregate principal amount of the 2047 Notes, in each case pursuant to the Eleventh Supplemental Indenture, dated as of September 21, 2017, to the Base Indenture (the “Eleventh Supplemental Indenture”);

WHEREAS, the Company has previously established a series of its Securities designated as the “2.500% Senior Notes due 2024” (the “Sterling 2024 Notes”) and issued £400,000,000 aggregate principal amount of the Sterling 2024 Notes, pursuant to the Thirteenth Supplemental Indenture, dated as of September 21, 2017, to the Base Indenture (the “Thirteenth Supplemental Indenture”);

WHEREAS, the Company has previously established (i) a series of its Securities designated as the “3.900% Senior Notes due 2024” (the “USD 2024 Notes”) and issued $476,725,000 aggregate principal amount of the USD 2024 Notes and (ii) a series of its Securities designated as the “3.950% Senior Notes due 2025” (the “2025 Notes”) and issued $488,512,000 aggregate principal amount of the 2025 Notes, in each case pursuant to the Fifteenth Supplemental Indenture, dated as of April 3, 2018, to the Base Indenture (the “Fifteenth Supplemental Indenture”);

 

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WHEREAS, the Company has previously established (i) a series of its Securities designated as the “4.125% Senior Notes due 2029” (the “2029 Notes”) and issued $750,000,000 aggregate principal amount of the 2029 Notes and (ii) a series of its Securities designated as the “5.300% Senior Notes due 2049” (the “2049 Notes”) and issued $750,000,000 aggregate principal amount of the 2049 Notes, in each case pursuant to the Seventeenth Supplemental Indenture, dated as of May 21, 2019, to the Base Indenture (the “Seventeenth Supplemental Indenture”);

WHEREAS, the Company has previously established (i) a series of its Securities designated as the “3.625% Senior Notes due 2030” (the “2030 Notes”) and issued $1,000,000,000 aggregate principal amount of the 2030 Notes and (ii) a series of its Securities designated as the “4.650% Senior Notes due 2050” (the “2050 Notes”) and issued $1,000,000,000 aggregate principal amount of the 2050 Notes, in each case pursuant to the Eighteenth Supplemental Indenture, dated as of May 18, 2020, to the Base Indenture (the “Eighteenth Supplemental Indenture”);

WHEREAS, the Company has previously established a series of its Securities designated as the “4.000% Senior Notes due 2055” (the “2055 Notes” and together with the 2023 Notes, the 2028 Notes, the 2037 Notes, the 2047 Notes, the Sterling 2024 Notes, the USD 2024 Notes, the 2025 Notes, the 2029 Notes, the 2049 Notes, the 2030 Notes and the 2050 Notes, collectively, the “Notes”) and issued $1,732,036,000 aggregate principal amount of the 2055 Notes, pursuant to the Nineteenth Supplemental Indenture, dated as of September 21, 2020, to the Base Indenture (the “Nineteenth Supplemental Indenture” and, together with the Eleventh Supplemental Indenture, the Thirteenth Supplemental Indenture, the Fifteenth Supplemental Indenture, the Seventeenth Supplemental Indenture and the Eighteenth Supplemental Indenture, collectively, the “Existing Supplemental Indentures”);

WHEREAS, Section 3.04 of each of the Existing Supplemental Indentures provides that under certain circumstances certain wholly-owned Domestic Subsidiaries shall execute and deliver to the Trustee a supplemental indenture pursuant to which such wholly-owned Domestic Subsidiaries shall guarantee payment of the Notes issued pursuant to such Existing Supplemental Indenture and shall become a Subsidiary Guarantor for all purposes under such Existing Supplemental Indenture; and

WHEREAS, pursuant to Section 8.01 of the Base Indenture, the parties hereto are authorized to execute and deliver this Supplemental Indenture to amend the Base Indenture, without the consent of any Holder.

WITNESSETH:

NOW, THEREFORE, for and in consideration of the premises contained herein, each party agrees for the benefit of each other party and for the equal and ratable benefit of the Holders of the Notes, as follows:

 

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ARTICLE 1

DEFINITIONS

Section 1.01.    Capitalized terms used but not defined in this Supplemental Indenture shall have the meanings ascribed to them in the Base Indenture. Terms defined in the preamble or recitals hereto are used herein as therein defined

Section 1.02.    References in this Supplemental Indenture to article and section numbers shall be deemed to be references to article and section numbers of this Supplemental Indenture unless otherwise specified.

ARTICLE 2

GUARANTEE

Section 2.01.    Agreement to Guarantee. The Subsidiary Guarantor hereby agrees, fully and unconditionally, to guarantee payment of the Notes on the terms and subject to the conditions set forth in Section 3.04 of each of the Existing Supplemental Indentures and to be bound by (and shall be entitled to the benefits of) all other applicable provisions of the Indenture as a Subsidiary Guarantor.

Section 2.02.    Termination, Release and Discharge. The Subsidiary Guarantor’s subsidiary guarantee shall terminate and be of no further force or effect, and the Subsidiary Guarantor shall be released and discharged from all obligations in respect of such subsidiary guarantee, as and when provided in Section 3.04 of each of the Existing Supplemental Indentures.

ARTICLE 3

MISCELLANEOUS

Section 3.01.    Ratification of Base Indenture. The Base Indenture, as supplemented by this Supplemental Indenture, is in all respects ratified and confirmed, and this Supplemental Indenture shall be deemed part of the Base Indenture in the manner and to the extent herein and therein provided.

Section 3.02.    Trust Indenture Act Controls. If any provision hereof limits, qualifies or conflicts with the duties imposed by Section 310 through Section 317 of the Trust Indenture Act of 1939, the imposed duties shall control.

Section 3.03.    Conflict with Indenture. To the extent not expressly amended or modified by this Supplemental Indenture, the Base Indenture shall remain in full force and effect. If any provision of this Supplemental Indenture relating to the Notes is inconsistent with any provision of the Base Indenture, the provision of this Supplemental Indenture shall control.

 

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Section 3.04.    Governing Law. THIS SUPPLEMENTAL INDENTURE AND THE NOTES SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE, EXCEPT AS MAY OTHERWISE BE REQUIRED BY MANDATORY PROVISIONS OF LAW.

Section 3.05.    Successors. All agreements of the Company, the Parent Guarantor and the Subsidiary Guarantor in the Base Indenture, this Supplemental Indenture and the Notes shall bind their respective successors. All agreements of the Trustee in the Base Indenture and this Supplemental Indenture shall bind its successors.

Section 3.06.    Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes. Electronic signatures believed by the Trustee to comply with the ESIGN Act of 2000 or other applicable law (including electronic images of handwritten signatures and digital signature provided by DocuSign, Orbit, Adobe Sign or any other digital signature provider acceptable to Trustee) shall also be deemed original signatures for all purposes hereunder. Any communication or documents sent to the Trustee hereunder must be in the form of a document that is signed manually or by way of a digital signature provided by DocuSign (or such other digital signature provider as specified in writing to the Trustee by the authorized representative of the Company). Notwithstanding the foregoing, Trustee may in any instance and in its sole discretion require that an original document bearing a manual signature be delivered to Trustee in lieu of, or in addition to, any such electronic method. The Company agrees to assume all risks arising out of the use of using digital signatures and electronic methods to submit communications to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties.

Section 3.07.    Trustee Disclaimer. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture other than as to the validity of its execution and delivery by the Trustee. The recitals and statements herein are deemed to be those of the Company, the Parent Guarantor and the Subsidiary Guarantor and not the Trustee.

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused the Supplemental Indenture to be duly executed as of the day and year first above written.

 

DISCOVERY COMMUNICATIONS, LLC
By:  

/s/ Fraser Woodford

  Name: Fraser Woodford
 

Title:   Executive Vice President, Treasury

            and Corporate Finance

WARNER BROS. DISCOVERY, INC.
By:  

/s/ Fraser Woodford

  Name: Fraser Woodford
 

Title:   Executive Vice President, Treasury

            and Corporate Finance

[Signature Page to Twentieth Supplemental Indenture]


MAGALLANES, INC.
By:  

/s/ Fraser Woodford

  Name: Fraser Woodford
 

Title:   Executive Vice President, Treasury

            and Corporate Finance

[Signature Page to Twentieth Supplemental Indenture]


U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, Trustee
By:  

Karen R. Beard

  Name: Karen R. Beard
  Title: Vice President

[Signature Page to Twentieth Supplemental Indenture]

Exhibit 4.2

EXECUTION VERSION

DISCOVERY COMMUNICATIONS, LLC,

Issuer

WARNER BROS. DISCOVERY, INC.,

Parent Guarantor

MAGALLANES, INC.,

a Subsidiary Guarantor (as defined herein)

and

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,

Trustee

TWENTY-FIRST SUPPLEMENTAL INDENTURE

DATED AS OF APRIL 8, 2022

TO

INDENTURE

DATED AS OF AUGUST 19, 2009

Relating To

$350,000,000 3.250% Senior Notes due 2023

$450,000,000 3.800% Senior Notes due 2024

$300,000,000 3.450% Senior Notes due 2025

$500,000,000 4.900% Senior Notes due 2026

€600,000,000 1.900% Senior Notes due 2027

$850,000,000 6.350% Senior Notes due 2040

$500,000,000 4.950% Senior Notes due 2042

$850,000,000 4.875% Senior Notes due 2043


TWENTY-FIRST SUPPLEMENTAL INDENTURE

TWENTY-FIRST SUPPLEMENTAL INDENTURE, dated as of April 8, 2022 (the “Supplemental Indenture”), to the Base Indenture (defined below) among Discovery Communications, LLC, a Delaware limited liability company (the “Company”), Warner Bros. Discovery, Inc. (f/k/a Discovery, Inc.), a Delaware corporation (the “Parent Guarantor”), Magallanes, Inc., a Delaware corporation (“Magallanes”), and U.S. Bank Trust Company, National Association, as Trustee (the “Trustee”).

RECITALS

WHEREAS, the Company has executed and delivered to the Trustee the Indenture, dated as of August 19, 2009 (the “Base Indenture” and, together with this Supplemental Indenture, the “Indenture”), providing for the issuance from time to time of its Securities;

WHEREAS, the Company has previously established a series of its Securities designated as the “6.350% Senior Notes due 2040” (the “2040 Notes”) and issued $850,000,000 aggregate principal amount of the 2040 Notes, pursuant to the Second Supplemental Indenture, dated as of June 3, 2010, to the Base Indenture;

WHEREAS, the Company has previously established a series of its Securities designated as the “4.950% Senior Notes due 2042” (the “2042 Notes”) and issued $500,000,000 aggregate principal amount of the 2042 Notes, pursuant to the Fourth Supplemental Indenture, dated as of May 17, 2012, to the Base Indenture;

WHEREAS, the Company has previously established (i) a series of its Securities designated as the “3.250% Senior Notes due 2023” (the “2023 Notes”) and issued $350,000,000 aggregate principal amount of the 2023 Notes and (ii) a series of its Securities designated as the “4.875% Senior Notes due 2043” (the “2043 Notes”) and issued $850,000,000 aggregate principal amount of the 2043 Notes, in each case pursuant to the Fifth Supplemental Indenture, dated as of March 19, 2013, to the Base Indenture;

WHEREAS, the Company has previously established a series of its Securities designated as the “3.450% Senior Notes due 2025” (the “2025 Notes”) and issued $300,000,000 aggregate principal amount of the 2025 Notes, pursuant to the Seventh Supplemental Indenture, dated as of March 2, 2015, to the Base Indenture;

WHEREAS, the Company has previously established a series of its Securities designated as the “1.900% Senior Notes due 2027” (the “2027 Notes”) and issued €600,000,000 aggregate principal amount of the 2027 Notes, pursuant to the Eighth Supplemental Indenture, dated as of March 19, 2015, to the Base Indenture;

WHEREAS, the Company has previously established a series of its Securities designated as the “4.900% Senior Notes due 2026” (the “2026 Notes”) and issued $500,000,000 aggregate principal amount of the 2026 Notes, pursuant to the Ninth Supplemental Indenture, dated as of March 11, 2016, to the Base Indenture;

 

2


WHEREAS, the Company has previously established a series of its Securities designated as the “3.800% Senior Notes due 2024” (the “2024 Notes” and together with the 2040 Notes, the 2042 Notes, the 2023 Notes, the 2043 Notes, the 2025 Notes, the 2027 Notes and the 2026 Notes, collectively, the “Notes”) and issued $450,000,000 aggregate principal amount of the 2024 Notes, pursuant to the Tenth Supplemental Indenture, dated as of March 13, 2017, to the Base Indenture;

WHEREAS, Magallanes is a wholly-owned subsidiary of the Parent Guarantor;

WHEREAS, pursuant to Section 8.01(e) of the Base Indenture, the Company may add a guarantor for the Securities of one or more series;

WHEREAS, the Company wishes to add Magallanes as a guarantor for the Notes; and

WHEREAS, pursuant to Section 8.01 of the Base Indenture, the parties hereto are authorized to execute and deliver this Supplemental Indenture to amend the Base Indenture, without the consent of any Holder.

WITNESSETH:

NOW, THEREFORE, for and in consideration of the premises contained herein, each party agrees for the benefit of each other party and for the equal and ratable benefit of the Holders of the Notes, as follows:

ARTICLE 1

DEFINITIONS

Section 1.01.    Capitalized terms used but not defined in this Supplemental Indenture shall have the meanings ascribed to them in the Base Indenture. Terms defined in the preamble or recitals hereto are used herein as therein defined.

Section 1.02.    References in this Supplemental Indenture to article and section numbers shall be deemed to be references to article and section numbers of this Supplemental Indenture unless otherwise specified.

ARTICLE 2

GUARANTEE

Section 2.01.    Agreement to Guarantee.

(a)    Magallanes hereby agrees, fully and unconditionally, to guarantee payment of the Notes, including principal and interest (and premium, if any), and all other amounts due under the Indenture relating to the Notes on an unsecured and unsubordinated basis as a Subsidiary Guarantor.

(b)    The obligations of Magallanes are limited to the maximum amount, as will, after giving effect to all other contingent and fixed liabilities of Magallanes and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in

 

3


respect of the obligations of such other Subsidiary Guarantor under its subsidiary guarantee or pursuant to its contribution obligations under the Indenture, result in the obligations of Magallanes under the subsidiary guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law, or being void or unenforceable under any law relating to insolvency of debtors.

(c)    The subsidiary guarantee will be a continuing guarantee and shall (i) remain in full force and effect until payment in full of the principal amount of all outstanding Notes (whether by payment at maturity, purchase, redemption, defeasance, retirement or other acquisition) and all other subsidiary guaranteed obligations of Magallanes then due and owing unless earlier terminated as described below, (ii) be binding upon Magallanes and (iii) inure to the benefit of and be enforceable by the Trustee, the Holders and their permitted successors, transferees and assigns.

Notwithstanding the foregoing provisions of this Section 2.01, Magallanes will automatically and unconditionally be released from all obligations under its subsidiary guarantee, and the subsidiary guarantee shall thereupon terminate and be discharged and of no further force or effect, (i) concurrently with any direct or indirect sale or disposition (by merger or otherwise) of Magallanes or any interest therein, or any other transaction, in accordance with the terms of the Indenture, (ii) at any time that Magallanes is (or, substantially concurrently with the release of the subsidiary guarantee or if as a result of the release of the subsidiary guarantee, will be) released from all of its obligations under its guarantee of payment by the Company of any Debt of the Company or the Parent Guarantor under the Revolving Credit Facility (it being understood that a release subject to contingent reinstatement is still a release, and that if any such guarantee is so reinstated, such subsidiary guarantee shall also be reinstated to the extent that Magallanes would then be required to provide a subsidiary Guarantee pursuant to this Section 2.01), (iii) upon the merger or consolidation of Magallanes with and into the Company or the Parent Guarantor or another Subsidiary Guarantor that is the surviving person in such merger or consolidation, or upon the liquidation of Magallanes following the transfer of all of its assets to the Company or the Parent Guarantor or another Subsidiary Guarantor, (iv) concurrently with Magallanes ceasing to constitute a Domestic Subsidiary of the Parent Guarantor, (v) upon legal or covenant defeasance of the Company’s obligations, or satisfaction and discharge of the Notes, or (vi) upon payment in full of the aggregate principal amount of all Notes then outstanding and all other subsidiary guaranteed obligations then due and owing (provided that the obligations of Magallanes hereunder shall be reinstated if at any time any payment which would otherwise have reduced or terminated the obligations of Magallanes hereunder and under its subsidiary guarantee (whether such payment shall have been made by or on behalf of the Company or by or on behalf of Magallanes) is rescinded or reclaimed from any of the Holders upon the insolvency, bankruptcy, liquidation or reorganization of the Company or Magallanes or otherwise, all as though such payment had not been made). Upon any such occurrence specified in this Section 2.01, the Trustee shall execute any documents reasonably requested by the Company in order to evidence such release, discharge and termination in respect of the subsidiary guarantee.

(d)    For purposes of this Section 2.01, the following definitions are applicable:

Domestic Subsidiary” means any Guarantor Subsidiary that is organized under the laws of any political subdivision of the United States that is not a Foreign Subsidiary.

 

4


Foreign Subsidiary” means any Guarantor Subsidiary that is organized under the laws of a jurisdiction other than the United States, a state thereof or the District of Columbia or that is a Foreign Subsidiary Holdco. For the avoidance of doubt, any Guarantor Subsidiary that is organized and existing under the laws of Puerto Rico or any other territory of the United States of America shall be a Foreign Subsidiary.

Foreign Subsidiary Holdco” means any Guarantor Subsidiary designated as a Foreign Subsidiary Holdco by the Company, so long as such Subsidiary has no material assets other than securities, indebtedness or receivables of one or more Foreign Subsidiaries (or Guarantor Subsidiaries thereof), intellectual property relating solely to such Foreign Subsidiaries (or Guarantor Subsidiaries thereof ) and/or other assets (including cash and cash equivalents) relating to an ownership interest in any such securities, indebtedness, intellectual property or Guarantor Subsidiaries.

Guarantor Subsidiary” means a corporation or other business entity of which equity interests having a majority of the voting power under ordinary circumstances is owned, directly or indirectly, by the Parent Guarantor or by one of more subsidiaries of the Parent Guarantor, or by the Parent Guarantor and one or more subsidiaries of the Parent Guarantor.

Revolving Credit Facility” means the Credit Agreement, dated as of June 9, 2021, among the Company, the Parent Guarantor, the lenders from time to time parties thereto, Bank of America, N.A., as administrative agent and the other parties party thereto, as amended by Amendment No. 1 to Credit Agreement, dated as of July 30, 2021 and as further amended, restated, supplemented, replaced, waived or otherwise modified from time to time.

Subsidiary Guarantor” means any Guarantor Subsidiary that enters into a subsidiary guarantee, in each case, unless and until such Guarantor Subsidiary is released from such subsidiary guarantee.

ARTICLE 3

MISCELLANEOUS

Section 3.01.    Ratification of Base Indenture. The Base Indenture, as supplemented by this Supplemental Indenture, is in all respects ratified and confirmed, and this Supplemental Indenture shall be deemed part of the Base Indenture in the manner and to the extent herein and therein provided.

Section 3.02.    Trust Indenture Act Controls. If any provision hereof limits, qualifies or conflicts with the duties imposed by Section 310 through Section 317 of the Trust Indenture Act of 1939, the imposed duties shall control.

Section 3.03.    Conflict with Indenture. To the extent not expressly amended or modified by this Supplemental Indenture, the Base Indenture shall remain in full force and effect. If any provision of this Supplemental Indenture relating to the Notes is inconsistent with any provision of the Base Indenture, the provision of this Supplemental Indenture shall control.

Section 3.04.    Governing Law. THIS SUPPLEMENTAL INDENTURE AND THE NOTES SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE

 

5


OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE, EXCEPT AS MAY OTHERWISE BE REQUIRED BY MANDATORY PROVISIONS OF LAW.

Section 3.05.    Successors. All agreements of the Company, the Parent Guarantor and Magallanes in the Base Indenture, this Supplemental Indenture and the Notes shall bind their respective successors. All agreements of the Trustee in the Base Indenture and this Supplemental Indenture shall bind its successors.

Section 3.06.    Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes. Electronic signatures believed by the Trustee to comply with the ESIGN Act of 2000 or other applicable law (including electronic images of handwritten signatures and digital signature provided by DocuSign, Orbit, Adobe Sign or any other digital signature provider acceptable to Trustee) shall also be deemed original signatures for all purposes hereunder. Any communication or documents sent to the Trustee hereunder must be in the form of a document that is signed manually or by way of a digital signature provided by DocuSign (or such other digital signature provider as specified in writing to the Trustee by the authorized representative of the Company). Notwithstanding the foregoing, Trustee may in any instance and in its sole discretion require that an original document bearing a manual signature be delivered to Trustee in lieu of, or in addition to, any such electronic method. The Company agrees to assume all risks arising out of the use of using digital signatures and electronic methods to submit communications to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties.

Section 3.07.    Trustee Disclaimer. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture other than as to the validity of its execution and delivery by the Trustee. The recitals and statements herein are deemed to be those of the Company, the Parent Guarantor and Magallanes and not the Trustee.

 

6


IN WITNESS WHEREOF, the parties hereto have caused the Supplemental Indenture to be duly executed as of the day and year first above written.

 

DISCOVERY COMMUNICATIONS, LLC
By:  

/s/ Fraser Woodford

  Name: Fraser Woodford
 

Title:   Executive Vice President, Treasury

            and Corporate Finance

WARNER BROS. DISCOVERY, INC.
By:  

/s/ Fraser Woodford

  Name: Fraser Woodford
 

Title:   Executive Vice President, Treasury

            and Corporate Finance

[Signature Page to Twenty-First Supplemental Indenture]


MAGALLANES, INC.
By:  

/s/ Fraser Woodford

  Name: Fraser Woodford
 

Title:   Executive Vice President, Treasury

            and Corporate Finance

[Signature Page to Twenty-First Supplemental Indenture]


U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION
By:  

/s/ Karen R. Beard

  Name: Karen R. Beard
  Title: Vice President

[Signature Page to Twenty-First Supplemental Indenture]

Exhibit 4.3

MAGALLANES, INC.,

AS ISSUER,

AT&T INC.,

AS PARENT GUARANTOR

(prior to completion of the Merger),

AND

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,

AS TRUSTEE

 

 

INDENTURE

DATED AS OF MARCH 15, 2022

 

 

3.428% SENIOR NOTES DUE 2024

3.528% SENIOR NOTES DUE 2024

3.638% SENIOR NOTES DUE 2025

3.788% SENIOR NOTES DUE 2025

3.755% SENIOR NOTES DUE 2027

4.054% SENIOR NOTES DUE 2029

4.279% SENIOR NOTES DUE 2032

5.050% SENIOR NOTES DUE 2042

5.141% SENIOR NOTES DUE 2052

5.391% SENIOR NOTES DUE 2062

FLOATING RATE SENIOR NOTES DUE 2024


CROSS-REFERENCE TABLE(1)

 

SECTION OF

TRUST INDENTURE ACT OF

1939, AS AMENDED

   SECTION OF INDENTURE

310(a)

   7.09

310(b)

   7.08

7.10

311(a)

   7.13

311(b)

   7.13

312(a)

   5.01

5.04

312(b)

   5.04(c)

312(c)

   5.04(c)

313(a)

   5.03

313(b)

   5.03

313(c)

   5.03

313(d)

   5.03

314(a)

   5.02(b)

314(b)

   Inapplicable

314(c)

   9.04

10.01(c)

12.06(b)

13.05

314(d)

   Inapplicable

314(e)

   13.05

314(f)

   Inapplicable

315(a)

   7.01

315(b)

   6.11

315(c)

   7.01

315(d)

   7.01

7.02

315(e)

   6.12

7.10(b)

316(a)

   6.09

6.10

8.04

316(b)

   6.06

6.10

316(c)

   8.02

317(a)

   6.04

317(b)

   3.04

318(a)

   11.07

 

(1)

This Cross-Reference Table does not constitute part of the Indenture and shall not have any bearing on the interpretation of any of its terms or provisions.


TABLE OF CONTENTS

 

         PAGE  
ARTICLE I

 

DEFINITIONS

 

Section 1.01

 

Definitions of Terms

     1  
ARTICLE II

 

GENERAL TERMS AND CONDITIONS OF THE NOTES

 

Section 2.01

 

Designation and Principal Amount

     20  

Section 2.02

 

Maturity

     20  

Section 2.03

 

Interest on Fixed Rate Notes

     21  

Section 2.04

 

Interest on Floating Rate Notes

     22  

Section 2.05

 

Form and Payment

     24  

Section 2.06

 

Form of Trustee’s Certificate of Authentication

     26  

Section 2.07

 

Authentication and Delivery of Notes

     26  

Section 2.08

 

Execution of Securities

     27  

Section 2.09

 

Certificate of Authentication

     27  

Section 2.10

 

Transfers and Exchanges

     27  

Section 2.11

 

Payment of Additional Interest

     34  

Section 2.12

 

Other Terms

     34  

Section 2.13

 

Mutilated, Defaced, Destroyed, Lost and Stolen Notes

     35  

Section 2.14

 

Cancellation of Notes; Destruction Thereof

     35  

Section 2.15

 

Temporary Notes

     36  
ARTICLE III

 

REDEMPTION OF NOTES

 

Section 3.01

 

Optional Redemption

     36  

Section 3.02

 

Special Mandatory Redemption

     37  

Section 3.03

 

Purchase of Notes Upon a Change of Control Triggering Event

     38  

Section 3.04

 

Notice of Redemption; Partial Redemptions

     39  

Section 3.05

 

Payment of Notes Called for Redemption

     40  

Section 3.06

 

No Redemption at the Option of Holders; No Sinking Fund

     41  
ARTICLE IV

 

COVENANTS OF THE COMPANY

 

Section 4.01

 

Payment of Interest

     41  

Section 4.02

 

Offices for Payments

     41  

Section 4.03

 

Appointments to fill a Vacancy in Office of Trustee

     42  

 

i


Section 4.04

 

Paying Agents

     42  

Section 4.05

 

Written Statement to Trustee

     43  

Section 4.06

 

Limitation on Liens

     43  

Section 4.07

 

Limitation on Sale and Leasebacks

     46  

Section 4.08

 

Activities of the Company Prior to Consummation of the Distribution and the Merger

     46  

Section 4.09

 

Contribution of the Spinco Business

     47  

Section 4.10

 

Certain Subsidiaries

     47  
ARTICLE V

 

NOTEHOLDERS LISTS AND REPORTS BY THE COMPANY, GUARANTOR AND THE TRUSTEE

 

Section 5.01

 

Company to Furnish Trustee Information as to Names and Addresses of Noteholders

     47  

Section 5.02

 

Reports by the Company and Guarantor

     47  

Section 5.03

 

Reports by the Trustee

     48  

Section 5.04

 

Preservation of Information; Communication with Noteholders

     48  
ARTICLE VI

 

EVENTS OF DEFAULT

 

Section 6.01

 

Event of Default Defined; Acceleration of Maturity; Waiver of Default

     48  

Section 6.02

 

Collection of Debt by the Trustee

     51  

Section 6.03

 

Application of Proceeds

     53  

Section 6.04

 

Suits for Enforcement

     53  

Section 6.05

 

Restoration of Rights on Abandonment of Proceedings

     54  

Section 6.06

 

Limitations on Suits by Noteholders

     54  

Section 6.07

 

Unconditional Right of Noteholders to Institute Certain Suits

     54  

Section 6.08

 

Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default

     55  

Section 6.09

 

Control by Holders of Notes

     55  

Section 6.10

 

Waiver of Past Defaults

     55  

Section 6.11

 

Trustee to Give Notice of Default

     56  

Section 6.12

 

Rights of Court to Require Filing of Undertaking to Pay Costs

     56  
ARTICLE VII

 

CONCERNING THE TRUSTEE

 

Section 7.01

 

Duties and Responsibilities of the Trustee; During Default; Prior to Default

     56  

Section 7.02

 

Certain Rights of the Trustee

     57  

Section 7.03

  Trustee Not Responsible for Recitals; Disposition of Notes or Application of Proceeds Thereof      59  

 

ii


Section 7.04

 

Trustee and Agents May Hold Notes; Collections, Etc.

     59  

Section 7.05

 

Moneys Held by Trustee

     59  

Section 7.06

 

Compensation and Indemnification of Trustee and Its Prior Claim

     59  

Section 7.07

 

Right of Trustee to Rely on Officer’s Certificate, Etc.

     60  

Section 7.08

 

Disqualification, Conflicting Interests

     60  

Section 7.09

 

Persons Eligible for Appointment as Trustee

     60  

Section 7.10

 

Resignation and Removal; Appointment of Successor Trustee

     60  

Section 7.11

 

Acceptance of Appointment by Successor Trustee

     61  

Section 7.12

 

Merger, Conversion, Consolidation or Succession to Business of Trustee

     62  

Section 7.13

 

Preferential Collection of Claims Against the Company

     63  
ARTICLE VIII

 

CONCERNING THE NOTEHOLDERS

 

Section 8.01

 

Evidence of Action Taken by Noteholders

     63  

Section 8.02

 

Proof of Execution of Instruments and of Holding of Notes

     63  

Section 8.03

 

Holders to Be Treated as Owners

     64  

Section 8.04

 

Notes Owned by Company Deemed Not Outstanding

     64  

Section 8.05

 

Right of Revocation of Action Taken

     64  
ARTICLE IX

 

SUPPLEMENTAL INDENTURES

 

Section 9.01

 

Supplemental Indentures without the Consent of Holders

     65  

Section 9.02

 

Supplemental Indentures with Consent of Holders

     66  

Section 9.03

 

Effect of Supplemental Indentures

     68  

Section 9.04

 

Documents to Be Given to Trustee

     68  

Section 9.05

 

Notes Affected by Supplemental Indentures

     68  
ARTICLE X

 

CONSOLIDATION, MERGER, SALE OR CONVEYANCE

 

Section 10.01

 

Company and Parent Guarantor May Consolidate, Merge, Etc., On Certain Terms

     68  

Section 10.02

 

Successor Company Substituted

     70  
ARTICLE XI

 

GUARANTEE

 

Section 11.01

 

Unconditional Guarantee

     70  

Section 11.02

 

Notations of Guarantee Not Required

     72  

Section 11.03

 

Release of Conditional Parent Guarantor

     72  

Section 11.04

 

Limitation of Guarantor’s Liability

     72  

Section 11.05

 

Future Guarantors

     72  

 

iii


ARTICLE XII

 

SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

 

Section 12.01

 

Discharge of Liability on Notes

     74  

Section 12.02

 

Repayment to the Company

     74  

Section 12.03

 

Option to Effect Defeasance or Covenant Defeasance

     74  

Section 12.04

 

Defeasance and Discharge

     74  

Section 12.05

 

Covenant Defeasance

     75  

Section 12.06

 

Conditions to Defeasance or Covenant Defeasance

     75  
ARTICLE XIII

 

MISCELLANEOUS PROVISIONS

 

Section 13.01

 

No Recourse

     76  

Section 13.02

 

Provisions of Indenture for the Sole Benefit of Parties and Holders of Notes

     76  

Section 13.03

 

Successors and Assigns of Company and Guarantor Bound by Indenture

     76  

Section 13.04

 

Notices and Demands on Company, Parent Guarantor, Trustee and Holders of Notes

     77  

Section 13.05

 

Officer’s Certificates and Opinions of Counsel; Statements to Be Contained Therein

     78  

Section 13.06

 

Payments Due on Saturdays, Sundays and Holidays

     79  

Section 13.07

 

Conflict of Any Provision of Indenture With Trust Indenture Act

     79  

Section 13.08

 

New York Law to Govern

     79  

Section 13.09

 

Waiver of Jury Trial

     79  

Section 13.10

 

Counterparts

     79  

Section 13.11

 

Effect of Headings

     80  

Section 13.12

 

Actions by Successor

     80  

Section 13.13

 

Severability

     80  

Section 13.14

 

Assignment

     80  

EXHIBITS

 

Exhibit A    Form of Initial Note
Exhibit B    Form of Exchange Note
Exhibit C    Form of Regulation S Certificate
Exhibit D    Form of Supplemental Indenture for Guarantor

 

iv


INDENTURE, dated as of March 15, 2022, between Magallanes, Inc., a Delaware corporation (the “Company”), AT&T Inc., a Delaware corporation (“AT&T”), as Parent Guarantor (prior to completion of the Merger), and U.S. Bank Trust Company, National Association, a national banking association, as trustee (the “Trustee”).

W I T N E S S E T H:

WHEREAS, the Company has duly authorized the creation and issuance of (i) $1,750,000,000 principal amount of its 3.428% Senior Notes due 2024 (the “2024 Notes”), (ii) $500,000,000 principal amount of its 3.528% Senior Notes due 2024 (the “2024 NC1 Notes”), (iii) $1,750,000,000 principal amount of its 3.638% Senior Notes due 2025 (the “2025 Notes”), (iv) $500,000,000 principal amount of its 3.788% Senior Notes due 2025 (the “2025 NC1 Notes”), (v) $4,000,000,000 principal amount of its 3.755% Senior Notes due 2027 (the “2027 Notes”), (vi) $1,500,000,000 principal amount of its 4.054% Senior Notes due 2029 (the “2029 Notes”), (vii) $5,000,000,000 principal amount of its 4.279% Senior Notes due 2032 (the “2032 Notes”), (viii) $4,500,000,000 principal amount of its 5.050% Senior Notes due 2042 (the “2042 Notes”), (ix) $7,000,000,000 principal amount of its 5.141% Senior Notes due 2052 (the “2052 Notes”) and (x) $3,000,000,000 principal amount of its 5.391% Senior Notes due 2062 (the “2062 Notes” and, together with the 2024 Notes, the 2024 NC1 Notes, the 2025 Notes, the 2025 NC1 Notes, the 2027 Notes, the 2029 Notes, the 2032 Notes, the 2042 Notes and the 2052 Notes, the “Fixed Rate Notes”) and $500,000,000 principal amount of its floating rate senior notes due 2024 (the “Floating Rate Notes”; the Floating Rate Notes, together with the Fixed Rate Notes, are referred to herein as the “Initial Notes” and the Initial Notes, together with any Exchange Notes (as defined herein) issued therefor as provided herein and any Additional Notes (as defined herein) issued in accordance with this Indenture, are referred to herein as the “Notes”).

WHEREAS, to provide for the issuance of the Notes, the Company has duly authorized the execution and delivery of this Indenture;

WHEREAS, each of the Company and the Parent Guarantor has duly authorized that this Indenture provide, among other things, for the authentication, delivery and administration of the Notes issued on and after the date hereof; and

WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according to its terms have been done.

NOW, THEREFORE, in consideration of the premises and the purchases of the Notes by the Holders thereof, each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the holders of the Notes as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions of Terms. The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section. All other terms used in this Indenture that are defined in the Trust Indenture Act,


including terms defined therein by reference to the Securities Act (except as herein otherwise expressly provided or unless the context otherwise clearly requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of this Indenture. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles, and the term “generally accepted accounting principles” means such accounting principles as are generally accepted at the time of any computation. The words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular.

A/N Voting Agreement” means the Voting Agreement, dated as of May 17, 2021, by and among Discovery, Inc., AT&T, the Company, ANP and ANPP.

Acceleration Event” has the meaning provided in Section 6.01(g).

“Additional Notes” has the meaning provided in Section 2.01.

Adjusted Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semi-annual equivalent Yield to Maturity of the applicable Comparable Treasury Issue, assuming a price for such Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the applicable Comparable Treasury Price for such Redemption Date.

Agent Members” has the meaning given to such term in Section 2.10.

Ancillary Agreements” means the Tax Matters Agreement, the Employee Matters Agreement, the Intellectual Property License Agreement, the Transition Services Agreement and the other agreements mutually agreed to by the parties pursuant to or in connection with the transactions contemplated by the Transaction Documents.

ANP” means Advance/Newhouse Partnership, a New York partnership.

ANPP” means Advance/Newhouse Programming Partnership, a New York partnership.

AT&T” has the meaning provided in the preamble.

Attributable Debt” has the meaning provided in Section 4.07(a).

Authentication Order” has the meaning provided in Section 2.07(a).

Authorized Newspaper” means a newspaper, in the English language or, at the option of the Company, in an official language of the country of publication, customarily published on each Business Day whether or not published on Saturdays, Sundays or holidays, and of general circulation in the place in connection with which the term is used or in the financial community of such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different Authorized Newspapers meeting the foregoing requirements and in each case on any Business Day.

 

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Below Investment Grade Rating Event” with respect to the Notes of a series means that such Notes become rated below Investment Grade by each Rating Agency on any date from the date of the public notice by the Parent Guarantor or the Company of an arrangement that results in a Change of Control until the end of the 60-day period following public notice by the Parent Guarantor or the Company of the occurrence of a Change of Control (which period will be extended so long as the rating of such series of Notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies); provided, however, that a Below Investment Grade Rating Event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Below Investment Grade Rating Event for purposes of the definition of Change of Control Triggering Event), if the Rating Agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the Trustee in writing at its request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control has occurred at the time of the Below Investment Grade Rating Event).

Benchmark” means, initially, Compounded SOFR; provided that if the Company (or the Company’s designee) determines that a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to Compounded SOFR (or the published SOFR Index used in the calculation thereof) or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement.

Benchmark Replacement” means the first alternative set forth in the order below that can be determined by the Company or its designee as of the Benchmark Replacement Date; provided that if the Benchmark Replacement cannot be determined in accordance with clause (1) below as of the Benchmark Replacement Date and the Company or its designee shall have determined that the ISDA Fallback Rate determined in accordance with clause (2) below is not an industry-accepted rate of interest as a replacement for the then-current Benchmark for U.S. dollar-denominated floating rate notes at such time, then clause (2) below shall be disregarded, and the Benchmark Replacement shall be determined in accordance with clause (3) below:

 

  (1)

the sum of: (a) an alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark and (b) the Benchmark Replacement Adjustment;

 

  (2)

the sum of: (a) the ISDA Fallback Rate and (b) the Benchmark Replacement Adjustment; or

 

  (3)

the sum of: (a) the alternate rate of interest that has been selected by the Company or its designee as the replacement for the then-current Benchmark giving due consideration to any industry-accepted rate of interest as a replacement for the then-current Benchmark for U.S. dollar denominated floating rate notes at such time and (b) the Benchmark Replacement Adjustment.

 

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Benchmark Replacement Adjustment” means the first alternative set forth in the order below that can be determined by the Company or its designee as of the Benchmark Replacement Date:

 

  (1)

the spread adjustment (which may be a positive or negative value or zero), or method for calculating or determining such spread adjustment, that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement;

 

  (2)

if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, the ISDA Fallback Adjustment; or

 

  (3)

the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Company or its designee giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar denominated floating rate notes at such time.

Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definitions or interpretations of Interest Period, the timing and frequency of determining rates and making payments of interest, the rounding of amounts or tenors, and other technical, administrative or operational matters) that the Company (or its designee) decide may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with market practice (or, if the Company or its designee decides that adoption of any portion of such market practice is not administratively feasible or if the Company (or its designee) determines that no market practice for use of the Benchmark Replacement exists, in such other manner as the Company (or its designee) determines is reasonably practicable).

Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark (including any daily published component used in the calculation thereof):

 

  (1)

in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the Benchmark permanently or indefinitely ceases to provide the Benchmark (or such component); or

 

  (2)

in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein.

For the avoidance of doubt, if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination.

 

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Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark (including the daily published component used in the calculation thereof):

 

  (1)

a public statement or publication of information by or on behalf of the administrator of the Benchmark (or such component) announcing that such administrator has ceased or will cease to provide the Benchmark (or such component), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark (or such component)

 

  (2)

a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark (or such component), the central bank for the currency of the Benchmark (or such component), an insolvency official with jurisdiction over the administrator for the Benchmark (or such component), a resolution authority with jurisdiction over the administrator for the Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for the Benchmark (or such component), which states that the administrator of the Benchmark (or such component) has ceased or will cease to provide the Benchmark (or such component) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark (or such component); or

 

  (3)

a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark announcing that the Benchmark is no longer representative.

Board of Directors” means, as to any Person, the board of directors or other governing body of such Person or, if such Person does not have such a board of directors or other governing body and is owned or managed by a single entity, such entity, the board of directors or other governing body of such entity, or, in either case, any committee thereof duly authorized to act on behalf of such board of directors or other governing body. Unless otherwise provided, “Board of Directors” means the Board of Directors of the Company.

Board Resolution” means, as to any Person, a copy of one or more resolutions, certified by the secretary or an assistant secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect, and delivered to the Trustee.

Business Day” means any day other than a Saturday or Sunday, legal holiday or a day on which federal or state banking institutions in the Borough of Manhattan, the City and State of New York, or other place of payment, are authorized or obligated by law, executive order or regulation to close.

 

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Change of Control” means the occurrence after the consummation of the Merger of any one of the following:

(1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Parent Guarantor and its subsidiaries, taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than to the Parent Guarantor or one of its subsidiaries;

(2) the consummation of any transaction (including without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act), other than any Significant Shareholder or any combination of Significant Shareholders, becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the outstanding Voting Stock of the Parent Guarantor or the Company, measured by voting power rather than number of shares;

(3) the consummation of a so-called “going private/Rule 13e-3 Transaction” that results in any of the effects described in paragraph (a)(3)(ii) of Rule 13e-3 under the Exchange Act (or any successor provision) with respect to each class of the Parent Guarantor’s common stock, following which any Significant Shareholder or any combination of Significant Shareholders “beneficially own” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, more than 50% of the outstanding Voting Stock of the Parent Guarantor, measured by voting power rather than number of shares; or

(4) the adoption of a plan relating to the liquidation, dissolution or winding-up of the Parent Guarantor.

For the avoidance of doubt, the Merger and the related transactions contemplated by the Transaction Documents shall not constitute a “Change of Control”.

Change of Control Triggering Event” means the occurrence of both a Change of Control and a Below Investment Grade Rating Event. Notwithstanding the foregoing, no Change of Control Triggering Event shall be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been consummated.

Clearstream” shall mean Clearstream Banking, société anonyme, Luxembourg.

Commission” means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date.

Company” means the Person named as the “Company” in the first paragraph of this instrument until a successor replaces it and, thereafter, “Company” shall mean the successor and, for purposes of any provision contained herein and required by the Trust Indenture Act, each other obligor on the Notes.

Company Order” means a written statement, request or order of the Company signed in its name by the president or any vice president of the Company.

 

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Company Subsidiary” means a corporation or other business entity of which equity interests having a majority of the voting power under ordinary circumstances is owned, directly or indirectly, by the Company or by one or more subsidiaries of the Company.

Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the Fixed Rate Notes of a series to be redeemed (assuming that such Fixed Rate Notes matured on the applicable Par Call Date) that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Fixed Rate Notes.

Comparable Treasury Price” means, with respect to any Redemption Date, (i) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Company obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

Compounded SOFR” will be determined by the Calculation Agent in accordance with the following formula (and the resulting percentage will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point):

 

LOGO

where:

SOFR IndexStart” equals, for periods other than the initial Interest Period, the SOFR Index value on the preceding Interest Payment Determination Date, and, for the initial interest period, the SOFR Index value on March 11. 2022;

SOFR IndexEnd” equals the SOFR Index value on the Interest Payment Determination Date relating to the applicable Floating Rate Interest Payment Date (or in the final Interest Period, relating to the applicable Stated Maturity Date); and

dc” is the number of calendar days in the relevant Observation Period.

Consent Agreement” means the Consent Agreement, dated as of May 17, 2021, by and among Discovery, Inc., ANPP and ANP (as it may be amended from time to time).

Corporate Trust Office” means the office of the Trustee at which, at any particular time, its corporate trust business with respect to this Indenture shall be administered, which office at the date hereof is located at U.S. Bank Trust Company, National Association, One Federal Street, Boston, MA 02110, Attention: K. Beard (Magallanes, Inc.), or such other address as the Trustee may designate from time to time by notice to the Holders, or the office of any successor Trustee designated from time to time by written notice to the Holders and the Company.

DCL” means Discovery Communications, LLC, a Delaware limited liability company.

 

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Debt” of any Person means any debt for money borrowed which is created, assumed, incurred or guaranteed in any manner by such Person or for which such Person is otherwise responsible or liable, and shall expressly include any such guaranty thereof by such Person. For the purpose of computing the amount of the Debt of any Person there shall be excluded all Debt of such Person for the payment or redemption or satisfaction of which money or securities (or evidences of such Debt, if permitted under the terms of the instrument creating such Debt) in the necessary amount shall have been deposited in trust with the proper depositary, whether upon or prior to the maturity or the Redemption Date of such Debt; and, in any instance where Debt is so excluded, for the purpose of computing the assets of such Person there shall be excluded the money, securities or evidences of Debt deposited by such Person in trust for the purpose of paying or satisfying such Debt.

Defaulted Interest” shall have the meaning set forth in Section 2.05(c).

Defeased Notes” shall have the meaning set forth in Section 12.03.

Depositary” means, with respect to the Notes of any series issuable or issued in the form of one or more Global Notes, the Person designated as Depositary by the Company pursuant to Section 2.07 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Depositary” shall mean or include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, “Depositary” as used with respect to the Notes of any such series shall mean the Depositary with respect to the Global Notes of that series.

Distribution” means the distribution by AT&T, pursuant to the Separation Agreement, of 100% of the shares of the common stock of the Company to AT&T stockholders in a pro rata distribution.

Distribution Compliance Period” means, with respect to any Notes, the period of 40 consecutive days beginning on the later of (i) the day on which such Notes are first offered to Persons other than distributors (as defined in Regulation S) in reliance on Regulation S and (ii) the issue date with respect to such Notes.

Domestic Subsidiary” means any Parent Subsidiary that is organized under the laws of any political subdivision of the United States that is not a Foreign Subsidiary.

Eligible Investments” means:

(1) securities issued or directly and fully guaranteed or insured by the U.S. government or any agency or instrumentality of the United States (provided that the full faith and credit of the United States is pledged in support thereof), having maturities of not more than 18 months from the date of acquisition;

(2) marketable general obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition and, at the time of acquisition, having a credit rating of at least “A” or the equivalent thereof by S&P or Moody’s, or carrying an equivalent rating by a nationally recognized Rating Agency, if both of the two named Rating Agencies cease publishing ratings of investments;

 

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(3) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers’ acceptances having maturities of not more than one year from the date of acquisition thereof issued by any commercial bank the long-term debt of which is rated at the time of acquisition thereof at least “A” or the equivalent thereof by S&P or Moody’s, or carrying an equivalent rating by a nationally recognized Rating Agency, if both of the two named Rating Agencies cease publishing ratings of investments, and having combined capital and surplus in excess of $500 million;

(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1), (2) and (3) entered into with any bank meeting the qualifications specified in clause (3) above;

(5) commercial paper rated at the time of acquisition thereof at least “A-2” or the equivalent thereof by S&P or “P-2” or the equivalent thereof by Moody’s or carrying an equivalent rating by a nationally recognized Rating Agency, if both of the two named Rating Agencies cease publishing ratings of investments, and in any case maturing within one year after the date of acquisition thereof; and

(6) interests in any investment company or money market fund which invests 95% or more of its assets in instruments of the type specified in clauses (1) through (5) above.

Employee Matters Agreement” means the Employee Matters Agreement, dated as of May 17, 2021, by and among AT&T, Discovery, Inc., and the Company.

Euroclear” means Euroclear Bank SA/NV, as operator of the Euroclear System.

Event of Default” means any event or condition specified as such in Section 6.01.

Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

Exchange Notes” means new Notes of a series containing terms substantially identical to the Initial Notes of such series (except that (i) such Exchange Notes may omit terms with respect to transfer restrictions and may be registered under the Securities Act, (ii) such Exchange Notes may omit terms with respect to the Special Mandatory Redemption, and (iii) certain provisions relating to an increase in the stated rate of interest thereon may be eliminated), that are issued and exchanged for the Initial Notes of such series pursuant to the Exchange Offer.

Exchange Offer” means an Exchange Offer as defined in the Registration Rights Agreement.

Fitch” means Fitch Ratings Ltd., and its successors.

Fixed Rate Interest Payment Date” has the meaning provided in Section 2.03(b).

Fixed Rate Notes” has the meaning provided in the recitals.

 

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Floating Rate Interest Payment Date” has the meaning provided in Section 2.04(b).

Floating Rate Notes” has the meaning provided in the recitals.

Foreign Subsidiary” means any Parent Subsidiary that is organized under the laws of a jurisdiction other than the United States, a State thereof or the District of Columbia or that is a Foreign Subsidiary Holdco. For the avoidance of doubt, any Parent Subsidiary that is organized and existing under the laws of Puerto Rico or any other territory of the United States of America shall be a Foreign Subsidiary.

Foreign Subsidiary Holdco” means any Parent Subsidiary designated as a Foreign Subsidiary Holdco by the Company, so long as such Parent Subsidiary has no material assets other than securities, indebtedness or receivables of one or more Foreign Subsidiaries (or Parent Subsidiaries thereof), intellectual property relating solely to such Foreign Subsidiaries (or Parent Subsidiaries thereof) and/or other assets (including cash and cash equivalents) relating to an ownership interest in any such securities, indebtedness, intellectual property or Parent Subsidiaries.

GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

Global Note” means a Note evidencing all or a part of a series of Notes, issued to the Depositary for such series in accordance with Section 2.05, and bearing the legend prescribed in Section 2.05.

Governmental Obligations” means securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America that, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with respect to any such Governmental Obligation or a specific payment of principal of or interest on any such Governmental Obligation held by such custodian for the account of the holder of such depositary receipt; provided, however, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Governmental Obligation or the specific payment of principal of or interest on the Governmental Obligation evidenced by such depositary receipt.

Guarantee” has the meaning set forth in Section 11.01.

 

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Holder”, “Noteholder”, “holder of the Note” or other similar terms mean the Person in whose name such Note is registered in the Note Register kept by the Company for that purpose in accordance with the terms hereof.

Indenture” means this instrument as originally executed and delivered or, if amended or supplemented as herein provided, as so amended or supplemented or both.

Initial Notes” has the meaning provided in the recitals.

Initial Purchaser Representatives” means Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC.

Interest Payment Date” has the meaning provided in Section 2.04(b).

Interest Payment Determination Date” means the date two U.S. Government Securities Business Days before each Floating Rate Interest Payment Date.

Interest Period” with respect to the Floating Rate Notes, means (i) the period commencing on any Floating Rate Interest Payment Date for the Floating Rate Notes (or with respect to the initial Interest Period only, commencing on March 15, 2022) to but excluding the next succeeding Floating Rate Interest Payment Date for the Floating Rate Notes, (ii) in the case of the last such period, from and including the Floating Rate Interest Payment date for the Floating Rate Notes immediately preceding the Stated Maturity Date for the Floating Rate Notes to, but excluding, such Stated Maturity Date or (iii) in the event of any repurchase or redemption of any such Floating Rate Notes, from and including the Floating Rate Interest Payment Date immediately preceding the applicable Redemption Date or date of repurchase to, but excluding, such Redemption Date or date of repurchase.

Investment Grade” means a rating of BBB- or better by S&P (or its equivalent under any successor rating category of S&P), a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating category of Moody’s) and a rating of BBB- or better by Fitch (or its equivalent under any successor rating category of Fitch).

ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time.

ISDA Fallback Adjustment” means the spread adjustment (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Benchmark for the applicable tenor.

ISDA Fallback Rate” means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Benchmark for the applicable tenor excluding the applicable ISDA Fallback Adjustment.

 

11


Lien” means any mortgage, pledge, hypothecation, assignment, deposit, arrangement, encumbrance, lien (statutory or other), chart, 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, any easement, right of way or other encumbrance on title to real property, and any financing lease substantially having the same economic effect as any of the foregoing).

Malone Voting Agreement” means the Voting Agreement, dated as of May 17, 2021, by and among Discovery, Inc., AT&T, the Company, John C. Malone, the John C. Malone 1995 Revocable Trust, the Malone Discovery 2021 Charitable Remainder Unitrust and the Malone CHUB 2017 Charitable Remainder Unitrust (as it may be amended from time to time).

Material Debt” means any Debt of the Company, the Parent Guarantor or any Subsidiary Guarantor in an aggregate principal amount equal to or greater than $400 million.

Merger” means the merger of Drake Subsidiary, Inc., a Delaware corporation, with and into the Company pursuant to the Merger Agreement, with the Company surviving such merger as a subsidiary of WBD.

Merger Agreement” means the Agreement and Plan of Merger, dated as of May 17, 2021, by and among Discovery, Inc., Drake Subsidiary, Inc., AT&T and the Company (as it may be amended from time to time).

Moody’s” means Moody’s Investors Service, Inc., and its successors.

No Call Date” has the meaning provided in Section 3.01(a).

Non U.S. Person” means a Person who is not a U.S. person, as defined in Regulation S.

Note Register” has the meaning set forth in Section 2.10(a).

Notes” has the meaning provided in the recitals.

Observation Period” means, in respect of each Interest Period, the period from, and including, the date two U.S. Government Securities Business Days preceding the first date in such Interest Period to, but excluding, the date two U.S. Government Securities Business Days preceding the Floating Rate Interest Payment Date for such Interest Period (or in the final Interest Period, preceding the applicable Stated Maturity Date).

Officer’s Certificate” means, with respect to the Company, the Parent Guarantor or any Subsidiary Guarantor, a certificate signed by the chair of the Board of Directors, the president, any vice president, the treasurer, any assistant treasurer, the secretary or any assistant secretary of the Company, the Parent Guarantor or such Subsidiary Guarantor, as the case may be, and delivered to the Trustee. Each such certificate shall comply with Section 314 of the Trust Indenture Act and shall include the statements provided for in Section 13.05, if and to the extent required hereby.

 

12


Opinion of Counsel” means an opinion in writing signed by the general corporate counsel or such other legal counsel who may be an employee of or counsel to the Company, the Parent Guarantor or any Subsidiary Guarantor and who shall be satisfactory to the Trustee. Each such opinion shall comply with Section 314 of the Trust Indenture Act and shall include the statements provided for in Section 13.05, if and to the extent required hereby.

Original Issue Date” of any Note (or portion thereof) means the earlier of (a) the date of such Note or (b) the date of any Note (or portion thereof) for which such Note was issued (directly or indirectly) on registration of transfer, exchange or substitution.

Outstanding,” when used with reference to the Notes, shall, subject to the provisions of Section 8.04, mean, as of any particular time, all Notes authenticated and delivered by the Trustee under this Indenture, except:

(a) Notes theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

(b) Notes, or portions thereof, for the payment or redemption of which moneys or Governmental Obligations (or a combination thereof) in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Company) or shall have been set aside, segregated and held in trust by the Company for the Holders of such Notes (if the Company shall act as its own paying agent); provided, that if such Notes, or portions thereof, are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as herein provided, or provision satisfactory to the Trustee shall have been made for giving such notice;

(c) Notes in substitution for which other Notes shall have been authenticated and delivered pursuant to the terms of Section 2.13 (except with respect to any such Note as to which proof satisfactory to the Trustee is presented that such Note is held by a Person in whose hands such Note is a legal, valid and binding obligation of the Company); and

(d) Notes not deemed outstanding pursuant to Section 12.04.

Par Call Date” means (i) March 15, 2023, with respect to the 2024 NC1 Notes, (ii) March 15, 2023, with respect to the 2025 NC1 Notes, (iii) February 15, 2027, with respect to the 2027 Notes, (iv) January 15, 2029, with respect to the 2029 Notes, (v) December 15, 2031, with respect to the 2032 Notes, (vi) September 15, 2041, with respect to the 2042 Notes, (vii) September 15, 2051, with respect to the 2052 Notes, and (viii) September 15, 2061, with respect to the 2062 Notes.

Parent Guarantor” means, prior to the completion of the Merger, AT&T; provided that AT&T shall cease to constitute a Parent Guarantor when its Guarantee is released in accordance with the terms of this Indenture and, upon execution and delivery of a supplemental indenture pursuant to and in accordance with Section 11.05, effective upon the date of the Merger, Warner Bros. Discovery, Inc. (“WBD”), a Delaware corporation.

 

13


Parent Subsidiary” means a corporation or other business entity of which equity interests having a majority of the voting power under ordinary circumstances is owned, directly or indirectly, by the Parent Guarantor or by one or more subsidiaries of the Parent Guarantor.

Payment Default” has the meaning provided in Section 6.01(g).

Paying Agent” means any Person authorized by the Company to pay the principal of or any premium or interest on any Notes on behalf of the Company.

Permitted Sale and Leaseback Transactions” has the meaning provided in Section 4.07(b).

Permitted Securitization Financing” means any financing arrangement or factoring of Securitization Assets by WBD or any subsidiary and any securitization facility of any Securitization Subsidiary, in each case, the obligations of which are non-recourse (except for Standard Securitization Undertakings) to WBD or any subsidiary (other than any Securitization Subsidiary) in connection therewith.

Person” means any individual, corporation, partnership, limited partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

principal” whenever used with reference to the Notes or any Note or any portion thereof, shall be deemed to include “and premium, if any”.

Private Placement Legend” means the legend set forth in Section 2.10(d).

QIB” means a qualified institutional buyer as defined in Rule 144A promulgated under the Securities Act.

Quotation Agent” means the Reference Treasury Dealer appointed by the Company.

Rating Agency” means (i) each of S&P, Moody’s and Fitch; and (ii) if any of S&P, Moody’s or Fitch ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” as defined in Section 3(a)(62) of the Exchange Act, selected by the Company (as certified by a Board Resolution and reasonably acceptable to the Trustee) as a replacement agency for S&P, Moody’s or Fitch, or all of them, as the case may be.

Redemption Date,” when used with respect to any Notes to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.

Redemption Price,” when used with respect to any Note to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.

Reference Time” with respect to any determination of the Benchmark means (1) if the Benchmark is Compounded SOFR, the SOFR Index Determination Time, and (2) if the Benchmark is not Compounded SOFR, the time determined by the Company or its designee in accordance with the Benchmark Replacement Conforming Changes.

 

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Reference Treasury Dealer” means (i) J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC, and Barclays Capital Inc., their respective affiliates and their respective successors with respect to the Fixed Rate Notes; provided, however, that if any of the foregoing ceases to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company will substitute therefor another Primary Treasury Dealer; and (ii) any other Primary Treasury Dealers selected by the Company.

Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date.

Registrar” shall have the meaning set forth in Section 2.10.

Registration Default” shall have the meaning given to such term in the Registration Rights Agreement.

Registration Rights Agreement” means the Registration Rights Agreement dated as of March 15, 2022, among the Company and the Initial Purchaser Representatives, relating to the Initial Notes, as the same may be amended, supplemented, waived or otherwise modified from time to time.

Regular Record Date” means (i) with respect to the 2024 Notes, each March 1 and September 1, (ii) with respect to the 2024 NC1 Notes, each March 1 and September 1, (iii) with respect to the 2025 Notes, each March 1 and September 1, (iv) with respect to the 2025 NC1 Notes, each March 1 and September 1, (v) with respect to the 2027 Notes, each March 1 and September 1, (vi) with respect to the 2029 Notes, each March 1 and September 1, (vii) with respect to the 2032 Notes, each March 1 and September 1, (viii) with respect to the 2042 Notes, each March 1 and September 1, (ix) with respect to the 2052 Notes, each March 1 and September 1, (x) with respect to the 2062 Notes, each March 1 and September 1 and (xi) with respect to the Floating Rate Notes, each March 1, June 1, September 1 and December 1.

Regulation S” means Regulation S as promulgated under the Securities Act.

Regulation S Certificate” means a certificate substantially in the form attached hereto as Exhibit C.

Regulation S Global Notes” means Global Notes substantially in the form set forth in Exhibit A which bear the Private Placement Legend applicable to Notes resold pursuant to Regulation S.

Regulation S-X” means Regulation S-X as promulgated under the Securities Act.

 

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Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.

Resale Restriction Termination Date” has the meaning provided in Section 2.10(d).

Responsible Officer,” when used with respect to the Trustee, means any officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of their knowledge of and familiarity with the particular subject, and who shall have direct responsibility for the administration of this Indenture.

Restricted Security” has the meaning assigned to such term in Rule 144(a)(3) under the Securities Act.

Revolving Credit Facility” means the multicurrency revolving credit agreement, dated as of June 9, 2021, among DCL, the borrowers and guarantors parties thereto from time to time, the lenders from time to time parties thereto and Bank of America, N.A., as administrative agent, swing line lender and L/C issuer, as amended on July 30, 2021 and as further amended, restated, supplemented, replaced, waived or otherwise modified from time to time.

Rule 144A” means Rule 144A promulgated under the Securities Act.

S&P” means S&P Global Ratings, a division of S&P Global, Inc., and its successors.

Sale and Leaseback Transaction” has the meaning provided in Section 4.07(a).

Scripps” means Scripps Networks Interactive, Inc., an Ohio corporation.

Securities Act” means the Securities Act of 1933 and any statute successor thereto, in each case as amended from time to time.

Securitization Assets” means accounts receivable, loans, mortgages, royalties, other rights to payment, supporting obligations therefor, proceeds therefrom and other related assets customarily disposed of or pledged in connection with non-recourse receivables financings or factorings or securitization facilities (as determined in good faith by WBD or any subsidiary).

Securitization Subsidiary” means any subsidiary formed for purposes of consummating any Permitted Securitization Financing and which holds no material assets other than Securitization Assets and which is engaged in no material activities other than those related to such Permitted Securitization Financing.

Senior Credit Facilities” means the Revolving Credit Facility and the Term Loan Facility.

Separation Agreement” means the Separation and Distribution Agreement, dated as of May 17, 2021, by and among Discovery, Inc., AT&T and the Company (as it may be amended from time to time).

 

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Significant Shareholder” means each of (i) the Parent Guarantor or any Parent Subsidiary and (ii) any other “person” (as that term is used in Section 13(d)(3) of the Exchange Act) if 50% or more of the Voting Stock of such person is “beneficially owned” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, by the Parent Guarantor or one of its Parent Subsidiaries or any combination thereof.

SOFR” means the daily secured overnight financing rate as provided by the SOFR Administrator on the SOFR Administrator’s Website.

SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of SOFR).

SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source.

SOFR Index” means, with respect to any U.S. Government Securities Business Day:

 

  (1)

the SOFR Index value as published by the SOFR Administrator as such index appears on the SOFR Administrator’s Website at 3:00 p.m. (New York time) on such U.S. Government Securities Business Day (the “SOFR Index Determination Time”); provided that:

 

  (2)

if a SOFR Index value does not so appear as specified in (1) above at the SOFR Index Determination Time, then: (i) if a Benchmark Transition Event and its related Benchmark Replacement Date have not occurred with respect to SOFR, then Compounded SOFR shall be the rate determined pursuant to the “SOFR Index Unavailable Provisions” in Section 2.04(f); or (ii) if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to SOFR, then Compounded SOFR shall be the rate determined pursuant to the “Effect of a Benchmark Transition Event” provisions in Section 2.04(g).

Special Mandatory Redemption” has the meaning provided in Section 3.02.

Special Mandatory Redemption Date” means the earlier to occur of (1) the tenth Business Day following July 15, 2023, if the Merger has not been consummated on or prior to July 15, 2023, or (2) the tenth Business Day following the termination of the Merger Agreement for any reason without the Merger having been consummated.

Special Mandatory Redemption Price” has the meaning provided in Section 3.02.

Standard Securitization Undertakings” means representations, warranties, covenants (including repurchase obligations) and indemnities entered into by WBD or any subsidiary that WBD or such subsidiary, as applicable, has determined in good faith are customary for “non-recourse” accounts receivables financings or factoring or securitization financings.

Stated Maturity Date” has the meaning given to such term in Section 2.02.

 

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Subsidiary Guarantee” means any guarantee of the Notes that may from time to time be entered into by a Parent Subsidiary after the completion of the Merger pursuant to Section 11.05.

Subsidiary Guarantor” means any Parent Subsidiary that provides a Subsidiary Guarantee, in each case, unless and until such Parent Subsidiary is released from such Subsidiary Guarantee in accordance with the terms of this Indenture.

Tax Matters Agreement” means the Tax Matters Agreement, dated as of May 17, 2021, by and among Discovery, Inc., AT&T and the Company (as it may be amended from time to time).

Term Loan Facility” means the term loan facility created pursuant to the Credit Agreement, dated as of June 4, 2021, among the Company, the lenders from time to time parties thereto and JPMorgan Chase Bank, N.A., as administrative agent, as amended, restated, supplemented, replaced, waived or otherwise modified from time to time.

Transaction Documents” means the Merger Agreement, the Separation Agreement, the Employee Matters Agreement, the Tax Matters Agreement, the A/N Voting Agreement, the Malone Voting Agreement, the Consent Agreement and the other Ancillary Agreements.

Trust Indenture Act” (except as otherwise provided in Sections 9.01 and 9.02) means the Trust Indenture Act as in force at the date as of which this Indenture was originally executed.

Trustee” means U.S. Bank Trust Company, National Association and, subject to the provisions of Article VII, shall also include its successors and assigns and, if at any time there is more than one Person acting in such capacity hereunder, “Trustee” shall mean each such Person.

U.S. Government Securities Business Day” means any day except for a Saturday, a Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.

Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.

U.S. Person” means any U.S. Person as defined in Regulation S.

vice president”, when used with respect to the Company, the Parent Guarantor, any Subsidiary Guarantor or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title of “vice president”.

Voting Stock” of any specified Person as of any date means any and all shares or equity interests (however designated) of such Person that are at the time entitled to vote generally in the election of the board of directors, managers or trustees of such Person, as applicable.

Spinco Business” shall have the meaning given to such term in the Separation Agreement.

 

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Yield to Maturity” means the yield to maturity on a series of securities, calculated at the time of issuance of such series, or, if applicable, at the most recent redetermination of interest on such series, and calculated in accordance with accepted financial practice.

 

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ARTICLE II

GENERAL TERMS AND CONDITIONS OF THE NOTES

Section 2.01 Designation and Principal Amount. The Notes are hereby authorized and are designated (i) the “3.428% Senior Notes due 2024,” (ii) the “3.528% Senior Notes due 2024,” (iii) the “3.638% Senior Notes due 2025,” (iv) the “3.788% Senior Notes due 2025,” (v) the “3.755% Senior Notes due 2027,” (vi) the “4.054% Senior Notes due 2029,” (vii) the “4.279% Senior Notes due 2032,” (viii) the “5.050% Senior Notes due 2042,” (ix) the “5.141% Senior Notes due 2052,” (x) the “5.391% Senior Notes due 2062,”and (xi) the “Floating Rate Senior Notes due 2024,” respectively. Each series of Notes is unlimited in aggregate principal amount. (i) The 2024 Notes issued on the date hereof pursuant to the terms of this Indenture shall be in an initial aggregate principal amount of $1,750,000,000; (ii) the 2024 NC1 Notes issued on the date hereof pursuant to the terms of this Indenture shall be in an initial aggregate principal amount of $500,000,000; (iii) the 2025 Notes issued on the date hereof pursuant to the terms of this Indenture shall be in an initial aggregate principal amount of $1,750,000,000; (iv) the 2025 NC1 Notes issued on the date hereof pursuant to the terms of this Indenture shall be in an initial aggregate principal amount of $500,000,000; (v) the 2027 Notes issued on the date hereof pursuant to the terms of this Indenture shall be in an initial aggregate principal amount of $4,000,000,000; (vi) the 2029 Notes issued on the date hereof pursuant to the terms of this Indenture shall be in an initial aggregate principal amount of $1,500,000,000; (vii) the 2032 Notes issued on the date hereof pursuant to the terms of this Indenture shall be in an initial aggregate principal amount of $5,000,000,000; (viii) the 2042 Notes issued on the date hereof pursuant to the terms of this Indenture shall be in an initial aggregate principal amount of $4,500,000,000; (ix) the 2052 Notes issued on the date hereof pursuant to the terms of this Indenture shall be in an initial aggregate principal amount of $7,000,000,000, (x) the 2062 Notes issued on the date hereof pursuant to the terms of this Indenture shall be in an initial aggregate principal amount of $3,000,000,000,and (xi) the Floating Rate Notes issued on the date hereof pursuant to the terms of this Indenture shall be in an initial aggregate principal amount of $500,000,000, each of which amounts shall be set forth in the written order of the Company for the authentication and delivery of the Notes pursuant to Section 2.07 of this Indenture. In addition, the Company may, from time to time, without notice to, or the consent of, the Holders of the Notes, create and issue additional Notes of any series ranking equally and ratably with the Notes of any series issued on the date hereof in all respects, so that such additional Notes shall be consolidated and form a single series with such series of Notes issued on the date hereof and shall have the same terms as to status, redemption or otherwise as such series of Notes issued on the date hereof (other than the date of issuance and, under certain circumstances, the first Interest Payment Date and the date from which interest thereon will begin to accrue), provided that if any such additional Notes are not fungible with the Notes initially issued hereunder for U.S. federal income tax purposes, such additional Notes shall have a separate CUSIP number (any such additional Notes of any series are herein referred to as “Additional Notes”).

Section 2.02 Maturity. (i) The principal amount of the 2024 Notes shall be payable on March 15, 2024; (ii) the principal amount of the 2024 NC1 Notes shall be payable on March 15, 2024; (iii) the principal amount of the 2025 Notes shall be payable on March 15, 2025; (iv) the principal amount of the 2025 NC1 Notes shall be payable on March 15, 2025; (v) the principal amount of the 2027 Notes shall be payable on March 15, 2027; (vi) the principal amount of the

 

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2029 Notes shall be payable on March 15, 2029; (vii) the principal amount of the 2032 Notes shall be payable on March 15, 2032; (viii) the principal amount of the 2042 Notes shall be payable on March 15, 2042; (ix) the principal amount of the 2052 Notes shall be payable on March 15, 2052; (x) the principal amount of the 2062 Notes shall be payable on March 15, 2062; (xi) the principal amount of the Floating Rate Notes shall be payable on March 15, 2024 (each a “Stated Maturity Date”).

Section 2.03 Interest on Fixed Rate Notes.

(a) (i) Interest on the 2024 Notes shall accrue at the rate of 3.428% per annum; (ii) interest on the 2024 NC1 Notes shall accrue at the rate of 3.528% per annum; (iii) interest on the 2025 Notes shall accrue at the rate of 3.638% per annum; (iv) interest on the 2025 NC1 Notes shall accrue at the rate of 3.788% per annum; (v) interest on the 2027 Notes shall accrue at the rate of 3.755% per annum; (vi) interest on the 2029 Notes shall accrue at the rate of 4.054% per annum; (vii) interest on the 2032 Notes shall accrue at the rate of 4.279% per annum; (viii) interest on the 2042 Notes shall accrue at the rate of 5.050% per annum; (ix) interest on the 2052 Notes shall accrue at the rate of 5.141% per annum; and (x) interest on the 2062 Notes shall accrue at the rate of 5.391% per annum. Interest on the Fixed Rate Notes shall be computed on the basis of a 360-day year comprised of twelve 30-day months. Each series of the Fixed Rate Notes will bear interest from March 15, 2022 or from the immediately preceding Fixed Rate Interest Payment Date to which interest has been paid.

(b) (i) Interest on the 2024 Notes shall be payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2022; (ii) interest on the 2024 NC1 Notes shall be payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2022; (iii) interest on the 2025 Notes shall be payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2022; (iv) interest on the 2025 NC1 Notes shall be payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2022; (v) interest on the 2027 Notes shall be payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2022; (vi) interest on the 2029 Notes shall be payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2022; (vii) interest on the 2032 Notes shall be payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2022; (viii) interest on the 2042 Notes shall be payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2022; (ix) interest on the 2052 Notes shall be payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2022; and (x) interest on the 2062 Notes shall be payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2022. On each such date (each a “Fixed Rate Interest Payment Date”), the Company will pay interest to the Holders in whose names the Notes are registered at the close of business on the Regular Record Date immediately preceding such Fixed Rate Interest Payment Date; provided that interest payable at any Stated Maturity Date or on a Redemption Date that is not a Fixed Rate Interest Payment Date will be payable to the Holder to whom the principal is payable. Interest payable on a Redemption Date that is a Fixed Rate Interest Payment Date will be payable to the Holders in whose names the Notes are registered at the close of business on the Regular Record Date. If any Fixed Rate Interest Payment Date is not a Business Day, then the related payment of interest for such Fixed Rate Interest Payment Date shall be paid on the next succeeding Business Day with the same force and effect as if made on such Fixed Rate Interest Payment Date and no further interest shall accrue as a result of such delay.

 

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Section 2.04 Interest on Floating Rate Notes.

(a) Interest on the Floating Rate Notes will accrue at a rate equivalent to Compounded SOFR plus 1.78% per annum. The Floating Rate Notes will bear interest from March 15, 2022 or from the immediately preceding Floating Rate Interest Payment Date to which interest has been paid. Interest on the Floating Rate Notes will be computed on the basis of a 360-day year and the actual number of days in the Observation Period.

(b) Interest on the Floating Rate Notes shall be payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, beginning on June 15, 2022, and on the Stated Maturity Date. On each such date (each a “Floating Rate Interest Payment Date”; any Fixed Rate Interest Payment Date or Floating Rate Interest Payment Date being are referred to as an “Interest Payment Date”), the Company will pay interest to the Holders in whose names the Notes are registered at the close of business on the Regular Record Date immediately preceding such Floating Rate Interest Payment Date; provided that interest payable at any Stated Maturity Date or Redemption Date that is not a Floating Rate Interest Payment Date will be payable to the Holder to whom the principal is payable. Interest payable on a Redemption Date that is a Floating Rate Interest Payment Date will be payable to the Holders in whose names the Notes are registered at the close of business on the Regular Record Date. If any Floating Rate Interest Payment Date is not a Business Day, then the related payment of interest for such Floating Rate Interest Payment Date shall be paid on the next succeeding Business Day, unless such next succeeding Business Day is in the next succeeding calendar month, in which case (other than the Stated Maturity Date) the Company will make the interest payment on the immediately preceding Business Day, in each case with the same force and effect as if made on such Floating Rate Interest Payment Date and no further interest shall accrue as a result of such delay.

(c) On each Interest Payment Determination Date relating to the Floating Rate Interest Payment Date, the Calculation Agent will calculate the amount of accrued interest payable on the Floating Rate Notes for each Interest Period by multiplying (i) the outstanding principal amount of the Floating Rate Notes by (ii) the product of (a) the interest rate for the relevant Interest Period multiplied by (b) the quotient of the actual number of calendar days in such Observation Period divided by 360. In no event will the interest on the Floating Rate Notes be less than zero.

The interest rate and amount of interest to be paid on the Floating Rate Notes for each Interest Period will be determined by the Calculation Agent. U.S. Bank Trust Company, National Association will initially serve as the Calculation Agent. All determinations made by the Calculation Agent shall, in the absence of manifest error, be conclusive for all purposes and binding on the Company and the holders of the Floating Rate Notes. So long as Compounded SOFR is required to be determined with respect to the Floating Rate Notes, there will at all times be a Calculation Agent. In the event that any then acting Calculation Agent shall be unable or unwilling to act, or that such Calculation Agent shall fail duly to establish Compounded SOFR for any Interest Period, or the Company proposes to remove such Calculation Agent, the Company shall appoint another Calculation Agent.

 

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None of the Trustee, the Paying Agent and the Calculation Agent shall be under any obligation (i) to monitor, determine or verify the unavailability or cessation of SOFR, the SOFR Index, or other applicable Benchmark Replacement, or whether or when there has occurred, or to give notice to any other transaction party of the occurrence of, any Benchmark Transition Event or related Benchmark Replacement Date, (ii) to select, determine or designate any Benchmark Replacement, or other successor or replacement benchmark index, or whether any conditions to the designation of such a rate or index have been satisfied, (iii) to select, determine or designate any Benchmark Replacement Adjustment, or other modifier to any replacement or successor index, or (iv) to determine whether or what Benchmark Replacement Conforming Changes are necessary or advisable, if any, in connection with any of the foregoing.

None of the Trustee, the Paying Agent and the Calculation Agent shall be liable for any inability, failure or delay on its part to perform any of its duties set forth in this Indenture as a result of the unavailability of SOFR, the SOFR Index or other applicable Benchmark Replacement, including as a result of any failure, inability, delay, error or inaccuracy on the part of any other transaction party in providing any direction, instruction, notice or information required or contemplated by the terms of this Indenture and reasonably required for the performance of such duties.

(d) Notwithstanding anything to the contrary in this Indenture relating to the Floating Rate Notes, if the Company or its designee determines on or prior to the relevant Reference Time that a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to determining Compounded SOFR, then the Benchmark Replacement provisions set forth in Section 2.04(g) will thereafter apply to all determinations of the rate of interest payable on the Floating Rate Notes.

(e) For the avoidance of doubt, in accordance with the benchmark replacement provisions, after a Benchmark Transition Event and its related Benchmark Replacement Date have occurred, the interest rate for each Interest Period on the Floating Rate Notes will be an annual rate equal to the sum of the Benchmark Replacement and the applicable margin.

(f) SOFR Index Unavailable Provisions. If a SOFR IndexStart or SOFR IndexEnd is not published on the associated Interest Payment Determination Date and a Benchmark Transition Event and its related Benchmark Replacement Date have not occurred with respect to SOFR, “Compounded SOFR” means, for the applicable Interest Period for which such index is not available, the rate of return on a daily compounded interest investment calculated in accordance with the formula for SOFR Averages, and definitions required for such formula, published on the SOFR Administrator’s Website currently available at https://www.newyorkfed.org/markets/reference-rates/additional-information-about-reference-rates, or any successor source. For the purposes of this provision, references in the SOFR Averages compounding formula and related definitions to “calculation period” shall be replaced with “Observation Period” and the words “that is, 30-, 90-, or 180- calendar days” shall be removed. If SOFR does not so appear for any day, “i” in the Observation Period, SOFRi for such day “i” shall be SOFR published in respect of the first preceding U.S. Government Securities Business Day for which SOFR was published on the SOFR Administrator’s Website.

 

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(g) Effect of Benchmark Transition Event.

(i) Benchmark Replacement. If the Company or its designee determines that a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any determination of the Benchmark on any date, the Benchmark Replacement will replace the then-current Benchmark for all purposes relating to the Floating Rate Notes in respect of such determination on such date and all determinations on all subsequent dates.

(ii) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Company or its designee will have the right to make Benchmark Replacement Conforming Changes from time to time.

(iii) Decisions and Determinations. Any determination, decision or election that may be made by the Company or its designee pursuant to the benchmark replacement provisions described herein, including any determination with respect to tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection: will be conclusive and binding absent manifest error; if made by the Company, will be made in its sole discretion; if made by the Company’s designee, will be made after consultation with the Company, and such designee will not make any such determination, decision or election to which the Company objects; and notwithstanding anything to the contrary in this Indenture, shall become effective without consent from the Holders of the Floating Rate Notes or any other party. Any determination, decision or election pursuant to the benchmark replacement provisions shall be made by the Company or the Company’s designee (which may be an affiliate of the Company but in no event shall be the initial Calculation Agent, the Trustee or the initial Paying Agent) on the basis as described above. The Calculation Agent shall have no liability for not making any such determination, decision or election.

Section 2.05 Form and Payment.

(a) The Notes of each series shall be issued as Global Notes, only in fully registered book-entry form, without coupons, in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. The Initial Notes shall be substantially in the form of Exhibit A and the Exchange Notes shall be substantially in the form of Exhibit B (and any Additional Notes shall be substantially in the form of Exhibit A or Exhibit B, as applicable), in each case unless otherwise set forth in one or more indentures supplemental hereto or as provided in a Board Resolution of the Company and as set forth in an Officer’s Certificate of the Company, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture or any indenture supplemental hereto and may have such letters, numbers or other marks of identification and such legends or endorsements (in addition to any required in accordance with this Section 2.05) placed thereon as the Company may reasonably deem appropriate and as are not inconsistent with the provisions of this Indenture, or as may be

 

24


required to comply with any law, with any rule or regulation made pursuant thereto, with any rules of any securities exchange, automated quotation system or clearing agency or to conform to usage, as may, consistently herewith, be determined by the officer executing such Notes, as evidenced by their execution of such Notes.

(b) Payments of principal, premium, if any, and interest on the Global Notes representing the Notes of each series shall be paid in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts and shall be made to the Paying Agent, which in turn shall make payment to the Depositary with respect to the Notes of such series or its nominee. If a Stated Maturity Date or a Redemption Date for the Notes falls on a day that is not a Business Day, the payment due on such date will be postponed to the next succeeding Business Day, and no further interest will accrue in respect of such postponement.

(c) Any interest on a Note that is payable, but is not punctually paid or duly provided for, on any Interest Payment Date for Notes of the same series (herein called “Defaulted Interest”) shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such holder of Notes; and such Defaulted Interest shall be paid to the Holders in whose names Notes of such series are registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such Defaulted Interest) established by notice given by mail by or on behalf of the Company to the Holders of such Notes not less than 15 days preceding such subsequent record date.

(d) The Global Notes representing the Notes of each series shall be deposited with, or on behalf of, the Depositary and shall be registered, at the request of the Depositary, in the name of the Depositary for such Global Note or the nominee of such Depositary. The Company initially appoints the Depository Trust Company, New York, New York as the Depositary. The Company initially appoints U.S. Bank Trust Company, National Association as custodian for the Depositary.

(e) The Company initially appoints U.S. Bank Trust Company, National Association as Paying Agent for each series of Notes. The Company may appoint and change the Paying Agent without prior notice to Holders.

 

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Section 2.06 Form of Trustee’s Certificate of Authentication. The Trustee’s certificate of authentication on all Notes shall be in substantially the following form:

This is one of the Notes of the series designated herein and referred to in the within-mentioned Indenture.

 

U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION
as Trustee
By:    
 

Authorized Officer

Section 2.07 Authentication and Delivery of Notes. The Company may deliver Notes of any series executed by or on behalf of the Company to the Trustee for authentication together with the applicable documents referred to below in this Section, and the Trustee shall thereupon authenticate and deliver such Notes to or upon the order of the Company (contained in the Authentication Order referred to below in this Section) or pursuant to such procedures acceptable to the Trustee and to such recipients as specified by the Authentication Order. In authenticating the Notes and accepting the additional responsibilities under this Indenture in relation to such Notes, the Trustee shall be entitled to receive, and (subject to Section 7.01) shall be fully protected in relying upon:

(a) Company Order requesting such authentication and setting forth delivery instructions if the Notes are not to be delivered to the Company (an “Authentication Order”); and

(b) an Officer’s Certificate of the Company and an Opinion of Counsel each stating in addition to the requirements of Section 13.05 that the form or forms and terms of the Notes have been established in conformity with this Indenture.

The Trustee shall have the right to decline to authenticate and deliver any Notes under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken by the Company or if the Trustee in good faith determines that such action would expose the Trustee to personal liability to existing Holders or would affect the Trustee’s own rights, duties or immunities under the Notes, this Indenture or otherwise.

Each Note shall be dated the date of its authentication.

The Company shall execute and the Trustee shall, in accordance with this Section with respect to the Notes of a series, authenticate and deliver one or more Global Notes that (i) shall represent and shall be denominated in an amount equal to the aggregate principal amount of all of the Notes of such series issued and not yet cancelled, (ii) shall be registered in the name of the Depositary for such Global Note or Notes or the nominee of such Depositary, (iii) shall be

 

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delivered by the Trustee to such Depositary or pursuant to such Depositary’s instructions and (iv) shall bear a legend substantially to the following effect: “Unless and until it is exchanged in whole or in part for Notes in definitive registered form, this Security may not be transferred except as a whole by the Depositary to the nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.”

Each Depositary designated pursuant to this Section must, at the time of its designation and at all times while it serves as Depositary, be a clearing agency registered under the Exchange Act and any other applicable statute or regulation.

Section 2.08 Execution of Securities. The Initial Notes shall be signed on behalf of the Company by the chief executive officer, the principal financial officer, the president, any vice president, the treasurer or any assistant treasurer of AT&T. The Exchange Notes shall be signed on behalf of the Company by its chief executive officer, its principal financial officer, its president, any vice president, its treasurer or any assistant treasurer. Such signatures may be executed by electronic means or in the form of manual or facsimile signatures of the present or any future such officers. Typographical and other minor errors or defects in any such reproduction of any such signature shall not affect the validity or enforceability of any Note that has been duly authenticated and delivered by the Trustee.

In case any officer of the Company who shall have signed any of the Notes shall cease to be such officer before the Note so signed shall be authenticated and delivered by the Trustee or disposed of by the Company, such Note nevertheless may be authenticated and delivered or disposed of as though the person who signed such Note had not ceased to be such officer of the Company; and any Note may be signed on behalf of the Company by such persons as, at the actual date of the execution of such Note, shall be the proper officers of the Company, although at the date of the execution and delivery of this Indenture any such person was not such an officer.

Section 2.09 Certificate of Authentication. Only such Notes as shall bear thereon a certificate of authentication substantially in the form hereinbefore recited, executed by the Trustee by the manual signature of one of its authorized officers, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. The execution of such certificate by the Trustee upon any Note executed by or on behalf of the Company shall be conclusive evidence that the Note so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture.

Section 2.10 Transfers and Exchanges.

(a) General. The Company will keep, or cause to be kept, at an office or agency designated for such the purpose (the “Registrar”) for each series of Notes a register or registers (the “Note Register”) in which, subject to such reasonable regulations as it may prescribe, it will provide for the registration of Notes of such series and the registration of transfer of Notes of such series. Such register shall be in written form in the English language or in any other form capable of being converted into such form within a reasonable time. At all reasonable times such register or registers shall be open for inspection by the Trustee. The office of the Registrar initially will be the Corporate Trust Office of the Trustee.

 

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Upon due presentation for registration of transfer of any Note of any series at the offices of the Registrar, the Company shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Note or Notes of the same series, maturity date, interest rate and Original Issue Date in authorized denominations for a like aggregate principal amount.

At the option of the Holder thereof, Notes of any series (except a Global Note) may be exchanged for a Note or Notes of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Notes to be exchanged at the offices of the Registrar, and upon payment, if the Company shall so require, of the charges hereinafter provided. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes which the Holder making the exchange is entitled to receive. All Notes surrendered upon any exchange or transfer provided for in this Indenture shall be promptly cancelled and disposed of by the Trustee and, upon request, the Trustee will deliver a certificate of disposition thereof to the Company.

All Notes presented for registration of transfer, exchange, redemption or payment shall (if so required by the Company or the Trustee) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder or their attorney duly authorized in writing.

The Company may require payment of a sum sufficient to cover any stamp or other tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Notes. No service charge shall be made for any such transaction.

The Company shall not be required to exchange or register a transfer of (a) any Notes of any series for a period of 15 days next preceding the first mailing of notice of redemption of Notes of such series to be redeemed or (b) any Notes selected, called or being called for redemption, in whole or in part, except, in the case of any Note to be redeemed in part, the portion thereof not so to be redeemed.

Except under the limited circumstances described below, Notes represented by a Global Note will not be exchangeable for, and will not otherwise be issuable as, Notes in definitive registered form. Owners of beneficial interests in Global Notes, including members of, or participants in, the Depositary (“Agent Members”), shall not be considered holders thereof for any purpose under this Indenture. The rights of beneficial holders of such Global Notes shall be exercised only through the Depositary. Each of the Company, the Trustee, any Paying Agent and the Registrar shall not have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Notes, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

Notwithstanding any other provision of this Section 2.10, unless and until it is exchanged in whole or in part for Notes in definitive registered form, a Global Note representing all or a portion of the Notes of a series may not be transferred except as a whole by the Depositary for such series to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary.

 

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If at any time the Depositary for the Notes of a series notifies the Company that it is unwilling or unable to continue as Depositary for the Notes of such series or if at any time the Depositary for the Notes of a series shall no longer be eligible under this Section 2.10, the Company shall appoint a successor Depositary with respect to the Notes of such series. If a successor Depositary for the Notes of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company’s election that the Notes of such series be represented by a Global Note shall no longer be effective and the Company will execute, and the Trustee, upon receipt of an Authentication Order and Officer’s Certificate for the authentication and delivery of definitive Notes of such series, will authenticate and deliver, Notes of such series in definitive registered form, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Global Note or Notes representing the Notes of such series, in exchange for such Global Note or Notes.

The Company may at any time and in its sole discretion determine that the Notes of any series issued in the form of one or more Global Notes shall no longer be represented by a Global Note or Notes. In such event the Company will execute, and the Trustee, upon receipt of an Authentication Order and Officer’s Certificate for the authentication and delivery of definitive Notes of such series, will authenticate and deliver, Notes of such series in definitive registered form, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Global Notes or Notes representing such series, in exchange for such Global Note or Notes.

The Depositary for such Global Note may surrender such Global Note in exchange in whole or in part for Notes of the same series in definitive registered form on such terms as are acceptable to the Company and such Depositary. Thereupon, the Company shall execute, and the Trustee shall authenticate and deliver, without service charge,

(i) to the Person specified by such Depositary a new Note or Notes of the same series, of any authorized denominations as requested by such Person, in an aggregate principal amount equal to and in exchange for such Person’s beneficial interest in the Global Note; and

(ii) to such Depositary a new Global Note in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Note and the aggregate principal amount of Notes authenticated and delivered pursuant to clause (i) above.

Upon the exchange in whole of a Global Note for Notes in definitive registered form, in authorized denominations, such Global Note shall be cancelled by the Trustee. Notes in definitive registered form issued in exchange for a Global Note pursuant to this Section 2.10 shall be registered in such names and in such authorized denominations as the Depositary for such Global Notes, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Notes to or as directed by the Persons in whose names such Notes are so registered.

 

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All Notes issued upon any transfer or exchange of Notes shall be valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such transfer or exchange.

(b) Transfers to Non U.S. Persons. The following provisions shall apply with respect to the registration of any proposed transfer of a Note that is a Restricted Security to any Non U.S. Person. The Registrar shall register such transfer if it complies with all other applicable requirements of this Indenture and,

(i) if the Note to be transferred consists of Notes in definitive registered form, (x) such transfer is after the relevant Resale Restriction Termination Date with respect to such Note or (y) the proposed transferor has delivered to the Registrar, the Company and the Trustee a Regulation S Certificate and, unless otherwise agreed by the Company and the Trustee, an Opinion of Counsel, certifications and other information satisfactory to the Company and the Trustee, and

(ii) if the proposed transferee is or is acting through an Agent Member, upon receipt by the Registrar, the Company and the Trustee of (x) the certificate, opinion, certifications and other information, if any, required by clause (i) above and (y) written instructions given in accordance with the procedures of the Registrar and of the Depositary

whereupon the Registrar shall reflect on its books and records the date and an increase in the principal amount of the transferee Global Note in an amount equal to the principal amount of the Note in definitive registered form or the beneficial interest in the relevant Global Note to be transferred, and shall cancel the Note in definitive registered form or reflect on its books and records the date and a decrease the principal amount of the transferor Global Note in an amount equal to the principal amount of the beneficial interest being so transferred.

Through the Distribution Compliance Period, a beneficial interest in a Regulation S Global Note may be held only through designated Agent Members holding on behalf of Euroclear or Clearstream unless delivery is made in accordance with the provisions of this Section 2.10(b).

(c) Transfers to QIBs. The following provisions shall apply with respect to the registration of any proposed transfer of a Note that is a Restricted Security to a QIB (excluding transfers to Non U.S. Persons): The Registrar shall register such transfer if it complies with all other applicable requirements of this Indenture and,

(i) if the Note to be transferred consists of Notes in definitive registered form, if such transfer is being made by a proposed transferor who has checked the box provided for on the form of such Note stating, or has otherwise certified to the Registrar, the Company and the Trustee in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of such Note stating, or has otherwise certified to Registrar, the Company and

 

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the Trustee in writing, that it is purchasing such Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and

(ii) if the proposed transferee is an Agent Member, upon receipt by the Registrar of the documents referred to in clause (i) and written instructions given in accordance with the procedures of the Registrar and of the Depositary,

whereupon the Registrar shall reflect on its books and records the date and an increase in the principal amount of the transferee Global Note in an amount equal to the principal amount of the Note in definitive registered form or the beneficial interest in the relevant Global Note to be transferred, and shall cancel the Note in definitive registered form or reflect on its books and records the date and a decrease in the principal amount of such transferor Global Note in an amount equal to the principal amount of the beneficial interest being so transferred.

(d) Private Placement Legend.

(i) Except as permitted by the following paragraphs (ii) and (iii), each Note shall (x) be subject to the restrictions on transfer set forth in this Section 2.10 (including those set forth in the legend below) unless such restrictions on transfer shall be waived by written consent of the Company, and the Holder of each Restricted Security, by such Holder’s acceptance thereof, agrees to be bound by all such restrictions on transfer and (y) bear a legend in substantially the following form (the “Private Placement Legend”) on the face thereof:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS [IN THE CASE OF RULE 144A NOTES: AT LEAST ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY),] [IN THE CASE OF

 

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REGULATION S NOTES: 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE DATE ON WHICH THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S) IN RELIANCE ON REGULATION S], ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. [IN THE CASE OF REGULATION S NOTES: BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.]

BY ITS ACQUISITION OF THIS SECURITY, THE HOLDER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (1) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE OR HOLD THIS SECURITY CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OF A PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) OR SIMILAR PROVISIONS UNDER ANY OTHER U.S. OR NON-U.S. FEDERAL, STATE, LOCAL OR OTHER LAWS OR REGULATIONS (“SIMILAR LAWS”), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF ANY SUCH PLAN, ACCOUNT OR ARRANGEMENT, OR (2) THE ACQUISITION, HOLDING AND DISPOSITION OF THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.

 

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(ii) Upon the transfer, exchange or replacement of Notes not bearing the Private Placement Legend, the Registrar shall deliver Notes that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Notes bearing the Private Placement Legend, the Registrar shall deliver only Notes that bear the Private Placement Legend unless (i) the requested transfer is after the relevant Resale Restriction Termination Date with respect to such Notes, (ii) upon written request of the Company after there is delivered to the Registrar an Opinion of Counsel (which Opinion of Counsel is satisfactory to the Company) to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act, or (iii) such Notes are sold or exchanged pursuant to an effective registration statement under the Securities Act.

(iii) Upon consummation of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.07, the Trustee shall authenticate one or more Global Notes representing Exchange Notes of each series in an aggregate principal amount equal to the principal amount of the beneficial interests in the Global Notes representing the Initial Notes accepted in the Exchange Offer issued in exchange for the applicable Initial Notes accepted for exchange in the Exchange Offer, which Exchange Notes shall not bear the Private Placement Legend. Initial Notes that remain outstanding after the consummation of an Exchange Offer and Exchange Notes issued in connection with an Exchange Offer shall be treated as a single class of Notes under this Indenture.

(e) Other Transfers. The Registrar shall effect and register, upon receipt of a written request from the Company to do so, a transfer not otherwise permitted by this Section 2.10, such registration to be done in accordance with the otherwise applicable provisions of this Section 2.10, upon the furnishing by the proposed transferor or transferee of a written opinion of counsel (which opinion of counsel is satisfactory to the Company) to the effect that, and such other certifications or information as the Company or the Trustee may require to confirm that, the proposed transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

A Note that is a Restricted Security may not be transferred other than as provided in this Section 2.10. A beneficial interest in a Global Note that is a Restricted Security may not be exchanged for a beneficial interest in another Global Note other than through a transfer in compliance with this Section 2.10.

(f) General. By its acceptance of any Note bearing the Private Placement Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Note only as provided in this Indenture.

 

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The Registrar shall retain copies of all letters, notices and other written communications received pursuant to this Section 2.10. The Company shall have the right to require the Registrar to deliver to the Company, at the Company’s expense, copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar.

In connection with any transfer of any Note, the Trustee, the Registrar and the Company shall be entitled to receive, shall be under no duty to inquire into, may conclusively presume the correctness of, and shall be fully protected in conclusively relying upon the certificates, opinions and other information referred to herein (or in the forms provided herein, attached hereto or to the Notes, or otherwise) received from any Holder and any transferee of any Note regarding the validity, legality and due authorization of any such transfer, the eligibility of the transferee to receive such Note and any other facts and circumstances related to such transfer.

Section 2.11 Payment of Additional Interest.

(a) Pursuant to and in accordance with the terms of the Registration Rights Agreement, upon the occurrence of a Registration Default, Holders of Notes will be entitled to the payment of additional interest on the Notes at a rate of 0.25% per annum (which rate shall increase by an additional 0.25% per annum for each subsequent 90-day period, in each case until and including the date such Registration Default ends, up to a maximum of 0.50% per annum).

(b) Prior to any Interest Payment Date on which any such additional interest is payable, the Company shall give notice to the Trustee of the amount of any additional interest due on such Interest Payment Date. The Trustee shall have no duty to calculate or verify the calculation of any additional interest that is payable as determined by the Company.

Section 2.12 Other Terms. The Notes shall be unsecured senior indebtedness of the Company and shall rank equally and ratably in right of payment with all of the Company’s other unsecured and unsubordinated indebtedness outstanding from time to time. The Notes shall not be convertible into, or exchangeable for, any other securities of the Company, except to the extent provided for in this Indenture.

 

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Section 2.13 Mutilated, Defaced, Destroyed, Lost and Stolen Notes. In case any temporary or definitive Note shall become mutilated, defaced or be destroyed, lost or stolen, the Company in its discretion may execute, and upon delivery of an Authentication Order, the Trustee shall authenticate and deliver a new Note of the same series, maturity date, interest rate and Original Issue Date, bearing a number or other distinguishing symbol not contemporaneously outstanding, in exchange and substitution for the mutilated or defaced Note, or in lieu of and substitution for the Note so destroyed, lost or stolen. In every case the applicant for a substitute Note shall furnish to the Company and to the Trustee and any agent of the Company or the Trustee such security or indemnity as may be required by them to indemnify and defend and to save each of them harmless and, in every case of destruction, loss or theft, evidence to their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof and in the case of mutilation or defacement shall surrender the Note to the Trustee.

Upon the issuance of any substitute Note, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. In case any Note which has matured or is about to mature or has been called for redemption in full, or is being surrendered for conversion in full, shall become mutilated or defaced or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Note, pay or authorize the payment of the same (without surrender thereof except in the case of mutilated or defaced Notes), if the applicant for such payment shall furnish to the Company and to the Trustee and any agent of the Company or the Trustee such security or indemnity as any of them may require to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and the Trustee and any agent of the Company or the Trustee evidence to their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof.

Every substitute Note of any series issued pursuant to the provisions of this Section by virtue of the fact that any such Note is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone and shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Notes of such series duly authenticated and delivered hereunder. All Notes shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment or conversion of mutilated, defaced or destroyed, lost or stolen Notes and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.

Section 2.14 Cancellation of Notes; Destruction Thereof. All Notes surrendered for exchange for Notes of the same series or for payment, redemption, or registration of transfer, if surrendered to the Company or any agent of the Company or the Trustee, shall be delivered to the Trustee for cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no Notes shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee shall dispose of cancelled Notes held by it in accordance with the Trustee’s customary cancellation procedures and, upon request, will deliver a certificate of disposition to the Company. If the Company shall acquire any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the Debt represented by such Notes unless and until the same are delivered to the Trustee for cancellation.

 

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Section 2.15 Temporary Notes. Pending the preparation of definitive Notes for any series, the Company may execute and the Trustee shall authenticate and deliver temporary Notes for such series (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Trustee). Temporary Notes of any series shall be issuable in any authorized denomination, and substantially in the form of the definitive Notes of such series but with such omissions, insertions and variations as may be appropriate for temporary Notes, all as may be determined by the Company with the concurrence of the Trustee as evidenced by the execution and authentication thereof. Temporary Notes may contain such reference to any provisions of this Indenture as may be appropriate. Every temporary Note shall be executed by or on behalf of the Company and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Notes. Without unreasonable delay the Company shall execute and shall furnish definitive Notes of such series and thereupon temporary Notes of such series may be surrendered in exchange therefor without charge at each office or agency to be maintained by the Company for that purpose pursuant to Section 4.02 and the Trustee shall authenticate and deliver in exchange for such temporary Notes of such series an equal aggregate principal amount of definitive Notes of the same series having authorized denominations. Until so exchanged, the temporary Notes of any series shall be entitled to the same benefits under this Indenture as definitive Notes of such series, unless the benefits of the temporary Notes are limited pursuant to this Indenture.

Section 2.16 CUSIP and ISIN Numbers. The Company in issuing the Notes of any series may use “CUSIP” and “ISIN” numbers, and, if it does so, the Trustee shall use the CUSIP and/or ISIN number in notices of redemption or exchange as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness or accuracy of such numbers printed in the notice or on the Notes of such series and that reliance may be placed only on the other identification numbers printed on the Notes of such series, and any such redemption or exchange shall not be affected by any defect in or omission of such numbers. The Company shall promptly notify the Trustee in writing of any change in the CUSIP number or ISIN number.

ARTICLE III

REDEMPTION OF NOTES

Section 3.01 Optional Redemption.

(a) The Floating Rate Notes will not be redeemable at the Company’s option. The 2032 Notes, the 2052 Notes and the 2062 Notes are not redeemable prior to March 15, 2027 (the “No Call Date”), other than in connection with a Special Mandatory Redemption. Prior to the applicable Par Call Date (or prior to the applicable Stated Maturity Date in the case of the 2024 Notes and the 2025 Notes) and other than in connection with a Special Mandatory Redemption (and, in the case of the 2032 Notes, the 2052 Notes and the 2062 Notes, on or after the No Call Date), each series of Fixed Rate Notes, shall be redeemable in whole or in part at the Company’s option at any time and from time to time at a Redemption Price equal to the greater of (i) 100%

 

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of the principal amount of the series of Fixed Rate Notes to be redeemed, and (ii) as determined by the Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest on the series of Fixed Rate Notes to be redeemed (not including any portion of such payments of interest accrued as of the Redemption Date) assuming that such series of Fixed Rate Notes matured on the applicable Par Call Date (if any) discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (1) plus 30 basis points in the case of the 2024 Notes, (2) plus 30 basis points in the case of the 2024 NC1 Notes, (3) plus 30 basis points in the case of the 2025 Notes, (4) plus 30 basis points in the case of the 2025 NC1 Notes, (5) plus 30 basis points in the case of the 2027 Notes, (6) plus 35 basis points in the case of the 2029 Notes, (7) plus 40 basis points in the case of the 2032 Notes, (8) plus 40 basis points in the case of the 2042 Notes, (9) plus 45 basis points in the case of the 2052 Notes, and (10) plus 50 basis points in the case of the 2062 Notes, plus in each case accrued and unpaid interest on the principal amount being redeemed to, but excluding, the Redemption Date.

On and after the applicable Par Call Date (if any), each series of Fixed Rate Notes shall be redeemable at the Company’s option, in whole at any time or in part from time to time, at a Redemption Price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest on the principal amount being redeemed to, but excluding, the Redemption Date.

Interest on the Notes or portions of Notes so called for redemption shall cease to accrue on and after the Redemption Date together with interest accrued to said date, subject to the satisfaction or waiver of any conditions precedent specified in such notice of redemption, unless the Company defaults in the payment of such Notes at the Redemption Price.

Section 3.02 Special Mandatory Redemption.

(a) In the event that (a) the Merger Agreement is terminated on or at any time prior to July 15, 2023 without the Merger having been consummated, or (b) the Merger is not consummated on or at any time prior to July 15, 2023, the Company will redeem all of the Notes on the Special Mandatory Redemption Date, at a price (the “Special Mandatory Redemption Price”) equal to 101% of the aggregate outstanding principal amount of such Notes, plus accrued and unpaid interest thereon from the last date on which interest was paid or, if interest has not been paid, from the Original Issue Date to, but excluding, the Special Mandatory Redemption Date (the “Special Mandatory Redemption”). Notwithstanding the foregoing, installments of interest on the Notes that are due and payable on Interest Payment Dates falling on or prior to the Special Mandatory Redemption Date will be payable on such Interest Payment Dates to the registered Holders as of the close of business on the relevant Regular Record Date.

(b) The Company shall cause the notice of Special Mandatory Redemption to be mailed or otherwise delivered in accordance with the applicable procedures of the Depositary, with a copy to the Trustee, within five Business Days after the occurrence of the event triggering the Special Mandatory Redemption to each Holder of Notes at its registered address. If funds sufficient to pay the Special Mandatory Redemption Price of the Notes to be redeemed on the Special Mandatory Redemption Date are deposited with the Trustee or a Paying Agent on or before such Special Mandatory Redemption Date, on and after such Special Mandatory Redemption Date, the notes will cease to bear interest and, other than the right to receive the Special Mandatory Redemption Price, all rights under such notes shall terminate.

 

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(c) Upon the occurrence of the closing of the Merger, the foregoing provisions regarding the Special Mandatory Redemption will cease to apply.

Section 3.03 Purchase of Notes Upon a Change of Control Triggering Event.

(a) If a Change of Control Triggering Event occurs, unless the Company has exercised its right to redeem a series of Notes in full, pursuant to Section 3.01, Holders of Notes of any series shall have the right to require the Company to repurchase all or a portion of such Holders’ Notes, as applicable, pursuant to the offer described in 3.03(b) below (such offer, the “Change of Control Offer”), at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase, subject to the rights of Holders of Notes of such series on the relevant record date to receive interest due on the relevant interest payment date.

(b) Within 30 days following the date upon which the Change of Control Triggering Event occurred, or at the Company’s option, prior to any Change of Control but after the public announcement of the pending Change of Control, the Company shall be required to send, by first class mail, or otherwise deliver in accordance with the applicable procedures of the Depositary, a notice to Holders of Notes of any series not redeemed, with a copy to the Trustee, which notice shall set forth the terms of the Change of Control Offer. Such notice shall state, among other things, the repurchase date, which must be no earlier than 30 days nor later than 60 days from the date such notice is mailed, or otherwise delivered to each holder in accordance with the applicable procedures of the Depositary, other than as may be required by law (the “Change of Control Payment Date”). The notice, if mailed or otherwise delivered to each Holder in accordance with the applicable procedures of the Depositary prior to the date of consummation of the Change of Control, may state that the Change of Control Offer is conditioned on the Change of Control being consummated on or prior to the Change of Control Payment Date. Holders of Notes of any series not redeemed electing to have their Notes repurchased pursuant to a Change of Control Offer will be required to surrender their Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the note completed, to the Paying Agent at the address specified in the notice, or transfer their notes to the Paying Agent by book-entry transfer pursuant to the applicable procedures of the Paying Agent, prior to the close of business on the third Business Day prior to the Change of Control Payment Date.

(c) The Company shall not be required to make a Change of Control Offer if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for such an offer made by the Company and such third party purchases all Notes of a series properly tendered and not withdrawn under its offer.

(d) The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of Notes as a result of a Change of Control Triggering Event. To the extent that the provisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the Notes of a series, the Company shall comply with those securities laws and regulations and shall not be deemed to have breached its obligations under the provisions in this Indenture governing the Change of Control Offer by virtue of any such conflict.

 

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Section 3.04 Notice of Redemption; Partial Redemptions.

Notice of redemption to the Holders of Notes of any series to be redeemed as a whole or in part at the option of the Company shall be given by mailing notice of such redemption by first class mail, postage prepaid, or otherwise delivered in accordance with the applicable procedures of the Depositary, at least 10 days and not more than 60 days prior to the Redemption Date to such Holders of Fixed Rate Notes of such series at their last addresses as they shall appear upon the Note Register. Any notice may, at the Company’s discretion, be subject to the satisfaction or waiver of one or more conditions precedent. In that case, such notice shall state the nature of such conditions precedent, and, if applicable, state that the Redemption Date may be delayed until the conditions are satisfied or that, if the conditions are not satisfied, such redemption may not occur and the notice may be rescinded.

Any notice which is given in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. Failure to give notice or any defect in the notice to the Holder of any Note of a series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Note of such series.

The notice of redemption to each such Holder shall specify the principal amount of each Note of such series held by such Holder to be redeemed, the Redemption Date, the Redemption Price, the place or places of payment, that payment will be made upon presentation and surrender of such Notes, that interest accrued to the Redemption Date will be paid as specified in such notice and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. In case any Notes of a series is to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the Redemption Date, upon surrender of such Note, a new Note or Note of such series in principal amount equal to the unredeemed portion thereof will be issued.

The notice of redemption of Notes of any series to be redeemed at the option of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company; provided that the Company shall have delivered to the Trustee, an Officer’s Certificate setting forth that the conditions precedent in the Indenture to the redemption and the sending of such notice of redemption have been complied with.

On or before the redemption date specified in the notice of redemption given as provided in this Section, the Company will deposit with the Trustee or Paying Agent (or, if the Company is acting as its own paying agent, set aside, segregate and hold in trust as provided in Section 4.04) an amount of money sufficient to redeem on the redemption date all the Notes of such series so called for redemption at the appropriate Redemption Price, together with accrued interest to, but excluding, the Redemption Date. The Company will deliver to the Trustee at least 10 days prior to the Redemption Date an Officer’s Certificate (which need not comply with Section 13.05) stating the aggregate principal amount of Notes to be redeemed, the Redemption

 

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Price, and the Redemption Date. In case of a redemption at the election of the Company prior to the expiration of any restriction on such redemption, the Company shall deliver to the Trustee, prior to the giving of any notice of redemption to Holders pursuant to this Section, an Officer’s Certificate stating that such restriction has been complied with.

If less than all the Notes of a series are to be redeemed, the Trustee shall select, in such manner as it shall deem appropriate and fair in accordance with the applicable Depositary procedures and any applicable stock exchange, Notes of such series to be redeemed in whole or in part. Notes may be redeemed in part in multiples equal to the minimum authorized denomination for Notes of such series or any multiple thereof. The Trustee shall promptly notify the Company in writing of the Notes of such series selected for redemption and, in the case of any Notes of such series selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Notes of any series shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed. If any Note selected for partial redemption is surrendered for conversion after such selection, the converted portion of such Note shall be deemed (so far as may be) to be the portion selected for redemption.

Section 3.05 Payment of Notes Called for Redemption. If notice of redemption has been given as above provided, the Notes or portions of Notes specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable Redemption Price, together with interest accrued to the Redemption Date, and on and after said date (unless the Company shall default in the payment of such Notes at the Redemption Price, together with interest accrued to said date) interest on the Notes or portions of Notes so called for redemption shall cease to accrue, and, except as provided in Sections 7.05 and 12.04, such Notes shall cease from and after the Redemption Date to be entitled to any benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Notes except the right to receive the Redemption Price thereof and unpaid interest to the Redemption Date. On presentation and surrender of such Notes at a place of payment specified in said notice, said Notes or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with interest accrued thereon to the Redemption Date; provided, that payment of interest becoming due on or prior to the Redemption Date shall be payable to the Holders of such Notes registered as such on the relevant record date subject to the terms and provisions of Sections 2.03 and 2.04 hereof.

If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the Redemption Date at the rate of interest borne by such Note until the principal of such Note shall have been paid or duly provided for.

Upon presentation of any Note redeemed in part only, the Company shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Company, a new Note or Notes of such series, of authorized denominations, in principal amount equal to the unredeemed portion of the Note so presented.

 

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Section 3.06 No Redemption at the Option of Holders; No Sinking Fund. The Notes shall not be redeemable at the option of any Holder thereof. The Notes will not be entitled to any sinking fund or analogous requirement. The Company may acquire Notes, from time to time and at any time, by means other than a redemption, whether by tender offer, open market purchases, negotiated transactions or otherwise, in accordance with applicable securities laws, so long as such acquisition does not otherwise violate the terms of this Indenture.

ARTICLE IV

COVENANTS OF THE COMPANY

Section 4.01 Payment of Interest. The Company covenants and agrees for the benefit of each series of Notes that it will duly and punctually pay or cause to be paid the principal of, and interest on, each of the Notes of such series (together with any additional amounts payable pursuant to the terms of such Notes) at the place or places, at the respective times and in the manner provided in such Notes and in this Indenture. The interest on Notes (together with any additional amounts payable pursuant to the terms of such Notes) shall be payable only to or upon the written order of the Holders thereof and at the option of the Company may be paid by mailing checks for such interest payable to or upon the written order of such Holders at their last addresses as they appear on the Note Register of the Company.

Section 4.02 Offices for Payments. So long as any Notes remain Outstanding, the Company will maintain (i) in the Borough of Manhattan, the City of New York, an agency where the Notes of each series may be presented for payment, an agency where the Notes of each series may be presented for exchange, and an agency where the Notes of each series may be presented for registration of transfer as in this Indenture provided and (ii) such further agencies in such places as may be determined for the Notes of such series pursuant to this Indenture.

The Company will maintain in the Borough of Manhattan, the City of New York, an agency where notices and demands to or upon the Company in respect of the Notes of any series or this Indenture may be served.

The Company will give to the Trustee written notice of the location of each such agency and of any change of location thereof. In case the Company shall fail to maintain any agency required by this Section to be located in the Borough of Manhattan, the City of New York, or shall fail to give such notice of the location or of any change in the location of any of the above agencies, presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee.

The Company may from time to time designate one or more additional agencies where the Notes of a series may be presented for payment, where the Notes of that series may be presented for exchange or conversion, if applicable, as provided in this Indenture and where the Notes of that series may be presented for registration of transfer as in this Indenture provided, and the Company may from time to time rescind any such designation, as the Company may deem desirable or expedient; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain the agencies provided for in this Section. The Company will give to the Trustee prompt written notice of any such designation or rescission thereof.

 

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Section 4.03 Appointments to fill a Vacancy in Office of Trustee. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 7.10, a Trustee, so that there shall at all times be a Trustee with respect to each series of Notes hereunder.

Section 4.04 Paying Agents. Whenever the Company shall appoint a Paying Agent other than the Trustee with respect to the Notes of any series, it will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section,

(a) that it will hold all sums received by it as such agent for the payment of the principal of or interest on the Notes of such series (whether such sums have been paid to it by the Company or by any other obligor on the Notes of such series) in trust for the benefit of the Holders of the Notes of such series or of the Trustee,

(b) that it will give the Trustee notice of any failure by the Company (or by any other obligor on the Notes of such series) to make any payment of the principal of or interest on the Notes of such series when the same shall be due and payable, and

(c) that at any time during the continuance of any such failure, upon the written request of the Trustee, it will forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

The Company will, on or prior to each due date of the principal of or interest on the Notes of such series, deposit with the Paying Agent a sum sufficient to pay such principal or interest so becoming due, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of any failure to take such action.

The Company or any Domestic Subsidiary may act as Paying Agent. If the Company shall act as its own Paying Agent with respect to the Notes of any series, it will, on or before each due date of the principal of or interest on the Notes of such series, set aside, segregate and hold in trust for the benefit of the Holders of the Notes of such series a sum sufficient to pay such principal or interest so becoming due. The Company will promptly notify the Trustee of any failure to take such action.

Anything in this Indenture to the contrary notwithstanding, but subject to Section 12.01, the Company may at any time, for the purpose of obtaining a satisfaction and discharge with respect to one or more or all series of Notes hereunder, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust for any such series by the Company or any paying agent hereunder, as required by this Section, such sums to be held by the Trustee upon the trusts herein contained.

Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Sections 12.03 and 12.04.

 

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Section 4.05 Written Statement to Trustee. So long as any Notes are Outstanding hereunder, the Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, a written statement covering the previous fiscal year, signed by its principal executive officer, principal financial officer or principal accounting officer (which statement need not comply with Section 13.05), stating that in the course of the performance of their duties as an officer of the Company, they would normally have knowledge of any default by the Company, in the performance or fulfillment of any covenant, agreement or condition contained in this Indenture, stating whether or not they have knowledge of any such default and, if so, specifying each such default of which the signer has knowledge and the nature thereof.

Section 4.06 Limitation on Liens.

(a) From and after the consummation of the Merger, the Company shall not, and shall not permit any Company Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset, to secure any Debt of the Company, any Company Subsidiary or any other Person, or permit any Company Subsidiary to do so, without securing the Notes equally and ratably with such Debt for as long as such Debt will be so secured, subject to the exceptions set forth in Section 4.06(b).

(b) The foregoing restriction does not apply, with respect to any Person, to any of the following:

(i) liens existing on, or provided for under written arrangements existing as of, the date of the consummation of the Merger;

(ii) liens on assets or property of a person at the time it becomes a subsidiary securing only indebtedness of such person or liens existing on assets or property at the time of the acquisition of such assets, provided such indebtedness was not incurred or such liens were not created in connection with such person becoming a subsidiary or such assets being acquired;

(iii) liens on assets created at the time of or within 12 months after the acquisition, purchase, lease, improvement or development of such assets to secure all or a portion of the purchase price or lease for, or the costs of improvement or development of, such assets;

(iv) liens to secure any extension, renewal, refinancing or refunding (or successive extensions, renewals, refinancings or refundings), in whole or in part, of any indebtedness secured by liens referred to above or liens created in connection with any amendment, consent or waiver relating to such indebtedness, so long as such lien does not extend to any other property and the amount of debt secured is not increased (other than by the amount equal to any costs and expenses incurred in connection with any extension, renewal, refinancing or refunding);

(v) liens on property incurred in Permitted Sale and Leaseback Transactions;

 

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(vi) liens in favor of only the Parent Guarantor, the Company or one or more subsidiaries of the Parent Guarantor granted by the Company or a subsidiary to secure any obligations owed to the Parent Guarantor, the Company or a subsidiary of the Parent Guarantor;

(vii) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, laborers’, landlords’ and similar liens arising in the ordinary course of business securing obligations that are not overdue for a period of more than 90 days or that are being contested in good faith by appropriate proceedings;

(viii) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any lien imposed by the Employment Retirement Income Security Act of 1974, as amended from time to time;

(ix) deposits to secure the performance of bids, trade contracts and leases, statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(x) liens arising out of a judgment, decree or order of court being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Parent Guarantor, the Company or the books of their subsidiaries, as the case may be, in conformity with GAAP;

(xi) liens for taxes not yet due and payable, or being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Parent Guarantor, the Company or the books of their subsidiaries, as the case may be, in conformity with GAAP;

(xii) easements, rights of way, restrictions and similar liens affecting real property incurred in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of business of the Parent Guarantor, the Company or of such subsidiary;

(xiii) liens securing reimbursement obligations with respect to letters of credit related to trade payables and issued in the ordinary course of business, which liens encumber documents and other property relating to such letters of credit and the products and proceeds thereof;

(xiv) liens encumbering customary initial deposits and margin deposits and other liens in the ordinary course of business, in each case securing indebtedness under any interest swap obligations and currency agreements and forward contract, option, futures contracts, futures options or similar agreements or arrangements designed to protect the Parent Guarantor, the Company or any of their subsidiaries from fluctuations in interest rates or currencies;

 

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(xv) liens in the nature of voting, equity transfer, redemptive rights or similar terms under any such agreement or other term customarily found in such agreements, in each case, encumbering the Company’s or such subsidiary’s equity interests or other investments in such subsidiary or other person;

(xvi) liens consisting of or relating to the sale, transfer, distribution, or financing of motion pictures, video and television programs, sound recordings, books or rights with respect thereto or with groups who may receive tax benefits or other third-party investors in connection with the financing and/or distribution of such motion pictures, video and television programming, sound recordings or books in the ordinary course of business and the granting to the Company or any subsidiary rights to distribute such motion pictures, video and television programming, sound recordings or books, including liens created in favor of a producer or supplier of television programming or films over distribution revenues and/or distribution rights which are allocable to such producer or supplier under related distribution arrangements;

(xvii) liens on Securitization Assets securing or transferred pursuant to any Permitted Securitization Financing;

(xviii) liens on motion pictures, video, television, interactive or multi-media programming, audio-visual works, sound recordings, books and other literary or written material, any software, copyright or other intellectual property related thereto, acquired directly or indirectly by purchase, business combination, production, creation or otherwise, any component of the foregoing or rights with respect thereto, and all improvements thereon, products and proceeds thereof and revenues derived therefrom (collectively, “Works”) which either (1) existed on such Works before the time of their acquisition and were not created in anticipation thereof, or (2) were created solely for the purpose of securing obligations to financiers, producers, distributors, exhibitors, completion guarantors, inventors, copyright holders, financial institutions or other participants incurred in the ordinary course of business in connection with the acquisition, financing, production, completion, distribution or exhibition of Works;

(xix) any liens on the office building and hotel complex located in Atlanta, Georgia known as the CNN Center Complex, including the parking decks for such complex (to the extent such parking decks are owned or leased by WBD or any of its subsidiaries), or any portion thereof and all property rights therein and the products, revenues and proceeds therefrom created as part of any mortgage financing or sale-leaseback of the CNN Center Complex;

(xx) liens on satellite transponders and all property rights therein and the products, revenues and proceeds therefrom which secure obligations incurred in connection with the acquisition, utilization or operation of such satellite transponders or the refinancing of any such obligations;

(xxi) liens resulting from progress payments or partial payments under United States government contracts or subcontracts; or

 

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(xxii) liens otherwise prohibited by this Section 4.06, securing indebtedness which, together with the value of Attributable Debt incurred in Sale and Leaseback Transactions prohibited by Section 4.07(a) below, do not at any time exceed 10% of the Parent Guarantor’s consolidated total assets (in each case, as set forth on the most recent consolidated balance sheet of the Parent Guarantor and its consolidated subsidiaries as of the end of the most recently ended fiscal quarter prior to the applicable date of determination for which financial statements are available; provided that the assets of the Parent Guarantor and its consolidated subsidiaries shall be adjusted to reflect any significant (as determined under Regulation S-X) acquisitions and dispositions of assets that have occurred during the period from the date of the applicable balance sheet through the applicable date of determination, including the transaction being tested under this Indenture).

Section 4.07 Limitation on Sale and Leasebacks.

(a) From and after the consummation of the Merger, the Company will not, and will not permit any Company Subsidiary to, enter into any arrangement with any person pursuant to which the Company or any Company Subsidiary leases any property that has been or is to be sold or transferred by the Company or the Company Subsidiary to such person (a “Sale and Leaseback Transaction”), except that a sale and leaseback transaction is permitted if the Company or such Company Subsidiary would be entitled to secure the property to be leased (without equally and ratably securing the outstanding Notes) in an amount equal to the present value of the lease payments with respect to the term of the lease remaining on the date as of which the amount is being determined, without regard to any renewal or extension in the lease, discounted at the rate of interest set forth or implicit in the terms of the lease, compounded semi-annually (such amount is referred to as the “Attributable Debt”).

(b) The foregoing restriction does not apply, with respect to any Person, to any of the following transactions (such transactions, “Permitted Sale and Leaseback Transactions”):

(i) temporary leases for a term, including renewals at the option of the lessee, of not more than three years;

(ii) leases between only the Company and a Company Subsidiary or only between Company Subsidiaries; and

(iii) leases of property executed by the time of, or within 12 months after the latest of, the acquisition, the completion of construction or improvement, or the commencement of commercial operation of the property.

Section 4.08 Activities of the Company Prior to Consummation of the Distribution and the Merger. Prior to the consummation of the Distribution and the Merger, the Company will not engage in any business activity or enter into any transaction or agreement, except any activities, transactions or agreements as necessary or appropriate to effectuate the transactions described in the Transaction Documents substantially in accordance with the description of such transactions set forth in the offering memorandum related to the offering of the Notes (including any activities, transactions or agreements (i) in compliance with the interim operating covenant of the

 

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Merger Agreement or (ii) required or permitted by the Separation Plan (as defined in the Separation Agreement)), performing its obligations in respect of the Term Loan Facility, this Indenture and the Notes, redeeming the Notes pursuant to the provisions described under Section 3.02, if applicable, and investing the net proceeds from the offering of the Notes in Eligible Investments, and conducting such other activities as are necessary or appropriate to carry out the activities described above.

Section 4.09 Contribution of the Spinco Business. Prior to the consummation of the Distribution and the Merger, (1) AT&T will convey to the Company or one or more subsidiaries of the Company certain assets and liabilities constituting the Spinco Business and will cause any applicable subsidiary of AT&T to convey to AT&T or its designated subsidiary (other than the Company or any subsidiary of the Company) certain excluded assets and excluded liabilities in order to separate the Spinco Business, in each case, as set forth in and subject to the terms and conditions of the Separation Agreement and in accordance in all material respects with the description of such transactions in the offering memorandum related to the Notes and (2) thereafter, AT&T will transfer all of the equity interests in each of the subsidiaries of AT&T holding certain assets and liabilities of the Spinco Business constituting the Spinco Business, directly or indirectly, to the Company.

Section 4.10 Certain Subsidiaries. If, from and after the consummation of the Merger, any Subsidiary Guarantor and its subsidiaries are subsidiaries of the Parent Guarantor but not subsidiaries of the Company, then such Subsidiary Guarantor and its subsidiaries shall be treated as if they were subsidiaries of the Company for all purposes under this Indenture, including for purposes of the provisions described in Sections 4.06 and 4.07.

ARTICLE V

NOTEHOLDERS LISTS AND REPORTS BY THE COMPANY, GUARANTOR AND THE TRUSTEE

Section 5.01 Company to Furnish Trustee Information as to Names and Addresses of Noteholders. The Company covenants and agrees that it will furnish or cause to be furnished to the Trustee a list in such form as the Trustee may reasonably require of the names and addresses of the Holders of the Notes of each series pursuant to Section 312 of the Trust Indenture Act:

(a) semiannually and not more than 15 days after each record date for the payment of interest on such Notes, as hereinabove specified, as of such record date, and

(b) at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request as of a date not more than 15 days prior to the time such information is furnished, provided, that, if and so long as the Trustee shall be the Registrar for such series, such list shall not be required to be furnished.

Section 5.02 Reports by the Company and Guarantor.

(a) Prior to the consummation of the Merger, the Company shall furnish to the Holders of Notes and to prospective investors designated by such Holders, upon the Holders’ request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

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(b) From and after the consummation of the Merger, the Company and the Parent Guarantor covenant to comply with Section 314(a) of the Trust Indenture Act insofar as it relates to information, documentations, and other reports which the Company or the Parent Guarantor may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act.

Section 5.03 Reports by the Trustee. Any Trustee’s report required under Section 313(a) of the Trust Indenture Act shall be transmitted on or before July 15th in each year following the date hereof, so long as any Notes are Outstanding hereunder, and shall be dated as of a date convenient to the Trustee but no more than 60 nor less than 45 days prior thereto. The Trustee shall comply with Sections 313(b), 313(c) and 313(d) of the Trust Indenture Act.

Section 5.04 Preservation of Information; Communication with Noteholders.

(a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders of Notes contained in the most recent list furnished to it as provided in Section 5.01 and as to the names and addresses of Holders of Notes received by the Trustee in its capacity as Registrar (if acting in such capacity).

(b) The Trustee may destroy any list furnished to it as provided in Section 5.01 upon receipt of a new list so furnished.

(c) Noteholders may communicate as provided in Section 312(b) of the Trust Indenture Act with other Noteholders with respect to their rights under this Indenture or under the Notes. The Company, the Parent Guarantor, any Subsidiary Guarantor, the Trustee, the Registrar and any other Person shall have the protection of Section 312(c) of the Trust Indenture Act.

ARTICLE VI

EVENTS OF DEFAULT

Section 6.01 Event of Default Defined; Acceleration of Maturity; Waiver of Default. “Event of Default”, with respect to Notes of any series wherever used herein, means each one of the following events which shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a) default in the payment of any installment of interest upon any of the Notes of such series as and when the same shall become due and payable, and continuance of such default for a period of 30 days;

 

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(b) default in the payment of all or any part of the principal or any premium on any of the Notes of such series as and when the same shall become due and payable either at maturity, upon redemption, by declaration or otherwise;

(c) default in the performance, or breach, of any covenant or warranty of the Company or the Parent Guarantor in respect of the Notes of such series or Guarantee (other than a covenant or warranty in respect of the Notes of such series a default in the performance or breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company and the Parent Guarantor by the Trustee or to the Company, the Parent Guarantor (with a copy to the Trustee) by the Holders of at least 25% in principal amount of the Outstanding Notes of all series affected thereby, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; provided, that any default in the performance or breach of Section 4.08 will (i) cease to exist and be deemed to have been cured and not to have occurred if, within 30 days following the consummation of the Merger, the Parent Guarantor and the Company are in compliance with all covenants that are applicable from and after the consummation of the Merger and (ii) if the Trustee or the Holders of at least 25% in principal amount of the Outstanding Notes of all such series affected thereby shall have delivered a Notice of Default prior to the consummation of the Merger, such Notice of Default shall cease to be effective upon such consummation;

(d) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company, the Parent Guarantor or any Subsidiary Guarantor in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Company, the Parent Guarantor or for all or substantially all of its property and assets or ordering the winding up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days;

(e) the Company, the Parent Guarantor or any Subsidiary Guarantor shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Company or the Parent Guarantor or for any substantial part of its property and assets, or make any general assignment for the benefit of creditors;

(f) a Guarantee ceases to be in full force and effect (except as contemplated by the terms of this Indenture) or is declared null and void in a judicial proceeding or the Parent Guarantor or any Subsidiary Guarantor, as applicable, denies or disaffirms its obligations under this Indenture or the applicable Guarantee; or

(g) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Parent Guarantor, the Company or any of their subsidiaries (or the payment of which is guaranteed by the Parent Guarantor, the Company or any of their subsidiaries), whether such indebtedness or guarantee now exists, or is created after the date of this Indenture, if that default

 

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(i) is caused by a failure to pay principal on such indebtedness at its stated final maturity (after giving effect to any applicable grace periods provided in such indebtedness) (a “Payment Default”) or (ii) results in the acceleration of such indebtedness prior to its express maturity (an “Acceleration Event”) and (A) in each case, the principal amount of any such indebtedness, together with the principal amount of any other such indebtedness under which there has been a Payment Default or an Acceleration Event, aggregates $400 million or more and (B) in the case of a Payment Default, such indebtedness is not discharged and, in the case of an Acceleration Event, such acceleration is not rescinded or annulled, within ten days after there has been given, by registered or certified mail, to the Company and the Parent Guarantor by the Trustee or to the Company, the Parent Guarantor (with a copy to the Trustee) by the Holders of at least 25% in principal amount of the Outstanding Notes, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder.

If an Event of Default described in clause (a) or (b) occurs and is continuing, then, and in each and every such case, unless the principal of all of the Notes of such series shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes of such series then Outstanding hereunder (each such series voting as a separate class) by notice in writing to the Company (and to the Trustee if given by Noteholders), may declare the entire principal of all Notes of such series and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. If an Event of Default described in clause (c), (f) or (g) occurs and is ongoing, then and in each and every such case, unless the principal of all of the Notes of such series shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Outstanding Notes affected thereby, by notice in writing to the Company (and to the Trustee if given by Noteholders), may declare the entire principal of all Notes of such series and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. If an Event of Default described in clause (d) or (e) occurs and is continuing, then and in each and every such case, the entire principal of all the Notes then Outstanding and interest accrued thereon, if any, shall become immediately due and payable.

The foregoing provisions, however, are subject to the condition that if, at any time after the principal of the Notes of any series (or of all the Notes, as the case may be) shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Notes of such series (or of all the Notes, as the case may be) and the principal of any and all Notes of such series (or of all the Notes, as the case may be) which shall have become due otherwise than by acceleration (with interest upon such principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest, at the same rate as the rate of interest specified in the Notes of such series, (or at the respective rates of interest of all the Notes, as the case may be) to the date of such payment or deposit) and such amount as shall be sufficient to cover compensation in accordance with Section 7.06 to the Trustee, its agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee except as a result of negligence or bad faith, and if any and all Events of Default under this Indenture, other than the non-payment of the principal of Notes which shall have become due by acceleration, shall have been cured, waived or otherwise

 

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remedied as provided herein—then and in every such case the Holders of a majority in aggregate principal amount of all the Notes of such series, each series voting as a separate class, (or of all the Notes, as the case may be, voting as a single class) then Outstanding, by written notice to the Company and to the Trustee, may waive all defaults with respect to such series (or with respect to all the Notes, as the case may be) and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon.

Section 6.02 Collection of Debt by the Trustee. The Company covenants that (a) in case default shall be made in the payment of any installment of interest on any of the Notes of any series when such interest shall have become due and payable, and such default shall have continued for a period of 30 days or (b) in case default shall be made in the payment of all or any part of the principal of any of the Notes of any series when the same shall have become due and payable whether upon maturity of the Notes of such series or upon any redemption or by declaration or otherwise—then, upon demand of the Trustee, the Company will pay to the Trustee for the benefit of the Holders of the Notes of such series the whole amount that then shall have become due and payable on all Notes of such series for principal or interest, as the case may be (with interest to the date of such payment upon the overdue principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest at the same rate as the rate of interest specified in the Notes of such series); and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including compensation in accordance with Section 7.06 to the Trustee and each predecessor trustee, their respective agents, attorneys and counsel, and any expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor trustee except as a result of its negligence or bad faith.

In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Company or other obligor upon such Notes and collect in the manner provided by law out of the property of the Company or other obligor upon such Notes, wherever situated, the moneys adjudged or decreed to be payable.

In case there shall be pending proceedings relative to the Company or any other obligor upon the Notes under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Company or its property, or such other obligor or its property, or in case of any other comparable judicial proceedings relative to the Company, or other obligor upon the Notes of any series, or to the creditors or property of the Company, or such other obligor, the Trustee, irrespective of whether the principal of any Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise:

 

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(i) to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Notes of any series, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for compensation in accordance with Section 7.06 to the Trustee and each predecessor trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor trustee, except as a result of negligence or bad faith) and of the Noteholders allowed in any judicial proceedings relative to the Company, or other obligor upon the Notes of any series, or to the creditors or property of the Company, or such other obligor,

(ii) unless prohibited by applicable law and regulations, to vote on behalf of the Holders of the Notes of any series in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or person performing similar functions in comparable proceedings, and

(iii) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Noteholders and of the Trustee on their behalf; and any trustee, receiver or liquidator, custodian or other similar official is hereby authorized by each of the Noteholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to the Noteholders, to pay to the Trustee such amounts as shall be sufficient to cover compensation in accordance with Section 7.06 to the Trustee, each predecessor trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor trustee except as a result of negligence or bad faith and all other amounts due to the Trustee or any predecessor trustee pursuant to Section 7.06.

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or composition affecting the Note of any series or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Noteholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar person.

All rights of action and of asserting claims under this Indenture, or under any of the Notes of any series, may be enforced by the Trustee without the possession of any of the Notes of such series or the production thereof on any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Notes in respect of which such action was taken.

In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party), the Trustee shall be held to represent all the Holders of the Notes in respect to which such action was taken, and it shall not be necessary to make any Holders of such Notes parties to any such proceedings.

 

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Section 6.03 Application of Proceeds. Any moneys or property collected by the Trustee pursuant to this Article in respect of any series shall be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys or property on account of principal or interest, upon presentation of the several Notes in respect of which monies have been collected and stamping (or otherwise noting) thereon the payment, or issuing Securities of such series in reduced principal amounts in exchange for the presented Securities of like series if only partially paid, or upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due to the Trustee or any predecessor trustee pursuant to Section 7.06;

SECOND: In case the principal of the Notes of such series in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest on the Notes of such series in default in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest at the same rate as the rate of interest specified in such Notes, such payments to be made ratably to the Persons entitled thereto, without discrimination or preference;

THIRD: In case the principal of the Notes of such series in respect of which moneys have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Notes of such series for principal and interest, with interest upon the overdue principal, and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest at the same rate as the rate of interest specified in the Notes of such series; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such series, then to the payment of such principal and interest or Yield to Maturity, without preference or priority of principal over interest or Yield to Maturity, or of interest or Yield to Maturity over principal, or of any installment of interest over any other installment of interest, or of any Note of such series over any other Note of such series, ratably to the aggregate of such principal and accrued and unpaid interest or Yield to Maturity; and

FOURTH: To the payment of the remainder, if any, to the Company, the Parent Guarantor or both, as they are entitled or any other Person lawfully entitled thereto.

Section 6.04 Suits for Enforcement. In case an Event of Default has occurred, has not been waived and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

 

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Section 6.05 Restoration of Rights on Abandonment of Proceedings. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the Company, the Parent Guarantor, any Subsidiary Guarantor and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Company, the Parent Guarantor, such Subsidiary Guarantor, the Trustee and the Noteholders shall continue as though no such proceedings had been taken.

Section 6.06 Limitations on Suits by Noteholders. No Holder of any Security of any series shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, unless such Holder previously shall have given to the Trustee written notice of default and of the continuance thereof, as hereinbefore provided, and unless also the Holders of not less than 25% in aggregate principal amount of the Notes of such series then Outstanding shall have made written request upon the Trustee to institute such action or proceedings in its own name as trustee hereunder and shall have offered to the Trustee such indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 6.09; it being understood and intended, and being expressly covenanted by the Holder of every Note with every other Holder and the Trustee, that no one or more Holders of Notes of any series shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other such Holder of Notes, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Notes of the applicable series. For the protection and enforcement of the provisions of this Section, each and every Noteholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

Section 6.07 Unconditional Right of Noteholders to Institute Certain Suits. Notwithstanding any other provision in this Indenture and any provision of any Note, the right of any Holder of any Note to receive payment of the principal of and interest on such Note on or after the respective due dates expressed in such Note, or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

 

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Section 6.08 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default. Except as provided in Section 6.06, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Notes is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

No delay or omission of the Trustee or of any Holder of Notes to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and, subject to Section 6.06, every power and remedy given by this Indenture or by law to the Trustee or to the Holders of Notes may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holders of Notes.

Section 6.09 Control by Holders of Notes. Subject to the provisions of Section 7.02(h) of this Indenture, the Holders of a majority in aggregate principal amount of the Notes of each series affected (with each series voting as a separate class) at the time Outstanding shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Notes of such series by this Indenture; provided, that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture and provided, further, that (subject to the provisions of Section 7.01) the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith shall determine that the action or proceedings so directed would involve the Trustee in personal liability or if the Trustee in good faith shall so determine that the actions or forbearances specified in or pursuant to such direction would be unduly prejudicial to the interests of Holders of the Notes of all series so affected not joining in the giving of said direction, it being understood that (subject to Section 7.01) the Trustee shall have no duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders.

Nothing in this Indenture shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee and which is not inconsistent with such direction or directions by Noteholders.

Section 6.10 Waiver of Past Defaults. Prior to the declaration of the acceleration of the maturity of the Notes of any series as provided in Section 6.01, the Holders of a majority in aggregate principal amount of the Notes of such series at the time Outstanding may on behalf of the Holders of all the Notes of such series waive any past default in the performance of any of the covenants contained herein with respect to such series and its consequences, except an uncured default in the payment of the principal of (or premium, if any), or interest on, any of the Notes of that series as and when the same shall become due by the terms of such Notes. In the case of any such waiver, the Company, the Parent Guarantor, and Subsidiary Guarantor, the Trustee and the Holders of the Notes of such series shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

 

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Upon any such waiver, such default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured, and not to have occurred for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.

Section 6.11 Trustee to Give Notice of Default. The Trustee shall, within 90 days after the occurrence of a default with respect to the Notes of any series of which a Responsible Officer of the Trustee has actual knowledge, give notice of all defaults with respect to that series known to the Trustee to all Holders of Notes of such series in the manner and to the extent provided in Section 5.03, unless in each case such defaults shall have been cured before the mailing or publication of such notice (the term “defaults” for the purpose of this Section being hereby defined to mean any event or condition which is, or with notice or lapse of time or both would become, an Event of Default); provided, that, except in the case of default in the payment of the principal of or interest on any of the Notes of such series, or in the payment of any sinking fund installment on such series, the Trustee shall be protected in withholding such notice if and so long as the Trustee in good faith determines that the withholding of such notice is in the interests of the Noteholders of such series.

Section 6.12 Rights of Court to Require Filing of Undertaking to Pay Costs. All parties to this Indenture agree, and each Holder of any Note by their acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Noteholder or group of Noteholders of any series holding in the aggregate more than 10% in aggregate principal amount of the Notes of such series, or to any suit instituted by any Noteholder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Note of such series, on or after the respective due dates expressed in such Note or established pursuant to this Indenture.

ARTICLE VII

CONCERNING THE TRUSTEE

Section 7.01 Duties and Responsibilities of the Trustee; During Default; Prior to Default. With respect to the Holders of any series of Notes issued hereunder, the Trustee, prior to the occurrence of an Event of Default with respect to the Notes of a particular series and after the curing or waiving of all Events of Default which may have occurred with respect to such series, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default with respect to the Notes of a series has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of their own affairs.

 

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No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct.

Section 7.02 Certain Rights of the Trustee. In furtherance of and subject to the Trust Indenture Act and subject to Section 7.01:

(a) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such statements, certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture;

(b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;

(c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders pursuant to Section 6.09 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture;

(d) none of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers if there shall be reasonable ground for believing that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it;

(e) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officer’s Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(f) any request, direction, order or demand of the Company, the Parent Guarantor or any Subsidiary Guarantor mentioned herein shall be sufficiently evidenced by an Officer’s Certificate of the Company, the Parent Guarantor or such Subsidiary Guarantor as the case may be (unless other evidence in respect thereof be herein specifically prescribed); and any Board Resolutions of the Company may be evidenced to the Trustee by a copy thereof certified by the secretary or an assistant secretary of the Company and any Board Resolutions of any other obligor may be evidenced to the Trustee by a copy thereof certified by the secretary or an assistant secretary of such other obligor;

 

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(g) the Trustee may consult with counsel and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;

(h) the Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee satisfactory security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby;

(i) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture;

(j) prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority in aggregate principal amount of the Notes of all series affected then Outstanding; provided, that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require indemnity satisfactory to it against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such investigation shall be paid by the Company, or, if paid by the Trustee or any predecessor trustee, shall be repaid by the Company upon demand;

(k) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder;

(l) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder and to its agents;

(m) in no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities; and

(n) The Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

 

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Section 7.03 Trustee Not Responsible for Recitals; Disposition of Notes or Application of Proceeds Thereof. The recitals contained herein and in the Notes, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of any of the Notes or of the proceeds thereof.

Section 7.04 Trustee and Agents May Hold Notes; Collections, Etc. The Trustee or any agent of the Company, the Parent Guarantor, any Subsidiary Guarantor or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes with the same rights it would have if it were not the Trustee or such agent and may otherwise deal with the Company, the Parent Guarantor or such Subsidiary Guarantor and receive, collect, hold and retain collections from the Company, the Parent Guarantor or such Subsidiary Guarantor with the same rights it would have if it were not the Trustee or such agent.

Section 7.05 Moneys Held by Trustee. Subject to the provisions of Section 12.04 hereof, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the Company, the Parent Guarantor or any Subsidiary Guarantor or the Trustee shall be under any liability for interest on any moneys received by it hereunder.

Section 7.06 Compensation and Indemnification of Trustee and Its Prior Claim. The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) as the Company and the Trustee may from time to time agree in writing and, except as otherwise expressly provided herein, the Company covenants and agrees to pay or reimburse the Trustee and each predecessor trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Company also covenants to indemnify the Trustee and each predecessor trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in the premises. The obligations of the Company under this Section to compensate and indemnify the Trustee and each predecessor trustee and to pay or reimburse the Trustee and each predecessor trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. Such additional indebtedness shall be a senior claim to that of the Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Notes, and the Notes are hereby subordinated to such senior claim.

 

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The provisions of this Section 7.06 shall survive the termination of this Indenture, the payment in full of the Notes, and the resignation or removal of the Trustee.

Section 7.07 Right of Trustee to Rely on Officer’s Certificate, Etc. Subject to Sections 7.01 and 7.02, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officer’s Certificate delivered to the Trustee, and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof.

Section 7.08 Disqualification, Conflicting Interests. If the Trustee has or shall acquire any “conflicting interest” within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the Company shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act.

Section 7.09 Persons Eligible for Appointment as Trustee. The Trustee for each series of Notes hereunder shall at all times be a corporation having a combined capital and surplus of at least $50,000,000 and shall be eligible in accordance with the provisions of Section 310(a) of the Trust Indenture Act. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of a Federal, State or District of Columbia supervising or examining authority, then, for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

Section 7.10 Resignation and Removal; Appointment of Successor Trustee.

(a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign with respect to one or more or all series of Notes by giving written notice of resignation to the Company and by mailing notice of such resignation to the Holders of then Outstanding Notes of each series affected at their addresses as they shall appear on the Note Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee or trustees with respect to the applicable series by written instrument in duplicate, executed by authority of the Board of Directors of the Company, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee or trustees. If no successor trustee shall have been so appointed with respect to any series and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Holder who has been a bona fide Holder of a Note or Notes of the applicable series for at least six months may, subject to the provisions of Section 6.12, on behalf of himself or herself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.

 

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(b) In case at any time any of the following shall occur:

(i) the Trustee shall fail to comply with the provisions of Section 310(b) of the Trust Indenture Act with respect to any series of Notes after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Note or Notes of such series for at least six months; or

(ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 310(a) of the Trust Indenture Act and shall fail to resign after written request therefor by the Company or by any Holder; or

(iii) the Trustee shall become incapable of acting with respect to any series of Notes, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation;

then, in any such case, (A) the Company may remove the Trustee with respect to the applicable series of Notes and appoint a successor trustee for such series by written instrument, in duplicate, executed by order of the Board of Directors of the Company, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, (B) subject to Section 315(e) of the Trust Indenture Act, any Holder who has been a bona fide Holder of a Note or Notes of such series for at least six months may on behalf of himself or herself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee with respect to such series. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee.

(c) The Holders of a majority in aggregate principal amount of the Notes of each series at the time Outstanding may at any time remove the Trustee with respect to Notes of such series and appoint a successor trustee with respect to the Notes of such series, with the consent of the Company, by delivering to the Trustee so removed, to the successor trustee so appointed, to the Company the evidence provided for in Section 7.01 of the action in that regard taken by the Holders.

(d) Any resignation or removal of the Trustee with respect to any series and any appointment of a successor trustee with respect to such series pursuant to any of the provisions of this Section 7.10 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 7.11.

Section 7.11 Acceptance of Appointment by Successor Trustee. Any successor trustee appointed as provided in Section 7.10 shall execute and deliver to the Company and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee with respect to all or any applicable series shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations with respect to such series of its predecessor hereunder, with like effect as if originally named as trustee for such series hereunder; but, nevertheless, on the written request of the Company or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 12.04,

 

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pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 7.06.

If a successor trustee is appointed with respect to the Notes of one or more (but not all) series, the Company, the Parent Guarantor, any Subsidiary Guarantors, the predecessor trustee and each successor trustee with respect to the Notes of any applicable series shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor trustee with respect to the Notes of any series as to which the predecessor trustee is not retiring shall continue to be vested in the predecessor trustee, and shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such trustees co-trustees of the same trust and that each such trustee shall be trustee of a trust or trusts under separate indentures.

No successor trustee with respect to any series of Notes shall accept appointment as provided in this Section 7.11 unless at the time of such acceptance such successor trustee shall be qualified under the provisions of Section 310(b) of the Trust Indenture Act and eligible under the provisions of Section 310(a) of the Trust Indenture Act.

Upon acceptance of appointment by any successor trustee as provided in this Section 7.11, the Company shall mail notice thereof to the Holders of Notes of each series affected, by mailing such notice to such Holders at their addresses as they shall appear on the Note Register. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 7.10. If the Company fails to mail such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be given at the expense of the Company.

Section 7.12 Merger, Conversion, Consolidation or Succession to Business of Trustee . Any organization or entity into which the Trustee may be merged or converted or with which it may be consolidated, or any organization or entity resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any organization or entity succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder; provided, that such organization or entity shall be qualified under the provisions of this Article VII and Section 310(b) of the Trust Indenture Act and eligible under the provisions of Section 310(a) of the Trust Indenture Act, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

 

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In case, at the time such successor to the Trustee shall succeed to the trusts created by this Indenture, any of the Notes of any series shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee and deliver such Notes so authenticated; and, in case at that time any of the Notes of any series shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Notes of such series or in this Indenture provided that the certificate of the Trustee shall have; provided, that the right to adopt the certificate of authentication of any predecessor trustee or to authenticate Notes of any series in the name of any predecessor trustee shall apply only to its successor or successors by merger, conversion or consolidation.

Section 7.13 Preferential Collection of Claims Against the Company. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship described in Section 311(b) of the Trust Indenture Act. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent included therein.

ARTICLE VIII

CONCERNING THE NOTEHOLDERS

Section 8.01 Evidence of Action Taken by Noteholders. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by a specified percentage in principal amount of the Noteholders of any or all series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of Noteholders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 7.01 and 7.02) conclusive in favor of the Trustee, the Company, the Parent Guarantor and any Subsidiary Guarantor, if made in the manner provided in this Article.

Section 8.02 Proof of Execution of Instruments and of Holding of Notes. Subject to Sections 7.01 and 7.02, the execution of any instrument by a Holder or his agent or proxy may be proved in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The holding of Notes shall be proved by the Note Register or by a certificate of the registrar thereof. The Company may set a record date for purposes of determining the identity of Holders of any series entitled to vote or consent to any action referred to in Section 8.01, which record date may be set at any time or from time to time by notice to the Trustee, for any date or dates (in the case of any adjournment or reconsideration) not more than 60 days nor less than five days prior to the proposed date of such vote or consent, and thereafter, notwithstanding any other provisions hereof, only Holders of such series of record on such record date shall be entitled to so vote or give such consent or revoke such vote or consent. Notice of such record date may be given before or after any request for any action referred to in Section 8.01 is made by the Company.

 

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Section 8.03 Holders to Be Treated as Owners. The Company, the Trustee and any agent of the Company, or the Trustee may deem and treat the Person in whose name any Note shall be registered upon the Note Register for such series as the absolute owner of such Note (whether or not such Note shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of, and, subject to the provisions of this Indenture, interest on, such Note and for all other purposes; and neither the Company or the Trustee nor any agent of the Company or the Trustee shall be affected by any notice to the contrary. All such payments so made to any such Person, or upon their order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable.

Section 8.04 Notes Owned by Company Deemed Not Outstanding. In determining whether the Holders of the requisite aggregate principal amount of Outstanding Notes of any or all series have concurred in any direction, consent or waiver under this Indenture, Notes which are owned by the Company or any other obligor on the Notes with respect to which such determination is being made or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Notes with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Notes which the Trustee actually knows are so owned shall be so disregarded. Notes so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Notes and that the pledgee is not the Company or any other obligor upon the Notes or any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Notes. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice.

Section 8.05 Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 8.01, of the taking of any action by the holders of the majority or percentage in aggregate principal amount of the Notes of a particular series specified in this Indenture in connection with such action, any holder of a Note of that series that is shown by the evidence to be included in the Notes the holders of which have consented to such action may, by filing written notice with the Trustee, and upon proof of holding as provided in Section 8.02, revoke such action so far as concerns such Note. Except as aforesaid any such action taken by the holder of any Note shall be conclusive and binding upon such holder and upon all future holders and owners of such Note, and of any Note issued in exchange therefor, on registration of transfer thereof or in place thereof, irrespective of whether or not any notation in regard thereto is made upon such Note. Any action taken by the holders of the majority or percentage in aggregate principal amount of the Notes of a particular series specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the holders of all the Notes affected by such action.

 

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ARTICLE IX

SUPPLEMENTAL INDENTURES

Section 9.01 Supplemental Indentures without the Consent of Holders. In addition to any supplemental indenture otherwise authorized by this Indenture, the Company, the Parent Guarantor, any Subsidiary Guarantor and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in effect), without the consent of the Holders, for one or more of the following purposes:

(a) to convey, transfer, assign, mortgage or pledge to the Trustee as security for the Notes of one or more series any property or assets;

(b) to evidence the succession of another Person to the Company, the Parent Guarantor or any Subsidiary Guarantor, or successive successions, and the assumption by the successor Person of the covenants, agreements and obligations of the Company, the Parent Guarantor or any Subsidiary Guarantor pursuant to Article X;

(c) to add to the covenants of the Company, the Parent Guarantor or any Subsidiary Guarantor such further covenants, restrictions, conditions or provisions for the protection of the Holders of Notes, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Notes of such series to waive such an Event of Default;

(d) to cure any ambiguity, omission, mistake, defect or inconsistency in this Indenture or in any supplemental indenture or the Notes, or to conform this Indenture or any supplemental indenture or the Notes to the description of the Notes set forth in the “Description of notes” section of the offering memorandum related to the Notes;

(e) to provide for or add guarantors for the Notes of one or more series;

(f) to establish the form or terms of Notes of any series as permitted by this Indenture;

(g) to evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Notes of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Section 7.11;

 

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(h) to add to, delete from or revise the conditions, limitations and restrictions on the authorized amount, terms, purposes of issue, authentication and delivery of any series of Notes, as herein set forth;

(i) to make any change to the Notes of any series so long as no Notes of such series are Outstanding; and

(j) to make any other change that does not adversely affect the rights of the Holders of the Notes in any material respect (as determined in good faith by the Company).

The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture that affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise (including, without limitation, in connection with the adoption of any Benchmark Replacement Conforming Changes).

Any supplemental indenture authorized by the provisions of this Section may be executed without the consent of the Holders of any of the Notes at the time Outstanding, notwithstanding any of the provisions of Section 9.02.

Section 9.02 Supplemental Indentures with Consent of Holders. With the consent (evidenced as provided in Article VIII) of the Holders of not less than a majority in aggregate principal amount of the Notes at the time Outstanding of any series affected by such supplemental indenture, the Company, the Parent Guarantor, any Subsidiary Guarantor and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in effect), for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Notes of each such series; provided, that no such supplemental indenture shall, without the consent of the Holder of each Note so affected,

(a) extend the final maturity of any Notes of such series;

(b) reduce the principal amount of, or premium, if any, on any Notes of such series;

(c) reduce the rate or extend the time of payment of interest on any Notes of such series;

(d) reduce the amount payable upon the redemption of any Notes of such series;

(e) change the currency of payment of principal of, or premium, if any, or interest on, any Notes of such series;

(f) change the provisions relating to the waiver of past defaults or change or impair the right of Holders to receive payment or to institute suit for the enforcement of any payment or conversion of any Notes of such series on or after the due date therefor;

 

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(g) reduce the above-stated percentage of outstanding Notes of such series the consent of whose Holders is necessary to modify or amend or to waive certain provisions of or defaults under this Indenture;

(h) waive a default in the payment of principal of or interest on the Notes;

(i) modify any of the provisions of this Section 9.02, except to increase any required percentage or to provide that certain other provisions cannot be modified or waived without the consent of the Holder of each Note of such series affected by the modification;

(j) reduce the amount of Notes whose Holders must consent to a supplemental indenture;

(k) reduce the amount payable upon the repurchase of any Note of such series or change the time at which any Note of such series may be repurchased pursuant to Section 3.03(a) whether through an amendment or waiver of provisions in the covenants, definitions or otherwise; or

(l) make any change to a Guarantee in any manner materially adverse to the Holders of Notes of such series (as determined in good faith by the Company).

A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Notes, or which modifies the rights of Holders of Notes of such series with respect to such covenant or provision, shall be deemed not to affect the rights under this Indenture of the Holders of Notes of any other series.

Upon the request of the Company, accompanied by an Officer’s Certificate and an Opinion of Counsel, and upon the filing with the Trustee of evidence of the consent of Noteholders as aforesaid and other documents, if any, required by Section 8.01, the Trustee shall execute such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise (including, without limitation, in connection with the adoption of any Benchmark Replacement Conforming Changes), in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.

It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, waiver or supplemental indenture, but it shall be sufficient if such consent approves the substance thereof.

Promptly after the execution of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall give a notice thereof to the Holders of then Outstanding Notes of each series affected thereby, by mailing a notice thereof by first-class mail to such Holders at their addresses as they shall appear on the Note Register, and in each case such notice shall set forth in general terms the substance of such supplemental indenture. Any failure of the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver.

 

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Section 9.03 Effect of Supplemental Indentures. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company, the Parent Guarantor, any Subsidiary Guarantor and the Holders of Notes of each series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

Section 9.04 Documents to Be Given to Trustee. The Trustee, subject to the provisions of Sections 7.01 and 7.02, may receive an Officer’s Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article IX complies with the applicable provisions of this Indenture.

Section 9.05 Notes Affected by Supplemental Indentures. Notes of any series, affected by a supplemental indenture, authenticated and delivered after the execution of such supplemental indenture pursuant to the provisions of this Article, may bear a notation in form approved by the Company, provided such form meets the requirements of any exchange upon which such series may be listed, as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Notes of that series so modified as to conform, in the opinion of the Board of Directors of the Company, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Company, authenticated by the Trustee and delivered in exchange for the Notes of that series then Outstanding.

ARTICLE X

CONSOLIDATION, MERGER, SALE OR CONVEYANCE

Section 10.01 Company and Parent Guarantor May Consolidate, Merge, Etc., On Certain Terms. Neither the Company nor, from and after the consummation of the Merger, the Parent Guarantor may consolidate or merge with or into, or sell, lease, convey, transfer or otherwise dispose of its property and assets substantially as an entirety to another entity unless:

(a) (1) the Company or the Parent Guarantor is the surviving entity, as applicable, or (2) the Person formed by such consolidation or into which the Company or the Parent Guarantor is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company or the Parent Guarantor substantially as an entirety, if other than the Company or the Parent Guarantor,

(i) shall be a corporation, limited liability company, partnership or trust,

(ii) shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and

 

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(iii) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest on all the Notes and the performance or observance of every covenant of this Indenture on the part of the Company or the Parent Guarantor, as applicable, to be performed, by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee, by the Person (if other than the Company or the Parent Guarantor) formed by such consolidation or into which the Company or the Parent Guarantor shall have been merged or by the Person which shall have acquired the Company’s or the Parent Guarantor’s assets;

(b) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or any Subsidiary Guarantor as a result of such transaction as having been incurred by the Company or such Subsidiary Guarantor at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing;

(c) if as a result of any consolidation, merger, sale or lease, conveyance or transfer described in this Section 10.01, properties or assets of the Company or the Parent Guarantor or any of its subsidiaries would become subject to any Lien that would not be permitted by Section 4.06 without equally and ratably securing the Notes, the Parent Guarantor or the Company or such successor entity, as the case may be, will take the steps as are necessary to secure effectively the Notes equally and ratably with, or prior to, all indebtedness secured by those Liens as described above; and

(d) the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with.

The conditions of (a)(ii) above shall not apply in the case of a corporation or entity not organized under the laws of the United States of America, any State thereof or the District of Columbia which shall agree, in form satisfactory to the Trustee, (i) to subject itself to the jurisdiction of the United States district court for the Southern District of New York and (ii) to indemnify and hold harmless the holders of all Notes against (A) any tax, assessment or governmental charge imposed on such holders by a jurisdiction other than the United States or any political subdivision or taxing authority thereof or therein with respect to, and withheld on the making of, any payment of principal or interest on such Notes and which would not have been so imposed and withheld had such consolidation, merger, sale or conveyance not been made and (B) any tax, assessment or governmental charge imposed on or relating to, and any costs or expenses involved in, such consolidation, merger, sale or conveyance.

The restrictions in this Section 10.01 shall not apply to (i) the merger or consolidation of the Company or the Parent Guarantor with one of its affiliates, if the Board of Directors of the Company determines in good faith that the purpose of such transaction is principally to change the Company’s or the Parent Guarantor’s State of incorporation or convert the Company’s or the Parent Guarantor’s form of organization to another form, or (ii) the merger of the Company or the Parent Guarantor with or into a single direct or indirect wholly owned Subsidiary pursuant to Section 251(g) (or any successor provision) of the General Corporation Law of the State of Delaware, if applicable.

 

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Nothing contained in this Article shall apply to, limit or impose any requirements upon the consolidation or merger of any Person into the Company or the Parent Guarantor where the Company or the Parent Guarantor, as applicable is the survivor of such transaction, or the acquisition by the Company or the Parent Guarantor, by purchase or otherwise, of all or any part of the property of any other Person (whether or not affiliated with the Company or the Parent Guarantor).

The limitations or the other requirements specified above shall not apply to the Merger or otherwise to the transactions contemplated by the Transaction Documents.

Section 10.02 Successor Company Substituted. Upon any consolidation of the Company or the Parent Guarantor with, or merger of the Company or the Parent Guarantor into, any other Person or any conveyance, transfer or lease of the properties and assets of the Company or the Parent Guarantor substantially as an entirety in accordance with Section 10.01, the successor Person formed by such consolidation or into which the Company or the Parent Guarantor is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or the Parent Guarantor under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Notes.

In case of any such consolidation, merger, sale, lease or conveyance, such changes in phraseology and form (but not in substance) may be made in the Notes thereafter to be issued as may be appropriate.

ARTICLE XI

GUARANTEE

Section 11.01 Unconditional Guarantee. The Parent Guarantor and each Subsidiary Guarantor hereby fully and unconditionally guarantees (such guarantee to be referred to herein as the “Guarantee”), on a senior unsecured basis, to each Holder of a Note issued by the Company, authenticated and delivered by the Trustee, the due and punctual payment of the principal of and any premium and interest on such Note, when and as the same shall become due and payable in accordance with the terms of such Note and this Indenture. The Parent Guarantor and each Subsidiary Guarantor hereby agrees that in the event of an Event of Default its obligations hereunder shall be as if it were a principal debtor and not merely a surety, and shall be absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any Note of any series or this Indenture, any failure to enforce the provisions of any Note of any series or this Indenture, any waiver, modification or indulgence granted to the Company with respect thereto by the Holder of any Note of any series or the Trustee, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor; provided, however, that, notwithstanding the foregoing, no such waiver, modification or indulgence shall, without the consent of the Parent Guarantor or such Subsidiary Guarantor,

 

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increase the principal amount of any Note or the interest rate thereon or increase any premium payable upon redemption thereof. The Parent Guarantor and each Subsidiary Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger or bankruptcy of the Company, any right to require a proceeding first against the Company, the benefit of discussion, protest or notice with respect to any Note or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee will not be discharged with respect to such Note except by payment in full of the principal thereof and any premium and interest thereon or as provided in this Article XI, Article XII or Section 10.02. If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Parent Guarantor, or any Subsidiary Guarantor or any custodian, trustee, liquidator or other similar official acting in relation to the Company or the Parent Guarantor, or such Subsidiary Guarantor any amount paid by the Company or the Parent Guarantor, or such Subsidiary Guarantor to the Trustee or such Holder, this Guarantee to the extent theretofore discharged, shall be reinstated in full force and effect. The Parent Guarantor, and each Subsidiary Guarantor further agrees that, as between the Parent Guarantor and each Subsidiary Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, the obligations guaranteed hereby may be accelerated as provided in Article VI hereof for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby.

The Parent Guarantor and each Subsidiary Guarantor also agrees, to pay any and all reasonable costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Trustee or any Holders in enforcing any rights under this Guarantee.

The Parent Guarantor and each Subsidiary Guarantor hereby waives any right of set off which the Parent Guarantor or such Subsidiary Guarantor, as the case may be, may have against the Holder of any Note in respect of any amounts which are or may become payable by such Holder to the Company.

The Parent Guarantor and each Subsidiary Guarantor shall be subrogated to all rights of the Holders of any series of Notes and the Trustee against the Company in respect of any amounts paid to such Holders and the Trustee by the Parent Guarantor and each Subsidiary Guarantor pursuant to the provisions of the Guarantee; provided, however, that neither the Parent Guarantor nor any Subsidiary Guarantor shall be entitled to enforce or to receive any payments arising out of or based upon, such right of subrogation until the principal of, premium, if any, and interest, if any, on all of the Notes of such series shall have been paid in full.

No past, present or future stockholder, officer, director, employee or incorporator of the Parent Guarantor or any Subsidiary Guarantor shall have any personal liability under the Guarantee set forth in this Section 11.01 by reason of his, her or its status as such stockholder, officer, director, employee or incorporator.

The Guarantee set forth in this Section 11.01 shall not be valid or become obligatory for any purpose with respect to any Note until the certificate of authentication on such Note shall have been signed by or on behalf of the Trustee.

 

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Section 11.02 Notations of Guarantee Not Required. Neither the Company, the Parent Guarantor, nor any Subsidiary Guarantor shall be required to make a notation on the Notes to reflect any Guarantee or any release, termination or discharge thereof.

Section 11.03 Release of Conditional Parent Guarantor.

(a) Upon the consummation of the Merger, the Guarantee by AT&T as a Parent Guarantor will be automatically, irrevocably and unconditionally released in all respects, AT&T shall have no further obligations or responsibilities under this Indenture or the Notes and the Guarantee by AT&T as a Parent Guarantor shall automatically terminate and be discharged and have no further force and effect without any action on the part of the Trustee, the Holders of the Notes, the Company, or AT&T as a Parent Guarantor under this Indenture. Following consummation of the Merger, the Guarantee by AT&T as a Parent Guarantor shall not be subject to reinstatement under any circumstances and the Holders of the Notes and the Trustee shall forever discharge AT&T from any claim or liability with respect to the Guarantee by AT&T as a Parent Guarantor.

(b) The Trustee shall deliver such instruments or other document as may be reasonably requested by AT&T or by the Company evidencing the irrevocable release, discharge and termination of the Guarantee by AT&T as a Parent Guarantor following the consummation of the Merger. AT&T or the Company, as applicable, shall provide written confirmation to the Trustee of the occurrence of the consummation of the Merger in connection with any such request.

Section 11.04 Limitation of Guarantor’s Liability. The obligations of each Subsidiary Guarantor shall be limited to the maximum amount, as will, after giving effect to all other contingent and fixed liabilities of such Subsidiary Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its contribution obligations under this Indenture, result in the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law, or being void or unenforceable under any law relating to insolvency of debtors.

Section 11.05 Future Guarantors.

(a) In connection with the Merger, substantially concurrently with the consummation of the Merger, the Company shall cause WBD to, by supplemental indenture substantially in the form attached to this Indenture as Exhibit D (which the Company and the Trustee shall countersign), effective upon the date of the consummation of the Merger, become party to this Indenture and guarantee payment of the Notes as a Parent Guarantor.

(b) Guarantee by Subsidiaries of the Parent Guarantor. Upon and after the consummation of the Merger, the Parent Guarantor will cause (1) each wholly-owned Domestic Subsidiary (other than the Company) that is a borrower or that guarantees the payment of any Debt under the Senior Credit Facilities and (2) each wholly-owned Domestic Subsidiary (other than the Company) that is a borrower or issuer or that guarantees the payment of any Material

 

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Debt, to execute and deliver to the Trustee within 30 days a supplemental indenture substantially in the form attached to this Indenture as Exhibit D (which the Company and the Trustee shall countersign), pursuant to which such wholly-owned Domestic Subsidiary will guarantee payment of the Notes, whereupon such Domestic Subsidiary will become a Subsidiary Guarantor for all purposes under this Indenture.

(c) Release of Subsidiary Guarantor. Notwithstanding the foregoing provisions of this Section 11.05, any Subsidiary Guarantor will automatically and unconditionally be released from all obligations under its Subsidiary Guarantee, and such Subsidiary Guarantee shall thereupon terminate and be discharged and of no further force or effect, (i) concurrently with any direct or indirect sale or disposition (by merger or otherwise) of such Subsidiary Guarantor or any interest therein, or any other transaction, in accordance with the terms of this Indenture, if as a result of such transaction such Subsidiary Guarantor is no longer a Parent Subsidiary, (ii) at any time that such Subsidiary Guarantor is (or, substantially concurrently with the release of the Subsidiary Guarantee of such Subsidiary Guarantor or if as a result of the release of the subsidiary guarantee of such Subsidiary Guarantor, will be) released from all of its obligations as borrower or its obligations under its guarantee of any Debt under the Senior Credit Facilities or any Material Debt (it being understood that a release subject to contingent reinstatement is still a release, and that if any such guarantee is so reinstated, such Subsidiary Guarantee shall also be reinstated to the extent that such Subsidiary Guarantor would then be required to provide a Subsidiary Guarantee pursuant to this Section 11.05), (iii) upon the merger or consolidation of such Subsidiary Guarantor with and into the Company or the Parent Guarantor or another Subsidiary Guarantor that is the surviving person in such merger or consolidation, or upon the liquidation of such Subsidiary Guarantor following the transfer of all of its assets to the Company or the Parent Guarantor or another Subsidiary Guarantor, (iv) concurrently with such Subsidiary Guarantor ceasing to constitute a Domestic Subsidiary of the Parent Guarantor, (v) upon legal or covenant defeasance of the Company’s obligations, or satisfaction and discharge of the Notes, or (vi) upon payment in full of the aggregate principal amount of all of the Notes then outstanding and all other subsidiary guaranteed obligations then due and owing (provided that the obligations of each Subsidiary Guarantor hereunder shall be reinstated if at any time any payment which would otherwise have reduced or terminated the obligations of any Subsidiary Guarantor hereunder and under its Subsidiary Guarantee (whether such payment shall have been made by or on behalf of the Company or by or on behalf of a Subsidiary Guarantor) is rescinded or reclaimed from any of the Holders upon the insolvency, bankruptcy, liquidation or reorganization of the Company or any Subsidiary Guarantor or otherwise, all as though such payment had not been made). Upon any such occurrence specified in this Section 11.05, and delivery of an Officer’s Certificate to the Trustee, the Trustee shall execute any documents reasonably requested by the Company (at the Company’s expense) in order to evidence such release, discharge and termination in respect of such Subsidiary Guarantee.

 

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ARTICLE XII

SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

Section 12.01 Discharge of Liability on Notes. When (a) the Company or the Parent Guarantor delivers to the Trustee all Outstanding Notes or all Outstanding Notes of any series, as the case may be, theretofore authenticated and delivered and all coupons, if any, appertaining thereto (other than (i) Notes or Notes of such series, as the case may be, and coupons, if any, which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.13, (ii) coupons, if any, appertaining to the Notes or Notes of such series, as the case may be, called for redemption and maturing after the relevant redemption date, whose surrender has been waived as provided in Section 3.05 and (iii) Notes or Notes of such series, as the case may be, and coupons, if any, for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company or the Parent Guarantor and thereafter repaid to the Company or the Parent Guarantor or discharged from such trust, as provided in Section 2.14) for cancellation or (b) all Outstanding Notes have become due and payable or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company or the Parent Guarantor deposits with the Trustee (i) cash sufficient to pay at stated maturity the principal of and interest on Outstanding Notes or all Outstanding Notes of such series (other than Notes replaced pursuant to Section 2.13), or (ii) such amount of Governmental Obligations (or a combination of amounts deposited in (i) and (ii)), and if in either case the Company or the Parent Guarantor pays all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect as to all Outstanding Notes or all Outstanding Notes of any series, as the case may be, except for those provisions which expressly survive by their terms. The Trustee shall join in the execution of proper instruments prepared by the Company or the Parent Guarantor acknowledging satisfaction and discharge of this Indenture on demand of the Company or the Parent Guarantor accompanied by an Officer’s Certificate and an Opinion of Counsel and at the cost and expense of the Company.

Section 12.02 Repayment to the Company. At the request of the Company or the Parent Guarantor, the Trustee and the Paying Agent shall return to the Company or the Parent Guarantor on Company Order any money held by them for the payment of any amount with respect to the Notes that remains unclaimed for two years; provided, however, that the Trustee or such paying agent, before being required to make any such return, shall, at the expense and direction of the Company or the Parent Guarantor, cause to be published once in an Authorized Newspaper in each place of payment of or mail to each such Holder notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed money then remaining will be returned to the Company or the Parent Guarantor. After return to the Company or the Parent Guarantor, Holders entitled to the money must look to the Company or the Parent Guarantor for payment as general creditors unless an applicable abandoned property law designates another person.

Section 12.03 Option to Effect Defeasance or Covenant Defeasance. The Company or the Parent Guarantor may, by Board Resolution, at its option, at any time, with respect to any series of Notes, elect to have either Section 12.04 or Section 12.05 be applied to all of the Outstanding Notes of any series (the “Defeased Notes”), upon compliance with the conditions set forth in this Article XII.

Section 12.04 Defeasance and Discharge. Upon the Company’s or the Parent Guarantor’s exercise under Section 12.03 of the option applicable to this Section 12.04, the Company or the Parent Guarantor shall be deemed to have been discharged from its obligations with respect to the Defeased Notes on the date the conditions set forth below in Section 12.06 are satisfied (hereinafter “defeasance”). For this purpose, such defeasance means that the Company

 

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or the Parent Guarantor shall be deemed to have paid and discharged the entire indebtedness represented by the Defeased Notes, which shall thereafter be deemed to be “Outstanding” only for the purposes of Sections 2.10, 2.13, 2.14, 2.15, 4.01, 4.02, 4.04, 7.06, 7.10 and 12.02 of this Indenture and to have satisfied all its other obligations under such series of Notes and this Indenture and cured all existing Events of Default insofar as such series of Notes are concerned (and the Trustee, at the expense of the Company, and, upon written request, shall execute proper instruments acknowledging the same). Subject to compliance with this Article XII, the Company or the Parent Guarantor may exercise its option under this Section 12.04 notwithstanding the prior exercise of its option under Section 12.05 with respect to a series of Notes.

Section 12.05 Covenant Defeasance. Upon the Company’s or the Parent Guarantor’s exercise under Section 12.03 of the option applicable under this Section 12.05, the Company or the Parent Guarantor shall be released from its obligations under Sections 3.03, 4.05, 4.06, 4.07, 4.08, 4.09, 11.05 and Article X with respect to the Defeased Notes on and after the date the conditions set forth below in Section 12.06 are satisfied (hereinafter “covenant defeasance”), and the Defeased Notes shall thereafter be deemed to be not “Outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences if any thereof) in connection with such covenants, but shall continue to be deemed “Outstanding” for all other purposes hereunder. For this purpose, such covenant defeasance means that, with respect to the Defeased Notes, the Company or the Parent Guarantor may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such Section or Article described in this Section 12.05, whether directly or indirectly, by reason of any reference elsewhere herein to any such Section or Article described in this Section 12.05 or by reason of any reference in any such Section or Article described in this Section 12.05 to any other provisions herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 but, except as specified above, the remainder of this Indenture and such Defeased Notes shall be unaffected thereby.

Section 12.06 Conditions to Defeasance or Covenant Defeasance . The following shall be the conditions to application of either Section 12.04 or Section 12.05 to a series of outstanding Notes.

(a) The Company or the Parent Guarantor shall have irrevocably deposited with the Trustee, in trust, (i) sufficient funds in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts to pay the principal of and interest to stated maturity (or redemption) on, the Notes of such series, or (ii) such amount of Governmental Obligations (or a combination of amounts deposited in (i) and (ii)), as will, together with the predetermined and certain income to accrue thereon without consideration of any reinvestment thereof, be sufficient to pay when due the principal of, and interest to stated maturity (or redemption) on, the Notes of such series.

(b) The Company or the Parent Guarantor shall (i) have delivered an opinion of counsel that the Holders of the Notes of such series will not recognize income, gain or loss for United States Federal income tax purposes as a result of such defeasance, and will be subject to tax in the same manner as if no defeasance and discharge or covenant defeasance, as the case may be, had occurred or (ii) in the case of an election under Section 12.04 the Company or the Parent Guarantor shall have delivered to the Trustee an Opinion of Counsel to the effect that (A)

 

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the Company or the Parent Guarantor has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date this Indenture was first executed, there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel in the United States shall confirm that, the holders of Outstanding Notes of that particular series will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance, and will be subject to tax in the same manner as if no defeasance and discharge had occurred.

ARTICLE XIII

MISCELLANEOUS PROVISIONS

Section 13.01 No Recourse. No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any Note, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, member, officer or director, past, present or future as such, of the Company, of the Parent Guarantor, of any Subsidiary Guarantor or of any predecessor or successor Person, either directly or through the Company, the Parent Guarantor, any Subsidiary Guarantor or any such predecessor or successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, members, officers or directors as such, of the Company, of the Parent Guarantor, of any Subsidiary Guarantor or of any predecessor or successor Person, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Notes or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, member, officer or director as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Notes or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of such Notes.

Section 13.02 Provisions of Indenture for the Sole Benefit of Parties and Holders of Notes. Nothing in this Indenture or in the Notes, expressed or implied, shall give or be construed to give to any Person other than the parties hereto and their successors and the Holders of the Notes any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and of the Holders of the Notes.

Section 13.03 Successors and Assigns of Company and Guarantor Bound by Indenture. All the covenants, stipulations, promises and agreements contained in this Indenture by or on behalf of the Company, the Parent Guarantor or Subsidiary Guarantor shall bind its successors and assigns, whether so expressed or not.

 

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Section 13.04 Notices and Demands on Company, Parent Guarantor, Trustee and Holders of Notes. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders of Notes to or on the Company, the Parent Guarantor or Subsidiary Guarantor may be given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Company is filed by the Company with the Trustee) (i) prior to the consummation of the Merger, c/o AT&T Inc., 208 S. Akard Street, 18th Floor, Dallas, Texas 75202, fax: (214) 653-2578, email: [redacted], Attention of the Senior Vice President and Treasurer with a copy to the Assistant Vice President – Senior Legal Counsel, Securities, AT&T Legal Department, 208 S. Akard Street, Room 2908, Dallas, Texas 75202, email: [redacted], and (ii) following the consummation of the Merger, c/o Discovery, Inc., 230 Park Avenue South, New York, New York 10003; Attention: Investor Relations. Any notice, direction, request or demand by the Company, the Parent Guarantor, any Subsidiary Guarantor or any Holder of Notes to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made at U.S. Bank Trust Company, National Association, Corporate Trust Services, One Federal Street, 10th Floor, Boston, Massachusetts 02110 Attn: K. Beard (Magallanes, Inc.).

Where this Indenture provides for notice to Holders of Notes, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder entitled thereto, at their last address as it appears in the Note Register. In any case where notice to such Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders.

In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Company, the Parent Guarantor, or any Subsidiary Guarantor when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice.

In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice of any event to Holders of Notes when said notice is required to be given pursuant to any provision of this Indenture or of the Notes, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. Neither the failure to give notice, nor any defect in any notice so given, to any particular Holder of a Note shall affect the sufficiency of such notice with respect to other Holders of Notes given as provided above.

Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

 

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Section 13.05 Officer’s Certificates and Opinions of Counsel; Statements to Be Contained Therein. Upon any application or demand by the Company, the Parent Guarantor or a Subsidiary Guarantor to the Trustee to take any action under any of the provisions of this Indenture, the Company, the Parent Guarantor or a Subsidiary Guarantor, as applicable, shall furnish to the Trustee an Officer’s Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished.

Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the person making such certificate or opinion has read such covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (c) a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.

Any certificate, statement or opinion of an officer of the Company, Parent Guarantor or a Subsidiary Guarantor may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which their certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters, information with respect to which is in the possession of the Company, Parent Guarantor or a Subsidiary Guarantor, upon the certificate, statement or opinion of or representations by an officer or officers of the Company, Parent Guarantor or a Subsidiary Guarantor, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which their certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.

Any certificate, statement or opinion of an officer of the Company, Parent Guarantor or Subsidiary Guarantor, or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Company, Parent Guarantor or a Subsidiary Guarantor, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which their certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.

Any certificate or opinion of any independent firm of public accountants filed with and directed to the Trustee shall contain a statement that such firm is independent.

 

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Section 13.06 Payments Due on Saturdays, Sundays and Holidays. If the date of maturity of interest on or principal of the Notes of any series or the Redemption Date or repayment of any such Note, or the last day on which a Holder has the right to convert any Note, shall not be a Business Day, then payment of interest or principal, need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the Redemption Date, and no interest shall accrue for the period after such date.

Section 13.07 Conflict of Any Provision of Indenture With Trust Indenture Act. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with another provision included in this Indenture by operation of Sections 310 to 317, inclusive, of the Trust Indenture Act, such incorporated provision shall control.

Section 13.08 New York Law to Govern. This Indenture and each Note shall be deemed to be a contract under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of the State of New York.

Section 13.09 Waiver of Jury Trial. EACH OF THE COMPANY, THE PARENT GUARANTOR, EACH SUBSIDIARY GUARANTOR, THE HOLDERS OF SECURITIES, THE NOTE REGISTRAR, THE PAYING AGENT, THE CALCULATION AGENT AND THE TRUSTEE 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 INDENTURE, THE SECURITIES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 13.10 Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. The words “execution,” “signed,” “signature,” and words of like import in this Indenture shall include images of manually executed signatures transmitted by facsimile, email or other electronic format (including, without limitation, “pdf,” “tif” or “jpg”) and other electronic signatures (including without limitation, DocuSign and AdobeSign or any other similar platform identified by the Company and reasonably available at no undue burden or expense to the Trustee). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code. Without limitation to the foregoing, and anything in this Indenture to the contrary notwithstanding, (a) any Officer’s Certificate, company order, Opinion of Counsel, Note, amendment, notice, direction, certificate of authentication appearing on or attached to any Note, supplemental indenture or other certificate, opinion of counsel, instrument, agreement or other document delivered pursuant to this Indenture may be executed, attested and transmitted by any of the foregoing electronic means and formats and (b) all references in Article II or elsewhere in this Indenture to the execution, attestation or authentication of any Note or any certificate of authentication appearing on or attached to any Note by means of a manual or facsimile signature shall be deemed to include signatures that are made or transmitted by any of the foregoing electronic means or formats. The Trustee shall have

 

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no duty to inquire into or investigate the authenticity or authorization of any such electronic signature and shall be entitled to conclusively rely on any such electronic signature without any liability with respect thereto. The Company, Parent Guarantor and any Subsidiary Guarantor each assume all risks arising out of the use of electronic signatures and electronic methods to send any communications to the Trustee, including without limitation the risk of the Trustee acting in good faith on an unauthorized notice and the risk of interception or misuse by third parties.

Section 13.11 Effect of Headings. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

Section 13.12 Actions by Successor. Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee, member or officer of the Company, the Parent Guarantor, or any Subsidiary Guarantor shall and may be done and performed with like force and effect by the corresponding board, committee, member or officer of any corporation or other entity that shall at the time be the lawful successor of the Company, the Parent Guarantor, or such Subsidiary Guarantor.

Section 13.13 Severability. In case any one or more of the provisions contained in this Indenture or in the Notes of any series shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Indenture or of such Notes, but this Indenture and such Notes shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

Section 13.14 Assignment. The Company will have the right at all times to assign any of its rights or obligations under this Indenture to a direct or indirect wholly owned subsidiary of the Company with the written consent of the parties hereto, provided that, in the event of any such assignment, the Company, will remain liable for all such obligations, subject to Section 10.01 of this Indenture. Subject to the foregoing, this Indenture is binding upon and inures to the benefit of the parties thereto and their respective successors and assigns. This Indenture may not otherwise be assigned by the parties thereto.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.

 

MAGALLANES, INC.,
as Issuer
By:   /s/ Andrew B. Keiser
  Name:   Andrew B. Keiser
 

Title:     Vice President and Assistant

              Treasurer of Magallanes, Inc. and AT&T Inc.

AT&T INC.,
prior to the Merger, as Parent Guarantor
By:   /s/ Andrew Keiser
  Name:   Andrew B. Keiser
 

Title:     Vice President and Assistant

              Treasurer of AT&T Inc.

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
By:   /s/ Karen R. Beard
  Name:   Karen R. Beard
  Title:     Vice President


EXHIBIT A

FORM OF INITIAL NOTE

[Private Placement Legend]

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS [IN THE CASE OF RULE 144A NOTES: AT LEAST ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY),] [IN THE CASE OF REGULATION S NOTES: 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE DATE ON WHICH THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S) IN RELIANCE ON REGULATION S], ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. [IN THE CASE OF REGULATION S NOTES: BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.]


BY ITS ACQUISITION OF THIS SECURITY, THE HOLDER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (1) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE OR HOLD THIS SECURITY CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OF A PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) OR SIMILAR PROVISIONS UNDER ANY OTHER U.S. OR NON-U.S. FEDERAL, STATE, LOCAL OR OTHER LAWS OR REGULATIONS (“SIMILAR LAWS”), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF ANY SUCH PLAN, ACCOUNT OR ARRANGEMENT, OR (2) THE ACQUISITION, HOLDING AND DISPOSITION OF THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.

[Global Note Legend]

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.


MAGALLANES, INC.

[•]% [Floating Rate] Senior Notes Due [•]

 

   CUSIP No.: [144A CUSIP: [•]] [Reg S CUSIP: [•]]
No. []    ISIN No.: [144A ISIN: [•]] [Reg S ISIN: [•]]
   $[]

MAGALLANES, INC., a Delaware corporation (the “Company”, which term includes any successor corporation), for value received promises to pay to CEDE & CO., or registered assigns, the principal sum of $             (the “Principal”) on [•].

Interest Payment Dates: [•] [, [•],[•]]1 and [•] (each, an “Interest Payment Date”), commencing on [•], 20[•].

Regular Record Dates: [•] [, [•],[•]]2 and [•] (each, a “Regular Record Date”).

Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place.

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.

 

MAGALLANES, INC.
By:    
 

Name:

 

Title:

 

1 

Insert for Floating Rate Notes

2 

Insert for Floating Rate Notes


This is one of the Notes of the series designated herein and referred to in the within-mentioned Indenture.

Dated: [•], 2022

 

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, Trustee
By:    
 

Name:

 

Title:


(REVERSE OF NOTE)

MAGALLANES, INC.

[•]% [Floating Rate] Senior Notes Due [•]

1. Interest.

MAGALLANES, INC., a Delaware corporation (the “Company”), promises to pay interest on the principal amount of this Note [at the rate per annum shown above]3[at a rate equivalent to Compounded SOFR (as defined in the Indenture), as determined on the applicable Interest Payment Determination Date (as defined in the Indenture), plus 1.78% per annum]4. Cash interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from March 15, 2022. The Company will pay interest [semi-annually]5[quarterly]6 in arrears on each Interest Payment Date, commencing [September 15, 2022]7[June 15, 2022]8. [Interest on this Note will be computed on the basis of a 360-day year of twelve 30-day months.]9[Interest on this Note will be computed on the basis of a 360-day year and the actual number of days in the Observation Period (as defined in the Indenture).]10 If any Interest Payment Date is not a Business Day, then the related payment of interest for such Interest Payment Date shall be paid on the next succeeding Business Day [unless such next succeeding Business Day is in the next succeeding calendar month, in which case the Company will make the interest payment on the immediately preceding Business Day, in each case]11 with the same force and effect as if made on such Interest Payment Date and no further interest shall accrue as a result of such delay.

Pursuant to and in accordance with the terms of the Registration Rights Agreement, upon the occurrence of a Registration Default, Holders of Notes will be entitled to the payment of additional interest on the Notes at a rate of 0.25% per annum (which rate shall increase by an additional 0.25% per annum for each subsequent 90-day period, in each case until and including the date such Registration Default ends, up to a maximum of 0.50% per annum).

 

3 

Insert for Fixed Rate Notes.

4 

Insert for Floating Rate Notes.

5 

Insert for Fixed Rate Notes.

6 

Insert for Floating Rate Notes.

7 

Insert for Fixed Rate Notes.

8 

Insert for Floating Rate Notes.

9 

Insert for Fixed Rate Notes.

10 

Insert for Floating Rate Notes.

11 

Insert for Floating Rate Notes.


The Company shall pay interest on overdue principal from time to time on demand at the rate borne by the Notes and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful.

2. Method of Payment.

The Company shall pay interest on the Notes (except defaulted interest) to the persons who are the registered Holders at the close of business on the Regular Record Date immediately preceding the Interest Payment Date notwithstanding any transfer or exchange of such Note subsequent to such Regular Record Date and prior to such Interest Payment Date. Holders must surrender Notes to the Trustee to collect principal payments. The Company shall pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts (“U.S. Legal Tender”). Payment of principal of (and premium, if any) and any such interest on this Note will be made at the Corporate Trust Office of the Trustee or at any other office or agency designated by the Company for such purpose; provided that at the option of the Company payment of interest may be made by check mailed to the address of the Holder entitled thereto as such address appears in the Note Register. However, the payments of interest, and any portion of the principal (other than interest payable at maturity or on any redemption or repayment date or the final payment of principal) shall be made by the Paying Agent, upon receipt from the Company of immediately available funds by 12:30 p.m., New York City time (or such other time as may be agreed to between the Company and the Paying Agent or the Company), directly to a Holder (by Federal funds wire transfer or otherwise) if the Holder has delivered written instructions to the Trustee 15 days prior to such payment date requesting that such payment will be so made and designating the bank account to which such payments shall be so made and in the case of payments of principal surrenders the same to the Trustee in exchange for a Note or Notes aggregating the same principal amount as the unredeemed principal amount of the Notes surrendered.

3. Paying Agent.

Initially, U.S. Bank Trust Company, National Association (the “Trustee”) will act as Paying Agent. The Company may change any Paying Agent without notice to the Holders.

4. Indenture.

The Company issued the Notes under an Indenture, dated as of March 15, 2022 (the “Indenture”), among the Company, the Parent Guarantor and the Trustee. Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) (the “TIA”), as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and the TIA for a statement of them.

The Indenture imposes certain limitations on the incurrence of liens and certain sale and leaseback transactions and limits the Company’s ability to consolidate, merge, convey, transfer or lease its properties and assets substantially as an entirety. To the extent the terms of the Indenture and this Note are inconsistent, the terms of the Indenture shall govern.


5. Optional Redemption.

[The Notes are redeemable, other than in connection with a Special Mandatory Redemption, in whole or in part, at the option of the Company, at any time and from time to time, at the Redemption Price described in the Indenture.]12 [The Notes are redeemable, other than in connection with a Special Mandatory Redemption, in whole or in part, at the Company’s option, at any time after the No Call Date, at the Redemption Price described in the Indenture.] 13 [The Notes are not redeemable at the Company’s option.] 14

6. Special Mandatory Redemption.

In the event that (a) the Merger Agreement is terminated on or at any time prior to July 15, 2023 without the Merger having been consummated, or (b) the Merger is not consummated on or at any time prior to July 15, 2023, then the Company will redeem the Notes on the Special Mandatory Redemption Date, at the Special Mandatory Redemption Price, plus accrued and unpaid interest on the Notes from the last date on which interest has been paid, or, if interest has not been paid from the Original Issue Date to, but excluding, the Special Mandatory Redemption Date (the “Special Mandatory Redemption”). Notwithstanding the foregoing, installments of interest on the Notes that are due and payable on Interest Payment Dates falling on or prior to the Special Mandatory Redemption Date will be payable on such Interest Payment Dates to the registered Holders as of the close of business on the Regular Record Date. Upon the occurrence of the closing of the Merger, the foregoing provision regarding Special Mandatory Redemption will cease to apply.

7. Change of Control Offer to Repurchase.

If a Change of Control Triggering Event (as defined in the Indenture) occurs, unless the Company has exercised its right to redeem the Notes, Holders of the Notes will have the right to require the Company to repurchase all or a portion of their Notes pursuant to the offer described in the Indenture at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of repurchase, subject to the rights of Holders of Notes on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date.

8. Denominations; Transfer; Exchange.

The Notes are in registered form, without coupons, in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. A Holder shall register the transfer of or exchange of Notes in accordance with the Indenture. The Company may require a Holder, among

 

12 

Omit with respect to the Spinco Debt Securities and the Floating Rate Notes.

13 

Insert for the 2032 Notes, the 2052 Notes and the 2062 Notes (“Spinco Debt Securities”).

14 

Insert with respect to the Floating Rate Notes.


other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Company need not issue, authenticate, register the transfer of or exchange any Notes or portions thereof for a period of 15 days before such series is selected for redemption, nor need the Company register the transfer or exchange of any Note selected for redemption in whole or in part.

9. Persons Deemed Owners.

The registered Holder of a Note shall be treated as the owner of it for all purposes.

10. Unclaimed Funds.

If funds for the payment of principal or interest remain unclaimed for two years, the Trustee and the Paying Agent will repay the funds to the Company or the Parent Guarantor at its written request. After that, all liability of the Trustee and such Paying Agent with respect to such funds shall cease.

11. Legal Defeasance and Covenant Defeasance.

The Company may be discharged from its obligations under the Notes and under the Indenture with respect to the Notes except for certain provisions thereof, and may be discharged from obligations to comply with certain covenants contained in the Notes and in the Indenture with respect to the Notes, in each case upon satisfaction of certain conditions specified in the Indenture.

12. Amendment; Supplement; Waiver.

Subject to certain exceptions, the Notes and the provisions of the Indenture relating to the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes of all series then outstanding affected by such amendment or supplement (voting as one class), and any existing Default or Event of Default or compliance with certain provisions may be waived with the consent of the Holders of a majority in aggregate principal amount of all the Notes of such series, each series voting as a separate class, (or of all the Notes, as the case may be, voting as a single class) then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture and the Notes to, among other things, cure any ambiguity, omission, mistake, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, or make any other change that does not adversely affect the rights of any Holder of the Notes in any material respect (as determined in good faith by the Company).

13. Defaults and Remedies.

If an Event of Default (other than certain bankruptcy Events of Default with respect to the Company, the Parent Guarantor or any Subsidiary Guarantor) occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Notes of this series then outstanding (voting as a separate class), except as otherwise provided in the Indenture, may declare all of the Notes to be due and payable immediately in the manner and with the effect


provided in the Indenture. If a bankruptcy Event of Default with respect to the Company, the Parent Guarantor or any Subsidiary Guarantor occurs and is continuing, the entire principal amount of the Notes then outstanding and interest accrued thereon, if any, shall immediately become due and payable. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has received indemnity satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of certain continuing Defaults or Events of Default if it determines that withholding notice is in their interest.

14. Trustee Dealings with Company.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company as if it were not the Trustee.

15. No Recourse Against Others.

No stockholder, director, officer, employee, member or incorporator, as such, of the Company, the Parent Guarantor, any Subsidiary Guarantor or any successor Person thereof shall have any liability for any obligation under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes.

16. Authentication.

This Note shall not be valid until the Trustee manually signs the certificate of authentication on this Note.

17. Abbreviations and Defined Terms.

Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

18. CUSIP Numbers.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon.


19. Governing Law.

The laws of the State of New York shall govern the Indenture and this Note thereof.


ASSIGNMENT FORM

I or we assign and transfer this Note to

 

                                                     

(Print or type name, address and zip code of assignee or transferee)

 

                                                     

(Insert Social Security or other identifying number of assignee or transferee)

and irrevocably appoint         agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.

CHECK ONE BOX BELOW

(1)    ☐    This Note is being transferred inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or

(2)    ☐    This Note is being transferred outside the United States to a Non-U.S. Person in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee will not be obligated to register this Note in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.10 of the Indenture shall have been satisfied.

Dated:                                   

Signed:                                 

(Signed exactly as name appears on the other

side of this Note)

Signature

Guarantee:                           

Participant in a recognized Signature Guarantee Medallion Program (or

other signature guarantor program reasonably acceptable to the Trustee)


TO BE COMPLETED BY PURCHASER IF (1) ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated:                                   

NOTICE: To be executed by an executive officer

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company pursuant to Section 3.03 of the Indenture, check the box ☐.

If you want to elect to have only part of this Note purchased by the Company pursuant to Section 3.03 of the Indenture, state the amount you elect to have purchased (must be integral multiples of $1,000):

$

Dated:                                   

Signed:                                 

(Signed exactly as name appears on the other

side of this Note)

Signature

Guarantee:                           

Participant in a recognized Signature Guarantee Medallion Program (or

other signature guarantor program reasonably acceptable to the Trustee)


EXHIBIT B

FORM OF EXCHANGE NOTE

[Global Note Legend]

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.


MAGALLANES, INC.

[•]% [Floating Rate] Senior Notes Due [•]

CUSIP No.: [144A CUSIP: [•]] [Reg S CUSIP: [•]]

No. ISIN No.: [144A ISIN: [•]] [Reg S ISIN: [•]]

$            

MAGALLANES, INC., a Delaware corporation (the “Company”, which term includes any successor corporation), for value received promises to pay to CEDE & CO., or registered assigns, the principal sum of $             (the “Principal”) on [•].

Interest Payment Dates: [•] [, [•],[•]]15 and [•] (each, an “Interest Payment Date”), commencing on [•], 20[•].

Regular Record Dates: [•] [, [•],[•]]16 and [•] (each, a “Regular Record Date”).

Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place.

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.

 

MAGALLANES, INC.
By:    
 

Name:

 

Title:

 

15 

Insert for Floating Rate Notes

16 

Insert for Floating Rate Notes


This is one of the Notes of the series designated herein and referred to in the within-mentioned Indenture.

Dated: [•], 2022

 

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, Trustee
By:    
 

Name:

 

Title:


(REVERSE OF NOTE)

MAGALLANES, INC.

[•]% [Floating Rate] Senior Notes Due [•]

1. Interest.

MAGALLANES, INC., a Delaware corporation (the “Company”), promises to pay interest on the principal amount of this Note [at the rate per annum shown above]17[at a rate equivalent to Compounded SOFR (as defined in the Indenture), as determined on the applicable Interest Payment Determination Date (as defined in the Indenture), plus 1.78% per annum]18. Cash interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from March 15, 2022. The Company will pay interest [semi-annually]19[quarterly]20 in arrears on each Interest Payment Date, commencing [September 15, 2022]21[June 15, 2022]22. [Interest on this Note will be computed on the basis of a 360-day year of twelve 30-day months.]23[Interest on this Note will be computed on the basis of a 360-day year and the actual number of days in the Observation Period (as defined in the Indenture).]24 If any Interest Payment Date is not a Business Day, then the related payment of interest for such Interest Payment Date shall be paid on the next succeeding Business Day [unless such next succeeding Business Day is in the next succeeding calendar month, in which case the Company will make the interest payment on the immediately preceding Business Day, in each case]25 with the same force and effect as if made on such Interest Payment Date and no further interest shall accrue as a result of such delay.

 

17 

Insert for Fixed Rate Notes.

18 

Insert for Floating Rate Notes.

19 

Insert for Fixed Rate Notes.

20 

Insert for Floating Rate Notes.

21 

Insert for Fixed Rate Notes.

22 

Insert for Floating Rate Notes.

23 

Insert for Fixed Rate Notes.

24 

Insert for Floating Rate Notes.

25 

Insert for Floating Rate Notes.


The Company shall pay interest on overdue principal from time to time on demand at the rate borne by the Notes and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful.

2. Method of Payment.

The Company shall pay interest on the Notes (except defaulted interest) to the persons who are the registered Holders at the close of business on the Regular Record Date immediately preceding the Interest Payment Date notwithstanding any transfer or exchange of such Note subsequent to such Regular Record Date and prior to such Interest Payment Date. Holders must surrender Notes to the Trustee to collect principal payments. The Company shall pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts (“U.S. Legal Tender”). Payment of principal of (and premium, if any) and any such interest on this Note will be made at the Corporate Trust Office of the Trustee or at any other office or agency designated by the Company for such purpose; provided that at the option of the Company payment of interest may be made by check mailed to the address of the Holder entitled thereto as such address appears in the Note Register. However, the payments of interest, and any portion of the principal (other than interest payable at maturity or on any redemption or repayment date or the final payment of principal) shall be made by the Paying Agent, upon receipt from the Company of immediately available funds by 12:30 p.m., New York City time (or such other time as may be agreed to between the Company and the Paying Agent or the Company), directly to a Holder (by Federal funds wire transfer or otherwise) if the Holder has delivered written instructions to the Trustee 15 days prior to such payment date requesting that such payment will be so made and designating the bank account to which such payments shall be so made and in the case of payments of principal surrenders the same to the Trustee in exchange for a Note or Notes aggregating the same principal amount as the unredeemed principal amount of the Notes surrendered.

3. Paying Agent.

Initially, U.S. Bank Trust Company, National Association (the “Trustee”) will act as Paying Agent. The Company may change any Paying Agent without notice to the Holders.

4. Indenture.

The Company issued the Notes under an Indenture, dated as of March 15, 2022 (the “Indenture”), among the Company, the Parent Guarantor and the Trustee. Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) (the “TIA”), as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and the TIA for a statement of them.

The Indenture imposes certain limitations on the incurrence of liens and certain sale and leaseback transactions and limits the Company’s ability to consolidate, merge, convey, transfer or lease its properties and assets substantially as an entirety. To the extent the terms of the Indenture and this Note are inconsistent, the terms of the Indenture shall govern.


5. Optional Redemption.

[The Notes are redeemable, other than in connection with a Special Mandatory Redemption, in whole or in part, at the option of the Company, at any time and from time to time, at the Redemption Price described in the Indenture.]26 [The Notes are redeemable, other than in connection with a Special Mandatory Redemption, in whole or in part, at the Company’s option, at any time after the No Call Date, at the Redemption Price described in the Indenture.] 27 [The Notes are not redeemable at the Company’s option.] 28

6. Change of Control Offer to Repurchase.

If a Change of Control Triggering Event (as defined in the Indenture) occurs, unless the Company has exercised its right to redeem the Notes, Holders of the Notes will have the right to require the Company to repurchase all or a portion of their Notes pursuant to the offer described in the Indenture at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of repurchase, subject to the rights of Holders of Notes on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date.

7. Denominations; Transfer; Exchange.

The Notes are in registered form, without coupons, in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. A Holder shall register the transfer of or exchange of Notes in accordance with the Indenture. The Company may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Company need not issue, authenticate, register the transfer of or exchange any Notes or portions thereof for a period of 15 days before such series is selected for redemption, nor need the Company register the transfer or exchange of any Note selected for redemption in whole or in part.

8. Persons Deemed Owners.

The registered Holder of a Note shall be treated as the owner of it for all purposes.

9. Unclaimed Funds.

If funds for the payment of principal or interest remain unclaimed for two years, the Trustee and the Paying Agent will repay the funds to the Company or the Parent Guarantor at its written request. After that, all liability of the Trustee and such Paying Agent with respect to such funds shall cease.

 

26 

Omit with respect to the Spinco Debt Securities and the Floating Rate Notes.

27 

Include for the 2032 Notes, the 2052 Notes and the 2062 Notes (“Spinco Debt Securities”).

28 

Insert with respect to the Floating Rate Notes.


10. Legal Defeasance and Covenant Defeasance.

The Company may be discharged from its obligations under the Notes and under the Indenture with respect to the Notes except for certain provisions thereof, and may be discharged from obligations to comply with certain covenants contained in the Notes and in the Indenture with respect to the Notes, in each case upon satisfaction of certain conditions specified in the Indenture.

11. Amendment; Supplement; Waiver.

Subject to certain exceptions, the Notes and the provisions of the Indenture relating to the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes of all series then outstanding affected by such amendment or supplement (voting as one class), and any existing Default or Event of Default or compliance with certain provisions may be waived with the consent of the Holders of a majority in aggregate principal amount of all the Notes of such series, each series voting as a separate class, (or of all the Notes, as the case may be, voting as a single class) then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture and the Notes to, among other things, cure any ambiguity, omission, mistake, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, or make any other change that does not adversely affect the rights of any Holder of the Notes in any material respect (as determined in good faith by the Company).

12. Defaults and Remedies.

If an Event of Default (other than certain bankruptcy Events of Default with respect to the Company, the Parent Guarantor or any Subsidiary Guarantor) occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Notes of this series then outstanding (voting as a separate class), except as otherwise provided in the Indenture, may declare all of the Notes to be due and payable immediately in the manner and with the effect provided in the Indenture. If a bankruptcy Event of Default with respect to the Company, the Parent Guarantor or any Subsidiary Guarantor occurs and is continuing, the entire principal amount of the Notes then outstanding and interest accrued thereon, if any, shall immediately become due and payable. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has received indemnity satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of certain continuing Defaults or Events of Default if it determines that withholding notice is in their interest.


13. Trustee Dealings with Company.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company as if it were not the Trustee.

14. No Recourse Against Others.

No stockholder, director, officer, employee, member or incorporator, as such, of the Company, the Parent Guarantor, any Subsidiary Guarantor or any successor Person thereof shall have any liability for any obligation under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes.

15. Authentication.

This Note shall not be valid until the Trustee manually signs the certificate of authentication on this Note.

16. Abbreviations and Defined Terms.

Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

17. CUSIP Numbers.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon.

18. Governing Law.

The laws of the State of New York shall govern the Indenture and this Note thereof.


ASSIGNMENT FORM

I or we assign and transfer this Note to

 

                                                     

(Print or type name, address and zip code of assignee or transferee)

 

                                                     

(Insert Social Security or other identifying number of assignee or transferee)

and irrevocably appoint        agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.

Dated:                                   

Signed:                                 

(Signed exactly as name appears on the other

side of this Note)

Signature

Guarantee:                           

Participant in a recognized Signature Guarantee Medallion Program (or

other signature guarantor program reasonably acceptable to the Trustee)


OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company pursuant to Section 3.03 of the Indenture, check the box☐.

If you want to elect to have only part of this Note purchased by the Company pursuant to Section 3.03 of the Indenture, state the amount you elect to have purchased (must be integral multiples of $1,000):

$

Dated:                                   

Signed:                                 

(Signed exactly as name appears on the other

side of this Note)

Signature

Guarantee:                           

Participant in a recognized Signature Guarantee Medallion Program (or

other signature guarantor program reasonably acceptable to the Trustee)


EXHIBIT C

Form of Regulation S Certificate

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION

[address]

Attention: 29

 

  Re:

MAGALLANES, INC (the “Company”)

[    ]% [Floating Rate] Senior Notes due [    ], 20[    ] (the “Notes”)

Ladies and Gentlemen:

In connection with our proposed sale of $________ aggregate principal amount of Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S (“Regulation S”) under the Securities Act of 1933, as amended (the “Securities Act”), and accordingly, we hereby certify as follows:

1. The offer of the Notes was not made to a person in the United States (unless such person or the account held by it for which it is acting is excluded from the definition of “U.S. person” pursuant to Rule 902(k) of Regulation S under the circumstances described in Rule 902(h)(3) of Regulation S) or specifically targeted at an identifiable group of U.S. citizens abroad.

2. Either (a) at the time the buy order was originated, the buyer was outside the United States or we and any person acting on our behalf reasonably believed that the buyer was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market, and neither we nor any person acting on our behalf knows that the transaction was pre-arranged with a buyer in the United States.

3. No directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(a)(2) or Rule 904(a)(2) of Regulation S, as applicable.

4. The proposed transfer of Notes is not part of a plan or scheme to evade the registration requirements of the Securities Act.

5. If we are a dealer or a person receiving a selling concession or other fee or remuneration in respect of the Notes, and the proposed transfer takes place before end of the distribution compliance period under Regulation S, or we are an officer or director of the Company or a distributor, we certify that the proposed transfer is being made in accordance with the provisions of Rules 903 and 904 of Regulation S.

6. If the proposed transfer takes place before the end of the distribution compliance period under Regulation S, the beneficial interest in the Notes so transferred will be held immediately thereafter through Euroclear (as defined in such Indenture) or Clearstream (as defined in such Indenture).

 

29 

Insert successor address or Trustee, as applicable.


7. We have advised the transferee of the transfer restrictions applicable to the Notes.

You, the Company, and counsel for the Company are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S.

 

Very truly yours,

[NAME OF SELLER]
By:    
  Name:
  Title:
  Address:

Date of this Certificate: _________________, 20__


Exhibit D

Form of Supplemental Indenture in Respect of Guarantees

SUPPLEMENTAL INDENTURE, dated as of [_________] (this “Supplemental Indenture”), among [name of Guarantor(s)] (the “[Parent] [Subsidiary] Guarantor”), [name of Company] (the “Company”), and each other then-existing Parent Guarantor or Subsidiary Guarantor under the Indenture referred to below (the “Existing Guarantors”), and [name of Trustee], as Trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H:

WHEREAS, the Company, AT&T Inc., as Parent Guarantor, and the Trustee have heretofore become parties to an Indenture, dated as of March 15, 2022 (as amended, supplemented, waived or otherwise modified, the “Indenture”), providing for the issuance of Notes;

WHEREAS, Section [_________] of the Indenture provides that the Company is required to cause the [Parent] [Subsidiary] Guarantors to execute and deliver to the Trustee a supplemental indenture pursuant to which the [Parent] [Subsidiary] Guarantors shall guarantee the due and punctual payment of the principal of and any premium and interest on such Note, when and as the same shall become due and payable in accordance with the terms of such Note and the Indenture pursuant to a Guarantee on the terms and conditions set forth herein and in Article XI of the Indenture;

WHEREAS, each [Parent] [Subsidiary] Guarantor desires to enter into such supplemental indenture for good and valuable consideration, including substantial economic benefit in that the financial performance and condition of such [Parent] [Subsidiary] Guarantor is dependent on the financial performance and condition of the Company, and the obligations hereunder of which such [Parent] [Subsidiary] Guarantor has guaranteed; and

WHEREAS, pursuant to Section 9.01 of the Indenture, the parties hereto are authorized to execute and deliver this Supplemental Indenture to amend the Indenture, without the consent of any Holder;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the [Parent] [Subsidiary] Guarantors, the Company, the Existing Guarantors and the Trustee mutually covenant and agree for the benefit of the Holders of the Notes as follows:

1. Defined Terms. As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.

2. Agreement to Guarantee. [The][Each] [Parent] [Subsidiary] Guarantor hereby agrees, jointly and severally with [all] [any] other [Parent] [Subsidiary] Guarantors and fully and unconditionally, to guarantee the due and punctual payment of the principal of and any premium and interest on the Notes, when and as the same shall become due and payable in accordance with the terms of such Note and this Indenture on the terms and subject to the conditions set forth in Article XI of the Indenture and to be bound by (and shall be entitled to the benefits of) all other applicable provisions of the Indenture as a [Parent] [Subsidiary] Guarantor.


3. Termination, Release and Discharge. [The][Each] [Parent] [Subsidiary] Guarantor’s Guarantee shall terminate and be of no further force or effect, and [the][each] [Parent] [Subsidiary] Guarantor shall be released and discharged from all obligations in respect of such [Parent] [Subsidiary] Guarantee, as and when provided in Section 11.05 of the Indenture.

4. Parties. Nothing in this Supplemental Indenture is intended or shall be construed to give any Person, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of [the][each] [Parent] [Subsidiary] Guarantor’s Guarantee or any provision contained herein or in Article XI of the Indenture.

5. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL INDENTURE.

6. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture or as to the accuracy of the recitals to this Supplemental Indenture.

7. Trustee Makes No Representation. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the [Parent] [Subsidiary] Guarantor.

8. Counterparts. The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile, PDF or other electronic transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile, PDF or other electronic methods shall be deemed to be their original signatures for all purposes.


9. Headings. The section headings herein are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.


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

 

[NAME OF GUARANTOR(S)],
as [Parent] [Subsidiary] Guarantor
By:    
Name:
Title:
[NAME OF COMPANY]
By:    
  Name:
  Title:
[NAME OF TRUSTEE],
as Trustee
By:    
  Name:
  Title:

Exhibit 4.4

EXECUTION VERSION

First Supplemental Indenture

FIRST SUPPLEMENTAL INDENTURE, dated as of April 8, 2022 (this “Supplemental Indenture”), among Warner Bros. Discovery, Inc., a Delaware corporation (the “Parent Guarantor”), Discovery Communications, LLC (“DCL”), Scripps Networks Interactive, Inc., an Ohio corporation (“Scripps”, and together with DCL, the “Subsidiary Guarantors” and each a “Subsidiary Guarantor”), Magallanes, Inc. (the “Company”), and U.S. Bank Trust Company, National Association, as Trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H:

WHEREAS, the Company, AT&T Inc., as Parent Guarantor, and the Trustee have heretofore become parties to an Indenture, dated as of March 15, 2022 (as amended, supplemented, waived or otherwise modified, the “Indenture”), providing for the issuance of Notes;

WHEREAS, Section 11.05 of the Indenture provides that the Company is required to cause the Parent Guarantor and the Subsidiary Guarantors to execute and deliver to the Trustee a supplemental indenture pursuant to which the Parent Guarantor and the Subsidiary Guarantors shall guarantee the due and punctual payment of the principal of and any premium and interest on such Notes, when and as the same shall become due and payable in accordance with the terms of such Notes and the Indenture pursuant to a Guarantee on the terms and conditions set forth herein and in Article XI of the Indenture;

WHEREAS, the Parent Guarantor and each Subsidiary Guarantor desires to enter into such supplemental indenture for good and valuable consideration, including substantial economic benefit in that the financial performance and condition of such Parent Guarantor or Subsidiary Guarantor is dependent on the financial performance and condition of the Company, and the obligations hereunder of which such Parent Guarantor or Subsidiary Guarantor has guaranteed; and

WHEREAS, pursuant to Section 9.01 of the Indenture, the parties hereto are authorized to execute and deliver this Supplemental Indenture to amend the Indenture, without the consent of any Holder;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Parent Guarantor and the Subsidiary Guarantors, the Company and the Trustee mutually covenant and agree for the benefit of the Holders of the Notes as follows:

1. Defined Terms. As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.


2. Agreement to Guarantee. The Parent Guarantor and each Subsidiary Guarantor each hereby agrees, jointly and severally and fully and unconditionally, to guarantee the due and punctual payment of the principal of and any premium and interest on the Notes, when and as the same shall become due and payable in accordance with the terms of such Notes and this Indenture on the terms and subject to the conditions set forth in Article XI of the Indenture and to be bound by (and shall be entitled to the benefits of) all other applicable provisions of the Indenture as a Parent Guarantor or as a Subsidiary Guarantor, as applicable.

3. Termination, Release and Discharge. The Parent Guarantor’s Guarantee and each Subsidiary Guarantor’s Guarantee, as applicable, shall terminate and be of no further force or effect, and the Parent Guarantor or such Subsidiary Guarantor, as applicable, shall be released and discharged from all obligations in respect of such Parent Guarantee or Subsidiary Guarantee, as applicable, as and when provided in Section 11.05 of the Indenture.

4. Parties. Nothing in this Supplemental Indenture is intended or shall be construed to give any Person, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of the Parent Guarantor’s Guarantee or any Subsidiary Guarantor’s Guarantee or any provision contained herein or in Article XI of the Indenture.

5. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL INDENTURE.

6. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture or as to the accuracy of the recitals to this Supplemental Indenture.

7. Trustee Makes No Representation. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Parent Guarantor and the Subsidiary Guarantors.

8. Counterparts. The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile, PDF or other electronic transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile, PDF or other electronic methods shall be deemed to be their original signatures for all purposes.


9. Headings. The section headings herein are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.


EXECUTION VERSION

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

 

WARNER BROS. DISCOVERY, INC.,
as Parent Guarantor
By:  

/s/ Fraser Woodford

Name:   Fraser Woodford
Title:   Executive Vice President, Treasury
  and Corporate Finance
DISCOVERY COMMUNICATIONS, LLC,
as Subsidiary Guarantor
By:  

/s/ Fraser Woodford

Name:   Fraser Woodford
Title:   Executive Vice President, Treasury
  and Corporate Finance
SCRIPPS NETWORKS INTERACTIVE, INC.,
as Subsidiary Guarantor
By:  

/s/ Fraser Woodford

Name:   Fraser Woodford
Title:   Executive Vice President, Treasury
  and Corporate Finance
MAGALLANES, INC.
By:  

/s/ Fraser Woodford

Name:   Fraser Woodford
Title:   Executive Vice President, Treasury
  and Corporate Finance

[Signature page to First Supplemental Indenture]


U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
By:  

/s/ Karen R. Beard

  Name: Karen R. Beard
  Title:   Vice President

[Signature page to First Supplemental Indenture]

Exhibit 4.5

Execution Version

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT dated March 15, 2022 (this “Agreement”) is entered into by and among Magallanes, Inc., a Delaware corporation (the “Company”), and J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC as representatives of the several initial purchasers listed in Schedule 1-A to the Purchase Agreement (defined below) (collectively, the “Initial Purchasers”).

The Company, AT&T and the Initial Purchasers are parties to the Purchase Agreement dated March 9, 2022 (the “Purchase Agreement”), pursuant to which (i) the Company sold to the several Initial Purchasers $1,750,000,000 aggregate principal amount of its 3.428% Senior Notes due 2024, $500,000,000 aggregate principal amount of its 3.528% Senior Notes due 2024, $1,750,000,000 aggregate principal amount of its 3.638% Senior Notes due 2025, $500,000,000 aggregate principal amount of its 3.788% Senior Notes due 2025, $4,000,000,000 aggregate principal amount of its 3.755% Senior Notes due 2027, $1,500,000,000 aggregate principal amount of its 4.054% Senior Notes due 2029, $4,500,000,000 aggregate principal amount of its 5.050% Senior Notes due 2042, $5,000,000,000 aggregate principal amount of its 5.141% Senior Notes due 2052 and $500,000,000 aggregate principal amount of its Floating Rate Senior Notes due 2024 (collectively, the “New Money Securities”) and (ii) the selling securityholders listed in Schedule 2-A to the Purchase Agreement (the “Selling Securityholders”) sold to the Initial Purchasers listed in Schedule 1-B to the Purchase Agreement $5,000,000,000 aggregate principal amount of the Company’s 4.279% Senior Notes due 2032, $2,000,000,000 aggregate principal amount of the Company’s 5.141% Senior Notes due 2052 and $3,000,000,000 aggregate principal amount of the Company’s 5.391% Senior Notes due 2062 (the “Debt Exchange Securities” and, together with the New Money Securities, the “Securities”), which they acquired from AT&T in satisfaction of certain debt obligations owed by AT&T. The Securities are being issued pursuant to an indenture, dated the date hereof (the “Indenture”), among the Company, AT&T and U.S. Bank National Association, as trustee (the “Trustee”), and will initially be guaranteed on a senior unsecured basis by AT&T.

The Securities are being issued and sold in connection with the proposed merger (the “Merger”) of Drake Subsidiary, Inc. (“Merger Sub”), which is a wholly-owned subsidiary of Discovery, Inc. (“Discovery”), with and into the Company, which is a wholly-owned subsidiary of AT&T. The date of the consummation of the Merger is referred to herein as the “Merger Closing Date.” On the Merger Closing Date, each of Warner Bros. Discovery, Inc. (“WBD”), Discovery Communications, LLC (“DCL”), Scripps Networks Interactive, Inc. (“Scripps” and, together with Discovery and DCL, the “Initial Guarantors”) shall execute and deliver a joinder to this Agreement (the “Joinder Agreement”), pursuant to which each Initial Guarantor will agree to be bound by the terms and provisions of this Agreement as if it were an original party hereto. The representations, warranties, authorizations, acknowledgements, covenants and agreements of the Guarantors under this Agreement shall not become effective or enforceable until the execution and delivery by each of them of the Joinder Agreement, at which time such representations, warranties, authorizations, acknowledgements, covenants and agreements shall become effective and enforceable as if made on the date hereof pursuant to the terms of the Joinder Agreement.

 


As an inducement to Holders to purchase the Securities, the Company agrees with the Initial Purchasers, and upon execution of the Joinder Agreement each of the Initial Guarantors agrees with the Initial Purchasers, for the benefit of the Holders, to enter into this Agreement and provide for the registration rights set forth herein.

In consideration of the foregoing, the parties hereto agree as follows:

1. Definitions. As used in this Agreement, the following terms shall have the following meanings:

Additional Guarantor” shall mean any subsidiary of WBD that executes a Guarantee under the Indenture after the date of this Agreement.

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

Business Day” shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed.

Company” shall have the meaning set forth in the preamble and shall also include the Company’s successors.

Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

Exchange Dates” shall have the meaning set forth in Section 2(a)(ii) hereof.

Exchange Offer” shall mean the exchange offer by the Company and the Guarantors of Exchange Securities for Registrable Securities pursuant to Section 2(a) hereof.

Exchange Offer Registration” shall mean a registration under the Securities Act effected pursuant to Section 2(a) hereof.

Exchange Offer Registration Statement” shall mean an exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form) and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document incorporated by reference therein.

Exchange Securities” shall mean unsecured senior notes issued by the Company and guaranteed by the Guarantors under the Indenture containing terms identical to the Securities (except that the Exchange Securities will not be subject to restrictions on transfer or to any increase in annual interest rate for failure to comply with this Agreement) and to be offered to Holders of Securities in exchange for Securities pursuant to the Exchange Offer.

FINRA” means the Financial Industry Regulatory Authority, Inc.

 

2


Free Writing Prospectus” means each free writing prospectus (as defined in Rule 405 under the Securities Act) prepared by or on behalf of the Company or used or referred to by the Company in connection with the sale of the Securities or the Exchange Securities.

Guarantees” shall mean the guarantees of the Securities and guarantees of the Exchange Securities by the Guarantors under the Indenture.

Guarantors” shall mean the Initial Guarantors, any Additional Guarantors and any Guarantor’s successor that Guarantees the Securities; provided, however, that a Guarantor shall no longer be bound by the terms and provisions of this Agreement at such time as such Guarantor ceases to guarantee the Securities.

Holders” shall mean the holders of Registrable Securities, and each of their successors, assigns and direct and indirect transferees who become owners of Registrable Securities under the Indenture; provided that, for purposes of Section 4 and Section 5 hereof, the term “Holders” shall include Participating Broker-Dealers.

Indemnified Person” shall have the meaning set forth in Section 5(c) hereof.

Indemnifying Person” shall have the meaning set forth in Section 5(c) hereof.

Indenture” shall have the meaning set forth in the preamble.

Initial Guarantors” shall have the meaning set forth in the preamble.

Initial Purchasers” shall have the meaning set forth in the preamble.

Inspector” shall have the meaning set forth in Section 3(a)(xiv) hereof.

Issuer Information” shall have the meaning set forth in Section 5(a) hereof.

Notice and Questionnaire” shall mean a notice of registration statement and selling security holder questionnaire distributed to a Holder by the Company upon receipt of a Shelf Request from such Holder.

Participating Broker-Dealers” shall have the meaning set forth in Section 4(a) hereof.

Participating Holder” shall mean any Holder of Registrable Securities that has returned a completed and signed Notice and Questionnaire to the Company in accordance with Section 2(b) hereof and any other information required in accordance with Section 3(b) hereof.

Person” shall mean an individual, partnership, limited liability company, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.

Prospectus” shall mean the prospectus included in, or, pursuant to the rules and regulations of the Securities Act, deemed a part of, a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to such prospectus, and in each case including any document incorporated by reference therein.

 

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Registrable Securities” shall mean the Securities; provided that the Securities shall cease to be Registrable Securities (i) when a Registration Statement with respect to such Securities has become effective under the Securities Act and such Securities have been exchanged or disposed of pursuant to such Registration Statement, (ii) when such Securities cease to be outstanding or (iii) except in the case of Securities that otherwise remain Registrable Securities and that are held by a Holder and that are ineligible to be exchanged in the Exchange Offer, when the Exchange Offer is consummated, in accordance with its terms.

Registration Default” shall mean the occurrence of any of the following: (i) the Exchange Offer is not completed on or prior to the Target Registration Date, (ii) the Shelf Registration Statement, if required pursuant to Section 2(b)(i) or Section 2(b)(ii) hereof, has not become effective on or prior to the Target Registration Date, (iii) if the Company receives a Shelf Request pursuant to Section 2(b)(iii), the Shelf Registration Statement required to be filed thereby has not become effective by the Target Registration Date, or (iv) the Shelf Registration Statement, if required by this Agreement, has become effective and thereafter ceases to be effective or the Prospectus contained therein ceases to be usable for its intended purpose without being succeeded promptly by a post-effective amendment to such Registration Statement that cures such failure and that is itself promptly declared effective, and such failure to remain effective or usable exists for more than 90 days (whether or not consecutive) in any 12-month period.

Registration Expenses” shall mean any and all expenses incident to performance of or compliance by the Company and the Guarantors with this Agreement, including without limitation: (i) all SEC, stock exchange or FINRA registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws (including reasonable fees and disbursements of counsel for any Underwriters or Holders in connection with blue sky qualification of any Exchange Securities or Registrable Securities), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus, any Free Writing Prospectus and any amendments or supplements thereto, any underwriting agreements, securities sales agreements or other similar agreements and any other documents relating to the performance of and compliance with this Agreement, (iv) all rating agency fees, (v) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws, (vi) the reasonable fees and disbursements of the Trustee and its counsel, (vii) the fees and disbursements of counsel for the Company and the Guarantors and, in the case of a Shelf Registration Statement, the reasonable fees and disbursements of one counsel for the Participating Holders (which counsel shall be selected by the Participating Holders holding a majority of the aggregate principal amount of Registrable Securities held by such Participating Holders and which counsel may also be counsel for the Initial Purchasers) and (viii) the fees and disbursements of the independent registered public accountants of the Company and the Guarantors, including the expenses of any special audits or “comfort” letters required by or incident to the performance of and compliance with this Agreement, but excluding fees and expenses of counsel to the Underwriters (other than fees and expenses set forth in clause (ii) above) or the Holders and underwriting discounts and commissions, brokerage commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder.

 

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Registration Statement” shall mean any registration statement of the Company and the Guarantors that covers any of the Exchange Securities or Registrable Securities pursuant to the provisions of this Agreement and all amendments and supplements to any such registration statement, including post-effective amendments, in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document incorporated by reference therein.

Scripps” shall have the meaning set forth in the preamble.

SEC” shall mean the United States Securities and Exchange Commission.

Securities” shall have the meaning set forth in the preamble.

Securities Act” shall mean the Securities Act of 1933, as amended from time to time.

Shelf Effectiveness Period” shall have the meaning set forth in Section 2(b) hereof.

Shelf Registration” shall mean a registration effected pursuant to Section 2(b) hereof.

Shelf Registration Statement” shall mean a “shelf” registration statement of the Company and the Guarantors, including an existing “shelf” registration statement designated by the Company and the Guarantors, that covers all or a portion of the Registrable Securities on an appropriate form under Rule 415 under the Securities Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document incorporated by reference therein.

Shelf Request” shall have the meaning set forth in Section 2(b) hereof.

Staff” shall mean the staff of the SEC.

Target Registration Date” shall mean the date that is the later of (i) July 15, 2023 and (ii) 365 days after the Merger Closing Date.

Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended from time to time.

Trustee” shall mean the trustee with respect to the Securities under the Indenture.

Underwriter” shall have the meaning set forth in Section 3(e) hereof.

Underwritten Offering” shall mean an offering in which Registrable Securities are sold to an Underwriter for reoffering to the public.

 

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2. Registration Under the Securities Act. (a) To the extent not prohibited by any applicable law or applicable interpretations of the Staff, the Company and the Guarantors shall use their commercially reasonable efforts to (x) cause to be filed an Exchange Offer Registration Statement covering an offer to the Holders to exchange all the Registrable Securities for Exchange Securities and (y) have such Registration Statement become and remain effective for a period ending on the earlier of (i) 120 days from the date on which the Exchange Offer Registration Statement is declared effective and (ii) the date on which no Broker-Dealer is required to deliver a prospectus in connection with market-making or other trading activities (as such period may be extended pursuant to Section 3(d) hereof). The Company and the Guarantors shall commence the Exchange Offer promptly after the Exchange Offer Registration Statement is declared effective by the SEC and use their commercially reasonable efforts to complete the Exchange Offer.

The Company and the Guarantors shall commence the Exchange Offer by delivering the related Prospectus, appropriate letters of transmittal and other accompanying documents to each Holder stating, in addition to such other disclosures as are required by applicable law, substantially the following:

(i) that the Exchange Offer is being made pursuant to this Agreement and that all Registrable Securities validly tendered and not properly withdrawn will be accepted for exchange;

(ii) the dates of acceptance for exchange (which shall be a period of at least 20 Business Days from the date such notice is mailed) (the “Exchange Dates”);

(iii) that any Registrable Security not tendered will remain outstanding and continue to accrue interest but will not retain any rights under this Agreement (including with respect to increases in annual interest rate), except as otherwise specified herein;

(iv) that any Holder electing to have a Registrable Security exchanged pursuant to the Exchange Offer will be required to (A) surrender such Registrable Security, together with the appropriate letters of transmittal, to the institution and at the address and in the manner specified in the notice, or (B) effect such exchange otherwise in compliance with the applicable procedures of the depositary for such Registrable Security, in each case prior to the close of business on the last Exchange Date; and

(v) that any Holder will be entitled to withdraw its election, not later than the close of business on the last Exchange Date, by (A) sending to the institution and at the address specified in the notice, a facsimile transmission or letter setting forth the name of such Holder, the principal amount of Registrable Securities delivered for exchange and a statement that such Holder is withdrawing its election to have such Securities exchanged or (B) effecting such withdrawal in compliance with the applicable procedures of the depositary for the Registrable Securities.

As a condition to participating in the Exchange Offer, a Holder will be required to represent to the Company and the Guarantors that (1) any Exchange Securities to be received by it will be acquired in the ordinary course of its business, (2) it is not engaged in, does not intend to engage in, and has no arrangement or understanding with any Person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Securities in violation of

 

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the provisions of the Securities Act, (3) it is not an “affiliate” (within the meaning of Rule 405 under the Securities Act) of the Company or any Guarantors and (4) if such Holder is a broker-dealer that will receive Exchange Securities for its own account in exchange for Registrable Securities that were acquired as a result of market-making or other trading activities, then such Holder will deliver a Prospectus (or, to the extent permitted by law, make available a Prospectus to purchasers) in connection with any resale of such Exchange Securities.

As soon as practicable after the last Exchange Date, the Company and the Guarantors shall:

(I) accept for exchange Registrable Securities or portions thereof validly tendered and not properly withdrawn pursuant to the Exchange Offer; and

(II) deliver, or cause to be delivered, to the Trustee for cancellation all Registrable Securities or portions thereof so accepted for exchange by the Company and issue, and cause the Trustee to promptly authenticate and deliver to each Holder, Exchange Securities equal in principal amount to the principal amount of the Registrable Securities tendered by such Holder.

The Company and the Guarantors shall use their commercially reasonable efforts to complete the Exchange Offer as provided above and shall comply with the applicable requirements of the Securities Act, the Exchange Act and other applicable laws and regulations in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions, other than that the Exchange Offer does not violate any applicable law or applicable interpretations of the Staff.

(b) In the event that (i) the Company and the Guarantors determine that the Exchange Offer Registration provided for in Section 2(a) hereof is not available or the Exchange Offer may not be completed because it would violate any applicable law or applicable interpretations of the Staff, (ii) the Exchange Offer is not for any other reason completed by the Target Registration Date or (iii) upon receipt of a written request (a “Shelf Request”) from any Holder representing that it holds Registrable Securities that are or were ineligible to be exchanged in the Exchange Offer, the Company and the Guarantors shall use their commercially reasonable efforts to cause to be filed as soon as practicable after such determination, date or Shelf Request, as the case may be, a Shelf Registration Statement providing for the sale of all the Registrable Securities by the Holders thereof and to have such Shelf Registration Statement become effective; provided that no Holder will be entitled to have any Registrable Securities included in any Shelf Registration Statement, or entitled to use the prospectus forming a part of such Shelf Registration Statement, until such Holder shall have delivered a completed and signed Notice and Questionnaire and provided such other information regarding such Holder to the Company as is contemplated by Section 3(b) hereof. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company and the Guarantors all information required to be disclosed in order to make the information previously furnished to the Company and the Guarantors by such Holder not materially misleading.

 

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In the event that the Company and the Guarantors are required to file a Shelf Registration Statement pursuant to clause (iii) of the preceding sentence, the Company and the Guarantors shall use their commercially reasonable efforts to file and have become effective both an Exchange Offer Registration Statement pursuant to Section 2(a) hereof with respect to all Registrable Securities and a Shelf Registration Statement (which may be a combined Registration Statement with the Exchange Offer Registration Statement) with respect to offers and sales of Registrable Securities held by the Holders after completion of the Exchange Offer.

The Company and the Guarantors agree to use their commercially reasonable efforts to keep the Shelf Registration Statement continuously effective until the earliest of (i) the time when such Registrable Securities covered by the Shelf Registration Statement can be sold pursuant to Rule 144 of the Securities Act without any limitations by non-affiliates of the Company and the Guarantors under clause (d) of Rule 144 of the Securities Act, (ii) the date on which all such Registrable Securities are disposed of in accordance with the Shelf Registration Statement and (iii) one year after the original effective date of the Shelf Registration Statement (the “Shelf Effectiveness Period”). The Company and the Guarantors further agree to supplement or amend the Shelf Registration Statement, the related Prospectus and any Free Writing Prospectus if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the Securities Act or by any other rules and regulations thereunder or if reasonably requested by a Holder of Registrable Securities with respect to information relating to such Holder, and to use their commercially reasonable efforts to cause any such amendment to become effective, if required, and such Shelf Registration Statement, Prospectus or Free Writing Prospectus, as the case may be, to become usable as soon as thereafter practicable. The Company and the Guarantors agree to furnish to the Participating Holders copies, upon request, of any such supplement or amendment promptly after its being used or filed with the SEC.

(c) The Company and the Guarantors shall pay all Registration Expenses in connection with any registration pursuant to Section 2(a) or Section 2(b) hereof. Each Holder shall pay all underwriting discounts and commissions, brokerage commissions and transfer taxes, if any, relating to the sale or disposition of such Holder’s Registrable Securities pursuant to the Shelf Registration Statement.

(d) An Exchange Offer Registration Statement pursuant to Section 2(a) hereof will not be deemed to have become effective unless it has been declared effective by the SEC. A Shelf Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective unless it has been declared effective by the SEC or is automatically effective upon filing with the SEC as provided by Rule 462 under the Securities Act.

If a Registration Default occurs, the interest rate on the Registrable Securities will be increased by (i) 0.25% per annum for the first 90-day period beginning on the day immediately following such Registration Default and (ii) an additional 0.25% per annum with respect to each subsequent 90-day period, in each case until and including the date such Registration Default ends, up to a maximum increase of 0.50% per annum. A Registration Default ends when the Securities cease to be Registrable Securities or, if earlier, (1) in the case of a Registration Default under clause (i) of the definition thereof, when the Exchange Offer is completed, (2) in the case of a Registration Default under clause (ii) or clause (iii) of the definition thereof, when the Shelf Registration Statement becomes effective or (3) in the case of a Registration Default under clause (iv) of the definition thereof, when the Shelf Registration Statement again becomes

 

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effective or the Prospectus again becomes usable. If at any time more than one Registration Default has occurred and is continuing, then, until the next date that there is no Registration Default, the increase in interest rate provided for by this paragraph shall apply as if there occurred a single Registration Default that begins on the date that the earliest such Registration Default occurred and ends on such next date that there is no Registration Default.

(e) Without limiting the remedies available to the Initial Purchasers and the Holders, the Company and the Guarantors acknowledge that any failure by the Company or the Guarantors to comply with their obligations under Section 2(a) and Section 2(b) hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company’s and the Guarantors’ obligations under Section 2(a) and Section 2(b) hereof; provided, however, that the parties hereto agree that the additional interest provided for in this Section 2 is intended to constitute the sole remedy for monetary damages in connection with any Registration Default.

3. Registration Procedures. (a) In connection with their obligations pursuant to Section 2(a) and Section 2(b) hereof, the Company and the Guarantors shall as expeditiously as possible:

(i) prepare and file with the SEC a Registration Statement on the appropriate form under the Securities Act, which form (A) shall be selected by the Company and the Guarantors, (B) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the Holders thereof and (C) shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith; and use their commercially reasonable efforts to cause such Registration Statement to become effective and remain effective for the applicable period in accordance with Section 2 hereof;

(ii) prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period in accordance with Section 2 hereof and cause each Prospectus to be supplemented by any required prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424 under the Securities Act; and keep each Prospectus current during the period described in Section 4(3) of and Rule 174 under the Securities Act that is applicable to transactions by brokers or dealers with respect to the Registrable Securities or Exchange Securities;

(iii) to the extent any Free Writing Prospectus is used, file with the SEC any Free Writing Prospectus that is required to be filed by the Company or the Guarantors with the SEC in accordance with the Securities Act and to retain any Free Writing Prospectus not required to be filed;

 

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(iv) in the case of a Shelf Registration, furnish to each Participating Holder, to counsel for the Initial Purchasers (if any Registrable Securities held by an Initial Purchaser are included in such Registration Statement), to counsel for such Participating Holders and to each Underwriter of an Underwritten Offering of Registrable Securities, if any, without charge, as many copies of each Prospectus, preliminary prospectus or Free Writing Prospectus, and any amendment or supplement thereto, as such Participating Holder, counsel or Underwriter may reasonably request in order to facilitate the sale or other disposition of the Registrable Securities thereunder; and, subject to Section 3(c) hereof, the Company and the Guarantors consent to the use of such Prospectus, preliminary prospectus or such Free Writing Prospectus and any amendment or supplement thereto in accordance with applicable law by each of the Participating Holders and any such Underwriters in connection with the offering and sale of the Registrable Securities covered by and in the manner described in such Prospectus, preliminary prospectus or such Free Writing Prospectus or any amendment or supplement thereto in accordance with applicable law;

(v) use their commercially reasonable efforts to register or qualify the Registrable Securities under all applicable state securities or blue sky laws of such jurisdictions as any Participating Holder shall reasonably request in writing by the time the applicable Registration Statement becomes effective; cooperate with such Participating Holders in connection with any filings required to be made with FINRA; and do any and all other acts and things that may be reasonably necessary or advisable to enable each Participating Holder to complete the disposition in each such jurisdiction of the Registrable Securities owned by such Participating Holder; provided that neither the Company nor any Guarantor shall be required to (1) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify but for the requirements of this Section 3(a)(v), (2) file any general consent to service of process in any such jurisdiction, (3) take any action that would subject it to the service of process in suits or to taxation in any jurisdiction where it is not then so subject or (4) make any change to its charter or by-laws or similar organizational documents;

(vi) notify counsel for the Initial Purchasers and, in the case of a Shelf Registration, notify each Participating Holder and counsel for such Participating Holders promptly and, if requested by any such Participating Holder or counsel, confirm such advice in writing (1) when a Registration Statement has become effective, when any post-effective amendment thereto has been filed and becomes effective, when any Free Writing Prospectus has been filed or any amendment or supplement to the Prospectus or any Free Writing Prospectus has been filed, (2) of any request by the SEC or any state securities authority for amendments and supplements to a Registration Statement, Prospectus or any Free Writing Prospectus or for additional information after the Registration Statement has become effective, (3) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, including the receipt by the Company of any notice of objection of the SEC to the use of a Shelf Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Securities Act, (4) if, between the applicable effective date of a Shelf Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Company or any Guarantor contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to an offering of such Registrable Securities cease to be true and correct in all material respects or if the Company or any Guarantor receives any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such

 

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purpose, (5) of the happening of any event during the period a Registration Statement is effective that makes any statement made in such Registration Statement or the related Prospectus or any Free Writing Prospectus untrue in any material respect or that requires the making of any changes in such Registration Statement or Prospectus or any Free Writing Prospectus in order to make the statements therein not misleading and (6) of any determination by the Company or any Guarantor that a post-effective amendment to a Registration Statement or any amendment or supplement to the Prospectus or any Free Writing Prospectus would be appropriate;

(vii) use their commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement or, in the case of a Shelf Registration, the resolution of any objection of the SEC pursuant to Rule 401(g)(2) under the Securities Act, including by filing, if necessary, an amendment to such Registration Statement on the proper form, at the earliest possible time and provide immediate notice to each Holder or Participating Holder of the withdrawal of any such order or such resolution;

(viii) in the case of a Shelf Registration, furnish to each Participating Holder, upon its request, without charge, at least one conformed copy of each Registration Statement and any post-effective amendment thereto (without any documents incorporated therein by reference or exhibits thereto, unless requested);

(ix) in the case of a Shelf Registration, cooperate with the Participating Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends and enable such Registrable Securities to be issued in such denominations and registered in such names (consistent with the provisions of the Indenture) as such Participating Holders may reasonably request at least one Business Day prior to the closing of any sale of Registrable Securities;

(x) subject to the Company’s right to, pursuant to Section 3(d), to suspend the disposition of Registrable Securities pursuant to a Registration Statement, upon the occurrence of any event contemplated by Section 3(a)(vi)(5) hereof, use their commercially reasonable efforts to prepare and file with the SEC a supplement or post-effective amendment to the applicable Exchange Offer Registration Statement or Shelf Registration Statement or the related Prospectus or any Free Writing Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered (or, to the extent permitted by law, made available) to purchasers of the Registrable Securities, such Prospectus or Free Writing Prospectus, as the case may be, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and the Company and the Guarantors shall notify the Participating Holders (in the case of a Shelf Registration Statement) and the Initial Purchasers and any Participating Broker-Dealers known to the Company (in the case of an Exchange Offer Registration Statement) to suspend use of the Prospectus or any Free Writing Prospectus as promptly as practicable after the occurrence of such an event, and such Participating Holders, such Participating Broker-Dealers and the Initial Purchasers, as applicable, hereby agree to suspend use of the Prospectus or any Free Writing Prospectus, as the case may be, until the Company and the Guarantors have amended or supplemented the Prospectus or the Free Writing Prospectus, as the case may be, to correct such misstatement or omission;

 

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(xi) a reasonable time prior to the filing of any Registration Statement, any Prospectus, any Free Writing Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus or a Free Writing Prospectus or of any document that is to be incorporated by reference into a Registration Statement, a Prospectus or a Free Writing Prospectus after initial filing of a Registration Statement, provide copies of such document to the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, to the Participating Holders and their counsel) and make such of the representatives of the Company and the Guarantors as shall be reasonably requested by the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Participating Holders or their counsel) available for discussion of such document; and the Company and the Guarantors shall not, at any time after initial filing of a Registration Statement, use or file any Prospectus, any Free Writing Prospectus, any amendment of or supplement to a Registration Statement or a Prospectus or a Free Writing Prospectus, or any document that is to be incorporated by reference into a Registration Statement, a Prospectus or a Free Writing Prospectus, of which the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, the Participating Holders and their counsel) shall not have previously been advised and furnished a copy or to which the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Participating Holders or their counsel) shall reasonably object;

(xii) obtain a CUSIP number for all Exchange Securities or Registrable Securities, as the case may be, not later than the initial effective date of a Registration Statement;

(xiii) cause the Indenture to be qualified under the Trust Indenture Act in connection with the registration of the Exchange Securities or Registrable Securities, as the case may be; cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and execute, and use their commercially reasonable efforts to cause the Trustee to execute, all documents as may be required to effect such changes and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner;

(xiv) in the case of a Shelf Registration, and subject to customary confidentiality agreements, make available for inspection, solely for due diligence purposes, by a representative of the Participating Holders (an “Inspector”), the managing underwriters, if any, participating in any disposition pursuant to such Shelf Registration Statement and any attorneys and accountants designated by such managing underwriter, at reasonable times and in a reasonable manner, all pertinent financial and other records, documents and properties of WBD and each of its subsidiaries that is a significant subsidiary within the meaning of such term as defined in Rule 1-02 of Regulation S-X of the SEC (the “Significant Subsidiaries”), and cause the respective officers, directors and employees of WBD and the Significant Subsidiaries to supply all information reasonably requested by any such Inspector, managing underwriter, attorney or accountant in connection with a Shelf Registration Statement;

(xv) if reasonably requested by any Participating Holder, promptly include in a Prospectus supplement or post-effective amendment such information with respect to such Participating Holder as such Participating Holder reasonably requests to be included therein and make all required filings of such Prospectus supplement or such post-effective amendment as soon as reasonably practicable after the Company has received notification of the matters to be so included in such filing; provided, that the Company shall not be required to make more than two such filings on behalf of the Participating Holders in any 30 day period;

 

 

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(xvi) in the case of a Shelf Registration, enter into such customary agreements and take all such other actions in connection therewith (including those reasonably requested by the Holders of a majority in principal amount of the Registrable Securities covered by the Shelf Registration Statement) that are necessary in order to expedite or facilitate the disposition of such Registrable Securities including, but not limited to, an Underwritten Offering and in such connection, (1) to the extent possible, make such representations and warranties to the Participating Holders and any Underwriters of such Registrable Securities with respect to the business of the Company and its subsidiaries and the Registration Statement, Prospectus, any Free Writing Prospectus and documents incorporated by reference or deemed incorporated by reference, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when requested, (2) solely with respect to an Underwritten Offering, obtain opinions of counsel to the Company and the Guarantors (which counsel and opinions shall be in form, scope and substance, shall be reasonably satisfactory to the Participating Holders and such Underwriters and their respective counsel) addressed to each Participating Holder and Underwriter of Registrable Securities, with customary limitations, assumptions and exclusions, and covering the matters customarily covered in opinions requested in underwritten offerings, (3) solely with respect to an Underwritten Offering, obtain “comfort” letters from the independent registered public accountants of the Company and the Guarantors (and, if necessary, any other registered public accountant of any subsidiary of Discovery, or of any business acquired by the Company or the Guarantors for which financial statements and financial data are or are required to be included in the Registration Statement) addressed to each Participating Holder (to the extent permitted by applicable professional standards) and Underwriter of Registrable Securities, such letters to be in customary form and covering matters of the type customarily covered in “comfort” letters in connection with underwritten offerings, including but not limited to financial information contained in any preliminary prospectus, Prospectus or Free Writing Prospectus and (4) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in principal amount of the Registrable Securities being sold or the Underwriters, and which are customarily delivered in underwritten offerings, to evidence the continued validity of the representations and warranties of the Company and the Guarantors made pursuant to clause (1) above and to evidence compliance with any customary conditions contained in an underwriting agreement; and

(xvii) so long as any Registrable Securities remain outstanding, cause each Additional Guarantor that, after the creation or acquisition by the Company of such Additional Guarantor, guarantees the Securities in accordance with the Indenture to execute a Joinder Agreement and to deliver such Joinder Agreement to the Initial Purchasers no later than ten Business Days following the execution thereof.

(b) In the case of a Shelf Registration Statement, the Company may require each Holder of Registrable Securities to furnish to the Company a Notice and Questionnaire and such other information regarding such Holder and the proposed disposition by such Holder of such Registrable Securities as the Company and the Guarantors may from time to time reasonably request in writing. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company and the Guarantors all information required to be disclosed in order to make the information previously furnished to the Company and the Guarantors by such Holder not materially misleading.

 

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(c) Each Participating Holder agrees that, upon receipt of any notice from the Company and the Guarantors of the happening of any event of the kind described in Section 3(a)(vi)(3) or Section 3(a)(vi)(5) hereof, such Participating Holder will forthwith discontinue disposition of Registrable Securities pursuant to the Shelf Registration Statement until such Participating Holder’s receipt of the copies of the supplemented or amended Prospectus and any Free Writing Prospectus contemplated by Section 3(a)(x) hereof and, if so directed by the Company and the Guarantors, such Participating Holder will deliver to the Company and the Guarantors all copies in its possession, other than permanent file copies then in such Participating Holder’s possession, of the Prospectus and any Free Writing Prospectus covering such Registrable Securities that is current at the time of receipt of such notice.

(d) If the Company and the Guarantors shall give any notice to suspend the disposition of Registrable Securities pursuant to a Registration Statement, the Company and the Guarantors shall extend the period during which such Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date when the Holders of such Registrable Securities shall have received copies of the supplemented or amended Prospectus or any Free Writing Prospectus necessary to resume such dispositions. Each Participating Holder agrees to hold in confidence the fact that it has received such notice and any communication related thereto; provided, however, that the Company and the Guarantors shall not give reasons for such suspension should it constitute material non-public information.

(e) The Participating Holders who desire to do so may sell such Registrable Securities in an Underwritten Offering. In any such Underwritten Offering, the investment bank or investment banks and manager or managers (each an “Underwriter”) that will administer the offering will be selected by the Holders of a majority in principal amount of the Registrable Securities included in such offering, provided, that any such Underwriters shall be reasonably satisfactory to the Company.

4. Participation of Broker-Dealers in Exchange Offer. (a) The Staff has taken the position that any broker-dealer that receives Exchange Securities for its own account in the Exchange Offer in exchange for Securities that were acquired by such broker-dealer as a result of market-making or other trading activities (a “Participating Broker-Dealer”) may be deemed to be an “underwriter” within the meaning of the Securities Act and must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Securities.

The Company and the Guarantors understand that it is the Staff’s position that if the Prospectus contained in the Exchange Offer Registration Statement includes a plan of distribution containing a statement to the above effect and the means by which Participating Broker-Dealers may resell the Exchange Securities, without naming the Participating Broker-Dealers or specifying the amount of Exchange Securities owned by them, such Prospectus may be delivered by Participating Broker-Dealers (or, to the extent permitted by law, made available to purchasers) to satisfy their prospectus delivery obligation under the Securities Act in connection with resales of Exchange Securities for their own accounts, so long as the Prospectus otherwise meets the requirements of the Securities Act.

 

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(b) In light of the above, and notwithstanding the other provisions of this Agreement, the Company and the Guarantors agree to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement for a period ending on the earlier of (i) 90 days from the date on which the Exchange Offer Registration Statement is declared effective and (ii) the date on which no Broker-Dealer is required to deliver a prospectus in connection with market-making or other trading activities (as such period may be extended pursuant to Section 3(d) hereof), in order to expedite or facilitate the disposition of any Exchange Securities by Participating Broker-Dealers consistent with the positions of the Staff recited in Section 4(a) above. The Company and the Guarantors further agree that Participating Broker-Dealers shall be authorized to deliver such Prospectus (or, to the extent permitted by law, make available) during such period in connection with the resales contemplated by this Section 4.

(c) The Initial Purchasers shall have no liability to the Company, any Guarantor or any Holder with respect to any request that they may make pursuant to Section 4(b) hereof.

5. Indemnification and Contribution. (a) The Company and the Guarantors (together, the “Indemnifying Party”) jointly and severally agree to indemnify and hold harmless the Initial Purchasers and each Holder, their respective affiliates, directors, officers and each Person, if any, who controls any Initial Purchaser or any Holder within the meaning of Section 15 of the Securities Act, or Section 20 of the Exchange Act (the Initial Purchasers, Holders and each such Person being an “Indemnified Party”) as follows:

(i) from and against any and all losses, claims, damages and liabilities (including, without limitation, reasonable legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon (1) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading or (2) any untrue statement or alleged untrue statement of a material fact contained in any Prospectus, any Free Writing Prospectus or any “issuer information” (“Issuer Information”) filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any of the documents referred to therein, furnished or made available by the Indemnifying Party or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to the Initial Purchasers or information relating to any Holder furnished to the Company in writing (including, without limitation, a Notice and Questionnaire of such Holder) through the Initial Purchasers or any selling Holder, respectively, expressly for use therein.

 

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(ii) from and against any and all loss, liability, claim, damage and reasonable expenses, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever related to, arising out of or based on any matter for which the Indemnified Party is entitled to indemnification pursuant to subparagraph (i) above, provided, except as specified in Section 5(g) below, any such settlement shall be effected with the written consent of the Indemnifying Party, which shall not be unreasonably withheld, delayed or conditioned; and

(iii) from and against any and all reasonable expense, as incurred (including the reasonable fees and disbursements of counsel chosen by the Initial Purchasers or Holder, as applicable), incurred in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever related to, arising out of or based on any matter for which the Indemnified Party is entitled to indemnification pursuant to subparagraph (i) or (ii) above.

(b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantors, the Initial Purchasers and the other selling Holders, the directors of the Company and the Guarantors, each officer of the Company and the Guarantors who signed the Registration Statement and each Person, if any, who controls the Company, the Guarantors, any Initial Purchaser and any other selling Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in subsection (a)(i) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Holder furnished to the Company in writing by such Holder expressly for use in any Registration Statement, any Prospectus and any Free Writing Prospectus;

(c) Promptly after receipt by an Indemnified Party of written notice of any claim or commencement of an action or proceeding with respect to which indemnification may be sought hereunder, such Indemnified Party shall notify the Indemnifying Party in writing of such claim or of the commencement of such action, claim or proceeding, but failure so to notify the Indemnifying Party will not relieve the Indemnifying Party from any liability which it may have hereunder to such Indemnified Party, and in any event will not relieve the Indemnifying Party from any other liability that it may have to such Indemnified Party. In the event of any such claim, action or proceeding, if such Indemnified Party shall notify the Indemnifying Party of the commencement thereof, the Indemnifying Party shall assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Party, and shall pay the fees and reasonable expenses of such counsel; provided, however, (i) if the Indemnifying Party fails to assume such defense in a timely manner or (ii) the Indemnified Party shall have concluded that there may be one or more legal defenses available to it which are different from or additional to those available to the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense of such action on behalf of the Indemnified Party, it being understood, however, that the Indemnifying Party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to one local counsel in any jurisdiction) for the Indemnified Party.

 

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(d) In the event an Indemnified Party is requested or required to appear as a witness in any action brought by or on behalf of or against the Indemnifying Party, the Indemnifying Party agrees to reimburse the Indemnified Party for all reasonable expenses as incurred by it in connection with such Indemnified Party’s appearing and preparing to appear as such a witness, including, without limitation, the reasonable fees and disbursements of its legal counsel, and to compensate the Indemnified Party in an amount to be mutually agreed upon. In addition, the Indemnifying Party agrees to promptly compensate the Indemnified Party in an amount to be mutually agreed upon per employee per day for each day that the Indemnified Party’s officer or employee is involved in preparation, discovery or testimony pertaining to any litigation, discovery or investigation in connection with this Agreement.

(e) If the indemnification provided for in Section 5(a) and (b) hereof is for any reason unavailable to or insufficient to hold harmless an Indemnified Party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then the Indemnifying Party agrees to contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such Indemnified Party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits to the Indemnifying Party from the offering of the Securities and the Exchange Securities on the one hand and to the Holders from receiving Securities or Exchange Securities registered under the Securities Act on the other hand or (ii) if, but only if, the allocation provided by clause (i) is for any reason held unenforceable, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also 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 losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits to the Indemnifying Party on the one hand and the Indemnified Party on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged 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 Company, the Guarantors, the Initial Purchasers and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 5(e) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 5(e). The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an Indemnified Party and referred to above in this Section 5(e) shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 5, in no event shall a Holder be required to contribute any amount in excess of the amount by which the total price at which the Securities or Exchange Securities sold by such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

 

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(f) The Indemnifying Party agrees that, without the Indemnified Party’s prior written consent, it will not settle, compromise or consent to the entry of any judgment in or with respect to any pending or threatened claim, action, investigation or proceeding in respect of which indemnification or contribution could be sought under this Section 5 (whether or not the Indemnified Party is an actual or potential party to such claim, action, investigation or proceeding), unless such settlement, compromise or consent (i) includes an unconditional release of each Indemnified Party from all liability arising out of such claim, action, investigation or proceeding and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of an Indemnified Party.

(g) An Indemnifying Party shall not be liable under this Section 5 to any Indemnified Party regarding any settlement or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, investigation or proceeding in respect of which indemnification or contribution may be sought under this Section 5 (whether or not the Indemnified Parties are actual or potential parties to such claim, action, investigation or proceeding) unless such settlement, compromise or consent is consented to by such Indemnifying Party, which consent shall not be unreasonably withheld.

(h) The rights of any Indemnified Party under this Section shall be in addition to and not in limitation of any rights that any Indemnified Party may have at common law or otherwise.

(i) The indemnity and contribution provisions contained in this Section 5 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Initial Purchaser or any Holder or any Person controlling any Initial Purchaser or any Holder, or by or on behalf of the Company or the Guarantors or the officers or directors of or any Person controlling the Company or the Guarantors, (iii) acceptance of any of the Exchange Securities and (iv) any sale of Registrable Securities pursuant to a Shelf Registration Statement.

6. General.

(a) No Inconsistent Agreements. The Company and the Guarantors represent, warrant and agree that (i) the rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of any other outstanding securities issued or guaranteed by the Company or any Guarantors under any other agreement and (ii) neither the Company nor any Guarantor has entered into, or on or after the date of this Agreement will enter into, any agreement that is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof.

(b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company and the Guarantors have obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or consent; provided that no amendment, modification, supplement, waiver or consent to any departure from the provisions of Section 5 hereof shall be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder. Any amendments, modifications, supplements, waivers or consents pursuant to this Section 6(b) shall be by a writing executed by each of the parties hereto.

 

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(c) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, facsimile transmission, electronic transmission or any courier guaranteeing overnight delivery (i) if to a Holder, at the most current address given by such Holder to the Company by means of a notice given in accordance with the provisions of this Section 6(c); (ii) if to the Company and the Guarantors, initially at the Company’s address set forth in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c); and (iii) if to the Initial Purchasers, at their respective addresses as provided in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c). All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged, if telecopied or electronically transmitted; and on the next Business Day if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture.

(d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Registrable Securities in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all the terms of this Agreement, and by taking and holding such Registrable Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits hereof. No Initial Purchaser (in its capacity as Initial Purchaser) shall have any liability or obligation to the Company or the Guarantors with respect to any failure by a Holder to comply with, or any breach by any Holder of, any of the obligations of such Holder under this Agreement.

(e) Third-Party Beneficiaries. Each Holder shall be a third-party beneficiary to the agreements made hereunder between the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights or the rights of other Holders hereunder.

(f) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement or any document to be signed in connection with this Agreement shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions contemplated hereunder by electronic means.

 

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(g) Headings. The headings in this Agreement are for convenience of reference only, are not a part of this Agreement and shall not limit or otherwise affect the meaning hereof.

(h) Governing Law. This Agreement, and any claim, controversy or dispute arising under or related to this Agreement, shall be governed by, and construed in accordance with, the laws of the State of New York.

(i) Entire Agreement; Severability. This Agreement contains the entire agreement between the parties relating to the subject matter hereof and supersedes all oral statements and prior writings with respect thereto. If any term, provision, covenant or restriction contained in this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable or against public policy, the remainder of the terms, provisions, covenants and restrictions contained herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated. The Company, the Guarantors and the Initial Purchasers shall endeavor in good faith negotiations to replace the invalid, void or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, void or unenforceable provisions.

 

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

 

MAGALLANES, INC.
By:  

/s/ Andrew B. Keiser

Name:   Andrew B. Keiser
Title:   Vice President and Assistant
  Treasurer of Magallanes, Inc. and
  AT&T Inc.

[Signature Page to Registration Rights Agreement]


Confirmed and accepted as of the date first above written:

 

J.P. MORGAN SECURITIES LLC
By:  

/s/ Som Bhattacharyya

Name:   Som Bhattacharyya
Title:   Executive Director
GOLDMAN SACHS & CO. LLC
By:  

/s/ Yasmine Coupal

Name:   Yasmine Coupal
Title:   Managing Director

[Signature Page to Registration Rights Agreement]


Annex A (Joinder Agreement)

Counterpart to Registration Rights Agreement

The undersigned hereby absolutely, unconditionally and irrevocably agrees as a Guarantor (as defined in the Registration Rights Agreement, dated March 15, 2022 by and among Magallanes, Inc., J.P. Morgan Securities LLC and Goldman Sachs & Co. LLC) to be bound by the terms and provisions of such Registration Rights Agreement.

IN WITNESS WHEREOF, the undersigned has executed this counterpart as of _______________, 202_.

 

[GUARANTOR]
By  

                     

Name:
Title:

Exhibit 4.6

EXECUTION VERSION

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of April 11, 2022 is made by and among Warner Bros. Discovery, Inc. (the “Corporation”), formerly known as Discovery, Inc. (“Discovery”), on the one hand, and each of Advance/Newhouse Partnership, a New York general partnership (“ANP”), and Advance/Newhouse Programming Partnership, a New York general partnership (“ANPP” and, together with ANP, collectively, the “Advance Stockholders”), on the other hand, to amend and restate the terms and conditions of that certain Registration Rights Agreement, dated as of September 17, 2008, by and between Discovery and ANPP (as previously amended, restated, supplemented or modified, the “Original Agreement”).

RECITALS:

WHEREAS, Discovery entered into that certain Agreement and Plan of Merger, dated as of May 17, 2021, by and among AT&T Inc., Magallanes, Inc., Discovery and Drake Subsidiary, Inc., (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”), pursuant to which, among other things, at the closing of the transactions contemplated by the Merger Agreement (the “Closing”), the Advance Stockholders held Common Stock (as defined below) of the Corporation;

WHEREAS, as an inducement to the Advance Stockholders to consent to the transactions contemplated by the Merger Agreement and enter into the Consent Agreement (the “Consent Agreement”), dated as of May 17, 2021, by and among Discovery and the Advance Stockholders, Discovery agreed to grant certain registration rights with respect to the shares of Common Stock, in each case, on the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, the parties desire to amend and restate the Original Agreement on the terms and conditions set forth herein and pursuant to Section 5.08 of the Original Agreement, and the parties are entering into this Agreement in compliance with Section 4 of the Consent Agreement.

NOW, THEREFORE, in consideration of the facts and circumstances recited above and the mutual covenants, representations, warranties and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Certain Defined Terms. As used in the Agreement, the following terms shall have the meanings set forth below:

Advance Owner” means each Person who, directly or indirectly, beneficially owns any equity interest in Advance Publications, Inc., Newhouse Broadcasting Corporation or any direct or indirect Subsidiary of Advance Publications, Inc. or Newhouse Broadcasting Corporation, and, in each case, any successor to all or substantially all of their assets.


Advance Family Foundation” means The Samuel I. Newhouse Foundation, Inc., a New York membership corporation.

Advance Stockholders has the meaning set forth in the preamble.

Affiliate of any specified Person means any other Person directly or indirectly Controlling, Controlled by or under direct or indirect common Control with such specified Person. For the purposes of this Agreement, the term “Control (including correlative meanings, the terms “Controlling”, “Controlled by”, and “under common Control with”), as used with respect to any Person, will mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by agreement or otherwise.

Agreement has the meaning set forth in the preamble.

ANP has the meaning set forth in the preamble.

ANPP has the meaning set forth in the preamble.

Automatic Shelf Registration Statement” means an “automatic shelf registration statement” as defined in Rule 405 on Form S-3ASR.

beneficially own has the meaning set forth in Rule 13d-3 promulgated under the Exchange Act, as such Rule is in effect on the date hereof.

Blackout Period has the meaning set forth in Section 2.04(a).

Board of Directors means the Board of Directors of the Corporation or any authorized committee thereof.

Business Day” means any day other than Saturday, Sunday or any day on which banks are required or permitted to close in New York, New York.

Closing has the meaning set forth in the recitals.

Common Stock means the common stock, par value $0.01 per share, of the Corporation.

Consent Agreement has the meaning set forth in the recitals.

Corporation” has the meaning set forth in the preamble.

 

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Demand Registration Statement has the meaning set forth in Section 2.01.

Demand Request has the meaning set forth in Section 2.01.

Discovery has the meaning set forth in the preamble.

Effective Time has the meaning set forth in Section 2.01.

Effectiveness Period has the meaning set forth in Section 2.01.

Exchange Act means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations promulgated thereunder.

Family Group” means, with respect to any Person, (a) such Person’s spouse, domestic partner, descendants (whether natural or adopted), parents, siblings and their descendants and any spouse or domestic partner of the foregoing Persons (collectively, “relatives”), and (b) any holding company, trust or other estate-planning vehicle owned by or for the benefit of such Person or any Person described in the foregoing clause (a) or any relatives of such Person’s spouse or domestic partner.

Free Writing Prospectus means each “free writing prospectus” within the meaning of Rule 405.

GAAP means generally accepted accounting principles as accepted by the accounting profession in the United States as in effect from time to time, consistently applied.

Governmental Authority” means any supranational, national, federal, state or local government, foreign or domestic, or the government of any political subdivision of any of the foregoing, or any entity, authority, agency, ministry, department, board, commission, court or other similar body exercising executive, legislative, judicial, regulatory or administrative authority or functions of or pertaining to government, including any authority or other quasi-governmental entity established by a Governmental Authority to perform any of such functions.

Holder means the Advance Stockholders and each Permitted Transferee, for so long as such Person beneficially owns Registrable Shares.

Indemnified Party has the meaning set forth in Section 4.03.

Indemnifying Party has the meaning set forth in Section 4.03.

Inspectors has the meaning set forth in Section 3.01(l).

Liability or “Liabilities has the meaning set forth in Section 4.01.

 

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Market Value of a share of Common Stock on any trading day means the last reported sale price, regular way, of a share of such stock on such trading day or, in case there is no last reported sale price on such trading day, the average of the reported closing bid and asked prices regular way of a share of such stock on such trading day, in either case on the Nasdaq Global Select Market, or if such share is not then listed on Nasdaq Global Select Market, on the principal stock exchange on which shares of such stock are traded.

Marketed Offering” means a registered underwritten offering of Registrable Shares (including any registered underwritten Shelf Offering) that is consummated by the applicable Holders following the participation by the Corporation’s management in a customary “road show” (including an “electronic road show”) or other similar marketing effort by the Corporation.

Maximum Number of Shares means, with respect to any underwritten offering, the maximum number of shares of Common Stock (including Registrable Shares) that the managing underwriters advise the Corporation can be included in such offering without having an adverse effect on such offering, including the price at which the shares can be sold.

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

MNPI Disclosure Condition has the meaning set forth in Section 2.04(a).

Original Agreement has the meaning set forth in the preamble.

Original Amount of Registrable Shares means, at the date of determination, the aggregate number of shares of Common Stock issued to the Advance Stockholders at the Closing, without regard to any subsequent transfers of such shares by the Advance Stockholders or any Permitted Transferee, including without limitation any transfer that causes such shares to cease to be Registrable Shares.

Other Securities” means Common Stock sought to be included in a registration other than Registrable Shares.

Other Shareholders means holders of Common Stock that have obtained registration rights from Discovery or the Corporation (other than the Holders).

Permitted Transferee” means, with respect to a Holder: (i) any Affiliate (other than any Portfolio Company) or other equity holder of such Holder; (ii) any entity wholly-owned by such Holder or any entity or individual that wholly owns such Holder; (iii) in the case of any Holder that is an individual or any individual that is an owner of such Holder with respect to the equity interests of such Holder, (A) a transferee by testamentary or intestate disposition or (B) a transferee who is a member of the Family Group; (iv) any Advance Owner; (v) any successor entity of such Person; and (vi) the Advance Family Foundation; provided that any such Permitted Transferee agrees, in

 

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writing in form and substance reasonably satisfactory to the Corporation, to be bound by the terms and provisions of this Agreement; provided further that in no event shall any Portfolio Company of any Holder or any entity controlled by a Portfolio Company of any Holder constitute a Permitted Transferee.

Person means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, Governmental Authority or other entity.

Piggyback Notice has the meaning set forth in Section 2.09(a).

Piggyback Registration has the meaning set forth in Section 2.09(a).

Portfolio Company” means Condė Nast, Advance Local, Stage Entertainment, The IRONMAN Group, American City Business Journals, Leaders Group, Turnitin, 1010data, POP, Charter Communications, Reddit and any other portfolio company (as such term is customarily used among institutional investors to refer to operating companies) of a Holder.

prospectus means the prospectus related to any Registration Statement (including a prospectus that discloses information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance on Rule 415), as amended or supplemented by any amendment (including post-effective amendments), pricing term sheet, Free Writing Prospectus or prospectus supplement, and all documents and materials incorporated by reference in such prospectus.

Records has the meaning set forth in Section 3.01(l).

Registrable Shares means, at any time after the Closing, all shares of Common Stock, whenever acquired prior to, on, or after the date hereof, and all other securities issued in respect of such Common Stock or into which such Common Stock is later converted or reclassified, in each case that are beneficially owned by any of the Holders (it being understood that, for purposes of this Agreement, a Holder shall be deemed to be a Holder of Registrable Shares whenever such Holder has the right to then acquire or obtain from the Corporation any Registrable Shares, whether or not such acquisition has actually been effected); provided, that any particular share of Common Stock will cease to be a Registrable Share: (i) if and when such share shall have been disposed of pursuant to an effective Registration Statement; (ii) if and when such share shall have been sold to the public pursuant to Rule 144; and (iii) if and when such share shall have ceased to be outstanding. Shares of Common Stock beneficially owned by a Holder shall also cease to be Registrable Shares if and when such shares may be disposed of by such Holder pursuant to Rule 144 without volume, holding period or manner of sale restrictions.

Registration Expenses means all expenses incurred in connection with any registration of Registrable Shares pursuant to this Agreement, including (i) the fees, disbursements and expenses of the Corporation’s counsel and accountants (including the expenses relating to any “comfort letters” or costs associated with the delivery by

 

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independent certified public accountants of any “comfort letters” or any special audits incidental to or required by any registration or qualification); (ii) all expenses, including filing fees, in connection with the preparation, printing and filing of any Registration Statement, any prospectus, any other offering documents and any amendments and supplements thereto and the mailing and delivering of copies thereof to any underwriters and dealers; (iii) the cost of printing or producing any agreements among underwriters, underwriting agreements, and blue sky or legal investment memoranda, any selling agreements and any other similar documents in connection with the offering, sale, distribution or delivery of the Registrable Shares to be disposed of; (iv) all expenses in connection with the qualification of the Registrable Shares to be disposed of for offering and sale or distribution under state securities laws, including the fees and disbursements of counsel for any underwriters in connection with such qualification and in connection with any blue sky and legal investment surveys; (v) the filing fees incident to securing any required review by the Financial Industry Regulatory Authority, Inc. (“FINRA”) of the terms of the sale or distribution of the Registrable Shares to be disposed of; (vi) all security engraving and security printing expenses; (vii) expenses relating to any analyst or investor presentations or any “road shows” undertaken in connection with the registration, marketing or selling of the Registrable Shares; (viii) all expenses in connection with the listing of the Registrable Shares on any stock exchange on which other shares of Common Stock are listed; and (ix) any other fees and disbursements of underwriters customarily paid by issuers of securities; provided, however, that “Registration Expenses” shall not include broker’s commissions or underwriters’ discounts, fees or commissions relating to any offer or sale of Registrable Shares or the fees and disbursements of Special Counsel or counsel to any Holder.

Registration Statement” means any registration statement of the Corporation under the Securities Act which covers any of the Registrable Shares pursuant to the provisions of this Agreement, including the prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

Rule 144 means Rule 144 as promulgated by the SEC under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule promulgated by the SEC.

Rule 405 means Rule 405 as promulgated by the SEC under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule promulgated by the SEC.

Rule 415 means Rule 415 as promulgated by the SEC under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule promulgated by the SEC.

 

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Rule 424 means Rule 424 as promulgated by the SEC under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule promulgated by the SEC.

Rule 433 means Rule 433 as promulgated by the SEC under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule promulgated by the SEC.

SEC means the United States Securities and Exchange Commission, or any successor federal agency.

Section 2.09 Registration Statement has the meaning set forth in Section 2.09.

Securities Act means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations promulgated thereunder.

Shelf Offering” has the meaning set forth in Section 2.10.

Special Counsel means such law firm of national reputation as may be selected by a majority of the Holders and is reasonably acceptable to the Corporation.

Subsidiary when used with respect to any Person, means any other Person (1) of which (x) in the case of a corporation, at least (A) a majority of the equity and (B) a majority of the voting interests are owned or Controlled, directly or indirectly, by such first Person, by any one or more of its Subsidiaries, or by such first Person and one or more of its Subsidiaries or (y) in the case of any Person other than a corporation, such first Person, one or more of its Subsidiaries, or such first Person and one or more of its Subsidiaries (A) owns a majority of the equity interests thereof and (B) has the power to elect or direct the election of a majority of the members of the governing body thereof or otherwise has Control over such organization or entity; or (2) that is required to be consolidated with such first Person for financial reporting purposes under GAAP.

Take-Down Notice” has the meaning set forth in Section 2.10.

ARTICLE II

REGISTRATION RIGHTS

Section 2.01 Registration Upon Demand. At any time after the Closing, and for so long as there are any Registrable Shares, upon the written request of a Holder of Registrable Shares then outstanding (a “Demand Request”), the Corporation shall prepare, file within ninety (90) days of such Demand Request and cause to be declared effective by the SEC in each case, as set forth below (if such Registration Statement is not an Automatic Shelf Registration Statement), a Registration Statement covering the sale or distribution from time to time by the Holders, on a delayed or continuous basis pursuant to Rule 415, of the Registrable Shares (a “Shelf Registration Statement”), or, if the Corporation is not then eligible to file such a Shelf Registration Statement, the

 

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Corporation shall prepare a registration statement on the appropriate form under the Securities Act for the type of offering contemplated by the Demand Request (together with the Shelf Registration Statement, a “Demand Registration Statement”). The Demand Request shall specify, for each Holder, the number of Registrable Shares to be included in such Demand Registration Statement for such Holder’s account; provided, that the aggregate Market Value of the Registrable Shares so specified in any such Demand Request shall be not less than $200,000,000 (as of the most recent trading day preceding the delivery of such Demand Request to the Corporation), determined net of underwriting discounts and commissions. The Corporation shall use reasonable best efforts, subject to Section 2.04 and Section 2.05, to cause the Demand Registration Statement to: (i) be filed with the SEC as promptly as reasonably practicable after the Corporation’s receipt of the Demand Request (but in any event within ninety (90) days in the case of a Shelf Registration Statement and forty-five (45) days in the case of a Demand Registration Statement that is not a Shelf Registration Statement of receipt of such request), provided, that the Corporation may delay the filing of a Demand Registration Statement (x) to the date that is ninety (90) days following the date hereof and (y) from the date the Corporation files its quarterly report for the period ended June 30, 2022 to the date the Corporation files its annual report on Form 10-K for the year ended December 31, 2022, in each case to the extent financial statements required to be filed under Regulation S-X are unavailable without commercially unreasonable effort or expense, (ii) become effective as promptly as reasonably practicable after filing (if such Registration Statement is not an Automatic Shelf Registration Statement) but in any event upon the earlier of (a) three business days following the date the SEC has provided notice it will not review such Demand Registration Statement and (b) the date that is one hundred and twenty (120) days following such filing if the SEC elects to review such filing, and (iii) remain continuously effective during the time period (the “Effectiveness Period”) commencing on the date such Demand Registration Statement is declared effective (the “Effective Time”) and ending on the earliest to occur of (a) the date that there are no longer any Registrable Shares covered by such Demand Registration Statement and (b) the third (3rd) anniversary of the effective date of such Demand Registration Statement if such Demand Registration Statement is an Automatic Shelf Registration Statement. If the Automatic Shelf Registration Statement has been outstanding for at least three (3) years, at or prior to the end of the third year, the Corporation shall refile a new Automatic Shelf Registration Statement covering the Registrable Shares, which will not count as a Demand Request. Holders shall have the right to make a total of five (5) Demand Requests hereunder. Notwithstanding anything contained in this Agreement to the contrary, the Corporation shall not be required to prepare or file a Demand Registration Statement for Registrable Shares identified in any Demand Request if the Corporation shall have effected a registration of shares of Common Stock pursuant to a Demand Request at any time during the immediately preceding one hundred and eighty-day (180) period or if a Shelf Registration Statement covering such Registrable Shares is already effective. The Effectiveness Period referred to above shall be extended by the number of days covered by any Blackout Period and/or the number of days during which the use of any prospectus is suspended pursuant to Section 2.05 or Section 3.01(k).

 

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Section 2.02 Revocation of Demand Request. No Demand Request shall be deemed to have occurred if the Holders that make a Demand Request revoke it and (a) the Demand Registration Statement relating thereto (and covering not less than all Registrable Shares specified in the applicable Demand Request for sale in accordance with the intended method or methods of distribution specified in such Demand Request) (i) does not become effective, or (ii) is not maintained as effective for the period required pursuant to Section 2.01 or (b) the offering of the Registrable Shares pursuant to such Demand Registration Statement is subject to a stop order, injunction, or similar order or requirement of the SEC during such period; provided, that such Holders promptly reimburse the Corporation for all Registration Expenses incurred by the Corporation relating to the registration requested pursuant to such revoked Demand Request.

Section 2.03 Selection of Underwriters and Underwriters Counsel; Cutbacks.

(a) Holders may effect an underwritten public offering with respect to the Registrable Shares included in a Demand Registration Statement filed pursuant to a Demand Request; provided, that no underwritten public offering shall be effected in which the gross proceeds to the selling Holders are not reasonably expected to exceed $200,000,000. In connection with any underwritten offering not initiated by the Corporation, the lead managing underwriter or underwriters shall be selected by the Holders holding the majority of Registrable Shares included in the Demand Registration Statement, including any Shelf Offering, initiated by such Holders, subject to the reasonable satisfaction of the Corporation. The Corporation shall be entitled to require that such underwriter or underwriters use the Corporation’s customary underwriters’ counsel or, if the Corporation does not have customary underwriters’ counsel, then such counsel as may be acceptable to the lead managing underwriter or underwriters and the Corporation.

(b) If the managing underwriters advise the Holders and the Corporation that the number of Registrable Shares requested pursuant to this Article II to be included in an underwritten offering exceeds the Maximum Number of Shares, the Registrable Shares to be included in such underwritten offering (up to the Maximum Number of Shares) shall be allocated pro rata among all the requesting Holders based on the relative number of Registrable Shares requested by each such Holder to be included in such underwritten offering. To the extent that an Other Shareholder of Other Securities has a contractual right to include such Other Securities in the Demand Registration Statement, and the number of such Other Securities, together with the Registrable Shares to be included in such underwritten offering, exceeds the Maximum Number of Shares in the opinion of the managing underwriters, the Corporation shall include in such registration:

(i) first, Registrable Shares, allocated pro rata among all the requesting Holders based on the relative number of Registrable Shares requested by each such Holder to be included in such underwritten offering (up to the Maximum Number of Shares); and

 

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(ii) second, Other Securities owned by any Other Shareholder with a contractual right to include such Other Securities in such registration, allocated pro rata among all the requesting Other Shareholders based on the relative number of Other Securities requested by each such Other Shareholder to be included in such underwritten offering (up to the Maximum Number of Shares); and

(iii) third, all of the shares of the Common Stock that the Corporation proposes to sell for its own account (up to the Maximum Number of Shares).

Section 2.04 Blackout Periods.

(a) With respect to any Demand Registration Statement, or amendment or supplement thereto, filed or to be filed pursuant to Section 2.01 or Section 2.10, if the Board of Directors determines, in its reasonable business judgment, that such registration would cause the Corporation to (A) be unable to comply with requirements under the Securities Act or the Exchange Act or (B) disclose material nonpublic information, which disclosure (x) would be required to be made in any registration statement so that such registration statement would not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or required to be made in any prospectus so that such prospectus would not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and (y) would not be required to be made at such time but for the filing or effectiveness of such registration statement or prospectus (the “MNPI Disclosure Condition”), the Corporation may, for a reasonable period of time, but not more than the period that the Board of Directors reasonably determines that the MNPI Disclosure Condition continues to exist (a “Blackout Period”), suspend the use or filing of, or the filing of an amendment or supplement to, such Demand Registration Statement, provided, however, that the Corporation may determine that a Blackout Period exists only twice during any period of consecutive twelve (12) months and each such Blackout Period may not exceed an aggregate of sixty (60) days (which period may not be extended or renewed) during such twelve (12) consecutive month period. The Holders shall cause any director of the Corporation who is designated pursuant to the Consent Agreement or who is an Affiliate of any Holder to recuse himself or herself from any decision made pursuant to this Section 2.04(a). The Corporation shall notify the Special Counsel and the Holders that such Demand Registration Statement is unavailable for use (or will not be filed as requested) promptly following the determination of a Blackout Period by the Board of Directors. Upon the receipt of any such written notice, the Holders shall forthwith discontinue use of the prospectus contained in an effective Demand Registration Statement. When any MNPI Disclosure Condition shall cease to exist, the Corporation shall promptly notify the Special Counsel and each Holder in writing and promptly take any and all actions necessary to permit the Holders to deliver a current prospectus or, in the case where the Demand Registration Statement has not yet been filed, to file such Demand Registration Statement. Each Blackout Period shall be deemed to begin on the date the relevant notice is given to the Holders and shall be deemed to end on the earlier to occur of (x) the date on which the Corporation gives the Holders a notice that any MNPI Disclosure Condition has ceased to exist and (y) the date on which the number of days during which such Blackout Period has been in effect exceeds the sixty (60)-day limit referred to above.

 

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(b) If the Corporation declares a Blackout Period with respect to a Demand Registration Statement that has not yet been declared effective, the Holders whose Registrable Shares were to be included in such Demand Registration Statement may withdraw their Demand Request therefor (and such request shall not count as one of the five Demand Requests referred to in Section 2.01).

Section 2.05 SEC Orders Suspending Effectiveness. The Corporation shall notify the Special Counsel and all Holders that have Registrable Shares included in a Demand Registration Statement of any stop order threatened or issued by the SEC and, as to threatened orders, shall take such actions as may be required, using commercially reasonable efforts, to prevent the entry of such stop order. If the effectiveness of a Demand Registration Statement is suspended by a stop order issued by the SEC at any time during the Effectiveness Period, the Corporation shall use commercially reasonable efforts to obtain the prompt withdrawal of such order, and as promptly as reasonably practicable after such suspension of effectiveness, amend or supplement the Demand Registration Statement in a manner reasonably expected by the Corporation to obtain the withdrawal of such order.

Section 2.06 Plan of Distribution. The “plan of distribution” section of each prospectus included in a Demand Registration Statement with respect to any offering to be made on a delayed or continuous basis under Rule 415 shall be substantially in the form of Annex A hereto, subject to the comments of the SEC and the inclusion of such other information as is required by applicable SEC regulations or to conform with applicable SEC practice. Each Holder agrees to dispose of its Registrable Shares under a Registration Statement in accordance with the “plan of distribution” section of the prospectus.

Section 2.07 Expenses. The Corporation shall, to the extent provided herein, pay all Registration Expenses arising from or incident to any registration of Registrable Shares pursuant to this Agreement.

Section 2.08 Transfer of Registration Rights. Each Holder shall have the right to assign, by written agreement, any or all of its rights granted under this Agreement to any Permitted Transferee; provided, that (x) the notice of any such transfer is provided to the Corporation and (y) such transfer is effected in accordance with applicable securities laws. Following any transfer or assignment made to a Permitted Transferee, a Holder shall retain all rights under this Agreement with respect to any Registrable Shares that continue to be beneficially owned by such Holder. A Permitted Transferee shall be deemed a Holder for purposes of this Agreement for so long as such Person continues to hold Registrable Shares. A Person that is not a Permitted Transferee to which a Holder transfers Registrable Shares shall not have any rights under this Agreement, and the shares so transferred shall no longer be deemed Registrable Shares.

 

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Section 2.09 Incidental Registration.

(a) If the Corporation or any Other Shareholder at any time after the Closing proposes to register the offer and sale of shares of the Common Stock under the Securities Act (other than on Form S-8 or S-4 or any successor or other forms promulgated for similar purposes or filed solely in connection with an exchange offer or any employee benefit or dividend reinvestment plan) (a “Section 2.09 Registration Statement”), whether for its own account or for the account of any Other Shareholders, in a manner which would permit registration of Registrable Shares for sale to the public under the Securities Act (a “Piggyback Registration”), the Corporation will promptly give written notice (a “Piggyback Notice”) to all Holders of its intention to do so and of such Holders’ rights under this Section 2.09, but in any event at least ten (10) Business Days prior to the anticipated filing date of the Section 2.09 Registration Statement. The Piggyback Notice shall offer all Holders the opportunity to include in such Section 2.09 Registration Statement such number of Registrable Shares as each Holder may request, subject to Section 2.09(c). The Corporation will use its reasonable best efforts to include in the Section 2.09 Registration Statement the number of Registrable Shares of each Holder sought to be included therein and so specified in a written notice delivered to the Corporation by such Holder within five (5) Business Days after such Holder’s receipt of the related Piggyback Notice, subject to the terms of this Section 2.09. A Holder may, prior to the effective date of a Section 2.09 Registration Statement, withdraw any Registrable Shares that it had sought to have included therein, whereupon it shall promptly pay to the Corporation all Registration Expenses incurred by the Corporation in connection with the registration of such withdrawn Registrable Shares under the Securities Act or the Exchange Act and the inclusion of such shares in the Section 2.09 Registration Statement. A Piggyback Registration shall not be considered a Demand Request for purpose of Section 2.01.

(b) If a Piggyback Registration involves an underwritten offering, then all Holders whose Registrable Shares are included in the Section 2.09 Registration Statement must sell such shares in such underwritten offering and agree to such terms and provisions that are customarily contained in underwriting agreements with respect to selling stockholders. The Corporation will use its reasonable best efforts to cause such underwriting agreement to include, with respect to Holders, indemnification and contribution provisions that are substantially to the effect provided in Article IV.

(c) The Corporation may elect, in its sole discretion, to terminate a Section 2.09 Registration Statement at any time prior to the effective date thereof. Upon giving written notice of such election to all Holders of Registrable Shares, the Corporation shall be relieved of its obligation to register any Registrable Shares in connection with such registration (without prejudice, however to the rights of Holders under Section 2.01 hereof). The Corporation will pay all Registration Expenses incurred by the Holders in connection with each Piggyback Registration.

 

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(d) If a Piggyback Registration involves an underwritten offering and the managing underwriters advise the Corporation (and, if applicable, the Other Shareholders) that the number of shares of Common Stock requested to be included in the Piggyback Registration exceeds the Maximum Number of Shares, the following rules shall apply:

(i) If the Section 2.09 Registration Statement was originated by the Corporation for a primary offering, then there will be included in such registration statement: (i) first, all of the shares of the Common Stock that the Corporation proposes to sell for its own account; and (ii) second, to the extent that the number of shares of Common Stock included by the Corporation for its own account is less than the Maximum Number of Shares, the shares of Common Stock proposed to be included by the Other Shareholders and the Registrable Shares proposed to be included by Holders, allocated pro rata among such Persons on the basis of the number of shares each such Person has requested to be included in such registration statement (up to the Maximum Number of Shares).

(ii) If the Section 2.09 Registration Statement was originated by Other Shareholders for a secondary offering, then there will be included in such registration statement: (i) first, all of the shares of the Common Stock that such Other Shareholders propose to sell for their own account and (ii) second, to the extent that the number of shares of Common Stock included by the Other Shareholders is less than the Maximum Number of Shares, the Registrable Shares proposed to be included by Holders, allocated pro rata among such Holders on the basis of the number of Registrable Shares that each such Holder has requested to be included in such registration statement (up to the Maximum Number of Shares).

Section 2.10 Shelf Take Downs. At any time that a Shelf Registration Statement covering Registrable Shares is effective, if one or more Holders delivers a notice to the Corporation (each, a “Take-Down Notice”) stating that they intend to sell all or part of their Registrable Shares included by them on such Shelf Registration Statement and the amount of gross proceeds to the selling Holders is reasonably expected to exceed $200,000,000 (each, a “Shelf Offering”), then the Corporation shall amend or supplement the Shelf Registration Statement as may be necessary in order to enable such Registrable Shares to be distributed pursuant to the Shelf Offering. In connection with any Shelf Offering, including any Shelf Offering that is an underwritten offering: (i) such proposing Holder(s) shall also deliver the Take-Down Notice to all other Holders included on such Shelf Registration Statement and permit each such other Holder to include its Registrable Shares included on the Shelf Registration Statement in the Shelf Offering if such other Holder notifies the proposing Holder(s) and the Corporation within one (1) Business Day after delivery of the Take-Down Notice to such Holder; and (ii) if the Shelf Offering is underwritten, in the event that the managing underwriter(s) of such Shelf Offering advise such other Holders in writing that it is their opinion the total number or dollar amount of

 

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shares proposed to be sold exceeds the Maximum Number of Shares, then the managing underwriter(s) may limit the number of Registrable Shares which would otherwise be included in such Shelf Offering, allocated pro rata among such Holders on the basis of the number of Registrable Shares that each such Holder has requested to be included in such Shelf Offering (up to the Maximum Number of Shares). For the avoidance of doubt, a Take-Down Notice will not be counted as a Demand Request. Notwithstanding the foregoing, at any time and from time to time if a Shelf Registration Statement covering Registrable Shares is effective, if a Holder wishes to engage in a Shelf Offering that is an underwritten or other coordinated registered, or “registered direct” offering not involving a “roadshow,” which is an offer commonly known as a “block trade” (a “Block Trade”), then notwithstanding the time periods provided for above, such Holder will deliver a Take-Down Notice to the Corporation of the Block Trade at least two (2) Business Days prior to the day such offering is to commence and the Corporation shall as expeditiously as possible use its commercially reasonable efforts to facilitate such Block Trade; provided, however, that the Holder representing a majority of the Registrable Shares wishing to engage in the Block Trade shall use commercially reasonable efforts to work with the Corporation and any underwriters prior to making such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the Block Trade. Notwithstanding anything to the contrary in this Agreement, Section 2.09 shall not apply to a Block Trade initiated by a Holder pursuant to this Agreement. The Holder initiating a Block Trade shall have the right to select the underwriters for such Block Trade (which shall consist of one or more reputable, nationally recognized investment banks). Notwithstanding anything contained in this Agreement to the contrary, the Corporation shall not be required to effect a Shelf Offering if the Corporation shall have effected a registration of shares of Common Stock pursuant to a Demand Request or Shelf Offering at any time during the immediately preceding ninety-day (90) period.

Section 2.11 Restrictions on Public Sale by Holders of Registrable Shares. If any registration pursuant to Article II of this Agreement shall be in connection with any Marketed Offering or an underwritten offering (including with respect to a Shelf Offering or a Block Trade), the Corporation will not effect any public sale or distribution of any Common Stock (or securities convertible into or exchangeable or exercisable for Common Stock) (other than a registration statement (i) on Form S-4, Form S-8 or any successor forms thereto or (ii) filed solely in connection with an exchange offer or any employee benefit or dividend reinvestment plan) for its own account, within ninety (90) days after the date of the prospectus (or prospectus supplement if the offering is made pursuant to a Shelf Registration Statement) for such offering except as may otherwise be agreed with the underwriters managing such offering. Each Holder agrees that for any registration pursuant to Article II of this Agreement that is in connection with any Marketed Offering or an underwritten offering (including with respect to a Shelf Offering or a Block Trade), whether or not such Holder is participating in such registration, upon the request of the Corporation and the underwriters managing such offering, such Holder will not effect (other than pursuant to such registration) any public sale or distribution of Common Stock, including, but not limited to, any sale pursuant to Rule 144, or make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of, or enter

 

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into any swap or other arrangement that transfers to another Person any of the economic consequences of ownership of, any Common Stock, any other equity securities of the Corporation or any securities convertible into or exchangeable or exercisable for any equity securities of the Corporation without the prior written consent of the Corporation or such underwriters, as the case may be, during the ninety (90) days after the date of the prospectus (or prospectus supplement if the offering is made pursuant to a Shelf Registration Statement) for such offering or such shorter period as may otherwise be agreed with the underwriters managing such offering. No Holder may participate in any Marketed Offering or an underwritten offering (including with respect to a Shelf Offering or a Block Trade) unless such Holder completes and executes all customary questionnaires, powers of attorney, indemnities, underwriting agreements and other customary documents as may be reasonably required under the terms of such underwriting arrangements.

ARTICLE III

REGISTRATION PROCEDURES

Section 3.01 Registration Procedures. In connection with any registration of Registrable Shares contemplated by this Agreement:

(a) In the case of registration pursuant to a proper Demand Request under Section 2.01, the Corporation shall use reasonable best efforts to, as promptly as reasonably practicable and not later than ninety (90) days in the case of a Shelf Registration statement and forty-five (45) days in the case of a Demand Registration Statement that is not a Shelf Registration Statement from the date of receipt of such Demand Request, prepare and file with the SEC a Demand Registration Statement for the sale of the Registrable Shares to be registered thereunder in accordance with the intended methods of distribution thereof, and use reasonable best efforts to cause such filed Demand Registration Statement to become and remain effective in accordance with this Agreement.

(b) The Corporation shall use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Shares for sale in any jurisdiction at the earliest date reasonably practicable.

(c) The Corporation shall, prior to the filing of a Registration Statement or related prospectus or any amendment or supplement thereto (including documents that would be incorporated or deemed to be incorporated therein by reference, if any, that expressly relate to any offering to be effected thereunder, except to the extent that such documents shall have previously been filed with or furnished to the SEC) with the SEC, furnish or otherwise make available to Special Counsel (who may share such documents with the Holders) and any underwriter (if such filing relates to an underwritten offering), if any, copies of all such documents proposed to be filed, which documents will be subject to the reasonable review and comment of such counsel, and

 

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such other documents reasonably requested by such counsel, including any comment letter from the SEC, and, if requested by such counsel, provide such counsel reasonable opportunity to participate in the preparation of such Registration Statement and each prospectus included therein and such other opportunities to conduct a reasonable investigation within the meaning of the Securities Act, as further described in Section 3.01(l).

(d) The Corporation shall promptly notify the Special Counsel and any underwriter (if such filing relates to an underwritten offering) after the Corporation receives notice thereof (i) when a prospectus or any prospectus supplement or post-effective amendment related to a Registration Statement has been filed, and, with respect to a Registration Statement or any post-effective amendment thereto, when the same has become effective (or in the case of an Automatic Shelf Registration Statement after the filing thereof), (ii) of any request by the SEC or any other Governmental Authority for amendments or supplements to a Registration Statement or related prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceeding for that purpose, (iv) of the receipt by the Corporation of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Shares for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, and (v) of the happening of any event that makes any statement made in such Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference, as then in effect, untrue in any material respect or that requires the making of any change in such Registration Statement, prospectus or documents so that, in the case of such Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that, in the case of such prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (which notice shall notify the selling Holders only of the occurrence of such an event and shall provide no additional information regarding such event to the extent such information would constitute material non-public information).

(e) The Corporation shall enter into such agreements (including underwriting agreements in form, scope and substance as is customary for the Corporation containing customary indemnification and contribution provisions) and take all such other customary actions reasonably requested by the Holders of a majority of the Registrable Shares being sold in connection therewith (including those reasonably requested by any underwriter (if such filing relates to an underwritten offering), if any) to expedite or facilitate the disposition of such Registrable Shares and, in the case of each underwritten offering, shall provide reasonable cooperation in connection with such disposition, including causing appropriate officers to attend and participate in one “road show” organized by the underwriters, with all out-of-pocket costs and expenses incurred by the Corporation or such officers in connection with such attendance to be paid by the Corporation.

 

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(f) After the initial Effective Time of a Registration Statement, the Corporation shall, as promptly as reasonably practicable, prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective during the period provided herein and comply in all material respects with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement and cause the related prospectus to be supplemented by any prospectus supplement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of the securities covered by such Registration Statement, and as so supplemented to be filed pursuant to Rule 424 (subject to Section 2.04 and Section 2.05).

(g) After the initial Effective Time of a Registration Statement, the Corporation shall, if requested by the Special Counsel or any underwriter (if such filing relates to an underwritten offering), promptly include in a prospectus supplement or post-effective amendment to the applicable Registration Statement such information as the Special Counsel or any underwriter may reasonably request in order to permit the intended method of distribution of the Registrable Shares and make all required filings of such prospectus supplement or such post-effective amendment as soon as practicable after the Corporation has received such request.

(h) The Corporation shall promptly furnish to the Special Counsel copies of any and all transmittal letters and other correspondence with the SEC and all correspondence (including comment letters) from the SEC to the Corporation relating to a Registration Statement or any prospectus or any amendment or supplement thereto; provided, that if such transmittal letters and other correspondence with the SEC contain information that the Corporation in its reasonable good faith judgment believes is competitively sensitive (and which information will not otherwise become public as a result of inclusion in such correspondence), the Corporation may redact such information from the copies furnished to the Special Counsel.

(i) After a Registration Statement is declared effective, and in connection with any underwritten offering under the Registration Statement, the Corporation shall furnish to the Holders whose Registrable Shares are included in such Registration Statement and to the underwriters such number of copies of the Registration Statement, each amendment and supplement thereto (in each case including all exhibits thereto but excluding documents incorporated by reference therein other than those that expressly relate to the offering or underwritten offering), the prospectus included in such Registration Statement and such other documents as any such Holders or underwriters may reasonably request in order to facilitate the disposition of the Registrable Shares included in the Registration Statement.

(j) The Corporation shall use reasonable efforts (i) to register or qualify the Registrable Shares under such other securities or blue sky laws of such jurisdictions in the United States (in the event an exemption is not available) as any Holder of Registrable Shares covered by a Registration Statement reasonably (in the light

 

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of such Holder’s intended plan of distribution) requests and (ii) to cause such Registrable Shares to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Corporation and do any and all other acts and things that may be reasonably necessary to enable such Holder to consummate the disposition in such jurisdictions of the Registrable Shares owned by such Holder; provided, that the Corporation will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (j), (ii) conform its capitalization or the composition of its assets at the time to the securities or blue sky laws of any such jurisdiction, (iii) subject itself to taxation in any such jurisdiction or (iv) consent to general service of process in any such jurisdiction.

(k) The Corporation shall promptly notify each Holder of Registrable Shares covered by the Registration Statement at any time when a prospectus relating thereto is required to be delivered (or deemed delivered) under the Securities Act or of the occurrence of any event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered (or deemed delivered) to the purchasers of such Registrable Shares, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. Subject to Section 2.04, the Corporation shall as promptly as reasonably practicable prepare and furnish to each such Holder a supplement to or an amendment required with respect to any prospectus so that, as thereafter delivered (or deemed delivered) to the purchasers of such Registrable Shares, such prospectus will not contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.

(l) The Corporation shall make available for inspection at reasonable times by any Holder of Registrable Shares covered by a Registration Statement, any underwriter participating in an underwritten offering pursuant to the Registration Statement, the Special Counsel, and any attorney, accountant or other professional retained by any such Holder or underwriter (collectively, the “Inspectors”), all financial and other records and pertinent corporate documents and properties of the Corporation (collectively, the “Records”) as shall be reasonably necessary to enable them to exercise their due diligence responsibilities, and cause the Corporation’s and its significant Subsidiaries’ executive officers to, and use commercially reasonable efforts to cause the Corporation’s independent accountants to, promptly supply all information reasonably requested by any Inspector in connection with such Registration Statement or underwritten offering; provided, that in no event shall the Corporation be required to make available to any Inspector any information which the Corporation in its reasonable judgment believes is competitively sensitive or, based on advice of the Corporation’s counsel, would (i) reasonably be expected to create any liability under applicable law or result in the waiver of any material legal privilege (provided, that in such latter event the Corporation shall use commercially reasonable efforts to cooperate to permit disclosure of such information in a manner consistent with the preservation of such legal privilege), (ii) result in the disclosure of any trade secrets of third parties or (iii) violate any

 

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obligation of the Corporation with respect to confidentiality (provided, that, with respect to this clause (iii), to the extent specifically requested by an Inspector, the Corporation has in good faith sought to obtain a waiver regarding the possible disclosure from the third party to whom it owes an obligation of confidentiality). Records which the Corporation determines, in good faith, to be confidential and which it notifies the Inspectors are confidential shall not be disclosed by the Inspectors (and the Inspectors shall confirm their agreement in advance to the Corporation if the Corporation shall so request) unless (i) the disclosure of such Records is necessary, in the Corporation’s reasonable judgment, to avoid or correct a misstatement or omission in such Registration Statement or (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction after exhaustion of all appeals therefrom. Each Inspector agrees (and the Inspectors shall confirm their agreement in advance to the Corporation if the Corporation shall so request) that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Corporation or its Affiliates unless and until such is made generally available to the public. Each Inspector further agrees (and will so confirm if requested by the Corporation) that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give prompt notice to the Corporation and allow the Corporation, at its expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential.

(m) In connection with an underwritten public offering of Registrable Shares covered by a Registration Statement, the Corporation shall use reasonable best efforts to furnish to the underwriters, on the date the Registrable Shares are delivered for sale, a signed counterpart of (i) an opinion or opinions of counsel to the Corporation addressed to such underwriters and (ii) a “comfort letter” or “comfort letters” from the Corporation’s independent public accountants, each in customary form and covering such matters of the type customarily covered by opinions or “comfort letters” in underwritten public offerings.

(n) The Corporation shall otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering a period of twelve (12) months beginning after the effective date of a Registration Statement, in a manner that satisfies the provisions of Section 11(a) of the Securities Act.

(o) The Corporation shall cooperate with, and direct the Corporation’s transfer agent to cooperate with, the selling Holders of Registrable Shares and any underwriter (if such filing relates to an underwritten offering), to facilitate the timely settlement of any offering or sale of Registrable Shares, including the preparation and delivery of certificates (not bearing any legend unless required under applicable law) or book-entry (not bearing stop transfer instructions unless required under applicable law) representing Registrable Shares to be sold after receiving written representations from each Holder of such Registrable Shares that the Registrable Shares represented by the certificates so delivered or book-entry so presented by such Holder will be transferred in

 

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accordance with the Registration Statement and, in connection therewith, if reasonably required by the Corporation’s transfer agent, the Corporation shall promptly after the effectiveness of the Registration Statement cause an opinion of counsel as to the effectiveness of any Registration Statement to be delivered to and maintained with its transfer agent, together with any other authorization, certificate, or direction required by the transfer agent that authorizes and directs the transfer agent to issue such Registrable Shares without restriction upon sale by the Holder of such shares of Registrable Shares under the Registration Statement.

(p) The Corporation shall use reasonable efforts to cause all Registrable Shares to be listed on each securities exchange on which the Common Stock is listed.

(q) The Corporation shall use commercially reasonable efforts to timely file the reports and materials required to be filed by it under the Exchange Act to enable the Holders to sell Registrable Shares without registration under the Securities Act within the limitation of the exemption provided by Rule 144. Upon the request of a Holder, the Corporation shall deliver to such Holder a written statement as to whether it has complied with such requirements, and shall provide such customary assurances as any broker or dealer facilitating a sale of Registrable Shares under Rule 144 may reasonably request.

(r) The Corporation shall cooperate with each selling Holder of Registrable Shares and each underwriter or agent participating in the disposition of such Registrable Shares and their respective counsel in connection with any filings required to be made with FINRA, including the use of reasonable best efforts to obtain FINRA’s pre-clearance or pre-approval of the Registration Statement and applicable prospectus upon filing with the SEC.

Section 3.02 Holder Responsibilities.

(a) The Corporation may require each Holder of Registrable Shares included in a Registration Statement to promptly furnish in writing to the Corporation such information regarding such Holder or the distribution of the Registrable Shares as the Corporation may from time to time reasonably request and such other information as may be legally required in connection with such registration or required to be disclosed in order to make the information previously furnished to the Corporation by such Holder not materially misleading or necessary to cause such Registration Statement not to omit a material fact with respect to such Holder necessary in order to make the statements therein not misleading. The right of any Holder to include such Holder’s Registrable Shares in any Registration Statement shall be subject to its compliance with this Section 3.02(a).

(b) In connection with any disposition of Registrable Shares pursuant to a Registration Statement, each Holder agrees that it will not use any Free Writing Prospectus without the prior consent of the Corporation.

 

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(c) Each Holder agrees that, upon receipt of any written notice from the Corporation of the happening of any event of the kind described in Section 3.01(k), such Holder will forthwith discontinue the disposition of such Holder’s Registrable Shares pursuant to a Registration Statement until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3.01(k). If the Corporation shall give such notice with regard to any Registration Statement, the Corporation shall extend the Effectiveness Period during which the effectiveness of such Registration Statement shall be maintained by the number of days during the period from and including the date of the notice given by the Corporation to the date when the Corporation shall make available to such Holder a prospectus or prospectus supplement that conforms with the requirements of Section 3.01(k).

(d) Each Holder shall comply with the Securities Act and the Exchange Act and all applicable state securities laws in connection with the registration and the disposition of Registrable Shares pursuant hereto.

(e) Each Holder of Registrable Shares included in a Registration Statement will enter into and perform agreements (including underwriting or similar agreements in customary form for the Corporation containing customary indemnification and contribution provisions) containing such terms and provisions that are customarily contained in underwriting agreements with respect to selling stockholders and will take such other commercially reasonable actions as are required in order to expedite or facilitate the disposition of any Registrable Shares pursuant hereto and shall provide all reasonable cooperation customary for similar dispositions in connection herewith. Notwithstanding the foregoing, the Corporation shall use its reasonable best efforts to cause any underwriting agreement to include, with respect to the Holders, indemnification and contribution provisions that are substantially to the effect provided in Article IV.

ARTICLE IV

INDEMNIFICATION

Section 4.01 Indemnification By The Corporation. The Corporation agrees to indemnify and hold harmless to the fullest extent permitted by law each Holder whose Registrable Shares are covered by a Registration Statement, its officers, directors, partners and managing members and each Person, if any, who controls such Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages, liabilities, and expenses, or any action or proceeding in respect thereof (each, a “Liability and collectively, “Liabilities”), as incurred, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any prospectus relating to such Registrable Shares (or in any amendment or supplement thereto), any Free Writing Prospectus or other document (including any related Registration Statement, notification, or the like) incident to any such registration, qualification or compliance, or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make

 

21


the statements therein not misleading, except insofar as such Liabilities arise out of or are based upon any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to the Corporation by such Holder or on such Holder’s behalf, in either such case expressly for use therein; provided, that, with respect to any untrue statement or omission or alleged untrue statement or omission made in any prospectus, the indemnity agreement contained in this paragraph shall not apply to the extent that any such Liability results from (a) the fact that a current copy of the prospectus was not sent or given to the Person asserting any such Liability at or prior to the written confirmation of the sale of the Registrable Shares concerned to such Person if it is determined that the Corporation has provided such prospectus and it was the responsibility of such Holder or its agents to provide such Person with a current copy of the prospectus and such current copy of the prospectus would have cured the defect giving rise to such Liability, (b) the use of any prospectus by or on behalf of any Holder after the Corporation has notified such Person in writing (i) pursuant to Section 3.01(k) that such prospectus contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (ii) pursuant to Section 2.05 that a stop order has been issued by the SEC with respect to the Registration Statement, or (iii) pursuant to Section 2.04(a) that an MNPI Disclosure Condition exists or (c) the use of any prospectus by or on behalf of any Holder with respect to any Registrable Shares after such time as the Corporation’s obligation to keep the Registration Statement effective in respect of such Registrable Shares has expired.

Section 4.02 Indemnification By Holders of Registrable Shares. Each Holder whose Registrable Shares are included in any Registration Statement agrees, severally and not jointly, to indemnify and hold harmless to the fullest extent permitted by law (including reimbursement of the Corporation for any legal or any other expenses reasonably incurred by it in investigating or defending such Liabilities) the Corporation, its officers, directors, agents, other Affiliates and each Person, if any, who controls the Corporation within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all Liabilities arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, any prospectus relating to such Registrable Shares, any amendments or supplements thereto, “issuer free writing prospectus” (as such term is defined in Rule 433) or other document relating to such Registrable Shares (or in any amendment or supplement thereto), or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only (i) to the extent such Liabilities arise out of or are based upon information furnished in writing by such Holder or on such Holder’s behalf, in either case expressly for use in the Registration Statement, prospectus or in any amendment or supplement thereto relating to such Holder’s Registrable Shares or (ii) to the extent that any Liability described in this Section 4.02 results from (a) the fact that a current copy of the prospectus was not sent or given to the Person asserting any such Liability at or prior to the written confirmation of the sale of the Registrable Shares concerned to such Person if it is determined that it was the responsibility of such Holder or its agent to provide such Person with a current copy of the prospectus and such

 

22


current copy of the prospectus would have cured the defect giving rise to such Liability, (b) the use of any prospectus by or on behalf of any Holder after the Corporation has notified such Person in writing (x) that such prospectus contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (y) that the SEC has issued a stop order with respect to the Registration Statement or (z) that an MNPI Disclosure Condition exists or (c) the use of any prospectus by or on behalf of any Holder after such time as the obligation of the Corporation to keep the related registration statement in respect of such Holder’s Registrable Shares effective has expired.

Section 4.03 Conduct Of Indemnification Proceeding. After receipt by any Person in respect of which indemnity may be sought pursuant to Section 4.01 or 4.02 (an “Indemnified Party) of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing, such Indemnified Party shall promptly notify the Person against whom such indemnity may be sought (the “Indemnifying Party) in writing; provided, however, that the delay or failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party from any obligation or liability except to the extent that the Indemnifying Party has been materially prejudiced by such delay or failure. If notice of commencement of any such action is given to the Indemnifying Party as above provided, the Indemnifying Party shall be entitled to participate in and, to the extent it may wish, jointly with any other Indemnifying Party similarly notified, to assume the defense of such action at its own expense, with counsel reasonably satisfactory to such Indemnified Party. In any such proceeding so assumed by the Indemnifying Party, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) representation of both parties by the same counsel would be inappropriate due to actual or potential differing or conflicting interests between them. It is understood that the Indemnifying Party, in connection with any proceeding or related proceedings in the same jurisdiction, shall be liable only for the reasonable fees and expenses of one firm of attorneys (in addition to any necessary local counsel) at any time for all such Indemnified Parties, and that all such fees and expenses shall be reimbursed as they are incurred upon submission of reasonably itemized invoices that comply with the Corporation’s standard billing policies for outside counsel. In the case of any such separate firm for Holders who are entitled to indemnity pursuant to Section 4.01, such firm shall be designated in writing by the Indemnified Party who had the largest number of Registrable Shares included in the Registration Statement at issue. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such proceeding.

 

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Section 4.04 Contribution.

(a) If the indemnification provided for hereunder shall for any reason be held by a court of competent jurisdiction to be unavailable to an Indemnified Party in respect of any Liability referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Liabilities between the Corporation on the one hand and each Holder whose Registrable Shares are covered by the Registration Statement in issue on the other, in such proportion as is appropriate to reflect the relative fault of the Corporation and of each such Holder in connection with any untrue statement of a material fact contained in the Registration Statement, any prospectus or any amendment or supplement thereto or caused by any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, which resulted in such Liabilities, as well as any other relevant equitable considerations. The relative fault of the Corporation on the one hand and of each such Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(b) The Corporation and the Holders (including each Permitted Transferee) agree that it would not be just and equitable if contribution pursuant to this Section 4.04 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the Liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Article IV, no Holder shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Shares sold by it under the Registration Statement exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Exchange Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

(c) For purposes of Sections 4.02 and 4.04(a), ANP and ANPP shall be jointly and severally liable with each other and any Subsidiary or Affiliate of the Advance Stockholders that is or becomes a Holder.

 

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ARTICLE V

MISCELLANEOUS PROVISIONS

Section 5.01 Recapitalization, Exchanges, etc. The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all securities into which any of the Registrable Shares are converted, exchanged or substituted in any recapitalization or other capital reorganization involving the Corporation and any and all securities of the Corporation or any successor or assign or acquirer of the Corporation (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in conversion of, in exchange for or in substitution of, such Registrable Shares and shall be appropriately adjusted for any stock dividends, splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof. The Corporation shall cause any successor or assign or acquiror (whether by merger, consolidation, sale of assets or otherwise) to enter into a new registration rights agreement with the Advance Stockholders and each Holder on terms no less favorable to such parties than the terms provided under this Agreement as a condition of any such transaction.

Section 5.02 Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement will be in writing and will be deemed to have been duly given if delivered personally or mailed, certified or registered mail with postage prepaid, or sent by telegram, overnight courier or confirmed facsimile, as follows:

 

If to any Advance Stockholder:

  

Advance Publications, Inc.

1 World Trade Center

  

New York, NY 10007

  

Attention:

   Chief Legal Officer

Email:

   [redacted]

with a copy (not constituting notice) to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019-6064

Attention:

   Robert B. Schumer
   Ariel J. Deckelbaum
   Cullen L. Sinclair
   Tracey A. Zaccone

Email:

   rschumer@paulweiss.com
   ajdeckelbaum@paulweiss.com
   csinclair@paulweiss.com
   tzaccone@paulweiss.com

 

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If to the Corporation:

  

Warner Bros. Discovery, Inc.

230 Park Avenue South

  

New York, NY 10003

  

Attention:

   Savalle Sims

Email:

   [redacted]

with a copy (not constituting notice) to:

Debevoise & Plimpton LLP

919 Third Avenue

New York, NY 10022

Attention:

   Matthew E. Kaplan

Email:

   mekaplan@debevoise.com

or to such other Person or address as any party will specify by notice in writing to the other party. All such notices, requests, demands, waivers and communications will be deemed to have been received on the date of delivery or on the third (3rd) Business Day after the mailing thereof, except that any notice of a change of address will be effective only upon actual receipt thereof.

Section 5.03 Entire Agreement; No Inconsistent Agreements.

(a) This Agreement constitutes the entire agreement among the parties hereto and supersedes any prior understandings, agreements or representations by or among the parties hereto, or any of them, written or oral, with respect to the subject matter hereof.

(b) The Corporation shall not hereafter enter into or amend any agreement with respect to its securities that is inconsistent with the rights granted to the Holders of Registrable Shares in this Agreement or otherwise conflicts with the provisions hereof.

(c) Prior to the date hereof, except as pursuant to the Original Agreement, the Corporation has not granted any “piggyback” or other registration rights to any Person that would entitle any Person (other than the Advance Stockholders and its Permitted Transferees) to participate in any registration contemplated by this Agreement, and the Corporation agrees not to grant any rights to so participate to any Person (other than the Advance Stockholders and its Permitted Transferees) after the date hereof and prior to the time when no Registrable Shares remain outstanding.

Section 5.04 Agreement Among Holders. Whenever provision is made in this Agreement for pro rata allocation among Holders of Registrable Shares to be included in an underwritten offering, such Holders may instead agree in a subsequent writing signed by all of the affected Holders as to the relative proportions of Registrable Shares owned by each Holder to be included in such underwritten offering (up to the Maximum Number of Shares, after taking into account all other shares that have priority in such underwritten offering).

 

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Section 5.05 Further Assurances. Each of the parties shall execute such documents and perform such further acts as may be reasonably required or desirable to carry out or perform the provisions of this Agreement.

Section 5.06 No Third-Party Beneficiaries. Except as provided in Sections 4.01, 4.02 and 4.04, this Agreement is not intended, and shall not be deemed, to confer any rights or remedies upon any Person other than the parties hereto and their respective successors and permitted assigns or to otherwise create any third-party beneficiary hereto.

Section 5.07 Assignment. This Agreement shall be binding upon, shall inure to the benefit of, and shall be enforceable by the parties hereto and their respective successors and permitted assigns and, with respect to each Holder, any Permitted Transferee. No assignment or transfer shall be effective hereunder unless and until the purported transferee executes and delivers an agreement, in form and substance reasonably acceptable to the parties, agreeing to be bound by the terms hereof. Notwithstanding anything to the contrary in this Agreement, the Corporation may not assign its obligations hereunder.

Section 5.08 Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless consented to in writing by the Corporation and Holders of at least 50% of the Registrable Shares held by all Holders of Registrable Shares outstanding as of such date.

Section 5.09 Nominees for Beneficial Owners. If any Registrable Shares are held by a nominee for the beneficial owner thereof, the beneficial owner thereof may, at its election in writing delivered to the Corporation, be treated as the Holder of such Registrable Shares for purposes of any request, consent, waiver or other action by any Holder or Holders of Registrable Shares pursuant to this Agreement or any determination of any number or percentage of Registrable Shares held by any Holder or Holders of Registrable Shares contemplated by this Agreement. If the beneficial owner of any Registrable Shares makes the election provided in this Section 5.09, the Corporation may require assurances reasonably satisfactory to it of such owner’s beneficial ownership of such Registrable Shares.

Section 5.10 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties hereto agree that the court making such determination shall have the power to limit the term or provision, to delete specific words

 

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or phrases, or to replace any invalid or unenforceable term or provision with a term or provisions that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified. In the event such court does not exercise the power granted to it in the prior sentence, the parties hereto agree to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that shall achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term.

Section 5.11 Termination. The right of any Holder to request registration or inclusion of Registrable Shares in any Registration Statement pursuant to Article II shall terminate upon the earliest to occur of:

(a) the date upon which the Registrable Shares owned, controlled or directed, directly or indirectly, in the aggregate, by such Holder constitute less than 1% of all of the issued and outstanding Common Stock (calculated on a non-diluted basis; and for purposes of this Section 5.11(a), all Holders aggregated as a single Holder for this purpose);

(b) the date on which this Agreement is terminated by the mutual consent of the parties;

(c) the dissolution or liquidation of the Corporation; or

(d) ten (10) years from the date hereof.

Section 5.12 Counterparts and Signature. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall be considered one and the same instrument and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other parties, it being understood that all parties need not sign the same counterpart. This Agreement may be executed and delivered by facsimile transmission or by attachment to email in portable document format (PDF) or by other electronic means.

Section 5.13 Interpretation. When reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement, unless otherwise indicated. The headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. 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. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa. Any reference to any federal, state, local or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

 

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Section 5.14 Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Delaware without giving effect to the conflicts of law principles thereof.

Section 5.15 Remedies. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party shall be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy shall not preclude the exercise of any other remedy. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which the parties are entitled at law or in equity.

Section 5.16 Submission to Jurisdiction; Venue. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of Delaware Chancery Court, or, if the Delaware Chancery Court does not have subject matter jurisdiction, in the state courts of the State of Delaware located in Wilmington, Delaware, or in the United States District Court for any district within such state, for the purpose of any suit, action or other proceeding arising out of this Agreement. Each party agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address in accordance with Section 5.02 will be effective service of process for any such action, suit or proceeding. Each party hereto irrevocably and unconditionally waives and agrees not to plead or claim any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably and unconditionally waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

Section 5.17 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

[Signature pages follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first above written.

 

CORPORATION:
WARNER BROS. DISCOVERY, INC.
By:  

/s/ Gunnar Wiedenfels

  Name: Gunnar Wiedenfels
  Title: Chief Financial Officer
ADVANCE STOCKHOLDERS:
ADVANCE/NEWHOUSE PARTNERSHIP
By:  

/s/ Steven A. Miron

  Name: Steven A. Miron
  Title: Chief Executive Officer
ADVANCE/NEWHOUSE
PROGRAMMING PARTNERSHIP
By:  

/s/ Steven A. Miron

  Name: Steven A. Miron
  Title: Chief Executive Officer


ANNEX A

Plan of Distribution

The selling securityholder, including some of its transferees who may later hold its interest in the securities covered by this prospectus and who are otherwise entitled to resell the securities using this prospectus, may sell the securities covered by this prospectus from time to time in any legal manner selected by the selling securityholder, including directly to purchasers or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions from the selling securityholder or the purchasers. These discounts, concessions or commissions as to any particular underwriter, broker-dealer or agent may be in excess of those customary in the types of transactions involved. The selling securityholder will act independently of us in making decisions with respect to the timing, manner and size of each sale of the securities covered by this prospectus.

The selling securityholder has advised us that the securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market prices, at varying prices determined at the time of sale and/or at negotiated prices and as in-kind distributions. These sales may be effected in one or more transactions, including:

 

   

on the Nasdaq Stock Market, Inc.;

 

   

in the over-the-counter market;

 

   

in transactions otherwise than on the Nasdaq Stock Market, Inc. or in the over-the-counter market; or

 

   

any combination of the foregoing.

In addition, subject to our Insider Trading Policy (for those selling securityholders subject to our Insider Trading Policy), the selling securityholder may enter into derivative, hedging or other types of transactions with third parties, or sell securities not covered by this prospectus to third parties. In connection with those transactions, the third parties may sell securities covered by this prospectus, including in short sale transactions. In connection with any such transaction, the third party may use securities pledged by the selling securityholder or borrowed from the selling securityholder or others to settle those sales or to close out any related open securities borrowings, and may use securities received from the selling securityholder in settlement of those transactions to close out any related open securities borrowings. The selling securityholder may also loan or pledge securities covered by this prospectus to third parties, who may sell the loaned securities or, in an event of default in the case of a pledge, sell the pledged securities pursuant to this prospectus.

 

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The selling securityholder has advised us that it has not entered into any agreements, arrangements or understandings with any underwriter, broker-dealer or agent regarding the sale of its securities. However, we are required, under the registration rights agreement relating to the securities being sold under this prospectus, to enter into customary underwriting and other agreements in connection with the distribution of the securities under this prospectus, subject to certain limitations. For more information regarding the registration rights agreement, see “Selling Securityholder—Relationships with the Selling Securityholder—Registration Rights Agreement.” The specific terms of any such underwriting or other agreement, if not included in this prospectus, will be disclosed in a supplement to this prospectus filed with the SEC under Rule 424(b) under the Securities Act, or, if appropriate, a post-effective amendment to the registration statement of which this prospectus forms a part. The selling securityholder may sell any or all of the securities offered by it pursuant to this prospectus.

In addition, there can be no assurance that the selling securityholder will not transfer, devise or gift the securities by other means not described in this prospectus.

There can be no assurance that the selling securityholder will sell any or all of the securities pursuant to this prospectus. In addition, any securities covered by this prospectus that qualify for sale pursuant to Rule 144 of the Securities Act may be sold under Rule 144 rather than pursuant to this prospectus.

The aggregate proceeds to the selling securityholder from the sale of the securities offered by it will be the purchase price of the securities less discounts and commissions, if any. If the securities are sold through underwriters or broker-dealers, the selling securityholder will be responsible for underwriting discounts and commissions and/or agents’ commissions. We will not receive any of the proceeds from the sale of the securities covered by this prospectus.

In order to comply with the securities laws of some states, if applicable, the securities may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the securities may not be sold unless they have been registered or qualified for sale or any exemption from registration or qualification requirements is available and is complied with.

Any underwriters, broker-dealers or agents that participate in the sale of the securities may be deemed to be “underwriters” within the meaning of Section 2(a)(11) of the Securities Act. As a result, any profits on the sale of the securities by the selling securityholder and any discounts, commissions or concessions received by any such broker-dealers or agents may be deemed to be underwriting discounts and commissions under the Securities Act.

To the extent required, the securities to be sold, the names of the selling securityholder, the respective purchase prices and public offering prices, the names of any agent, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or document incorporated by reference into this prospectus or, if appropriate, a post-effective amendment to the registration statement of which this prospectus is a part.

 

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We have agreed to indemnify the selling securityholder and its directors, officers and controlling persons against certain liabilities, including specified liabilities under the Securities Act, or to contribute with respect to payments which the selling securityholder may be required to make in respect of such liabilities. The selling securityholder has agreed to indemnify us for liabilities arising under the Securities Act with respect to written information furnished to us by it or to contribute with respect to payments in connection with such liabilities.

We have agreed to pay all of the costs, fees and expenses incident to our registration of the resale of the selling securityholder’s securities, excluding any legal fees of the selling securityholder and commissions, fees and discounts of underwriters, brokers, dealers and agents.

Under our registration rights agreement with the selling securityholder, we will use our commercially reasonable efforts to keep the registration statement of which this prospectus is a part continuously effective, subject to customary suspension periods, until the date that there are no longer any securities covered by such registration statement.

Our obligation to keep the registration statement to which this prospectus relates effective is subject to specified, permitted exceptions. In these cases, we may suspend offers and sales of the securities pursuant to the registration statement to which this prospectus relates.

 

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Exhibit 10.1

EXECUTION VERSION

 

 

TRANSITION SERVICES AGREEMENT

by and between

AT&T SERVICES, INC.

and

MAGALLANES, INC.

Dated as of April 8, 2022

 

 


TRANSITION SERVICES AGREEMENT

Table of Contents

 

         Page  
ARTICLE I   
SERVICES   

Section 1.1

  Provision of Services      1  

Section 1.2

  Quality and Scope of Services      2  

Section 1.3

  Additional Services and Omitted Services      3  

Section 1.4

  Use of Affiliates and Third-Party Vendors      4  

Section 1.5

  Pass-Through Warranties      5  

Section 1.6

  Disclaimer of Warranties      5  

Section 1.7

  Independent Contractor; Employees      6  

Section 1.8

  Cooperation; Resources.      6  

Section 1.9

  Information from Service Provider; No Duty of Verification      9  

Section 1.10

  Exceptions to Service Provider’s Obligation to Perform      9  
ARTICLE II   
FEES FOR THE SERVICES   

Section 2.1

  Fees for the Services      11  

Section 2.2

  Manner and Timing of Payments      11  

Section 2.3

  Taxes      12  

Section 2.4

  Access to Records      13  
ARTICLE III   
SERVICE FAILURE; INDEMNITY; LIMITATION OF LIABILITY   

Section 3.1

  Service Failure      14  

Section 3.2

  Third-Party IP Matters      15  

Section 3.3

  Indemnity      15  

Section 3.4

  Indemnification Claims      15  

Section 3.5

  Limitation of Liability; Limitation of Damages      16  

Section 3.6

  Lapse of Claim      17  
ARTICLE IV   
TERM AND TERMINATION   

Section 4.1

  Term      17  

Section 4.2

  Termination and Other Remedies for Default      17  

Section 4.3

  Termination by Service Recipient      18  

Section 4.4

  Effect of Termination      18  

Section 4.5

  Survival      19  

 

ii


ARTICLE V   
CONFIDENTIALITY; INTELLECTUAL PROPERTY; DATA PRIVACY   

Section 5.1

  Definitions of Confidential Information; Disclosing Party and Receiving Party      19  

Section 5.2

  Use and Disclosure Limitations      19  

Section 5.3

  Data Processing      20  

Section 5.4

  Destruction      20  

Section 5.5

  Relief      21  

Section 5.6

  Intellectual Property      21  

Section 5.7

  Other Related Matters      22  
ARTICLE VI   
COMPUTER SYSTEMS ACCESS, SECURITY AND INTEGRITY   

Section 6.1

  Systems Access      23  

Section 6.2

  Data Breaches      24  

Section 6.3

  Virus Protection      24  
ARTICLE VII   
GENERAL PROVISIONS   

Section 7.1

  Dispute Resolution      24  

Section 7.2

  Governing Law and Venue; Waiver of Jury Trial      25  

Section 7.3

  Severability      26  

Section 7.4

  Modification or Amendment; Waiver      26  

Section 7.5

  Assignment      27  

Section 7.6

  No Third-Party Beneficiaries      27  

Section 7.7

  Notice      27  

Section 7.8

  Entire Agreement      28  

Section 7.9

  Specific Performance      28  

Section 7.10

  Counterparts      28  

Section 7.11

  Interpretation and Construction      29  

Section 7.12

  Inconsistency      30  

Section 7.13

  Force Majeure      30  

Section 7.14

  Compliance with Law      30  

Section 7.15

  No Set-Off      31  

Section 7.16

  Definitions.      31  

 

iii


EXHIBIT A

SCHEDULE I

SCHEDULE II

SCHEDULE III

SCHEDULE IV

EXHIBITS & SCHEDULES

 

Exhibit A    Definitions
Schedule I    Forward Services and Fees
Schedule II    Reverse Services and Fees
Schedule III    Excluded Services
Schedule IV    Dependent or Interrelated Services

 

iv


TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT (this “Agreement”) is made and entered into as of April 8, 2022 (the “Effective Date”), by and between AT&T SERVICES, INC., a Delaware corporation (“AT&T”), and MAGALLANES, INC., a Delaware corporation (“Spinco” and together with AT&T, each, a “Party” and together, the “Parties”).

RECITALS

WHEREAS, AT&T Inc., a Delaware corporation (“AT&T Parent”), Spinco, Discovery, Inc., a Delaware corporation (“Discovery”), and Drake Subsidiary, Inc., a Delaware corporation and a wholly owned Subsidiary of Discovery (“Merger Sub”), have entered into that certain Agreement and Plan of Merger, dated as of May 17, 2021 (as it may be amended, modified or supplemented from time to time in accordance with its terms, the “Merger Agreement”), pursuant to which, among other things, at the Effective Time, Merger Sub shall merge with and into Spinco (the “Merger”), with Spinco as the surviving entity in the Merger, all upon the terms and subject to the conditions set forth in the Merger Agreement;

WHEREAS, pursuant to the Merger Agreement, AT&T Parent and Discovery agreed to duly execute, or cause their applicable Affiliates to duly execute, a transition services agreement with such terms and conditions as set forth on Exhibit I to the Merger Agreement; and

WHEREAS, in connection with the transactions contemplated by the Merger Agreement, Spinco desires that AT&T provide certain services to Spinco and its Subsidiaries on a transitional basis to the extent described in Schedule I attached to this Agreement (the “Forward Services”) and AT&T desires that Spinco provide certain services to AT&T Parent and its Subsidiaries on a transitional basis to the extent described in Schedule II attached to this Agreement (the “Reverse Services,” together with the Forward Services, each, a “Service” and collectively, the “Services”).

NOW, THEREFORE, in consideration of the foregoing and the covenants herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

SERVICES

Section 1.1 Provision of Services. Except as otherwise provided in this Agreement, on the terms and subject to the conditions set forth in this Agreement, Service Provider shall, or shall cause one or more of its Affiliates to, including through one or more third-party vendors in accordance with Section 1.4), provide to Service Recipient and its designated Subsidiaries, solely for use in connection with the Spinco Business or Remainco Business, as applicable, and the operation of Service Recipient and its Subsidiaries, each of the services described in Schedule I or Schedule II, as applicable, in each case, as Schedule I or Schedule II may be supplemented, modified, substituted or otherwise amended from time to time in accordance with Section 1.3, commencing on the Effective Date and continuing through the Term, unless (a) otherwise specified for a particular Service in Schedule I or Schedule II, as

 

1


applicable, (b) a particular Service is terminated in accordance with the terms and conditions hereof, (c) otherwise mutually agreed to by Service Provider and Service Recipient in writing, or (d) this Agreement is terminated in accordance with this Agreement prior to the expiration of the Term. Except as otherwise expressly set forth in this Agreement (including Schedule I and Schedule II, as applicable), (i) solely with respect to each of Schedule I and Schedule II, all references therein to “Spinco” shall be deemed to include its Subsidiaries, (ii) solely with respect to Schedule I, all references therein to “Service Provider” shall also be deemed to refer to the applicable member of the Remainco Group and (iii) solely with respect to Schedule II, all references therein to “AT&T” shall also be deemed to refer to the applicable member of the Remainco Group. For the avoidance of doubt, capitalized terms used but not defined in Schedule I or Schedule II shall have their respective meanings ascribed to them herein.

Section 1.2 Quality and Scope of Services.

(a) On the terms and subject to the conditions of this Agreement, the Services shall be provided in accordance with applicable Law and in the manner, quality, frequency and timeliness consistent with the manner, quality, frequency and timeliness of the Services as provided by Service Provider to Service Recipient and its Subsidiaries in connection with the Spinco Business or the Remainco Business, as applicable, during the Lookback Period (the “Service Standard”).

(b) Notwithstanding anything to the contrary contained in this Agreement, with respect to any Service (and without limiting Service Provider’s rights under Section 1.10):

(i) Service Provider shall not be bound to apply a standard of care higher than the Service Standard; and

(ii) Service Provider may, in its sole discretion:

(A) perform or cause its Affiliates to perform (including through one or more third-party vendors, in accordance with Section 1.4) such Service substantially consistent with any improved or enhanced practice (as compared to the Service Standard) as Service Provider deems reasonably prudent; and

(B) with respect to any Service that is provided by Service Provider (including through one or more third-party vendors, in accordance with Section 1.4) to other segments of its own business, otherwise make changes from time to time in the manner in which such Service is provided if:

(w) Service Provider is making similar changes in the manner in which such Service is provided for its own businesses and, as a result of such similar changes, Service Provider would not, through the use of commercially reasonably efforts, be able to continue to deliver the Service hereunder on an unchanged basis without incurring significant additional costs;

 

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(x) Service Provider consults in good faith with Service Recipient with respect to such change;

(y) Service Provider furnishes to Service Recipient at least twenty (20) days’ prior written notice which shall describe such change to be made, including any increase or decrease (in each case, not to exceed ten percent (10%)), as the case may be, in the Service Fee related thereto); provided that, solely with respect to sub-schedule TSA 1 of Schedule I, such increase or decrease in the Service Fee shall apply only to the individual portion of the Service Fee, as identified on such sub-schedule TSA 1, that corresponds to the affected Service (or portion thereof); and

(z) Service Provider will treat Service Recipient consistent with the manner in which it treats its own Business and the business of its Affiliates who, prior to such change, used such Service in a comparable manner (including comparable quality, frequency, and level of usage) to Service Recipient’s use of such Service.

Section 1.3 Additional Services and Omitted Services.

(a) In the event Service Recipient requests that Service Provider provide additional services that are not Omitted Services (“Additional Services”), Service Provider shall consider such request in good faith and if Service Provider is willing to provide such Additional Services, in Service Provider’s reasonable discretion, the Parties shall negotiate in good faith to agree on the terms upon which Service Provider would provide such Additional Services and the amounts payable by Service Recipient for such Additional Services. In the event that Service Provider agrees to provide any such Additional Service, such Additional Service shall be added to Schedule I or Schedule II, as applicable, in each case, and be deemed Services hereunder and, accordingly, Service Provider shall, and shall cause its Affiliates, as applicable, to, provide (including through one or more third-party vendors, in accordance with Section 1.4 such Additional Services, or cause such Additional Services to be provided, in accordance with the terms and conditions of this Agreement, and in consideration for the provision of such Additional Services, Service Recipient shall pay to Service Provider the Service Fee mutually agreed to by the Parties for each such Additional Service. For the avoidance of doubt, (i) Service Provider shall have no obligation to provide any Additional Services if the Parties failed to agree on the terms thereof (including, for the avoidance of doubt, the amounts payable by Service Recipient for such Additional Services) and (ii) any such Additional Services shall continue for a term agreed upon between the Parties and shall not exceed the end of the Term.

(b) Within ninety (90) days following the Effective Date, if Service Recipient or any of its respective Affiliates identify any services that Service Provider or its Affiliates provided to Service Recipient and its Subsidiaries in connection with the Spinco Business or the Remainco Business, as applicable, during the Lookback Period and that are reasonably necessary in order for such Business to operate in substantially the same manner in which such Business operated during the Lookback Period, then Service Recipient may request such service by providing request thereof in writing to Service Provider explaining why Service Recipient believes such service is required to operate the Spinco Business or the Remainco

 

3


Business, as applicable. On Service Recipient’s written request in accordance with the preceding sentence, Service Provider shall provide Service Recipient and its Affiliates with any such services as requested by Service Recipient (collectively, the “Omitted Services”); provided that Service Provider shall have no obligation to provide (i) any of the Services listed on Schedule III attached hereto, (ii) any Omitted Service if Service Provider (x) determines, in its reasonable discretion, that Service Provider or its Affiliates would not be obligated to perform such Omitted Service if such Omitted Service had been set forth on Schedule I or Schedule II, as applicable, as of the Effective Date due to any of the circumstances set forth in Section 1.10(a) or (y) is unable to provide such Omitted Service or is unable to provide such Omitted Service to the Service Standard because the personnel who performed such Omitted Service for Service Provider or its Affiliates during the Lookback Period are no longer employed by Service Provider or its Affiliates or are otherwise unavailable to Service Provider to perform and Service Provider, using commercially reasonable efforts, is unable to replace such personnel without an undue burden on or material costs incurred by Service Provider or its Affiliates, or (iii) any Omitted Service of which the Parties fail to agree on the terms (including, for the avoidance of doubt, the amounts payable by Service Recipient for such Omitted Service) (provided that the Parties have negotiated in good faith to agree to the terms of such Omitted Service). All such Omitted Services shall be added to Schedule I or Schedule II, as applicable, in each case, and be deemed Services hereunder. Any such Omitted Service shall be provided in accordance with the terms of this Agreement but shall not include any services that Service Provider and its Affiliates do not provide (either themselves or through third-party vendors) to the Business of Service Recipient during the Lookback Period. In consideration for the provision of such Omitted Services, Service Recipient shall pay to Service Provider the Service Fee mutually agreed to by the Parties for each such Omitted Service; provided that such Service Fee shall be calculated using a methodology consistent with that which was used to determine the Service Fees for the Services as of the Effective Date in accordance with Section 2.1.

Section 1.4 Use of Affiliates and Third-Party Vendors.

(a) Subject to the terms and conditions set forth in this Section 1.4, Service Provider may, in its sole discretion, use one or more Affiliates or third-party vendors to provide the Services under this Agreement. Any third-party vendors (i) not previously used to provide a Service during the Lookback Period or (ii) not otherwise currently providing substantially similar services to Service Provider or its Affiliates, as applicable, must be approved by Service Recipient, with such approval not to be unreasonably withheld, conditioned or delayed. Service Provider shall remain responsible for the performance of the Services, as well as any act or omission, by any of its Affiliates or third-party vendors in their performance of the Services.

(b) All of Service Provider’s and its Affiliates’ personnel and third-party vendors providing Services on behalf of Service Provider to Service Recipient and its Subsidiaries in accordance with this Agreement shall remain and shall be deemed to be for all purposes, including all compensation and employees benefits purposes, representatives, employees, independent contractors or agents of Service Provider or its Affiliates or such third-party vendors, and not of Service Recipient or its Subsidiaries.

 

4


Section 1.5 Pass-Through Warranties. Service Provider shall use commercially reasonable efforts to pass through to Service Recipient any and all third-party representations, warranties and indemnities, if any, with respect to any software, technology, services or materials included in the Services or used by Service Provider to provide the Services, to the extent permitted by the terms of Service Provider’s agreement with such third party. Service Provider agrees to reasonably cooperate with Service Recipient to enforce such representations, warranties and indemnities for the benefit of Service Recipient. Service Recipient shall pay, in accordance with Section 2.2, Service Provider’s costs and expenses incurred by Service Provider or any of its Affiliates in connection with Service Provider’s compliance with this Section 1.5; provided that (i) Service Provider is enforcing such representations, warranties and indemnities due to a breach by such third party of its agreement with Service Provider that solely impacts Service Recipient; and (ii) to the extent permitted by applicable Law, Service Recipient has provided written consent to Service Provider prior to Service Provider incurring such costs and expenses. In the event that the representation, warranty or indemnity that is being enforced pursuant to this Section 1.5 is due to a breach that affects both Parties, Service Recipient shall pay, in accordance with Section 2.2, Service Provider’s costs and expenses incurred by Service Provider or any of its Affiliates, and shall be entitled to share in any recovery, on a pro rata basis based on the extent that such enforcement relates to any benefit allocable to Service Recipient described in this Section 1.5.

Section 1.6 Disclaimer of Warranties

Except as otherwise expressly set forth in this Agreement, none of Service Provider or any of its Affiliates or any other Person makes any representations or warranties regarding its provision of any or all of the Services. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE SERVICES ARE PROVIDED “AS IS” WITH ALL FAULTS AND WITHOUT WARRANTY OF ANY KIND. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER SERVICE PROVIDER NOR ITS AFFILIATES NOR ANY OTHER PERSON MAKES ANY OTHER REPRESENTATION OR WARRANTY UNDER THIS AGREEMENT, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF THE SERVICES, INCLUDING IN RESPECT OF THE MANNER, QUALITY, FREQUENCY OR TIMELINESS OF THE SERVICES, AND NEITHER SERVICE PROVIDER NOR ITS AFFILIATES NOR ANY OTHER PERSON MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, INCLUDING WARRANTIES AS TO MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT, QUIET ENJOYMENT, NO ENCUMBRANCES, SYSTEM INTEGRATION ACCURACY, WORKMANLIKE EFFORT OR WARRANTIES ARISING THROUGH COURSE OF DEALING OR USAGE OF TRADE. ANY SUCH OTHER REPRESENTATION OR WARRANTY IS HEREBY EXPRESSLY DISCLAIMED BY SERVICE RECIPIENT ON BEHALF OF ITSELF AND ITS AFFILIATES. NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY SERVICE PROVIDER, ITS AFFILIATES OR THEIR AUTHORIZED REPRESENTATIVES OR THIRD-PARTY VENDORS SHALL CREATE A WARRANTY OR IN ANY WAY INCREASE THE SCOPE OF SERVICE PROVIDER’S OR ITS AFFILIATES’ OBLIGATIONS UNDER OR WITH RESPECT TO THIS AGREEMENT.

 

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Section 1.7 Independent Contractor; Employees. The Parties acknowledge and agree that each Party is engaged in a business that is independent from that of the other Party and that Service Provider and its Affiliates shall perform the Services under this Agreement as independent contractors with the sole right to supervise, manage, operate, control and, direct the performance of the Services, including the right to designate which resources Service Provider and its Affiliates shall assign to perform any Service and the right to remove and replace any such resources at any time or, subject to Section 1.4, to designate a third-party vendor to perform such Service. Service Provider and its Affiliates shall have and maintain exclusive control over all of their respective employees, agents, third-party vendors, other contractors and operations. Service Provider and its Affiliates shall be solely responsible for payment of compensation to their employees. Service Provider and its Affiliates shall assume full responsibility for payment of all federal, state and local taxes or contributions imposed or required under unemployment insurance, social security and income tax Laws with respect to such employees. Service Provider and its Affiliates have no authority (express, implied or apparent) by virtue of this Agreement or the Services hereunder to represent Service Recipient and its Subsidiaries as to any matters or to incur any obligations or liability on behalf of Service Recipient or its Subsidiaries, and Service Provider and each of its Affiliates shall not be, act as, purport to act as, or be deemed to be, the agent, representative or employee of Service Recipient or its Subsidiaries by virtue of this Agreement or the Services hereunder. Service Recipient and its Subsidiaries have no authority (express, implied or apparent) by virtue of this Agreement or the Services hereunder to represent Service Provider or its Affiliates as to any matters or to incur any obligations or liability on behalf of Service Provider and its Affiliates, and Service Recipient and its Subsidiaries shall not be, act as, purport to act as, or be deemed to be, the agent, representative or employee of Service Provider and any of its Affiliates by virtue of this Agreement or the Services hereunder. No partnership, joint venture, association, alliance, syndicate or other entity, or fiduciary, employee/employer, principal/agent or any relationship other than that of independent contractors is created by virtue of this Agreement or the Services hereunder, expressly or by implication. Except as expressly set forth herein, neither Party shall gain, by virtue of this Agreement or the Services hereunder, by implication or otherwise, any rights of ownership of any property or Intellectual Property owned by the other.

Section 1.8 Cooperation; Resources.

(a) On the terms and subject to the conditions set forth in this Agreement, Service Provider and Service Recipient shall use good faith efforts to cooperate with each other, and to cause their Affiliates to cooperate with each other, in all matters relating to the provision of Services. Such cooperation shall include, subject to Article V and applicable Laws, (i) exchanging information reasonably requested by the other Party and (ii) cooperating, as reasonably requested by the other Party, in obtaining timely decisions, approvals and acceptances, and obtaining all consents, licenses, sublicenses or approvals necessary or desirable in order to permit each Party to perform its obligations under this Agreement in a timely and efficient manner (“Third-Party Consents”); provided that Service Provider shall be responsible for obtaining any such Third-Party Consents; provided, further, that Service Recipient agrees to cooperate in seeking such Third-Party Consents. Except as provided in Section 1.8(b), in no event shall Service Provider or any of its Affiliates be required to make any non-de minimis payment, incur any non-de minimis liability, commence any litigation or make any non-de

 

6


minimis concession (financial or otherwise) to obtain any Third-Party Consents contemplated by this Agreement. Service Recipient shall use commercially reasonable efforts to provide information and documentation sufficient for Service Provider to satisfy its obligations under this Agreement. In connection with the Services, each Party shall make available for consultation with the other Party, either electronically, telephonically or in person, those employees and consultants or other service providers of such Party reasonably necessary for the effective provision of the Services.

(b) In the event any costs, fees or expenses are incurred by Service Provider or any of its Affiliates in connection with obtaining or soliciting any Third-Party Consents, such costs, fees and expenses shall be the responsibility of, and shall be paid by, Service Recipient, and Service Recipient shall reimburse Service Provider and its Affiliates in accordance with Section 2.2; provided that: (i) Service Recipient has provided written consent to Service Provider prior to Service Provider incurring such costs, fees and expenses; (ii) such costs, fees, and expenses are documented and (iii) Service Provider has used commercially reasonable efforts to minimize such costs. Service Recipient shall cooperate with Service Provider in seeking such Third-Party Consents.

(c) If a third party does not provide a Third-Party Consent or the Third-Party Consent has expired or been withdrawn before the end of the relevant Service Term, Service Provider shall, as soon as reasonably practicable, inform Service Recipient thereof in writing. If Service Recipient continues using such Service, Service Recipient will be responsible for any Damages arising from the use of the relevant Service without a required Third-Party Consent; provided that Service Provider (i) has notified Service Recipient of the fact that the relevant Third-Party Consent has not been provided or has expired or has been withheld; and (ii) has provided commercially reasonable alternative arrangements reasonably acceptable to Service Recipient for the provision of any affected Service; provided that the Parties shall cooperate and negotiate in good faith to determine the terms of the alternative service (including, among other things, the reasonable, documented amounts to be paid based on costs actually incurred for any such alternative service (such fees to be paid in accordance with Section 2.2, and to include any out-of-pocket costs incurred by Service Provider or its Affiliates in providing or arranging for such alternative service); it being understood that Service Provider shall have no obligation to provide such alternative services unless the terms of the alternative service are agreed between the Parties in accordance with this Section 1.8(c).

(d) Each Party shall appoint an employee of such Party, reasonably acceptable to the other Party, to act as its services coordinator (the “AT&T Service Coordinator” and the “Spinco Service Coordinator,” as the case may be, and each, a “Service Coordinator” and collectively, the “Service Coordinators”), who shall be directly responsible for coordinating and managing the delivery of the Services and shall have authority to act on the appointing Party’s behalf with respect to matters relating to this Agreement. Each Service Coordinator shall (i) work with the personnel of the appointing Party to periodically address issues and matters raised by the other Party related to this Agreement and (ii) serve as the appointing Party’s primary liaison with the other Party’s Service Coordinator but, for purposes of clarification, not be the sole liaison of the appointing Party or its employees or third-party vendors with the other Party or its employees. Each Party shall use commercially reasonable efforts to maintain the

 

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same individual as its Service Coordinator throughout the Term, but in the event that, despite such efforts, the appointing Party determines to replace such individual, the appointing Party may replace its Service Coordinator with another employee of the appointing Party upon written notice to the other Party. The initial AT&T Service Coordinator shall be Neeta Joseph and the initial Spinco Service Coordinator shall be Lisa Pols.

(e) The Service Coordinators shall generally be available, one to the other, as reasonably necessary to coordinate the provision of Services. The Service Coordinators shall make themselves available to meet, either electronically, telephonically or in person, at such times as determined by the Service Coordinators to discuss the Services being provided, any problems with the Services or Service Fees and any proposed modifications or extensions of this Agreement, but in no event less often than once per month (unless otherwise agreed to by the Service Coordinators); provided that nothing in this Section 1.8(e) shall be deemed to impose an obligation on Service Provider to modify or extend any Services other than as expressly set forth herein. Each Party shall at all times during the Term maintain a Service Coordinator.

Section 1.9 Information from Service Provider; No Duty of Verification. Service Provider and its Affiliates shall not be liable for any impairment of any Service to the extent caused by their not receiving information or access to Persons and documents or required decisions on the part of Service Recipient or its Subsidiaries, either timely or at all; provided that Service Provider has used reasonable efforts to notify the applicable Service Coordinator (orally or in writing) of such failure to receive such information, access or decision and the impact of such failure on Service Provider’s or its Affiliates’ provision of the Services, or by their receiving inaccurate or incomplete information from Service Recipient or its Subsidiaries that is required or reasonably requested by Service Provider. Service Provider and its Affiliates shall not have any responsibility for verifying the accuracy or completeness of any information given to them by or on behalf of Service Recipient or its Subsidiaries for the purpose of providing any Service.

Section 1.10 Exceptions to Service Provider’s Obligation to Perform.

(a) Notwithstanding anything to the contrary contained in this Agreement, Service Provider shall not be required to provide or cause its Affiliates to provide (including through any third-party vendor) any Service or any portion thereof (i) to the extent that the performance of such Service or any portion thereof (A) would require Service Provider or its Affiliates (or, if applicable, any such third-party vendor) to violate any applicable Law that becomes effective after the date hereof, or (B) would result in the breach of any contract or agreement due to (x) a failure to have the necessary Third-Party Consents, other than as a result of Service Provider’s or its Affiliates’ failure to comply with their obligations set forth in Section 1.8(a), or (ii) upon the occurrence of a Force Majeure Event that would reasonably be expected to prevent or delay Service Provider’s performance of such Service for so long as the Force Majeure Event persists. In furtherance of the foregoing, if Service Provider determines that Service Provider and its Affiliates would be unable, using commercially reasonable efforts, to perform certain Services at all or to the Service Standard, due to any actions taken by Service Provider or its Affiliates to comply with any applicable Law that is adopted or becomes effective after the date hereof (including any order of a Governmental Entity or any other quasi-

 

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governmental authorities having jurisdiction over Service Provider or its Affiliates), Service Provider may, at its sole discretion, stop or suspend, or cause its Affiliates to stop or suspend, the performance of such Services, or provide or cause its Affiliates to provide (including through one or more third-party vendors) such Services in a manner that deviates from the Service Standard, which level shall become the Service Standard during any such period; provided that Service Provider will treat Service Recipient consistently with the manner in which Service Provider treats its own Business and the Business of its Affiliates who use such affected Service in a comparable manner (including comparable quality, frequency, timeliness and rate of service charges) to Service Recipient’s use of such affected Service. If Service Provider takes or causes its Affiliates to take any actions pursuant to this Section 1.10(a), Service Provider shall provide written notice to Service Recipient as soon as reasonably practicable, and, following such notice, the Parties shall promptly discuss, in good faith, any actions that may be taken to minimize the impact on the provision of the Services by Service Provider or its Affiliates. In the event that an entire Service has ceased pursuant to this Section 1.10(a), Service Provider shall be responsible for providing a commercially reasonable alternative arrangement reasonably acceptable to Service Recipient for the provision of any such Service or portion thereof; provided that the Parties shall cooperate and negotiate in good faith to determine the terms of the alternative service (including, among other things, the reasonable, documented amounts to be paid based on costs actually incurred for any such alternative service (such fees to be paid in accordance with Section 2.2, and to include any out-of-pocket costs incurred by Service Provider or its Affiliates in providing or arranging for such alternative service)); provided, further, that, in respect of such alternative service and fees will be consistent with the manner in which Service Provider treats its own Business and the Business of its Affiliates who use such affected Service in a comparable manner (including comparable quality, frequency, timeliness and rate of service charges); it being understood that Service Provider shall have no obligation to provide such alternative service unless the terms of the alternative service are agreed between the Parties in accordance with this Section 1.10(a).

(b) Notwithstanding anything to the contrary contained in this Agreement:

(i) Service Provider and its Affiliates shall have the sole and exclusive responsibility and discretion to select and manage personnel employed by Service Provider or its Affiliates or, subject to Section 1.7, personnel of third party vendors or contractors who provide the Services, provided that, Service Provider shall consider in good faith Service Recipient’s reasonable request that Service Provider substitute any such personnel providing the Services; provided, further, that any decision to replace or substitute such personnel shall remain in Service Provider’s sole discretion, and Service Provider shall supervise them in connection with the performance of the Services and shall have the sole and exclusive responsibility and discretion to select and provide the information technology or communications systems, networks, equipment, data, configurations, processes, procedures or practices (“Equipment and Systems”) necessary to deliver the applicable Services, except to the extent that any changes to the method of delivering Services would (A) cause a suspension or unreasonable delay of Services or (B) require Service Recipient or its Subsidiaries to incur additional costs (other than any such costs Service Provider or its Affiliates agree to reimburse) to adjust to the new delivery model; provided that, to the extent that Service Recipient has specific Equipment

 

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and Systems that it prefers to Service Provider’s equipment and systems, Service Recipient may provide additional Equipment and Systems at Service Recipient’s own expense (including any licensing and support systems); provided, further, that the provision and use of such Equipment and Systems shall not cause any undue burdens on Service Provider’s or its Affiliates’ ability to provide any Services. If Service Recipient elects to decommission, replace, modify or change its Equipment and Systems in a manner that adversely affects Service Provider’s ability to provide or cause its Affiliates to provide any Service as required hereunder, then (x) Service Provider shall have no liability whatsoever with respect to the effectiveness or quality of such Service to the extent resulting from such adverse effect and shall be excused from any liability resulting from such adverse effect until Service Recipient eliminates the adverse effect of such change and (y) Service Recipient shall be responsible for all direct out-of-pocket expenses incurred by Service Provider or its Affiliates relating to the cessation and, if applicable, the resumption of such Service;

(ii) in accordance with the provisions of this Section 1.10(b)(ii), Service Provider may suspend, or cause its Affiliates to suspend, performance of any Service if, in Service Provider’s reasonable judgment, the integrity, security or performance of the Equipment and Systems of Service Provider or any of its Affiliates, or any data stored thereon, is being or is reasonably likely to be jeopardized in any material respect by the activities of Service Recipient, its Subsidiaries or their respective employees, agents, representatives or contractors. Any such suspension shall be made only to the extent necessary to mitigate such threat to Service Provider’s or its Affiliates’ Equipment and Systems to the extent that Service Provider does (or would in similar circumstances) suspend such Service to itself and its Affiliates. The applicable Service Coordinator shall notify the other Service Coordinator of any such suspension within forty-eight (48) hours thereof and shall provide a detailed explanation of the reasons therefor. Service Provider shall, and shall cause its Affiliates, as applicable, to, use reasonable best efforts to remediate the circumstances giving rise to the suspension as expeditiously as possible. Service Recipient shall cooperate with Service Provider at Service Provider’s reasonable request in remediating such circumstances. Service Provider shall, and shall cause its Affiliates, as applicable, to, resume provision of the Services as soon as such circumstances are remediated. In addition, if Service Provider notifies Service Recipient in good faith and in advance that termination of any Service (or any portion thereof) in accordance with Section 4.3 (A) increases Service Provider’s cost to provide any remaining Service, or (B) results in any of the reasons specified above in this clause (ii), and Service Recipient nevertheless elects to terminate such Service (or applicable portion thereof), in each case, the Service Provider may suspend such Service, without any tolling of the Service Term, until Service Recipient has cured the cause for such suspension; provided that if Service Provider chooses to continue to provide such Service, the Service Fees for such Service shall be re-assessed in good faith between the Parties in accordance with Section 2.1.

 

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ARTICLE II

FEES FOR THE SERVICES

Section 2.1 Fees for the Services. In consideration of the provision of the Services, Service Recipient shall pay to Service Provider a service fee for each such Service in the amount equal to the fee set forth on Schedule I or Schedule II, as applicable, in each case,

with respect to such Service, which shall include any reasonable costs or expenses that are incurred by Service Provider and directly related to the provision of such Service hereunder, including payments or costs that would otherwise not be incurred for an ongoing license, grant or provision of rights or services, including any implemented license or similar fees, if any, required to be paid to software vendors or licensors (with respect to each Service, the “Service Fee” and, collectively for all Services, the “Service Fees”). Any incidental expenses not contemplated in the Service Fees that are incurred by Service Provider and pre-approved by Service Recipient, such approval not to be unreasonably withheld, shall be reimbursed by Service Recipient to Service Provider in accordance with Section 2.2. Service Recipient shall not be obligated to pay for any individual Service that was terminated pursuant to and in accordance with Section 4.3; provided that Service Recipient shall, in accordance with Section 4.3, pay Service Provider the Service Fee relating to any terminated Service until the effective date of termination; provided, further, that, if any such Services are terminated in accordance with Section 4.3 and result in an increase in Service Provider’s cost to provide any remaining Service, then, solely to the extent such remaining Service is expressly identified on Schedule I or Schedule II, as applicable, as dependent on or interrelated with such terminated Service, the Service Fees and provision of such remaining Services shall be re-assessed in good faith between the Parties in accordance with this Section 2.1 (provided that such remaining Services are not suspended in accordance with Section 1.10(b)(ii)); provided, further that Service Provider is not obligated to provide any such remaining Service noted as dependent or interrelated to the terminated Service on Schedule I or Schedule II, as applicable, in accordance with Section 4.1 and identified on Schedule IV as a Service that cannot reasonably be provided without the terminated Service. All Services processed by Service Provider under this Agreement require that Service Recipient be, except as otherwise set forth on Schedule I or Schedule II, as applicable, responsible for inventory, software or Service purchases by Service Provider procured at the direction of Service Recipient’s or its Affiliates and for which Service Recipient has provided written consent; provided that if Service Recipient does not provide written consent, Service Provider shall have no obligation to provide such inventory, software or Service purchases. Unless otherwise set forth on Schedule I or Schedule II, commencing on the first anniversary of the Effective Date, (i) rates for third-party vendors providing Services hereunder will increase by two percent (2%) annually and (ii) with respect to headcount costs, hourly rates will increase by three percent (3%) annually. With respect to any Service set forth in Schedule I or Schedule II that indicates the corresponding Service Fee as having both a “Fixed Monthly Fee” and a “Monthly Variable Rate,” such charges are additive to and not exclusive of one another. The Service Fees for any Service shall be no greater than Service Provider’s fully loaded cost (for the avoidance of doubt, including employee costs to provide such Service) without a profit margin. Service Recipient shall not be obligated to pay for any individual Service or portion thereof that was terminated pursuant to the terms and conditions hereof, except as set forth in Section 4.3.

Section 2.2 Manner and Timing of Payments. All undisputed payments shall be made by Service Recipient, without set-off (subject to Section 2.3), within thirty (30) days after receipt of an invoice therefor; provided that any undisputed amounts (or amounts that are not disputed in good faith) not paid within such thirty (30) day period shall be subject to a late payment charge calculated based on the per annum rate of interest in effect as publicly announced by JPMorgan Chase & Co. as its prime lending rate plus 0.5 of a percentage point

 

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from the original due date of such amounts until any payment that is due is made (the “Late Payment Charge”). If any Service is terminated in accordance with Section 4.3, any such termination shall be effective on the last day of the calendar month specified in the written notice of termination and may not be effective prior to the last day of any calendar month. Unless otherwise provided in Schedule I or Schedule II, as applicable, Service Provider shall send invoices on a monthly basis for payments to be made under this Agreement. Such invoices shall specify in reasonable detail the costs and expenses to be reimbursed by Service Recipient; provided that for Services with a fixed-monthly fee as noted in Schedule I or Schedule II, as applicable, such invoice shall only specify the total Service Fee and the applicable sub-schedule (e.g., TSA 1, TSA 2) of Schedule I or Schedule II, as applicable, for which such invoice is issued. All payments made by Service Recipient under this Agreement shall be by wire transfer of the payment amount to Service Provider’s account identified in Schedule I or Schedule II, as applicable, in each case, attached hereto or other account notified in writing by Service Provider to Service Recipient (an “Alternative Service Provider Account”), or if requested in writing by Service Provider, by a medium agreed by both Parties. All such payments shall be effective upon receipt. Each Party shall invoice on behalf of itself or an Affiliate that is providing Services. Any amounts not disputed shall be deemed accepted following forty-five (45) days of receiving such invoice (unless the basis for disputing such amounts was not capable of being discovered within such forty-five (45) day period) and shall be paid notwithstanding disputes with respect to any other items within the applicable payment period. In the event that Service Recipient disputes in good faith any portion of the amount due on any invoice, then Service Recipient shall deliver a written statement to Service Provider through the applicable Service Coordinator which shall list all disputed items and provide a reasonably detailed description of each disputed item and the basis for such dispute (each such dispute, a “Fee Dispute”), together with reasonable supporting documentation, prior to the date the payment of the disputed invoice is due, or where the basis of the Fee Dispute was not capable of being discovered during such forty-five (45) day period, promptly after the disputing party should have been aware of the basis for the Fee Dispute. The Parties shall seek to resolve all such Fee Disputes expeditiously and in good faith in accordance with the provisions of Section 7.1, and Service Provider shall continue performing the Services in accordance with the Agreement pending resolution of any Fee Dispute. Service Recipient shall pay any settled amounts owed to Service Provider, if any, as soon as reasonably practicable following resolution of any such Fee Dispute.

Section 2.3 Taxes. Service Fees do not include any amounts in respect of Taxes. Service Recipient shall be responsible for and pay to Service Provider all applicable Taxes (including any sales, use, value added, gross receipt or similar Taxes, but excluding, for the avoidance of doubt, the Washington business & occupation Tax, the Texas “margin” Tax, the Ohio commercial activity Tax and similar Taxes) that are chargeable on the provision of any Service to Service Recipient hereunder, except for (A) any such Taxes with respect to which Service Recipient has provided Service Provider with a proper tax exemption certificate and (B) any such Taxes incurred or payable on the goods or services used or consumed by Service Provider (or any Affiliate or third-party vendor of Service Provider) in providing such Service to Service Recipient; provided, however, that each of Service Provider and Service Recipient shall be responsible for (a) any real or personal Taxes on property it owns or leases, (b) franchise, margin, privilege and similar Taxes on its business, (c) the employment Taxes of its employees and (d) Taxes based on its net or gross income. Any Taxes due and payable by Service

 

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Recipient to Service Provider pursuant to the preceding sentence shall be separately itemized on the relevant invoice and shall be paid at the same time as the other amounts for the applicable Service to which such Taxes relate. If Service Recipient is required to withhold any Tax from any amounts otherwise due and payable to Service Provider pursuant to this Agreement, the amount paid to Service Provider by Service Recipient for such Services shall be grossed up such that Service Provider receives the amount due prior to the withholding (including any withholding imposed in respect of any additional amounts paid hereunder), and Service Recipient shall timely remit such withheld amounts to the appropriate government authority and furnish to Service Provider evidence of payment of such Tax; provided that Service Recipient shall not be required to gross up with respect to any Tax which is (i) described in clauses (a) through (d) of this Section 2.3, (ii) imposed as a result of Service Provider having a present or former connection with the jurisdiction imposing the Tax (other than connections arising from Service Provider having executed, delivered, become a party to, performed its obligations under, received payments under, engaged in any other transaction pursuant to or enforced this Agreement), (iii) attributable to Service Provider’s failure to comply with any applicable certification, identification, documentation, information or other reporting requirement or to provide any tax forms or documentation reasonably requested by Service Recipient or (iv) imposed on a payment made by Service Recipient to an Alternative Service Provider Account and would not have been imposed if such payment had been made to Service Provider’s account identified in Schedule I or Schedule II, as applicable; provided, further, that Service Provider and Service Recipient and their respective Affiliates shall cooperate in good faith in mitigating any such withholding. To the extent Service Provider pays or is required to pay any such Taxes that are the responsibility of Service Recipient in accordance with this Section 2.3, Service Recipient shall promptly reimburse Service Provider on an after-Tax basis. In the event of any conflict between the terms of this Section 2.3 and the Tax Matters Agreement, the terms of the Tax Matters Agreement shall govern in all respects.

Section 2.4 Access to Records. Subject to the Parties’ obligations under Section 5.1, Service Provider and its Affiliates shall, in accordance with Service Provider’s generally applicable recordkeeping and retention policies and procedures, keep reasonable books and records of all third-party vendor costs relating to Services provided hereunder for Service Recipient to verify third-party charges made by Service Provider under this Agreement and to comply with all applicable requirements of Law; provided that Service Provider shall not be required to share any vendor invoices or any underlying information thereto related to third-party expenses incurred by Service Provider. If requested by Service Recipient, such request to be made no more than once per calendar quarter, Service Provider shall agree to a review of such invoices or underlying information by a mutually agreed-upon third-party reviewer (which shall not at the time of the review be acting as an external auditor for either the Service Provider or Service Recipient) (a “Third-Party Review”) to assist in providing assurance to Service Recipient that such invoices contain expenses applicable to the Services provided by Service Provider to Service Recipient. Service Provider and Service Recipient agree that a Third-Party Review shall be limited to validating that the third-party charges: (i) are for the period after the Effective Date; (ii) are associated with the delivery of the Services by the Service Provider to Service Recipient; (iii) were incurred in connection with the provision of Services under this Agreement; or (iv) the amount of such charges; provided that such third-party reviewer shall not be permitted to share the amount of such charges with Service Recipient if (A) prohibited by Service Provider’s

 

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confidentiality obligations to the vendor or (B) would directly or indirectly violate a confidentiality obligation owed by Service Provider to any of its vendors. A Third-Party Review shall only provide assurance to Service Recipient and shall not disclose any vendor or proprietary information, and Service Provider shall have the right to review each report prior to such report being shared with Service Recipient. Service Recipient shall be responsible for all expenses related to a Third-Party Review. In the event it is determined by a Third-Party Review that any amount that was paid by Service Recipient (or its designated Affiliate) was not properly owed, Service Provider will refund that amount to Service Recipient in accordance with Section 2.2. Service Recipient shall have the right to a Third Party Review in accordance with the terms of this Section 2.4 during the Term and for six (6) months following any termination of the Agreement, subject to applicable Law, confidentiality restrictions, contractual limitations and any generally applicable recordkeeping and retention policies of Service Provider. For clarity, nothing in this Section 2.4 shall require Service Provider to modify its existing recordkeeping and retention policies and procedures.

ARTICLE III

SERVICE FAILURE; INDEMNITY; LIMITATION OF LIABILITY

Section 3.1 Service Failure. If Service Provider or its Affiliates fail to perform a Service to a level consistent with the Service Standard (a “Service Failure”), Service Recipient shall provide written notice thereof to Service Provider (a “Performance Notice”). Except as otherwise provided in Section 3.3, Section 4.2 and Section 4.3, Service Recipient’s sole remedy in such event shall be to (a) require Service Provider or its Affiliates to commence re-performance of the applicable Service and take measures to cure such Service Failure as promptly as practicable, but in any event within a twenty (20) day period following the delivery of the relevant Performance Notice, unless such Service cannot reasonably be performed within such twenty (20) day time period, in which case such period shall be extended, in Service Provider’s sole discretion, but in no event for more than an additional ten (10) days, to provide Service Provider and its Affiliates with a reasonable period of time to perform the Service working in good faith (the “Cure Period”), at no further charge, subject to the limitations specified in this Agreement; or (b) if at the termination of the Cure Period, Service Provider fails to commence re-performance to a level consistent with the Service Standard, Service Provider shall provide commercially reasonable alternative arrangements reasonably acceptable to Service Recipient to substitute such Service; provided that the Parties shall cooperate and negotiate in good faith to determine the terms of the alternative service (including, among other things, the reasonable, documented amounts to be paid based on costs actually incurred for any such alternative service (such fees to be paid in accordance with Section 2.2, and to include any out-of-pocket costs incurred by Service Provider or its Affiliates in providing or arranging for such alternative service)). Any Performance Notice delivered by Service Recipient under this Section 3.1 shall (a) specify in reasonable detail the particular error or defect in relation to the performance of the Services and (b) be received by Service Provider no more than the later of (i) twenty (20) days from the date of the failure or (ii) twenty (20) days from the date that the failure could have been reasonably discovered by Service Recipient.

 

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Section 3.2 Third-Party IP Matters. Notwithstanding anything else in this Agreement to the contrary, subject to the last sentence of this Section 3.2, in the event of any breach of this Agreement by either Party or the incurrence of any liability, in each case, to the extent arising out of or relating to the failure of a third party to provide, or provide access or a license to, Intellectual Property owned or controlled by such third party and licensed to Service Provider or its Affiliates (a “Third-Party IP Matter”), Service Provider’s and its Affiliates’ sole and exclusive obligation in respect of any such breach or liability (including the failure to provide any Services) shall be (i) to use commercially reasonable efforts to enforce the terms of the applicable agreement between Service Provider or any of its applicable Affiliates and such third-party provider and (ii) in the event Service Provider and its Affiliates fail to enforce the terms of such agreement, to use commercially reasonable efforts to assist Service Recipient in engaging a substitute third-party provider. Without limiting the Parties’ rights set forth in Section 3.3, Section 4.2 and Section 4.3, Service Recipient’s and its Subsidiaries’ sole and exclusive remedy for such breach or liability is to require Service Provider or any of its applicable Affiliates to engage in the actions contemplated in this Section 3.2. Notwithstanding anything else in this Agreement to the contrary, other than as set forth in the immediately preceding sentence, in no event shall Service Provider or any of its Affiliates be responsible or liable for any breach or liabilities to the extent that they arise out of or relate to any Third-Party IP Matter. Notwithstanding anything else in this Agreement to the contrary, this Section 3.2 shall not limit any of the Parties’ obligations under Section 1.8.

Section 3.3 Indemnity. Subject to the limitations set forth in Section 3.5, each Party (the “Indemnifying Party”) agrees to indemnify, defend and hold harmless the other Party, its Affiliates and their respective officers, directors, employees, agents and representatives (collectively, the “Indemnitees”) from and against any and all Damages incurred or suffered by an Indemnitee based upon, arising out of, in connection with or resulting from a claim relating to: (i) the fraud, gross negligence or willful misconduct by the Indemnifying Party, any of its Affiliates or of their representatives in connection with their performance of their obligations hereunder; (ii) any material breach of Section 5.1, Section 5.2 or Article VI hereof or Sections 4.3(b) (Instructions), (c) (Disclosure), (d) (Purposes), (i) (International Transfers) or (n) (Termination) or Section 5.6.1 of the Global Data Protection Agreement by the Indemnifying Party or any of its Affiliates; (iii) any Data Breach involving Personal Information in the possession, custody or control of the Indemnifying Party or any of its Affiliates or for which the Indemnifying Party or any of its Affiliates are otherwise responsible; (iv) any amounts payable by the Indemnifying Party pursuant to Section 1.5, (v) any amounts payable by Service Recipient pursuant to Section 1.8(b) and Section 1.8(c), or (vi) the Indemnifying Party’s failure to pay any amount to Service Provider under this this Agreement as and when due.

Section 3.4 Indemnification Claims. Any Indemnitee wishing to claim indemnification under Section 3.3, upon learning of any such Damages, shall notify the Indemnifying Party thereof in writing and in reasonable detail of the potential claim, as promptly as practicable and in any event within thirty (30) days of becoming aware of the Damages; provided, however, that the failure to provide notice to the Indemnifying Party pursuant to this sentence shall not release the Indemnifying Party from any of its obligations under Section 3.3 and this Section 3.4, except and solely to the extent the Indemnifying Party shall have been actually materially prejudiced as a result of such failure. Any claims for indemnification that are undisputed between the Indemnifying Party and the Indemnitee shall be paid to the Indemnified Party in accordance with Section 2.2. Any claims for indemnification that are disputed, by either Party, shall be settled in accordance with Section 7.1.

 

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Section 3.5 Limitation of Liability; Limitation of Damages.

(a) TO THE MAXIMUM EXTENT PERMITTED BY LAW, AND EXCEPT AS PROVIDED IN SECTION 3.5(b) BELOW, NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY FOR ANY LOST PROFITS, LOSS OF USE, OR BUSINESS INTERRUPTION OR INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY, ARISING FROM THE PERFORMANCE OF, OR RELATING TO, THIS AGREEMENT REGARDLESS OF WHETHER SUCH PARTY HAS BEEN NOTIFIED OF THE POSSIBILITY OF, OR THE FORESEEABILITY OF, SUCH DAMAGES, PROVIDED THAT, FOR THE AVOIDANCE OF DOUBT, AMOUNTS AWARDED BY A GOVERNMENTAL ENTITY TO A THIRD PARTY SHALL NOT CONSTITUTE ANY OF THE FOREGOING DAMAGES.

(b) EXCEPT AS PROVIDED IN SECTION 3.5(c) BELOW, NEITHER SERVICE PROVIDER NOR SERVICE RECIPIENT SHALL BE LIABLE FOR ANY DAMAGES OR LIABILITIES, IN EXCESS OF THE GREATER OF (i) AGGREGATE SERVICE FEES PAID IN RESPECT OF THE SERVICE SET FORTH ON THE SUB-SCHEDULES (E.G., TSA 1, TSA 2) OF SCHEDULE I AND SCHEDULE II, AS APPLICABLE OR (ii) THREE MILLION DOLLARS ($3,000,000), FOR WHICH SUCH DAMAGES OR LIABILITIES ARISE, WHETHER SUCH DAMAGES OR LIABILITIES ARISE IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR OTHERWISE; PROVIDED THAT IN NO EVENT SHALL SERVICE PROVIDER BE LIABLE FOR MORE THAN ANY SERVICE FEES (WHICH INCLUDES FIXED AND VARIABLE SERVICE FEES) PAYABLE IN RESPECT OF THE SERVICE SET FORTH ON THE SUB-SCHEDULES (E.G., TSA 1, TSA 2) OF SCHEDULE I AND SCHEDULE II, AS APPLICABLE, FOR WHICH SUCH LIABILITY AROSE; PROVIDED, FURTHER, THAT ANY VARIABLE SERVICE FEES INCLUDED IN SUCH SERVICE FEES, IN RESPECT OF SUCH SERVICE, SHALL BE CALCULATED BY EXTRAPOLATING SUCH VARIABLE SERVICE FEES FOR THE RELEVANT SERVICE TERM (WITH NO EXTENSION PERIOD) BASED ON THE AMOUNT OF SUCH VARIABLE SERVICE FEES CHARGED WHEN SUCH LIABILITY AROSE.

(c) THE LIMITATIONS AND EXCLUSIONS OF LIABILITY SET FORTH IN SECTION 3.5(a) AND SECTION 3.5(b) WILL NOT APPLY WITH RESPECT TO ANY OF THE FOLLOWING: (i) THE INDEMNITY OBLIGATIONS SET FORTH IN SECTION 3.3; (ii) A BREACH OF ARTICLE V (CONFIDENTIALITY; DATA PRIVACY), ARTICLE VI (COMPUTER SYSTEMS ACCESS; SECURITY AND INTEGRITY) OR THE GLOBAL DATA PROTECTION AGREEMENT; (iii) A DATA BREACH; OR (iv) DAMAGES OR LIABILITIES ARISING OUT OF THE FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A PARTY.

 

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Section 3.6 Lapse of Claim. If a Party does not give notice to the other Party of any claim pursuant to this Article III within (a) nine (9) months after the termination or expiration of the last Service to terminate or expire, (b) nine (9) months after the termination of this Agreement or (c) three (3) months after the date when such Party becomes or ought to have become aware of the facts giving rise to such claim, whichever is earliest, such Party shall be deemed to have waived such claim.

ARTICLE IV

TERM AND TERMINATION

Section 4.1 Term. The term of this Agreement shall commence on the Effective Date and shall continue until the termination of all Services provided for in Schedule I or Schedule II, as applicable, in each case (the “Term”), and Service Provider’s obligation to perform each Service shall terminate as set forth in Schedule I or Schedule II, as applicable, in each case, with respect to such Service (in each case, the “Service Term”); provided that this Agreement shall terminate with respect to all Services provided hereunder at such time when all Services to be provided by Service Provider or its Affiliates under this Agreement have been terminated (or the terms of which have expired) in accordance with the terms of this Agreement, unless this Agreement is terminated sooner in accordance with Section 4.2 or Section 4.3 or extended by mutual written agreement of the Parties. Not less than forty-five (45) days prior to the end of the applicable Service Term for each Service, unless indicated otherwise in Schedule I or Schedule II, as applicable, in each case, Service Recipient may notify Service Provider if Service Recipient determines in good faith that it shall not be able to complete the transition from, or to replace, such Service prior to the end of the applicable Service Term for such Service, except as otherwise expressly stated in Schedule I or Schedule II for any particular Service. If Service Recipient so notifies Service Provider with respect to a Service, Service Provider and its Affiliates shall continue to provide such Service at the price calculated in accordance with Section 2.1, and, solely with respect to such Service, extend the applicable Service Term for up to the shorter of (i) ninety (90) days and (ii) such extension period stated in Schedule I or Schedule II; as applicable, for such Service (the “Extension Period”). Service Recipient may only request one (1) such extension for each Service that has an Extension Period available to such Service and Service Provider shall have no obligation to extend any Service beyond such Extension Period and Service Recipient shall at all times use commercially reasonable efforts to minimize the duration of any such extension, including by entering into agreements directly with third-party sources or otherwise obtaining alternative third-party sources to provide the Services, to the extent necessary or advisable to transition such Services to Service Recipient, and Service Provider shall undertake commercially reasonable efforts to support Service Recipient’s efforts to enter such agreements. Any termination or expiration of this Agreement with respect to any particular Service shall not terminate this Agreement with respect to any other Service provided under this Agreement.

Section 4.2 Termination and Other Remedies for Default. In the event (a) of any breach by either Party, in any material respect, in the due performance or observance by it of any of the terms, covenants or agreements contained in this Agreement or (b) either Party shall become or be adjudicated insolvent or bankrupt, or a receiver or trustee shall be appointed for either Party or its property or a petition for reorganization or arrangement under any bankruptcy

 

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or insolvency Law shall be approved, or either Party shall file a voluntary petition in bankruptcy or shall consent to the appointment of a receiver or trustee (in each such case, the “Defaulting Party”), then any non-Defaulting Party shall have the right, at its sole discretion, (i) in the case of a default under clause (a) to terminate all or any portion of the applicable Service(s) and/or this Agreement, with such termination being effective only after the Defaulting Party has failed to cure the breach within thirty (30) days after receiving written notice of such breach, or after an additional thirty (30) days if the extension provided for in Section 3.1 is used, and (ii) in the case of the circumstances described under clause (b), to terminate this Agreement immediately upon notice to the Defaulting Party. For the avoidance of doubt, any breach covered under clause (a) of this Section 4.2 is subject to the Cure Period requirement of Section 3.1 before Service Recipient is entitled to any termination rights under this Agreement.

Section 4.3 Termination by Service Recipient. This Agreement may be terminated with respect to all Services by Service Recipient prior to the end of the Term upon forty-five (45) days’ prior written notice to Service Provider. Any termination of this Agreement, of any Service or of any dependent Services, as expressly set forth on Schedule I or Schedule II, as applicable, in whole or in part, permitted pursuant to this Section 4.3 shall become effective on the last day of the calendar month of the date that constitutes forty-five (45) days following Service Provider’s receipt of Service Recipient’s notice of termination delivered specified in the written notice of termination and may not be effective prior to the last day of any calendar month delivered in accordance with this Section 4.3; provided that any termination of a particular Service in accordance with this Section 4.3 must be terminated in its entirety and may not be terminated in part, except for the Services set forth in sub-schedules TSA 1 (by service), TSA 5 (by cluster) and TSA 7 (by vendor) as indicated in Schedule I,; provided, further, that, following any early termination of any Service in accordance with this Section 4.3, Service Recipient shall reimburse Service Provider for any early termination charges, wind-down costs and other fees and costs payable or that have been committed to or paid in advance by Service Provider that arise as a result of the early termination of such Service, with such reimbursable charges, costs and fees to be invoiced by Service Provider, with reasonable supporting documentation, and paid by Service Recipient pursuant to Section 2.2.

Section 4.4 Effect of Termination. Upon expiration or termination of this Agreement or of any Service provided hereunder, all rights and obligations of the Parties shall cease under the Agreement with respect to all Services (in the case of a termination of the Agreement) or with respect to such Service (in the case of a termination of a particular Service), except as provided in Section 4.5 and except that Service Recipient shall pay to Service Provider within thirty (30) days of the issuance of a final invoice, with such invoice being marked as final, following the expiration or termination of this Agreement or any Service, as the case may be, all amounts that are or that shall become due and payable as a result of the provision of the Services or terminated Service, as applicable, pursuant to this Agreement in the manner set forth in Article II. Upon notice of termination of this Agreement in accordance with its terms with respect to any Service for any reason or, in the event of expiration, for a reasonable period of time prior to such expiration, Service Provider shall reasonably cooperate, at Service Recipient’s request and expense, in order to minimize the disruption to the Business of both Parties and to effect an orderly transition and transfer of the responsibility for such Service(s) to Service Recipient or to a third party designated by Service Recipient.

 

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Section 4.5 Survival. Notwithstanding anything in this Agreement to the contrary, (a) Article II, Article III, Section 4.4, this Section 4.5, Article V and Article VII shall survive the expiration or termination of this Agreement and (b) the expiration or termination of this Agreement shall not act as a waiver of any breach of this Agreement and shall not act as a release of either Party for any liability or obligation incurred under this Agreement through the effective date of the expiration or termination.

ARTICLE V

CONFIDENTIALITY; INTELLECTUAL PROPERTY; DATA PRIVACY

Section 5.1 Definitions of Confidential Information; Disclosing Party and Receiving Party. “Confidential Information” shall mean any information or data of a Party or its Affiliates (the “Disclosing Party”) received or obtained by the other Party or its Affiliates (the “Receiving Party”) as a result of the exercise of the Receiving Party’s rights or the performance of the Receiving Party’s obligations under this Agreement, and includes any business, marketing, sales, technical information, trade secrets, processes, designs, data, plans, product or service specifications and information, prototypes, software, source code, customer and vendor information and lists, research, business opportunities, contracts and contract information, Personal Information and other information and materials related to or arising from the Services and which may be in any form or medium (except to the extent that such Information can be shown to have been (a) in the public domain or known to the public through no fault of the Receiving Party or its Affiliates, (b) lawfully acquired by the Receiving Party or its Affiliates from other sources not known by the Receiving Party to be subject to confidentiality obligations with respect to such Confidential Information or (c) independently developed by the Receiving Party or its Affiliates after the time of the Spinco Distribution without reference to or use of any Confidential Information). As used herein, by example and without limitation, Confidential Information shall mean any information of a Party marked as confidential, proprietary and/or privileged.

Section 5.2 Use and Disclosure Limitations. Notwithstanding any termination of this Agreement, each Party shall, and shall cause its Affiliates to, hold, and cause each of their respective officers, employees, agents, third-party vendors, consultants and advisors to hold, in strict confidence, at a standard of care no less than that used for its own Confidential Information (and in any event no less than a reasonable standard of care), and not to disclose or release, or except as otherwise permitted by this Agreement, use, without the prior written consent of each Party to whom (or to whose Affiliate) the Confidential Information relates (which may be withheld in each such Party’s sole and absolute discretion), any and all Confidential Information concerning or belonging to another Party or any of its Affiliates; provided that each Party may disclose, or may permit disclosure of, such Confidential Information (i) to its (or any of its Affiliates) respective auditors, attorneys, financial advisors, bankers and other appropriate employees, consultants and advisors who have a need to know such Confidential Information for auditing and other purposes and are informed of the confidentiality and non-use obligations to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, the applicable Party will be responsible, (ii) if any Party or any of its Affiliates is required or compelled to disclose any such Confidential Information by judicial or administrative process or by other requirements of Law or stock exchange rule, (iii) to the extent reasonably

 

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required in connection with any Proceeding by one Party (or any of its Affiliates) against any other Party (or any of its Affiliates) or in respect of claims by one Party (or any of its Affiliates) against the other Party (or any of its Affiliates) brought in a Proceeding, subject to reasonably acceptable protective measures, (iv) to the extent necessary for a Party (or any of its Affiliates) to enforce its rights or perform its obligations under this Agreement or (v) to Governmental Entities in accordance with applicable procurement regulations and contract requirements. Notwithstanding the foregoing, with respect to clause (ii), (iii), (iv) or (v) above, each Party, as applicable, shall promptly notify (to the extent permissible by Law) the Party to whom (or to whose Affiliate) the Confidential Information relates of the existence of such request, demand or disclosure requirement and shall provide such Party (and/or any applicable Affiliate) a reasonable opportunity to seek, at its expense, an appropriate protective order or other remedy, which such Parties shall, and shall cause the other members of their respective group to, cooperate in obtaining to the extent reasonably practicable. The Party who is (or whose Affiliate is) required to make such disclosure shall or shall cause the applicable member of its group to furnish (at the expense of the Party seeking to limit such request, demand or disclosure requirement), or cause to be furnished, only that portion of the Confidential Information that is legally required to be disclosed and shall take commercially reasonable steps to ensure that confidential treatment is accorded to such Confidential Information (at the expense of the Party seeking (or whose Affiliate is seeking) to limit such request, demand or disclosure requirement).

Section 5.3 Data Processing. To the extent that Service Provider or Service Recipient or their respective Affiliates process Personal Information on behalf of the other Party in performance or receipt of the Services, Service Provider and Service Recipient and their respective Affiliates agree to process Personal Information in compliance with applicable Privacy Requirements and the Global Data Protection Agreement.

Section 5.4 Destruction. Except (a) as expressly required under the respective records and information management policy applicable pursuant to Section 2.4, (b) as expressly prohibited by Law or (c) as permitted by a separate written agreement between the Parties, within thirty (30) calendar days following request by the Disclosing Party after the expiration or termination of the applicable Service or the termination of this Agreement pursuant to Article IV, the Receiving Party shall, in compliance with applicable data destruction Laws, (i) if written, promptly return to the Disclosing Party or a nominated third party (in a format and a method defined by the Disclosing Party, with all reasonable, documented and pre-approved costs associated with converting and transferring the Information borne by the Disclosing Party) or destroy, at the Receiving Party’s option such Confidential Information and any copies, extracts and summaries thereof and (ii) if digital or electronic, destroy or delete such Confidential Information, including all versions, extracts and summaries, and upon the Disclosing Party’s request, such destruction or deletion will be certified by a member of the Receiving Party’s senior management; provided, however, that the Receiving Party’s legal counsel may retain one copy of the Confidential Information for legal retention (archival/evidentiary) purposes; and provided, further, that the Receiving Party may retain a copy of Confidential Information stored in its routine data back-up systems and in compliance with its generally applicable document retention policies, and such Confidential Information shall remain subject to the confidentiality obligations herein in perpetuity. The Receiving Party shall deliver to the Disclosing Party written certification of such destruction.

 

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Section 5.5 Relief. The Receiving Party agrees that any unauthorized disclosure or use of the Confidential Information may cause irreparable harm and result in significant commercial damage to the Disclosing Party. The Parties agree that the Disclosing Party shall be entitled to seek equitable relief, including an injunction and specific performance, in the event of any breach of the covenants regarding Confidential Information, in addition to all other remedies available at law and in equity.

Section 5.6 Intellectual Property.

(a) Nothing in this Agreement or in the performance, use or receipt of the Services under this Agreement shall be deemed to transfer, assign or otherwise convey any rights, title or interests in or to any Intellectual Property or proprietary rights (including rights in or to data or other Information) of one Party or its Affiliates to the other Party or its Affiliates, except as expressly set forth in this Section 5.6.

(b) If, in connection with the provision of any Service, any Intellectual Property, data or other Information is created, discovered, compiled or invented by either Service Provider or Service Recipient, or any of their respective Affiliates, as between the Parties, such Intellectual Property, data or other Information shall be owned by the applicable Service Provider, and Service Recipient and its Affiliates hereby do assign such Intellectual Property, data or other Information to such Service Provider, and agree to execute such assignments or other documents as may be reasonably required by Service Provider or such Affiliate to effectuate the foregoing. Notwithstanding the foregoing, as between the Parties, Service Recipient shall own all data regarding the Business of Service Recipient with respect to which the applicable Service is provided. By way of example, if in performing a Service, Service Provider generates a schedule of tax withholding amounts for Service Recipient employees, such data would be owned by, and constitute the Confidential Information of, Service Recipient.

(c) If Service Provider or any of its Affiliates provides to Service Recipient or any of its Affiliates any Service, the receipt of which by Service Recipient or such Affiliate would, in the absence of a license from Service Provider or its Affiliates, infringe, misappropriate or otherwise violate any Intellectual Property or other proprietary rights (including rights in or to data or other Information) that is licensed to Service Provider or its Affiliates by a third party and sublicensable to Service Recipient or its Affiliates without any required Third-Party Consent, breach of any agreement or the payment of any additional consideration or granting of any additional rights by Service Provider or its Affiliates (such Intellectual Property or proprietary rights, “Service Provider Third-Party IP”) or any TSA IP owned and licensable by Service Provider or its Affiliates, including any TSA IP owned by Service Provider or its Affiliates as contemplated by Section 5.6(b) above (such Intellectual Property or proprietary rights, including any Service Provider Third-Party IP, “Service Provider IP”), Service Provider, on behalf of itself and its Affiliates, hereby grants to Service Recipient or such Affiliate a non-exclusive, non-revocable (other than revocations in connection with a valid termination of a Service in accordance with Section 4.2), personal, non-transferable, worldwide, royalty-free, fully paid-up (as provided in Article II) license (or sublicense subject to the terms of the third-party license, as applicable), without the right to sublicense, under such Service Provider IP, solely to the extent necessary for Service Recipient or such Affiliate to receive such Service in accordance with this Agreement and solely during the term of the applicable Service.

 

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(d) If Service Provider or any of its Affiliates provides to Service Recipient or any of its Affiliates any Service, the provision of which by Service Provider or such Affiliate would, in the absence of a license from Service Recipient or its Affiliates, infringe, misappropriate or otherwise violate any Intellectual Property or other proprietary rights (including rights in or to data or other Information) that is licensed to Service Recipient or its Affiliates by a third-party and sublicensable to Service Provider or its Affiliates without any required Third-Party Consent, breach of any agreement or the payment of any additional consideration or granting of any additional rights by Service Recipient or its Subsidiaries (such Intellectual Property or proprietary rights, “Service Recipient Third-Party IP”) or any TSA IP owned and licensable by Service Recipient or its Affiliates (such Intellectual Property or proprietary rights, including any Service Recipient Third-Party IP, “Service Recipient IP”), Service Recipient, on behalf of itself and its Affiliates, hereby grants to Service Provider or such Affiliate, a non-exclusive, non-revocable (other than revocations in connection with a valid termination of a Service in accordance with Section 4.2), personal, non-transferable, worldwide, royalty-free, fully paid-up (as provided in Article II) license (or sublicense subject to the terms of the third-party license, as applicable), without the right to sublicense, under such Service Recipient IP, solely to the extent necessary for Service Provider or such Affiliate to provide such Service in accordance with this Agreement and solely during the term of the applicable Service.

(e) All rights and licenses with respect to Intellectual Property or other proprietary rights (including rights in or to data or other Information) not expressly granted in this Section 5.6 are expressly reserved by the relevant Party. Upon the termination or expiration of any Service pursuant to this Agreement, the license or sublicense, as applicable, to the relevant Intellectual Property or other proprietary rights (including rights in or to data or other Information) granted hereunder in connection with such Service shall automatically terminate (except to the extent such license or sublicense also applies to one or more Services that have not terminated or expired); provided, however, that all licenses and sublicenses granted hereunder shall terminate immediately upon the expiration or earlier termination of this Agreement for any reason.

Section 5.7 Other Related Matters. With respect to any Service, and subject to Section 5.3, Service Recipient agrees that (a) all software, hardware or data, procedures and materials provided to Service Recipient or its Subsidiaries by or on behalf of Service Provider or its Affiliates in connection with such Service are solely for the use of Service Recipient and its Subsidiaries with respect to the Spinco Business or the Remainco Business, as applicable, and solely for purposes of using such Service for the Spinco Business or the Remainco Business, as applicable, during the Term, (b) other than that which is owned by Service Recipient, Service Recipient shall not, and shall cause its Subsidiaries not to, copy, modify, reverse engineer, decompile, distribute or in any way alter or make derivative works of any software, hardware or data used in performing such Service without Service Provider’s prior written consent, (c) other than that which is owned by Service Provider, Service Provider shall not, and shall cause its Subsidiaries not to, copy, modify, reverse engineer, decompile, distribute or in any way alter or make derivative works of any software, hardware or data used in

 

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performing such Service without Service Recipient’s prior written consent, (d) Service Recipient shall, and shall cause its Subsidiaries to, comply with any and all reasonable usage guidelines pertaining to any Service and provided by or on behalf of Service Provider or its Affiliates, including any and all usage guidelines pertaining to software, data, or other Intellectual Property or proprietary rights, provided that compliance with such guidelines shall in no way limit the Parties’ rights and obligations set forth herein, and (e) Service Provider shall, and shall cause its Subsidiaries to, comply with any and all reasonable usage guidelines pertaining to any Service and received by or on behalf of Service Recipient or its Subsidiaries, including any and all usage guidelines pertaining to software, data, or other Intellectual Property or proprietary rights; provided that compliance with such guidelines shall in no way limit the Parties’ rights and obligations set forth herein.

ARTICLE VI

COMPUTER SYSTEMS ACCESS, SECURITY AND INTEGRITY

Section 6.1 Systems Access.

To the extent that Service Provider or Service Recipient or their respective Affiliates (including any third-party vendors engaged thereby and subject to Service Recipient’s prior written approval) are given access (each in such capacity, a “Guest User”) to the other’s computer system(s), facilities, networks, databases or software (collectively, “Systems”) in connection with the performance of the Services, such Guest User shall comply with the other Party’s (each in such capacity, a “Host”) (a) Systems security policies, procedures and requirements made available to the Guest User from time to time (as such procedures may be amended by the Host from time to time), (b) Privacy Requirements, (c) agreed-upon security requirements set forth herein or in the Global Data Protection Agreement, and (d) privacy policies ((a), (b), (c) and (d), collectively, the “Security Regulations”); provided that, such Security Regulations are materially consistent with the Security Regulations a Party applies to its Affiliates. The Guest User shall not tamper with or circumvent any security measures employed by the Host, and shall use commercially reasonable efforts not to compromise any such security measures employed by the Host. For the avoidance of doubt, the Guest User must comply with the confidentiality obligations set forth in Article V for any Security Regulations made available to such Guest User under this Section 6.1. The Parties may agree to specific Systems access agreement(s); provided that such access agreement(s) shall not change the Parties’ rights or obligations set forth hereunder. The Guest User shall ensure that only those personnel specifically authorized to access the Host’s Systems on behalf of the Guest User do so and that such access is granted only on a strictly as-needed basis in accordance with least privileged access principles. For the avoidance of doubt, the Guest User’s access to the Systems shall be solely for purposes of, and to the extent necessary to, provide or receive the applicable Services in accordance with the terms of this Agreement. The Guest User shall use appropriate and reasonable technical, administrative and organizational measures to prevent unauthorized destruction, alteration or loss of information contained on the Host’s Systems. If at any time the Guest User determines, or the Host notifies the Guest User, that any Person has sought to circumvent or has circumvented the Host’s Security Regulations or other security, or that an unauthorized Person has accessed or may access the Host’s Systems, or that a Person has engaged in activities that may lead to the unauthorized access, destruction or alteration or loss of

 

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either Party’s data, information or software, the Guest User shall promptly terminate and/or take other reasonable measures to block any such Person’s access to the Host’s Systems and promptly notify the Host thereof until such activities are remediated to the reasonable satisfaction of the Host. Without limiting the Guest User’s obligations stated in the foregoing sentence, the Host may revoke such Guest User’s personnel’s Systems credentials and privileges or otherwise take measures to protect the Systems from such personnel for so long as the Host determines, on a good faith basis, that they present a threat to the Systems. Each Host shall be provided with reasonably sufficient access, at reasonable times upon reasonable notice (e-mail to the applicable Service Coordinator or its designee shall be deemed sufficient to satisfy such notice), to audit the Guest User’s use of the Host’s Systems and compliance with the Host’s Security Regulations. The Guest User and Host shall use commercially reasonable efforts upon the termination or expiration of any Services to ensure that all applicable user IDs and passwords assigned to the Guest User are cancelled.

Section 6.2 Data Breaches.

A Party that experiences any actual or reasonably suspected unauthorized access to or acquisition, disclosure, destruction, loss, alteration or use of Personal Information transmitted, stored or otherwise processed by such Party (a “Data Breach”) shall notify the other Party in accordance with Privacy Requirements and the Global Data Protection Agreement.

Section 6.3 Virus Protection.

Both Parties agree to implement and maintain the regular use of Virus protection software programs to prevent Viruses from being coded or introduced into the Systems used in connection with the Services, including any of Service Provider’s or Service Recipient’s or their respective Affiliates’ proprietary Systems, and shall promptly implement appropriate Virus protection updates issued by applicable third-party vendors and publishers. If a Virus is found to have been introduced into the Systems used in connection with the Services, the Parties shall reasonably cooperate to eradicate and reduce the effects of such Virus and, if the Virus causes a loss of operational efficiency or loss of data, reasonably cooperate to mitigate any losses of operational efficiency or data caused by the Virus.

ARTICLE VII

GENERAL PROVISIONS

Section 7.1 Dispute Resolution.

(a) Any dispute arising out of or in connection with this Agreement shall initially be submitted for resolution pursuant to the provisions of this Section 7.1 before any Party may commence any Proceeding (other than a Proceeding solely for injunctive relief) pursuant to Section 7.2(a).

(b) Any dispute shall initially be submitted to the Service Coordinators for resolution. Service Provider and Service Recipient shall cause their respective Service Coordinator to act in good faith in connection with the negotiation and resolution of the dispute.

 

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(c) In the event the Service Coordinators fail to resolve a dispute within twenty (20) Business Days of the submission of such dispute for resolution pursuant to Section 7.1(b), then the dispute shall be submitted to the following identified executives, or their respective successors: Jerrie Kertz shall be the representative of AT&T and Rebecca Kent shall be the representative of Spinco. Such individuals shall cooperate in good faith to attempt to conclusively resolve any such dispute together.

(d) If the individuals specified in Section 7.1(c) cannot resolve a dispute within twenty (20) Business Days of the referral of the dispute to them for resolution pursuant to Section 7.1(c), either Party may avail itself of its rights provided in Section 7.2(b) and Section 7.2(c) of the Separation and Distribution Agreement pursuant to the terms and conditions thereof, which shall apply mutatis mutandis to this Agreement; provided, however, that any notices related hereto shall be given pursuant to Section 7.7.

Section 7.2 Governing Law and Venue; Waiver of Jury Trial.

THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF (OR ANY OTHER JURISDICTION) TO THE EXTENT THAT SUCH PRINCIPLES WOULD DIRECT A MATTER TO ANOTHER JURISDICTION.

(a) Each of the Parties agrees that: (i) it shall bring any Proceeding in connection with, arising out of or otherwise relating to this Agreement, any instrument or other document delivered pursuant to this Agreement or the transactions contemplated hereby exclusively in the Chosen Courts; and (ii) solely in connection with such Proceedings, (A) it irrevocably and unconditionally submits to the exclusive jurisdiction of the Chosen Courts, (B) it waives any objection to the laying of venue in any Proceeding in the Chosen Courts, (C) it waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any Party, (D) mailing of process or other papers in connection with any such Proceeding in the manner provided in Section 7.7 or in such other manner as may be permitted by applicable Law shall be valid and sufficient service thereof and (E) it shall not assert as a defense any matter or claim waived by the foregoing clauses (A) through (D) of this Section 7.2(a) or that any order issued by the Chosen Courts may not be enforced in or by the Chosen Courts. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by Law or to commence any Proceeding or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any Proceeding brought pursuant to this Section 7.2(a).

(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY BE IN CONNECTION WITH, ARISE OUT OF OR OTHERWISE RELATE TO THIS AGREEMENT, ANY INSTRUMENT OR OTHER DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT OR OTHER DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY IRREVOCABLY AND UNCONDITIONALLY

 

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WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY PROCEEDING, DIRECTLY OR INDIRECTLY, IN CONNECTION WITH, ARISING OUT OF OR OTHERWISE RELATING TO THIS AGREEMENT, ANY INSTRUMENT OR OTHER DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HEREBY ACKNOWLEDGES AND CERTIFIES (i) THAT NO REPRESENTATIVE OF THE OTHER PARTIES, AS THE CASE MAY BE, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTIES WOULD NOT, IN THE EVENT OF ANY ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) IT MAKES THIS WAIVER VOLUNTARILY AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS, ACKNOWLEDGMENTS AND CERTIFICATIONS CONTAINED IN THIS SECTION 7.2(b).

Section 7.3 Severability. The provisions of this Agreement shall be deemed severable and the illegality, invalidity or unenforceability of any provision shall not affect the legality, validity or enforceability of this Agreement. If any provision of this Agreement or the application of such provision to any Person or any circumstance is illegal, invalid or unenforceable, (a) a suitable and equitable provision to be negotiated by the Parties, each acting reasonably and in good faith, shall be substituted therefor in order to carry out, so far as may be legal, valid and enforceable, the intent and purpose of such illegal, invalid or unenforceable provision, and (b) the remainder of this Agreement and the application of such provision, covenant or restriction to other Persons or circumstances shall not be affected by such illegality, invalidity or unenforceability, nor shall such illegality, invalidity or unenforceability affect the legality, validity or enforceability of such provision, or the application of such provision, in any other jurisdiction.

Section 7.4 Modification or Amendment; Waiver.

(a) This Agreement may not be modified or amended except by an agreement in writing specifically designated as an amendment hereto signed by each of the Parties. Any provision of this Agreement may be waived, if and only if, such waiver is in writing and signed by the Party against which the waiver is to be effective.

(b) No failure or delay by any Party in exercising any right, power or privilege hereunder or under applicable Law shall operate as a waiver of such rights and, except as otherwise expressly provided herein, no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.

 

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Section 7.5 Assignment. Neither this Agreement nor any right or obligation hereunder may be directly or indirectly assigned, or transferred by either Party in whole or in part, to any person or entity, by operation of law or otherwise, whether voluntarily or

involuntarily, without the other Party’s prior written consent, except in the event of a Change of Control of a Party, in which case such Party undergoing the Change of Control shall provide the other Party with prior written notice thereof. In the event of any such permitted Change of Control, the Parties acknowledge and agree that the Services shall continue to be provided only to those entities receiving Services hereunder as of the date of such permitted assignment or Change of Control. No assignment or Change of Control hereunder shall increase the obligations for which the non-assigning Party would have been liable hereunder in the absence of such assignment. Any assignment in violation of this Section 7.5 shall be void and of no effect. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns.

Section 7.6 No Third-Party Beneficiaries. Except in respect of the indemnification obligations expressly provided for in Section 3.3 and Section 3.4, there shall be no third-party beneficiaries of this Agreement, or any exhibit, annex or schedule hereto, and none of them shall confer on any Person other than the Parties any claim, cause of action, right or remedy.

Section 7.7 Notice. All notices, requests, instructions, consents, claims, demands, waivers, approvals and other communications to be given or made hereunder by one or more Parties to one or more of the other Parties, as the case may be, shall be in writing and shall be deemed to have been duly given or made on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a Business Day (or otherwise on the next succeeding Business Day) if (a) served by personal delivery or by a nationally recognized overnight courier service upon the Party or Parties for whom it is intended, (b) delivered by registered or certified mail, return receipt requested or (c) sent by email; provided that the email transmission is promptly confirmed by telephone or in writing by the recipient thereof (excluding out-of-office replies or other automatically generated responses). Such communications shall be sent to the respective Party at the following street addresses or email addresses or at such other street address or email address for a Party, as the case may be, as shall be specified for such purpose in a notice given in accordance with this Section 7.7:

To Spinco:

Discovery, Inc.

230 Park Avenue South

New York, NY 10003

Attention: Bruce Campbell

Email: [redacted]

With a copy to:

Debevoise & Plimpton LLP

919 Third Avenue

New York, New York 10022

Attention: Jeffrey J. Rosen

Jonathan E. Levitsky

 

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Sue Meng

Email: jrosen@debevoise.com

jlevitsky@debevoise.com

smeng@debevoise.com

To AT&T:

AT&T SERVICES, INC.

208 S. Akard St.

Dallas, Texas 752-2

Attention: [redacted]

Email: [redacted]

With a copy to:

Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004

Attention: Eric M. Krautheimer

Melissa Sawyer

Email: Krautheimere@sullcrom.com

Sawyerm@sullcrom.com

Section 7.8 Entire Agreement. This Agreement (including the schedules hereto) constitutes the entire agreement and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the Parties, with respect to the subject matter hereof.

Section 7.9 Specific Performance. Subject to Article III, each of the Parties acknowledges and agrees that the rights of each Party are special, unique and of extraordinary character and that if for any reason any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached, immediate and irreparable harm or damage would be caused for which money damages would not be an adequate remedy. Accordingly, each Party agrees that, in addition to any other available remedies a Party may have in equity or at law, each Party shall be entitled to enforce specifically the terms and provisions of this Agreement and to obtain an injunction restraining any breach or violation or threatened breach or violation of the provisions of this Agreement without the necessity of posting a bond or other form of security. In the event that any Proceeding should be brought in equity to enforce the provisions of this Agreement, no Party shall allege, and each Party hereby waives the defense, that there is an adequate remedy at law.

Section 7.10 Counterparts. This Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement. A signed copy of this Agreement delivered by facsimile, email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

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Section 7.11 Interpretation and Construction.

(a) The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof.

(b) The Preamble, and all Recital, Article, Section, Subsection, Schedule, Annex and Exhibit references used in this Agreement are to the recitals, articles, sections, subsections, schedules, annexes and exhibits to this Agreement unless otherwise specified herein.

(c) Except as otherwise expressly provided herein, for purposes of this Agreement: (i) the terms defined in the singular have a comparable meaning when used in the plural and vice versa; (ii) words importing the masculine gender shall include the feminine and neutral genders and vice versa; (iii) whenever the word “includes” or “including” is used, it shall be deemed to be followed by the words “without limitation”; (iv) the word “or” is not exclusive; (v) the words “hereto,” “hereof,” “hereby,” “herein,” “hereunder” and similar terms in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (vi) the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends and such phrase shall not mean simply “if”; and (vii) a reference to any Person includes such Person’s successors and permitted assigns.

(d) All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.

(e) Except as otherwise expressly provided herein, the term “dollars” and the symbol “$” mean United States Dollars.

(f) Except as otherwise expressly provided herein, all references in this Agreement to any statute include the rules and regulations promulgated thereunder, in each case as amended, re-enacted, consolidated or replaced from time to time and in the case of any such amendment, re-enactment, consolidation or replacement, reference herein to a particular provision shall be read as referring to such amended, re-enacted, consolidated or replaced provision and shall also include, unless the context otherwise requires, all applicable guidelines, bulletins or policies made in connection therewith.

(g) The Parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.

(h) Neither the specification of any dollar amount in any representation or warranty set forth in this Agreement nor the inclusion of any specific item in any schedule is intended to imply that such amount, or higher or lower amounts, or the item so included or other items, are or are not material, and no Party shall use the fact of the setting forth of any such amount or the inclusion of any such item in any dispute or controversy between the

 

29


Parties as to whether any obligation, item or matter not described herein or included in any schedule is or is not material for purposes of this Agreement. Neither the specification of any item or matter in any representation or warranty set forth in this Agreement nor the inclusion of any specific item in any schedule is intended to imply that such item or matter, or other items or matters, are or are not in the ordinary course of business, and no Party shall use the fact of the setting forth or the inclusion of any specific item or matter in any dispute or controversy between the Parties as to whether any obligation, item or matter not described herein or included in any schedule is or is not in the ordinary course of business for purposes of this Agreement.

Section 7.12 Inconsistency. In the event of any inconsistency between the terms of this Agreement and Schedule I or Schedule II, as applicable, in each case, hereto, the terms of this Agreement shall control. In the event of any inconsistency between the terms of this Agreement and the Merger Agreement, the terms of the Merger Agreement shall control.

Section 7.13 Force Majeure. Neither Party shall be liable in any manner for failure or delay of performance of all or part of this Agreement (other than payment obligations), directly or indirectly, owing to any acts of God, acts, orders, restrictions or interventions of any civil, military or government authority, wars (declared or undeclared), hostilities, invasions (including the invasion of and acts of war on Ukraine by Russia commencing in February of 2022), revolutions, rebellions, insurrections, terrorist acts, sabotages, embargoes, epidemics or pandemics or public health emergencies (including the COVID-19 pandemic, the governmental and social responses thereto, and changes in general economic conditions with respect to or as a result of COVID-19), strikes or other labor disturbances, civil disturbances, riots, fires, floods, storms, explosions, earthquakes, nuclear accidents, power or other utility failures, disruptions or other failures in Internet and/or other telecommunication lines, networks and backbones, delays in transportation, losses or destruction of property, changes in Laws, or any other similar causes or circumstances, in each case to the extent beyond the reasonable control of such Party (each, a “Force Majeure Event”); provided that such Party treats the other Party in dealing with such Force Majeure consistent with the manner in which it treats its own Business and the business of its Affiliates. Upon the occurrence of a Force Majeure Event, the Party whose performance is prevented or delayed shall provide written notice as soon as reasonably practicable to the other party and shall use commercially reasonable efforts to cure such failure or delay. Following such notice, the Parties shall promptly confer, in good faith, on what action may be taken to minimize the impact on both Parties of such Force Majeure Event. The Parties agree that the effects of the COVID-19 pandemic that is ongoing as of the date hereof may be invoked as a Force Majeure Event only to the extent those effects are not reasonably foreseeable by the Parties as of the date hereof.

Section 7.14 Compliance with Law. Each Party shall comply in all material respects with applicable requirements of Law applicable to its activities in connection with this Agreement (including import and export control). If either Party receives notice from a Governmental Entity that it is in violation of a Law as a result of such Party’s provision of a Service, the Parties shall mutually cooperate such that the Service may be provided in a way that is not in violation; provided that none of Service Provider or any of its Affiliates shall have any liability for discontinuing its provision of any such Service until the Parties mutually agree in writing to the appropriate changes of such Service.

 

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Section 7.15 No Set-Off.

The obligations of each Party shall not be subject to setoff for non-performance or any monetary or non-monetary claim by the other Party or any of its respective Affiliates under any other agreement between the Parties or any of their respective Affiliates.

Section 7.16 Definitions.

For purposes of this Agreement, capitalized terms (including, with correlative meaning, their singular and plural variations) have the meanings ascribed to such terms in EXHIBIT A or as otherwise defined elsewhere in this Agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, each of the Parties has caused this Transition Services Agreement to be executed as of the date first above written.

 

AT&T SERVICES, INC.
By:  

/s/ Stephen A. McGaw

Name:   Stephen A. McGaw
Title:   Senior Vice President – Corporate
  Strategy and Development

[Signature Page to Transition Services Agreement]


MAGALLANES, INC.
By:  

/s/ Stephen A. McGaw

  Name: Stephen A. McGaw
  Title: President

[Signature Page to Transition Services Agreement]


EXHIBIT A

DEFINITIONS

The following terms when used in this Agreement shall have the following definitions:

Additional Services” has the meaning set forth in Section 1.3(a).

Affiliates” has the meaning set forth in the Separation and Distribution Agreement.

Agreement” has the meaning set forth in the Preamble.

Alternative Service Provider Account” has the meaning set forth in Section 2.2.

AT&T” has the meaning set forth in the Preamble.

AT&T Parent” has the meaning set forth in the Recitals.

AT&T Service Coordinator” has the meaning set forth in Section 1.8(d).

Business” has the meaning set forth in the Separation and Distribution Agreement.

Business Days” has the meaning set forth in the Merger Agreement.

CCPA” has the meaning set forth in the Global Data Protection Agreement.

Change of Control” shall mean the occurrence of any of the following events, either with respect to Service Provider or Service Recipient, as applicable: (i) an acquisition of a Party by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation but excluding any merger effected exclusively for the purpose of changing the domicile of such Party); or (ii) a sale of all or substantially all of the assets of a Party, so long as in either case such Party’s stockholders of record immediately prior to such sale, immediately after such sale, hold less than fifty percent (50%) of the voting power of the surviving or acquiring entity; provided that a transfer by one Party to a wholly owned subsidiary of the ultimate parent company of such Party is not a Change of Control.

Chosen Courts” has the meaning set forth in the Merger Agreement.

Closing” has the meaning set forth in the Merger Agreement.

Confidential Information” has the meaning set forth in Section 5.1.

Consumer Price Index” means the measure that is published by the U.S. Bureau of Labor Statistics of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.


Contract” has the meaning set forth in the Merger Agreement.

Cure Period” has the meaning set forth in Section 3.1.

Damages” has the meaning set forth in the Separation and Distribution Agreement.

Data Breach” has the meaning set forth in Section 6.2.

“Data Protection Regulation” has the meaning set forth in the Global Data Protection Agreement.

Defaulting Party” has the meaning set forth in Section 4.2.

Disclosing Party” has the meaning set forth in Section 5.1.

Discovery” has the meaning set forth in the Recitals.

Effective Date” has the meaning set forth in the Preamble.

Effective Time” has the meaning set forth in the Merger Agreement.

Equipment and Systems” has the meaning set forth in Section 1.10(b)(i).

Extension Period” has the meaning set forth in Section 4.1.

Fee Dispute” has the meaning set forth in Section 2.2.

Force Majeure Event” has the meaning set forth in Section 7.13.

Forward Services” has the meaning set forth in the Recitals.

GAAP” has the meaning set forth in the Merger Agreement.

Global Data Protection Agreement” means the Global Data Protection Agreement, dated as of April 8, 2022, by and between Magallanes, Inc. and AT&T Services, Inc.

Governmental Entity” has the meaning set forth in the Merger Agreement.

Guest User” has the meaning set forth in Section 6.1.

Host” has the meaning set forth in Section 6.1.

Indemnifying Party” has the meaning set forth in Section 3.3.

Indemnitees” has the meaning set forth in Section 3.3.

Information” shall mean all information in written, oral, electronic, computerized, digital or other tangible or intangible media; provided that the term “Information” does not include any datasets or derived data, or any Intellectual Property rights, embodied in any of the foregoing in this definition.


Intellectual Property” has the meaning set forth in the Merger Agreement. “Late Payment Charge” has the meaning set forth in Section 2.2.

Laws” has the meaning set forth in the Merger Agreement.

Lookback Period” means the twelve (12) month period immediately preceding the Closing.

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.

Omitted Services” has the meaning set forth in Section 1.3(b).

Other Competent Authority” has the meaning set forth in the Global Data Protection Agreement.

Parties” and “Party” have the meanings set forth in the Preamble.

Performance Notice” has the meaning set forth in Section 3.1.

Person” has the meaning set forth in the Merger Agreement.

Personal Information” shall mean any information that is processed in connection with the provision of Services relating to or reasonably capable of being associated with an identified or identifiable person, device or household, including, but not limited to: (a) a natural person’s name, street address or specific geolocation information, date of birth, telephone number, email address, online contact information, photograph, biometric data, Social Security number, driver’s license number, passport number, tax identification number, any government-issued identification number, financial account number, or credit card number, any information that would permit access to a financial account, a user name and password that would permit access to an online account, health information, insurance account information, personal characteristics such as race or ethnicity, marital status, sexuality, or gender, any persistent identifier such as a customer number held in a cookie, an Internet protocol address, a processor or device serial number, user ID, advertising ID, or a unique device identifier; (b) “personal data,” “personal information,” “protected health information,” “nonpublic personal information,” or other similar terms as defined by Privacy Requirements; or (c) any other information that allows the identification of a natural person.


Privacy Requirements” means any applicable national, federal, state or provincial data privacy or data protection Law or regulation of the jurisdictions in which the Services are performed, data subjects reside and/or Personal Information is processed, as amended or introduced from time to time, including but not limited to the Data Protection Regulation, UK Data Protection Legislation, Canada’s Personal Information Protection and Electronic Documents Act, Japan’s Act on Protection of Personal Information, CCPA, and the Federal Data Protection Act of 19 June 1992 (Switzerland); together with: any guidance, directions, decisions, determinations, codes of practice, orders, notices or demands issued by any Supervisory Authority or Other Competent Authority; and any associated binding judgments of any competent tribunal, regulatory body, or court of law; each as applicable and as amended, supplemented, substituted or replaced from time to time.

Proceeding” has the meaning set forth in the Merger Agreement.

Receiving Party” has the meaning set forth in Section 5.1.

Remainco Business” has the meaning set forth in the Separation and Distribution Agreement.

Remainco Group” has the meaning set forth in the Separation and Distribution Agreement.

Reverse Services” has the meaning set forth in the Recitals.

Security Regulations” has the meaning set forth in Section 6.1.

Separation and Distribution Agreement” has the meaning set forth in the Merger Agreement.

Service” and “Services” have the meanings set forth in the Recitals.

Service Coordinator” and “Service Coordinators” have the meanings set forth in Section 1.8(d).

Service Failure” has the meaning set forth in Section 3.1.

Service Fee” and “Service Fees” have the meanings set forth in Section 2.1.

Service Provider” means either Party, as applicable, in its capacity as a provider of any Service under this Agreement.

Service Provider IP” has the meaning set forth in Section 5.6(c).

Service Provider Third-Party IP” has the meaning set forth in Section 5.6(c).

Service Recipient” means either Party, as applicable, in its capacity as a recipient of any Service under this Agreement.

Service Recipient IP” has the meaning set forth in Section 5.6(d).

Service Recipient Third-Party IP” has the meaning set forth in Section 5.6(d).

Service Standard” has the meaning set forth in Section 1.2(a).


Service Term” has the meaning set forth in Section 4.1.

Spinco” has the meaning set forth in the Preamble.

Spinco Business” has the meaning set forth in the Separation and Distribution Agreement.

Spinco Distribution” has the meaning set forth in the Merger Agreement.

Spinco Service Coordinator” has the meaning set forth in Section 1.8(d).

Subsidiaries” has the meaning set forth in the Merger Agreement.

Supervisory Authority” has the meaning set forth in the Global Data Protection Agreement.

Systems” has the meaning set forth in Section 6.1.

Tax Matters Agreement” has the meaning set forth in the Merger Agreement.

Taxes” has the meaning set forth in the Tax Matters Agreement.

Term” has the meaning set forth in Section 4.1.

Third-Party Consents” has the meaning set forth in Section 1.8(a).

Third-Party IP Matter” has the meaning set forth in Section 3.2.

Third-Party Review” has the meaning set forth in Section 2.4.

Trademarks” has the meaning set forth in the Merger Agreement.

TSA IP” means any Intellectual Property or other proprietary rights (including rights in or to data or other Information), excluding rights under Trademarks or audiovisual content.

UK Data Protection Legislation” has the meaning set forth in the Global Data Protection Agreement.

Virus” means any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop dead device,” “virus,” “malicious logic,” software routines, devices, effects, computer codes, programs or hardware components or other undisclosed feature or file that would (a) enable or assist any Person to access, without authorization, any software, firmware, middleware, hardware, network, data or other Systems element, or (b) disrupt, disable, harm, erase or otherwise impede in any manner the operation or functionality of the foregoing features or files, any portion thereof or any other software, firmware, middleware, hardware, network, data or other Systems element, except as disclosed in the documentation therefor.


Schedule I

Forward Services and Fees


Schedule II

Reverse Services and Fees


Schedule III

Excluded Services


Schedule IV

Dependent Services

Exhibit 10.2

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES

THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO

ITEM 601(b)(10)(iv) WHEREBY CERTAIN IDENTIFIED INFORMATION HAS

BEEN EXCLUDED BECAUSE IT IS BOTH NOT MATERIAL AND WOULD

LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY

DISCLOSED: [***]

EXECUTION VERSION

INTELLECTUAL PROPERTY MATTERS AGREEMENT

This INTELLECTUAL PROPERTY MATTERS AGREEMENT (this “Agreement”), dated as of April 8, 2022, is made and entered into by and between AT&T Inc., a Delaware corporation (“AT&T”) and AT&T Intellectual Property LLC, a Delaware corporation (“IP HoldCo”, and together with AT&T, the “AT&T Parties”), on the one hand, and Magallanes, Inc., a Delaware corporation (“Spinco”), on the other hand.

WHEREAS, upon the terms and subject to the conditions set forth in the Separation and Distribution Agreement, dated as of May 17, 2021, by and between AT&T, Spinco and Discovery, Inc. (“RMT Partner,” and such agreement the “Separation and Distribution Agreement”), AT&T has agreed to assign and transfer certain assets to Spinco and the parties thereto have agreed to take certain other actions as set forth therein;

WHEREAS, following the consummation of the transactions contemplated by the Separation and Distribution Agreement, Merger Sub, a wholly owned subsidiary of RMT Partner, shall be merged with and into Spinco, with Spinco as the surviving entity, all upon the terms and subject to the conditions set forth in that certain Merger Agreement, dated as of May 17, 2021, by and among AT&T, Spinco, RMT Partner, and Merger Sub (the “Merger Agreement”); and

WHEREAS, in connection with the transactions contemplated by the Separation and Distribution Agreement and the Merger Agreement, the Parties desire to enter into this Agreement as provided in the Separation and Distribution Agreement and Merger Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and in the Separation and Distribution Agreement and the Merger Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Certain Defined Terms. The following capitalized terms as used in this Agreement shall have the meanings specified in this Article I:

Affiliate” has the meaning set forth in the Separation and Distribution Agreement.

Agreement” has the meaning set forth in the Preamble.

AT&T Business” means the Remainco Business, as defined in the Separation and Distribution Agreement.


AT&T Entities” means AT&T and each Person (other than Spinco and the other members of Spinco Group) that is a direct or indirect Subsidiary of AT&T immediately prior to the Spinco Distribution, and each Person that becomes a Subsidiary of AT&T after the Spinco Distribution.

AT&T Parties” has the meaning set forth in the Preamble.

AT&T Transition Period” has the meaning set forth in Section 2.02(c).

AT&T” has the meaning set forth in the Preamble.

Back Office Collateral” means the collateral and the Content set forth in Annex E, that is used internally, solely for back office purposes.

Business Day” has the meaning set forth in the Merger Agreement.

Chosen Courts” has the meaning set forth in the Merger Agreement.

Closing Date” has the meaning set forth in the Merger Agreement.

Closing” has the meaning set forth in the Merger Agreement.

Content” means any visual, audio or audiovisual programming content, including any portion or element thereof.

Continuing Arrangements” has the meaning set forth in the Separation and Distribution Agreement.

Contract” has the meaning set forth in the Merger Agreement.

Control” (or the correlative, “Controlled”) by a Person means, with respect to any Intellectual Property, the right of such Person to license or sublicense such Intellectual Property within the scope of the applicable license granted under this Agreement without (a) breach of any obligation to any Third Party, (b) requirement to obtain consent of any Third Party or (c) obligation to assign or forfeit any rights, pay any royalty, or provide other consideration or incur any other liability to any Third Party.

Copyright” has the meaning set forth in the definition of “Intellectual Property.”

Corporate and Legal Identity” means, collectively, (a) letterhead, business cards, stationery, web sites, social media sites, packaging slips, invoices, product datasheets, product labels and any other materials to the extent that any of the foregoing identifies a company or a corporate identity, and (b) corporate names, assumed names, fictitious names, d/b/a’s, or other legal identities.

[***]

 

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[***]

Distribution Date” means the “Spinco Distribution Date” as defined in the Separation and Distribution Agreement.

Facilities-Based System” means a physical transmission facility that distributes television programming using: (a) cable, fiber, wireline technology, satellite master antenna television, multichannel multipoint distribution service, or digital subscriber line; (b) telecommunications infrastructure (i.e., systems either: (i) primarily using common carrier telephone land lines or (ii) operated by common carrier telephone companies using a primarily terrestrial distribution system (such as Verizon FIOS)); (c) direct broadcast satellite; or (d) successor wireline or non-wireline technologies. Distribution on a Facilities-Based System expressly excludes any distribution via wireless or the internet.

Improvement” to Technology means any modifications, derivative works, enhancements and improvements. For clarity, an item of Technology will be deemed to be an Improvement of another item of Technology only if it is actually derived from such other item of Technology and not merely because it may have the same or similar functionality or use as such other item of Technology.

Intellectual Property” means, collectively, all U.S. and foreign intellectual property rights, including all rights in (a) trademarks, service marks, brand names, certification marks, collective marks, d/b/a’s, Internet domain names, logos, designs, symbols, trade dress, trade names, and other indicia of origin, all applications and registrations for the foregoing, and all goodwill associated therewith and symbolized thereby, including all renewals of same (“Trademarks”); (b) all patents, patent applications, including divisions, continuations, continuations-in-part, extensions, reissues, reexaminations, and any other governmental grant for the protection of inventions or industrial designs (“Patents”); (c) trade secrets and all other confidential and proprietary information, including, know-how, processes, schematics, business methods, formulae, technical data, specifications, operating and maintenance manuals, drawings, prototypes, models, designs, customer lists and supplier lists (“Trade Secrets”); (d) published and unpublished works of authorship in any media, whether copyrightable or not (including software, source code, object code, databases and other compilations of information), copyrights therein and thereto, and registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof (“Copyrights”); (e) all derivative, compilation and ancillary rights of every kind, whether now known or hereafter recognized, related to Copyrights; and (f) moral rights, rights of publicity and rights of privacy.

Intercompany Contract” means any and all Contracts on commercial terms between any member of the Spinco Group, on the one hand, and any AT&T Entity (other than Spinco or its Subsidiaries), on the other hand, in effect at Closing, including the applicable Continuing Arrangements finalized pursuant to the procedures set forth in Section 1.2(a) of the Separation and Distribution Agreement.

 

3


IP HoldCo” has the meaning set forth in the Preamble.

Law” has the meaning set forth in the Merger Agreement.

Licensed AT&T Identified Patents” means the Patents set forth in Annex A-1 and all Related Patents thereto (regardless of when such Related Patents are filed or issued) that are Controlled by any AT&T Entity at any time during the term of this Agreement.

Licensed AT&T Patents” means the Licensed AT&T Identified Patents and the Licensed AT&T Technology Patents.

Licensed AT&T Technology IPR” means the Other IPR Controlled by AT&T or any entity that is a Subsidiary of AT&T as of immediately following the Closing that is embodied or contained in the applicable Licensed AT&T Technology.

Licensed AT&T Technology Patents” means the Patents Controlled by AT&T or any entity that is a Subsidiary of AT&T as of immediately following the Closing, that claim or cover the applicable Licensed AT&T Technology, including the making or use of such Licensed AT&T Technology, and all Related Patents thereto (regardless of when such Related Patents are filed or issued) that are Controlled by any AT&T Entity at any time during the term of this Agreement.

Licensed AT&T Technology” means all (a) Technology constituting a tangible (including electronic) embodiment of Intellectual Property Controlled by AT&T or any entity that is a Subsidiary of AT&T as of immediately following the Closing, and that was used in the conduct of the Spinco Business at any time during the period commencing twelve (12) months prior to the Closing Date and ending on the Closing Date, including the Technology set forth in Annex B and Annex E, and (b) Spinco Business Information; provided, however, that Licensed AT&T Technology shall exclude (i) any Technology that was used by Spinco or its Subsidiaries solely pursuant to Intercompany Contracts, and (ii) the Common Data Platform, as such term is defined in that certain License Agreement, dated as of March 31, 2022, by and between IP Holdco and Spinco.

Licensed AT&T Trademarks” means the Trademarks that are owned by AT&T or any entity that is a Subsidiary of AT&T as of immediately following the Closing and that are used or displayed in connection with the Spinco Business as of the Closing Date; provided, however, that Licensed AT&T Trademarks shall exclude any Trademark that was used by Spinco or its Subsidiaries solely pursuant to Intercompany Contracts.

Licensed AT&T Transition Content” means Content owned by AT&T or any entity that is a Subsidiary of AT&T as of immediately following the Closing that is used or displayed in a manner ancillary or appurtenant to any Licensed AT&T Trademark in connection with the Spinco Business (excluding any Content distribution business) as of the Closing Date; provided, however, that Licensed AT&T Transition Content shall exclude any Content that was used by Spinco or its Subsidiaries solely pursuant to Intercompany Contracts.

 

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Licensed AT&T Transition Materials” means the Licensed AT&T Trademarks and Licensed AT&T Transition Content.

Licensed Spinco Identified Patents” means the Patents set forth in Annex A-2 and all Related Patents thereto (regardless of when such Related Patents are filed or issued) that are Controlled by any member of the Spinco Group at any time during the term of this Agreement.

Licensed Spinco Patents” means the Licensed Spinco Identified Patents and the Licensed Spinco Technology Patents.

Licensed Spinco Technology IPR” means the Other IPR Controlled by Spinco or any entity that is a Subsidiary of Spinco as of immediately following the Closing that is embodied or contained in the applicable Licensed Spinco Technology.

Licensed Spinco Technology Patents” means the Patents Controlled by Spinco or any entity that is a Subsidiary of Spinco as of immediately following the Closing, that claim or cover the applicable Licensed Spinco Technology, including the making or use of such Licensed Spinco Technology, and all Related Patents thereto (regardless of when such Related Patents are filed or issued) that are Controlled by any member of the Spinco Group at any time during the term of this Agreement.

Licensed Spinco Technology” means all Technology constituting a tangible (including electronic) embodiment of Intellectual Property Controlled by Spinco or any entity that is a Subsidiary of Spinco as of immediately following the Closing, and that was used in the conduct of the AT&T Business at any time during the period commencing twelve (12) months prior to the Closing Date and ending on the Closing Date, including the Technology set forth in Annex C; provided, however, that Licensed Spinco Technology shall exclude any Technology that was used by any AT&T Entity solely pursuant to Intercompany Contracts.

Licensed Spinco Trademark” means the Trademarks that are owned by Spinco or any entity that is a Subsidiary of Spinco as of immediately following the Closing and that are used or displayed in connection with the AT&T Business as of the Closing Date; provided, however, that Licensed Spinco Trademark shall exclude any Trademark that was used by any AT&T Entity solely pursuant to Intercompany Contracts.

Licensed Spinco Transition Content” means Content owned by Spinco or any entity that is a Subsidiary of Spinco as of immediately following the Closing that is used or displayed in a manner ancillary or appurtenant to any Licensed Spinco Trademark in connection with the AT&T Business (excluding any Content distribution business) as of the Closing Date; provided, however, that Licensed Spinco Transition Content shall exclude any Content that was used by any AT&T Entity solely pursuant to Intercompany Contracts.

Licensed Spinco Transition Materials” means the Licensed Spinco Trademarks and Licensed Spinco Transition Content.

Merger Agreement” has the meaning set forth in the Recitals.

 

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Merger Sub” has the meaning set forth in the Merger Agreement.

[***]

Other IPR” means all Intellectual Property, other than (a) Patents, (b) Trademarks and (c) Copyrights in Content or other proprietary rights in Content. For clarity, and notwithstanding the foregoing, Other IPR shall include Intellectual Property rights in Back Office Collateral.

Party” means each of the AT&T Parties and Spinco individually, and “Parties” means the AT&T Parties and Spinco collectively. References to “the other Party” shall mean the AT&T Parties (collectively) or Spinco, as applicable.

Patent” has the meaning set forth in the definition of “Intellectual Property.”

Person” has the meaning set forth in the Merger Agreement.

Personal Data” has the meaning set forth in the Merger Agreement.

Proceeding” has the meaning set forth in the Merger Agreement.

Related Patents” of a Patent (the “First Patent”) means all Patents in any country of the world claiming priority to, or from which priority is claimed by, the First Patent, together with all foreign counterparts thereof.

Remainco Entities” has the meaning set forth in the Merger Agreement.

RMT Partner” has the meaning set forth in the Recitals.

Separation and Distribution Agreement” has the meaning set forth in the Recitals.

Specified Shared Technology IP” means the Copyrights and Trade Secrets embodied in the Specified Shared Technology.

Specified Shared Technology” means the Technology described in Annex D.

Spinco” has the meaning set forth in the Preamble.

 

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Spinco Business” has the meaning set forth in the Separation and Distribution Agreement.

Spinco Business Information” means business information and data generated by AT&T or any of its Subsidiaries (excluding, for clarity, the Spinco Group) prior to the Closing, for or on behalf of the Spinco Group for use in the operation of the Spinco Business; provided, however, that Business Information shall exclude (a) any Personal Data, and (b) any information and data (including usage data) regarding actual or potential customers or subscribers of products or services of AT&T or any of its Subsidiaries (excluding, for clarity, the Spinco Group) or [***] or any of its Affiliates. For clarity, any data compilation that otherwise meets the foregoing definition (or applicable portion thereof, if less than the entire compilation meets the foregoing definition) shall constitute Spinco Business Information.

Spinco Distribution” has the meaning set forth in the Separation and Distribution Agreement.

Spinco Entities” has the meaning set forth in the Merger Agreement.

Spinco Group” has the meaning set forth in the Separation and Distribution Agreement.

Spinco Transition Period” has the meaning set forth in Section 2.01(d).

Standards of Quality” means at least the same standards of quality, appearance, service and other standards that were observed as of the Closing Date by the Parties and their Affiliates in connection with the use and display of the applicable Trademarks licensed pursuant to Section 2.01(d) or Section 2.02(c), as applicable.

Subsidiary” has the meaning set forth in the Separation and Distribution Agreement.

Technology” means tangible embodiments, whether in electronic, written or other media, of Intellectual Property, including designs, documentation (such as bill of materials, build instructions and test reports), schematics, layouts, reports, algorithms, routines, software (including source code and object code), lab notebooks, equipment, processes, prototypes and devices. For clarity, and notwithstanding the foregoing, Technology excludes any Intellectual Property itself or Content, data or data compilations, but includes Back Office Collateral.

Third Party” means any Person, other than AT&T, AT&T’s Affiliates, Spinco and Spinco’s Affiliates.

Trade Secret” has the meaning set forth in the definition of “Intellectual Property.”

Trademark” has the meaning set forth in the definition of “Intellectual Property.”

Transaction Documents” has the meaning set forth in the Merger Agreement.

 

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Transition Material Licensee” has the meaning set forth in Section 3.01.

Transition Material Licensor” has the meaning set forth in Section 3.01.

Transition Material” means the Licensed AT&T Transition Materials or the Licensed Spinco Transition Materials, as applicable.

Transition Services Agreement” has the meaning set forth in the Merger Agreement.

ARTICLE II

LICENSES AND INTELLECTUAL PROPERTY RIGHTS

Section 2.01 Licenses to Spinco.

(a) License under Licensed AT&T Identified Patents. Effective as of the Distribution Date and subject to the terms and conditions of this Agreement, IP HoldCo, on behalf of itself, AT&T and any entity that is a Subsidiary of AT&T as of immediately following the Closing, hereby grants to the Spinco Group a non-exclusive, royalty-free, fully paid-up, irrevocable, perpetual, worldwide, non-sublicensable and non-transferable (except as permitted by Section 7.09) right and license under the Licensed AT&T Identified Patents to make, have made, use, have used, sell, have sold, offer to sell, import or have imported, or otherwise exploit any product or service and to practice any method or process, each of which rights may be exercised by the Spinco Group or, at the election of any member of the Spinco Group, on its behalf by its authorized agents, end users, directors, employees, officers, distributors, resellers, contractors, subcontractors, suppliers and original equipment manufacturers, in each case, for any and all purposes. For clarity, the ongoing rights granted pursuant to the foregoing license to any member of the Spinco Group that ceases to be an Affiliate of Spinco are as set forth in Section 7.09.

(i) If any member of the Spinco Group identifies any Patent(s) Controlled by any AT&T Entity filed after June 14, 2018 and prior to the Closing Date, for which the named inventors include at least one employee of the Spinco Entities and one employee of the Remainco Entities, in each case where the conception or reduction to practice of the relevant invention took place during the period of employment and such Patent(s) are not set forth on Annex A-1, or otherwise included in the Licensed AT&T Identified Patents as of the date such Patent(s) are identified, then promptly following notice thereof to the AT&T Parties, IP HoldCo shall amend the definition of Licensed AT&T Identified Patents so as to include such Patent(s), retroactive as to the date of this Agreement, to the extent rights in such Patent(s) remain licensable by IP HoldCo (or any other AT&T Entity) as of the date of such notice.

(b) License to Licensed AT&T Technology. With respect to each item of Licensed AT&T Technology (including, without limitation, such Licensed AT&T Technology identified in Annex B and Annex E), effective as of the Distribution Date and subject to the terms and conditions of this Agreement, IP HoldCo, on behalf of itself, AT&T and any entity that is a Subsidiary of AT&T as of immediately following the Closing, hereby grants to the Spinco Group the following non-exclusive, royalty-free, fully paid-up, non-terminable, irrevocable (except as permitted under Section 5.02), perpetual, worldwide, non-sublicensable and non-transferable (except as permitted by Section 7.09) right and license and/or sublicense, as applicable:

 

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(i) under the Licensed AT&T Technology Patents to make, have made, use, have used, sell, have sold, offer to sell, import or have imported, or otherwise exploit such Licensed AT&T Technology and Improvements thereto, or any product or service that uses or incorporates such Licensed AT&T Technology or such Improvements (but only to the extent of such use or incorporation), and to practice any method or process in connection with the foregoing, and

(ii) under the Licensed AT&T Technology IPR, to copy, use, modify, reproduce, display, perform, make Improvements of or to, distribute, provide and otherwise exploit such Licensed AT&T Technology (in object code and source code form, to the extent the source code is in the possession of any member of the Spinco Group as of the Closing Date or is provided (or required to be provided) to the Spinco Group under Section 2.01(b)(iv)), or any product or service that uses or incorporates such Licensed AT&T Technology or such Improvements (but only to the extent of such use or incorporation),

each of which rights may be exercised by the Spinco Group or, at the election of any member of the Spinco Group, on its behalf by its authorized agents, end users, directors, employees, officers, distributors, resellers, contractors, subcontractors, suppliers and original equipment manufacturers, in each case, in the conduct of the business of the Spinco Group, in order to continue using the Licensed AT&T Technology in substantially the same manner as used in the conduct of the Spinco Business during the period commencing twelve (12) months prior to the Closing Date and ending on the Closing Date. For clarity, (A) the ongoing rights granted pursuant to the foregoing license to any member of the Spinco Group that ceases to be an Affiliate of Spinco are as set forth in Section 7.09 and (B) the license in this Section 2.01(b) shall provide rights to use or practice the applicable Licensed AT&T Technology Patents and the Licensed AT&T Technology IPR only in connection with use or exploitation of the Licensed AT&T Technology (and any modifications, updates, upgrades, new versions and other derivatives thereof).

(iii) Restrictions. Except as expressly provided above in this Section 2.01(b) or otherwise in this Agreement, Spinco shall not (and shall ensure that its Subsidiaries do not) provide, distribute, license, sublicense, sell, assign or transfer any Licensed AT&T Technology, in whole or in part, to any Third Party, or authorize any Third Party to in any way access or utilize any Licensed AT&T Technology. Spinco shall not (and shall ensure that its Subsidiaries do not), directly or indirectly, (A) access or use any Licensed AT&T Technology except as expressly permitted hereunder; or (B) remove from any Licensed AT&T Technology any language or designation indicating the confidential nature thereof or the proprietary rights or trademarks of AT&T; or (C) provide access to any Licensed AT&T Technology to any Third Party except as expressly permitted hereunder. The source code for the Licensed AT&T Technology is proprietary to AT&T. Spinco shall (and shall ensure that its Subsidiaries do) maintain such source code in confidence and shall not sell, disclose, transfer, sublicense, or otherwise distribute the source code for any Licensed AT&T Technology, in whole or in part, to any Third Party, other than consultants and contractors in the context of their performance of services to Spinco or its Subsidiaries, pursuant to confidentiality agreements at least as restrictive as this Agreement.

 

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(iv) No Delivery, Services or Technical Support. On or prior to the Closing Date, AT&T shall (or, as applicable, shall cause its Subsidiaries or require the relevant third party to) deliver to Spinco (or any Subsidiary of Spinco that Spinco designates) a copy of any software that comprises the “Passcard” application (as listed in Annex B) or the Specified Shared Technology (as listed on Annex D), which such software is readily in the possession or control of AT&T or any of its Subsidiaries (and only in the form (whether in object code or source code form) in such possession or control). Other than as set forth in the immediately preceding sentence, nothing in this Section 2.01 shall require any AT&T Entity to deliver to Spinco or its Subsidiaries any Technology (including any source code for object code in the possession of Spinco or its Subsidiaries) or provide any services (including software-as-a-service) or technical support related to the Licensed AT&T Technology; provided that, if Spinco or its Subsidiaries, within twelve (12) months of the Distribution Date, identify any Technology that is the subject of the licenses granted in Section 2.01(b) for which the object code is in the possession of Spinco and its Subsidiaries and the source code thereof is not in the possession of Spinco and its Subsidiaries but is in the possession of the AT&T Entities, the AT&T Entities shall provide a copy thereof to Spinco or its Subsidiaries, at Spinco’s reasonable request, in a form to be mutually agreed.

[***]

(d) License to Licensed AT&T Transition Materials. Effective as of the Distribution Date and subject to the terms and conditions of this Agreement (including Article III), IP HoldCo, on behalf of itself, AT&T and any entity that is a Subsidiary of AT&T as of immediately following the Closing, hereby grants to the Spinco Group a non-exclusive, royalty-free, fully paid-up, worldwide, non-sublicensable (other than to third parties for purposes of providing marketing or other commercial services to the Spinco Group) and non-transferable (except as permitted by Section 7.09) license to continue using, displaying and otherwise exploiting the Licensed AT&T Transition Materials in the same manner as used immediately prior to the Closing: (A) in Corporate and Legal Identity for a period of thirty (30) days after the Closing Date, (B) in connection with the operation of the RSN business for a period of eighteen (18) months after the Closing Date, and (C) for all other uses and displays, for a period not to exceed sixty (60) days after the Closing Date (each such period, a “Spinco Transition Period”). For clarity, the ongoing rights granted pursuant to the foregoing license to any member of the Spinco Group that ceases to be an Affiliate of Spinco are as set forth in Section 7.09.

 

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(i) Spinco and its Subsidiaries shall cease using and displaying the Licensed AT&T Transition Materials as soon as commercially reasonable and in any event within the applicable Spinco Transition Period (as may be extended pursuant to Section 3.01). Notwithstanding anything to the contrary in this Agreement, neither Spinco nor its Subsidiaries shall have any obligation to recall, replace or modify any item of sales collateral or installed customer equipment distributed prior to the Closing that, following the Closing, is not under Spinco’s or its Subsidiaries’ control. For clarity, the licenses granted to the Spinco Group pursuant to Section 2.01(d) above are granted only for wind-down or internal purposes, as applicable, during the applicable Spinco Transition Period. Notwithstanding the foregoing, nothing in this Agreement shall be read to place Spinco and its current and future Subsidiaries in a worse position than a member of the general public as to the Licensed AT&T Transition Materials or any part thereof.

Section 2.02 Licenses to AT&T.

(a) License under Licensed Spinco Identified Patents. Effective as of the Distribution Date and subject to the terms and conditions of this Agreement, Spinco, on behalf of itself and any entity that is a Subsidiary of Spinco as of immediately following the Closing, hereby grants to the AT&T Entities a non-exclusive, royalty-free, fully paid-up, irrevocable, perpetual, worldwide, non-sublicensable and non-transferable (except as permitted by Section 7.09) right and license under the Licensed Spinco Identified Patents, to make, have made, use, have used, sell, have sold, offer to sell, import or have imported or otherwise exploit any product or service and to practice any method or process, each of which rights may be exercised by any AT&T Entity or, at the election of the AT&T Entities, on its or their behalf by its and their authorized agents, end users, directors, employees, officers, distributors, resellers, contractors, subcontractors, suppliers and original equipment manufacturers, in each case, for any and all purposes. For clarity, the ongoing rights granted pursuant to the foregoing license to any AT&T Entity that ceases to be a Subsidiary of AT&T are as set forth in Section 7.09.

(i) If any AT&T Entity identifies any Patent(s) Controlled by any member of the Spinco Group filed after June 14, 2018 and prior to the Closing Date, for which the named inventors include at least one employee of the Spinco Entities and one employee of the Remainco Entities, in each case where the conception or reduction to practice of the relevant invention took place during the period of employment, and such Patent(s) are not set forth on Annex A-2, or otherwise included in the Licensed Spinco Identified Patents as of the date such Patent(s) are identified, then promptly following notice thereof to Spinco, Spinco shall amend the definition of Licensed Spinco Identified Patents so as to include such Patent(s), retroactive as to the date of this Agreement, to the extent rights in such Patent(s) remain licensable by Spico (or any member of the Spinco Group) as of the date of such notice.

(b) License to Licensed Spinco Technology. With respect to each item of Licensed Spinco Technology (including, without limitation, such Licensed Spinco Technology identified in Annex C), effective as of the Distribution Date and subject to the terms and conditions of this Agreement, Spinco, on behalf of itself and any entity that is a Subsidiary of Spinco as of immediately following the Closing, hereby grants to the AT&T Entities the following non-exclusive, royalty-free, fully paid-up, non-terminable, irrevocable (except as permitted under Section 5.02), perpetual, worldwide, non-sublicensable and non-transferable (except as permitted by Section 7.09) right and license and/or sublicense, as applicable:

 

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(i) under the Licensed Spinco Technology Patents to make, have made, use, have used, sell, have sold, offer to sell, import or have imported, or otherwise exploit such Licensed Spinco Technology and Improvements thereto, or any product or service that uses or incorporates such Licensed Spinco Technology or such Improvements (but only to the extent of such use or incorporation), and to practice any method or process in connection with the foregoing, and

(ii) under the Licensed Spinco Technology IPR, to copy, use, modify, reproduce, display, perform, make Improvements of or to, distribute, provide and otherwise exploit such Licensed Spinco Technology (in object code and source code form, to the extent the source code is in the possession of any of the AT&T Entities as of the Closing Date or is provided (or required to be provided) to the AT&T Entities under Section 2.02(b)(iv)), or any product or service that uses or incorporates such Licensed Spinco Technology or such Improvements (but only to the extent of such use or incorporation),

each of which rights may be exercised by any AT&T Entity or, at the election of the AT&T Entities, on its or their behalf by its and their authorized agents, end users, directors, employees, officers, distributors, resellers, contractors, subcontractors, suppliers and original equipment manufacturers, in each case, in the conduct of the business of the AT&T Entities, in order to continue using the Licensed Spinco Technology in substantially the same manner as used in the conduct of the AT&T Business during the period commencing twelve (12) months prior to the Closing Date and ending on the Closing Date. For clarity, (A) the ongoing rights granted pursuant to the foregoing license to any AT&T Entity that ceases to be a Subsidiary of AT&T are as set forth in Section 7.09 and (B) the license in this Section 2.02(b) shall provide rights to use or practice the applicable Licensed Spinco Technology Patents and the Licensed Spinco Technology IPR only in connection with use or exploitation of the Licensed Spinco Technology (and any modifications, updates, upgrades, new versions and other derivatives thereof).

(iii) Restrictions. Except as expressly provided above in this Section 2.02(b) or otherwise in this Agreement, AT&T shall not (and shall ensure that its Subsidiaries do not) provide, distribute, license, sublicense, sell, assign or transfer any Licensed Spinco Technology, in whole or in part, to any Third Party, or authorize any Third Party to in any way access or utilize any Licensed Spinco Technology. AT&T shall not (and shall ensure that its Subsidiaries do not), directly or indirectly, (A) access or use any Licensed Spinco Technology except as expressly permitted hereunder; or (B) remove from any Licensed Spinco Technology any language or designation indicating the confidential nature thereof or the proprietary rights or trademarks of Spinco; or (C) provide access to any Licensed Spinco Technology to any Third Party except as expressly permitted hereunder. The source code for the Licensed Spinco Technology is proprietary to Spinco. AT&T shall (and shall ensure that its Subsidiaries do) maintain such source code in confidence and shall not sell, disclose, transfer, sublicense, or otherwise distribute the source code for any Licensed Spinco Technology, in whole or in part, to any Third Party, other than consultants and contractors in the context of their performance of services to AT&T or its Subsidiaries, pursuant to confidentiality agreements at least as restrictive as this Agreement.

 

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(iv) No Delivery, Services or Technical Support. For clarity, nothing in this Section 2.02 shall require Spinco or its Affiliates to deliver to the AT&T Entities any Technology (including any source code for object code in the possession of any AT&T Entity) or provide any services (including software-as-a-service) or any technical support related to the Licensed Spinco Technology; provided that, if any of the AT&T Entities, within twelve (12) months of the Distribution Date, identifies any Technology that is the subject of the licenses granted in Section 2.02(b) for which the object code is in the possession of the AT&T Entities and the source code thereof is not in the possession of the AT&T Entities but is in the possession of the Spinco Group, Spinco shall provide a copy thereof to AT&T or its Subsidiaries, at AT&T’s reasonable request, in a form to be mutually agreed.

(c) License to Licensed Spinco Transition Materials. Effective as of the Distribution Date and subject to the terms and conditions of this Agreement (including Article III), Spinco, on behalf of itself and any entity that is a Subsidiary of Spinco as of immediately following the Closing, hereby grants to the AT&T Entities a non-exclusive, royalty-free, fully paid-up, worldwide, non-sublicensable (other than to third parties for purposes of providing marketing or other commercial services to the AT&T Entities) and non-transferable (except as permitted by Section 7.09) license to continue using, displaying and otherwise exploiting the Licensed Spinco Transition Materials in the same manner as used immediately prior to the Closing: (A) in Corporate and Legal Identity for a period of thirty (30) days after the Closing Date and (B) for all other uses and displays, for a period not to exceed sixty (60) days after the Closing Date (each such period, an “AT&T Transition Period”). For clarity, the ongoing rights granted pursuant to the foregoing license to any AT&T Entity that ceases to be a Subsidiary of AT&T are as set forth in Section 7.09.

(i) The AT&T Entities shall cease using and displaying the Licensed Spinco Transition Materials as soon as commercially reasonable and in any event within the applicable AT&T Transition Period (as may be extended pursuant to Section 3.01). Notwithstanding anything to the contrary in this Agreement, no AT&T Entity shall have any obligation to recall, replace or modify any item of sales collateral or installed customer equipment distributed prior to the Closing that, following the Closing, is not under AT&T’s or its Subsidiaries’ control. For clarity, the licenses granted to the AT&T Entities pursuant to this Section 2.02(c) are granted only for wind-down or internal purposes, as applicable, during the applicable AT&T Transition Period. Notwithstanding the foregoing, nothing in this Agreement shall be read to place the AT&T Entities in a worse position than a member of the general public as to the Licensed Spinco Transition Materials or any part thereof.

Section 2.03 Third Party Licenses.

(a) Except as provided expressly in this Article II, this Agreement does not grant or otherwise convey to any Party a license or any other right under or to any Intellectual Property or Technology owned by any Third Party. In the event that a Party uses any such Intellectual Property or Technology other than as licensed hereunder, such Party acknowledges that it must have an appropriate license to use or otherwise exploit such Intellectual Property and Technology from the Third Party owner (or its permitted licensee).

 

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(b) As to any sublicense granted by IP Holdco to the Spinco Group, or granted by Spinco to the AT&T Entities, in each case pursuant to Article II, the sublicense-receiving Party shall comply, and shall require its Subsidiaries to comply, with the terms and conditions of the applicable, underlying Third Party license agreement, following reasonable advance, written notice of such terms and conditions.

Section 2.04 Ownership of Improvements. Except as expressly provided in another written agreement between the Parties, as between the AT&T Entities, on the one hand, and the Spinco Group, on the other hand, ownership of any Intellectual Property in and to Improvements made with respect to the Technology licensed hereunder after the Closing Date shall vest with the Party that developed such Improvement. Without limiting the foregoing, except as expressly set forth in Article II, no right or license (whether express or implied) to any Improvement or Intellectual Property covering or embodied therein is granted under this Agreement. For the avoidance of doubt, no Party shall have any obligation under this Agreement to disclose or otherwise provide any Improvement made by or on behalf of such Party or its Subsidiaries to the other Party or its Affiliates.

Section 2.05 Joint Ownership of Specified Shared Technology.

(a) Effective as of the Distribution Date and subject to the terms and conditions of this Agreement, as among the Parties and their respective Affiliates, the Specified Shared Technology IP shall be owned jointly by AT&T and Spinco in equal and undivided shares. Each Party and its Affiliates hereby irrevocably assigns, transfers and conveys, to AT&T or Spinco, as applicable, an equal, undivided share in all Specified Shared Technology IP. Notwithstanding any more limited rights available to the Parties and their Affiliates under applicable Law, each Party and its Affiliates grants to the other Party and their respective Affiliates the rights and privileges set forth in Section 2.05(b)-(c).

(b) From the Distribution Date, (i) the Parties, and each of their respective Affiliates will be free to copy, use, modify, reproduce, display, perform, make Improvements of or to, distribute, provide and otherwise exploit (in object code and source code form, in the case of software) such Specified Shared Technology IP without (A) the consent of the other Party or (B) any duty of accounting to, or duty of sharing of profits with, any other Party, and (ii) the Parties shall be permitted to assign, transfer and grant licenses under their rights, title and interest in and to the Specified Shared Technology IP, provided that any disclosure by a Party or its Affiliates of the Specified Shared Technology to a non-Affiliate of such Party shall be subject to customary confidentiality undertakings.

(c) From the Distribution Date, either AT&T or Spinco may, without the consent of the other Party, (i) assert or otherwise bring and prosecute legal action (including judicial and administrative proceedings of any kind) for infringement or other violation of the Specified Shared Technology IP (as applicable), provided that, the other Party shall join in any such action to the extent necessary for standing purposes (with the Party asserting or otherwise bringing and prosecuting such action bearing such other Party’s reasonable costs and expenses for participation in such action), and (ii) take any and all actions in respect of the registration, maintenance or protection of Intellectual Property to the extent claiming or covering elements of the Specified Shared Technology. No Party or its Affiliates shall be required to participate in any activity, or join any action, undertaken by another Party pursuant to the foregoing sentence, except as otherwise expressly provided therein.

 

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(d) If any Party or any of their respective Affiliates files a Patent that covers or claims any Specified Shared Technology, the claim(s) of such Patent that cover or claim the Specified Shared Technology shall, if filed by Spinco or its Affiliates, be automatically included in the license to the AT&T Entities under Section 2.02(a) and, if filed by any AT&T Entity, automatically included in the license to the Spinco Group under Section 2.01(a).

ARTICLE III

TRANSITION MATERIAL PROVISIONS

Section 3.01 Extensions of Transition Periods. In the event that a Party and its Subsidiaries have used commercially reasonable efforts to cease the use, display and other exploitation of any Transition Material licensed to them (the “Transition Material Licensee”) by the other Party (the “Transition Material Licensor”) pursuant to Section 2.01(d) or Section 2.02(c) within the relevant Spinco Transition Period or AT&T Transition Period (as applicable), but are nonetheless unable to cease such copying, use, reproduction, display, performance, distribution and provision (in the case of Content) or use and display (in the case of Trademarks) (e.g., because they have been unable to obtain any approval required by Law), such Transition Material Licensee shall request in writing from the applicable Transition Material Licensor an extension of the relevant Spinco Transition Period or AT&T Transition Period (as applicable) at least ten (10) Business Days before the expiration of the applicable Spinco Transition Period or AT&T Transition Period (as applicable), and the Transition Material Licensor shall consider such request reasonably and in good faith, and shall respond to such Transition Material Licensee within such ten (10) Business Day period regarding such request; provided, however, that the Transition Material Licensor shall not unreasonably withhold consent to at least one thirty (30) day extension for each of the relevant Spinco Transition Period or AT&T Transition Period (as applicable), it being acknowledged that it would be reasonable for the Transition Material Licensor to withhold consent, inter alia, to the extent prohibited by applicable Law or, if the applicable extension would raise material commercial risks for the Transition Material Licensor or its Affiliates. If the applicable Transition Material Licensor grants any such extension, the Transition Material Licensee and its Subsidiaries shall continue to apply commercially reasonable efforts to cease the copying, use, reproduction, display, performance, distribution and provision (in the case of Content) or use and display (in the case of Trademarks) of the applicable Transition Materials within the extended Spinco Transition Period or AT&T Transition Period (as applicable). Notwithstanding anything to the contrary herein, other than in respect of the uses and displays contemplated by Section 2.01(d)(B), in no event will any Spinco Transition Period or AT&T Transition Period (as applicable) extend beyond one-hundred twenty (120) days after the Closing Date.

Section 3.02 Quality. Each Transition Material Licensee acknowledges the importance to the applicable Transition Material Licensor and each of its Affiliates of maintaining the goodwill associated with the Trademarks licensed to such Transition Material Licensee and its Subsidiaries pursuant to Section 2.01(d) or Section 2.02(c) (as applicable) and such Transition Material Licensee agrees that the conduct of any activities it and its Subsidiaries conduct in connection with such Trademarks shall be in accordance with the Standards of Quality. Without

 

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limitation to any other rights a Transition Material Licensor may have hereunder, if a Transition Material Licensee or its Subsidiaries is not complying with the Standards of Quality in respect of any Trademark licensed to it hereunder and the applicable Transition Material Licensor notifies such Transition Material Licensee in writing thereof, setting forth, in reasonable detail, a written description of the noncompliance and any suggestions for curing such noncompliance, then such Transition Material Licensee shall, and shall cause its applicable Subsidiaries to, cure such noncompliance as soon as is practicable but in any event within ten (10) Business Days thereafter or, if such breach is not capable of being cured on commercially reasonable terms within such ten (10) Business Day period, as soon as reasonably practicable. No Transition Material Licensee shall, or shall permit its Subsidiaries to, knowingly use the Trademarks licensed to it hereunder in any manner that (a) derogates the goodwill associated with such Trademarks or (b) compromises the validity of such Trademarks. Each Party shall use and display the Trademarks licensed to it pursuant to this Agreement in compliance with all applicable Laws and provisions of this Agreement. Notwithstanding anything to the contrary in this Agreement, a Transition Material Licensee’s use of the Trademarks licensed to it hereunder in substantially the same manner as the applicable Transition Material Licensor used such Trademarks as of the Closing Date shall be deemed to not be in breach of this Agreement and shall be deemed to meet the Standards of Quality.

Section 3.03 Trademark Inspection. Each Transition Material Licensor reserves for itself the right to inspect and review, no more than once during the relevant Spinco Transition Period or AT&T Transition Period (as applicable), during the Transition Material Licensee’s regular business hours and with reasonable advance notice, the use each Trademark licensed to such Transition Material Licensee or its Subsidiaries pursuant to this Agreement in order to confirm that the nature and quality of the products, services and activities associated with such Trademarks, and that the uses and displays of such Trademarks by such Transition Material Licensee and its Subsidiaries, comply with the requirements of this Agreement.

Section 3.04. Mitigation. In the event of any breach or threatened breach by a Transition Material Licensee or any of its Subsidiaries of any of the terms, provisions or covenants of this Article III, or any customer, governmental or industry complaint arising from the products, services and activities associated with a Transition Material Licensee’s or any of its Subsidiaries’ use of the Trademarks licensed to them pursuant to this Agreement, and without limiting any other right or remedy of the applicable Transition Material Licensor under this Agreement or otherwise, the applicable Transition Material Licensor may, in its sole discretion but after reasonable consultation with the applicable Transition Material Licensee, determine any reasonable plan and course of action to be taken to mitigate any harm or potential harm to the goodwill associated with the applicable Trademark or the reputation of the Transition Material Licensor or any of its Affiliates, including any marketing, customer relations or government relations activity required in connection therewith (the “Mitigation Plan”). In such a case, the applicable Transition Material Licensee and its Subsidiaries shall, to the extent reasonably practicable, implement the Mitigation Plan and reasonably cooperate with the applicable Transition Material Licensor in implementing the Mitigation Plan, if applicable.

 

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ARTICLE IV

RESERVATION OF RIGHTS; CONFIDENTIALITY

Section 4.01 Reservation of Rights.

(a) All rights not expressly granted by a Party hereunder are reserved by such Party. Without limiting the generality of the foregoing, the Parties expressly acknowledge that nothing contained herein shall be construed or interpreted as a grant, by implication or otherwise, of any licenses other than the licenses expressly set forth in Article II. No Party shall, except as specifically permitted in this Agreement or approved in advance in writing by the other Party, give consent to the use of any Intellectual Property licensed to such Party hereunder to any other Person in any manner. Nothing herein shall be read to amend or otherwise affect any Intercompany Contract related to Intellectual Property.

(b) Each Party shall have the sole and exclusive right and option, at its expense, to file, maintain, assert and defend the Intellectual Property owned by such Party and licensed to the other Party hereunder.

Section 4.02 Confidentiality. Any Trade Secret or other confidential information licensed under this Agreement, including but not limited to the Licensed AT&T Technology or the Licensed Spinco Technology, shall be held in confidence by the license receiving Party (and the license receiving Party’s Subsidiaries) and such receiving Party shall not (and shall require its Subsidiaries to not) disclose such Trade Secret or confidential information except pursuant to appropriate confidentiality undertakings or as required by applicable Law.

ARTICLE V

TERM AND TERMINATION

Section 5.01 Term. Subject to Section 5.02, the term of this Agreement shall commence on the Closing Date and continue until, and automatically terminate upon, the date on which all Intellectual Property licensed hereunder expires or is no longer subsisting.

Section 5.02 Termination of Certain Sublicenses. Any sublicense granted by IP HoldCo to the Spinco Group, or granted by Spinco to the AT&T Entities, in each case pursuant to Article II shall immediately terminate upon the earlier to occur of: (a) the termination or expiration of the underlying Third Party license agreement, if any, (unless renewed), except to the extent such sublicense survives termination or expiration of such agreement, or (b) upon notice from such sublicense-granting Party in the case of any material breach of the terms of the applicable Third Party license by the sublicense-receiving Party or any of its Subsidiaries, or in the case of any other action or inaction taken by or on behalf of such other sublicense-receiving Party or any of its Subsidiaries that could result in a material negative impact to the sublicense-granting Party or any of its Affiliates under such Third Party license.

 

17


Section 5.03 Survival. The following provisions of this Agreement shall survive notwithstanding any termination of this Agreement: Section 2.03(a), Section 2.04, Section 2.05, Article IV, Article V, Article VI and Article VII.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES; DISCLAIMER;

ASSUMPTION OF RISK

Section 6.01 Representations and Warranties. Each Party hereby represents and warrants to the other Party that: (a) it has the power and authority to enter into this Agreement and to fully perform its obligations hereunder (including to grant the licenses granted pursuant to Article II); (b) this Agreement has been duly authorized, executed and delivered by it; and (c) this Agreement is a valid and binding agreement enforceable against it in accordance with the terms hereof except as enforceability may be limited by bankruptcy laws, other similar laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies.

Section 6.02 DISCLAIMER.

(a) WITHOUT PREJUDICE TO ANY PROVISIONS OF THE OTHER TRANSACTION DOCUMENTS OR CONTINUING ARRANGEMENTS AND EXCEPT AS OTHERWISE SET FORTH HEREIN, EACH PARTY AGREES AND ACKNOWLEDGES THAT THE LICENSED AT&T PATENTS, LICENSED SPINCO PATENTS, LICENSED AT&T TECHNOLOGY IPR, LICENSED SPINCO TECHNOLOGY IPR, LICENSED AT&T TECHNOLOGY, LICENSED SPINCO TECHNOLOGY, LICENSED AT&T TRANSITION MATERIALS AND LICENSED SPINCO TRANSITION MATERIALS ARE LICENSED HEREUNDER ON AN AS-IS BASIS, WITH ALL FAULTS, WITHOUT WARRANTY OF ANY KIND, AND SUBJECT TO ALL EXISTING LICENSES AND RIGHTS GRANTED, AND THAT EXCEPT AS OTHERWISE SET FORTH HEREIN OR IN THE OTHER TRANSACTION DOCUMENTS OR CONTINUING ARRANGEMENTS, NO PARTY NOR ANY OF THEIR RESPECTIVE AFFILIATES MAKES, AND EACH OF THE PARTIES AND THEIR RESPECTIVE AFFILIATES HEREBY SPECIFICALLY DISCLAIM, ALL REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE LICENSED AT&T PATENTS, LICENSED SPINCO PATENTS, LICENSED AT&T TECHNOLOGY IPR, LICENSED SPINCO TECHNOLOGY IPR, LICENSED AT&T TECHNOLOGY, LICENSED SPINCO TECHNOLOGY, LICENSED AT&T TRANSITION MATERIALS AND LICENSED SPINCO TRANSITION MATERIALS, EXPRESS OR IMPLIED, INCLUDING OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT; AND FURTHER, NEITHER PARTY MAKES ANY REPRESENTATIONS, OR EXTENDS WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND ASSUMES NO RESPONSIBILITIES WHATSOEVER WITH RESPECT TO THE MANUFACTURE, USE, SALE OR OTHER DISPOSITION (AS APPLICABLE) BY THE OTHER PARTY, ITS SUBSIDIARIES, OR ITS OR THEIR RESPECTIVE LICENSEES OR OTHER TRANSFEREES, OR CUSTOMERS, OF PRODUCTS, PROCESSES, OR METHODS INCORPORATING OR MADE BY USE OF INVENTIONS OR OTHER TECHNOLOGY SUBJECT TO THIS AGREEMENT OR ANY INFORMATION WHICH MAY BE

 

18


FURNISHED BY EITHER PARTY UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY AND ITS SUBSIDIARIES ASSUME TOTAL RESPONSIBILITY AND RISK FOR THEIR USE OF THE RIGHTS GRANTED TO THEM BY THE OTHER PARTY UNDER THIS AGREEMENT, INCLUDING THE RISK OF ANY DEFECTS OR INACCURACIES THEREIN. THE PARTIES ACKNOWLEDGE AND AGREE THAT NOTHING CONTAINED IN THIS AGREEMENT SHALL CONSTITUTE A WAIVER OF ANY OF A PARTY’S RIGHTS PURSUANT TO THE OTHER TRANSACTION DOCUMENTS OR CONTINUING ARRANGEMENTS AND THAT THE REPRESENTATIONS, WARRANTIES, COVENANTS, AGREEMENTS, INDEMNITIES AND OTHER TERMS CONTAINED THEREIN SHALL NOT BE ALTERED OR SUPERSEDED HEREBY, BUT SHALL REMAIN IN FULL FORCE AND EFFECT TO THE FULL EXTENT PROVIDED THEREIN.

(b) EACH PARTY AND THEIR AFFILIATES, EMPLOYEES, DIRECTORS, SHAREHOLDERS, AGENTS, REPRESENTATIVES DISCLAIM AND SHALL NOT BE LIABLE TO THE OTHER PARTY (OR THE OTHER PARTY’S AFFILIATES, EMPLOYEES, DIRECTORS, SHAREHOLDERS, AGENTS, REPRESENTATIVES) IN ANY WAY IN RESPECT OF THEIR AND THEIR AFFILIATES’ HANDLING OF, OR THE RESULTS OBTAINED FROM, FILING, PROSECUTION OR MAINTENANCE OR ANY FAILURE TO SO FILE, PROSECUTE OR MAINTAIN THE LICENSED AT&T PATENTS AND LICENSED SPINCO PATENTS. EACH PARTY HEREBY RELEASES AND FOREVER DISCHARGES THE OTHER PARTY AND ALL OF ITS AFFILIATES, COUNSEL, SUCCESSORS, PREDECESSORS, ASSIGNS, DIRECTORS, OFFICERS, EMPLOYEES, AND SHAREHOLDERS FROM AND AGAINST ALL ACTIONS, CLAIMS, SUITS, DEMANDS, DAMAGES, JUDGMENTS, CAUSES OF ACTION, DEBTS, LIABILITIES, OR CONTROVERSIES OF ANY KIND WHATSOEVER, WHETHER MATURED OR UNMATURED, WHETHER AT LAW OR IN EQUITY, WHETHER BEFORE A LOCAL, STATE OR FEDERAL COURT, TRIBUNAL, ADMINISTRATIVE AGENCY OR COMMISSION, AND WHETHER NOW KNOWN OR UNKNOWN, LIQUIDATED OR UNLIQUIDATED, THAT THEY NOW HAVE OR MAY HAVE HAD, ON BEHALF OF THEMSELVES OR ANY OTHER PERSON OR ENTITY, ARISING OUT OF, OR IN ANY WAY RELATED TO THE PROSECUTION OF THE LICENSED AT&T PATENTS AND LICENSED SPINCO PATENTS, EXCEPT TO THE EXTENT IT CONSTITUTES A BREACH OF ANY REPRESENTATION OR WARRANTY SET FORTH IN THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS OR CONTINUING ARRANGEMENTS.

Section 6.03 NO CONSEQUENTIAL DAMAGES. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY CONTAINED IN THIS AGREEMENT, EXCEPT FOR DAMAGES ARISING FROM FRAUD, GROSS NEGLIGENCE OR WILLFUL BREACH, NO PARTY SHALL BE LIABLE UNDER THIS AGREEMENT FOR (A) ANY PUNITIVE OR EXEMPLARY DAMAGES, OR (B) ANY DAMAGES THAT ARE SPECULATIVE OR NOT REASONABLY DETERMINABLE, EXCEPT, IN EACH CASE OF ITEMS (A) AND (B), TO THE EXTENT AWARDED BY A COURT OF COMPETENT JURISDICTION AND PAID TO A THIRD PARTY IN CONNECTION WITH A CLAIM.

 

19


ARTICLE VII

MISCELLANEOUS PROVISIONS

Section 7.01 Modification or Amendment; Waiver.

(a) This Agreement may not be modified or amended except by an agreement in writing specifically designated as an amendment hereto signed by each of the Parties. Any provision of this Agreement may be waived, if and only if, such waiver is in writing and signed by the Party against whom the waiver is to be effective.

(b) No failure or delay by any Party in exercising any right, power or privilege hereunder or under applicable Law shall operate as a waiver of such rights and, except as otherwise expressly provided herein, no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law

Section 7.02 Counterparts. This Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement. A signed copy of this Agreement delivered by facsimile, email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

Section 7.03 Governing Law and Venue; Submission to Jurisdiction; Selection of Forum; Waiver of Trial by Jury.

(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF (OR ANY OTHER JURISDICTION) TO THE EXTENT THAT SUCH PRINCIPLES WOULD DIRECT A MATTER TO ANOTHER JURISDICTION.

(b) Each of the Parties agrees that: (i) it shall bring any Proceeding in connection with, arising out of or otherwise relating to this Agreement or the transactions contemplated hereby exclusively in the Chosen Courts; and (ii) solely in connection with such Proceedings, (A) it irrevocably and unconditionally submits to the exclusive jurisdiction of the Chosen Courts, (B) it waives any objection to the laying of venue in any Proceeding in the Chosen Courts, (C) it waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any Party, (D) mailing of process or other papers in connection with any such Proceeding in the manner provided in Section 7.05 or in such other manner as may be permitted by applicable Law shall be valid and sufficient service thereof and (E) it shall not assert as a defense, any matter or claim waived by the foregoing clauses (A) through (D) of this Section 7.03(b) or that any order issued by the Chosen Courts may not be enforced in or by the Chosen Courts. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by Law or to commence any Proceeding or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any Proceeding brought pursuant to this Section 7.03(b).

 

20


(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY BE IN CONNECTION WITH, ARISE OUT OF OR OTHERWISE RELATE TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY PROCEEDING DIRECTLY OR INDIRECTLY, IN CONNECTION WITH, ARISING OUT OF OR OTHERWISE RELATING TO THIS AGREEMENT, ANY INSTRUMENT OR OTHER DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HEREBY ACKNOWLEDGES AND CERTIFIES (i) THAT NO REPRESENTATIVE OF THE OTHER PARTIES, AS THE CASE MAY BE, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTIES WOULD NOT, IN THE EVENT OF ANY ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) IT MAKES THIS WAIVER VOLUNTARILY AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS, ACKNOWLEDGMENTS AND CERTIFICATIONS CONTAINED IN THIS SECTION 7.03(C).

Section 7.04 Specific Performance. Each of the Parties acknowledges and agrees that the rights of each Party to consummate the transactions contemplated hereby are special, unique and of extraordinary character and that if for any reason any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached, immediate and irreparable harm or damage would be caused for which money damages would not be an adequate remedy. Accordingly, each Party agrees that, in addition to any other available remedies a Party may have in equity or at law, each Party shall be entitled to enforce specifically the terms and provisions of this Agreement and to obtain an injunction restraining any breach or violation or threatened breach or violation of the provisions of this Agreement without necessity of posting a bond or other form of security. In the event that any Proceeding should be brought in equity to enforce the provisions of this Agreement, no Party shall allege, and each Party hereby waives the defense, that there is an adequate remedy at law.

Section 7.05 Notice. All notices, requests, instructions, consents, claims, demands, waivers, approvals and other communications to be given or made hereunder by one or more Parties to one or more of the other Parties, as the case may be, shall be in writing and shall be deemed to have been duly given or made on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a Business Day (or otherwise on the next succeeding Business Day) if (a) served by personal delivery or by a nationally recognized overnight courier service upon the Party or Parties for whom it is intended, (b) delivered by registered or certified mail, return receipt requested or (c) sent by email, provided that the email transmission is promptly confirmed by telephone or in writing by the recipient thereof (excluding out-of-office replies or other automatically generated responses). Such communications shall be sent to the respective Party at the following street addresses or email addresses or at such other street address or email address for a Party, as the case may be, as shall be specified for such purpose in a notice given in accordance with this Section 7.05.

 

21


If to the AT&T Parties:

AT&T Inc.

208 S. Akard St.

Dallas, Texas 75202

Attention: SVP – Corporate Strategy and Development

Email: [redacted]

AT&T Inc.

208 S. Akard St.

Dallas, Texas 75202

Attention: SVP – Assistant General Counsel

Email: [redacted]

[redacted]

General Counsel

AT&T Intellectual Property, LLC

754 Peachtree Street, Suite 7C

Atlanta, GA 30308

Business Number: [redacted]

with a copy (which shall not constitute notice) to:

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Attention: Eric M. Krautheimer

Melissa Sawyer

Nader Mousavi

Email: krautheimere@sullcrom.com

sawyerm@sullcrom.com

mousavin@sullcrom.com

If to Spinco:

Discovery, Inc.

230 Park Avenue South

New York, NY 10003

Attention: Bruce Campbell

Email: [redacted]

 

22


with copies (which shall not constitute notice) to:

Debevoise & Plimpton LLP

919 Third Avenue

New York, New York 10022

Attention: Jeffrey J. Rosen

Jonathan E. Levitsky

Sue Meng

Email: jrosen@debevoise.com

jlevitsky@debevoise.com

smeng@debevoise.com

Section 7.06 Entire Agreement. This Agreement (including the schedules, exhibits and annexes hereto) constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements, negotiations, understandings, and representations and warranties, whether oral or written, with respect to such matters.

Section 7.07 Third-Party Beneficiaries. The Parties hereby agree that their respective agreements and covenants set forth in this Agreement are solely for the benefit of the other Parties, as the case may be, on the terms and subject to the conditions set forth in this Agreement, and this Agreement is not intended to, and does not, confer upon any Third Party any rights or remedies, express or implied.

Section 7.08 Severability. The provisions of this Agreement shall be deemed severable and the illegality, invalidity or unenforceability of any provision shall not affect the legality, validity or enforceability of the other provisions of this Agreement. If any provision of this Agreement, or the application of such provision to any Person or any circumstance, is illegal, invalid or unenforceable, (a) a suitable and equitable provision to be negotiated by the Parties, each acting reasonably and in good faith, shall be substituted therefor in order to carry out, so far as may be legal, valid and enforceable, the intent and purpose of such illegal, invalid or unenforceable provision, and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such illegality, invalidity or unenforceability, nor shall such illegality, invalidity or unenforceability affect the legality, validity or enforceability of such provision, or the application of such provision, in any other jurisdiction.

Section 7.09 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties (and any of their respective successors, legal representatives and permitted assigns). No Party may assign any of its rights or delegate any of its obligations under this Agreement, in whole or in part, by operation of Law or otherwise, without the prior written consent of the other Parties; provided, however, that (a) either Party may extend the licenses granted to it and its Subsidiaries pursuant to Article II in connection with the sale or other transfer or divestiture of any business, product line, division or Subsidiary of such Party, and (b) either Party may assign this Agreement (in whole but not in part) in connection with a sale of all or substantially all of its and its Affiliates’ assets or business, to which this Agreement relates. Any attempted or purported assignment or delegation in violation of this Section 7.09 shall be null and void.

 

23


Section 7.10 Assignment of Intellectual Property Rights. Any Party may freely assign or transfer any Intellectual Property that it owns and is licensed hereunder, provided that such Intellectual Property shall remain subject to the license grants and other terms of this Agreement following such assignment or transfer.

Section 7.11 Interpretation and Construction.

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

(b) The Preamble, and all Recital, Article, Section, Subsection, Schedule, Annex and Exhibit references used in this Agreement are to the recitals, articles, sections, subsections, schedules, annexes and exhibits to this Agreement unless otherwise specified herein.

(c) Except as otherwise expressly provided herein, for purposes of this Agreement: (i) the terms defined in the singular have a comparable meaning when used in the plural and vice versa; (ii) words importing the masculine gender shall include the feminine and neutral genders and vice versa; (iii) whenever the words “includes” or “including” are used, they shall be deemed to be followed by the words “without limitation”; (iv) the word “or” is not exclusive; (v) the words “hereto,” “hereof,” “hereby,” “herein,” “hereunder” and similar terms in this Agreement shall refer to this Agreement as a whole and not any particular provision of this Agreement; (vi) the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends and such phrase shall not mean simply “if”; and (vii) a reference to any Person includes such Person’s successors and permitted assigns.

(d) All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.

(e) Except as otherwise expressly provided herein, the term “dollars” and the symbol “$” mean United States Dollars.

(f) Except as otherwise expressly provided herein, all references in this Agreement to any statute include the rules and regulations promulgated thereunder, in each case as amended, re-enacted, consolidated or replaced from time to time and in the case of any such amendment, re-enactment, consolidation or replacement, reference herein to a particular provision shall be read as referring to such amended, re-enacted, consolidated or replaced provision and shall also include, unless the context otherwise requires, all applicable guidelines, bulletins or policies made in connection therewith.

(g) The Parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.

 

24


Section 7.12 Bankruptcy Assurance. All rights and licenses granted to either Party under or pursuant to this Agreement are, for all purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined in the U.S. Bankruptcy Code, and, in the event that a case under the U.S. Bankruptcy Code is commenced by or against a Party granting any right or license hereunder, each applicable licensed Party will have all of the rights set forth in Section 365(n) of the U.S. Bankruptcy Code to the maximum extent permitted thereby.

Section 7.13 Nature of Relationship. Each Party to this Agreement acknowledges and agrees that (a) this Agreement does not create a fiduciary relationship between them or between or among any of their respective Affiliates; (b) each shall remain an independent business; and (c) nothing in this Agreement, express or implied, is intended to constitute any Party as an agent, legal representative, subsidiary, joint venturer, partner, employee or servant of the other for any purpose whatsoever. During the term of this Agreement, no Party shall indicate that there is any agency relationship between the Parties or any of their Affiliates arising hereunder. Nothing in this Agreement authorizes any Party to make any contract, agreement, warranty or representation on behalf of the other Party, nor to incur any debt or other obligation in the name of the other Party. In no event shall any Party or any of their respective Affiliates assume any liability for, or be deemed liable hereunder as a result of, any such action, and no Party nor any of its respective Affiliates shall have any liability by reason of this Agreement for any act or omission of another Party or any of its Affiliates in the conduct of their respective businesses.

Section 7.14 Inconsistency. In the event of any inconsistency between the terms of this Agreement and the schedules hereto, the terms of this Agreement shall control. In the event of any inconsistency between the terms of this Agreement and the Separation and Distribution Agreement, the terms of this Agreement shall control (subject to the limitations set forth in Section 9.18(k) of the Separation and Distribution Agreement).

Section 7.15 Fulfillment of Obligations. Any obligation of any Party to the other Party under this Agreement, which obligation is performed, satisfied or fulfilled completely by an Affiliate of such Party, shall be deemed to have been performed, satisfied or fulfilled by such Party.

[The remainder of this page has been intentionally left blank.]

 

25


IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the date first written above by their respective duly authorized officers.

 

AT&T INC.
By:  

/s/ Stephen A. McGaw

  Name:   Stephen A. McGaw
  Title:  

Senior Vice President – Corporate

Strategy and Development

AT&T INTELLECTUAL PROPERTY LLC
By:  

/s/ Scott Frank

  Name:   Scott Frank
  Title:   President and Chief Executive Officer
MAGALLANES, INC.
By:  

/s/ Stephen A. McGaw

  Name:   Stephen A. McGaw
  Title:   President

 

26


Annex A-1

(Licensed AT&T Identified Patents)

 

27


Annex A-2

(Licensed Spinco Identified Patents)

 

28


Annex B

(Licensed AT&T Technology)

 

29


Annex C

(Licensed Spinco Technology)

 

30


Annex D

(Specified Shared Technology)

 

31


Annex E

(Security Training Materials)

 

32

Exhibit 10.3

Execution Version

 

 

 

CREDIT AGREEMENT

Dated as of June 4, 2021

among

MAGALLANES, INC.,

as Borrower,

the Lenders party hereto,

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

GOLDMAN SACHS BANK USA

as Syndication Agent,

and

BANK OF AMERICA, N.A., BARCLAYS BANK PLC, BNP PARIBAS, CITIBANK, N.A., CREDIT SUISSE LOAN FUNDING LLC, DEUTSCHE BANK AG NEW YORK BRANCH, MIZUHO BANK, LTD., ROYAL BANK OF CANADA, BANCO SANTANDER, S.A., NEW YORK BRANCH, COMMERZBANK AG, NEW YORK BRANCH, MUFG BANK, LTD., THE BANK OF NOVA SCOTIA, THE TORONTO-DOMINION BANK, NEW YORK BRANCH, TRUIST BANK, and WELLS FARGO BANK, NATIONAL ASSOCIATION

as Co-Documentation Agents

and

JPMORGAN CHASE BANK, N.A., GOLDMAN SACHS BANK USA, BOFA SECURITIES, INC., BARCLAYS BANK PLC, BNP PARIBAS, CITIBANK, N.A., CREDIT SUISSE LOAN FUNDING LLC, DEUTSCHE BANK SECURITIES INC., MIZUHO SECURITIES USA LLC and RBC CAPITAL MARKETS1,

as Joint Lead Arrangers and Joint Bookrunners

 

 

 

 

1

RBC Capital Markets is a brand name for the capital markets business of Royal Bank of Canada and its affiliates.


TABLE OF CONTENTS

 

          Page  
   ARTICLE I.   
   DEFINITIONS AND ACCOUNTING TERMS   

1.01

   Defined Terms      2  

1.02

   Other Interpretive Provisions      34  

1.03

   Accounting Terms      35  

1.04

   Rounding      36  

1.05

   [Reserved]      36  

1.06

   Interest Rates; LIBOR Notification      36  

1.07

   [Reserved]      37  

1.08

   Times of Day      37  
   ARTICLE II.   
   THE COMMITMENTS AND LOANS   

2.01

   Committed Loans      37  

2.02

   Borrowings, Conversions and Continuations of Committed Loans      38  

2.03

   [Reserved]      39  

2.04

   [Reserved]      39  

2.05

   Prepayments      39  

2.06

   Termination or Reduction of Commitments.      40  

2.07

   Repayment of Loans      40  

2.08

   Interest      41  

2.09

   Fees      41  

2.10

   Computation of Interest and Fees      42  

2.11

   Evidence of Debt      42  

2.12

   Payments Generally; Administrative Agent’s Clawback      42  

2.13

   Sharing of Payments by Lenders      44  

2.14

   Alternate Rate of Interest      44  

2.15

   [Reserved]      46  

2.16

   [Reserved]      46  

2.17

   Defaulting Lenders      46  
   ARTICLE III.   
   TAXES, YIELD PROTECTION AND ILLEGALITY   

3.01

   Taxes.      48  

3.02

   Illegality      52  

3.03

   [Reserved]      52  

3.04

   Increased Costs; Reserves on Eurocurrency Rate Loans      53  

3.05

   Compensation for Losses      54  

3.06

   Mitigation Obligations; Replacement of Lenders      55  

3.07

   Survival      55  

 

-i-


TABLE OF CONTENTS

(continued)

 

          Page  
   ARTICLE IV.   
   CONDITIONS PRECEDENT TO LOANS   

4.01

  

Conditions of Effectiveness

     55  

4.02

  

Conditions to Closing Date

     56  
  

ARTICLE V.

  
  

REPRESENTATIONS AND WARRANTIES

  

5.01

  

Existence, Qualification and Power

     58  

5.02

  

Authorization; No Contravention

     58  

5.03

  

Governmental Authorization; Other Consents

     58  

5.04

  

Binding Effect

     59  

5.05

  

[Reserved]

     59  

5.06

  

Litigation

     59  

5.07

  

No Default

     59  

5.08

  

Ownership of Property; Liens

     59  

5.09

  

Environmental Compliance

     59  

5.10

  

Insurance

     59  

5.11

  

Taxes

     59  

5.12

  

ERISA Compliance

     60  

5.13

  

Subsidiaries; Joint Ventures

     61  

5.14

  

Margin Regulations; Investment Company Act

     61  

5.15

  

Disclosure

     61  

5.16

  

Compliance with Laws

     61  

5.17

  

Taxpayer Identification Number; Other Identifying Information

     61  

5.18

  

Intellectual Property; Licenses, Etc.

     61  

5.19

  

Sanctions Restrictions

     62  

5.20

  

Use of Proceeds

     62  

5.21

  

Anti-Corruption Laws

     62  

5.22

  

Affected Financial Institutions

     62  

5.23

  

Covered Entities

     62  
  

ARTICLE VI.

  
  

AFFIRMATIVE COVENANTS

  

6.01

  

Financial Statements

     62  

6.02

  

Certificates; Other Information

     63  

6.03

  

Notices

     65  

6.04

  

Payment of Obligations

     66  

6.05

  

Preservation of Existence, Etc.

     66  

6.06

  

Maintenance of Properties

     66  

6.07

  

Maintenance of Insurance

     66  

6.08

  

Compliance with Laws

     67  

6.09

  

Books and Records

     67  

6.10

  

Inspection Rights

     67  

6.11

  

Use of Proceeds

     67  

6.12

  

Approvals and Authorizations

     67  

6.13

  

Sanctions

     67  

6.14

  

Anti-Corruption Laws

     68  

6.15

  

Joinder of Discovery, DCL and Scripps to this Agreement

     68  

6.16

  

Additional Guarantors

     68  

 

-ii-


TABLE OF CONTENTS

(continued)

 

          Page  
  

ARTICLE VII.

  
  

NEGATIVE COVENANTS

  

7.01

  

Liens

     68  

7.02

  

Investments

     71  

7.03

  

Indebtedness

     72  

7.04

  

Fundamental Changes

     75  

7.05

  

Dispositions

     75  

7.06

  

Restricted Payments

     76  

7.07

  

Change in Nature of Business

     77  

7.08

  

Transactions with Affiliates

     77  

7.09

  

Burdensome Agreements

     78  

7.10

  

Use of Proceeds

     79  

7.11

  

Financial Covenants

     79  

7.12

  

Sanctions Restrictions

     80  

7.13

  

Anti-Corruption Laws

     80  
  

ARTICLE VIII.

  
  

EVENTS OF DEFAULT AND REMEDIES

  

8.01

  

Events of Default

     80  

8.02

  

Remedies Upon Event of Default

     82  

8.03

  

Application of Funds

     82  

8.04

  

Certain Funds Provisions

     83  
  

ARTICLE IX.

  
  

ADMINISTRATIVE AGENT

  

9.01

  

Appointment and Authority

     83  

9.02

  

Rights as a Lender

     84  

9.03

  

Exculpatory Provisions

     84  

9.04

  

Reliance by Administrative Agent

     85  

9.05

  

Delegation of Duties

     85  

9.06

  

Resignation of Administrative Agent

     85  

9.07

  

Non-Reliance on Administrative Agent and Other Lenders

     86  

9.08

  

No Other Duties, Etc.

     86  

9.09

  

Administrative Agent May File Proofs of Claim

     87  

9.10

  

Collateral and Guaranty Matters

     87  

9.11

  

Certain ERISA Matters

     88  

9.12

  

Acknowledgements of Lenders

     89  
  

ARTICLE X.

  
  

CONTINUING GUARANTY

  

10.01

  

Guaranty

     90  

10.02

  

Rights of Lenders

     91  

10.03

  

Certain Waivers

     91  

10.04

  

Obligations Independent; Limitation on Guarantees

     91  

 

-iii-


TABLE OF CONTENTS

(continued)

 

          Page  

10.05

  

Subrogation

     92  

10.06

  

Termination; Reinstatement

     92  

10.07

  

Subordination

     92  

10.08

  

Stay of Acceleration

     92  

10.09

  

Condition of the Borrower

     92  
  

ARTICLE XI.

  
  

MISCELLANEOUS

  

11.01

  

Amendments, Etc.

     93  

11.02

  

Notices; Effectiveness; Electronic Communication

     94  

11.03

  

No Waiver; Cumulative Remedies; Enforcement

     96  

11.04

  

Expenses; Indemnity; Limitation of Liability; Damage Waiver

     97  

11.05

  

Payments Set Aside

     98  

11.06

  

Successors and Assigns

     99  

11.07

  

Treatment of Certain Information; Confidentiality

     102  

11.08

  

Right of Setoff

     103  

11.09

  

Interest Rate Limitation

     104  

11.10

  

Counterparts; Integration; Effectiveness

     104  

11.11

  

Survival of Representations and Warranties

     104  

11.12

  

Severability

     105  

11.13

  

Replacement of Lenders

     105  

11.14

  

Governing Law; Jurisdiction; Etc.

     106  

11.15

  

Waiver of Jury Trial

     107  

11.16

  

No Advisory or Fiduciary Responsibility

     107  

11.17

  

Electronic Execution of Assignments and Certain Other Documents

     108  

11.18

  

USA PATRIOT Act

     109  

11.19

  

[Reserved]

     109  

11.20

  

Acknowledgement and Consent to Bail-In of Affected Financial Institutions

     109  

11.21

  

ENTIRE AGREEMENT

     110  

11.22

  

Acknowledgement Regarding Any Supported QFCs

     110  

 

-iv-


SCHEDULES   
  2.01    Commitments and Applicable Percentages
  5.12    Pension Plans
  5.13    Subsidiaries; Joint Ventures
               7.01    Existing Liens
  7.03    Existing Indebtedness
  11.02    Administrative Agent’s Office; Certain Addresses for Notices
EXHIBITS
      Form of
  A    Committed Loan Notice
  C-1    Note (Tranche 1 Loans)
  C-2    Note (Tranche 2 Loans)
  D    Compliance Certificate
  E-1    Assignment and Assumption
  E-2    Administrative Questionnaire
  G    [Reserved]
  H    [Reserved]
  I    [Reserved]
  K    U.S. Tax Compliance Certificates
  L    Solvency Certificate

 

-v-


CREDIT AGREEMENT

This CREDIT AGREEMENT (“Agreement”) is entered into as of June 4, 2021, among MAGALLANES, INC., a Delaware corporation (as further defined in Section 1.01, the “Borrower”), each lender from time to time party hereto (as further defined in Section 1.01, collectively, the “Lenders” and individually, a “Lender”), JPMORGAN CHASE BANK, N.A., as Administrative Agent.

AT&T Inc. (“AT&T”, and together with its subsidiaries, the “AT&T Business”) intends to (a) separate certain businesses, operations and activities, including the business, operations and activities that constitute the WarnerMedia segment of AT&T as narratively described in the Form 10-K of AT&T for the period ending December 31, 2020 (the “Spinoff Business”) from the AT&T Business (the “Separation”) and (b) following the Separation, combine the Spinoff Business with Discovery, Inc. (“Discovery”, and together with its subsidiaries, the “Discovery Business”, and the Discovery Business, together with the Spinoff Business, the “Combined Businesses”). The foregoing will be consummated on the terms and subject to the conditions set forth in the Separation and Distribution Agreement, dated as of May 17, 2021 (as amended from time to time and including the annexes, exhibits, schedules and all related documents, collectively the “Separation and Distribution Agreement”), by and among AT&T, the Borrower and Discovery and the Agreement and Plan of Merger, dated as of May 17, 2021 (as amended from time to time and including the annexes, exhibits, schedules and all related documents, collectively the “Business Combination Agreement” and, together with the Separation and Distribution Agreement, collectively the “Transaction Agreements”), by and among AT&T, the Borrower, Discovery, a newly formed wholly owned direct or indirect subsidiary of Discovery and the other parties thereto, pursuant to which it is intended that (1) AT&T, to effect the Separation, will contribute or transfer the Spinoff Business to the Borrower, a wholly owned subsidiary of AT&T (the “Contribution”), (2) in connection with the Separation and in partial consideration of the Contribution, the Borrower will issue to AT&T debt securities up to the Additional Amount (as defined in the Separation and Distribution Agreement) pursuant to the terms of the Separation and Distribution Agreement (the “Borrower Securities”) and make a cash payment to AT&T in an aggregate amount of $41,500,000,000 less the principal amount of Borrower Securities issued to AT&T, subject to other adjustments (the cash payment to AT&T, the “Borrower Cash Distribution”), (3) substantially concurrently with or within one Business Day following the Borrower Cash Distribution, AT&T will distribute to the holders of AT&T common stock all of the issued and outstanding shares of the common stock of the Borrower by means of a pro rata distribution and/or an exchange offer (the “Distribution”) and (4) immediately following the Distribution, the Borrower and Discovery will engage in a strategic business combination, following which the Borrower shall become a wholly owned subsidiary of Discovery (the “Combination”, and together with the Separation, Contribution, the issuance (or incurrence) of the Borrower Securities (if any), the Borrower Cash Distribution and the Distribution, collectively the “Combination Transactions”). In connection with the Combination Transactions, the Borrower has requested the Lenders extend credit to enable it to borrow on the Closing Date a principal amount not in excess of $10,000,000,000 (consisting of a $3,000,000,000 18-month tranche 1 term loan and a $7,000,000,000 three-year tranche 2 term loan). The proceeds of borrowings hereunder are to be used to finance a portion of the Borrower Cash Distribution, to pay fees and expenses related to the Transactions and as otherwise permitted by Section 6.11.

The Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions herein set forth.

 

1


In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:

Act” has the meaning specified in Section 11.18.

Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 11.02, or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.

Administrative Questionnaire” means an Administrative Questionnaire in substantially the form of Exhibit E-2 or any other form approved by the Administrative Agent.

Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.

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.

Agent Parties” has the meaning specified in Section 11.02(c).

Aggregate Commitments” means the Commitments of all the Lenders. As of the Effective Date, the Aggregate Commitments are $10,000,000,000.

Aggregate Tranche 1 Commitments” means the Tranche 1 Commitments of all the Tranche 1 Lenders. As of the Effective Date, the Aggregate Tranche 1 Commitments are $3,000,000,000.

Aggregate Tranche 2 Commitments” means the Tranche 2 Commitments of all the Tranche 2 Lenders. As of the Effective Date, the Aggregate Tranche 2 Commitments are $7,000,000,000.

Agreement” means this Credit Agreement, as amended, restated, waived or otherwise modified from time to time.

Ancillary Document” has the meaning specified in Section 11.17.

Applicable Loan Percentage” means (i) with respect to any Tranche 1 Lender at any time, the percentage (carried out to the ninth decimal place) of the aggregate Outstanding Amount of all Tranche 1 Loans represented by the aggregate Outstanding Amount of such Tranche 1 Lender’s Tranche 1 Loans at such time, and (ii) with respect to any Tranche 2 Lender at any time, the percentage (carried out to the ninth decimal place) of the aggregate Outstanding Amount of all Tranche 2 Loans represented by the aggregate Outstanding Amount of such Tranche 2 Lender’s Tranche 2 Loans at such time.

Applicable Percentage” means (i) with respect to any Tranche 1 Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Tranche 1 Commitments represented by such Tranche 1 Lender’s Tranche 1 Commitment at such time, and (ii) with respect to any Tranche 2 Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Tranche 2 Commitments represented by such Tranche 2 Lender’s Tranche 2 Commitment at such time, subject in each case to

 

2


adjustment as provided in Section 2.17. If the commitment of each Tranche 1 Lender to make Tranche 1 Loans has been terminated pursuant to Section 8.02 or if the Aggregate Tranche 1 Commitments have expired, in each case prior to the funding of the Loans, then the Applicable Percentage of each Tranche 1 Lender shall be determined based on the Applicable Percentage of such Tranche 1 Lender most recently in effect, giving effect to any subsequent assignments; and if the commitment of each Tranche 2 Lender to make Tranche 2 Loans has been terminated pursuant to Section 8.02 or if the Aggregate Tranche 2 Commitments have expired, in each case prior to the funding of the Loans, then the Applicable Percentage of each Tranche 2 Lender shall be determined based on the Applicable Percentage of such Tranche 2 Lender most recently in effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each Tranche 1 Lender is set forth opposite the name of such Tranche 1 Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Tranche 1 Lender becomes a party hereto, as applicable, and the initial Applicable Percentage of each Tranche 2 Lender is set forth opposite the name of such Tranche 2 Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Tranche 2 Lender becomes a party hereto, as applicable.

Applicable Rate” means, from time to time, the following percentages per annum, based upon the Debt Rating as set forth below:

Applicable Rate for Tranche 1 Commitments and Tranche 1 Loans

 

Pricing
Level

  

Debt Ratings
S&P/Moody’s

  

Ticking Fee

  

Applicable

Margin for
Eurocurrency
Rate Loans

  

Applicable
Margin for Base
Rate Loans

1

   A-/A3 or better    7.5 bps    75.0 bps    0.0 bps

2

   BBB+/Baa1    10 bps    87.5 bps    0.0 bps

3

   BBB/Baa2    12.5 bps    112.5 bps    12.5 bps

4

   BBB-/Baa3    17.5 bps    125.0 bps    25.0 bps

5

   BB+/Ba1 or worse    27.5 bps    150.0 bps    50.0 bps

Applicable Rate for Tranche 2 Commitments and Tranche 2 Loans

 

Pricing
Level

  

Debt Ratings
S&P/Moody’s

  

Ticking Fee

  

Applicable
Margin for
Eurocurrency
Rate Loans

  

Applicable
Margin for Base
Rate Loans

1

   A-/A3 or better    7.5 bps    87.5 bps    0.0 bps

2

   BBB+/Baa1    10 bps    100.0 bps    0.0 bps

3

   BBB/Baa2    12.5 bps    125.0 bps    25.0 bps

4

   BBB-/Baa3    17.5 bps    137.5 bps    37.5 bps

5

   BB+/Ba1 or worse    27.5 bps    162.5 bps    62.5 bps

Debt Rating” means, as of any date of determination, the rating as determined by either S&P or Moody’s (collectively, the “Debt Ratings”) of the Borrower’s non-credit-enhanced, senior unsecured long-term debt; provided that (a) if the respective Debt Ratings issued by the foregoing rating agencies differ by one level, then the Pricing Level for the higher of such Debt Ratings shall apply (with the Debt Rating for Pricing Level 1 being the highest and the Debt Rating for Pricing Level 5 being the lowest); (b) if there is a split in Debt Ratings of more than one level, then the Pricing Level that is one level lower than the Pricing Level of the higher Debt Rating shall apply; (c) if the Borrower has only one Debt Rating, the Pricing Level that is one level lower than that of such Debt Rating shall apply; and (d) upon and after the consummation of the Combination Transactions, if the Borrower does not have any Debt Rating, Pricing Level 5 shall apply; provided that, upon and after consummation of the Combination Transactions, all of the foregoing references to the Borrower in this definition shall be deemed to refer to Discovery.

 

3


Initially, the Applicable Rate shall be determined based upon Pricing Level 4. Thereafter, each change in the Applicable Rate upon and after the consummation of the Combination Transactions resulting from a publicly announced change in the Debt Rating shall be effective during the period commencing on the date of the public announcement thereof and ending on the date immediately preceding the effective date of the next such change.

Applicable Tranche 1 Loan Percentage” means, with respect to any Tranche 1 Lender at any time, such Tranche 1 Lender’s Applicable Loan Percentage at such time.

Applicable Tranche 1 Percentage” means, with respect to any Tranche 1 Lender at any time, such Tranche 1 Lender’s Applicable Percentage at such time.

Applicable Tranche 2 Loan Percentage” means, with respect to any Tranche 2 Lender at any time, such Tranche 2 Lender’s Applicable Loan Percentage at such time.

Applicable Tranche 2 Percentage” means, with respect to any Tranche 2 Lender at any time, such Tranche 2 Lender’s Applicable Percentage at such time.

Appropriate Lender” means, at any time, (a) with respect to any of the Tranche 1 Loans, a Tranche 1 Lender and (b) with respect to any of the Tranche 2 Loans, a Tranche 2 Lender.

Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

Arranger” means each of JPMorgan Chase Bank, N.A. and Goldman Sachs Bank USA in its capacity as a joint lead arranger and a joint bookrunner.

Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit E-1 or any other form (including electronic documentation generated by use of an electronic platform) approved by the Administrative Agent.

Attributable Indebtedness” means, on any date, (a) in respect of any Capital 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.

AT&T” has the meaning specified in the recitals hereto.

AT&T Business” has the meaning specified in the recitals hereto.

Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if the then-current Benchmark is a term rate, any tenor for such Benchmark that is or may be used for determining the length of an Interest Period or (y) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date.

 

4


Availability Period” means the period from and including the Effective Date to and including the earliest of (a) the termination of the Business Combination Agreement in accordance with its terms, (b) the Outside Date (as defined in the Business Combination Agreement as in effect on May 17, 2021), (c) the consummation of the Distribution with or without the funding of the Loans (after giving effect to any Loans made) and (d) the date of termination in full of the Aggregate Tranche 1 Commitments and Aggregate Tranche 2 Commitments pursuant to Section 2.06.

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

Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, rule, regulation or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

Banking Services” means each and any of the following bank services provided to the Borrower or any of its Subsidiaries: (a) credit cards for commercial customers (including, without limitation, commercial credit cards and purchasing cards), (b) stored value cards and (c) treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, overdrafts and interstate depository network services).

Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a) the NYFRB Rate plus 1/2 of 1%, (b) the Prime Rate and (c) the LIBO Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.00%. Any change in the Base Rate due to a change in the Prime Rate, the NYFRB Rate or the LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the LIBO Rate, respectively. If the Base Rate is being used as an alternate rate of interest pursuant to Section 2.14 (for the avoidance of doubt, only until the Benchmark Replacement has been determined pursuant to Section 2.14(b)), then the Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the Base Rate as determined pursuant to the foregoing would be less than 1.00%, such rate shall be deemed to be 1.00% for purposes of this Agreement.

Base Rate Loan” means a Loan that bears interest based on the Base Rate.

Benchmark” means, initially, LIBO Rate; provided that if a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to the LIBO Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (b) or clause (c) of Section 2.14.

Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:

(1) the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;

(2) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;

 

5


(3) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for Dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment;

provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion; provided further that, notwithstanding anything to the contrary in this Agreement or in any other Loan Document, upon the occurrence of a Term SOFR Transition Event, and the delivery of a Term SOFR Notice, on the applicable Benchmark Replacement Date the “Benchmark Replacement” shall revert to and shall be deemed to be the sum of (a) Term SOFR and (b) the related Benchmark Replacement Adjustment, as set forth in clause (1) of this definition (subject to the first proviso above).

If the Benchmark Replacement as determined pursuant to clause (1), (2) or (3) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.

Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:

(1) for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Administrative Agent:

(a) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor;

(b) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and

(2) for purposes of clause (3) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities;

 

6


provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Administrative Agent in its reasonable discretion.

Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent reasonably decides (in consultation with the Borrower) may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent reasonably decides (in consultation with the Borrower) is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents), in each case, to the extent such changes are being made to other syndicated credit agreements with similarly situated borrowers.

Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:

(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof);

(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (3) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date;

(3) in the case of a Term SOFR Transition Event, the date that is thirty (30) days after the date a Term SOFR Notice is provided to the Lenders and the Borrower pursuant to Section 2.14(c); or

(4) in the case of an Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election, as applicable, is provided to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election, as applicable, is provided to the Lenders, written notice of objection to such Early Opt-in Election, as applicable, from Lenders comprising the Required Lenders.

For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

 

7


Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:

(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);

(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the FRB, the NYFRB, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), in each case, which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or

(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.

For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.14 and (y) ending at the time that a Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.14.

Beneficial Ownership Certification” means a certification regarding individual beneficial ownership solely to the extent expressly required by the Beneficial Ownership Regulation.

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

Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.

Bonds” means, collectively, the Discovery Bonds and the TW Bonds.

 

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Borrower” has the meaning specified in the introductory paragraph hereto and any successor in interest thereto.

Borrower Cash Distribution” has the meaning specified in the recitals hereto.

Borrower Securities” has the meaning specified in the recitals hereto.

Borrowing” means a Tranche 1 Borrowing or a Tranche 2 Borrowing, as the context may require.

Bridge Facility” means the $41,500,000,000 senior unsecured bridge credit facility contemplated by that certain Commitment Letter, dated as of May 17, 2021 (the “Commitment Letter”), among JPMorgan Chase Bank, N.A., Goldman Sachs Bank USA, Goldman Sachs Lending Partners LLC, the Borrower and the other banks and financial institutions party thereto.

Business Combination Agreement” has the meaning specified in the recitals hereto.

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, the state where the Administrative Agent’s Office is located and if such day relates to any interest rate settings as to a Eurocurrency Rate Loan, any fundings, disbursements, settlements and payments in respect of any such Eurocurrency Rate Loan, or any other dealings to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan, means any such day that is also a London Banking Day.

Capital Lease” means, subject to Section 1.03(a), an obligation that is required to be classified as, and expenses in respect of which are recognized as for, a capitalized lease for income statement reporting purposes in accordance with GAAP.

Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

Change of Control” means an event by which both:

(a) (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) other than any Significant Shareholder or any combination of Significant Shareholders becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934), directly or indirectly, of more than 50% of the equity securities of the Borrower or (solely upon and after the consummation of the Combination Transactions) Discovery entitled to vote for members of the board of directors or equivalent governing body of such Loan Party, measured by voting power rather than number of shares;

 

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(ii) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of (A) prior to the consummation of the Combination Transactions, the Borrower and its Subsidiaries, taken as a whole, and (B) solely upon and after the consummation of the Combination Transactions, Discovery and its Subsidiaries, taken as a whole, in each case, to any “person” (as that term is used in Section 13(d) of the Securities Exchange Act of 1934) other than to Discovery, the Borrower or one of their respective Subsidiaries;

(iii) solely upon and after the consummation of the Combination Transactions, the consummation of a so-called “going private/Rule 13e-3 Transaction” that results in any of the effects described in paragraph (a)(3)(ii) of Rule 13e-3 under the Securities Exchange Act of 1934 (or any successor provision) with respect to each class of Discovery’s common stock, following which any Significant Shareholder or any combination of Significant Shareholders “beneficially own” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934), directly or indirectly, more than 50% of the outstanding equity securities of Discovery entitled to vote for members of the board of directors or equivalent governing body of Discovery measured by voting power rather than number of shares; or

(iv) the adoption of a plan relating to the liquidation, dissolution or winding up of the Borrower or (solely upon and after the consummation of the Combination Transactions) Discovery; and

(b) within 60 days after the occurrence of any event described in clauses (a)(i) to (iv), the Loan Parties shall not have procured and delivered to the Administrative Agent a rating of the Borrower’s non-credit enhanced, senior long-term debt from both of S&P and Moody’s of “BBB-” or better by S&P (or its equivalent under any successor rating category of S&P) and a rating of “Baa3” or better by Moody’s (or its equivalent under any successor rating category of Moody’s).

Notwithstanding anything to the contrary in the foregoing, the Transactions shall not constitute or give rise to a Change of Control.

Closing Date” means the first date all the conditions precedent in Section 4.02 are satisfied or waived in accordance with Section 11.01.

Code” means the Internal Revenue Code of 1986.

Combination” has the meaning specified in the recitals hereto.

Combination Bonds” means senior unsecured debt securities (including debt securities convertible into equity) of the Borrower and/or its Subsidiaries in an aggregate principal amount not to exceed $31,500,000,000 (provided that such amount may be increased up to an amount not to exceed $41,500,000,000 solely to the extent the proceeds of such additional Combination Bonds in excess of $31,500,000,000 are used to prepay the Committed Loans pursuant to Section 2.05 or reduce Commitments hereunder pursuant to Section 2.06, in each case dollar for dollar), the proceeds of which are to be used to pay a portion of the Borrower Cash Distribution and other fees and expenses in connection with the Transactions.

Combination Transactions” has the meaning specified in the recitals hereto.

 

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Combination Transaction Representations” means the representations made by Discovery in the Business Combination Agreement as are material to the interests of the Lenders (but only to the extent that the Borrower or its applicable affiliates has the right to terminate its obligation to consummate the Combination (or otherwise does not have an obligation to close) under the Business Combination Agreement as a result of a failure of such representations in the Business Combination Agreement to be accurate without liability to any of them).

Combined Businesses” has the meaning specified in the recitals hereto.

Commitment” means, as to each Lender, the sum of its Tranche 1 Commitment and its Tranche 2 Commitment.

Committed Borrowing” means a Tranche 1 Borrowing or a Tranche 2 Borrowing.

Committed Loan” means a Tranche 1 Loan or a Tranche 2 Loan.

Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a conversion of Committed Loans from one Type to the other, or (c) a continuation of Eurocurrency Rate Loans, pursuant to Section 2.02(a), which shall be substantially in the form of Exhibit A or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.

Compliance Certificate” means a certificate substantially in the form of Exhibit D.

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

consolidated” or “consolidated basis” means, with respect to the Borrower and its Subsidiaries, the consolidation of the accounts of each of the Subsidiaries with those of the Borrower in accordance with GAAP; provided that even if, following the consummation of the Combination Transactions, any Subsidiary Guarantor and its Subsidiaries are Subsidiaries of Discovery but not Subsidiaries of the Borrower, the accounts of each such Subsidiary Guarantor and its Subsidiaries shall be treated as if they were consolidated into the accounts of the Borrower in accordance with GAAP.

Consolidated EBITDA” means, for any Measurement Period, for the Borrower and its Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income for such period plus (a) the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Charges for such period, (ii) the provision for Federal, state, local and foreign income taxes payable by the Borrower and its Subsidiaries for such period, (iii) depreciation and amortization expense (other than Film Rights Amortization, but including (x) amortization expense from launch and representation rights and (y) amortization of capitalized fees related to any Permitted Securitization Financing), (iv) expenses related to long term incentive plans of the Borrower and its Subsidiaries reducing such Consolidated Net Income which do not represent a cash item in such period, (v) amounts attributable to a minority interest in any Subsidiary of the Borrower held by a Person (other than the Borrower or another Subsidiary of the Borrower) which do not represent a cash item in such period, (vi) amounts attributable to losses in respect of equity interests in unconsolidated Persons which do not represent a cash item in such period and (vii) other non-recurring expenses or losses of the Borrower and its Subsidiaries reducing such Consolidated Net Income which do not represent a cash item in such period or any future period, plus (b) losses to the extent related to (x) the implementation of direct-to-consumer platforms of Discovery, the Borrower and their respective subsidiaries and (y) the provision of coverage for the 2020 Summer Olympics by Discovery, the Borrower and their respective subsidiaries; provided that the aggregate amount of add-backs pursuant to the immediately preceding clauses (x) and (y) collectively shall be capped at (1) $750,000,000 for any

 

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Measurement Period ending on or after September 30, 2021, through and including June 30, 2022, (2) $500,000,000 for any Measurement Period ending on or after September 30, 2022, through and including June 30, 2023, (3) $250,000,000 for any Measurement Period ending on or after September 30, 2023, through and including June 30, 2024 and (4) $0 thereafter, plus (c) the amount of loss or discount on sale of receivables, Securitization Assets and related assets to any Securitization Subsidiary in connection with a Permitted Securitization Financing, and minus (d) the following to the extent included in calculating such Consolidated Net Income: (i) Federal, state, local and foreign income tax credits of the Borrower and its Subsidiaries for such period and (ii) non-recurring gains of the Borrower and its Subsidiaries increasing such Consolidated Net Income which do not represent a cash item in such period or any future period. Upon and after consummation of the Combination Transactions, all of the foregoing references to Subsidiaries of the Borrower in this definition shall be deemed to include each Subsidiary Guarantor and its Subsidiaries.

Consolidated Funded Indebtedness” means, as of any date of determination, for the Borrower and its Subsidiaries on a consolidated basis, without duplication, the sum of (a) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments (net of cash or cash equivalents held on the balance sheet of the Borrower and its Subsidiaries in respect of Pre-Funded Acquisition Debt), (b) all purchase money Indebtedness (except as also excluded from clause (d) below), (c) all direct obligations arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments (other than (i) commercial letters of credit in an aggregate face amount of not more than $22,500,000 and (ii) surety bonds in an aggregate face amount of not more than $22,500,000), (d) all obligations in respect of the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and, to the extent applicable, net of cash or cash equivalents held on the balance sheet of the Borrower and its Subsidiaries in respect of Pre-Funded Acquisition Debt), (e) Attributable Indebtedness in respect of Capital Leases and Synthetic Lease Obligations, (f) without duplication, all Guarantees with respect to outstanding Indebtedness of the types specified in clauses (a) through (e) above of Persons other than the Borrower or any of its Subsidiaries, and (g) all Indebtedness of the types referred to in clauses (a) through (f) above of any partnership or joint venture (other than a joint venture that is itself a corporation, limited liability company or similar limited liability entity organized under the laws of a jurisdiction other than the United States or a state thereof) in which the Borrower or any of its Subsidiaries is a general partner or joint venturer, unless such Indebtedness is expressly made non-recourse to the Borrower or such Subsidiary; provided, that (i) if the Borrower or any Subsidiary delivers or causes to be delivered an irrevocable repayment or redemption notice that results in Indebtedness in the form of debt securities being due and payable in full not later than 30 days after such repayment or redemption notice has been delivered and deposits cash with or for the benefit of the trustee or holders of such Indebtedness to fund such repayment or redemption in full, then such Indebtedness shall be considered repaid or redeemed (it being understood that if any applicable deposit is returned and the corresponding Indebtedness is not repaid or redeemed, but remains outstanding, such Indebtedness shall no longer be considered repaid or redeemed), and (ii) if the Borrower or any Subsidiary commences a tender offer to repurchase Indebtedness (the “Repurchased Indebtedness”) and will be obligated to repurchase such Indebtedness for payment in full, together with accrued and unpaid interest thereon, after the satisfaction or waiver of any conditions of such tender offer, and in connection therewith issues Indebtedness in the form of debt securities (the “New Indebtedness”) the proceeds of which are to be used to repurchase the Repurchased Indebtedness within 30 days of issuance of such New Indebtedness (the “Period”), then to the extent, and solely so long as, the Borrower or any Subsidiary either holds the proceeds of such New Indebtedness in an escrow account with an independent escrow agent or deposits the proceeds of such New Indebtedness with or for the benefit of the trustee or holders of such Repurchased Indebtedness to fund the repurchase of such Repurchased Indebtedness, then, without duplication of any amounts excluded under clause (i) above, the amount of such New Indebtedness shall be deemed for the purpose of this definition to be reduced by the amount of the proceeds thereof that

 

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are so held in escrow or with or for the benefit of the trustee or holders of such Repurchased Indebtedness (solely to the extent and for so long as so held, and not for the avoidance of doubt to the extent applied to repurchase the Repurchased Indebtedness or applied for any other purpose other than the repayment of the New Indebtedness); provided, further, that upon the end of the Period, the deemed reduction of the New Indebtedness described above shall no longer apply. Upon and after consummation of the Combination Transactions, all of the foregoing references to Subsidiaries of the Borrower in this definition shall be deemed to include each Subsidiary Guarantor and its Subsidiaries.

Consolidated Interest Charges” means, for any Measurement Period, for the Borrower and its Subsidiaries on a consolidated basis, the sum of, without duplication (a) all interest, premium payments, debt discount, fees, charges and related expenses of the Borrower and its Subsidiaries in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, but excluding any interest, premium payments, debt discount, fees, charges and related expenses of the Borrower and its Subsidiaries in connection with Pre-Funded Acquisition Debt, (b) commissions, discounts, yield and other fees and charges (including any interest expense) related to any Permitted Securitization Financing, and (c) the portion of rent expense of the Borrower and its Subsidiaries with respect to such period under Capital Leases that is treated as interest in accordance with GAAP. Upon and after consummation of the Combination Transactions, all of the foregoing references to Subsidiaries of the Borrower in this definition shall be deemed to include each Subsidiary Guarantor and its Subsidiaries.

Consolidated Interest Coverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated EBITDA for the Measurement Period then most recently ended on or prior to such date, to (b) Consolidated Interest Charges for such period.

Consolidated Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA for the Measurement Period then most recently ended on or prior to such date.

Consolidated Net Income” means, for any Measurement Period, for the Borrower and its Subsidiaries on a consolidated basis, the net income of the Borrower and its Subsidiaries (excluding extraordinary gains and extraordinary losses) for that period. Upon and after consummation of the Combination Transactions, all of the foregoing references to Subsidiaries of the Borrower in this definition shall be deemed to include each Subsidiary Guarantor and its Subsidiaries.

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

Contribution” has the meaning specified in the recitals hereto.

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. “Controlling” and “Controlled” have meanings correlative thereto.

Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

Covered Entity” has the meaning specified in Section 11.22.

 

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Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which may include a lookback) being established by the Administrative Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for business loans; provided, that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion, which shall be consistent with the then-prevailing market conventions and shall not be adverse to the interests of the Borrower.

DCL” means Discovery Communications, LLC, a Delaware limited liability company and any successor in interest thereto.

Debt Rating” has the meaning specified in the definition of “Applicable Rate.”

Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, judicial management or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.

Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

Default Rate” means an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per annum; provided, however, that with respect to a Eurocurrency Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum.

Defaulting Lender” means, subject to Section 2.17(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans that are required to be funded hereunder on the Closing Date, or (ii) pay to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within two Business Days of the date when due, (b) has notified the Borrower or the Administrative Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect, (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, other than via an Undisclosed Administration (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, judicial manager, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.17(b)) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to

 

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the Borrower and each other Lender promptly following such determination. For purposes of this definition, “Undisclosed Administration” means, in relation to a Lender or its direct or indirect parent company, the appointment of a receiver, conservator, trustee, administrator, custodian or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender or such parent company is subject to home jurisdiction, if applicable law requires that such appointment not be publicly disclosed.

Designated Default” means a Default under Sections 8.01(a), (f) or (g).

Designated Jurisdiction” means any country or territory to the extent that such country or territory itself is targeted by any Sanction.

Discovery” has the meaning specified in the recitals hereto.

Discovery Bonds” means, collectively, (a) the notes issued pursuant to the Indenture dated as of August 19, 2009, among DCL, Discovery, and U.S. Bank National Association, and any supplemental indentures thereto and (b) the notes issued pursuant to the Indenture, dated as of December 1, 2011, by and among Scripps and U.S. Bank National Association, and any supplemental indentures thereto.

Discovery Business” has the meaning specified in the recitals hereto.

Disqualified Institution” means (i) any Persons identified by the Borrower in writing to the Arrangers on or prior to the Closing Date and (ii) any competitors of the Borrower, Discovery and their respective Subsidiaries identified by the Borrower in writing to the Arrangers (or to any Affiliates of such competitors to the extent such affiliates are reasonably identifiable as affiliates solely on the basis of the name thereof).

Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any 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. The term “Disposition” shall not include (a) any issuance of Equity Interests otherwise permitted by Section 7.06, (b) any Involuntary Disposition or (c) any cash payments otherwise permitted under this Agreement.

Distribution” has the meaning specified in the recitals hereto.

Dollar” and “$” mean lawful money of the United States.

Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States that is not a Foreign Subsidiary.

Early Opt-in Election” means, if the then current Benchmark is LIBO Rate, the occurrence of:

(1) a notification by the Administrative Agent to (or the request by the Borrower to the Administrative Agent to notify) each of the other parties hereto that at least five currently outstanding Dollar denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and

 

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(2) the joint election by the Administrative Agent and the Borrower to trigger a fallback from LIBO Rate and the provision, as applicable, by the Administrative Agent of written notice of such election to the Borrower and the Lenders.

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

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

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

Effective Date” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 11.01.

Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.

Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 11.06(b)(iii), and (v) subject to such consents, if any, as may be required under Section 11.06(b)(iii); provided that no Disqualified Institution shall be an Eligible Assignee.

Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

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

Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

 

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ERISA” means the Employee Retirement Income Security Act of 1974.

ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower and, solely upon and after the consummation of the Combination Transactions, Discovery within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code); provided that ERISA Affiliates of the Borrower shall not include the AT&T Business other than the Spinoff Business.

ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of the Borrower or any of its ERISA Affiliates and, solely upon and after the consummation of the Combination Transactions, Discovery or any of its ERISA Affiliates from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any of its ERISA Affiliates and, solely upon and after the consummation of the Combination Transactions, Discovery or any of its ERISA Affiliates from a Multiemployer Plan; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any of its ERISA Affiliates and, solely upon and after the consummation of the Combination Transactions, Discovery or any of its ERISA Affiliates.

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

Eurocurrency Rate Loan” means a Committed Loan that bears interest at a rate determined by reference to the LIBO Rate.

Event of Default” has the meaning specified in Section 8.01.

Excluded Taxes” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 11.13) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.01(a)(ii), (a)(iii) or (c), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.01(e) and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.

 

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FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.

FATCA” means (a) Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code, (b) any treaty, law, regulation or other official guidance enacted in any jurisdiction, or relating to an intergovernmental agreement between the United States and any other jurisdiction, with the purpose (in either case) of facilitating the implementation of clause (a) above, or (c) any agreement pursuant to the implementation of clauses (a) or (b) above with the United States Internal Revenue Service, the United States government or any Governmental Authority.

FCA” has the meaning assigned to such term in Section 1.06.

Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as shall be set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than 0.00%, such rate shall be deemed to be 0.00% for the purposes of this Agreement.

Film Rights Amortization” means, for any Person, the amortization of payments for the acquisition of film rights and broadcast programming by such Person in accordance with GAAP.

Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to LIBO Rate.

Foreign Lender” means a Lender that is not a U.S. Person. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States, a State thereof or the District of Columbia or that is a Foreign Subsidiary Holdco. For the avoidance of doubt, any Subsidiary that is organized and existing under the laws of Puerto Rico or any other territory of the United States of America shall be a Foreign Subsidiary.

Foreign Subsidiary Holdco” means any Subsidiary designated as a Foreign Subsidiary Holdco by the Borrower, so long as such Subsidiary has no material assets other than securities, Indebtedness or receivables of one or more Foreign Subsidiaries (or Subsidiaries thereof), intellectual property relating solely to such Foreign Subsidiaries (or Subsidiaries thereof) and/or other assets (including cash and cash equivalents) relating to an ownership interest in any such securities, Indebtedness, intellectual property or Subsidiaries.

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

Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

 

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GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other 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 obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other 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 obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other 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 obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person. 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.

Guarantor” and “Guarantors” have the meanings specified in Section 10.01.

Guaranty” means the Guaranty made by the Guarantors in favor of the Lender Parties pursuant to Article X.

Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

Impacted LIBO Rate Interest Period” has the meaning assigned to such term in the definition of “LIBO Rate.”

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;

 

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(b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

(c) net obligations of such Person under any Swap Contract;

(d) all non-contingent obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business);

(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), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

(f) Capital Leases and Synthetic Lease Obligations;

(g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and

(h) all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation, limited liability company or similar limited liability entity organized under the laws of a jurisdiction other than the United States or a state thereof) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any Capital Lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.

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

Indemnitees” has the meaning specified in Section 11.04(b).

Information” has the meaning specified in Section 11.07.

Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date applicable to such Loan; provided, however, that if any Interest Period for a Eurocurrency Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December and the Maturity Date applicable to such Loan.

 

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Interest Period” means, as to each Eurocurrency Rate Loan, the period commencing on the date such Eurocurrency Rate Loan is disbursed or converted to or continued as a Eurocurrency Rate Loan and ending on the date one, three or six months thereafter (in each case, subject to availability), as selected by the Borrower in its Committed Loan Notice or such other period that is twelve months or less requested by the Borrower and consented to by all the Lenders; provided that:

(i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, in the case of a Eurocurrency Rate Loan, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

(ii) any Interest Period pertaining to a Eurocurrency Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(iii) no Interest Period shall extend beyond the applicable Maturity Date.

Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment, less any amount paid, repaid, returned, distributed or otherwise received in respect of any Investment. For the avoidance of doubt, advances and reimbursements to officers, directors or employees of (x) the Borrower and its Subsidiaries or (y) (upon and after consummation of the Combination Transactions) Discovery and its Subsidiaries, as applicable, for travel, entertainment, relocation and analogous ordinary business purposes shall not be deemed to be an Investment hereunder.

Involuntary Disposition” means any casualty loss, destruction, condemnation or other involuntary taking by any Governmental Authority of any property of the Borrower or any of its Subsidiaries.

IP Rights” has the meaning specified in Section 5.18.

IRS” means the United States Internal Revenue Service.

Joint Venture” means any Person (other than a wholly-owned Subsidiary of the Borrower) if any of the Equity Interests of such Person having ordinary voting power for the election of directors or other governing body of such Person are held by the Borrower and/or any of its Subsidiaries and the Borrower or any such Subsidiary is a party to a Joint Venture Agreement in respect of such Equity Interests.

Joint Venture Agreement” means, for any Joint Venture, any stockholder agreement, voting trust agreement, limited liability company agreement, operating agreement or other similar agreement related to the ownership of the Equity Interests of such Joint Venture having ordinary voting power for the election of directors or other governing body of such Joint Venture among the owners of such Equity Interests.

Laws” means, collectively, all 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, in each case whether or not having the force of law.

 

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Lender” has the meaning specified in the introductory paragraph hereto and, as the context requires, includes a Lender in its capacity as Tranche 1 Lender and as Tranche 2 Lender.

Lender Parties” means, collectively, the Lenders and the Administrative Agent.

Lender Related Person” has the meaning specified in Section 11.04(e).

Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent which office may include any Affiliate of such Lender or any domestic or foreign branch of such Lender or such Affiliate. Unless the context otherwise requires each reference to a Lender shall include its applicable Lending Office.

LIBO Interpolated Rate” means, at any time, with respect to any Eurocurrency Rate Loan for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBO Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBO Screen Rate for the longest period (for which the LIBO Screen Rate is available) that is shorter than the Impacted LIBO Rate Interest Period; and (b) the LIBO Screen Rate for the shortest period (for which the LIBO Screen Rate is available) that exceeds the Impacted LIBO Rate Interest Period, in each case, at such time; provided that if any LIBO Interpolated Rate shall be less than 0.00%, such rate shall be deemed to be 0.00% for the purposes of this Agreement.

LIBO Rate” means, with respect to any Eurocurrency Rate Loan and for any Interest Period, the LIBO Screen Rate at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period; provided that if the LIBO Screen Rate shall not be available at such time for such Interest Period (an “Impacted LIBO Rate Interest Period”) then the LIBO Rate shall be the LIBO Interpolated Rate.

LIBO Screen Rate” means, for any day and time, with respect to any Eurocurrency Rate Loan and for any Interest Period, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate) for Dollars for a period equal in length to such Interest Period as displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion); provided that if the LIBO Screen Rate as so determined would be less than 0.00%, such rate shall be deemed to be 0.00% for the purposes of this Agreement.

LIBOR” has the meaning assigned to such term in Section 1.06.

Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

 

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Loan” means a Tranche 1 Loan or a Tranche 2 Loan.

Loan Documents” means this Agreement (including the Guaranty), each Note, any joinder agreement executed by Discovery, DCL or Scripps to become a Guarantor pursuant to Section 6.15, any joinder agreement executed by any other Material Subsidiary of Discovery to become a Guarantor pursuant to Section 6.16.

Loan Parties” means the Borrower and each Guarantor.

Loan Party Materials” has the meaning specified in Section 6.02.

London Banking Day” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

Master Agreement” has the meaning specified in the definition of “Swap Contract”.

Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, assets, properties, liabilities (actual or contingent) or financial condition of Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower and their respective Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.

Material Subsidiary” means any wholly-owned Domestic Subsidiary of Discovery constituting a “significant subsidiary” in accordance with Rule 1-02 under Regulation S-X under the Securities Act.

Maturity Date” means the Tranche 1 Maturity Date in the case of the Tranche 1 Loans, and the Tranche 2 Maturity Date in the case of the Tranche 2 Loans; provided, however, that, in each case, if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.

Maximum Rate” has the meaning specified in Section 11.09.

Measurement Period” means a period of four consecutive fiscal quarters of the Borrower (or upon and after the consummation of the Combination Transactions, Discovery). Unless otherwise specified, on any date of determination, a reference herein to a Measurement Period shall be to such period then ended or then most recently ended, as the case may be, for which financial statements of the Borrower (or, upon and after the consummation of the Combination Transactions, Discovery) have been (or have been required to be) delivered under Section 6.01.

Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any of its ERISA Affiliates and, solely upon and after the consummation of the Combination Transactions, Discovery or any of its ERISA Affiliates makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

Multiple Employer Plan” means a Plan which has two or more contributing sponsors (including the Borrower or any of its ERISA Affiliates and, solely upon and after the consummation of the Combination Transactions, Discovery or any of its ERISA Affiliates) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

 

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Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that: (i) (A) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 11.01 and (B) has been approved by the Required Lenders; (ii) (A) requires the approval of all Tranche 1 Lenders in accordance with the terms of Section 11.01 and (B) has been approved by the Required Tranche 1 Lenders; or (iii) (A) requires the approval of all Tranche 2 Lenders in accordance with the terms of Section 11.01 and (B) has been approved by the Required Tranche 2 Lenders.

Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.

Note” means a promissory note made by the Borrower in favor of a Lender evidencing Loans made by such Lender to the Borrower, substantially in the form of Exhibit C-1 (in the case of Tranche 1 Loans) and Exhibit C-2 (in the case of Tranche 2 Loans).

NYFRB” means the Federal Reserve Bank of New York.

NYFRB’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.

NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from a federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates as so determined be less than 0.00%, such rate shall be deemed to be 0.00% for purposes of this Agreement.

Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.

Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement (or equivalent or comparable constitutive documents with respect to any non-US jurisdiction); and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

 

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

Other Taxes” means all present or future stamp, court or documentary, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.06).

Outstanding Amount” means with respect to Committed Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of such Loans occurring on such date.

Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight eurocurrency borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.

Overnight Rate” means, for any day, the NYFRB Rate.

Participant” has the meaning specified in Section 11.06(d).

Participant Register” has the meaning specified in Section 11.06(d).

PBGC” means the Pension Benefit Guaranty Corporation.

Pension Act” means the Pension Protection Act of 2006.

Pension Funding Rules” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans set forth in Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

Pension Plan” means any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by the Borrower or any of its ERISA Affiliates and, solely upon and after the consummation of the Combination Transactions, Discovery or any of its ERISA Affiliates and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

Permitted Priority Amount” on any date of determination means an amount equal to the sum of (a) 10% of the total consolidated assets of the Borrower and its Subsidiaries on such date, plus (b) for the Borrower and its Subsidiaries on a consolidated basis, outstanding Attributable Indebtedness on such date in respect of the Capital Leases identified on Schedule 7.01 and any renewals or extensions thereof permitted by Section 7.01(b).

 

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Permitted Securitization Financing” means any financing arrangement or factoring of Securitization Assets by the Borrower or any of its Subsidiaries (or, solely upon and after the consummation of the Combination Transactions, any Subsidiaries of Discovery) and any securitization facility of any Securitization Subsidiary of the Borrower (or, solely upon and after the consummation of the Combination Transactions, any Securitization Subsidiary of Discovery), in each case, the obligations of which are non-recourse (except for Standard Securitization Undertakings) to the Borrower or any of its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, any Subsidiaries of Discovery) (other than any Securitization Subsidiary) in connection therewith.

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

Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained for employees of the Borrower or any of its ERISA Affiliates and, solely upon and after the consummation of the Combination Transactions, Discovery or any of its ERISA Affiliates or any such Plan to which the Borrower or any of its ERISA Affiliates and, solely upon and after the consummation of the Combination Transactions, Discovery or any of its ERISA Affiliates is required to contribute on behalf of any of its employees.

Platform” has the meaning specified in Section 6.02.

Pre-Funded Acquisition Debt” means Indebtedness incurred for the purpose of financing a significant acquisition or business combination (including for the avoidance of doubt the Combination Transactions, and with significance otherwise calculated in accordance with Article 11 of Regulation S-X under the Securities Act), which Indebtedness is issued in advance of the date of consummation of such significant acquisition; provided that in the event of the termination of the acquisition agreement for such significant acquisition and/or combination agreement for such significant business combination as a result of the failure to consummate such significant acquisition, such Indebtedness shall be regarded as Pre-Funded Acquisition Debt solely for a period of 45 days after the termination of such acquisition agreement.

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

Pro Forma Basis”, “Pro Forma Compliance” and “Pro Forma Effect” means, for any transaction or proposed transaction deemed to have occurred on and as of the first day of a Measurement Period pursuant to Section 1.03(d), the following pro forma adjustments:

(a) in the case of any such transaction or proposed transaction that is a Disposition, all income statement items (whether positive or negative) attributable to property, line of business or the Person subject to such Disposition shall be excluded from the results of Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries for such Measurement Period;

(b) in the case of any such transaction or proposed transaction that is an Investment, income statement items (whether positive or negative) attributable to property, line of business or the Person subject to such Investment shall be included in the results of Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries for such Measurement Period;

 

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(c) in the case of any retirement of Indebtedness or any Indebtedness that was or is to be repaid or refinanced in such transaction or proposed transaction, interest accrued on such Indebtedness during such Measurement Period shall be excluded from the results of Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries for such Measurement Period (and to the extent not already excluded pursuant to any other clause of this definition or pursuant to Section 1.03(d), the principal amount of such Indebtedness shall also be excluded); and

(d) in the case of the incurrence or assumption of any Indebtedness in such transaction or proposed transaction, interest shall be deemed to have accrued on such Indebtedness during such Measurement Period (in the case of interest that accrues at a formula or floating rate, at the rate in effect at the time of determination) and shall be included in the results of Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries for such Measurement Period.

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

Public Lender” has the meaning specified in Section 6.02.

Recipient” means the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder.

Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is LIBO Rate, 11:00 a.m. (London time) on the day that is two London banking days preceding the date of such setting and (2) if such Benchmark is not LIBO Rate, the time determined by the Administrative Agent in its reasonable discretion which shall be consistent with the then-prevailing market conventions.

Register” has the meaning specified in Section 11.06(c).

Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, and advisors of such Person and of such Person’s Affiliates.

Relevant Governmental Body” means the Federal Reserve Board and/or the NYFRB, or a committee officially endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto.

Removal Effective Date” has the meaning specified in Section 9.06(b).

Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

Required Lenders” means, at any time, Lenders having Total Credit Exposures representing more than 50% of the Total Credit Exposures of all Lenders. The Total Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.

 

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Required Tranche 1 Lenders” means, at any time, Tranche 1 Lenders having Total Tranche 1 Credit Exposures representing more than 50% of the Total Tranche 1 Credit Exposures of all Tranche 1 Lenders. The Total Tranche 1 Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Tranche 1 Lenders at any time.

Required Tranche 2 Lenders” means, at any time, Tranche 2 Lenders having Total Tranche 2 Credit Exposures representing more than 50% of the Total Tranche 2 Credit Exposures of all Tranche 2 Lenders. The Total Tranche 2 Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Tranche 2 Lenders at any time.

Resignation Effective Date” has the meaning specified in Section 9.06(a).

Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

Responsible Officer” means (a) the chief executive officer, president, chief financial officer, senior executive vice president, executive vice president, senior vice president, vice president – treasury, treasurer, assistant treasurer or controller of a Loan Party, (b) solely for purposes of the delivery of incumbency certificates pursuant to Section 4.01, the secretary or any assistant secretary of a Loan Party and (c) solely for purposes of notices given pursuant to Article II, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

Restricted Payment” means, for any Person, any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of such 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, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to such Person’s stockholders, partners or members (or the equivalent Person thereof).

RMT Partner Material Adverse Effect” has the meaning given to “RMT Partner Material Adverse Effect” in the Business Combination Agreement.

S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of S&P Global, Inc. and any successor thereto.

Same Day Funds” means immediately available funds.

Sanction(s)” means any international economic sanction imposed, administered or enforced by the United States Government (including without limitation, OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.

Scripps” means Scripps Networks Interactive, Inc., an Ohio corporation and any successor in interest thereto.

SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

Securities Act” means the Securities Act of 1933, as amended from time to time.

 

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Securitization Assets” means accounts receivable, loans, mortgages, royalties, other rights to payment, supporting obligations therefor, proceeds therefrom and other related assets customarily disposed of or pledged in connection with non-recourse receivables financings or factorings or securitization facilities (as determined in good faith by the Borrower or (solely upon and after the consummation of the Combination Transactions) any Subsidiary of Discovery, as applicable).

Securitization Subsidiary” means any Subsidiary of the Borrower (or, solely upon and after the consummation of the Combination Transactions, any Subsidiary of Discovery) formed for purposes of consummating any Permitted Securitization Financing and which holds no material assets other than Securitization Assets and which is engaged in no material activities other than those related to such Permitted Securitization Financing.

Separation” has the meaning specified in the recitals hereto.

Separation and Distribution Agreement” has the meaning specified in the recitals hereto.

Significant Shareholder” means each of (a) Advance/Newhouse Programming Partnership, (b) Discovery or any of its Subsidiaries, (c) solely prior to the consummation of the Combination Transactions, AT&T or any of its Subsidiaries and (d) any other Person if 50% or more of the equity securities of such Person entitled to vote for members of the board of directors or equivalent governing body of such Person on a fully-diluted basis (and taking into account any option rights) is “beneficially owned” (as defined in Rules 13d-3 and 13d-5 under the Securities and Exchange Act of 1934), directly or indirectly, by Advance/Newhouse Programming Partnership or Discovery or one of its Subsidiaries or any combination thereof.

Significant Subsidiary” means, as of any date of determination, each direct or indirect Subsidiary of the Borrower (and, upon and after the consummation of the Combination Transactions, Discovery) that either (i) has assets as of such date the book value of which is equal to 5% or more of the consolidated total assets as of the last day of the four fiscal quarter period of the Borrower most recently ended for which financial information is available or (ii) had revenues in such four fiscal quarter period equal to 5% or more of the consolidated total revenues of the Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries. For the purpose of the foregoing calculations, the assets and revenues of a Subsidiary shall be deemed to include the assets and revenues of its Subsidiaries.

SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.

SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).

SOFR Administrator’s Website” means the NYFRB’s website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.

Solvent” means (i) the Fair Value and Present Fair Salable Value (as defined on Exhibit L) of the assets of the Borrower and its Subsidiaries taken as a whole exceed their Stated Liabilities and Identified Contingent Liabilities (as defined on Exhibit L); (ii) the Borrower and its Subsidiaries taken as a whole do not have Unreasonably Small Capital (as defined on Exhibit L); and (iii) the Borrower and its Subsidiaries taken as a whole will be able to pay their Stated Liabilities and Identified Contingent Liabilities as they mature.

 

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Special Cash Payment” has the meaning given to “Spinco Special Cash Payment” in the Separation and Distribution Agreement.

Specified Representations” means the representations and warranties of the Borrower set forth in (a) Section 5.01(a) (solely with respect to the Borrower), 5.01(b)(ii) (solely with respect to the Borrower), 5.02(a) (solely with respect to the Borrower and Discovery), 5.02(b)(i) (solely with respect to debt instruments of the Borrower and its Subsidiaries governing Indebtedness for borrowed money in an outstanding principal amount or committed amount in excess of the Threshold Amount (in each case, after giving effect to the Combination Transactions and the incurrence of Indebtedness on the Closing Date)), 5.04, the second sentence of 5.07 (solely with respect to any Default under Section 8.01(a), or, solely with respect to the Borrower, Sections 8.01(f) or (g)), 5.14(a), 5.14(b) and 5.20 (solely to the extent the use of proceeds of the Loans on the Closing Date would violate the Act, the Foreign Corrupt Practices Act of 1977 or OFAC) and (b) the certification delivered pursuant to Section 4.02(e) on the Closing Date.

Specified Transaction” means (a) any Investment or series of related Investments in Equity Interests or assets constituting a line of business of a Person or Persons made by the Borrower or any of its Subsidiaries and permitted pursuant to Section 7.02(e) or (f) in an amount in excess of $225,000,000 made during any Measurement Period in which the aggregate amount of all Investments made by the Borrower and its Subsidiaries and permitted pursuant to Section 7.02(e) or (f) exceeds (or would exceed) $675,000,000, and (b) any Disposition or series of related Dispositions of Equity Interests or assets constituting a line of business of a Person or Persons made by the Borrower or any of its Subsidiaries and permitted pursuant to Section 7.05(f) or (g) in an amount in excess of $225,000,000 made during any Measurement Period in which aggregate amount of all Dispositions made by the Borrower and its Subsidiaries and permitted pursuant to Section 7.05(f) and (g) exceeds (or would exceed) $675,000,000.

Spinoff Business” has the meaning specified in the recitals hereto.

Standard Securitization Undertakings” means representations, warranties, covenants (including repurchase obligations) and indemnities entered into by the Borrower or any of its Subsidiaries (or, solely upon and after the consummation of the Combination Transactions, any Subsidiary of Discovery) that the Borrower or Subsidiary of Discovery, as applicable, has determined in good faith are customary for “non-recourse” accounts receivables financings or factoring or securitization financings.

Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors 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 the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower and, solely upon and after the consummation of the Combination Transactions, shall include each Subsidiary Guarantor and any Subsidiary thereof. All references herein to a “wholly-owned Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which all of the shares of securities or other interests having ordinary voting power for the election of directors 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, directly, or indirectly through one or more intermediaries, or both, by such Person, other than, to the extent required by the applicable laws of the jurisdiction of organization of

 

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such entity (a) any such shares that are required by such laws to be owned by the government of such jurisdiction or individuals or corporate citizens of such jurisdiction in order for such entity to transact business in such jurisdiction and (b) directors qualifying shares. Notwithstanding anything to the contrary in the immediately preceding sentence, for all purposes of this Agreement, Animal Planet, LP, a Delaware limited partnership, shall be deemed to be a wholly owned Subsidiary of DCL if, and so long as, its Equity Interests are beneficially owned (i) at least 85% either directly by DCL or indirectly by DCL through one or more Subsidiaries of DCL and (ii) the remainder, if any, either directly by Discovery or indirectly by Discovery through one or more other Subsidiaries of Discovery.

Subsidiary Guarantor” has the meaning specified in Section 10.01.

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 (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any 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 (which may include a Lender or any Affiliate of a Lender).

Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

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

Term SOFR” means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

Term SOFR Notice” means a notification by the Administrative Agent to the Lenders and the Borrower of the occurrence of a Term SOFR Transition Event.

 

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Term SOFR Transition Event” means the determination by the Administrative Agent (in consultation with the Borrower) that (a) Term SOFR has been recommended for use by the Relevant Governmental Body, (b) the administration of Term SOFR is administratively feasible for the Administrative Agent and (c) a Benchmark Transition Event or an Early Opt-in Election, as applicable, has previously occurred resulting in a Benchmark Replacement in accordance with Section 2.14 that is not Term SOFR.

Threshold Amount” means $400,000,000.

Total Credit Exposure” means, as to any Lender, at any time, the unused Commitments and aggregate Outstanding Amount of all Loans held by such Lender at such time.

Total Tranche 1 Credit Exposure” means, as to any Tranche 1 Lender at any time, the aggregate Outstanding Amount of all Tranche 1 Loans held by such Tranche 1 Lender at such time.

Total Tranche 2 Credit Exposure” means, as to any Tranche 2 Lender at any time, the aggregate Outstanding Amount of all Tranche 2 Loans held by such Tranche 2 Lender at such time.

Tranche” means (a) the Tranche 1 Commitments or the Tranche 2 Commitments, as the context may require or (b) Tranche 1 Loans or Tranche 2 Loans, as the context may require.

Tranche 1 Borrowing” means a borrowing consisting of simultaneous Tranche 1 Loans of the same Type and, in the case of Eurocurrency Rate Loans, having the same Interest Period made by each of the Tranche 1 Lenders pursuant to Section 2.01(a).

Tranche 1 Commitment” means, as to each Tranche 1 Lender, its obligation to make Tranche 1 Loans to the Borrower pursuant to Section 2.01(a), in an aggregate principal amount at any one time outstanding not to exceed the Dollar amount set forth opposite such Tranche 1 Lender’s name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Tranche 1 Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

Tranche 1 Lender” means a Lender with a Tranche 1 Commitment or holding Tranche 1 Loans.

Tranche 1 Loan” has the meaning specified in Section 2.01(a).

Tranche 1 Maturity Date” means the date that is 18 months after the Closing Date.

Tranche 2 Borrowing” means a borrowing consisting of simultaneous Tranche 2 Loans of the same Type and, in the case of Eurocurrency Rate Loans, having the same Interest Period made by each of the Tranche 2 Lenders pursuant to Section 2.01(b).

Tranche 2 Commitment” means, as to each Tranche 2 Lender, its obligation to make Tranche 2 Loans to the Borrower pursuant to Section 2.01(b) in an aggregate principal amount at any one time outstanding not to exceed the Dollar amount set forth opposite such Tranche 2 Lender’s name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Tranche 2 Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

Tranche 2 Lender” means a Lender with a Tranche 2 Commitment or holding Tranche 2 Loans.

Tranche 2 Loan” has the meaning specified in Section 2.01(b).

Tranche 2 Maturity Date” means the date that is three years after the Closing Date.

 

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Tranche 1 Ticking Fee” has the meaning specified in Section 2.09(a)(i).

Tranche 2 Ticking Fee” has the meaning specified in Section 2.09(a)(ii).

Transactions” means, collectively, any and all of the following (whether or not consummated): (i) the Combination Transactions, (ii) the entry into the Transaction Agreements and all the transactions thereunder, (iii) the entry into this Agreement, and the initial incurrence of Indebtedness hereunder and (iv) all other transactions relating to any of the foregoing (including payment of fees and expenses related to any of the foregoing).

Transaction Agreements” has the meaning specified in the recitals hereto.

TW Bonds” means, collectively, (a) the notes issued pursuant to the Indenture dated as of January 15, 1993, by and among Historic TW Inc. (“Historic TW”) (in its capacity as successor to Time Warner Companies, Inc. (“TWCI”)), Warner Media, LLC (in its capacity as successor to Time Warner Inc.), Historic AOL LLC (formerly known as AOL LLC) (“AOL”), Turner Broadcasting System, Inc. (“TBS”), Home Box Office, Inc. (“HBO”) and The Bank of New York Mellon (formerly known as The Bank of New York) (“BNY Mellon”) (as successor trustee to The Chase Manhattan Bank (formerly known as Chemical Bank)) as Trustee, and any supplemental indentures thereto, (b) the notes issued pursuant to the Indenture dated as of June 1, 1998, by and among Historic TW (including in its capacity as successor to TWCI), Warner Media, LLC (in its capacity as successor to Time Warner Inc.), TBS, AOL, HBO and BNY Mellon (as successor trustee to The Chase Manhattan Bank), as Trustee, and any supplemental indentures thereto, (c) the notes issued pursuant to the Indenture dated as of April 19, 2001, by and among Warner Media, LLC (in its capacity as successor to Time Warner Inc.), AOL, Historic TW (including in its capacity as successor to TWCI), TBS, HBO and BNY Mellon (as successor trustee to The Chase Manhattan Bank), as Trustee, and any supplemental indentures thereto, (d) the notes issued pursuant to the Indenture dated as of November 13, 2006, by and among Warner Media, LLC (in its capacity as successor to Time Warner Inc.), Historic TW (including in its capacity as successor TWCI), TBS and BNY Mellon, as Trustee, and any supplemental indentures thereto, and (e) the notes issued pursuant to the Indenture dated as of March 11, 2010, by and among Warner Media, LLC (in its capacity as successor to Time Warner Inc.), Historic TW, HBO, TBS and BNY Mellon, as Trustee, and any supplemental indentures thereto.

Type” means, with respect to a Committed Loan, its character as a Base Rate Loan or a Eurocurrency Rate Loan.

United States” and “U.S.” mean the United States of America.

UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person subject to IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

Unadjusted Benchmark Replacement means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.

U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.

 

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U.S. Tax Compliance Certificate” has the meaning specified in Section 3.01(e)(ii)(B)(III).

Works” means motion pictures, video, television, interactive or multi-media programming, audio-visual works, sound recordings, books and other literary or written material, any software, copyright or other intellectual property related thereto, acquired directly or indirectly by purchase, business combination, production, creation or otherwise, any component of the foregoing or rights with respect thereto, and all improvements thereon, products and proceeds thereof and revenues derived therefrom.

Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document.

(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (vii) any reference to any IRS form shall be construed to include any successor form.

(b) In 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.”

(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

 

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(d) Any reference herein to a merger, consolidation, amalgamation, conveyance, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a division of or by a limited liability company or a limited partnership, as applicable, or an allocation of assets to a series of a limited liability company or a limited partnership, as applicable (or the unwinding of such a division or allocation), as if it were a merger, consolidation, amalgamation, conveyance, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. Any division of a limited liability company or a limited partnership, as applicable, shall constitute a separate Person hereunder (and each division of any limited liability company or any limited partnership, as applicable, that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).

(e) If, following the Closing Date, any Subsidiary Guarantor and its Subsidiaries are Subsidiaries of Discovery but not Subsidiaries of the Borrower, so long as such Subsidiary Guarantor and its Subsidiaries are and remain Subsidiaries of Discovery, such Subsidiary Guarantor and its Subsidiaries shall be treated as if they were Subsidiaries of the Borrower for all purposes (including for purposes of Section 7.11) under this Agreement.

1.03 Accounting Terms. (a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied in a manner consistent with that used in preparing the audited financial statements required to be delivered pursuant to Section 4.02(d), except as otherwise specifically prescribed herein. Notwithstanding the foregoing, in no event will any lease that would have been categorized as an operating lease as determined in accordance with GAAP prior to giving effect to the Accounting Standards Codification 842 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect), or any modification or interpretative change to GAAP subsequent to the date hereof, be considered a Capital Lease for purposes of this Agreement. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.

(b) Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Without limiting the foregoing, leases shall continue to be classified and accounted for on a basis consistent with that reflected in the audited financial statements of any Person for all purposes of this Agreement, notwithstanding any change in GAAP relating thereto, unless the parties hereto shall enter into a mutually acceptable amendment addressing such changes, as provided for above.

(c) Consolidation of Variable Interest Entities. All references herein to consolidated financial statements of the Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower and their respective Subsidiaries or to the determination of any amount for Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower and their respective Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that such Person is required to consolidate pursuant to FASB ASC 810 as if such variable interest entity were a Subsidiary of such Person.

 

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(d) Pro Forma Determinations. Notwithstanding anything in this Agreement to the contrary:

(i) if on any date of determination pro forma compliance with the requirements of this Agreement is a condition precedent to the consummation of a proposed transaction pursuant to any provision of this Agreement, then for that purpose such compliance shall be determined on a Pro Forma Basis giving effect to (A) such proposed transaction and (B) without duplication, any Specified Transaction that has been consummated during the Measurement Period then most recently ended for which financial statements have been delivered pursuant to Section 6.01 or during the period following such Measurement Period and prior to such date, in each case, as of the first day of such Measurement Period, provided that, for the avoidance of doubt, where compliance with the terms of this Agreement on a Pro Forma Basis is required with respect to Section 7.11, the financial covenants contained therein shall be tested on a Pro Forma Basis on the applicable date of determination;

(ii) for each Specified Transaction that is consummated during any Measurement Period, compliance with the requirements of this Agreement shall be determined on a Pro Forma Basis giving effect to such Specified Transaction as of the first day of such Measurement Period; and

(iii) for the purpose of calculating Consolidated EBITDA, Consolidated Interest Charges and Consolidated Net Income for any Measurement Period, if during such period the Borrower or any Subsidiary shall have made a significant acquisition or significant disposition (including for the avoidance of doubt the Combination Transactions, and with significance otherwise calculated in accordance with Article 11 of Regulation S-X under the Securities Act), each of Consolidated EBITDA, Consolidated Interest Charges and Consolidated Net Income shall be calculated giving Pro Forma Effect thereto as if such significant acquisition or disposition occurred on the first day of such period.

1.04 Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

1.05 [Reserved]

1.06 Interest Rates; LIBOR Notification. The interest rate on a Loan denominated in dollars may be derived from an interest rate benchmark that is, or may in the future become, the subject of regulatory reform. Regulators have signaled the need to use alternative benchmark reference rates for some of these interest rate benchmarks and, as a result, such interest rate benchmarks may cease to comply with applicable laws and regulations, may be permanently discontinued, and/or the basis on which they are calculated may change. The London interbank offered rate (“LIBOR”) is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. On March 5, 2021, the U.K. Financial Conduct Authority (“FCA”) publicly announced that: immediately after June 30, 2023, the 1-month, 3-month and 6-month U.S. Dollar LIBOR settings will cease to be provided or, subject to the FCA’s consideration of the case, be provided on a synthetic basis and no longer be representative of the underlying market and economic reality they are intended to measure and that representativeness will not be restored. There is no assurance that dates announced by the FCA will not change or that the administrator of LIBOR and/or regulators will not take further action that could

 

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impact the availability, composition, or characteristics of LIBOR or the currencies and/or tenors for which LIBOR is published. Each party to this agreement should consult its own advisors to stay informed of any such developments. Public and private sector industry initiatives are currently underway to identify new or alternative reference rates to be used in place of LIBOR. Upon the occurrence of a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, Section 2.14(b) and (c) provide a mechanism for determining an alternative rate of interest. The Administrative Agent will promptly notify the Borrower, pursuant to Section 2.14(e), of any change to the reference rate upon which the interest rate on Eurocurrency Rate Loans is based. However, the Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, performance or any other matter related to the LIBOR or other rates in the definition of “LIBO Rate” or with respect to any alternative or successor rate thereto, or replacement rate thereof (including, without limitation, (i) any such alternative, successor or replacement rate implemented pursuant to Section 2.14(b) or (c), whether upon the occurrence of a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, and (ii) the implementation of any Benchmark Replacement Conforming Changes pursuant to Section 2.14(d)), including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the LIBO Rate or have the same volume or liquidity as did the London interbank offered rate prior to its discontinuance or unavailability. The Administrative Agent and its affiliates and/or other related entities may engage in transactions that affect the calculation of any alternative, successor or alternative rate (including any Benchmark Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain the LIBO Rate, any component thereof, or rates referenced in the definition thereof, in each case pursuant to the terms of this Agreement, and shall, in the absence of its own gross negligence, willful misconduct or bad faith, have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.

1.07 [Reserved]

1.08 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

ARTICLE II.

THE COMMITMENTS AND LOANS

2.01 Committed Loans.

(a) Subject to the terms and conditions set forth herein, each Tranche 1 Lender severally agrees to make loans (each such loan, a “Tranche 1 Loan”) to the Borrower in Dollars on the Closing Date in an aggregate amount not to exceed at any time outstanding the amount of such Tranche 1 Lender’s Tranche 1 Commitment. Tranche 1 Loans may be Base Rate Loans or Eurocurrency Rate Loans, as further provided herein. Tranche 1 Loans borrowed under this Section 2.01(a) and paid or prepaid may not be reborrowed.

(b) Subject to the terms and conditions set forth herein, each Tranche 2 Lender severally agrees to make loans (each such loan, a “Tranche 2 Loan”) to the Borrower in Dollars on the Closing Date in an aggregate amount not to exceed at any time outstanding the amount of such Tranche 2 Lender’s Tranche 2 Commitment. Tranche 2 Loans may be Base Rate Loans or Eurocurrency Rate Loans, as further provided herein. Tranche 2 Loans borrowed under this Section 2.01(b) and paid or prepaid may not be reborrowed.

 

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2.02 Borrowings, Conversions and Continuations of Committed Loans.

(a) Each Committed Borrowing, each conversion of Committed Loans from one Type to the other, and each continuation of Eurocurrency Rate Loans shall be made upon the Borrower’s notice to the Administrative Agent, which may be given by: (A) telephone or (B) a Committed Loan Notice. Each such notice must be received by the Administrative Agent not later than (i) 11:00 a.m. on the date that is two Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurocurrency Rate Loans or of any conversion of Eurocurrency Rate Loans to Base Rate Loans and (ii) 12:00 p.m. on the date of the requested date of any Borrowing of Base Rate Loans; provided that, notwithstanding the foregoing, the Committed Loan Notice referred to in the foregoing clause (i) may be delivered no later than 11:00 a.m on the date that is one Business Day prior to the Closing Date in the case of the initial Borrowing on the Closing Date.. Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Each Borrowing of, conversion to or continuation of Eurocurrency Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Each Committed Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof. Each Committed Loan Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a Committed Borrowing (and the applicable Tranche), a conversion of Committed Loans (and the applicable Tranche) from one Type to the other, or a continuation of Eurocurrency Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Committed Loans to be borrowed, converted or continued, (iv) the Type of Committed Loans to be borrowed or to which existing Committed Loans are to be converted and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Committed Loan in a Committed Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Committed Loans shall be made as, or converted to, Base Rate Loans. Any automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurocurrency Rate Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of Eurocurrency Rate Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. No Tranche 1 Loan may be converted into or continued as a Tranche 2 Loan, and no Tranche 2 Loan may be converted into or continued as a Tranche 1 Loan. Subject to Section 3.05, the Borrower may provide that a Committed Loan Notice may be revocable at the instructions of the Borrower.

(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Appropriate Lender of the amount of its Applicable Percentage of the applicable Committed Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Appropriate Lender of the details of any automatic conversion to Base Rate Loans as described in the preceding subsection. Each Appropriate Lender shall make the amount of its Committed Loan available to the Administrative Agent in Same Day Funds at the Administrative Agent’s Office not later than 2:00 p.m. on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02, the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent by wire transfer of such funds in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower.

(c) Except as otherwise provided herein, a Eurocurrency Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurocurrency Rate Loan. During the existence of an Event of Default, (i) no Tranche 1 Loans may be requested as, converted to or continued as Eurocurrency Rate Loans having Interest Periods of greater than one month without the consent of the Required Tranche 1 Lenders and (ii) no Tranche 2 Loans may be requested as, converted to or continued as Eurocurrency Rate Loans having Interest Periods of greater than one month without the consent of the Required Tranche 2 Lenders.

 

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(d) The Administrative Agent shall promptly notify the Borrower and the Appropriate Lenders of the interest rate applicable to any Interest Period for Eurocurrency Rate Loans upon determination of such interest rate.

(e) After giving effect to all Committed Borrowings, all conversions of Committed Loans from one Type to the other, and all continuations of Committed Loans as the same Type, there shall not be more than sixteen Interest Periods in effect with respect to all Committed Loans.

(f) The failure of any Lender to make any Committed Loan to be made by it as part of any Committed Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Committed Loan on the date of such Committed Borrowing. No Lender shall be responsible for the failure of any other Lender to make any Committed Loan to be made by such other Lender on the date of any Committed Borrowing.

2.03 [Reserved]

2.04 [Reserved]

2.05 Prepayments. The Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Committed Loans in whole or in part without premium or penalty (other than as set forth in Section 3.05); provided that (i) such notice must be appropriately completed and signed by a Responsible Officer, and received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurocurrency Rate Loans and (B) one Business Day prior to any date of prepayment of Base Rate Loans; (ii) any prepayment of Eurocurrency Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment, the Type(s) of Committed Loans to be prepaid, and the applicable Tranche, and, if Eurocurrency Rate Loans are to be prepaid, the Interest Period(s) of such Loans, and any such notice may state that it is conditioned upon the occurrence or non-occurrence of any event specified therein (including the effectiveness of other credit facilities), in which case such notice may be revoked by the Borrower (by written notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. The Administrative Agent will promptly notify each Tranche 1 Lender of its receipt of each such notice in respect of any Tranche 1 Loans, and of the amount of such Tranche 1 Lender’s Applicable Tranche 1 Loan Percentage of such prepayment and will promptly notify each Tranche 2 Lender of its receipt of each such notice in respect of any Tranche 2 Loans, and of the amount of such Tranche 2 Lender’s Applicable Tranche 2 Loan Percentage of such prepayment. Following such notice by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurocurrency Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05. Subject to Section 2.17, each such prepayment of Tranche 1 Loans shall be applied to the Tranche 1 Loans of the Tranche 1 Lenders in accordance with their respective Applicable Tranche 1 Loan Percentages and each such prepayment of Tranche 2 Loans shall be applied to the Tranche 2 Loans of the Tranche 2 Lenders in accordance with their respective Applicable Tranche 2 Loan Percentages. Any prepayment of Committed Loans pursuant to this Section 2.05 shall be applied to reduce the subsequent scheduled repayments of Committed Loans of the applicable Tranche to be made pursuant to Section 2.07 as directed in writing by the Borrower or, if no such direction has been provided, in direct order of maturity.

 

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2.06 Termination or Reduction of Commitments.

(a) The Borrower may, upon notice to the Administrative Agent, terminate the Aggregate Tranche 1 Commitments, or from time to time permanently reduce the Aggregate Tranche 1 Commitments; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. one Business Day prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof and (iii) any such notice may state that it is conditioned upon the occurrence or non-occurrence of any event specified therein (including the effectiveness of other credit facilities), in which case such notice may be revoked by the Borrower (by written notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Tranche 1 Commitments. Any reduction of the Aggregate Tranche 1 Commitments shall be applied to the Tranche 1 Commitment of each Tranche 1 Lender according to its Applicable Tranche 1 Percentage. All fees accrued until the effective date of any termination of the Aggregate Tranche 1 Commitments shall be paid on the effective date of such termination.

(b) The Borrower may, upon notice to the Administrative Agent, terminate the Aggregate Tranche 2 Commitments, or from time to time permanently reduce the Aggregate Tranche 2 Commitments; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. one Business Day prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof and (iii) any such notice may state that it is conditioned upon the occurrence or non-occurrence of any event specified therein (including the effectiveness of other credit facilities), in which case such notice may be revoked by the Borrower (by written notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Tranche 2 Commitments. Any reduction of the Aggregate Tranche 2 Commitments shall be applied to the Tranche 2 Commitment of each Tranche 2 Lender according to its Applicable Tranche 2 Percentage. All fees accrued until the effective date of any termination of the Aggregate Tranche 2 Commitments shall be paid on the effective date of such termination.

(c) To the extent not previously terminated, all unused Commitments hereunder shall terminate on the earlier of (i) the Closing Date (after giving effect to the Loans made on such date) and (ii) the expiry of the Availability Period. The Borrower shall provide the Administrative Agent prompt written notice of any commitment reduction pursuant to clause (ii) hereof.

(d) Notwithstanding anything in Section 2.05 or this Section 2.06 or anything else herein to the contrary, any prepayment of Loans or reduction of Commitments, whether voluntary or mandatory, to be made with respect to the Commitments or Loans of Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC under this Agreement shall be allocated between their respective Commitments or Loans, as applicable, as Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC shall elect in their sole discretion.

2.07 Repayment of Loans. (a) The Borrower shall repay to the Administrative Agent for the ratable account of the Tranche 1 Lenders on the Maturity Date the aggregate principal amount of Tranche 1 Loans made to the Borrower outstanding on such date.

 

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(b) The Borrower shall repay to the Administrative Agent for the ratable account of the Tranche 2 Lenders on the Maturity Date the aggregate principal amount of Tranche 2 Loans made to the Borrower outstanding on such date.

2.08 Interest. (a) Subject to the provisions of subsection (b) below, (i) each Eurocurrency Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the LIBO Rate for such Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.

(b) (i) If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(ii) If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iii) [reserved].

(iv) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

2.09 Fees.

(a) Facility Fees. (i) The Borrower shall pay to the Administrative Agent for the account of each Tranche 1 Lender in accordance with its Applicable Tranche 1 Percentage, a ticking fee (the “Tranche 1 Ticking Fee”) equal to the Applicable Rate times the actual daily outstanding principal amount of the Aggregate Tranche 1 Commitments subject to adjustment as provided in Section 2.17. The Tranche 1 Ticking Fee shall accrue commencing on August 15, 2021 to the end of the Availability Period, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Effective Date, and on the last day of the Availability Period. The Tranche 1 Ticking Fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.

(ii) The Borrower shall pay to the Administrative Agent for the account of each Tranche 2 Lender in accordance with its Applicable Tranche 2 Percentage, a ticking fee (the “Tranche 2 Ticking Fee”) equal to the Applicable Rate times the actual daily outstanding principal amount of the Aggregate Tranche 2 Commitments subject to adjustment as provided in Section 2.17. The Tranche 2 Ticking Fee shall accrue commencing on August 15, 2021 to the end of the Availability Period, and shall be due and payable quarterly in arrears on the last Business Day of

 

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each March, June, September and December, commencing with the first such date to occur after the Effective Date, and on the last day of the Availability Period. The Tranche 2 Ticking Fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.

(b) Other Fees. (i) The Borrower shall pay to the Arrangers and the Administrative Agent, for their own respective accounts, in Dollars, fees in the amounts and at the times separately agreed with such Persons pursuant to a written agreement.

2.10 Computation of Interest and Fees. All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to the LIBO Rate) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a), bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

2.11 Evidence of Debt. The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Loans made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender to the Borrower made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans to the Borrower in addition to such accounts or records. Each Lender may attach schedules to a Note and endorse thereon the date, Type (if applicable), amount, currency and maturity of its Loans and payments with respect thereto.

2.12 Payments Generally; Administrative Agents Clawback. (a) General. All payments to be made by the Borrower shall be made free and clear of and without condition or reduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the Appropriate Lenders to which such payment is owed, at the applicable Administrative Agent’s Office in Dollars and in Same Day Funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Appropriate Lender its Applicable Loan Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

 

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(b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from an Appropriate Lender prior to the proposed date of any Committed Borrowing of Eurocurrency Rate Loans (or, in the case of any Committed Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Committed Borrowing) that such Appropriate Lender will not make available to the Administrative Agent such Appropriate Lender’s share of such Committed Borrowing, the Administrative Agent may assume that such Appropriate Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Committed Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if an Appropriate Lender has not in fact made its share of the applicable Committed Borrowing available to the Administrative Agent, then the applicable Appropriate Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in Same Day Funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the Overnight Rate, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Committed Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Committed Loan included in such Committed Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

(ii) Payments by the Borrower; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Appropriate Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Appropriate Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Appropriate Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Appropriate Lender, in Same Day Funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Overnight Rate.

A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

(c) Failure to Satisfy Conditions Precedent. If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender to the Borrower as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Loan set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

(d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make Committed Loans and to make payments pursuant to Section 11.04(c) are several and not joint. The failure of any Lender to make any Committed Loan or to make any payment under Section 11.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Committed Loan or to make its payment under Section 11.04(c).

 

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(e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

2.13 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Committed Loans made by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Committed Loans and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Committed Loans in the Tranche in respect of which it is an Appropriate Lender, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Committed Loans and other amounts owing them, provided that the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender) or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Committed Loans to any assignee or participant, other than an assignment to the Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).

Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.

2.14 Alternate Rate of Interest. (a) Subject to clauses (b), (c), (d), (e), (f), (g) and (h) of this Section 2.14, if prior to the first day of any Interest Period for any Eurocurrency Rate Loan:

(i) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the LIBO Rate (including because the LIBO Screen Rate is not available or published on a current basis), for such Interest Period; or

(ii) the Administrative Agent shall have received notice from the Required Lenders that the LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) (as certified by such Lender or Lenders) of making or maintaining their affected Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the relevant Lenders by telephone, telecopy or electronic mail as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (A) any Committed Loan Notice that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurocurrency Rate Loan shall be ineffective and (B) if any Committed Loan Notice requests a Eurocurrency Rate Loan, such Borrowing shall be made as a Base Rate Borrowing.

 

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(b) Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (3) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided by the Administrative Agent to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document (other than, for the avoidance of doubt, as provided in the definition of “Benchmark Replacement”) so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders.

(c) Notwithstanding anything to the contrary herein or in any other Loan Document and subject to the proviso below in this paragraph, if a Term SOFR Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then the applicable Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder or under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings, without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document (other than, for the avoidance of doubt, as provided in the definition of “Term SOFR Transition Event”); provided that, this clause (c) shall not be effective unless the Administrative Agent has delivered to the Lenders and the Borrower a Term SOFR Notice. For the avoidance of doubt, the Administrative Agent shall not be required to deliver a Term SOFR Notice after the occurrence of a Term SOFR Transition Event and may do so in its sole discretion.

(d) In connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document other than, for the avoidance of doubt, as provided in the definition of “Benchmark Replacement Conforming Changes”).

(e) The Administrative Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, (iv) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (f) below and (v) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, the Borrower or any Lender (or group of Lenders) pursuant to this Section 2.14, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.14.

(f) Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or LIBO Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to

 

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time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.

(g) Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Eurocurrency Rate Loan of, conversion to or continuation of Eurocurrency Rate Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to Base Rate Loans. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Base Rate.

(h) The Administrative Agent and, to the extent any other party hereto shall have any consent or consultation right in respect of the selection of such Benchmark Replacement, each such applicable party shall use commercially reasonable efforts to satisfy any applicable Internal Revenue Service guidance, including Proposed Treasury Regulation 1.1001-6 and any future guidance, to the effect that a Benchmark Replacement will not result in a deemed exchange for U.S. federal income tax purposes of any Loan under this Agreement; provided, that the Administrative Agent and any other relevant party shall not have any liability to any Loan Party or any Subsidiary thereof under this Agreement to the extent a Benchmark Replacement results in any such deemed exchange.

2.15 [Reserved].

2.16 [Reserved].

2.17 Defaulting Lenders.

(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definitions of “Required Lenders,” “Required Tranche 1 Lenders,” and “Required Tranche 2 Lenders” and Section 11.01.

(ii) Defaulting Lender Waterfall. No Tranche 1 Ticking Fee or Tranche 2 Ticking Fee shall accrue for the account of a Defaulting Lender so long as such Lender shall be a Defaulting Lender. Without limiting the foregoing, any other payment of principal or interest or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 11.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts

 

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owing by such Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; third, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement; fourth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; fifth, so long as no Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and sixth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Lender until such time as all Loans and funded by the Lenders pro rata in accordance with the Commitments hereunder. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant to this Section 2.17(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) Replacement of Defaulting Lender. The Borrower shall have the right (A)(x) to seek one or more Persons reasonably satisfactory to the Administrative Agent and the Borrower to become a substitute Lender and assume all or part of the Commitment of any Defaulting Lender, and in such event, the Borrower, the Administrative Agent and any such substitute Lender shall execute and deliver, and such Defaulting Lender shall thereupon be deemed to have executed and delivered, a duly completed Assignment and Assumption to effect such substitution and/or (y) to seek one or more Persons reasonably satisfactory to the Administrative Agent and the Borrower to become a substitute Lender and purchase all or part of the Loans and Commitments of such Defaulting Lender and, in such event, the Borrower, the Administrative Agent and any such substitute Lender shall execute and deliver, and such Defaulting Lender shall thereupon be deemed to have executed and delivered, a duly completed Assignment and Assumption to effect such substitution or (B) upon notice to the Administrative Agent, and at the Borrower’s option, terminate the Commitments of such Defaulting Lender, in whole or in part, without premium or penalty.

(b) Defaulting Lender Cure. If the Borrower and the Administrative Agent agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase at par that portion of outstanding Tranche 1 Loans and/or Tranche 2 Loans of the other Lenders, as applicable, or take such other actions as the Administrative Agent may determine to be necessary to cause the relevant Loans to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

 

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ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 Taxes.

(a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes.

(i) Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable Laws. If any applicable Laws (as determined in the good faith discretion of the Administrative Agent or a Loan Party) require the deduction or withholding of any Tax from any such payment by the Administrative Agent or a Loan Party, then the Administrative Agent or such Loan Party shall be entitled to make such deduction or withholding, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.

(ii) If any Loan Party or the Administrative Agent shall be required by the Code to withhold or deduct any Taxes, including both United States federal backup withholding and withholding taxes, from any payment under any Loan Document, then (A) the Administrative Agent or Loan Party, as applicable, shall withhold or make such deductions as are determined by the Administrative Agent or Loan Party, as applicable, to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the Administrative Agent or Loan Party, as applicable, shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.

(iii) If any Loan Party or the Administrative Agent shall be required by any applicable Laws other than the Code to withhold or deduct any Taxes from any payment under any Loan Document, then (A) such Loan Party or the Administrative Agent, as required by such Laws, shall withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) such Loan Party or the Administrative Agent, to the extent required by such Laws, shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with such Laws, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.

(b) Payment of Other Taxes by the Loan Parties. Without limiting the provisions of subsection (a) above, the Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable Laws, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

 

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(c) Tax Indemnifications.

(i) Each of the Loan Parties shall, and does hereby, indemnify each Recipient, and shall make payment in respect thereof within 10 days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.01) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A reasonably detailed certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. Each of the Loan Parties shall, and does hereby, indemnify the Administrative Agent, and shall make payment in respect thereof within 10 days after written demand therefor, for any amount which a Lender for any reason fails to pay indefeasibly to the Administrative Agent as required pursuant to Section 3.01(c)(ii) below.

(ii) Each Lender shall, and does hereby, severally indemnify, and shall make payment in respect thereof within 10 days after written demand therefor, (x) the Administrative Agent against any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Party to do so), (y) the Administrative Agent and the Loan Party, as applicable, against any Taxes attributable to such Lender’s failure to comply with the provisions of Section 11.06(d) relating to the maintenance of a Participant Register and (z) the Administrative Agent and the Loan Party, as applicable, against any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent or a Loan Party in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this clause (ii).

(d) Evidence of Payments. Upon request by the Borrower or the Administrative Agent, as the case may be, after any payment of Taxes by any Loan Party or by the Administrative Agent to a Governmental Authority as provided in this Section 3.01, the Borrower shall deliver to the Administrative Agent or the Administrative Agent shall deliver to the Borrower, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Laws to report such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as the case may be.

(e) Status of Lenders; Tax Documentation.

(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times required by applicable Laws or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable Laws or the taxing authorities of a jurisdiction pursuant to such applicable Laws or reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, at the time or times required by applicable Laws or if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable Laws or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup

 

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withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation either (A) set forth in Section 3.01(e)(ii)(A), (ii)(B) and (ii)(D) below or (B) required by applicable Laws other than the Code or the taxing authorities of the jurisdiction pursuant to such applicable Laws to comply with the requirements for exemption or reduction of withholding tax in that jurisdiction) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing,

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

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

(I) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(II) executed originals of IRS Form W-8ECI;

(III) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit K-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN or W-8BEN-E, as applicable; or

(IV) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, as applicable, a U.S. Tax Compliance Certificate substantially in the form of Exhibit K-2 or Exhibit K-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable;

 

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provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit K-4 on behalf of each such direct and indirect partner;

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

(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. For purposes of determining withholding Taxes imposed under FATCA, from and after the effective date of this Agreement, the Borrower and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) the Agreement as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).

(iii) The Administrative Agent shall deliver to the Borrower on or prior to the date on which it becomes the Administrative Agent under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower), executed originals of IRS Form W-9 (and/or other applicable tax forms) certifying that the Administrative Agent is exempt from U.S. federal withholding tax.

(iv) The Administrative Agent and each Lender agree that if any form or certification it previously delivered pursuant to this Section 3.01 expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

(f) Treatment of Certain Refunds. Unless required by applicable Laws, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender, or have any obligation to pay to any Lender, any refund of Taxes withheld or deducted from funds paid for the account of such Lender. If any Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified by any Loan Party or with respect to

 

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which any Loan Party has paid additional amounts pursuant to this Section 3.01, it shall pay to such Loan Party an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by a Loan Party under this Section 3.01 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that each Loan Party, upon the request of the Recipient, agrees to repay the amount paid over to such Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the event the Recipient is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection (f), in no event will the applicable Recipient be required to pay any amount to such Loan Party pursuant to this subsection (f) the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection (f) shall not be construed to require any Recipient to make available its tax returns (or any other information relating to its Taxes that it deems confidential) to any Loan Party or any other Person.

(g) [Reserved].

(h) Survival. Each party’s obligations under this Section 3.01 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.

3.02 Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to determine or charge interest rates based upon the LIBO Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the applicable interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, (i) any obligation of such Lender to make or continue Eurocurrency Rate Loans or to convert Base Rate Loans to Eurocurrency Rate Loans, shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the LIBO Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the LIBO Rate component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or convert all Eurocurrency Rate Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the LIBO Rate component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurocurrency Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurocurrency Rate Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the LIBO Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the LIBO Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the LIBO Rate. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.

3.03 [Reserved].

 

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3.04 Increased Costs; Reserves on Eurocurrency Rate Loans.

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

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.04(e), other than as set forth below);

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

(iii) impose on any Lender or the London interbank market any other condition, cost or expense (in each case, other than Taxes) affecting this Agreement or Eurocurrency Rate Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such Lender of making converting to, continuing or maintaining any Loan the interest on which is determined by reference to the LIBO Rate (or of maintaining its obligation to make any such Loan), or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered; provided that such amounts shall be consistent conceptually with amounts that the Lender is generally charging other similarly situated borrowers and shall not be duplicative of any amounts paid by the Borrower under any other provision of this Agreement.

(b) Capital Requirements. If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered; provided that such amounts shall be consistent conceptually with amounts that such Lender is generally charging other similarly situated borrowers and shall not be duplicative of any amounts paid by the Borrower under any other provision of this Agreement.

(c) Certificates for Reimbursement. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

(d) Delay in Requests. Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section 3.04 shall not constitute a waiver of such Lender’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered

 

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more than nine months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

(e) Additional Reserve Requirements. The Borrower shall pay to each Lender, (i) as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each Eurocurrency Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), and (ii) as long as such Lender shall be required to comply with any reserve ratio requirement or analogous requirement of any other central banking or financial regulatory authority imposed in respect of the maintenance of the Commitments or the funding of the Eurocurrency Rate Loans, such additional costs (expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five decimal places) equal to the actual costs allocated to such Commitment or Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which in each case shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower shall have received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such additional interest or costs from such Lender. If a Lender fails to give notice 10 days prior to the relevant Interest Payment Date, such additional interest or costs shall be due and payable 10 days from receipt of such notice.

3.05 Compensation for Losses. Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower;

(c) [reserved]; or

(d) any assignment of a Eurocurrency Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 11.13;

including any foreign exchange losses and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan, from fees payable to terminate the deposits from which such funds were obtained or from the performance of any foreign exchange contract, but excluding any loss of profits or margin. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurocurrency Rate Loan made by it at the LIBO Rate for such Loan by a matching deposit or other borrowing in the offshore interbank market for such currency for a comparable amount and for a comparable period, whether or not such Eurocurrency Rate Loan was in fact so funded.

 

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3.06 Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office. Each Lender may make any Loan to the Borrower through any Lending Office, provided that the exercise of this option shall not affect the obligation of the Borrower to repay the Loan in accordance with the terms of this Agreement. If any Lender requests compensation under Section 3.04, or requires the Borrower to pay Indemnified Taxes or any additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then at the request of the Borrower such Lender shall, as applicable, use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) Replacement of Lenders. If any Lender requests compensation under Section 3.04, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or to the Administrative Agent or any Governmental Authority for the account of any Lender pursuant to Section 3.01 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 3.06(a), the Borrower may replace such Lender in accordance with Section 11.13.

3.07 Survival. All obligations of the Loan Parties under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder and resignation of the Administrative Agent.

ARTICLE IV.

CONDITIONS PRECEDENT TO LOANS

4.01 Conditions of Effectiveness. The effectiveness of this Agreement is subject to satisfaction or waiver in accordance with Section 11.01 of the following conditions:

(a) The Administrative Agent’s receipt of this Agreement, properly executed by a Responsible Officer of the Borrower, dated the Effective Date.

(b) The Administrative Agent shall have received Notes executed by the Borrower in favor of each Lender requesting Notes.

(c) The Arrangers shall have received at least three Business Days prior to the Effective Date all documentation and information as is reasonably requested in writing by the Administrative Agent, at least 10 Business Days prior to the Effective Date, about the Borrower required by U.S. regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act. If the Borrower qualifies as a “legal entity” customer under 31 C.F.R. § 1010.230, the Borrower shall have delivered to each requesting Lender at least three Business Days prior to the Effective Date (to the extent requested by such Lender at least 10 Business Days prior to the Effective Date) a Beneficial Ownership Certification in relation to the Borrower.

(d) All fees and reimbursement of expenses invoiced no later than two Business Days prior to the Effective Date related to the Transactions payable to the Arrangers, the Administrative Agent or the Lenders shall have been paid to the extent due.

 

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(e) The Administrative Agent shall have received the following, each properly executed by a Responsible Officer of the Borrower, each dated the Effective Date (or, in the case of certificates of governmental officials, a recent date before the Effective Date):

(i) such certificates or resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of the Borrower as the Administrative Agent may reasonably require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which the Borrower is a party; and

(ii) such documents and certifications as the Administrative Agent may reasonably require to evidence that the Borrower is duly organized or formed, and that the Borrower is validly existing and in good standing in its jurisdiction of organization.

Without limiting the generality of the provisions of the last paragraph of Section 9.03, for purposes of determining compliance with the conditions specified in this Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Effective Date specifying its objection thereto. The Administrative Agent shall give the Borrower and the Lenders notice of occurrence of the Effective Date. The giving of such notice by the Administrative Agent shall conclusively be deemed to constitute an acknowledgement by the Administrative Agent and each Lender that each of the conditions precedent set forth in this Section 4.01 shall have been satisfied in accordance with its respective terms or shall have been irrevocably waived by such Person.

4.02 Conditions to Closing Date. The obligation of each Lender to honor any request for a Loan on the Closing Date is subject to the satisfaction or waiver in accordance with Section 11.01 of the following conditions precedent:

(a) The Arrangers shall have received an officer’s certificate from the Borrower certifying that (a) the conditions to the Combination set forth in the Business Combination Agreement (without giving effect to any Alternative Transaction Structure (as defined in the Business Combination Agreement), modifications, consents, amendments (including amendments to the Business Combination Agreement in connection with the implementation of any Alternative Transaction Structure) or waivers thereto by Discovery that in each case are materially adverse to the interests of the Lenders or the Arrangers, in their capacities as such) and conditions to the Contribution and Distribution set forth in the Separation and Distribution Agreement (without giving effect to any modifications, consents, amendments or waivers thereto by Discovery that in each case are materially adverse to the interests of the Lenders or the Arrangers, in their capacities as such) (in each case, it being understood and agreed that (i) changes in the amount of the Special Cash Payment pursuant to the Transaction Agreements in effect on the date hereof shall not be deemed to be materially adverse to the interests of the Lenders or the Arrangers and shall not require the consent of the Arrangers if, in the case of a reduction of the Special Cash Payment, first, at the option of the Borrower, the commitments in respect of the Bridge Facility are reduced dollar for dollar in accordance with the Commitment Letter, and, second, the commitments in respect of the Loans are reduced dollar for dollar (applied pro rata between the Tranche 1 Commitment and the Tranche 2 Commitment) and (ii) any change in the definition of “RMT Partner Material Adverse Effect” in the Business Combination Agreement shall be deemed to be materially adverse to the Lenders and the Arrangers, in their capacities as such), unless the Arrangers shall have provided their written consent thereto (such consent not to be unreasonably withheld, conditioned or delayed), in each case, other than such conditions that by their nature are to be satisfied upon the closing of such transaction, have been satisfied or waived or are expected to be satisfied and waived on the Closing Date or one Business Day thereafter and (b) the Distribution is expected to be, the Combination is expected to be and the Contribution has been or is expected to be consummated on the Closing Date or one Business Day thereafter.

 

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(b) Since the date of the Business Combination Agreement, there shall not have occurred any Effect (as defined in the Business Combination Agreement as in effect on May 17, 2021) that, individually or in the aggregate, has had or would reasonably be expected to have an RMT Partner Material Adverse Effect (as defined in the Business Combination Agreement as in effect on May 17, 2021).

(c) All fees and reimbursement of expenses invoiced no later than two Business Days prior to Closing Date related to the Transactions payable to the Arrangers, the Administrative Agent or the Lenders shall have been paid to the extent due.

(d) The Arrangers shall have received (i) audited consolidated annual balance sheets and related statements of operations and comprehensive income, stockholders equity and cash flows of the Spinoff Business for the three most recently completed fiscal years ended at least 90 days before the Closing Date, (ii) unaudited interim consolidated balance sheets and related statements of operations and comprehensive income and cash flows of the Spinoff Business for any subsequent interim financial period ended at least 60 days prior to the Closing Date, and for the comparable period of the prior fiscal year, (iii) audited consolidated annual balance sheets and related statements of operations and comprehensive income, stockholders equity and cash flows of the Discovery Business for the three most recently completed fiscal years ended at least 60 days before the Closing Date, (iv) unaudited interim consolidated balance sheets and related statements of operations and comprehensive income and cash flows of the Discovery Business for any subsequent interim financial period ended at least 40 days prior to the Closing Date, and for the comparable period of the prior fiscal year and (v) customary unaudited pro forma financial statements of the Combined Business giving effect to the Transactions, as of the date of and for the period ending on the date of the latest financial statements pursuant to the above clauses, in each case as required by and prepared in compliance with Rule 3-05 and Article 11 of Regulation S-X under the Securities Act, as applicable, regardless of when Discovery is required to file such financial statements with the Securities and Exchange Commission, and in each of (i) through (v) meeting the requirements of Regulation S-X under the Securities Act. The public filing with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended of any of the foregoing financial statements, will satisfy the requirements under clauses (i), (ii), (iii) or (iv), as applicable, of the first sentence of this paragraph. The Arrangers hereby acknowledge receipt of the financial statements for the Discovery Business for the fiscal years ended December 31, 2020, December 31, 2019 and December 31, 2018 and for the fiscal quarter ended March 31, 2021.

(e) The Administrative Agent shall have received a certificate of the chief financial officer or treasurer (or other comparable officer) of the Borrower substantially in the form of Exhibit L.

(f) The Specified Representations and the Combination Transaction Representations shall be true and correct in all material respects on and as of the Closing Date (although any Specified Representation or Combination Transaction Representation which expressly relates to a given date or period shall be required only to be true and correct in all material respects as of the respective date or for the respective period, as the case may be).

(g) The Administrative Agent shall have received a Committed Loan Notice for the Borrowing to occur on the Closing Date.

(h) The Administrative Agent shall have received a certificate from a Responsible Officer of the Borrower certifying as to the satisfaction of the conditions precedent contained in Section 4.02(b) and (f).

 

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(i) The Administrative Agent shall have received a customary legal opinion from internal counsel of the Borrower (or a parent of the Borrower) or other counsel, in each case, reasonably acceptable to the Arrangers and the Administrative Agent.

Without limiting the generality of the provisions of the last paragraph of Section 9.03, for purposes of determining compliance with the conditions specified in this Section 4.02, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the Closing Date specifying its objection thereto. Without limiting the Lenders’ rights and remedies under Article VIII hereunder, the making of the Loans shall conclusively be deemed to constitute an acknowledgement by the Administrative Agent and each Lender that each of the conditions precedent set forth in this Section 4.02 shall have been satisfied in accordance with its respective terms or shall have been irrevocably waived by such Person.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

Each Loan Party represents and warrants to the Administrative Agent and the Lenders on (a) (other than with respect to the representations that are stated to be made as of the Closing Date and Section 5.20) the Effective Date and (b) the Closing Date that:

5.01 Existence, Qualification and Power. Each Loan Party and each Subsidiary of the Borrower (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (a) (with respect to non-Loan Parties only), (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

5.02 Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any Subsidiary of the Borrower or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law, except in each case referred to in clause (b) or (c), to the extent that such conflict or violation could not reasonably be expected to have a Material Adverse Effect.

5.03 Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, other than (i) any thereof as have been obtained, taken or made on or prior to the Closing Date and (ii) filings with the SEC to the extent required by the Securities Exchange Act of 1934.

 

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5.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of each Loan Party that is a party thereto, enforceable against such Loan Party in accordance with its terms, except as may be limited by applicable Debtor Relief Laws and general principles of equity, regardless of whether considered in a proceeding in equity or at law.

5.05 [Reserved].

5.06 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Loan Parties, threatened, at law, in equity, in arbitration or before any Governmental Authority, by or against Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of the Borrower’s Subsidiaries or against any of their properties or revenues (a) that purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) as to which there is a reasonable possibility of an adverse determination and that, if determined adversely, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

5.07 No Default. No Loan Party nor any Subsidiary of the Borrower is in default under or with respect to any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

5.08 Ownership of Property; Liens. Each of the Borrower and each of its Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The property of the Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted by Section 7.01.

5.09 Environmental Compliance. The effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on the respective businesses, operations and properties of the Borrower and its Subsidiaries could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

5.10 Insurance. The properties (if any) of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower or, solely upon and after the consummation of the Combination Transactions, Discovery, in such amounts (after giving effect to any self-insurance compatible with the following standards), with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates.

5.11 Taxes. Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower and the Borrower’s Subsidiaries have filed all United States federal, state and other material tax returns and reports required to be filed, and have paid all United States federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except (a) those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. There is no proposed tax assessment against Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of the Borrower’s Subsidiaries that would, if made, have a Material Adverse Effect.

 

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5.12 ERISA Compliance.

(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state laws, except where noncompliance could not reasonably be expected to result in aggregate liability to Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries in excess of the Threshold Amount. Each Pension Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the IRS to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the IRS to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the IRS. To the best knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status.

(b) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

(c) (i) No ERISA Event has occurred, and neither the Borrower nor any ERISA Affiliate is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan; (ii) the Borrower and each of its ERISA Affiliates and, solely upon and after the consummation of the Combination Transactions, Discovery and each of its ERISA Affiliates, has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) as of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and neither the Borrower nor any of its ERISA Affiliates and, solely upon and after the consummation of the Combination Transactions, neither Discovery nor any of its ERISA Affiliates knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) neither the Borrower nor any of its ERISA Affiliates and solely upon and after the consummation of the Combination Transactions, neither Discovery nor any of its ERISA Affiliates has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (v) neither the Borrower nor any of its ERISA Affiliates and solely upon and after the consummation of the Combination Transactions, neither Discovery nor any of its ERISA Affiliates has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.

(d) Neither the Borrower nor any of its ERISA Affiliates and, solely upon and after the consummation of the Combination Transactions, neither Discovery nor any of its ERISA Affiliates, maintains or contributes to, or has any unsatisfied obligation to contribute to, or liability under, any active or terminated Pension Plan other than (A) on the Effective Date, those listed on Schedule 5.12 hereto and (B) thereafter, Pension Plans not otherwise prohibited by this Agreement.

(e) The Borrower represents and warrants as of the Closing Date that it is not and will not be using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with the Loans or the Commitments.

 

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5.13 Subsidiaries; Joint Ventures. As of the Effective Date, the Borrower has no Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13. As of the Effective Date all of the outstanding Equity Interests in the Borrower and in each of its Subsidiaries have been validly issued, are fully paid and nonassessable, and are owned by the Person and in the amounts as specified on Part (a) of Schedule 5.13, free and clear of all Liens, other than restrictions on transfer under applicable securities Laws. As of the Effective Date, neither the Borrower nor any of its Subsidiaries has any equity investments in any Joint Venture other than those specifically disclosed in Part (b) of Schedule 5.13.

5.14 Margin Regulations; Investment Company Act.

(a) No Loan Party is engaged or will engage, principally, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. No part of the proceeds of any Loan will be used for any purpose that violates the provisions of Regulation U. As of the Closing Date, after giving effect to the application of the proceeds of each Loan, not more than twenty-five percent (25%) of the value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of Section 7.01 or Section 7.05 or subject to any restriction contained in any agreement or instrument between a Loan Party and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of Section 8.01(e) will be margin stock (within the meaning of Regulation U issued by the FRB).

(b) None of Discovery, the Borrower, or any of their respective Subsidiaries is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

5.15 Disclosure. No written report, financial statement, certificate or other written information furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) taken as a whole contains as of the Closing Date any material misstatement of fact or omits to state as of the Closing Date any material fact necessary to make the statements therein, taken as a whole, in the light of the circumstances under which they were made, not misleading at the time they were so provided; provided that, with respect to projected financial information, each Loan Party represents only that such information was prepared in good faith based upon assumptions believed by such Loan Party to be reasonable at the time (it being understood and agreed that financial projections are not a guarantee of financial performance and actual results may differ from financial projections and such differences may be material).

5.16 Compliance with Laws. Each Loan Party and each Subsidiary of the Borrower is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

5.17 Taxpayer Identification Number; Other Identifying Information. The true and correct U.S. taxpayer identification number of the Borrower is set forth on Schedule 11.02.

5.18 Intellectual Property; Licenses, Etc. The Borrower and its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, “IP Rights”) that are material to the operation of their respective businesses, without conflict with the rights of any other Person, except for any

 

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such conflicts which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. To the best knowledge of each Loan Party, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Borrower or Subsidiary of the Borrower infringes upon any rights held by any other Person, except for any such infringement which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. No claim or litigation regarding any of the foregoing is pending or, to the best knowledge of each Loan Party, threatened, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

5.19 Sanctions Restrictions. Neither the Borrower, nor any of its Subsidiaries, nor, to the knowledge of the Borrower and its Subsidiaries, any director, officer, employee, agent, affiliate or representative thereof, is an individual or entity currently targeted by any Sanctions, nor is the Borrower or any Subsidiary located, organized or resident in a Designated Jurisdiction.

5.20 Use of Proceeds. The Borrower will not knowingly, directly or indirectly, use any part of the proceeds of any Loan in material violation of the Act or the Foreign Corrupt Practices Act of 1977. The Borrower will not knowingly, directly or indirectly, use any part of the proceeds of any Loan in violation of applicable Sanctions.

5.21 Anti-Corruption Laws. The Borrower and its Subsidiaries have instituted and maintained policies and procedures designed to promote and achieve compliance with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other applicable anti-corruption legislation in other jurisdictions.

5.22 Affected Financial Institutions. No Loan Party is an Affected Financial Institution.

5.23 Covered Entities. No Loan Party is a Covered Entity.

ARTICLE VI.

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied each Loan Party shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02, and 6.03) cause each Subsidiary of the Borrower to:

6.01 Financial Statements. Deliver to the Administrative Agent (for delivery to each Lender):

(a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Spinoff Business (commencing with the fiscal year ending December 31, 2021), a consolidated balance sheet of the Spinoff Business as at the end of such fiscal year, and the related consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal year, together with condensed consolidating financial information, if any, provided to holders of any indebtedness of the Spinoff Business in an outstanding principal amount in excess of the Threshold Amount, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Required Lenders (it being understood and agreed that each of Ernst & Young LLP and PricewaterhouseCoopers LLP is acceptable to the Lenders), which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit; and

 

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(b) as soon as available, but in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Spinoff Business (commencing with the fiscal quarter ending September 30, 2021), a consolidated balance sheet of the Spinoff Business as at the end of such fiscal quarter, and the related consolidated statements of income or operations for such fiscal quarter and for the portion of the Spinoff Business’s fiscal year then ended, and the related consolidated statements of changes in shareholders’ equity, and cash flows for the portion of the Spinoff Business’s fiscal year then ended, together with condensed consolidating financial information, if any, provided to holders of any indebtedness of the Spinoff Business in an outstanding principal amount in excess of the Threshold Amount, and setting forth in each case in comparative form, as applicable, 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, (A) such consolidated statements to be certified by a Responsible Officer of the Borrower as fairly presenting in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of the Spinoff Business in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and (B) any such consolidating statements to be certified by a Responsible Officer of the Spinoff Business to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of the Spinoff Business.

As to any information contained in materials furnished pursuant to Section 6.02(c), the Loan Parties shall not be separately required to furnish such information under subsection (a) or (b) above, but the foregoing shall not be in derogation of the obligation of the Loan Parties to furnish the information and materials described in subsections (a) and (b) above at the times specified therein.

Notwithstanding the foregoing, upon and after the consummation of the Combination Transactions, the obligations in subsections (a) and (b) above shall be satisfied by furnishing the applicable consolidated financial statements of Discovery and its Subsidiaries instead (it being further agreed that the furnishing of Discovery’s (A) annual report on Form 10-K for the applicable fiscal year, as filed with the SEC, shall satisfy the obligations in subsection (a) above and (B) quarterly report on Form 10-Q for the applicable fiscal quarter, as filed with the SEC, shall satisfy the obligations in subsection (b) above); provided that if Discovery shall hold material assets or have material operations other than through the Borrower and its Subsidiaries (including, after giving effect to Section 1.02(e)) as of the last day of the relevant reporting period, such financial statements shall be accompanied by consolidating information, which need not be audited or compliant with Regulation S-X, that explains in reasonable detail (as determined in good faith by the Borrower, which determination shall be conclusive) the non-equity differences between the financial information relating to Discovery and its Subsidiaries, on the one hand, and the information relating to the Borrower and its Subsidiaries (including, after giving effect to Section 1.02(e)) on a standalone basis, on the other hand.

6.02 Certificates; Other Information. Deliver to the Administrative Agent (for delivery to each Lender):

(a) concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b) (commencing with the delivery of the financial statements for September 30, 2021), a duly completed Compliance Certificate signed by the chief executive officer, chief financial officer, treasurer, assistant treasurer or controller of the Borrower (or, solely upon and after the consummation of the Combination Transactions, Discovery) (which delivery may, unless the Administrative Agent, or a Lender requests executed originals, be by electronic communication including fax or email and shall be deemed to be an original authentic counterpart thereof for all purposes);

(b) promptly after any request by the Administrative Agent, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee

 

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of the board of directors) of (x) prior to the consummation of the Combination Transactions, the Borrower and (y) solely upon and after the consummation of the Combination Transactions, Discovery, in each case, by independent accountants in connection with the accounts or books of Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries, as applicable, or any audit of any of them;

(c) promptly after the same are available, (i) copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of (A) prior to the consummation of the Combination Transactions, the Borrower and (B) solely upon and after the consummation of the Combination Transactions, Discovery, and (ii) copies of all annual, regular, periodic and special reports and registration statements which (A) prior to the consummation of the Combination Transactions, the Borrower and (B) solely upon and after the consummation of the Combination Transactions, Discovery, may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;

(d) promptly after the furnishing thereof, copies of any statement or report furnished to any holder of any debt securities in an outstanding principal amount in excess of the Threshold Amount of any Loan Party or any Subsidiary of the Borrower pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section 6.01 or any other clause of this Section 6.02;

(e) promptly, and in any event within 15 calendar days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each written notice or other correspondence received from the Division of Enforcement of the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary of the Borrower; and

(f) promptly, such additional information regarding the business, financial or corporate affairs of Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of the Borrower’s Subsidiaries, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request.

Notwithstanding anything to the contrary in this Section 6.02, none of Discovery, the Borrower or any of its Subsidiaries will be required to disclose or permit the inspection or discussion of, any document, information or other matter (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or the Lenders (or their respective representatives) is prohibited by Requirement of Law or any binding agreement; provided that Discovery (solely upon and after the consummation of the Combination Transactions) and the Borrower agree to use commercially reasonable efforts to overcome any such Requirement of Law or any binding agreement, or (iii) that is subject to attorney client or similar privilege or constitutes attorney work product; provided, in each case, that none of the foregoing exceptions shall excuse the Borrower or Discovery, as applicable, from providing a duly completed Compliance Certificate in accordance with Section 6.02(a).

Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(c) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower or (solely upon and after the consummation of the Combination Transactions) Discovery, as applicable, posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 11.02; or (ii) on which such documents are posted on behalf of the Borrower or (solely upon and after the consummation of the Combination Transactions) Discovery, as applicable, on an Internet or intranet website, if any, to which each Lender and the Administrative Agent

 

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have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) the Borrower or (solely upon and after the consummation of the Combination Transactions) Discovery, as applicable, shall deliver paper copies of such documents to the Administrative Agent or any Lender upon its request to the Borrower or (solely upon and after the consummation of the Combination Transactions) Discovery, as applicable, to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower or (solely upon and after the consummation of the Combination Transactions) Discovery, as applicable, shall notify the Administrative Agent and each Lender (by facsimile or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower or (solely upon and after the consummation of the Combination Transactions) Discovery, as applicable, with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

Each Loan Party hereby acknowledges that (a) the Administrative Agent and/or the Arrangers may, but shall not be obligated to, make available to the Lenders materials and/or information provided by or on behalf of the Loan Parties (the “Loan Party Materials”) by posting the Loan Party Materials on DebtDomain, IntraLinks, Syndtrak, ClearPar or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to any of the Loan Parties or their respective Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. Each Loan Party hereby agrees that so long as any Loan Party is the issuer of any outstanding debt or equity securities that are registered or issued pursuant to a private offering or is actively contemplating issuing any such securities (w) all Loan Party Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Loan Party Materials “PUBLIC”, each Loan Party shall be deemed to have authorized the Administrative Agent, the Arrangers and the Lenders to treat the Loan Party Materials as not containing any material non-public information with respect to any Loan Party or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent the Loan Party Materials constitute Information, they shall be treated as set forth in Section 11.07); (y) all Loan Party Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent and the Arrangers shall be entitled to treat the Loan Party Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”

Notwithstanding the foregoing, no Loan Party shall be under any obligation to mark the Loan Party Materials “PUBLIC.”

6.03 Notices. Promptly notify the Administrative Agent upon any Responsible Officer of Discovery (solely upon and after the consummation of the Combination Transactions) or the Borrower obtaining actual knowledge of:

(a) the occurrence of any Default;

(b) any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of the Borrower’s Subsidiaries; (ii) any dispute, litigation, investigation, proceeding or suspension between Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any

 

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of the Borrower’s Subsidiaries and any Governmental Authority; (iii) the commencement of, or any material development in, any litigation or proceeding affecting Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of the Borrower’s Subsidiaries, including pursuant to any applicable Environmental Laws; or (iv) the occurrence of any ERISA Event, in each case, that has resulted or could reasonably be expected to result in a Material Adverse Effect;

(c) any material change in accounting policies or financial reporting practices by Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of the Borrower’s Subsidiaries; and

(d) any announcement by S&P or Moody’s of any change in a Debt Rating.

Each notice pursuant to this Section 6.03 (other than Section 6.03(d)) shall be accompanied by a statement of a Responsible Officer of the applicable Loan Party setting forth details of the occurrence referred to therein and stating what action the Loan Parties have taken and propose to take with respect thereto. Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable (subject to any applicable grace periods), all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness (other than Indebtedness that individually or in the aggregate does not exceed the Threshold Amount), as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness, unless, in each case, (i) the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or such Subsidiary or (ii) the failure to so pay or discharge could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and effect its legal existence and, if applicable, good standing under the Laws of the jurisdiction of its organization except (i) in a transaction permitted by Section 7.04 or 7.05 or (ii) in the case of a Subsidiary of the Borrower, where the failure to do so could not reasonably be expected to have a Material Adverse Effect; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except in a transaction permitted by Section 7.04 or Section 7.05 or to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

6.06 Maintenance of Properties. (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; and (b) make all necessary repairs thereto and renewals and replacements thereof, in the case of each of clauses (a) and (b) except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

6.07 Maintenance of Insurance. Solely upon and after the consummation of the Combination Transactions, maintain with financially sound and reputable insurance companies not Affiliates of the Borrower or, solely upon and after the consummation of the Combination Transactions, Discovery, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business and owning similar properties in localities where

 

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the Borrower or any of its Subsidiaries operates, of such types and in such amounts (after giving effect to any self insurance compatible with such standards) as are customarily carried under similar circumstances by such other Persons.

6.08 Compliance with Laws. Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

6.09 Books and Records. Maintain proper books of record and account in a manner to allow financial statements to be prepared in conformity with GAAP consistently applied in respect of all material financial transactions and matters involving the assets and business of (x) prior to the consummation of the Combination Transactions, the Borrower and its Subsidiaries, taken as a whole, and (y) solely upon and after the consummation of the Combination Transactions, Discovery and its Subsidiaries, taken as a whole.

6.10 Inspection Rights. Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its Responsible Officers at any meeting which may be scheduled for that purpose by the Administrative Agent (at the request of any Lender) not more than once in any six month period; provided that the Administrative Agent will give all Lenders and the Borrower not less than 5 Business Days advance notice of any such requested meeting; and provided, further, that when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice. Notwithstanding anything to the contrary in this Section 6.10, none of Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries will be required to disclose or permit the inspection or discussion of, any document, information or other matter (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or the Lenders (or their respective representatives) is prohibited by Requirement of Law or any binding agreement; provided that Discovery (solely upon and after the consummation of the Combination Transactions) and the Borrower agree to use commercially reasonable efforts to overcome any such Requirement of Law or any binding agreement or (iii) that is subject to attorney client or similar privilege or constitutes attorney work product (provided, that the Borrower shall notify the Administrative Agent promptly upon obtaining knowledge that any such document, information or other matter is being withheld).

6.11 Use of Proceeds. Use the proceeds of the Loans to (i) fund, in part, the Borrower Cash Distribution and to otherwise fund the other Transactions and (ii) pay fees and expenses related to the Transactions.

6.12 Approvals and Authorizations. Except to the extent that non-compliance could not reasonably be expected to have a Material Adverse Effect, maintain all authorizations, consents, approvals and licenses from, exemptions of, and filings and registrations with, each Governmental Authority of the jurisdiction in which each Loan Party that is a Foreign Subsidiary is organized and existing, and all approvals and consents of each other Person in such jurisdiction, in each case that are required in connection with the Loan Documents.

6.13 Sanctions. Maintain policies and procedures designed to promote and achieve compliance with Sanctions.

 

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6.14 Anti-Corruption Laws. Maintain policies and procedures designed to promote and achieve compliance with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other applicable anti-corruption legislation in other jurisdictions.

6.15 Joinder of Discovery, DCL and Scripps to this Agreement. Following the consummation of the Combination Transactions, the Borrower shall (x) cause DCL and Scripps to comply with this Agreement as if they were Subsidiaries of the Borrower and (y) cause Discovery, DCL and Scripps to sign a customary joinder agreement to this Agreement concurrently with the consummation of the Combination to Guarantee the Obligations hereunder as provided for in Article X and, in the case of any such joinder executed by Discovery, DCL and Scripps, causing counsel to the Borrower or Discovery to deliver a customary legal opinion relating thereto addressed to the Administrative Agent and the Lenders.

6.16 Additional Guarantors. Following the consummation of the Combination Transactions, if any Material Subsidiary of Discovery (other than a Securitization Subsidiary) guarantees Indebtedness for borrowed money of Discovery or the Borrower in an outstanding principal amount or committed amount in excess of the Threshold Amount, Discovery shall within 10 Business Days (as such time period may be extended by the Administrative Agent, in its sole discretion) cause such Material Subsidiary to execute a customary joinder to this Agreement to Guarantee the Obligations hereunder as provided for in Article X.

ARTICLE VII.

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder or any Loan or other Obligation hereunder shall remain unpaid or unsatisfied the Borrower shall not, nor shall it permit any of its Subsidiaries to (and solely upon and after the consummation of the Combination Transactions and solely in respect of the covenants and agreements in Section 7.04, Discovery shall not), directly or indirectly:

7.01 Liens. 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 the following:

(a) Liens pursuant to any Loan Document;

(b) Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or extensions thereof, provided that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased except as contemplated by Section 7.03(b), and (iii) any renewal or extension of the obligations secured or benefited thereby is permitted by Section 7.03(b);

(c) Liens for Taxes not yet delinquent or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

(d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, laborer’s, landlord’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

(e) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;

 

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(f) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business, including cash collateralization in respect of letters of credit;

(g) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

(h) Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.01(h) or securing appeal or other surety bonds related to such judgments;

(i) Liens encumbering the Borrower’s or any of its Subsidiaries’ (and, solely upon and after the consummation of the Combination Transactions, any of Discovery’s Subsidiaries’) equity interests or other Investments in any Joint Venture (i) securing obligations (other than Indebtedness) of the Borrower or such Subsidiary under the Joint Venture Agreement for such Joint Venture or (ii) in the nature of customary voting, equity transfer, redemptive rights or similar terms (other than Liens securing Indebtedness) under any such agreement;

(j) Liens securing Indebtedness of a Subsidiary of the Borrower (and, solely upon and after the consummation of the Combination Transactions, a Subsidiary of Discovery) to the Borrower or another Subsidiary of the Borrower (and, solely upon and after the consummation of the Combination Transactions, another Subsidiary of Discovery) permitted under Section 7.03(c); provided, however, that, except as contemplated under Section 7.01(m), no promissory note or other instrument evidencing such Indebtedness shall be subject to any Lien or otherwise pledged in favor of any Person, other than the Borrower or a Subsidiary of the Borrower (and, solely upon and after the consummation of the Combination Transactions, a Subsidiary of Discovery);

(k) Liens securing Indebtedness permitted under Section 7.03(e); provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition;

(l) Liens incurred on any date of determination (including Liens securing Indebtedness permitted under Section 7.03(f)); provided that (i) at the time of the incurrence of such Lien no Designated Default or other Event of Default shall then exist and no Event of Default would result from such incurrence giving Pro Forma Effect to such Lien and (ii) the principal amount secured by such Liens together with, without duplication (A) all other then outstanding secured Indebtedness of the Borrower and its Subsidiaries permitted pursuant to this Section 7.01(l), (B) secured Indebtedness of the Borrower and its Subsidiaries and unsecured Indebtedness of Subsidiaries of the Borrower that are not Subsidiary Guarantors permitted pursuant to Section 7.03(b), (C) Indebtedness of the Borrower and its Subsidiaries permitted pursuant to Section 7.03(e), (D) secured Indebtedness of the Borrower and its Subsidiaries permitted pursuant to Section 7.03(f), and (E) other Indebtedness of Subsidiaries of the Borrower that are not Subsidiary Guarantors permitted pursuant to Section 7.03(g) , in aggregate, does not exceed the Permitted Priority Amount on such date;

(m) Liens securing any of the Bonds if required pursuant to the terms thereof, provided, however, that the Obligations shall also be ratably secured by any such Lien on terms reasonably satisfactory to the Administrative Agent;

 

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(n) licenses, leases (other than Capital Leases) or subleases granted to others not interfering in any material respect with the business of the Borrower or any of its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, Discovery’s Subsidiaries);

(o) any interest of title of a lessor under, and Liens arising from UCC financing statements (or equivalent filings, registrations or agreements in foreign jurisdictions) relating to, leases otherwise permitted by this Agreement;

(p) normal and customary rights of setoff upon deposits of cash in favor of banks or other depository institutions;

(q) Liens on assets of the Borrower or any of its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, Discovery’s Subsidiaries) maintained with providers of Banking Services;

(r) Liens upon real property heretofore leased or leased after the Closing Date (under operating or Capital Leases) in the ordinary course of business by the Borrower or any of its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, Discovery’s Subsidiaries), as lessee, in favor of the lessor of such property created at the inception of the lease transaction, securing obligations of the Borrower or any of its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, Discovery’s Subsidiaries) under or in respect of such lease and extending to or covering only the property subject to such lease and improvements thereon;

(s) Liens created in favor of a producer or supplier of television programming or films over distribution revenues and/or distribution rights which are allocable to such producer or supplier under related distribution agreements;

(t) Liens of a collection bank arising under Section 4-208 of the New York Uniform Commercial Code (or similar provision of other applicable jurisdiction) on items in the course of collection;

(u) Liens existing on property or assets of Discovery and its Subsidiaries as of, or provided for under written arrangements existing as of, the Closing Date (or, if later, the date of joinder of Discovery as a Guarantor hereunder); provided, however, that such Liens are not created in contemplation of the Combination Transactions, and that such Liens are limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which such Liens arose, could secure) the obligations to which such Liens relate;

(v) Liens on Securitization Assets securing or transferred pursuant to any Permitted Securitization Financing;

(w) Liens on any amounts held by a trustee or other escrow agent under any indenture or other debt agreement issued in escrow pursuant to customary escrow arrangements pending the release thereof;

(x) Liens consisting of or relating to the sale, transfer, distribution, or financing of motion pictures, video and television programs, sound recordings, books or rights with respect thereto or with groups who may receive tax benefits or other third-party investors in connection with the financing and/or distribution of such motion pictures, video and television programming, sound recordings or books in the ordinary course of business and the granting to the Borrower or any of its Subsidiaries of rights to distribute such motion pictures, video and television programming, sound recordings or books; provided, however, that no such Lien shall attach to any asset or right of the Borrower or any of its Subsidiaries (other than (1)

 

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the motion pictures, video and television programming, sound recordings, books or rights which were sold, transferred to or financed by groups who may receive tax benefits or third-party investors in question or the proceeds arising therefrom and (2) the stock or equity interests of a Subsidiary substantially all of the assets of which consist of such motion pictures, video and television programming, sound recordings, books or rights and related proceeds);

(y) Liens on Works which either (1) existed on such Works before the time of their acquisition and were not created in anticipation thereof, or (2) were created solely for the purpose of securing obligations to financiers, producers, distributors, exhibitors, completion guarantors, inventors, copyright holders, financial institutions or other participants incurred in the ordinary course of business in connection with the acquisition, financing, production, completion, distribution or exhibition of Works;

(z) any Liens on the office building and hotel complex located in Atlanta, Georgia known as the CNN Center Complex, including the parking decks for such complex (to the extent such parking decks are owned or leased by us or our Subsidiaries), or any portion thereof and all property rights therein and the products, revenues and proceeds therefrom created as part of any mortgage financing or sale-leaseback of the CNN Center Complex;

(aa) Liens on satellite transponders and all property rights therein and the products, revenues and proceeds therefrom which secure obligations incurred in connection with the acquisition, utilization or operation of such satellite transponders or the refinancing of any such obligations; and

(bb) Liens resulting from progress payments or partial payments under United States government contracts or subcontracts.

7.02 Investments. Make any Investments, except:

(a) Investments held by the Borrower or any of its Subsidiaries existing on the date hereof;

(b) Investments held by the Borrower or any of its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, held by Discovery’s Subsidiaries) in the form of cash or cash equivalents;

(c) (i) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, (ii) Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss; and (iii) Investments received in connection with a Disposition permitted under Section 7.05;

(d) Guarantees or Swap Contracts permitted by Section 7.03; and, to the extent constituting Investments, Restricted Payments permitted by Section 7.06;

(e) Investments (i) by the Borrower in any wholly-owned Subsidiary of the Borrower (and, solely upon and after the consummation of the Combination Transactions, in any wholly-owned Subsidiary of Discovery) and (ii) by any Subsidiary of the Borrower (and, solely upon and after the consummation of the Combination Transactions, by any Subsidiary of Discovery) in any wholly-owned Subsidiary of the Borrower (and, solely upon and after the consummation of the Combination Transactions, in any wholly-owned Subsidiary of Discovery);

 

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(f) other Investments not otherwise permitted under this Section 7.02; provided that at the time of such Investment no Designated Default or any other Event of Default shall then exist and no Event of Default would result from such Investment giving Pro Forma Effect to such Investment;

(g) any Investment held by Discovery and its Subsidiaries as of, or entered into pursuant to written arrangements existing as of, the Closing Date (or, if later, the date of joinder of Discovery as a Guarantor hereunder) so long as such Investment was not acquired by such Person in contemplation of the Combination Transactions;

(h) Investments made by the Borrower or any of its Subsidiaries pursuant to or in connection with the Transactions;

(i) the Borrower or any of its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, any Subsidiary of Discovery) may make investments to consummate or otherwise pursuant to any Permitted Securitization Financing;

(j) Investments consisting of or relating to the sale, transfer, distribution, or financing of motion pictures, video and television programs, sound recordings, books or rights with respect thereto or with groups who may receive tax benefits or other third-party investors in connection with the financing and/or distribution of such motion pictures, video and television programming, sound recordings or books in the ordinary course of business and the granting to the Borrower or any of its Subsidiaries of rights to distribute such motion pictures, video and television programming, sound recordings or books;

(k) Investments made by the Borrower or any of its Subsidiaries prior to the consummation of the Combination Transactions in connection with any intercompany receivables, payables, loans and balances between AT&T or any of its Subsidiaries, on the one hand, and the Borrower or any of its Subsidiaries, on the other hand, including in connection with the satisfaction or settlement thereof; and

(l) Investments made pursuant to or in connection with the Transactions (including, for the avoidance of doubt, any Investments permitted under the Transaction Agreements).

7.03 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, except:

(a) Indebtedness under the Loan Documents;

(b) Indebtedness outstanding on the date hereof listed on Schedule 7.03 and any refinancings, refundings, renewals or extensions thereof; provided that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and (ii) in the case of any such Indebtedness of the Borrower, no Subsidiary of the Borrower that is not a Subsidiary Guarantor shall become liable in respect of such Indebtedness;

(c) (i) Indebtedness (other than Guarantees) (A) of the Borrower to any of its wholly-owned Subsidiaries, (B) of any wholly-owned Subsidiary of the Borrower (and, solely upon and after the consummation of the Combination Transactions, of any wholly-owned Subsidiary of Discovery) to the Borrower or any other such Subsidiary, and (C) of any non-wholly-owned Subsidiary of the Borrower (and, solely upon and after the consummation of the Combination Transactions, of any non-wholly-owned Subsidiary of Discovery) to the Borrower or any wholly-owned Subsidiary of the Borrower; and (ii) Guarantees (A) of the Borrower in respect of Indebtedness otherwise permitted hereunder of any wholly-owned Subsidiary of the Borrower (and, solely upon and after the consummation of the Combination

 

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Transactions, of any wholly-owned Subsidiary of Discovery), and (B) of any Subsidiary of the Borrower (and, solely upon and after the consummation of the Combination Transactions, of any Subsidiary of Discovery) in respect of Indebtedness otherwise permitted hereunder of the Borrower or any wholly-owned Subsidiary of the Borrower (and, solely upon and after the consummation of the Combination Transactions, of any non-wholly-owned Subsidiary of Discovery);

(d) obligations (contingent or otherwise) of the Borrower or any of its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, any Subsidiary of Discovery) existing or arising under any Swap Contract; provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by the Borrower or any of its Subsidiaries, or changes in the value of securities issued by any such Person, and not for purposes of speculation or taking a “market view;” and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;

(e) Indebtedness in respect of Capital Leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in Section 7.01(k); provided, however, that the aggregate amount of all such Indebtedness outstanding on any date, together with, without duplication (A) all other then outstanding secured Indebtedness of the Borrower and its Subsidiaries permitted pursuant to this Section 7.03(e), (B) secured Indebtedness of the Borrower and its Subsidiaries and unsecured Indebtedness of Subsidiaries of the Borrower that are not Subsidiary Guarantors permitted pursuant to Section 7.03(b), (C) Indebtedness secured by Liens permitted pursuant to Section 7.01(l), (D) secured Indebtedness of the Borrower and its Subsidiaries permitted pursuant to Section 7.03(f), and (E) other Indebtedness of Subsidiaries of the Borrower that are not Subsidiary Guarantors permitted pursuant to Section 7.03(g) , in aggregate, shall not exceed the Permitted Priority Amount on such date;

(f) other secured Indebtedness of the Borrower and its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, Subsidiaries of Discovery); provided that (i) at the time of the incurrence of such Indebtedness no Designated Default or other Event of Default shall then exist and no Event of Default would result from such incurrence giving Pro Forma Effect to such Indebtedness, and (ii) the Indebtedness incurred pursuant to this Section 7.03(f) on any date, together with, without duplication, all then outstanding (A) other secured Indebtedness of the Borrower and its Subsidiaries incurred pursuant to this Section 7.03(f), (B) secured Indebtedness of the Borrower and its Subsidiaries and unsecured Indebtedness of Subsidiaries of the Borrower that are not Subsidiary Guarantors permitted pursuant to Section 7.03(b), (C) unsecured Indebtedness of Subsidiaries of the Borrower that are not Subsidiary Guarantors permitted pursuant to Section 7.03(g), (D) Indebtedness of the Borrower and its Subsidiaries permitted pursuant to Section 7.03(e), (E) [reserved] and (F) Indebtedness secured by Liens permitted pursuant to Section 7.01(l), in aggregate, does not exceed the Permitted Priority Amount on such date;

(g) unsecured Indebtedness of the Borrower and its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, Subsidiaries of Discovery); provided that (i) at the time of the incurrence of such Indebtedness no Designated Default or other Event of Default shall then exist and no Event of Default would result from such incurrence after giving Pro Forma Effect to such Indebtedness and (ii) in the case of the incurrence of any such Indebtedness by a Subsidiary of the Borrower that is not a Subsidiary Guarantor on any date, such Indebtedness, together with, without duplication, all then outstanding (A) other Indebtedness of Subsidiaries of the Borrower that are not Subsidiary Guarantors incurred pursuant to this Section 7.03(g), (B) secured Indebtedness of the Borrower and its Subsidiaries and unsecured Indebtedness of Subsidiaries of the Borrower that are not Subsidiary Guarantors permitted pursuant to Section 7.03(b), (C) secured Indebtedness of the Borrower and its Subsidiaries permitted

 

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pursuant to Section 7.03(f), (D) Indebtedness of the Borrower and its Subsidiaries permitted pursuant to Section 7.03(e), (E) [reserved] and (F) Indebtedness secured by Liens permitted pursuant to Section 7.01(l), in aggregate, does not exceed the Permitted Priority Amount on such date;

(h) Indebtedness of the Borrower or any of its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, any Subsidiaries of Discovery) incurred in the ordinary course of business as an account party in respect of (i) letters of credit or (ii) any surety bonds, performance bonds, customs bonds, statutory, appeal or similar bonds, completion guarantees or other obligations of a like nature;

(i) Indebtedness of Discovery and its Subsidiaries outstanding (or pursuant to commitments outstanding) as of the Closing Date so long as (except for Indebtedness incurred under Discovery’s revolving credit facility) such Indebtedness was not incurred in contemplation of the Combination Transactions and any refinancings, refundings, renewals or extensions thereof (which refinancing, refunding, renewal or extension may be incurred by the Borrower or any of its Subsidiaries); provided that the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing;

(j) Indebtedness of the Borrower and/or its Subsidiaries incurred pursuant to the Borrower Securities, the Combination Bonds and/or Bridge Facility and any refinancings, refundings, renewals or extensions thereof; provided that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and (ii) no Subsidiary of the Borrower (and, solely upon and after the consummation of the Combination Transactions, no Subsidiary of Discovery) that is not a Subsidiary Guarantor shall become liable in respect of such Indebtedness;

(k) Indebtedness under the TW Bonds and any refinancings, refundings, renewals or extensions thereof, in each case in a maximum principal amount at any time outstanding not exceeding in the aggregate the amount equal to (i) the amount outstanding under such Indebtedness on the Effective Date plus (ii) in the event of any refinancing of any such Indebtedness, the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such refinancing;

(l) Indebtedness of the Borrower or any of its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, any Subsidiaries of Discovery) pursuant to a Permitted Securitization Financing;

(m) Indebtedness consisting of or relating to the sale, transfer, distribution, or financing of motion pictures, video and television programs, sound recordings, books or rights with respect thereto or with groups who may receive tax benefits or other third-party investors in connection with the financing and/or distribution of such motion pictures, video and television programming, sound recordings or books in the ordinary course of business and the granting to the Borrower or any of its Subsidiaries of rights to distribute such motion pictures, video and television programming, sound recordings or books;

(n) Indebtedness of the Borrower or any of its Subsidiaries incurred prior to the consummation of the Combination Transactions in connection with any intercompany receivables, payables, loans and balances between AT&T or any of its Subsidiaries, on the one hand, and the Borrower or any of its Subsidiaries, on the other hand, including in connection with the satisfaction or settlement thereof; and

 

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(o) Indebtedness incurred by the Borrower or any of its Subsidiaries pursuant to or in connection with the Transactions (including, for the avoidance of doubt, any Indebtedness permitted under the Transaction Agreements).

7.04 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, (x) the Borrower or any of its Subsidiaries may merge with or into Discovery or any of its Subsidiaries pursuant to or in connection with the Transactions and (y) so long as no Designated Default or other Event of Default then exists and no Event of Default would result from such transaction after giving Pro Forma Effect to such transaction:

(a) each Loan Party may merge with any other Person (other than another Loan Party); provided that (i) such Loan Party shall be the continuing or surviving Person, and (ii) immediately after giving effect to such merger such surviving Loan Party shall affirm its Obligations hereunder in a writing to the Lender Parties satisfactory to the Administrative Agent;

(b) any Subsidiary of the Borrower (and, solely upon and after the consummation of the Combination Transactions, any Subsidiary of Discovery) may merge with (i) the Borrower, provided that the Borrower shall be the continuing or surviving Person and promptly after giving effect to such merger the Borrower shall reaffirm its Obligations hereunder in a writing to the Lender Parties satisfactory to the Administrative Agent, or (ii) any one or more other such Subsidiaries or any other Person;

(c) any Subsidiary of the Borrower (and, solely upon and after the consummation of the Combination Transactions, any Subsidiary of Discovery) may Dispose of all or substantially all of its assets (upon voluntary liquidation, dissolution or otherwise) to the Borrower or to any other Person; and

(d) Discovery may Dispose of all or substantially all of its assets to the Borrower or a Subsidiary of the Borrower.

7.05 Dispositions. Make any Disposition, except:

(a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;

(b) Dispositions of inventory in the ordinary course of business;

(c) Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property;

(d) Dispositions of property by the Borrower to any wholly-owned Subsidiary of the Borrower or by any Subsidiary of the Borrower to the Borrower or a wholly-owned Subsidiary of the Borrower;

(e) licenses of IP Rights in the ordinary course of business;

(f) Dispositions permitted by Section 7.04 and Restricted Payments permitted by Section 7.06; and

 

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(g) Dispositions by the Borrower and its Subsidiaries(and, solely upon and after the consummation of the Combination Transactions, Subsidiaries of Discovery) of property pursuant to sale-leaseback transactions and other Dispositions by the Borrower and its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, Subsidiaries of Discovery) not otherwise permitted under this Section 7.05; provided that at the time of such Disposition, no Designated Default or other Event of Default shall then exist and no Event of Default would result from such Disposition giving Pro Forma Effect to such Disposition;

(h) Dispositions of Securitization Assets pursuant to a Permitted Securitization Financing;

(i) Dispositions consisting of or relating to the sale, transfer, distribution, or financing of motion pictures, video and television programs, sound recordings, books or rights with respect thereto or with groups who may receive tax benefits or other third-party investors in connection with the financing and/or distribution of such motion pictures, video and television programming, sound recordings or books in the ordinary course of business and the granting to the Borrower or any of its Subsidiaries of rights to distribute such motion pictures, video and television programming, sound recordings or books; and

(j) Dispositions pursuant to or in connection with the Transactions (including, for the avoidance of doubt, any Dispositions permitted under the Transaction Agreements).

7.06 Restricted Payments. With respect to the Borrower and its Subsidiaries, declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, or issue or sell any of their respective Equity Interests, except that:

(a) each Subsidiary of the Borrower (and, solely upon and after the consummation of the Combination Transactions, each Subsidiary of Discovery) may declare and make dividend payments in cash with respect to any class of Equity Interests of such Subsidiary to the then holders of such Equity Interests ratably according to their respective holdings;

(b) the Borrower and each of its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, each of Discovery’s Subsidiaries) may declare and make dividend payments or other distributions payable solely in the common stock or other common Equity Interests of such Person to the then holders of such Equity Interests ratably according to their respective holdings;

(c) solely upon and after the consummation of the Combination Transactions, the Borrower may declare and make dividend payments in cash to Discovery (directly or through any Subsidiary of Discovery) in an aggregate amount for any period not greater than an amount sufficient to permit Discovery to (i) make payments pursuant to and in accordance with stock option plans or other management plans for management or employees of Discovery, the Borrower and its Subsidiaries during such period, (ii) pay any Taxes of Discovery, the Borrower and its Subsidiaries which are due and payable, (iii) pay customary directors’ fees paid to the members of Discovery’s board of directors, in their capacity as such, and the reimbursement for necessary and reasonable out-of-pocket expenses of such members in their capacities as such, in each case arising from their direct service as members of such board of directors, (iv) pay ordinary course overhead expenses of Discovery (including administrative, legal, accounting and similar expenses payable to third parties), (v) pay customary third party advisor fees and expenses owed by Discovery in the ordinary course of its business, (vi) pay customary director and officers insurance premiums owed by Discovery with respect to its officers and directors in the ordinary course of its business and (vii) pay customary and reasonable indemnification claims made by directors and officers of Discovery;

(d) the Borrower and each of its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, each Subsidiary of Discovery) may issue and sell their respective Equity Interests and may make Restricted Payments not otherwise permitted by this Section 7.06; provided that no Designated Default or any other Event of Default shall then exist and no Event of Default would result from such issuance and sale or such Restricted Payment, as the case may be, giving Pro Forma Effect to such issuance and sale or such Restricted Payment;

 

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(e) the Borrower may issue and sell (i) its common Equity Interests; provided that no Change of Control would result from such issuance and sale; and (ii) the Borrower may issue and sell its Equity Interest in connection with grants of such securities and stock options with respect to such securities pursuant to employment, benefit plans, service and severance arrangements with current and former officers, directors, consultants, advisors and employees of the Borrower or any Subsidiary of the Borrower, as determined in good faith by the board of directors or senior management of the Borrower or such Subsidiary, as applicable;

(f) the Borrower or any of its Subsidiaries may make Restricted Payments pursuant to or in connection with the Transactions (including, for the avoidance of doubt, the Borrower Cash Distribution and any other Restricted Payments permitted under the Transaction Agreements);

(g) the Borrower and its Subsidiaries (and, solely upon and after the consummation of the Combination Transactions, any Subsidiary of Discovery) may make any Restricted Payment as part of a Permitted Securitization Financing;

(h) prior to the consummation of the Combination Transactions, the Borrower or any of its Subsidiaries may make any Restricted Payment.

7.07 Change in Nature of Business. Engage in any material line of business substantially different from those lines of business conducted by the Spinoff Business (and, solely upon and after the consummation of the Combination Transactions, Discovery’s Subsidiaries) on the date hereof (or, if later, the date of joinder of Discovery as a Guarantor hereunder), any other cable and other standard and nonstandard motion pictures, films, television, programming, multimedia, entertainment or education business, or any business substantially related or incidental thereto.

7.08 Transactions with Affiliates. Upon and after the consummation of the Combination Transactions, enter into any transaction of any kind with Discovery or any Affiliate of Discovery, whether or not in the ordinary course of business, other than (A) on terms substantially as favorable to the Borrower or such Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate or (B) any such transaction or series of related or similar transactions involving an amount (in the case of such a transaction or transactions providing for periodic payments or installments, including the aggregate amount of such payments or installments, and in the case of Indebtedness, including the largest aggregate amount that may be outstanding thereunder and the largest amount of interest and fees that may become due thereunder in any twelve month period) not in excess of $60,000,000; provided that the foregoing restriction shall not apply to:

(a) transactions otherwise permitted hereunder with a Joint Venture pursuant to a Joint Venture Agreement to which a Significant Shareholder and/or an Affiliate of a Significant Shareholder (other than the Borrower or any of its Subsidiaries) is also a party; provided that such Joint Venture Agreement is on terms substantially as favorable to the Borrower or such Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate;

(b) transactions otherwise permitted hereunder between or among the Borrower and any of its Subsidiaries (other than any Subsidiary of the Borrower that is a Joint Venture described in clause (a) above) or between and among any such Subsidiaries;

 

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(c) Guarantees made by the Borrower or any of its Subsidiaries otherwise permitted under Section 7.03 in respect of any Affiliate of such Person;

(d) Restricted Payments permitted by Section 7.06;

(e) (i) expense reimbursement, indemnities, salaries and other compensation to current and former officers, directors, consultants, advisors and employees of Discovery, the Borrower or any Subsidiary of the Borrower, or (ii) entering into (and payments under) employment, benefit plans, service and severance arrangements with current and former officers, directors, consultants, advisors and employees of Discovery, the Borrower or any Subsidiary of the Borrower, including, without limitation, grants of securities, stock options, and similar rights, as determined in good faith by the board of directors, a committee thereof or senior management of Discovery, the Borrower or such Subsidiary, as applicable;

(f) transactions pursuant to or in connection with the Transactions; and

(g) transactions pursuant to or in connection with any Permitted Securitization Financing.

7.09 Burdensome Agreements. Enter into any Contractual Obligation (other than this Agreement or any other Loan Document) that limits the ability:

(a) of any Subsidiary of the Borrower to make Restricted Payments to the Borrower or any other Subsidiary of the Borrower or to otherwise transfer property to the Borrower,

(b) of any Subsidiary of the Borrower to Guarantee the Obligations of the Borrower under this Agreement, or

(c) of the Borrower or any Subsidiary of the Borrower to create, incur, assume or suffer to exist Liens on property of such Person to secure the Obligations of the Borrower under this Agreement;

provided, however, that this Section shall not prohibit:

(i) any negative pledge in favor of any holder of purchase money or other Indebtedness permitted under Sections 7.03(e), solely to the extent any such negative pledge relates to the property permitted to be encumbered by such Indebtedness;

(ii) any such restrictions or conditions in favor of any other secured Indebtedness of the Borrower or any of its Subsidiaries permitted under Section 7.03(f);

(iii) any such restrictions or conditions in favor of any unsecured Indebtedness of the Borrower or any of its Subsidiaries permitted under Section 7.03(g);

(iv) any such restrictions or conditions in favor of (A) any Indebtedness of the Borrower or any of its Subsidiaries permitted under Section 7.03(i), 7.03(j) or 7.03(k) and (B) any Indebtedness permitted under Section 7.03(m) or 7.03(o);

(v) any negative pledge in favor of any holder of any Indebtedness listed on Schedule 7.03 (and, in each case, any refinancing, refundings, renewals or extensions thereof to the extent permitted by Section 7.03(b)), so long as any such negative pledge is no more restrictive on the ability of the Borrower or any such Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person to secure the Obligations of the Borrower under this Agreement than is the negative pledge in such Indebtedness as of the date hereof;

 

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(vi) in the case of a Joint Venture that is a Subsidiary of the Borrower, customary obligations in the Joint Venture Agreement for any such Joint Venture that limit the Joint Venture’s ability to make Restricted Payments to, to Guarantee the Indebtedness of, and to create Liens on its property for the benefit of Indebtedness of, any holder of the Equity Interests of such Joint Venture (and neither the Borrower nor any Subsidiary of the Borrower a party to such Joint Venture Agreement shall waive their rights to the benefit of such obligations as against any other party thereto);

(vii) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder;

(viii) customary provisions in leases and other contracts restricting the assignment thereof;

(ix) restrictions and conditions in any indenture, agreement, document, instrument or other arrangement relating to the assets or business of any Subsidiary existing prior to the consummation of an acquisition in which such Subsidiary was acquired (and not created in contemplation of such acquisition); or

(x) restrictions pursuant to or in connection with any Permitted Securitization Financing.

7.10 Use of Proceeds. Use the proceeds of any Loan, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose, except in each case in compliance with Regulation U, nor allow, after giving effect to the application of the proceeds of any Loan, more than twenty-five percent (25%) of the value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of Section 7.01 or Section 7.05 or subject to any restriction contained in any agreement or instrument between a Loan Party and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of Section 8.01(e) to be margin stock (within the meaning of Regulation U issued by the FRB).

7.11 Financial Covenants.

(a) Consolidated Interest Coverage Ratio. As of the last day of each Measurement Period (commencing with the last day of the first full fiscal quarter following the Closing Date), permit the Consolidated Interest Coverage Ratio to be less than 3.00:1.00.

(b) Consolidated Leverage Ratio. As of the last day of each Measurement Period (commencing with the last day of the first full fiscal quarter following the Closing Date), permit the Consolidated Leverage Ratio to be greater than (i) from and after the last day of the first full fiscal quarter following the Closing Date to the Measurement Period ending on the last day of the first full fiscal quarter after the first anniversary of the Closing Date, 5.75:1.00, (ii) from and after the Measurement Period ending on the last day of the first full fiscal quarter after the first anniversary of the Closing Date to the Measurement Period ending on the last day of the first full quarter after the second anniversary of the Closing Date, 5.00:1.00, and (iii) thereafter, 4.50:1.00.

 

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7.12 Sanctions Restrictions. Directly or indirectly, use the proceeds of any Loan, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other individual or entity, to fund any activities of or business with any individual or entity, or in any Designated Jurisdiction, that, at the time of such funding, is targeted by Sanctions, unless otherwise authorized by applicable Laws, or in any other manner that will result in a violation by any party to any Loan Document (including any Lender, Arranger, Administrative Agent or otherwise) of Sanctions.

7.13 Anti-Corruption Laws. Use the proceeds of any Loan for any purpose which would result in a material violation of the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other applicable anti-corruption legislation in other jurisdictions.

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

8.01 Events of Default. Any of the following shall constitute an Event of Default:

(a) Non-Payment. The Borrower fails to pay (i) when and as required to be paid herein any amount of principal of any Loan, or (ii) within two Business Days after the same becomes due, any interest on any Loan, any fee due hereunder, or any other amount payable hereunder or under any other Loan Document; or

(b) Specific Covenants. (i) The Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 6.01, 6.02(a), (b) or (d), 6.03, 6.05, 6.10, 6.11, 6.15 or Article VII; or (ii) Discovery (solely upon and after the consummation of the Combination Transactions) fails to observe any term covenant or agreement contained in Section 7.04; or

(c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days after notice of such default from the Administrative Agent or any Lender or after any Responsible Officer of Discovery (solely upon and after the consummation of the Combination Transactions) or the Borrower obtains actual knowledge thereof; or

(d) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect in any material respect when made or deemed made; or

(e) Cross-Default. (i) Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of the Borrower’s Subsidiaries (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) beyond any applicable grace period in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) equal to or greater than the Threshold Amount, or (B) fails to observe or perform (beyond any applicable grace period) any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or 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, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; provided that this clause (B) shall not apply to any of the following: (x)

 

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Indebtedness that becomes due as a result of the voluntary sale or transfer of property or assets securing such Indebtedness, if such sale or transfer and the application of the proceeds thereof is permitted hereunder and under the documents providing for such Indebtedness; (y) the mandatory prepayment of any bridge financing made with the proceeds of permanent financing or the proceeds of asset sales or equity issuances; or (z) any event, so long as such event does not otherwise cause a Default or Event of Default under any Loan Documents, requiring the repurchase, repayment or redemption (automatically or otherwise) or an offer to repurchase, prepay or redeem any Indebtedness, or the delivery of any notice with respect thereto, solely as a result of the Borrower’s or any of its Subsidiaries’ failure to consummate a merger or other acquisition contemplated to be funded in whole or in part with the proceeds of such Indebtedness; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries as a result thereof is equal to or greater than the Threshold Amount, and in the case of any Early Termination Date resulting from such a Termination Event, such Early Termination Date is not rescinded or such Swap Termination Value is not paid within 5 Business Days following such Early Termination Date; or

(f) Insolvency Proceedings, Etc. Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Significant Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator, judicial manager 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 or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

(g) Inability to Pay Debts; Attachment. (i) Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Significant Subsidiaries becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or

(h) Judgments. There is entered against Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Significant Subsidiaries one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) and (i) enforcement proceedings to attach or levy upon any material assets of the Borrower or any of its Subsidiaries are commenced by any creditor upon such judgment or order, or (ii) there is a period of 20 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect, or such judgment is not satisfied, vacated or discharged; or

 

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(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of Discovery (solely upon and after the consummation of the Combination Transactions) or the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) Discovery (solely upon and after the consummation of the Combination Transactions) or any of its ERISA Affiliates or the Borrower or any of its ERISA Affiliates fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

(j) Invalidity of Loan Documents. Any provision of any Loan Document that is material (in the determination of the Required Lenders), 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 the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or

(k) Change of Control. There occurs any Change of Control.

8.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, subject to Section 8.04, take any or all of the following actions:

(a) declare the commitment of each Lender to make Loans to be terminated, whereupon such commitments and obligation shall be terminated;

(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower to the maximum extent permitted by applicable law;

(c) [reserved]; and

(d) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents;

provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans shall automatically terminate and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable in each case without further act of the Administrative Agent or any Lender; and provided further, however, that the Required Tranche 1 Lenders and the Required Tranche 2 Lenders shall not have any power or authority under this Section 8.02 separate or apart from that of the Administrative Agent and the Required Lenders with respect to all Loans and other Obligations.

8.03 Application of Funds. After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall, subject to the provisions of Section 2.17, be applied by the Administrative Agent in the following order:

 

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First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;

Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including fees, charges and disbursements of counsel to the respective Lenders (including fees and time charges for attorneys who may be employees of any Lender) and amounts payable under Article III), ratably among them in proportion to the respective amounts described in this clause Second payable to them;

Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and other Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;

Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause Fourth held by them; and

Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.

8.04 Certain Funds Provisions. Notwithstanding anything to the contrary herein or in any Loan Document, during the Availability Period, and notwithstanding (i) that any representation or warranty made on the Effective Date or the Closing Date (excluding for the avoidance of doubt, the Specified Representations and/or Combination Transaction Representations made on the Closing Date) was incorrect, (ii) any failure by Discovery, the Borrower or any of their respective Subsidiaries to comply with the affirmative covenants, negative covenants, financial covenants or any other obligation under this Agreement, related notes (including the Notes), related fee letters or any other Loan Document, (iii) any provision to the contrary in this Agreement or in any Loan Document or otherwise or (iv) that any condition to the Effective Date may subsequently be determined not to have been satisfied, neither the Administrative Agent nor any Lender shall be entitled to (1) cancel any of its Commitments (except as set forth in Section 2.06(c)), (2) rescind, terminate or cancel this Agreement or any Loan Document or exercise any right or remedy or make or enforce any claim under this Agreement, related notes (including the Notes), related fee letters or any Loan Document or otherwise it may have to the extent to do so would prevent, limit or delay the making of its Loans hereunder, (3) refuse to participate in making its Loan hereunder or (4) exercise any right of set-off or counterclaim in respect of its Loan hereunder to the extent to do so would prevent, limit or delay the making of its Loan; provided in each case that the applicable conditions to the making of such loans precedent set forth in Section 4.02 have been satisfied or waived on or prior to the Closing Date; provided, further, that with respect to items (1) through (4) above, the foregoing shall not apply if an Event of Default pursuant to Section 8.01(f) or (g) with respect to the Borrower has occurred and is continuing under this Agreement. For the avoidance of doubt, immediately after the expiration of the Availability Period, all of the rights, remedies and entitlements of the Administrative Agent and the Lenders shall be available notwithstanding that such rights were not available prior to such time as a result of the foregoing.

ARTICLE IX.

ADMINISTRATIVE AGENT

9.01 Appointment and Authority. Each of the Lenders hereby irrevocably appoints JPMorgan Chase Bank, N.A. to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such

 

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actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and no Loan Party shall have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

9.02 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender,” “Lenders,” “Tranche 1 Lender,” “Tranche 1 Lenders,” “Tranche 2 Lender,” or “Tranche 2 Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and

(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Party or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 11.01 and 8.02) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by a Loan Party or a Lender.

 

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The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

9.04 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

9.05 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub agents appointed by the Administrative Agent. The Administrative Agent and any such sub agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub agent and to the Related Parties of the Administrative Agent and any such sub agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.

9.06 Resignation of Administrative Agent. (a) The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which (i) shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States, (ii) shall be a Lender or an Affiliate of a Lender and (iii) shall have accepted such appointment. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that in no event shall any such successor Administrative Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

 

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(b) If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment, within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 3.01(h) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable) and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 11.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.

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

9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the Arrangers, Co-Syndication Agents or Co-Documentation Agents listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.

 

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9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.09 and 11.04) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, judicial manager, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.09 and 11.04.

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

9.10 Collateral and Guaranty Matters. The Lenders irrevocably authorize the Administrative Agent to accept Liens granted to the Administrative Agent for the benefit of the Lender Parties pursuant to Section 7.01(m) or otherwise, and, at its option and in its discretion,

(a) to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than unasserted indemnification, tax gross up, expense reimbursement or yield protection obligations, in each case, for which no claim has been made), (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, or (iii) subject to Section 11.01, if approved, authorized or ratified in writing by the Required Lenders;

(b) to subordinate any Lien as may hereafter be granted on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 7.01(k); and

(c) to release any Subsidiary Guarantor (but not Discovery (solely upon and after the consummation of the Combination Transactions)) from its obligations under the Guaranty if:

(i) the circumstances causing the Borrower to cause such Subsidiary to become a Subsidiary Guarantor pursuant to Section 6.16 no longer exist (or, substantially concurrently with the release of such Subsidiary Guarantor or if as a result of the release of such Subsidiary Guarantor, will no longer exist) (it being understood that a release subject to contingent reinstatement is still a release, and that if any such Guarantee is so reinstated, such Subsidiary Guarantee shall also be reinstated to the extent that such Subsidiary Guarantor would then be required to provide a Subsidiary Guarantee pursuant to Section 6.16);

 

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(ii) if such Subsidiary Guarantor ceases (or, substantially concurrently with the release of such Subsidiary Guarantor, will cease) to be a Subsidiary of the Borrower in accordance with the terms hereof;

(iii) upon the merger or consolidation of such Subsidiary Guarantor with and into the Borrower or another Guarantor that is the surviving Person in such merger or consolidation, or upon the liquidation of such Subsidiary Guarantor following the transfer of all of its assets to the Borrower or another Guarantor;

(iv) upon the merger or consolidation of such Subsidiary Guarantor with and into another Subsidiary of the Borrower or, solely upon and after the consummation of the Combination Transactions, Discovery that is not the Borrower or a Guarantor with such other Subsidiary being the surviving Person in such merger or consolidation, or upon liquidation of such Subsidiary Guarantor following the transfer of all of its assets to a Subsidiary that is not a Subsidiary Guarantor; or

(v) upon payment in full of the aggregate principal amount of all Loans and guaranteed Obligations then due and owing.

Upon any such occurrence specified in this Section 9.10(c), the Administrative Agent shall execute any documents reasonably requested by the Borrower in order to evidence such release, discharge and termination in respect of the applicable Guarantee. Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property pursuant to this Section 9.10.

9.11 Certain ERISA Matters.

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

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

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

 

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

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

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

9.12 Acknowledgements of Lenders. (a) (i) Each Lender hereby agrees that (x) if the Administrative Agent notifies such Lender that the Administrative Agent has determined in its sole discretion that any funds received by such Lender from the Administrative Agent or any of its Affiliates (whether as a payment, prepayment or repayment of principal, interest, fees or otherwise; individually and collectively, a “Payment”) were erroneously transmitted to such Lender (whether or not known to such Lender), and demands the return of such Payment (or a portion thereof), such Lender shall promptly, but in no event later than two Business Days thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect, and (y) to the extent permitted by applicable law, such Lender shall not assert, and hereby waives, as to the Administrative Agent, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Payments received, including without limitation any defense based on “discharge for value” or any similar doctrine. A notice of the Administrative Agent to any Lender under this Section 9.12(a) shall be conclusive, absent manifest error.

(ii) Each Lender hereby further agrees that if it receives a Payment from the Administrative Agent or any of its Affiliates (x) that is in a different amount than, or on a different date from, that specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such Payment (a “Payment Notice”) or (y) that was not preceded or accompanied by a Payment Notice, it shall be on notice, in each such case, that an error has been made with respect to such Payment. Each Lender agrees that, in each such case, or if it otherwise becomes aware a Payment (or portion thereof) may have been sent in error, such Lender shall promptly notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in no event later than one Business Day thereafter,

 

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return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect.

(iii) The Borrower and each other Loan Party hereby agrees that (x) in the event an erroneous Payment (or portion thereof) are not recovered from any Lender that has received such Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of such Lender with respect to such amount and (y) an erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Loan Party, except, in each case, to the extent such erroneous Payment is, and solely with respect to the amount of such erroneous Payment that is, comprised of funds of the Borrower or such other Loan Party.

(iv) Each party’s obligations under this Section 9.12(a) shall survive the resignation or replacement of the Administrative Agent or any transfer of rights or obligations by, or the replacement of, a Lender, the termination of the Commitments or the repayment, satisfaction or discharge of all Obligations under any Loan Document.

ARTICLE X.

CONTINUING GUARANTY

10.01 Guaranty. Following the execution of a customary joinder document hereto, as the case may be, by (x) each of Discovery, DCL and Scripps that is required to become a guarantor hereunder as a result of Section 6.15 and (y) each other Material Subsidiary of Discovery that is required to become a guarantor hereunder as a result of Section 6.16 (each such entity (other than Discovery) that becomes a guarantor hereunder, a “Subsidiary Guarantor” and, together with Discovery that becomes a guarantor hereunder, the “Guarantors” and each a “Guarantor”), such Guarantor, subject to the terms of such joinder document executed by such Guarantor, hereby absolutely and unconditionally guarantees, as a guaranty of payment and performance and not merely as a guaranty of collection, prompt payment when due, whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at all times thereafter, of any and all of the Obligations, whether for principal, interest, premiums, fees, indemnities, damages, costs, expenses or otherwise, of the Borrower to the Lender Parties, arising hereunder or under any other Loan Document (including all renewals, extensions, amendments, refinancings and other modifications thereof and all costs, attorneys’ fees and expenses incurred by the Lender Parties in connection with the collection or enforcement thereof). Without limiting the generality of the foregoing, the Obligations shall to the maximum extent permitted by applicable law include any such indebtedness, obligations and liabilities, or portion thereof, which may be or hereafter become unenforceable or compromised or shall be an allowed or disallowed claim under any proceeding or case commenced by or against any Loan Party under any Debtor Relief Laws. The Administrative Agent’s books and records showing the amount of the Obligations shall be admissible in evidence in any action or proceeding, and shall be binding upon the applicable Guarantor, and conclusive for the purpose of establishing the amount of the Obligations absent manifest error. This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Obligations or any instrument or agreement evidencing any Obligations, or by the existence, validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the Obligations which might otherwise constitute a defense to the obligations of either Guarantor under this Guaranty (other than full payment and performance), and each Guarantor hereby irrevocably waives to the maximum extent permitted by applicable law any defenses it may now have or hereafter acquire in any way relating to any or all of the foregoing.

 

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10.02 Rights of Lenders. Each Guarantor consents and agrees to the maximum extent permitted by applicable law that the Lender Parties may, at any time and from time to time, without notice or demand, and without affecting the enforceability or continuing effectiveness hereof: (a) amend, extend, renew, compromise, discharge, accelerate or otherwise change the time for payment or the terms of the Obligations or any part thereof; (b) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any security for the payment of this Guaranty or any Obligations; (c) apply such security and direct the order or manner of sale thereof as the Administrative Agent and the Lenders in their sole discretion may determine; and (d) release or substitute one or more of any endorsers or other guarantors of any of the Obligations. Without limiting the generality of the foregoing, each Guarantor consents to the taking of, or failure to take, any action which might in any manner or to any extent vary the risks of such Guarantor under this Guaranty or which, but for this provision, might operate as a discharge of such Guarantor.

10.03 Certain Waivers. Each Guarantor waives to the maximum extent permitted by applicable law (a) any defense arising by reason of any disability or other defense of the Borrower or any other guarantors, or the cessation from any cause whatsoever (including any act or omission of any Lender Party) of the liability of the Borrower; (b) any defense based on any claim that such Guarantor’s obligations exceed or are more burdensome than those of the Borrower; (c) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder; (d) any right to proceed against the Borrower, proceed against or exhaust any security for the Obligations, or pursue any other remedy in the power of any Lender Party whatsoever; (e) any benefit of and any right to participate in any security now or hereafter held by any Lender Party; (f) any defense arising from any law or regulation of any jurisdiction or any other event affecting any term of an obligation of such Guarantor; and (g) to the fullest extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by applicable law limiting the liability of or exonerating guarantors or sureties (other than full payment and performance). Each Guarantor expressly waives to the maximum extent permitted by applicable law all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the Obligations, and all notices of acceptance of this Guaranty or of the existence, creation or incurrence of new or additional Obligations. As provided below, this Guaranty shall be governed by, and construed in accordance with, the laws of the State of New York.

10.04 Obligations Independent; Limitation on Guarantees.

(a) The obligations of each Guarantor hereunder are those of primary obligor, and not merely as surety, and are independent of the Obligations and the obligations of any other guarantor, and a separate action may be brought against either Guarantor or both of the Guarantors to enforce this Guaranty whether or not the Borrower or any other person or entity is joined as a party.

(b) Notwithstanding any other provisions of this Agreement, the obligations of each Guarantor under its Guarantee shall be limited under the relevant laws applicable to such Guarantor and the granting of such Guarantees (including laws relating to corporate benefit, capital preservation, financial assistance, fraudulent conveyances and transfers, voidable preferences, or transactions under value) to the maximum amount payable such that such Guarantees shall not constitute a fraudulent conveyance, fraudulent transfer, voidable preference, a transaction under value or unlawful financial assistance or otherwise, or under similar laws affecting the rights of creditors generally, cause the Guarantor to be insolvent under relevant law or such Guarantee to be void, unenforceable or ultra vires or cause the directors and officers of such Guarantor to be held in breach of applicable corporate or commercial law providing for such Guarantee. The obligations of each Guarantor will be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor (including but not limited to any Guarantee by it of other indebtedness), and after giving effect to any collections from or payments made by or on behalf of

 

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any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under this Agreement, result in the obligations of such Guarantor under the Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law, or being void or unenforceable under any law relating to insolvency of debtors.

10.05 Subrogation. Each Guarantor shall not exercise any right of subrogation, contribution, indemnity, reimbursement or similar rights with respect to any payments it makes under this Guaranty until all of the Obligations and any other amounts payable under this Guaranty have been indefeasibly paid and performed in full (other than unasserted indemnification, tax gross up, expense reimbursement or yield protection obligations, in each case, for which no claim has been made) and the Commitments are terminated. If any amounts are paid to either Guarantor in violation of the foregoing limitation, then such amounts shall be held in trust for the benefit of the Lender Parties and shall forthwith be paid to the Lender Parties to reduce the amount of the Obligations, whether matured or unmatured.

10.06 Termination; Reinstatement. This Guaranty is a continuing and irrevocable guaranty of all Obligations now or hereafter existing and shall remain in full force and effect until all Obligations and any other amounts payable under this Guaranty are indefeasibly paid in full in cash (other than unasserted indemnification, tax gross up, expense reimbursement or yield protection obligations, in each case, for which no claim has been made) and the Commitments and Facilities are terminated. Notwithstanding the foregoing, this Guaranty shall continue in full force and effect or be revived, as the case may be, if any payment by or on behalf of the Borrower or any Guarantor is made, or any of the Lender Parties exercises its right of setoff, in respect of the Obligations and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by any of the Lender Parties in their discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Laws or otherwise, all as if such payment had not been made or such setoff had not occurred and whether or not the Lender Parties are in possession of or have released this Guaranty and regardless of any prior revocation, rescission, termination or reduction. The obligations of each Guarantor under this paragraph shall survive termination of this Guaranty.

10.07 Subordination. Each Guarantor hereby subordinates the payment of all obligations and indebtedness of the Borrower owing to such Guarantor, whether now existing or hereafter arising, including but not limited to any obligation of the Borrower to such Guarantor as subrogee of the Lender Parties or resulting from such Guarantor’s performance under this Guaranty, to the indefeasible payment in full in cash of all Obligations. If the Lender Parties so request after the occurrence and during the continuance of an Event of Default, any such obligation or indebtedness of the Borrower to the applicable Guarantor shall be enforced and performance received by such Guarantor as trustee for the Lender Parties and the proceeds thereof shall be paid over to the Lender Parties on account of the Obligations, but without reducing or affecting in any manner the liability of such Guarantor under this Guaranty.

10.08 Stay of Acceleration. If acceleration of the time for payment of any of the Obligations is stayed, in connection with any case commenced by or against either Guarantor or the Borrower under any Debtor Relief Laws, or otherwise, all such amounts shall nonetheless be payable by such Guarantor immediately upon demand by the Lender Parties.

10.09 Condition of the Borrower. Each Guarantor acknowledges and agrees that it has the sole responsibility for, and has adequate means of, obtaining from the Borrower and any other guarantor such information concerning the financial condition, business and operations of the Borrower and any such other guarantor as such Guarantor requires, and that none of the Lender Parties has any duty, and such Guarantor is not relying on the Lender Parties at any time, to disclose to such Guarantor any information relating to the business, operations or financial condition of the Borrower or any other guarantor (such Guarantor waiving any duty on the part of the Lender Parties to disclose such information and any defense relating to the failure to provide the same).

 

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ARTICLE XI.

MISCELLANEOUS

11.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by any Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the applicable Loan Party and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:

(a) [reserved];

(b) extend or increase the Commitment of any Lender under any Tranche (or reinstate any Commitment under any Tranche terminated, subject to Section 8.04, pursuant to Section 8.02) without the written consent of such Lender;

(c) postpone any date fixed by this Agreement or any other Loan Document for any payment or mandatory prepayment of principal, interest, fees or other amounts due to the Lenders (or any of them) or any scheduled or mandatory reduction of the Aggregate Commitments hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;

(d) reduce the principal of, or the rate of interest specified herein on, any Loan (subject to clause (iv) of the second proviso to this Section 11.01) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that (i) only the consent of the Required Tranche 1 Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default Rate, in respect of any payments to the Tranche 1 Lenders, and (ii) only the consent of the Required Tranche 2 Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default Rate, in respect of any payments to the Tranche 2 Lenders;

(e) change Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;

(f) [reserved];

(g) [reserved];

(h) [reserved];

(i) [reserved];

(j) (A) change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder without the written consent of each Lender, (B) change any provision of this Section or the definition of “Required Tranche 1 Lenders” or any other provision hereof specifying the number or percentage of Tranche 1 Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder without the written consent of each Tranche 1 Lender, or (C) change any provision of

 

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this Section or the definition of “Required Tranche 2 Lenders” or any other provision hereof specifying the number or percentage of Tranche 2 Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder without the written consent of each Tranche 2 Lender;

(k) except as otherwise permitted or contemplated by this Agreement, otherwise change the provisions of any Loan Document in a manner that by its terms could reasonably be expected, in any material respect, to adversely affect payments due to Lenders holding Loans in a particular Tranche differently from the rights of Lenders holding Loans in the other Tranche without the prior written consent of the requisite Lenders in the adversely and differently affected Tranche (i.e., in the case of Tranche 1, the Required Tranche 1 Lenders, and in the case of Tranche 2, the Required Tranche 2 Lenders);

(l) upon and after the date of joinder of Discovery as a Guarantor hereunder, release Discovery from the Guaranty without the written consent of each Lender;

and, provided, further, that no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender under any Tranche may not be increased or extended without the consent of such Defaulting Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.

11.02 Notices; Effectiveness; Electronic Communication.

(a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier or facsimile as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(i) if to the Borrower or any other Loan Party or the Administrative Agent, to the address, telecopier or facsimile number, electronic mail address or telephone number specified for such Person on Schedule 11.02; and

(ii) if to any other Lender, to the address, telecopier or facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to Discovery or the Borrower).

Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by telecopier or facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).

 

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(b) Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail, FpML messaging, and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may each, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii), if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient.

(c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE LOAN PARTY MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE LOAN PARTY MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE LOAN PARTY MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to any Loan Party, any Lender or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s, any Loan Party’s or the Administrative Agent’s transmission of Loan Party Materials or notices through the platform, any other electronic platform or electronic messaging service, or through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to any Loan Party, any Lender or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).

(d) Change of Address, Etc. Each of the Borrower, Discovery, any other Loan Party and the Administrative Agent may change its address, telecopier, facsimile or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier, facsimile or telephone number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier or facsimile number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such

 

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Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Loan Party Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to any Loan Party or its securities for purposes of United States Federal or state securities laws.

(e) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic notices and Committed Loan Notices) purportedly given by or on behalf of a Loan Party even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. Each Loan Party shall indemnify the Administrative Agent, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of such Loan Party. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

11.03 No Waiver; Cumulative Remedies; Enforcement. No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 and subject to Section 8.04 for the benefit of all the Lenders; provided, however, that the foregoing shall not, subject to Section 8.04, prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any Lender from exercising setoff rights in accordance with Section 11.08 (subject to the terms of Section 2.13 and Section 8.04), or (c) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02, subject to Section 8.04 and (ii) in addition to the matters set forth in clauses (b)and (c) of the preceding proviso and subject to Section 2.13 and Section 8.04, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

 

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11.04 Expenses; Indemnity; Limitation of Liability; Damage Waiver.

(a) Costs and Expenses. The Borrower shall pay (i) all reasonable, documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated) and (ii) all out-of-pocket expenses incurred by the Administrative Agent or any Lender (including the fees, charges and disbursements of any counsel for the Administrative Agent or any Lender, but limited to one firm of counsel for the Administrative Agent and the Lenders and, if necessary, one firm of local counsel in each appropriate jurisdiction, in each case for the Administrative Agent and the Lenders (and, in the case of an actual or perceived conflict of interest where the Person affected by such conflict informs the Borrower of such conflict and thereafter, retains its own counsel, of another firm of counsel for such affected Person)) in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.

(b) Indemnification by Loan Parties. Each Loan Party shall indemnify the Administrative Agent (and any sub-agent thereof) and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Borrower or any other Loan Party) other than such Indemnitee and its Related Parties arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents (including in respect of any matters addressed in Section 3.01), (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries, or any Environmental Liability related in any way to Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by Discovery, the Borrower, or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or any Related Party of such Indemnitee, (y) result from a claim brought by Discovery, the Borrower, or any other Loan Party against an Indemnitee or any Related Party of such Indemnitee for material breach of such Indemnitee’s or Related Party’s obligations hereunder or under any other Loan Document, if Discovery, the Borrower, or such other Loan Party, as the case may be, has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction, or (z) result from disputes solely between or among Indemnitees (other than any claims against any Indemnitee in its capacity as the Administrative Agent, an Arranger or any similar role under this Agreement or any other Loan Documents or any of their Subsidiaries or Affiliates (in each case, acting in its capacity as such)) and not arising out of or involving any act or omission of the Borrower or any of its Subsidiaries or Affiliates (including their officers, directors, employees or controlling Persons). Without limiting the provisions of Section 3.01(c), this Section 11.04(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, or liabilities arising from any non-Tax claim.

 

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(c) Reimbursement by Lenders. To the extent that the Borrower or Discovery for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the Total Credit Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be made severally among them based on such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), provided further that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), in its capacity as such, or against any Related Party acting for the Administrative Agent (or any such sub-agent), in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.12(d).

(d) Waiver of Consequential Damages, Etc. In addition to (and not as a part of) the indemnification obligations set forth in Section 11.04(b) (i) to the fullest extent permitted by applicable law, no Loan Party shall assert, and hereby waives, and acknowledges that no other Person shall have, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof and (ii) none of the Administrative Agent (and any sub-agent thereof), any Arranger, any Lender, or any Related Party of any of the foregoing Persons (each such Person being called a “Lender-Related Person”) shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Lender Related Person through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

(e) Payments. All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.

(f) Survival. The agreements in this Section and the indemnity provisions of Section 11.02(e) shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

11.05 Payments Set Aside. To the extent that any payment by or on behalf of any Loan Party is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Overnight Rate from time to time in effect. The obligations of the Lenders under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

 

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11.06 Successors and Assigns.

(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (e) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment under any Tranche and the Loans at the time owing to it); provided that (in each case with respect to any Tranche) any such assignment shall be subject to the following conditions:

(i) Minimum Amounts.

(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment (in each case with respect to any Tranche) or contemporaneous assignments to related Approved Funds (determined after giving effect to such Assignment) that equal at least the amount specified in subsection (b)(i)(B) of this Section in the aggregate and the Loans at the time owing to it under such Tranche or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of any Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed).

(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate Tranches hereunder on a non-pro rata basis;

 

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(iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrower shall be required; provided that, solely after the funding of the Loans on the Closing Date, (x) such consent shall not be unreasonably withheld or delayed and (y) no such consent shall be required if (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided, further, that, after the Closing Date, the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto in writing (including email) to the Administrative Agent within ten (10) Business Days after having received notice thereof; and

(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender.

(iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(v) No Assignment to Certain Persons. No such assignment shall be made (A) to Discovery, the Borrower or any of their respective Affiliates or Subsidiaries, or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), or (C) to a natural Person (or to a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person).

(vi) Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

 

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Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower (and such agency being non-fiduciary and solely for tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural Person, or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person, or a Defaulting Lender, or Discovery, the Borrower or any of Discovery’s or the Borrower’s respective Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 11.04(c) without regard to the existence of any participation.

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 11.01 that affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section (it being understood that the documentation required under Section 3.01(e) shall be delivered to the Lender who sells the participation) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 3.06 and 11.13 as if it were an assignee under paragraph (b) of this Section and (B) shall not be entitled to receive any greater payment under Sections 3.01 or 3.04, with respect to any participation, than the Lender from whom it acquired the applicable participation would have

 

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been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 3.06 with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.08 as though it were a Lender, provided that such Participant agrees to be subject to Section 2.13 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(e) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note(s), if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any other central bank having jurisdiction over such Lender; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

11.07 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and shall have agreed to keep such Information confidential), (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder, (g) on a confidential basis to, upon the request of, (i) any rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the prior written consent of the Borrower, (i) on a confidential basis to any credit insurance provider relating to the Borrower and its obligations, or (j) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than Discovery, the Borrower or any of their Subsidiaries and that is not in breach of a confidentiality obligation to Discovery or to the Borrower or any of their

 

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Subsidiaries. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Arrangers and the Lenders in connection with the administration of this Agreement, the other Loan Documents, and the Commitments, but only to the extent consistent with information that has previously been publicly disclosed by Discovery.

For purposes of this Section, “Information” means all information received from Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries relating to Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower, any of their respective Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries (from a source other than Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries and that is not in breach of a confidentiality obligation to Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries), provided that, in the case of information received from Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised reasonable care or the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Each of the Administrative Agent and the Lenders acknowledges that (a) the Information may include material non-public information concerning Discovery (solely upon and after the consummation of the Combination Transactions), the Borrower or any of their respective Subsidiaries, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States Federal and state securities Laws.

If any Loan Party provides the Lender Parties with personal data of any individual as required by or pursuant to the Loan Documents, that Loan Party represents and warrants to the Lender Parties that it has, to the extent required by law, (a) notified the relevant individual of the purposes for which data will be collected, processed, used or disclosed, and (b) obtained such individual’s consent for, and hereby consents on behalf of such individual to, the collection, processing, use and disclosure of his/her personal data by the Lender Parties, in each case, in accordance with or for the purposes of the Loan Documents. Each Loan Party agrees and undertakes to notify the Administrative Agent promptly upon its becoming aware of the withdrawal by the relevant individual of his/her consent to the collection, processing, use and/or disclosure by any Lender Party of any personal data provided by that Loan Party to any Lender Party. Any consent given pursuant to this Agreement in relation to personal data shall, subject to all applicable laws and regulations, survive death, incapacity, bankruptcy or insolvency of any such individual and the termination or expiration of this Agreement.

11.08 Right of Setoff. Subject to Section 8.04, if an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the Borrower or any other Loan Party against any and all of the obligations of the Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document

 

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to such Lender or its respective Affiliates, irrespective of whether or not such Lender or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower or such Loan Party may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.17 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender and its respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or its respective Affiliates may have. Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

11.09 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

11.10 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement.

11.11 Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Loan, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied (other than unasserted indemnification, tax gross up, expense reimbursement or yield protection obligations, in each case, for which no claim has been made).

 

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11.12 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 11.12, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, then such provisions shall be deemed to be in effect only to the extent not so limited.

11.13 Replacement of Lenders. If the Borrower is entitled to replace a Lender pursuant to the provisions of Section 3.06, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 11.06), all of its interests, rights (other than its existing rights to payments pursuant to Sections 3.01 and 3.04) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

(a) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 11.06(b);

(b) such Lender shall have received payment of an amount equal to 100% of the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

(c) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter;

(d) such assignment does not conflict with applicable Laws; and

(e) in the case of an assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver or consent by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

Notwithstanding the foregoing, in connection with any replacement of a Lender under this Section 11.13, if a Lender that is being replaced pursuant to the provisions of Section 3.06, or is a Defaulting Lender or a Non-Consenting Lender, as applicable, that was provided notice as set forth in the previous paragraph does not execute and deliver to the Administrative Agent a duly completed Assignment and Assumption and/or any other documentation necessary to reflect such replacement by the later of (a) the date on which the replacement Lender executes and delivers such Assignment and Assumption and/or such other documentation and (b) the date as of which all obligations of the Borrower owing to such Lender that is being replaced pursuant to the provisions of Section 3.06, of that is a Defaulting Lender or a Non-Consenting Lender, as applicable, relating to the Loans so assigned shall be paid in full to such Lender,

 

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then such Lender that is being replaced pursuant to the provisions of Section 3.06, of is a Defaulting Lender or a Non-Consenting Lender, as applicable, shall be deemed to have executed and delivered such Assignment and Assumption and/or such other documentation as of such date, and the Administrative Agent shall record such assignment in the Register.

11.14 Governing Law; Jurisdiction; Etc.

(a) GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK PROVIDED THAT, NOTWITHSTANDING THE FOREGOING, IT IS UNDERSTOOD AND AGREED THAT (I) THE INTERPRETATION OF THE DEFINITION OF RMT PARTNER MATERIAL ADVERSE EFFECT AND WHETHER OR NOT AN RMT PARTNER MATERIAL ADVERSE EFFECT HAS OCCURRED, (II) THE DETERMINATION OF THE ACCURACY OF ANY COMBINATION TRANSACTION REPRESENTATION AND WHETHER AS A RESULT OF ANY INACCURACY THEREOF, THE BORROWER (OR ITS APPLICABLE AFFILIATES) HAS THE RIGHT TO TERMINATE ITS OBLIGATION TO CONSUMMATE THE COMBINATION (OR OTHERWISE DOES NOT HAVE AN OBLIGATION TO CLOSE) UNDER THE BUSINESS COMBINATION AGREEMENT AS A RESULT OF A FAILURE OF SUCH REPRESENTATIONS IN THE BUSINESS COMBINATION AGREEMENT TO BE ACCURATE WITHOUT LIABILITY TO ANY OF THEM AND (III) THE DETERMINATION OF WHETHER (A) THE CONDITIONS TO THE DISTRIBUTION SET FORTH IN THE SEPARATION AND DISTRIBUTION AGREEMENT AND (B) THE CONDITIONS TO THE COMBINATION SET FORTH IN THE BUSINESS COMBINATION AGREEMENT, IN EACH CASE, OTHER THAN SUCH CONDITIONS THAT BY THEIR NATURE ARE TO BE SATISFIED UPON THE CLOSING OF SUCH TRANSACTION, HAVE BEEN SATISFIED OR WAIVED OR ARE EXPECTED TO BE SATISFIED AND WAIVED ON THE CLOSING DATE OR ONE BUSINESS DAY THEREAFTER, IN EACH CASE, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW (AS DEFINED IN THE BUSINESS COMBINATION AGREEMENT AS IN EFFECT ON MAY 17, 2021) OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF (OR ANY OTHER JURISDICTION) TO THE EXTENT THAT SUCH PRINCIPLES WOULD DIRECT A MATTER TO ANOTHER JURISDICTION.

(a) SUBMISSION TO JURISDICTION. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN ANY FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN THE BOROUGH OF MANHATTAN, OR, IF THAT COURT DOES NOT HAVE SUBJECT MATTER JURISDICTION, IN ANY STATE COURT LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH FEDERAL COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH NEW YORK STATE COURT. EACH OF THE PARTIES HERETO AGREES THAT A

 

106


FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTWITHSTANDING THE FOREGOING, EACH OF THE PARTIES AGREES THAT (I) IF ALL SUCH NEW YORK COURTS DECLINE JURISDICTION OVER ANY PERSON, OR DECLINE (OR IN THE CASE OF THE FEDERAL DISTRICT COURT, LACK) JURISDICTION OVER ANY SUBJECT MATTER OF SUCH ACTION OR PROCEEDING, A LEGAL ACTION OR PROCEEDING MAY BE BROUGHT WITH RESPECT THERETO IN ANOTHER COURT HAVING JURISDICTION AND (II) IN THE EVENT A LEGAL ACTION OR PROCEEDING IS BROUGHT AGAINST ANY PARTY HERETO OR INVOLVING ANY OF ITS ASSETS OR PROPERTY IN ANOTHER COURT (WITHOUT ANY COLLUSIVE ASSISTANCE BY SUCH PARTY OR ANY OF ITS SUBSIDIARIES OR AFFILIATES), NOTHING HEREIN SHALL PREVENT SUCH PARTY FROM ASSERTING A CLAIM OR DEFENSE (INCLUDING ANY CLAIM OR DEFENSE THAT THIS SECTION 11.14(B) WOULD OTHERWISE REQUIRE TO BE ASSERTED IN A LEGAL PROCEEDING IN A NEW YORK COURT) IN ANY SUCH ACTION OR PROCEEDING.

(b) WAIVER OF VENUE. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(c) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

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

11.16 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower and each other Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Lenders and the Arrangers, are arm’s-length commercial transactions between each Loan Parties and their respective Affiliates, on the one hand, and the Administrative Agent, the Lenders and the Arrangers, on the other hand, (B) each Loan Party has consulted its own legal, accounting, regulatory and tax advisors to the extent it has

 

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deemed appropriate, and (C) each Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A), the Administrative Agent, each Lender and each Arranger is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for any Loan Party or any of its respective Affiliates or any other Person and (B) neither the Administrative Agent nor any Lender nor the Arrangers have any obligation to any Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, each Lender and the Arrangers and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Loan Parties and their respective Affiliates, and neither the Administrative Agent nor any Lender nor any Arranger has any obligation to disclose any of such interests to the Loan Parties or any of their respective Affiliates. To the fullest extent permitted by law, the Guarantors, the Borrower, and each other Loan Party, each hereby waives and releases any claims that it may have against the Administrative Agent, the Lenders and the Arrangers with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby. Each Guarantor, the Borrower, and other Loan Party agree that it will not claim that the Administrative Agent, the Lenders or the Arrangers have rendered advisory services of any nature or respect or owe a fiduciary or similar duty to any Guarantor, the Borrower, or other Loan Party, in connection with such transactions or the process leading thereto.

11.17 Electronic Execution of Assignments and Certain Other Documents. Delivery of an executed counterpart of a signature page of (x) this Agreement, (y) any other Loan Document and/or (z) any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to this Agreement, any other Loan Document and/or the transactions contemplated hereby and/or thereby (each an “Ancillary Document”) that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement, such other Loan Document or such Ancillary Document, as applicable. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement, any other Loan Document and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the Administrative Agent to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it; provided, further, without limiting the foregoing, (i) to the extent the Administrative Agent has agreed to accept any Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the Borrower or any other Loan Party without further verification thereof and without any obligation to review the appearance or form of any such Electronic signature and (ii) upon the request of the Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by a manually executed counterpart. Without limiting the generality of the foregoing, the Borrower and each Loan Party hereby (A) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Administrative Agent, the Lenders and the Loan Parties, Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page and/or any electronic images of this Agreement, any other Loan Document and/or any Ancillary Document shall have the same legal effect, validity and enforceability as any paper original, (B) the Administrative Agent and each of the Lenders may, at its option, create one or more copies of this Agreement, any other Loan Document and/or any Ancillary Document in the form of an imaged electronic record in any format, which shall be deemed created in the ordinary course of such Person’s business, and destroy the original paper document (and all

 

108


such electronic records shall be considered an original for all purposes and shall have the same legal effect, validity and enforceability as a paper record), (C) waives any argument, defense or right to contest the legal effect, validity or enforceability of this Agreement, any other Loan Document and/or any Ancillary Document based solely on the lack of paper original copies of this Agreement, such other Loan Document and/or such Ancillary Document, respectively, including with respect to any signature pages thereto and (D) waives any claim against any Lender-Related Person for any Liabilities arising solely from the Administrative Agent’s and/or any Lender’s reliance on or use of Electronic Signatures and/or transmissions by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page, including any Liabilities arising as a result of the failure of the Borrower and/or any Loan Party to use any available security measures in connection with the execution, delivery or transmission of any Electronic Signature.

11.18 USA PATRIOT Act. Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies each Loan Party that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of such Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify such Loan Party in accordance with the Act. Each Loan Party shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act and the Beneficial Ownership Regulation.

11.19 [Reserved].

11.20 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Lender that is an Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

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

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

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

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

(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of the applicable Resolution Authority.

 

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11.21 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

11.22 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for any Swap Contract or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”, and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):

(a) In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.

(b) As used in this Section 11.22, the following terms have the following meanings:

BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

QFC has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

[Signature pages follow.]

 

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

 

MAGALLANES, INC.
By:   /s/ Andrew B. Keiser
Name:   Andrew B. Keiser
Title:   Vice President and Assistant Treasurer

Magallanes, Inc.

Term Loan Credit Agreement


JPMORGAN CHASE BANK, N.A., as

Administrative Agent

By:   /s/ John Kowalczuk
Name:   John Kowalczuk
Title:   Executive Director

Magallanes, Inc.

Term Loan Credit Agreement


JPMORGAN CHASE BANK, N.A., as a Lender
By:   /s/ John Kowalczuk
Name:   John Kowalczuk
Title:   Executive Director

Magallanes, Inc.

Term Loan Credit Agreement


GOLDMAN SACHS LENDING PARTNERS LLC, as a Lender
By:   /s/ Robert Ehudin
Name:   Robert Ehudin
Title:   Authorized Signatory

Magallanes, Inc.

Term Loan Credit Agreement


Bank of America, N.A., as a Lender
By:   /s/ Laura L. Olson
Name:   Laura L. Olson
Title:   Director

Magallanes, Inc.

Term Loan Credit Agreement


BARCLAYS BANK PLC, as a Lender
By:   /s/ Sean Duggan
Name: Sean Duggan
Title: Vice President

 

Magallanes, Inc.

Term Loan Credit Agreement


BNP PARIBAS, as a Lender
By:   /s/ Nicole Rodriguez
Name: Nicole Rodriguez
Title: Director
By:   /s/ Nicolas Doche
Name: Nicolas Doche
Title: Vice President

 

Magallanes, Inc.

Term Loan Credit Agreement


CITIBANK, N.A., as a Lender
By:   /s/ Michael Vondriska
Name: Michael Vondriska
Title: Vice President

 

Magallanes, Inc.

Term Loan Credit Agreement


CITICORP NORTH AMERICA, INC., as a Lender
By:   /s/ Michael Vondriska
Name: Michael Vondriska
Title: Vice President

 

Magallanes, Inc.

Term Loan Credit Agreement


CREDIT SUISSE AG, Cayman Islands Branch, as a Lender
By:   /s/ Judith E. Smith
Name: Judith E. Smith
Title: Authorized Signatory
By:   /s/ Doreen Barr
Name: Doreen Barr
Title: Authorized Signatory

 

Magallanes, Inc.

Term Loan Credit Agreement


Deutsche Bank AG New York Branch, as a Lender
By:   /s/ Ming K Chu
Name: Ming K Chu
Title: Director
By:   /s/ Marko Lukin
Name: Marko Lukin
Title: Vice President

 

Magallanes, Inc.

Term Loan Credit Agreement


Mizuho Bank, Ltd., as a Lender
By:   /s/ John Davies
Name: John Davies
Title: Authorized Signatory

 

Magallanes, Inc.

Term Loan Credit Agreement


ROYAL BANK OF CANADA, as a Lender

By:

 

/s/ Alfonse Simone

Name: Alfonse Simone

Title: Authorized Signatory

 

Magallanes, Inc.

Term Loan Credit Agreement


Banco Santander, S.A., New York Branch, as a

Lender

By:   /s/ Andres Barbosa
Name: Andres Barbosa
Title: Managing Director
By:   /s/ Rita Walz-Cuccioli
Name: Rita Walz-Cuccioli
Title: Executive Director

 

Magallanes, Inc.

Term Loan Credit Agreement


COMMERZBANK AG, NEW YORK BRANCH,

as a Lender

By:

 

/s/ Mathew Ward

Name: Mathew Ward

Title: Managing Director

By:

 

/s/ Neil Kiernan

Name: Neil Kiernan

Title: Director

 

Magallanes, Inc.

Term Loan Credit Agreement


MUFG Bank, Ltd., as a Lender

By:

 

/s/ Lillian Kim

Name: Lillian Kim

Title: Director

 

Magallanes, Inc.

Term Loan Credit Agreement


THE BANK OF NOVA SCOTIA, as a Lender

By:

 

/s/ Michelle C. Phillips

Name: Michelle C. Phillips

Title: Managing Director

 

Magallanes, Inc.

Term Loan Credit Agreement


The Toronto-Dominion Bank, New York Branch, as

a Lender

By:

 

/s/ Maria Macchiaroli

Name: Maria Macchiaroli

Title: Authorized Signatory

 

Magallanes, Inc.

Term Loan Credit Agreement


Truist Bank, as a Lender

By:

 

/s/ Cynthia Burton

Name: Cynthia Burton

Title: Director

 

Magallanes, Inc.

Term Loan Credit Agreement


WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender
By:   /s/ Nicholas Grocholski
Name: Nicholas Grocholski
Title: Managing Director

 

Magallanes, Inc.

Term Loan Credit Agreement


ING Bank N.V., Dublin Branch, as a Lender
By:   /s/ Sean Hassett
Name: Sean Hassett
Title: Director
By:   /s/ Padraig Matthews
Name: Padraig Matthews
Title: Director

 

Magallanes, Inc.

Term Loan Credit Agreement


PNC BANK, NATIONAL ASSOCIATION, as a Lender
By:   /s/ R. Ruining Nguyen
Name: R. Ruining Nguyen
Title: Senior Vice President

 

Magallanes, Inc.

Term Loan Credit Agreement


Sumitomo Mitsui Banking Corporation, as a Lender
By:   /s/ Gail Motonaga
Name: Gail Motonaga
Title: Executive Director

 

Magallanes, Inc.

Term Loan Credit Agreement


Fifth Third Bank, National Association, as a Lender
By:   /s/ Marisa Lake
Name: Marisa Lake
Title: Assistant Vice President

 

Magallanes, Inc.

Term Loan Credit Agreement


U.S. Bank National Association, as a Lender
By:   /s/ Susan Bader
Name: Susan Bader
Title: Senior Vice President

 

Magallanes, Inc.

Term Loan Credit Agreement


Australia and New Zealand Banking Group Limited, as a Lender
By:   /s/ Robert Grillo
Name: Robert Grillo
Title: Executive Director

 

Magallanes, Inc.

Term Loan Credit Agreement


BANCO BILBAO VIZCAYA ARGENTARIA, S.A. NEW YORK BRANCH, as a Lender
By:   /s/ Cara Younger
Name: Cara Younger
Title: Executive Director
By:   /s/ Miriam Trautmann
Name: Miriam Trautmann
Title: Senior Vice President

 

Magallanes, Inc.

Term Loan Credit Agreement


Canadian Imperial Bank of Commerce, New York Branch, as a Lender
By:  

/s/ Farhad Merali

Name: Farhad Merali
Title: Head of U.S. Industrials

Magallanes, Inc.

Term Loan Credit Agreement


CAPITAL ONE, NATIONAL ASSOCIATION, as a Lender
By:   /s/ Nirmal Bivek
Name: Nirmal Bivek
Title: Duly Authorized Signatory

Magallanes, Inc.

Term Loan Credit Agreement


CREDIT AGRICOLE CORPORATE AND

INVESTMENT BANK, as a Lender

By:   /s/ Gordon Yip

Name: Gordon Yip

Title: Director

 

By:   /s/ Andrew Sidford

Name: Andrew Sidford

Title: Managing Director

Magallanes, Inc.

Term Loan Credit Agreement


INTESA SANPAOLO S.P.A. – NEW YORK BRANCH,

as a Lender

By:   /s/ Glen Binder

Name: Glen Binder

Title: Global Relationship Manager

 

By:   /s/ Manuela Insana

Name: Manuela Insana

Title: Relationship Manager

Magallanes, Inc.

Term Loan Credit Agreement


National Westminster Bank plc, as a Lender

By:   /s/ Jonathan Eady

Name: Jonathan Eady

Title: Director

Magallanes, Inc.

Term Loan Credit Agreement


SOCIÉTÉ GÉNÉRALE, as a Lender

By:   /s/ Jonathan Logan

Name: Jonathan Logan

Title: Director

Magallanes, Inc.

Term Loan Credit Agreement


THE BANK OF NEW YORK MELLON, as a Lender

By:   /s/ William M. Feathers

Name: William M. Feathers

Title: Director

Magallanes, Inc.

Term Loan Credit Agreement


UNICREDIT BANK AG, NEW YORK BRANCH, as a

Lender

By:   /s/ Douglas Riahi

Name: Douglas Riahi

Title: Managing Director

 

By:   /s/ Karan Dedhia

Name: Karan Dedhia

Title: Associate

Magallanes, Inc.

Term Loan Credit Agreement

Exhibit 10.5

 

 

 

SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

Dated as of April 7, 2022

by and among

AT&T RECEIVABLES FUNDING II, LLC,

as Seller,

THE PERSONS FROM TIME TO TIME PARTY HERETO,

as Purchasers and as Group Agents,

PNC BANK, NATIONAL ASSOCIATION,

as Administrative Agent,

TURNER BROADCASTING SYSTEM, INC.,

as initial Servicer,

and

PNC CAPITAL MARKETS LLC,

as Structuring Agent and as Sustainability Agent

 

 

 


TABLE OF CONTENTS

 

SECTION    HEADING                                    PAGE  

ARTICLE I

   DEFINITIONS      1  

Section 1.01.

  

Certain Defined Terms

     1  

Section 1.02.

  

Other Interpretative Matters

     2  

Section 1.04.

  

SOFR Notification

     2  

Section 1.05.

  

Conforming Changes Relating to SOFR

     2  

ARTICLE II

   TERMS OF THE PURCHASES AND INVESTMENTS      3  

Section 2.01.

  

Purchase Facility

     3  

Section 2.02.

  

Making Investments; Return of Capital

     5  

Section 2.03.

  

Yield and Fees

     8  

Section 2.04.

  

Records of Investments and Capital

     8  

Section 2.05.

  

Selection of Yield Rates and Tranche Periods

     8  

Section 2.06.

  

Defaulting Purchasers

     9  

ARTICLE III

   SELLER GUARANTY      11  

Section 3.01.

  

Guaranty of Payment

     11  

Section 3.02.

  

Unconditional Guaranty

     11  

Section 3.03.

  

Modifications

     13  

Section 3.04.

  

Waiver of Rights

     13  

Section 3.05.

  

Reinstatement

     14  

Section 3.06.

  

Remedies

     14  

Section 3.07.

  

Subrogation

     14  

Section 3.08.

  

Inducement

     15  

Section 3.09.

  

Security Interest

     15  

Section 3.10.

  

Further Assurances

     16  

Section 3.11.

  

Release of Seller Collateral and Reconveyance of Certain Sold Receivables

     17  

ARTICLE IV

   SETTLEMENT PROCEDURES AND PAYMENT PROVISIONS      17  

Section 4.01.

  

Settlement Procedures

     17  

Section 4.02.

  

Payments and Computations, Etc

     20  

Section 4.03.

  

Reimbursement and Deemed Loan

     20  

ARTICLE V

   INCREASED COSTS; FUNDING LOSSES; TAXES; ILLEGALITY AND BACK-UP SECURITY INTEREST      21  

Section 5.01.

  

Increased Costs

     21  

Section 5.02.

  

Funding Losses

     23  

Section 5.03.

  

Taxes

     24  

Section 5.04.

  

Inability to Determine SOFR Rate; Change in Legality

     28  

Section 5.05.

  

Back-Up Security Interest

     34  

 

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ARTICLE VI

   CONDITIONS TO EFFECTIVENESS AND INVESTMENTS      35  

Section 6.01.

  

Reserved

     35  

Section 6.02.

  

Conditions Precedent to All Investments

     35  

Section 6.03.

  

Conditions Precedent to All Releases

     36  

Section 6.04.

  

Conditions Precedent to Restatement Effective Date

     36  

ARTICLE VII

   REPRESENTATIONS AND WARRANTIES      37  

Section 7.01.

  

Representations and Warranties of the Seller

     37  

Section 7.02.

  

Representations and Warranties of the Servicer

     43  

ARTICLE VIII

   COVENANTS      46  

Section 8.01.

  

Covenants of the Seller

     46  

Section 8.02.

  

Covenants of the Servicer

     56  

Section 8.03.

  

Separate Existence of the Seller

     63  

Section 8.04.

  

Post-Closing Covenant

     67  

ARTICLE IX

   ADMINISTRATION AND COLLECTION OF RECEIVABLES      67  

Section 9.01.

  

Appointment of the Servicer

     67  

Section 9.02.

  

Duties of the Servicer

     68  

Section 9.03.

  

Collection Account Arrangements

     69  

Section 9.04.

  

Enforcement Rights

     69  

Section 9.05.

  

Responsibilities of the Seller

     71  

Section 9.06.

  

Servicing Fee

     72  

ARTICLE X

   EVENTS OF TERMINATION      72  

Section 10.01.

  

Events of Termination

     72  

ARTICLE XI

   THE ADMINISTRATIVE AGENT      76  

Section 11.01.

  

Authorization and Action

     76  

Section 11.02.

  

Administrative Agent’s Reliance, Etc

     77  

Section 11.03.

  

Administrative Agent and Affiliates

     77  

Section 11.04.

  

Indemnification of Administrative Agent

     77  

Section 11.05.

  

Delegation of Duties

     77  

Section 11.06.

  

Action or Inaction by Administrative Agent

     78  

Section 11.07.

  

Notice of Events of Termination; Action by Administrative Agent

     78  

Section 11.08.

  

Non-Reliance on Administrative Agent and Other Parties

     78  

Section 11.09.

  

Successor Administrative Agent

     79  

Section 11.10.

  

Structuring Agent

     79  

Section 11.11.

  

Erroneous Payments

     79  

ARTICLE XII

   THE GROUP AGENTS      81  

Section 12.01.

  

Authorization and Action

     81  

 

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Section 12.02.

  

Group Agent’s Reliance, Etc

     81  

Section 12.03.

  

Group Agent and Affiliates

     81  

Section 12.04.

  

Indemnification of Group Agents

     82  

Section 12.05.

  

Delegation of Duties

     82  

Section 12.06.

  

Notice of Events of Termination

     82  

Section 12.07.

  

Non-Reliance on Group Agent and Other Parties

     82  

Section 12.08.

  

Successor Group Agent

     83  

Section 12.09.

  

Reliance on Group Agent

     83  

ARTICLE XIII

   INDEMNIFICATION      83  

Section 13.01.

  

Indemnities by the Seller

     83  

Section 13.02.

  

Indemnification by the Servicer

     86  

ARTICLE XIV

   MISCELLANEOUS      87  

Section 14.01.

  

Amendments, Etc

     87  

Section 14.02.

  

Notices, Etc

     89  

Section 14.03.

  

Assignability; Addition of Purchasers

     89  

Section 14.04.

  

Costs and Expenses

     92  

Section 14.05.

  

No Proceedings; Limitation on Payments

     93  

Section 14.06.

  

Confidentiality

     94  

Section 14.07.

  

GOVERNING LAW

     95  

Section 14.08.

  

Execution in Counterparts

     96  

Section 14.09.

  

Integration; Binding Effect; Survival of Termination

     96  

Section 14.10.

  

CONSENT TO JURISDICTION

     96  

Section 14.11.

  

WAIVER OF JURY TRIAL

     96  

Section 14.12.

  

Ratable Payments

     97  

Section 14.13.

  

Limitation of Liability

     97  

Section 14.14.

  

Intent of the Parties

     97  

Section 14.15.

  

USA Patriot Act

     97  

Section 14.16.

  

Reserved

     98  

Section 14.17.

  

Severability

     98  

Section 14.18.

  

Mutual Negotiations

     98  

Section 14.19.

  

Captions and Cross References

     98  

Section 14.20.

  

Purchaser Representation

     98  

Section 14.21.

  

Amendment and Restatement

     99  

Section 14.22.

  

Effect of Spin-Off Date

     99  

 

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EXHIBITS

 

EXHIBIT A

        

Form of Investment Request

EXHIBIT B

        

Form of Reduction Notice

EXHIBIT C

        

Form of Assignment and Acceptance Agreement

EXHIBIT D

        

Form of Assumption Agreement

EXHIBIT E

        

[Reserved]

Exhibit F

        

[Reserved]

EXHIBIT G

        

Form of Information Package

EXHIBIT H

        

Form of Compliance Certificate

EXHIBIT I

        

[Reserved]

EXHIBIT I-2

        

Restatement Effective Date Closing Memorandum

EXHIBIT J

        

[Reserved]

Exhibit K

        

Defined Terms (Prior to Spin-Off)

Exhibit L

        

Defined Terms (After to Spin-Off)

SCHEDULES

SCHEDULE I

        

Commitments

SCHEDULE II

        

Lock-Boxes, Collection Accounts and Collection Account Banks

SCHEDULE III

        

Notice Addresses

SCHEDULE IV

        

Initial Schedule of Sold Receivables

SCHEDULE V

        

[Reserved]

SCHEDULE VI

        

Special Obligors

 

 

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This Second AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) is entered into as of April 7, 2022, by and among the following parties:

(i)    AT&T RECEIVABLES FUNDING II, LLC, a Delaware limited liability company, as Seller (together with its successors and assigns, the “Seller”);

(ii)    the Persons from time to time party hereto as Purchasers and as Group Agents;

(iii)    PNC BANK, NATIONAL ASSOCIATION (“PNC”), as Administrative Agent;

(iv)    TURNER BROADCASTING SYSTEM, INC., a Delaware corporation, in its individual capacity (“Turner”) and as initial Servicer (in such capacity, together with its successors and assigns in such capacity, the “Servicer”); and

(v)    PNC CAPITAL MARKETS LLC, a Pennsylvania limited liability company, as Structuring Agent and as Sustainability Agent.

PRELIMINARY STATEMENTS

The Seller has acquired, and will acquire from time to time, Receivables from certain Originators pursuant to the Purchase and Sale Agreement. The Seller desires to sell certain of the Receivables to the Purchasers and, in connection therewith, has requested that the Purchasers make Investments from time to time, on the terms, and subject to the conditions set forth herein.

The Seller, the Servicer, PNC, as a Purchaser and as a Group Agent, the Administrative Agent and the Structuring Agent are currently party to that certain Amended and Restated Receivables Purchase Agreement, dated as of June 26, 2019 (as amended, the “Existing Receivables Purchase Agreement”). The Seller hereby requests that certain amendments be made to the Existing Receivables Purchase Agreement and, for the sake of clarity and convenience, that the Existing Receivables Purchase Agreement be restated as so amended.

In consideration of the mutual agreements, provisions and covenants contained herein, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01.    Certain Defined Terms. (A) Prior to the Spin-Off Date, the defined terms used in this Agreement shall have the meanings as set forth in Exhibit K attached hereto and (B) after the Spin-Off Date, the defined terms used in this Agreement shall have the meanings as set forth in Exhibit L attached hereto (such meanings to be equally applicable to both the singular and plural forms of the terms defined).


Section 1.02.    Other Interpretative Matters. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York and not specifically defined herein, are used herein as defined in such Article 9. Unless otherwise expressly indicated, all references herein to “Article,” “Section,” “Schedule”, “Exhibit” or “Annex” shall mean articles and sections of, and schedules, exhibits and annexes to, this Agreement. For purposes of this Agreement, the other Transaction Documents and all such certificates and other documents, unless the context otherwise requires: (a) references to any amount as on deposit or outstanding on any particular date means such amount at the close of business on such day; (b) the words “hereof,” “herein” and “hereunder” and words of similar import refer to such agreement (or the certificate or other document in which they are used) as a whole and not to any particular provision of such agreement (or such certificate or document); (c) references to any Article, Section, Schedule, Exhibit or Annex are references to Articles, Sections, Schedules, Exhibits and Annexes in or to such agreement (or the certificate or other document in which the reference is made), and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (d) the term “including” means “including without limitation”; (e) references to any Applicable Law refer to that Applicable Law as amended from time to time and include any successor Applicable Law; (f) references to any agreement refer to that agreement as from time to time amended, restated or supplemented or as the terms of such agreement are waived or modified in accordance with its terms; (g) references to any Person include that Person’s permitted successors and assigns; (h) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof; (i) unless otherwise provided, in the calculation of time from a specified date to a later specified date, the term “from” means “from and including”, and the terms “to” and “until” each means “to but excluding”; (j) terms in one gender include the parallel terms in the neuter and opposite gender; (k) references to any amount as on deposit or outstanding on any particular date means such amount at the close of business on such day and (l) the term “or” is not exclusive.

Section 1.03.    SOFR Notification. Section 5.04(c) of this Agreement provides a mechanism for determining an alternative rate of interest in the event that the Term SOFR Rate or Daily Simple SOFR is no longer available or in certain other circumstances. The Administrative Agent does not warrant or accept any responsibility for and shall not have any liability with respect to, the administration, submission or any other matter related to the Term SOFR Rate, Daily Simple SOFR or with respect to any alternative or successor rate thereto, or replacement rate therefor, except, in the case of administration or calculation of such interest rate hereunder, liability for its own gross negligence, bad faith or willful misconduct, to the extent determined in a final, non-appealable judgment by a court of competent jurisdiction.

Section 1.04.    Conforming Changes Relating to SOFR. With respect to the Term SOFR Rate and Daily Simple SOFR, the Administrative Agent will have the right, in consultation with the Seller, to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any amendments implementing such

 

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Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Transaction Document; provided that, with respect to any such amendment effected, the Administrative Agent shall provide notice to the Seller and the Purchasers of each such amendment implementing such Conforming Changes reasonably promptly after such amendment becomes effective.

ARTICLE II

TERMS OF THE PURCHASES AND INVESTMENTS

Section 2.01.    Purchase Facility.

(a)    Investments. Upon a request by the Seller pursuant to Section 2.02, and on the terms and subject to the conditions hereinafter set forth, the Conduit Purchasers, ratably, in accordance with the aggregate of the Commitments of the Related Committed Purchasers with respect to each such Conduit Purchaser, severally and not jointly, may, in their sole discretion, make payments of Capital to the Seller on a revolving basis, and if and to the extent any Conduit Purchaser does not make any such payment of Capital or if any Group does not include a Conduit Purchaser, the Related Committed Purchaser(s) for such Conduit Purchaser or the Committed Purchaser for such Group, as the case may be, shall, ratably in accordance with their respective Commitments, severally and not jointly, make such payment of Capital to the Seller, in either case, from time to time during the period from the Initial Investment Date to the Termination Date. Each such payment of Capital by a Purchaser to the Seller shall constitute an Investment hereunder for all purposes. Under no circumstances shall any Purchaser be obligated to make any Investment if, after giving effect thereto:

(i)    the Aggregate Capital would exceed the Facility Limit at such time;

(ii)    the sum of (A) the Capital of such Purchaser, plus (B) the aggregate outstanding Capital of each other Purchaser in its Group, would exceed the Group Commitment of such Purchaser’s Group;

(iii)    if such Purchaser is a Committed Purchaser, the aggregate outstanding Capital of such Committed Purchaser would exceed its Commitment; or

(iv)    the Aggregate Capital would exceed the Capital Coverage Amount at such time.

(b)    Sale of Receivables and Other Sold Assets. In consideration of the Purchasers’ respective agreements to make Investments in accordance with the terms hereof, the Seller, on the Initial Investment Date, on the date of each other Investment and on each other date occurring on or prior to the Termination Date, hereby sells, assigns and transfers to the Administrative Agent (for the ratable benefit of the Purchasers according to their Capital as increased or reduced from time to time hereunder), all of the Seller’s right, title and interest in, to and under all of the following, whether now or hereafter owned, existing or arising (collectively, the “Sold Assets”): (i) all Sold Receivables, (ii) all Related Security with respect to such Sold

 

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Receivables, (iii) all Collections with respect to such Sold Receivables and (iv) all proceeds of the foregoing; provided, notwithstanding the foregoing or any provision of any Transaction Document, none of the Administrative Agent, any Purchaser Party or any beneficiary thereof shall have the right to hold, review, view, audit or otherwise possess (x) any Contract; or (y) any financial reporting or other books or records specifically relating to such Contract and the Receivables generated thereunder, the disclosure of which is precluded by the applicable terms of such Contract, provided, further, however, that during the occurrence and continuance of an Event of Termination, to the extent that the related Obligor has defaulted in the payment of any Receivable, upon the request of the Administrative Agent the Seller shall provide the Administrative Agent with such information reasonably requested with respect to any such Contract (which may be redacted versions of or excerpts of any Contract) to the extent needed for the Administrative Agent to enforce such Contract against the applicable Obligor. Such sales, assignments and transfers by the Seller shall, in each case, occur and be deemed to occur for all purposes in accordance with the terms hereof automatically without further action, notice or consent of any party.

(c)    Intended Characterization as a Purchase and Sale. It is the intention of the parties to this Agreement that the transfer and conveyance of the Seller’s right, title and interest in, to and under the Sold Assets to the Administrative Agent (for the ratable benefit of the Purchasers according to their Capital as increased or reduced from time to time hereunder) pursuant to this Agreement shall constitute a purchase and sale and not a pledge for security, and such purchase and sale of the Sold Assets hereunder shall be treated as a sale for all purposes (except as provided in Sections 2.01(d) and 14.14). For the avoidance of doubt, this clause (c) shall not be construed to limit or otherwise modify Section 5.05 or any rights, interests, liabilities or obligations of any party thereunder.

(d)    Obligations Not Assumed. Notwithstanding any provision contained in this Agreement or any other Transaction Document to the contrary, the foregoing sale, assignment, transfer and conveyance set forth in Section 2.01(b) does not constitute, and is not intended to result in, the creation or an assumption by the Administrative Agent, any Group Agent or any Purchaser of any obligation or liability of the Seller, any Originator, the Servicer, or any other Person under or in connection with all, or any portion of, any Sold Assets, all of which shall remain the obligations and liabilities of the Seller, the Originators, the Servicer and such other Persons, as applicable.

(e)    Selection, Designation and Reporting of Sold Receivables. The Seller (or the Servicer on its behalf) shall select and identify from the Pool Receivables all Sold Receivables to be sold pursuant to Section 2.01(b) in its sole discretion; provided, however, that the Seller shall not permit the aggregate Outstanding Balance of Sold Receivables to exceed the Aggregate Capital at any time; provided, further, no Receivable that is subject to any withholding Taxes shall be designated as a Sold Receivable. The Seller shall maintain (or cause the Servicer to maintain) books and records sufficient to readily identify the Sold Receivables. The Seller and Servicer shall cause all Sold Receivables to be identified on each Investment Request in accordance with Section 2.02(a) and on each Information Package delivered hereunder.

 

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(f)    Extension of Scheduled Termination Date. On the Spin-Off Date, the Seller (or the Performance Guarantor on its behalf) shall pay to the Structuring Agent a fully earned non-refundable extension fee in an amount equal to (x) 0.035% times (y) the aggregate Commitments of all Committed Purchasers hereunder. Upon payment of such extension fee, the Scheduled Termination Date shall be extended to December 9, 2022.

Section 2.02.    Making Investments; Return of Capital. (a) The Seller may request an Investment by delivering to the Administrative Agent and each Group Agent an Investment Request in the form attached hereto as Exhibit A. Each such Investment Request shall be delivered on a Business Day by no later than (i) if the amount of Capital requested does not exceed $50,000,000, 12:00 p.m. on the day the related requested Investment is to be made and (ii) otherwise, 1:00 p.m. (New York City time) at least one (1) Business Day prior to the day the related requested Investment is to be made, it being understood in each case that any such request made after such time specified in clauses (i) and (ii) shall be deemed to have been made on the following Business Day. Each Investment Request shall specify (i) the amount of Capital requested (which amount shall (x) not be less than $100,000 and shall be an integral multiple of $100,000 and (y) after giving effect to the addition of Pool Receivables to the Sold Receivables or Pledged Receivables, as applicable, in connection with such Investment, not cause (1) a Capital Coverage Deficit to exist or (2) the Aggregate Capital to be less than an amount that is equal to the lesser of (A) sixty-six and sixty-seven hundredths percent (66.67%) of the Facility Limit at such time and (B) the Capital Coverage Amount at such time, (ii) the allocation of such amount among the Groups (which shall be ratable based on the Group Commitments), (iii) the account to which the Capital of such Investment shall be distributed, (iv) the date such requested Investment is to be made (which shall be a Business Day) (v) all Pool Receivables that are or, effective upon the making of such Investment, will be, Sold Receivables, and (vi) all Pool Receivables that are or, effective upon the making of such Investment, will be, Pledged Receivables.

(b)    (i) On the date of each Investment specified in the applicable Investment Request, the Purchasers shall, upon satisfaction of the applicable conditions set forth in Article VI and pursuant to the other conditions set forth in this Article II, deliver to the Administrative Agent by wire transfer of immediately available funds at the account from time to time designated in writing by the Administrative Agent, an amount equal to the portion of Capital relating to the undivided percentage ownership interest then being funded by such Purchaser. On the date of each Investment specified in the applicable Investment Request, the Administrative Agent shall, upon satisfaction of the applicable conditions set forth in Article VI and pursuant to the other conditions set forth in this Article II, make available to the Seller in same day funds an aggregate amount equal to the amount of Capital to be funded by all Purchasers, at the account set forth in the related Investment Request.

(ii)    Unless the Administrative Agent shall have received notice from a Purchaser or Group Agent prior to the proposed date of any Investment that such Purchaser’s or Group Agent’s Group will not make available to the Administrative Agent such Group’s share of such Investment, the Administrative Agent may assume that such Group has made such share available on such date in accordance with the foregoing clause (b)(i) and may, in reliance upon such assumption, make available to the Seller a corresponding amount. In such event, if a Group

 

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has not in fact made its share of the applicable Investment available to the Administrative Agent, then the Committed Purchaser in such Group and the Seller severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Seller to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Committed Purchaser, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Seller, the Base Rate. If such Committed Purchaser pays such amount to the Administrative Agent, then such amount shall constitute such Committed Purchaser’s Capital included in such Investment. If the Seller and such Committed Purchaser shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Seller the amount of such interest paid by the Seller for such period. Any such payment by the Seller shall be without prejudice to any claim the Seller may have against a Committed Purchaser that shall have failed to make such payment to the Administrative Agent.

(c)    Each Committed Purchaser’s obligation shall be several, such that the failure of any Committed Purchaser to make available to the Seller or Administrative Agent any funds in connection with any Investment shall not relieve any other Committed Purchaser of its obligation, if any, hereunder to make funds available on the date such Investments are requested (it being understood, that no Committed Purchaser shall be responsible for the failure of any other Committed Purchaser to make funds available to the Seller in connection with any Investment hereunder).

(d)    The Seller shall return in full the outstanding Capital of each Purchaser on the Seller Obligation Final Due Date. Prior thereto, the Seller shall, on each Settlement Date, reduce the outstanding Capital of the Purchasers to the extent required under Section 4.01 and otherwise only in accordance with such Section 4.01 (subject to the priorities for payment set forth therein) by paying the amount of such reduction in accordance with Section 4.02. Notwithstanding the foregoing, the Seller, in its discretion, shall have the right to reduce, in whole or in part by payment only from Collections on Sold Receivables, the outstanding Capital of any or all Purchasers on any Business Day by delivering a Reduction Notice in the form attached hereto as Exhibit B to the Administrative Agent and each Group Agent by no later than (i) if the amount of outstanding Capital to be reduced does not exceed $100,000,000, 3:00 p.m. on the date of such reduction and (ii) otherwise, one (1) Business Day prior to the date of such reduction; provided, however, that (A) each such reduction shall not be less than $100,000 (unless the Capital of the applicable Purchaser or the Aggregate Capital, as applicable, would be reduced to zero) and shall be an integral multiple of $100,000; provided, however, that notwithstanding the foregoing, a reduction may be in an amount necessary to reduce any Capital Coverage Deficit existing at such time to zero, (B) any accrued Yield and Fees in respect of the portion(s) of Capital so reduced shall be paid in full on the immediately following Settlement Date and (C) it shall be a condition precedent to any such reduction in Capital that after giving effect to the reduction in the outstanding Capital proposed in such Reduction Notice, the outstanding Capital at such time would not be less than an amount equal to the lesser of (x) sixty-six and sixty-seven hundredths percent (66.67%) of the Facility Limit at such time and (y) the Capital Coverage Amount at such time; provided, further, if the outstanding Capital of any Committed Purchaser is reduced to zero, the Seller may, in its discretion reduce the Commitment of such Committed Purchaser to zero.

 

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(e)    The Seller may, at any time upon at least thirty (30) days’ prior written notice to the Administrative Agent and each Group Agent, terminate the Facility Limit in whole or ratably reduce the Facility Limit in part. Each partial reduction in the Facility Limit shall be in a minimum aggregate amount of $100,000,000 (unless the Commitment of any applicable Committed Purchaser shall be reduced to zero) or integral multiples of $100,000,000 in excess thereof, and no such partial reduction shall reduce the Facility Limit to an amount less than $1,000,000,000. In connection with any partial reduction in the Facility Limit, the Commitment of each Committed Purchaser shall be ratably reduced. Notwithstanding the foregoing, if any Affected Person in the related Group shall have submitted a claim for reimbursement or compensation under Section 5.01 or any Purchaser in the related Group shall have become a Defaulting Purchaser, at any time upon at least one (1) day’s prior written notice to the Administrative Agent and each Group Agent, reduce the Facility Limit in part by reducing the Commitment of the related Committed Purchaser on a non-ratable basis.

(f)    In connection with any reduction of the Commitments, the Seller shall remit to the Administrative Agent (i) instructions regarding such reduction and (ii) for payment to the Purchasers, cash from available Collections in an amount sufficient to pay (A) the Capital of Purchasers in each Group in excess of the Group Commitment of such Group and (B) all other outstanding Seller Obligations with respect to such reduction (determined based on the ratio of the reduction of the Commitments being effected to the amount of the Commitments prior to such reduction or, if the Administrative Agent reasonably determines that any portion of the outstanding Seller Obligations is allocable solely to that portion of the Commitments being reduced or has arisen solely as a result of such reduction, all of such portion) including, without duplication, any associated Breakage Fees. Upon receipt of any such amounts, the Administrative Agent shall apply such amounts from available Collections first to the reduction of the outstanding Capital, and second to the payment of the remaining outstanding Seller Obligations with respect to such reduction, including any Breakage Fees, by paying such amounts to the Purchasers.

(g)    So long as no Event of Termination or Unmatured Event of Termination has occurred and is continuing, with the prior written consent of the Administrative Agent and upon prior notice to the Purchasers, the Seller may from time to time request an increase in the Commitment with respect to one or more Committed Purchasers or cause additional Persons to become parties to this Agreement, as purchasers, at any time following the Closing Date and prior to the Termination Date; provided, that any such increase in such Committed Purchasers’ Commitments and the Commitments of all such additional Committed Purchasers may not exceed $2,000,000,000 in the aggregate during the life of this Agreement; provided, that each request for an increase and addition shall be in a minimum amount of $100,000,000. At the time of sending such notice with respect to any Purchaser, the Seller (in consultation with the Administrative Agent) shall specify the time period within which such Purchasers and the Administrative Agent are requested to respond to the Seller’s request (which shall in no event be less than ten (10) Business Days from the date of delivery of such notice to the Administrative Agent). Each Committed Purchaser being asked to increase its Commitment and the

 

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Administrative Agent shall notify the Seller within the applicable time period whether or not such Person agrees, in its respective sole discretion, to the increase to such Committed Purchaser’s Commitment. Any such Person not responding within such time period shall be deemed to have declined to consent to an increase in such Committed Purchaser’s Commitment. For the avoidance of doubt, only the consent of the Purchaser then being asked to increase its Commitment (or an additional Purchaser) and the Administrative Agent shall be required in order to approve any such request. If the Commitment of any Committed Purchaser is increased (or a new Person is added as Committed Purchaser) in accordance with this clause (g), the Administrative Agent, such Purchaser and the Seller shall determine the effective date with respect to such increase (or addition) and shall enter into such documents as agreed to by such parties to document such increase (or addition). If the Commitment of any Committed Purchaser is increased (or a new Person is added as Committed Purchaser) the Administrative Agent shall provide written notice of such increase (or addition) to each Purchaser and Group Agent.

Section 2.03.    Yield and Fees. (a) On each Settlement Date, the Seller shall, in accordance with the terms and priorities for payment set forth in Section 4.01, pay to the Administrative Agent for the benefit of each Group Agent, each Purchaser, the Administrative Agent and the Structuring Agent certain fees (collectively, the “Fees”) in the amounts set forth in the fee letter agreements from time to time entered into, among the Seller, the members of the applicable Group (or their Group Agent on their behalf) and/or the Administrative Agent (each such fee letter agreement, as amended, restated, supplemented or otherwise modified from time to time, collectively being referred to herein as the “Fee Letter”). Commitment Fees (as defined in the Fee Letter) shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Purchaser and each other Purchaser in the same Group as provided in Section 2.06.

(b)    Each Purchaser’s Capital shall accrue Yield on each day when such Capital remains outstanding at the then applicable Yield Rate for such Capital (or each applicable portion thereof). The Seller shall pay all Yield (including, for the avoidance of doubt, all Yield accrued on Term SOFR Tranches during a Yield Period regardless of whether the applicable Tranche Period has ended), Fees and Breakage Fees accrued during each Yield Period on each Settlement Date in accordance with the terms and priorities for payment set forth in Section 4.01.

Section 2.04.    Records of Investments and Capital. Each Group Agent shall notify the Administrative Agent in writing of the date and amount of each Investment made by the Purchasers in its Group hereunder, the Yield Rate with respect to the related Capital (and each portion thereof), the Yield accrued on such Purchasers’ Capital and each repayment and payment thereof and the Administrative Agent shall record such amounts and dates in the Register pursuant to Section 14.03(c). The failure to so record any such information or any error in so recording any such information shall not, however, limit or otherwise affect the obligations of the Seller hereunder or under the other Transaction Documents to repay the Capital of each Purchaser, together with all Yield accruing thereon and all other Seller Obligations.

Section 2.05.    Selection of Yield Rates and Tranche Periods. (a) Subject to the following sentence, each Purchaser’s Capital (including all portions thereof) shall accrue Yield initially at Daily Simple SOFR plus the applicable SOFR Adjustment. Thereafter, so long as no Event of Termination has occurred and is continuing, , the Seller may from time to time elect to change or

 

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continue the type of SOFR Rate and/or Tranche Period borne by the Purchasers’ Capital or, subject to the minimum amount requirement set forth in Section 2.02, a portion thereof by notice to the Administrative Agent not later than 11:00 a.m. (New York City time), one (1) Business Day prior to the expiration of any Tranche Period or Yield Period, as applicable; provided, that there shall not be more than three (3) Term SOFR Tranches outstanding hereunder at any one time; provided, further that for the avoidance of doubt, any change from Daily Simple SOFR to the Term SOFR Rate and/or any change to a Tranche Period applicable to any Capital (or portion thereof) shall not be effective until the Monthly Settlement Date occurring after the date of such request. Any such notices requesting the continuation or conversion of any Capital (or any portion thereof) to the Administrative Agent may be given by telephone, telecopy, or other telecommunication device acceptable to the Administrative Agent (which notice shall be irrevocable once given and, if by telephone, shall be promptly confirmed in writing in a manner acceptable to the Administrative Agent).

(b)    If, by the time required in Section 2.05(a), the Seller fails to select a Tranche Period or SOFR Rate for any Capital (or portion thereof), such Capital (or portion thereof) shall automatically accrue Yield at Daily Simple SOFR plus the applicable SOFR Adjustment for the next occurring Yield Period.

Section 2.06.    Defaulting Purchasers. Notwithstanding any provision of this Agreement to the contrary, if any Purchaser becomes a Defaulting Purchaser, then the following provisions shall apply for so long as such Purchaser is a Defaulting Purchaser:

(a)    Commitment Fees (as defined in the Fee Letter) shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Purchaser and each other Purchaser in the same Group.

(b)    The Commitment and Capital of such Defaulting Purchaser and each other Purchaser in the same Group shall not be included in determining whether the Majority Purchasers have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 14.01); provided, that, except as otherwise provided in Section 14.01, this clause (b) shall not apply to the vote of a Defaulting Purchaser (or other Purchaser in the same Group) in the case of an amendment, waiver or other modification requiring the consent of such Purchaser or each Purchaser directly affected thereby (if such Purchaser is directly affected thereby).

(c)     In the event that one or more Committed Purchasers fails to fund any portion of its Investments (or the Capital thereof) by 8:00 a.m. (New York City time) on the Business Day following the date of the Investment specified in the related Investment Request, the Administrative Agent shall notify each of the other Committed Purchasers not later than 11:00 a.m. (New York City time) on such Business Day, and each of the other Committed Purchasers (or the Related Conduit Purchasers on their behalf) shall, upon satisfaction of the applicable conditions set forth in Article VI and pursuant to the other conditions set forth in this Article II, make available to the Seller a supplemental Investment in an amount equal to the lesser of (a) the aggregate Capital of the related Investment Request that was unfunded multiplied by such Committed Purchaser’s

 

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Percentage (which for purposes of this clause will not include the aggregate Commitment of the Committed Purchaser failing to make the Investment on such prior Business Day) and (b) the excess of (i) such Committed Purchaser’s Commitment over (ii) the product of such Committed Purchaser’s related Percentage multiplied by all outstanding Commitments (after giving effect to the supplemental Investment on such date). In the event that the Committed Purchasers that originally failed to fund their Investments in respect of a applicable Investment Request, have not otherwise cured such failure, such supplemental Investments shall be made by wire transfer to the Administrative Agent in Dollars in same day funds no later than 12:00 p.m. (New York City time) on the Business Day that is two (2) Business Days following the Business Day on which the notice described in the preceding sentence was received by such Committed Purchaser (it being understood that any such request received after 11:00 a.m. (New York City time) shall be deemed to have been received on the next Business Day). The Administrative Agent will make available to the Seller by wire transfer in same day funds at the account from time to time designated in writing by the Seller to the Administrative Agent the amount of such supplemental Investments no later than 4:00 p.m. (New York City time) on the day such supplemental Investments are received from the Committed Purchasers. If any Committed Purchaser which shall have failed to fund its Investment in respect of an Investment Request shall subsequently pay such amount, the Seller shall immediately remit such funds to the Administrative Agent which shall apply such amount pro rata to repay any supplemental Investments made by the other Committed Purchasers (or the related Conduit Purchasers on their behalf) pursuant to this Section 2.06(c). Any payment of principal, interest, fees or other amounts payable to the account of a Defaulting Purchaser (whether voluntary or mandatory, at maturity or otherwise) shall be applied by the Servicer first to all other Committed Purchasers on a pro rata basis prior to being applied to the payment of any Investments of such Defaulting Purchaser until such time as all Investments are held by the Committed Purchasers (or the related Conduit Purchasers on their behalf) pro rata in accordance with the Commitments. Any payments, prepayments or other amounts paid or payable to a Defaulting Purchaser that are applied to pay amounts owed by a Defaulting Purchaser pursuant to this Section 2.06(c) shall be deemed paid to and redirected by such Defaulting Purchaser, and each Committed Purchaser irrevocably consents hereto. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Purchaser arising from that Committed Purchaser having become a Defaulting Purchaser. No Defaulting Purchaser or any other Purchaser in the same Group shall be entitled to receive any Commitment Fees (as defined in the Fee Letter) for any period during which that Purchaser is a Defaulting Purchaser (and the Seller shall not be required to pay any such Commitment Fees that otherwise would have been required to have been paid to that Defaulting Purchaser or any other Purchaser in the same Group for such period).

(d)    In the event that the Administrative Agent, the Seller and the Servicer each agrees in writing that a Defaulting Purchaser has adequately remedied all matters that caused such Purchaser to be a Defaulting Purchaser, then on such date such Purchaser shall purchase at par such of the Capital of the other Purchasers as the Administrative Agent shall determine may be necessary in order for such Purchaser to hold such Capital in accordance with its Percentage; provided, that no adjustments shall

 

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be made retroactively with respect to fees accrued or payments made by or on behalf of the Seller while such Purchaser was a Defaulting Purchaser, and provided, further, that except to the extent otherwise agreed by the affected parties, no change hereunder from Defaulting Purchaser to Purchaser that is not a Defaulting Purchaser will constitute a waiver or release of any claim of any party hereunder arising from that Purchaser having been a Defaulting Purchaser.

ARTICLE III

SELLER GUARANTY

Section 3.01.    Guaranty of Payment. The Seller hereby absolutely, irrevocably and unconditionally guarantees to each Purchaser, the Administrative Agent and the other Secured Parties the prompt payment of the Sold Receivables by the related Obligors and all other payment obligations included in the Sold Assets (collectively, the “Guaranteed Obligations”), in each case, in full when due, whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise (such guaranty, the “Seller Guaranty”). The Seller Guaranty is a guaranty of payment and not of collection and is a continuing irrevocable guaranty and shall apply to all Guaranteed Obligations whenever arising. To the extent the obligations of the Seller hereunder with respect to the Seller Guaranty shall be adjudicated to be invalid or unenforceable for any reason (including because of any applicable state or federal Law relating to fraudulent conveyances or transfers) then such obligations of the Seller shall be limited to the maximum amount that is permissible under Applicable Law (whether federal or state or otherwise and including the Bankruptcy Code and any other applicable bankruptcy, insolvency, reorganization or other similar laws).

Section 3.02.    Unconditional Guaranty. The obligations of the Seller under the Seller Guaranty are absolute and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of any Guaranteed Obligations, any Contract, any Transaction Document or any other agreement or instrument referred to therein, to the fullest extent permitted by Applicable Law, and irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor. The Seller agrees that the Seller Guaranty may be enforced by the Administrative Agent or the Purchasers without the necessity at any time of resorting to or exhausting any other security or collateral and without the necessity at any time of having recourse to any of the other Transaction Documents or any collateral, including the Sold Assets, hereafter securing the Guaranteed Obligations, the Seller Obligations or otherwise, and the Seller hereby waives the right to require the Administrative Agent or the Purchasers to make demand on or proceed against any Obligor, any Originator, the Pledgor, the Servicer or the Performance Guarantor or any other Person or to require the Administrative Agent or the Purchasers to pursue any other remedy or enforce any other right. The Seller further agrees that no Person or Governmental Authority shall have any right to request any return or reimbursement of funds from the Administrative Agent or the Purchasers in connection with monies received under or in respect of the Seller Guaranty. The Seller further agrees that nothing contained herein shall prevent the Administrative Agent or the Purchasers from suing on any of the other Transaction Documents or foreclosing its or their, as applicable, security interest in or lien on the Sold Assets, the Seller

 

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Collateral, the Pledged Collateral or any other collateral securing the Guaranteed Obligations or the Seller Obligations or from exercising any other rights available to it or them, as applicable, under any Transaction Document, or any other instrument of security and the exercise of any of the aforesaid rights and the completion of any foreclosure proceedings shall not constitute a discharge of the Seller’s obligations under the Seller Guaranty; it being the purpose and intent of the Seller that its obligations under the Seller Guaranty shall be absolute, independent and unconditional under any and all circumstances. Neither the Seller Guaranty nor any remedy for the enforcement thereof shall be impaired, modified, changed or released in any manner whatsoever by an impairment, modification, change, release, increase or limitation of the liability of any Obligor, any Originator, the Pledgor, the Servicer or the Performance Guarantor or by reason of the bankruptcy or insolvency of any Obligor, any Originator, the Pledgor, the Servicer or the Performance Guarantor. The Seller hereby waives any and all notice of the creation, renewal, extension, accrual, or increase of any of the Guaranteed Obligations and notice of or proof of reliance by the Administrative Agent or any Purchaser on the Seller Guaranty or acceptance of the Seller Guaranty. All dealings between any Obligor, any Originator, the Pledgor, the Servicer, the Performance Guarantor or the Seller, on the one hand, and the Administrative Agent and the Purchasers, on the other hand, shall be conclusively presumed to have been had or consummated in reliance upon the Seller Guaranty. The Seller hereby represents and warrants that it is, and immediately after giving effect to the Seller Guaranty and the obligation evidenced hereby, will be, Solvent. The Seller Guaranty and the obligations of the Seller under the Seller Guaranty shall be valid and enforceable and shall not be subject to any limitation, impairment or discharge for any reason (other than payment in full of all Guaranteed Obligations), including the occurrence of any of the following, whether or not the Administrative Agent or any Purchaser shall have had notice or knowledge of any of them: (A) any failure to assert or enforce or agreement not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy with respect to the Sold Assets or the Guaranteed Obligations or any agreement relating thereto, or with respect to any guaranty of or other security for the payment of the Sold Assets or the Guaranteed Obligations, (B) any waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to Termination Events) of any Transaction Document or any agreement or instrument executed pursuant thereto, or of any guaranty or other security for the Sold Assets or the Guaranteed Obligations, (C) to the fullest extent permitted by Applicable Law, any of the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect, (D) the application of payments received from any source to the payment of Indebtedness other than the Guaranteed Obligations, even though the Administrative Agent might have elected to apply such payment to any part or all of the Guaranteed Obligations, (E) any failure to perfect or continue perfection of a security interest in any of the Sold Assets or other Seller Collateral including the Pledged Collateral, (F) any defenses, set-offs or counterclaims which the Seller, the Pledgor, any Originator, the Servicer, the Performance Guarantor or any Obligor may allege or assert against the Administrative Agent or any Purchaser in respect of the Sold Assets or the Guaranteed Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury, and (G) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of the Seller as an obligor in respect of the Sold Assets or the Guaranteed Obligations.

 

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Section 3.03.    Modifications. The Seller agrees that: (a) all or any part of any security interest, lien, collateral security or supporting obligation now or hereafter held for any Guaranteed Obligation may be exchanged, compromised or surrendered from time to time; (b) none of the Purchasers or the Administrative Agent shall have any obligation to protect, perfect, secure or insure any security interest or lien now or hereafter held, if any, for the Guaranteed Obligations; (c) the time or place of payment of any Guaranteed Obligation may be changed or extended, in whole or in part, to a time certain or otherwise, and may be renewed or accelerated, in whole or in part; (d) any Obligor, any Originator, the Pledgor, the Seller, the Servicer or the Performance Guarantor and any other party (including any co-guarantor) liable for payment of any Guaranteed Obligation may be granted indulgences generally; (e) any of the provisions of Contracts or any other agreements or documents governing or giving rise to any Guaranteed Obligation may be modified, amended or waived; and (f) any deposit balance for the credit of any Obligor, any Originator, the Pledgor, the Servicer, the Performance Guarantor or the Seller or any other party (including any co-guarantor) liable for the payment of any Guaranteed Obligation or liable upon any security therefor may be released, in whole or in part, at, before or after the stated, extended or accelerated maturity of the Guaranteed Obligations, in each case without notice to or further assent by the Seller, which shall remain bound thereon, notwithstanding any such exchange, compromise, surrender, extension, renewal, acceleration, modification, indulgence or release.

Section 3.04.    Waiver of Rights. The Seller expressly waives to the fullest extent permitted by Applicable Law: (a) notice of acceptance of the Seller Guaranty by the Purchasers and the Administrative Agent; (b) presentment and demand for payment or performance of any of the Guaranteed Obligations; (c) protest and notice of dishonor or of default (except as specifically required in this Agreement) with respect to the Guaranteed Obligations or with respect to any security therefor; (d) notice of the Purchasers or the Administrative Agent obtaining, amending, substituting for, releasing, waiving or modifying any security interest or lien, if any, hereafter securing the Guaranteed Obligations, or the Purchasers or the Administrative Agent subordinating, compromising, discharging or releasing such security interests or liens, if any; (e) all other notices, demands, presentments, protests or any agreement or instrument related to the Sold Assets or the Guaranteed Obligations to which the Seller might otherwise be entitled; (f) any right to require the Administrative Agent or any Purchaser as a condition of payment or performance by the Seller, to (i) proceed against any Obligor, any Originator, the Pledgor, the Servicer, the Performance Guarantor or any other Person, (ii) proceed against or exhaust any other security held from any Obligor, any Originator, the Pledgor, the Servicer, the Performance Guarantor or any other Person, (iii) proceed against or have resort to any balance of any deposit account, securities account or credit on the books of the Administrative Agent, the Purchasers or any other Person, or (iv) pursue any other remedy in the power of the Administrative Agent or the Purchasers whatsoever; (g) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of any Obligor, any Originator, the Pledgor, the Servicer, the Performance Guarantor or any other Person including any defense based on or arising out of the lack of validity or the unenforceability of the Sold Assets or the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of any Obligor, any Originator, the Pledgor, the Servicer, the Performance Guarantor or any other Person from any cause other than payment in full of the Sold Assets and the Guaranteed Obligations; (h) any defense based upon any Applicable Law

 

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which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (i) any defense based upon the Administrative Agent’s or any Purchaser’s errors or omissions in the administration of the Sold Assets or the Guaranteed Obligations; (j) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Agreement and any legal or equitable discharge of the Sold Assets or the Guaranteed Obligations, (ii) the benefit of any statute of limitations affecting the Seller’s liability under the Seller Guaranty or the enforcement of the Seller Guaranty, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that the Administrative Agent and the Purchasers protect, secure, perfect or insure any other security interest or lien or any property subject thereto; and (k) to the fullest extent permitted by Applicable Law, any defenses or benefits that may be derived from or afforded by Applicable Law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of this Agreement and the Seller Guaranty.

Section 3.05.    Reinstatement. Notwithstanding anything contained in this Agreement or the other Transaction Documents, the obligations of the Seller under this Article III shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of any Person in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and the Seller agrees that it will indemnify Administrative Agent and each Purchaser on demand for all reasonable costs and expenses (including reasonable fees of counsel) incurred by such Person in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.

Section 3.06.    Remedies. The Seller agrees that, as between the Seller, on the one hand, and Administrative Agent and the Purchasers, on the other hand, the Guaranteed Obligations may be declared to be forthwith due and payable as provided in Article IX (and shall be deemed to have become automatically due and payable in the circumstances provided in Article IX) notwithstanding any stay, injunction or other prohibition preventing such declaration (or preventing such Guaranteed Obligations from becoming automatically due and payable) as against any other Person and that, in the event of such declaration (or such Guaranteed Obligations being deemed to have become automatically due and payable), such Guaranteed Obligations (whether or not due and payable by any other Person) shall forthwith become due and payable by the Seller.

Section 3.07.    Subrogation. The Seller hereby waives all rights of subrogation (whether contractual or otherwise) to the claims of the Administrative Agent, the Purchasers and the other Secured Parties against any Obligor, any Originator, the Pledgor, the Servicer, the Performance Guarantor or any other Person in respect of the Guaranteed Obligations until such time as all Guaranteed Obligations have been indefeasibly paid in full in cash and the Final Payout Date has occurred. The Seller further agrees that, to the extent such waiver of its rights of subrogation is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation shall be junior and subordinate to any rights the Administrative Agent or any Purchaser may have against any Obligor, any Originator, the Pledgor, the Servicer, the Performance Guarantor or any other Person in respect of the Guaranteed Obligations.

 

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Section 3.08.    Inducement. The Purchasers have been induced to make the Investments under this Agreement in part based upon the Seller Guaranty and the Seller desires that the Seller Guaranty be honored and enforced as separate obligations of the Seller, should Administrative Agent and the Purchasers desire to do so.

Section 3.09.    Security Interest. (a) To secure the prompt payment and performance of the Guaranteed Obligations, the Seller Guaranty and all other Seller Obligations, the Seller hereby grants to the Administrative Agent, for the benefit of the Purchasers and the other Secured Parties, a continuing security interest in and lien upon all property and assets of the Seller, whether now or hereafter owned, existing or arising and wherever located, including the following (collectively, the “Seller Collateral”):

(i)    all Unsold Receivables;

(ii)    all Related Security with respect to such Unsold Receivables;

(iii)    all Collections with respect to such Unsold Receivables;

(iv)    all Pledged Collateral including the Pledged Receivables;

(v)    the Lock-Boxes and Collection Accounts, including the rights of the Seller in the Pledgor Collection Account, other than the Excluded Collection Accounts and all amounts on deposit therein, and all certificates and instruments, if any, from time to time evidencing such Lock-Boxes and Collection Accounts other than the Excluded Collection Accounts and amounts on deposit therein;

(vi)    all rights (but none of the obligations) of the Seller under the Purchase and Sale Agreement;

(vii)    all rights (but none of the obligations) of the Seller under the Pledgor Purchaser Assignment including, but not limited to, all rights (but none of the obligations) of the Pledgor under the Pledgor Purchase and Sale Agreement and the other Transaction Documents;

(viii)    all other personal and fixture property or assets of the Seller of every kind and nature including, without limitation, all goods (including inventory, equipment and any accessions thereto), instruments (including promissory notes), documents, accounts, chattel paper (whether tangible or electronic), deposit accounts, securities accounts, securities entitlements, letter-of-credit rights, commercial tort claims, securities and all other investment property, supporting obligations, money, any other contract rights or rights to the payment of money, insurance claims and proceeds, and all general intangibles (including all payment intangibles) (each as defined in the UCC);

 

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(ix) the Pledged Investment Account and all Permitted Investments contained therein, the Pledged Deposit Account, and all amounts on deposit therein, and all certificates and instruments, if any, from time to time evidencing the Pledged Investment Account and the Pledged Deposit Account; and

(ix)    all proceeds of, and all amounts received or receivable under any or all of, the foregoing;

provided, notwithstanding the foregoing or any provision of any Transaction Document, none of the Administrative Agent, any Purchaser Party or any beneficiary thereof shall have the right to hold, review, view, audit or otherwise possess (x) any Contract; or (y) any financial reporting or other books or records specifically relating to such Contract and the Receivables generated thereunder, the disclosure of which is precluded by the applicable terms of such Contract, provided, further, however, that during the occurrence and continuance of an Event of Termination, to the extent that the related Obligor has defaulted in the payment of any Receivable, upon the request of the Administrative Agent the Seller shall provide the Administrative Agent with such information reasonably requested with respect to any such Contract (which may be redacted versions of or excerpts of any Contract) to the extent needed for the Administrative Agent to enforce such Contract against the applicable Obligor.

(b)    The Administrative Agent (for the benefit of the Secured Parties) shall have, with respect to all the Seller Collateral, and in addition to all the other rights and remedies available to the Administrative Agent (for the benefit of the Secured Parties), all the rights and remedies of a secured party under any applicable UCC. The Seller hereby authorizes the Administrative Agent to file financing statements describing the collateral covered thereby as “all of the debtor’s personal property or assets” or words to that effect, notwithstanding that such wording may be broader in scope than the collateral described in this Agreement.

(c)    Immediately upon the occurrence of the Final Payout Date, the Seller Collateral shall be automatically released from the lien created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent, the Purchasers and the other Purchaser Parties hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Seller Collateral shall revert to the Seller; provided, however, that promptly following written request therefor by the Seller delivered to the Administrative Agent following any such termination, and at the expense of the Seller, the Administrative Agent shall execute and deliver to the Seller UCC-3 termination statements and such other documents as the Seller shall reasonably request to evidence such termination.

(d)    For the avoidance of doubt, the grant of security interest pursuant to this Section 3.09 shall be in addition to, and shall not be construed to limit or modify, the sale of Sold Assets pursuant to Section 2.01(b) or the Seller’s grant of security interest pursuant to Section 5.05.

Section 3.10.    Further Assurances. Promptly upon request, the Seller shall deliver such instruments, assignments or other documents or agreements, and shall take such actions, as the

 

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Administrative Agent or any Purchaser deems appropriate to evidence or perfect its security interest and lien on any of the Seller Collateral, including, but not limited to, performing in accordance with Section 8.01(a) with respect to the Pledged Collateral, or otherwise to give effect to the intent of this Article III.

Section 3.11.    Release of Seller Collateral and Reconveyance of Certain Sold Receivables. Contemporaneously with any release and reconveyance of Transferred Assets pursuant to Section 8.4(b) of the Purchase and Sale Agreement, and without any further consideration other than as specified therein, the Administrative Agent (on behalf of the Purchasers) agrees to reconvey to Buyer or its designee, all of its rights, title and interest in and to any such Transferred Assets constituting Sold Receivables or Sold Assets and to release any security interest it may have in, and all of its right, title and interest in and to the related Transferred Assets.

ARTICLE IV

SETTLEMENT PROCEDURES AND PAYMENT PROVISIONS

Section 4.01.    Settlement Procedures. (a) The Servicer shall set aside and hold in trust for the benefit of the Secured Parties (or, if so requested by the Administrative Agent during the continuance of an Event of Termination, segregate in a separate account designated by the Administrative Agent, which shall be an account maintained and controlled by the Administrative Agent unless the Administrative Agent otherwise instructs in its sole discretion), for application in accordance with the priority of payments set forth below, all Collections on Pool Receivables that are received by the Servicer or the Seller or received in any Lock-Box or Collection Account; provided, however, that so long as each of the conditions precedent set forth in Section 6.03 are satisfied on such date, the Servicer may release to the Seller a portion of such Collections (each such release of Collections, a “Release”); provided, further that, pursuant to Section 3.1(d) of the Pledgor Purchaser Assignment, Collections on Pledged Receivables that are received by the Servicer or the Pledgor in any Pledgor Collection Account shall be applied in accordance with the priority of payments set forth below solely to the extent that Collections on Pool Receivables in each other Lock-Box or Collection Account are insufficient to make all distributions required in clauses (i) through (iv) below. On each Settlement Date, the Servicer (or, following its assumption of control of the Collection Accounts, the Administrative Agent) shall distribute any such Collections not previously Released in the following order of priority:

(i)    first, to the Servicer for the payment of the accrued Servicing Fees payable for the immediately preceding Yield Period (plus, if applicable, the amount of Servicing Fees payable for any prior Yield Period to the extent such amount has not been distributed to the Servicer);

(ii)    second, to the Administrative Agent, for the account of each Purchaser and other Purchaser Party (ratably, based on the amount then due and owing), all accrued and unpaid Yield, Fees and Breakage Fees due to such Purchaser and other Purchaser Party for the immediately preceding Yield Period (including any additional amounts or indemnified amounts payable under Sections 5.03 and 13.01 in respect of such

 

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payments), plus, if applicable, the amount of any such Yield, Fees and Breakage Fees (including any additional amounts or indemnified amounts payable under Sections 5.03 and 13.01 in respect of such payments) payable for any prior Yield Period to the extent such amount has not been distributed to such Purchaser or Purchaser Party;

(iii)    third, as set forth in clause (x), (y) or (z) below, as applicable:

(x)    prior to the occurrence of the Termination Date, to the extent that a Capital Coverage Deficit exists on such date, to the Administrative Agent, for the account of each Purchaser (ratably, based on the aggregate outstanding Capital of each Purchaser at such time) for the return of a portion of the outstanding Aggregate Capital at such time, in an aggregate amount equal to the amount necessary to reduce the Capital Coverage Deficit to zero ($0);

(y)    on and after the occurrence of the Termination Date, to the Administrative Agent, for the account of each Purchaser (ratably, based on the aggregate outstanding Capital of each Purchaser at such time) for the return in full of the aggregate outstanding Capital of such Purchaser at such time; or

(z)    prior to the occurrence of the Termination Date, at the election of the Seller and in accordance with Section 2.02(d), to the Administrative Agent, for the account of each Purchaser (ratably, based on the aggregate outstanding Capital of each Purchaser at such time) for the return of all or any portion of the outstanding Capital of the Purchasers at such time;

(iv)    fourth, to the Purchaser Parties, the Affected Persons and the Seller Indemnified Parties (ratably, based on the amount due and owing at such time), for the payment of all other Seller Obligations then due and owing by the Seller to the Purchaser Parties, the Affected Persons and the Seller Indemnified Parties; and

(v)    fifth, prior to the Spin-Off Date, on the first Settlement Date of each calendar quarter, to the Pledgor for the payment of the accrued Guaranty Fee as defined in Section 1.3 of the Pledgor Purchaser Assignment;

(vi)    sixth, prior to the Spin-Off Date, to the Pledgor, the amount due pursuant to the penultimate sentence of Section 4.03 for the immediately preceding Yield Period; and

(vii)    seventh, the balance, if any, to be paid to the Seller for its own account.

Amounts payable pursuant to clauses first through sixth above shall be paid first from available Collections on Sold Receivables and other Sold Assets, and second, to the extent necessary in order to make all such payments in full, from Collections on Unsold Receivables and other Seller Collateral (including the Pledged Collateral). The Seller’s right to receive payments (if any) from time to time pursuant to clause seventh above shall, to the extent arising from Collections on Sold Receivables, constitute compensation to the Seller for the Seller’s provision of the Seller Guaranty of the Purchaser Parties’ interests in the Seller Collateral.

 

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(b)    All payments or distributions to be made by the Servicer, the Seller and any other Person to the Purchasers (or their respective related Affected Persons and the Seller Indemnified Parties), shall be paid or distributed to the related Group Agent at its Group Agent’s Account. Each Group Agent, upon its receipt in the applicable Group Agent’s Account of any such payments or distributions, shall distribute such amounts to the applicable Purchasers, Affected Persons and the Seller Indemnified Parties within its Group ratably; provided that if such Group Agent shall have received insufficient funds to pay all of the above amounts in full on any such date, such Group Agent shall pay such amounts to the applicable Purchasers, Affected Persons and the Seller Indemnified Parties within its Group in accordance with the priority of payments set forth above, and with respect to any such category above for which there are insufficient funds to pay all amounts owing on such date, ratably (based on the amounts in such categories owing to each such Person in such Group) among all such Persons in such Group entitled to payment thereof.

(c)    If and to the extent the Administrative Agent, any Purchaser Party, any Affected Person or any Seller Indemnified Party shall be required for any reason to pay over to any Person (including any Obligor or any trustee, receiver, custodian or similar official in any Insolvency Proceeding) any amount received on its behalf hereunder, such amount shall be deemed not to have been so received but rather to have been retained by the Seller and, accordingly, the Administrative Agent, such Purchaser Party, such Affected Person or such Seller Indemnified Party, as the case may be, shall have a claim against the Seller for such amount.

(d)    For the purposes of this Section 4.01:

(i)    if on any day the Outstanding Balance of any Pool Receivable is reduced or adjusted as a result of any defective, rejected, returned, repossessed or foreclosed goods, licenses or services, or any revision, cancellation, allowance, rebate, credit memo, discount or other adjustment made by the Seller, the Pledgor, any Originator, the Servicer or any Affiliate of the Servicer, or any setoff, counterclaim or dispute between the Seller, the Pledgor, any Originator, the Servicer or any Affiliate of the Servicer and an Obligor, the Seller shall be deemed to have received on such day a Collection of such Pool Receivable in the amount of such reduction or adjustment and shall pay any and all such amounts in respect thereof on the next Settlement Date, or after the occurrence and during the continuance of an Event of Termination, within two (2) Business Days, to a Collection Account subject to an Account Control Agreement (or as otherwise directed by the Administrative Agent at such time) for the benefit of the Purchaser Parties for application pursuant to Section 4.01(a);

(ii)    if on any day any of the representations or warranties in Sections 7.01(m) or 7.01(u) is not true with respect to any Pool Receivable, the Seller shall be deemed to have received on such day a Collection of such Pool Receivable in full and shall pay the amount of such deemed Collection on the next Settlement Date, or after the occurrence and during the continuance of an Event of Termination, within two (2) Business Days, to

 

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a Collection Account subject to an Account Control Agreement (or as otherwise directed by the Administrative Agent at such time) for the benefit of the Purchaser Parties for application pursuant to Section 4.01(a) (Collections deemed to have been received pursuant to Section 4.01(d) are hereinafter sometimes referred to as “Deemed Collections”);

(iii)    except as provided in clauses (i) or (ii) above or otherwise required by Applicable Law or the relevant Contract, all Collections received from an Obligor of any Receivable shall be applied to the Receivables of such Obligor in the order of the age of such Receivables, starting with the oldest such Receivable, unless such Obligor designates in writing its payment for application to specific Receivables; and

(iv)    if and to the extent the Administrative Agent, any Purchaser Party, any Affected Person or any Seller Indemnified Party shall be required for any reason to pay over to an Obligor (or any trustee, receiver, custodian or similar official in any Insolvency Proceeding) any amount received by it hereunder, such amount shall be deemed not to have been so received by such Person but rather to have been retained by the Seller and, accordingly, such Person shall have a claim against the Seller for such amount, payable when and to the extent that any distribution from or on behalf of such Obligor is made in respect thereof.

Section 4.02.    Payments and Computations, Etc. (a) All amounts to be paid by the Seller or the Servicer to the Administrative Agent, any Purchaser Party, any Affected Person or any Seller Indemnified Party hereunder shall be paid no later than noon (New York City time) on the day when due in same day funds to the applicable Group Agent’s Account.

(b)    All computations of Yield, Fees and other amounts hereunder shall be made on the basis of a year of 360 days (or, in the case of amounts determined by reference to the Base Rate, 365 or 366 days, as applicable) for the actual number of days (including the first but excluding the last day) elapsed. Whenever any payment or deposit to be made hereunder shall be due on a day other than a Business Day, such payment or deposit shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of such payment or deposit.

Section 4.03.    Reimbursement and Deemed Loan. If on any Settlement Date the amount of Collections on Pool Receivables (other than Pledged Receivables) available to the Seller (or the Servicer on behalf of the Seller) are insufficient to make the distributions required under Section 4.01(a) clause (i) through (iv), and an amount of Collections on Pledged Receivables, pursuant to Section 3.1(d) of the Purchaser Assignment, are remitted (or caused to be remitted) to the Seller (or the Servicer on behalf of the Seller) (such amount, the “Pledge Payment”), the Pledgor has a right of reimbursement from the Seller in an amount equal to the Pledge Payment. The right of reimbursement arising from a Pledge Payment pursuant to the preceding sentence that is due shall represent a deemed loan in the amount described in the preceding sentence made from the Pledgor to the Seller that shall bear interest, compounded monthly, at a rate of 3.0% per annum, payable on the next Settlement Date. The Pledgor, Seller and Servicer hereby agree that the Pledgor’s rights under this provision shall be fully subordinated to the rights of any Purchaser Party under any Transaction Document.

 

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ARTICLE V

INCREASED COSTS; FUNDING LOSSES; TAXES; ILLEGALITY AND

BACK-UP SECURITY INTEREST

Section 5.01.    Increased Costs.

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

(i)    impose, modify or deem applicable any reserve, special deposit, liquidity, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Affected Person (except any such reserve requirements reflected in the Term SOFR Rate or Daily Simple SOFR);

(ii)    subject any Affected Person to any Taxes (except to the extent such Taxes are (A) Indemnified Taxes for which relief is sought under Section 5.03, (B) Taxes described in clause (b) or (c) of the definition of Excluded Taxes or (C) Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes) on its loans, loan principal, letters of credit, commitments or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii)    impose on any Affected Person any other condition, cost or expense (other than Taxes) (A) affecting the Sold Assets, the Seller Collateral, this Agreement, any other Transaction Document, any Program Support Agreement, any Capital or any participation therein or (B) affecting its obligations or rights to make Investments or fund or maintain Capital;

and the result of any of the foregoing shall be to increase the cost to such Affected Person of (A) acting as the Administrative Agent, a Group Agent or a Purchaser hereunder or as a Program Support Provider with respect to the transactions contemplated hereby, (B) making any Investment or funding or maintaining any Capital (or any portion thereof) or (C) maintaining its obligation to make any Investment or to fund or maintain any Capital (or any portion thereof), or to reduce the amount of any sum received or receivable by such Affected Person hereunder, then, upon request of such Affected Person (or its Group Agent), the Seller shall pay to such Affected Person such additional amount or amounts as will compensate such Affected Person for such additional costs incurred or reduction suffered.

(b)    Capital and Liquidity Requirements. If any Affected Person determines that any Change in Law affecting such Affected Person or any lending office of such Affected Person or such Affected Person’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of (x) increasing the amount of capital required to be maintained by

 

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such Affected Person or Affected Person’s holding company, if any, or increasing the amount of high quality liquid assets such Affected Person or Affected Person’s holding company, if any, is required to maintain as a result of any funding commitment made by such Affected Person under any Transaction Document, (y) reducing the rate of return on such Affected Person’s capital or on the capital of such Affected Person’s holding company, if any, or (z) causing an internal capital or liquidity charge or other imputed cost to be assessed upon such Affected Person or Affected Person’s holding company, if any, in each case, as a consequence of (A) this Agreement or any other Transaction Document, (B) the commitments of such Affected Person hereunder or under any other Transaction Document or any related Program Support Agreement, (C) the Investments made by such Affected Person, or (D) any Capital (or portion thereof), to a level below that which such Affected Person or such Affected Person’s holding company could have achieved but for such Change in Law (taking into consideration such Affected Person’s policies and the policies of such Affected Person’s holding company with respect to capital adequacy and liquidity), then from time to time, upon request of such Affected Person (or its Group Agent), the Seller will pay to such Affected Person such additional amount or amounts as will compensate such Affected Person or such Affected Person’s holding company for any such increase, reduction or charge.

(c)    Reserved.

(d)    Certificates for Reimbursement. A certificate of an Affected Person (or its Group Agent on its behalf) setting forth the amount or amounts necessary to compensate such Affected Person or its holding company, as the case may be, as specified in clause (a) or (b) of this Section and delivered to the Seller, shall be conclusive absent manifest error. The Seller shall, subject to the priorities of payment set forth in Section 4.01, pay such Affected Person the amount shown as due on any such certificate on the first Settlement Date occurring after the Seller’s receipt of such certificate.

(e)    Delay in Requests. Failure or delay on the part of any Affected Person to demand compensation pursuant to this Section shall not constitute a waiver of such Affected Person’s right to demand such compensation; provided that the Seller shall not be required to compensate an Affected Person pursuant to this Section for any increased costs incurred or reductions suffered more than six months prior to the date that such Affected Person notifies the Seller of the Change in Law giving rise to such increased costs or reductions and of such Affected Person’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof).

(f)    Anything in Section 5.01(a) to the contrary notwithstanding, if any Affected Person enters into agreements for the acquisition of interests in receivables, notes or other financial assets from one or more Persons, other than the Seller, that has entered into a receivables purchase agreement, receivables transfer agreement, loan agreement or funding agreement with such Person (each, an “Other Seller”) (or to provide liquidity or credit support therefor), such Affected Person shall ratably allocate the liability for any amounts under this Section 5.01(f), which are generally imposed on or applicable to such Affected Person, to the Seller and each Other Seller; provided, however, that if such amounts are solely attributable to the Seller and not

 

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attributable to any Other Seller, as determined in such Affected Person’s reasonable discretion, the Seller shall be solely liable for such amounts or if such amounts are attributable to Other Sellers and not attributable to the Seller, as determined in such Affected Person’s reasonable discretion, such Other Sellers shall be solely liable for such amounts. Any Affected Person claiming any additional amounts payable pursuant to Section 5.01(a) agrees to use its reasonable efforts to designate a different office or branch of such Affected Person as its lending office if the making of such a designation would avoid the need for, or reduce the amount of, any such additional amounts to be paid by the Seller, so long as any such designation is not otherwise disadvantageous to such Affected Person.

(g)    Upon the receipt by the Seller of a claim for reimbursement or compensation under Section 5.01(a) by an Affected Person, if payment thereof shall not be waived by such Affected Person, the Seller shall request one or more of the other Purchasers in such Affected Person’s Group, with the consent of the Administrative Agent and the Group Agent for such Group (which consents shall not be unreasonably withheld), to acquire and assume all or a part of such Affected Person’s rights and obligations (if any) hereunder (a “Replacement Person”) and if no such other Purchaser in such Affected Person’s Group shall become the Replacement Person, the Seller shall request such claiming Affected Person’s Group Agent to use commercially reasonable efforts to assist the Seller at the Seller’s sole expense, to attempt to obtain a replacement bank, financial institution or commercial paper conduit, as applicable, satisfactory to the Seller and consented to by the Administrative Agent and the Group Agent for the applicable Group (which consents shall not be unreasonably withheld), to become the Replacement Person. Upon notice from the Seller, an Affected Person being replaced hereunder shall assign, without recourse, its rights and obligations (if any) hereunder, or a ratable share thereof, to the Replacement Person or Replacement Persons designated and consented to as provided in this Section 5.01(g) for a purchase price equal to the sum of the amount of such Affected Person’s aggregate outstanding Capital at such time or interests therein so assigned, all accrued and unpaid Yield thereon and any other amounts (including fees and any amounts owing under this Section 5.01) to which such Affected Person is entitled hereunder; provided, that the Seller shall have paid all reasonable and documented out-of-pocket costs and expenses incurred by any Affected Person in connection with any such designation or assignment. Notwithstanding the foregoing, (i) no Affected Person which is a Group Agent may be replaced pursuant to this Section 5.01 unless (A) it has consented to such replacement or (B) a successor for such Group Agent has been duly appointed and such Group Agent shall have received payment of all amounts to which it is entitled hereunder; (ii) the Seller need not make any request under this Section 5.01(g) if the replacement of any claiming Affected Person would be more economically or administratively burdensome on the Seller or Servicer than not replacing such Affected Person or if such replacement would be unlawful, and (iii) no Affected Person shall be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Affected Person or otherwise, the circumstances entitling the Seller to require such assignment and delegation cease to apply.

Section 5.02.    Funding Losses. (a) The Seller will pay each Purchaser all Breakage Fees.

(b)    A certificate of a Purchaser (or its Group Agent on its behalf) setting forth the amount or amounts necessary to compensate such Purchaser, as specified in clause (a) above and

 

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delivered to the Seller, shall be conclusive absent manifest error. The Seller shall, subject to the priorities of payment set forth in Section 4.01, pay such Purchaser the amount shown as due on any such certificate on the first Settlement Date occurring after the Seller’s receipt of such certificate.

Section 5.03.    Taxes. (a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Seller under any Transaction Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of the Seller or applicable withholding agent) requires the deduction or withholding of any Tax from any such payment to a Purchaser Party, Affected Person or Seller Indemnified Party, then the Seller or applicable withholding agent shall be entitled to 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, then the sum payable by the Seller shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section), the applicable Purchaser Party, Affected Person or Seller Indemnified Party receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(b)    Payment of Other Taxes by the Seller. The Seller shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or, at the option of the Administrative Agent, timely reimburse it for the payment of, any Other Taxes.

(c)    Indemnification by the Seller. The Seller shall indemnify each Affected Person, within ten days after demand therefor, for the full amount of (i) any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Affected Person or required to be withheld or deducted from a payment to such Affected Person and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority and (ii) incremental Taxes that arise solely because an Investment or any Capital is successfully treated for U.S. federal income tax purposes as a purchase and sale of the Sold Receivables rather than as debt for U.S. federal income tax purposes (a “Tax Recharacterization”), such indemnification will apply to any U.S. federal income taxes imposed, as necessary to make such Affected Person whole on an after tax basis taking into account the taxability of receipt of payments under this clause (ii) and any reasonable expenses (other than Taxes) solely arising out of the foregoing; provided, (1) that if the applicable Affected Person fails to give notice to the Seller of the imposition of any Indemnified Tax or Tax Recharacterization described in clause (ii) of this paragraph (c) within 120 days following its receipt of actual written notice of the imposition of such Tax, there will be no obligation for the Seller to pay interest or penalties attributable to the period beginning after such 120th day and ending 7 days after the Seller receives notice from the applicable Affected Person and (2) if the applicable Affected Person fails to give notice of a Tax Recharacterization described in clause (ii) of this paragraph (c) and such failure to notify the Seller materially prejudices the Seller’s ability to contest or challenge the Tax Recharacterization then no such incremental Taxes shall be owing and payable to such Affected Person. For purposes of calculating any indemnity under the foregoing clause (ii), it shall be assumed that

 

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each beneficial owner of an Investment or of any Capital is (A) entitled to, and will take full advantage of the benefits of any double taxation treaty between the United States and such party’s jurisdiction of organization or jurisdiction of operations (as applicable) and (B) will comply with all required documentation or certification requirements that would be necessary to achieve a reduced or to eliminate any otherwise applicable U.S. federal withholding taxes that would apply to such party. In addition, the foregoing clause (ii) shall be the sole provision in this Agreement pursuant to which any beneficial owner of an Investment or Capital may seek an indemnity in the event of the successful treatment of an Investment or any Capital in a manner other than that described in the Intended Tax Treatment. A certificate as to the amount of such payment or liability delivered to the Seller by an Affected Person (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of an Affected Person, shall be conclusive absent manifest error.

(d)    Indemnification by the Purchasers. Each Purchaser (other than the Conduit Purchasers) shall severally indemnify the Administrative Agent, within ten days after demand therefor, for (i) any Indemnified Taxes attributable to such Purchaser, its Related Conduit Purchaser or any of their respective Affiliates that are Affected Persons (but only to the extent that the Seller and its Affiliates have not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting any obligation of the Seller, the Servicer or their Affiliates to do so), (ii) any Taxes attributable to the failure of such Purchaser, its Related Conduit Purchaser or any of their respective Affiliates that are Affected Persons to comply with Section 14.03(f) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Purchaser, its Related Conduit Purchaser or any of their respective Affiliates that are Affected Persons, in each case, that are payable or paid by the Administrative Agent in connection with any Transaction Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Purchaser (or its Group Agent) by the Administrative Agent shall be conclusive absent manifest error. Each Purchaser (other than the Conduit Purchasers) hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Purchaser, its Related Conduit Purchaser or any of their respective Affiliates that are Affected Persons under any Transaction Document or otherwise payable by the Administrative Agent to such Purchaser, its Related Conduit Purchaser or any of their respective Affiliates that are Affected Persons from any other source against any amount due to the Administrative Agent under this clause (d).

(e)    Evidence of Payments. As soon as practicable after any payment of Taxes by the Seller to a Governmental Authority pursuant to this Section 5.03, the Seller shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(f)    Status of Affected Persons. (i) Any Affected Person that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Transaction Document shall deliver to the Seller and the Administrative Agent, at the time or times reasonably requested by the Seller or the Administrative Agent, such properly completed and

 

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executed documentation reasonably requested by the Seller or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Affected Person, if reasonably requested by the Seller or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Seller or the Administrative Agent as will enable the Seller or the Administrative Agent to determine whether or not such Affected Person is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 5.03(f)(ii)(A), 5.03(f)(ii)(B) and 5.03(g)) shall not be required if, in the Affected Person’s reasonable judgment, such completion, execution or submission would subject such Affected Person to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Affected Person.

(ii)    Without limiting the generality of the foregoing:

(A)    an Affected Person that is a U.S. Person shall deliver to the Seller and the Administrative Agent from time to time upon the reasonable request of the Seller or the Administrative Agent, executed originals of Internal Revenue Service Form W-9 certifying that such Affected Person is exempt from U.S. federal backup withholding tax;

(B)    any Affected Person that is not a U.S. Person shall, to the extent it is legally entitled to do so, deliver to the Seller and the Administrative Agent (in such number of copies as shall be requested by the Affected Person) from time to time upon the reasonable request of the Seller or the Administrative Agent, whichever of the following is applicable:

(1)    in the case of such an Affected Person claiming the benefits of an income tax treaty to which the United States is a party, (x) with respect to payments of interest under any Transaction Document, executed originals of Internal Revenue Service Form W-8BEN or Internal Revenue Service Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Transaction Document, Internal Revenue Service Form W-8BEN or Internal Revenue Service Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(2)    executed originals of Internal Revenue Service Form W-8ECI;

(3)    in the case of such an Affected Person claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate to the effect that such Affected Person is not a “bank”

 

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within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Seller within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals of Internal Revenue Service Form W-8BEN or Internal Revenue Service Form W-8BEN-E, as applicable; or

(4)    to the extent such Affected Person is not the beneficial owner, executed originals of Internal Revenue Service Form W-8IMY, accompanied by Internal Revenue Service Form W-8ECI, Internal Revenue Service Form W-8BEN or Internal Revenue Service Form W-8BEN-E, as applicable, a U.S. Tax Compliance Certificate, Internal Revenue Service Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that, if such Affected Person is a partnership and one or more direct or indirect partners of such Affected Person are claiming the portfolio interest exemption, such Affected Person may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner; and

(C)    any Affected Person that is not a U.S. Person shall, to the extent it is legally entitled to do so, deliver to the Seller and the Administrative Agent (in such number of copies as shall be requested by the recipient), from time to time upon the reasonable request of the Seller or the Administrative Agent, executed originals of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Seller or the Administrative Agent to determine the withholding or deduction required to be made.

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

(h)    Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been

 

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

(i)    Survival. Each party’s obligations under this Section 5.03 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Purchaser Party or any other Affected person, the termination of the Commitments and the repayment, satisfaction or discharge of all the Seller Obligations and the Servicer’s obligations hereunder.

(j)    Updates. Each Affected Person agrees that if any form or certification it previously delivered pursuant to this Section 5.03 expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Seller and the Administrative Agent in writing of its legal inability to do so.

Section 5.04.    Inability to Determine SOFR Rate; Change in Legality. (a) If any Purchaser shall have determined (which determination shall be conclusive and binding upon the parties hereto absent manifest error) before the first day of any Yield Period (with respect to the SOFR Rate determined by reference to the Term SOFR Rate) or on any day (with respect to the SOFR Rate determined by reference to Daily Simple SOFR), either that: (i) the SOFR Rate cannot be determined because it is not available or published on a current basis, (ii) adequate and reasonable means do not exist for ascertaining the SOFR Rate for such Tranche Period, Yield Period or day, as applicable, or (iii) the SOFR Rate determined pursuant hereto does not accurately reflect the cost to the applicable Purchaser (as conclusively determined by such Purchaser) of funding or maintaining any Portion of Capital during such Tranche Period, Yield Period or day, as applicable, such Purchaser shall promptly give telephonic notice of such determination, confirmed in writing, to the Administrative Agent and the Seller before the first day of any Yield Period (with respect to the SOFR Rate determined by reference to the Term SOFR Rate) or on such day (with respect to the SOFR Rate determined by reference to Daily Simple SOFR). Upon delivery of such notice: (i) no Portion of Capital shall be funded thereafter at the SOFR Rate, and shall instead be funded at the Base Rate, unless and until such Purchaser

 

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shall have given notice to the Seller and the Administrative Agent that the circumstances giving rise to such determination no longer exist and (ii) with respect to any outstanding Portion of Capital then funded at the SOFR Rate, the Yield Rate with respect to such Portion of Capital shall automatically be converted to the Base Rate on the last day of the then-current Yield Period (with respect to the SOFR Rate determined by reference to the Term SOFR Rate) or immediately (with respect to the SOFR Rate determined by reference to Daily Simple SOFR).

(b)    If at any time any time any Purchaser shall have determined (which determination shall be final and conclusive absent manifest error) that the funding or maintenance of any Portion of Capital at or by reference to the SOFR Rate has been made impracticable or unlawful by compliance by such Purchaser in good faith with any Applicable Law or any interpretation or application thereof by any Governmental Authority or with any request or directive of any such Governmental Authority (whether or not having the force of law), such Purchaser shall notify the Seller and the Administrative Agent thereof. Upon receipt of such notice, until the applicable Purchaser notifies the Seller and the Administrative Agent that the circumstances giving rise to such determination no longer apply, (i) no Portion of Capital shall be funded thereafter at the SOFR Rate, and shall instead be funded at the Base Rate, unless and until such Purchaser shall have given notice to the Administrative Agent and the Seller that the circumstances giving rise to such determination no longer exist and (ii) with respect to any outstanding Portion of Capital then funded at the SOFR Rate, the Yield Rate with respect to such Portion of Capital shall automatically and immediately be converted to the Base Rate.

(c)    (i) Notwithstanding anything to the contrary herein or in any other Transaction Document (and any Hedging Agreement shall be deemed not to be a “Transaction Document” for purposes of this Section), if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then the Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Transaction Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Seller and the Purchasers without any amendment to, or further action or consent of any other party to, this Agreement or any other Transaction Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Purchasers comprising the Majority Purchasers.

(ii)    In connection with the implementation and administration of a Benchmark Replacement, the Administrative Agent will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Transaction Document; provided, that any such amendment implementing such Conforming Changes that results in any incremental material cost or expense for the Seller will not become effective without the consent of the Seller.

(iii)    The Administrative Agent will promptly notify the Seller and the Purchasers of (A) any occurrence of a Benchmark Transition Event and its related Benchmark Replacement Date,

 

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(B) the implementation of any Benchmark Replacement, (C) the effectiveness of any Conforming Changes, (D) the removal or reinstatement of any tenor of a Benchmark pursuant to paragraph (iv) below and (E) the commencement of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Purchaser (or group of Purchasers) pursuant to this Section, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Transaction Document except, in each case, as expressly required pursuant to this Section.

(iv)    Notwithstanding anything to the contrary herein or in any other Transaction Document, at any time (including in connection with the implementation of a Benchmark Replacement), (A) if the then-current Benchmark is a term rate and either (I) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (II) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Tranche Period” or “Yield Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (B) if a tenor that was removed pursuant to clause (A) above either (I) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (II) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Tranche Period” or “Yield Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.

(v)    Upon the Seller’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Seller may revoke any request for an Investment, or a conversion to or continuation of Capital, accruing Yield at the SOFR Rate to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Seller will be deemed to have converted any such request into a request for an Investment, or a conversion of Capital to Capital, accruing Yield at the Base Rate, and, for the avoidance of doubt, all outstanding Capital accruing Yield at the SOFR Rate shall automatically be converted to Capital accruing Yield at the Base Rate. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Base Rate.

(vi)    As used in this Section:

Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if the then-current Benchmark is a term rate or is based on a term rate, any tenor for such Benchmark that is or may be used for determining the length of a Tranche Period or Yield Period or (y) otherwise, any payment period for Yield calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date.

 

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Benchmark” means, initially, the SOFR Rate; provided that if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to the SOFR Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to this Section. Any reference to “Benchmark” shall include, as applicable, the published component used in the calculation thereof.

Benchmark Replacement means, for any Available Tenor, the sum of (A) the alternate benchmark rate that has been selected by the Administrative Agent and the Seller as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to any evolving or then-prevailing market convention, including any applicable recommendations made by the Relevant Governmental Body, for U.S. dollar-denominated syndicated credit facilities at such time and (B) the related Benchmark Replacement Adjustment;

provided that if the Benchmark Replacement as so determined above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Transaction Documents and provided further, that any such Benchmark Replacement shall be administratively feasible as determined by the Administrative Agent in its sole discretion.

Benchmark Replacement Adjustment means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Available Tenor for any setting of such Unadjusted Benchmark Replacement the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Seller for the applicable Corresponding Tenor giving due consideration to any evolving or then-prevailing market convention, including any applicable recommendations made by the Relevant Governmental Body, for U.S. dollar-denominated syndicated credit facilities at such time; provided that, if the then-current Benchmark is a term rate, more than one tenor of such Benchmark is available as of the applicable Benchmark Replacement Date and the applicable Unadjusted Benchmark Replacement will not be a term rate, the Available Tenor of such Benchmark for purposes of this definition of “Benchmark Replacement Adjustment” shall be deemed to be the Available Tenor that has approximately the same length (disregarding business day adjustments) as the payment period for interest calculated with reference to such Unadjusted Benchmark Replacement.

Benchmark Replacement Date means a date and time determined by the Administrative Agent, which date shall be at the end of a Tranche Period, Yield Period or day (as applicable) and no later than the earliest to occur of the following events with respect to the then-current Benchmark:

 

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(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (A) the date of the public statement or publication of information referenced therein and (B) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or

(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date determined by the Administrative Agent, which date shall promptly follow the date of the public statement or publication of information referenced therein;

For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

Benchmark Transition Event” means, the occurrence of one or more of the following events, with respect to any then-current Benchmark:

(1)    a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);

(2)    a public statement or publication of information by a Governmental Authority having jurisdiction over the Administrative Agent, the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof)

 

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permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or

(3)    a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) or a Governmental Authority having jurisdiction over the Administrative Agent announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.

For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in accordance with this Section and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in accordance with this Section.

Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the SOFR Rate or, if no floor is specified, zero.

Reference Time” means, with respect to any setting of the then-current Benchmark, the time determined by the Administrative Agent in its reasonable discretion.

Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.

 

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Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.

Section 5.05.    Back-Up Security Interest. (a) If, notwithstanding the intent of the parties stated in Section 2.01(c), the sale, assignment and transfer of any Sold Assets to the Administrative Agent (for the ratable benefit of the Purchasers) hereunder (including pursuant to Section 2.01(b)) is not treated as a sale for all purposes (except as provided in Sections 2.01(d) and 14.14), then such sale, assignment and transfer of such Sold Assets shall be treated as the grant of a security interest by the Seller to the Administrative Agent (for the ratable benefit of the Purchasers) to secure the payment and performance of all the Seller’s obligations to the Administrative Agent, the Purchasers and the other Secured Parties hereunder and under the other Transaction Documents (including all Seller Obligations). Therefore, as security for the performance by the Seller of all the terms, covenants and agreements on the part of the Seller to be performed under this Agreement or any other Transaction Document, including the punctual payment when due of the Aggregate Capital and all Yield and all other Seller Obligations, the Seller hereby grants to the Administrative Agent for its benefit and the ratable benefit of the Secured Parties, a continuing security interest in, all of the Seller’s right, title and interest in, to and under all of the Sold Assets, whether now or hereafter owned, existing or arising, provided, notwithstanding the foregoing or any provision of any Transaction Document, none of the Administrative Agent, any Purchaser Party or any beneficiary thereof shall have the right to hold, review, view, audit or otherwise possess (x) any Contract; or (y) any financial reporting or other books or records specifically relating to such Contract and the Receivables generated thereunder, the disclosure of which is precluded by the applicable terms of such Contract, provided, further, however, that during the occurrence and continuance of an Event of Termination, to the extent that the related Obligor has defaulted in the payment of any Receivable, upon the request of the Administrative Agent the Seller shall provide the Administrative Agent with such information reasonably requested with respect to any such Contract (which may be redacted versions of or excerpts of any Contract) to the extent needed for the Administrative Agent to enforce such Contract against the applicable Obligor.

(b)    The Administrative Agent (for the benefit of the Secured Parties) shall have, with respect to all the Sold Assets, and in addition to all the other rights and remedies available to the Administrative Agent (for the benefit of the Secured Parties), all the rights and remedies of a secured party under any applicable UCC. The Seller hereby authorizes the Administrative Agent to file financing statements describing the collateral covered thereby as “all of the debtor’s personal property or assets” or words to that effect, notwithstanding that such wording may be broader in scope than the collateral described in this Agreement.

(c)    For the avoidance of doubt, (i) the grant of security interest pursuant to this Section 5.05 shall be in addition to, and shall not be construed to limit or modify, the sale of Sold Assets pursuant to Section 2.01(b) or the Seller’s grant of security interest pursuant to Section 3.09, (ii) nothing in Section 2.01 shall be construed as limiting the rights, interests (including any security interest), obligations or liabilities of any party under this Section 5.05, and (iii) subject to the foregoing clauses (i) and (ii), this Section 5.05 shall not be construed to contradict the intentions of the parties set forth in Section 2.01(c).

 

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ARTICLE VI

CONDITIONS TO EFFECTIVENESS AND INVESTMENTS

Section 6.01.    Reserved.

Section 6.02.    Conditions Precedent to All Investments. Each Investment hereunder on or after the Closing Date shall be subject to the conditions precedent that:

(a)    the Seller shall have delivered to the Administrative Agent and each Group Agent an Investment Request for such Investment, in accordance with Section 2.02(a);

(b)    the Servicer shall have delivered to the Administrative Agent and each Group Agent all Information Packages required to be delivered hereunder;

(c)    the conditions precedent to such Investment specified in Section 2.01(i) through (iv), shall be satisfied;

(d)    on the date of such Investment the following statements shall be true and correct (and upon the occurrence of such Investment, the Seller and the Servicer shall be deemed to have represented and warranted that such statements are then true and correct):

(i)    the representations and warranties of the Seller and the Servicer contained in Sections 7.01 and 7.02 are true and correct in all material respects (except such representations that are qualified by materiality, which shall be correct in all respects) on and as of the date of such Investment as though made on and as of such date unless such representations and warranties by their terms refer to an earlier date, in which case they shall be true and correct in all material respects (except such representations that are qualified by materiality, which shall be correct in all respects) on and as of such earlier date;

(ii)    no Event of Termination or Unmatured Event of Termination has occurred and is continuing, and no Event of Termination or Unmatured Event of Termination would result from such Investment;

(iii)    no Capital Coverage Deficit exists or would exist after giving effect to such Investment;

(iv)    the Termination Date has not occurred; and

(v)    after giving effect to such Investment, the Aggregate Capital shall be equal to or greater than an amount that is equal to the lesser of (a) sixty-six and sixty-seven hundredths percent (66.67%) of the Facility Limit at such time and (b) the Capital Coverage Amount at such time.

 

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Section 6.03.    Conditions Precedent to All Releases. Each Release hereunder on or after the Closing Date (excluding for the avoidance of doubt the releases set forth in Section 14.22) shall be subject to the conditions precedent that:

(a)    after giving effect to such Release, the Servicer shall be holding in trust for the benefit of the Secured Parties an amount of Collections sufficient to pay the sum of (x) all accrued and unpaid Servicing Fees, Yield, Fees and Breakage Fees, in each case, through the date of such Release, (y) the amount of any Capital Coverage Deficit and (z) the amount of all other accrued and unpaid Seller Obligations through the date of such Release; provided, the Servicer shall not be required to segregate such amount of Collections;

(b)    on the date of such Release the following statements shall be true and correct (and upon the occurrence of such Release, the Seller and the Servicer shall be deemed to have represented and warranted that such statements are then true and correct):

(i)    the representations and warranties of the Seller and the Servicer contained in Sections 7.01 and 7.02 are true and correct in all material respects (except such representations that are qualified by materiality, which shall be correct in all respects) on and as of the date of such Release as though made on and as of such date unless such representations and warranties by their terms refer to an earlier date, in which case they shall be true and correct in all material respects (except such representations that are qualified by materiality, which shall be correct in all respects) on and as of such earlier date;

(ii)    no Event of Termination or Unmatured Event of Termination has occurred and is continuing, and no Event of Termination or Unmatured Event of Termination would result from such Release;

(iii)    no Capital Coverage Deficit exists or would exist after giving effect to such Release;

(iv)    the Aggregate Capital shall be equal to or greater than an amount that is equal to the lesser of (A) sixty-six and sixty-seven hundredths percent (66.67%) of the Facility Limit at such time and (B) the Capital Coverage Amount at such time; and

(v)    the Termination Date has not occurred.

Section 6.04.    Conditions Precedent to Restatement Effective Date. This Agreement shall become effective as of the Restatement Effective Date when (a) the Administrative Agent shall have received each of the documents, agreements (in fully executed form), opinions of counsel, lien search results, UCC filings, certificates and other deliverables listed on the closing

 

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memorandum attached as Exhibit I-2 hereto, in each case, in form and substance acceptable to the Administrative Agent and (b) all fees and expenses payable by the Seller on the Restatement Effective Date to the Purchaser Parties have been paid in full in accordance with the terms of the Transaction Documents.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

Section 7.01.    Representations and Warranties of the Seller. The Seller represents and warrants to each Purchaser Party as of the Closing Date, the Restatement Effective Date, on each Settlement Date, on each date on which any Information Package or other report is delivered to the Administrative Agent or any Purchaser hereunder, and on each day on which an Investment or Release shall have occurred:

(a)    Organization and Good Standing. The Seller is a limited liability company duly organized and validly existing in good standing under the laws of the State of Delaware and has full power and authority under its constitutional documents and under the laws of its jurisdiction to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted.

(b)    Due Qualification. The Seller is duly qualified to do business as a limited liability company, is in good standing as a foreign limited liability company, and has obtained all necessary licenses and approvals in all jurisdictions in which the conduct of its business requires such qualification, licenses or approvals, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

(c)    Power and Authority; Due Authorization. The Seller (i) has all necessary limited liability company power and authority to (A) execute and deliver this Agreement and the other Transaction Documents to which it is a party, (B) perform its obligations under this Agreement and the other Transaction Documents to which it is a party and (C) grant a security interest in the Sold Assets and Seller Collateral to the Administrative Agent on the terms and subject to the conditions herein provided and (ii) has duly authorized by all necessary limited liability company action such grant and the execution, delivery and performance of, and the consummation of the transactions provided for in, this Agreement and the other Transaction Documents to which it is a party.

(d)    Binding Obligations. This Agreement and each of the other Transaction Documents to which the Seller is a party constitutes the legal, valid and binding obligations of the Seller, enforceable against the Seller in accordance with their respective terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) as such enforceability may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

 

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(e)    No Conflict or Violation. The execution, delivery and performance of, and the consummation of the transactions contemplated by, this Agreement and the other Transaction Documents to which the Seller is a party, and the fulfillment of the terms hereof and thereof, will not (i) conflict with, result in any breach of any of the terms or provisions of, or constitute (with or without notice or lapse of time or both) a default under its organizational documents or any indenture, sale agreement, credit agreement, loan agreement, security agreement, mortgage, deed of trust, or other agreement or instrument to which the Seller is a party or by which it or any of its properties is bound, (ii) result in the creation or imposition of any Adverse Claim upon any of the Sold Assets or Seller Collateral pursuant to the terms of any such indenture, credit agreement, loan agreement, security agreement, mortgage, deed of trust, or other agreement or instrument other than this Agreement and the other Transaction Documents or (iii) conflict with or violate any Applicable Law.

(f)    Litigation and Other Proceedings. (i) There is no action, suit, proceeding or investigation pending or, to the knowledge of the Seller, threatened, against the Seller before any Governmental Authority and (ii) the Seller is not subject to any order, judgment, decree, injunction, stipulation or consent order of or with any Governmental Authority that, in the case of either of the foregoing clauses (i) and (ii), (A) purports to affect the legality, validity or enforceability of this Agreement or any other Transaction Document, (B) individually or in the aggregate for all such actions, suits, proceedings and investigations could reasonably be expected to have a Material Adverse Effect, or (C) is not disclosed in a filing by the Seller with the SEC.

(g)    Governmental Approvals. Except where the failure to obtain or make such authorization, consent, order, approval or action could not reasonably be expected to have a Material Adverse Effect, all authorizations, consents, orders and approvals of, or other actions by, any Governmental Authority that are required to be obtained by the Seller in connection with the grant of a security interest in the Sold Assets or the Seller Collateral to the Administrative Agent hereunder or the due execution, delivery and performance by the Seller of this Agreement or any other Transaction Document to which it is a party and the consummation by the Seller of the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party have been obtained or made and are in full force and effect.

(h)    Margin Regulations. The Seller is not engaged, principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meanings of Regulations T, U and X of the Board of Governors of the Federal Reserve System).

(i)    Solvency. The Seller is Solvent.

(j)    Offices; Legal Name. The Seller’s sole jurisdiction of organization is the State of Delaware and such jurisdiction has not changed within four months prior to the date of this Agreement. The office of the Seller is located at Rm. 1843, 208 South Akard St., Dallas, Texas 75202 (or, on and after the Spin-Off Date, such other office as is

 

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notified to the Administrative Agent by the Seller in accordance with this Agreement). The legal name of the Seller is AT&T Receivables Funding II, LLC (or, on and after the Spin-Off Date, such name as is notified to the Administrative Agent by the Seller in accordance with this Agreement).

(k)    Investment Company Act; Volcker Rule. (i) The Seller is not, and is not controlled by, an “investment company” registered or required to be registered under the Investment Company Act and (ii) the transactions contemplated by this Agreement and the Transaction Documents do not result in the Administrative Agent or any Purchaser having an ownership interest in the Seller. For purposes of this clause (k), “ownership interest” has the meaning set forth in §             . 10(d)(6) of the Volcker Rule.

(l)    No Material Adverse Effect. Since the date of formation of the Seller, there has been no Material Adverse Effect with respect to the Seller.

(m)    Accuracy of Information. All Information Packages, Investment Requests, certificates, reports, statements, documents and other information furnished in writing to the Administrative Agent or any other Purchaser Party by or on behalf of the Seller pursuant to any provision of this Agreement or any other Transaction Document, or in connection with or pursuant to any amendment or modification of, or waiver under, this Agreement or any other Transaction Document (taken as a whole and combined with all information previously furnished to the Administrative Agent or such other Purchaser Party), in light of the circumstances under which such information was furnished, was, at the time the same were so furnished, true and accurate in all material respects on the date the same were furnished to the Administrative Agent or such other Purchaser Party, and does not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not misleading.

(n)    Sanctions. (i) The Seller is not a Person that is, or is owned or controlled by Persons that are the subject or target of any Sanctions; (ii) the Seller, or an Affiliate on its behalf, has implemented and maintains in effect policies and procedures designed to promote compliance by the Seller with Anti-Corruption Laws, and (iii) the Seller is in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.

(o)    Linked Accounts. There are no deposit accounts or other similar accounts that are “linked accounts” tied to any Collection Account unless the applicable depository bank has agreed pursuant to the applicable Account Control Agreement governing such Collection Account that such account will be de-linked upon the Administrative Agent delivering a notice of exclusive control or similar notice under the Account Control Agreement related to such Collection Account.

(p)    Perfection Representations.

(i)    This Agreement creates a valid and continuing ownership or security interest (as defined in the applicable UCC) in the Seller’s right, title and interest in, to and under the Sold Assets and Seller Collateral which

 

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(A) ownership or security interest has been perfected and is enforceable against creditors of and purchasers from the Seller and (B) will be free of all Adverse Claims in such Sold Assets and Seller Collateral other than Permitted Liens.

(ii)    Prior to the sale of, or grant of security interest in, the Sold Assets and Seller Collateral hereunder, the Seller owns and has good and marketable title to such Sold Assets and Seller Collateral or, with respect to the Pledged Collateral, the Seller has a first priority perfected security interest in such Pledged Collateral, in each case free and clear of any Adverse Claim of any Person other than Permitted Liens. After giving effect to the sale of, or grant of security interest in, the Sold Assets and Seller Collateral hereunder, the Administrative Agent owns or has a first priority perfected security interest in the Sold Assets and Seller Collateral free and clear of any Adverse Claim of any Person other than Permitted Liens.

(iii)    All appropriate financing statements, financing statement amendments and continuation statements have been filed in the proper filing office in the appropriate jurisdictions under Applicable Law in order to perfect (and continue the perfection of) (A) the Pledgor’s grant of a security interest in the Pledged Receivables and other Pledged Collateral (solely to the extent perfection may be achieved by filing a financing statement under the UCC) to the Seller pursuant to the Pledgor Purchaser Assignment and (B) the Seller’s sale of, and/or grant of a security interest in, the Sold Assets and Seller Collateral (solely to the extent perfection may be achieved by filing a financing statement under the UCC) to the Administrative Agent pursuant to this Agreement.

(iv)    Other than the security interest granted to the Administrative Agent pursuant to this Agreement, the Seller has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Sold Assets or Seller Collateral except as permitted by this Agreement and the other Transaction Documents. The Seller has not authorized the filing of and is not aware of any financing statements filed against the Seller that include a description of collateral covering the Sold Assets or Seller Collateral other than any financing statement (i) in favor of the Administrative Agent or (ii) that has been terminated.

(v)    Notwithstanding any other provision of this Agreement or any other Transaction Document, the representations contained in this Section 7.01(p) shall be continuing and remain in full force and effect until the Final Payout Date.

(q)    The Lock-Boxes and Collection Accounts.

(i)    Nature of Collection Accounts. As of the date each Collection Account is established, such Collection Account constitutes a “deposit account” within the meaning of the applicable UCC.

 

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(ii)    Ownership. Except with respect to an Excluded Collection Account or a Pledgor Collection Account, each Lock-Box and Collection Account is in the name of the Seller, and the Seller owns and has good and marketable title to the Collection Accounts free and clear of any Adverse Claim. Each Excluded Collection Account is in the name of the applicable Excluded Collection Account Owner, and the applicable Excluded Collection Account Owner owns and has good and marketable title to such Excluded Collection Account free and clear of any Adverse Claim. Following the date that the Pledgor establishes the Pledgor Purchaser Assignment, the Pledgor Collection Account is in the name of the Pledgor, and the Pledgor owns and has good and marketable title to the Pledgor Collection Account free and clear of any Adverse Claim.

(iii)    Perfection. The Seller has delivered or caused to be delivered to the Administrative Agent a fully executed Account Control Agreement relating to each Lock-Box and Collection Account other than (x) the TD Account (unless the TD Account becomes subject to an Account Control Agreement in accordance with Section 9.03), (y) each Excluded Collection Account, and (z) until the date that the Pledgor is in compliance with Section 7.14 of the Pledgor Purchaser Assignment, the Pledgor Collection Account, pursuant to which each applicable Collection Account Bank has agreed to comply with the instructions originated by the Administrative Agent directing the disposition of funds in such Lock-Box and Collection Account without further consent by the Seller, the Pledgor, the Servicer or any other Person. The Administrative Agent has “control” (as defined in Section 9-104 of the UCC) over each Collection Account other than (x) the TD Account (unless the TD Account becomes subject to an Account Control Agreement in accordance with Section 9.03), (y) each Excluded Collection Account, and (z) until the date that the Pledgor is in compliance with Section 7.14 of the Pledgor Purchaser Assignment, the Pledgor Collection Account.

(iv)    Instructions. None of the Seller, the Pledgor, the Servicer nor any Excluded Collection Account Owner, as applicable, has consented to the applicable Collection Account Bank complying with instructions of any Person other than the Administrative Agent or, with respect to any Excluded Collection Account, the related Excluded Collection Account Owner.

(r)    Ordinary Course of Business. Each remittance of Collections by or on behalf of the Seller to the Purchaser Parties under this Agreement will have been (i) in payment of an obligation incurred by the Seller in the ordinary course of business or financial affairs of the Seller and (ii) made in the ordinary course of business or financial affairs of the Seller.

(s)    Event of Termination. No Event of Termination or Unmatured Event of Termination has occurred or will result from any Investment or Release.

(t)    Bulk Sales Act. No transaction contemplated by this Agreement requires compliance by it with any bulk sales act or similar law.

 

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(u)    Eligible Receivables. Each Receivable included as an Eligible Receivable in the calculation of the Net Receivables Pool Balance as of any date is an Eligible Receivable as of such date.

(v)    Taxes. The Seller has (i) timely filed all U.S. federal and other material tax returns required to be filed by it and (ii) paid, or caused to be paid, all taxes, assessments and other governmental charges, if any, other than taxes, assessments and other governmental charges being contested in good faith by appropriate proceedings and as to which adequate reserves have been provided in accordance with GAAP, except in each case to the extent that such failure to file or pay could not reasonably be expected to have a Material Adverse Effect.

(w)    Tax Status. The Seller has not been characterized as an association (or publicly traded partnership) taxable as a corporation or as a taxable mortgage pool, for U.S. federal income tax purposes. The Seller is not subject to U.S. federal net income tax and its distributions or allocations of income are not subject to U.S. federal withholding tax under Section 1445 or 1446 of the Code.

(x)    Opinions. The facts regarding the Seller, the Servicer, each Originator, the Pledgor, (prior to the Spin-Off Date) AT&T as Performance Guarantor, the Receivables, the Related Security and the related matters set forth or assumed in the opinion of counsel regarding true sale and substantive consolidation matters delivered in connection with this Agreement and the Transaction Documents are true and correct in all material respects.

(y)    Other Transaction Documents. Each representation and warranty made by the Seller under each other Transaction Document to which it is a party is true and correct in all material respects as of the date when made.

(z)    Liquidity Coverage Ratio. The Seller does not, does not and will not during this Agreement issue any LCR Security. The Seller further represents and warrants that its assets and liabilities are consolidated with the assets and liabilities of the Parent for purposes of GAAP.

(aa)    Beneficial Ownership Regulation. As of the Restatement Effective Date, the Seller is an entity that is organized under the laws of the United States or of any state and at least 51% of whose common stock or analogous equity interest is owned directly or indirectly by a company listed on the New York Stock Exchange or the American Stock Exchange or designated as a NASDAQ National Market Security listed on the NASDAQ stock exchange and is excluded on that basis from the definition of “Legal Entity Customer” as defined in the Beneficial Ownership Regulation.

Notwithstanding any other provision of this Agreement or any other Transaction Document, the representations and warranties contained in this Section shall be continuing and remain in full force and effect until the Final Payout Date.

 

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Section 7.02.    Representations and Warranties of the Servicer. The Servicer represents and warrants to each Purchaser Party as of the Closing Date, the Restatement Effective Date, on each Settlement Date, on each date on which any Information Package or other report is delivered to the Administrative Agent or any Purchaser hereunder, and on each day on which an Investment or Release shall have occurred:

(a)    Organization and Good Standing. The Servicer is a duly organized and validly existing corporation in good standing under the laws of the State of Delaware, with the power and authority under its organizational documents and under the laws of Delaware to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted.

(b)    Due Qualification. The Servicer is duly qualified to do business, is in good standing as a foreign entity and has obtained all necessary licenses and approvals in all jurisdictions in which the conduct of its business or the servicing of the Pool Receivables as required by this Agreement requires such qualification, licenses or approvals, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

(c)    Power and Authority; Due Authorization. The Servicer has all necessary power and authority to (i) execute and deliver this Agreement and the other Transaction Documents to which it is a party and (ii) perform its obligations under this Agreement and the other Transaction Documents to which it is a party and the execution, delivery and performance of, and the consummation of the transactions provided for in, this Agreement and the other Transaction Documents to which it is a party have been duly authorized by the Servicer by all necessary action.

(d)    Binding Obligations. This Agreement and each of the other Transaction Documents to which it is a party constitutes legal, valid and binding obligations of the Servicer, enforceable against the Servicer in accordance with their respective terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) as such enforceability may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(e)    No Conflict or Violation. The execution and delivery of this Agreement and each other Transaction Document to which the Servicer is a party, the performance of the transactions contemplated by this Agreement and the other Transaction Documents and the fulfillment of the terms of this Agreement and the other Transaction Documents by the Servicer will not (i) conflict with, result in any breach of any of the terms or provisions of, or constitute (with or without notice or lapse of time or both) a default under, the organizational documents of the Servicer or any indenture, sale agreement, credit agreement, loan agreement, security agreement, mortgage, deed of trust or other agreement or instrument to which the Servicer is a party or by which it or any of its property is bound except where such conflict, breach or default could not reasonably be

 

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expected to have a Material Adverse Effect, or (ii) conflict with or violate any Applicable Law, except to the extent that any such conflict, breach, default, Adverse Claim or violation could not reasonably be expected to have a Material Adverse Effect.

(f)    Litigation and Other Proceedings. There is no action, suit, proceeding or investigation pending, or to the Servicer’s knowledge threatened, against the Servicer before any Governmental Authority: (i) purporting to affect the legality, validity or enforceability of this Agreement or any of the other Transaction Documents; (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any other Transaction Document; or (iii) seeking any determination or ruling that could materially and adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability of, this Agreement or any of the other Transaction Documents.

(g)    No Consents. The Servicer is not required to obtain the consent of any other party or any consent, license, approval, registration, authorization or declaration of or with any Governmental Authority in connection with the execution, delivery, or performance of this Agreement or any other Transaction Document to which it is a party that has not already been obtained, except where the failure to obtain such consent, license, approval, registration, authorization or declaration could not reasonably be expected to have a Material Adverse Effect.

(h)    Compliance with Laws. The Servicer has maintained in effect all qualifications required under Applicable Law in order to service each Pool Receivable and the related Contract, if any, in accordance with this Agreement except where the failure to do so would not have a Material Adverse Effect and has complied in all material respects with all other requirements of Applicable Law in connection with servicing each Pool Receivable and the related Contract.

(i)    Accuracy of Information. All Information Packages, Investment Requests, certificates, reports, statements, documents and other information furnished in writing to the Administrative Agent or any other Purchaser Party by the Servicer or on behalf of the Seller pursuant to any provision of this Agreement or any other Transaction Document, or in connection with or pursuant to any amendment or modification of, or waiver under, this Agreement or any other Transaction Document (taken as a whole and combined with all information previously furnished to the Administrative Agent or such other Purchaser Party), in light of the circumstances under which such information was furnished, was, at the time the same were so furnished, true and accurate in all material respects on the date the same were furnished to the Administrative Agent or such other Purchaser Party, and does not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not misleading.

(j)    Location of Records. The offices where the initial Servicer keeps all of its records relating to the servicing of the Pool Receivables are located at One CNN Center, Atlanta, GA 30303.

 

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(k)    Credit and Collection Policy. The Servicer has complied in all material respects with the Credit and Collection Policy with regard to each Pool Receivable and the related Contracts.

(l)    Eligible Receivables. Each Receivable included as an Eligible Receivable in the calculation of the Net Receivables Pool Balance as of any date is an Eligible Receivable as of such date.

(m)    Servicing Programs. No license or approval is required for the Administrative Agent’s use of any software or other computer program used by the Servicer, any Originator, the Pledgor, or any Sub-Servicer in the servicing of the Pool Receivables, other than those which have been obtained and are in full force and effect.

(n)    Servicing of Pool Receivables. Since the Restatement Effective Date there has been no material adverse change in the ability of the Servicer or any Sub-Servicer to service and collect the Pool Receivables and the Related Security.

(o)    Other Transaction Documents. Each representation and warranty made by the Servicer under each other Transaction Document to which it is a party is true and correct in all material respects as of the date when made.

(p)    No Material Adverse Effect. Since December 31, 2018, there has been no Material Adverse Effect on the Servicer.

(q)    Investment Company Act. The Servicer is not an “investment company,” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act.

(r)    Sanctions. (i) The Servicer is not a Person that is, or is owned or controlled by Persons that are the subject or target of any Sanctions; (ii) the Servicer, or an Affiliate on its behalf, has implemented and maintains in effect policies and procedures designed to promote compliance by the Servicer with Anti-Corruption Laws, and (iii) the Servicer is in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.

(s)    Event of Termination. No Event of Termination or Unmatured Event of Termination has occurred or will result from any Investment or Release.

(t)    Financial Condition. The consolidated balance sheets of the Parent and its consolidated Subsidiaries as of December 31, 2018, and the related statements of income and shareholders’ equity of the Parent and its consolidated Subsidiaries for the fiscal quarter then ended, copies of which have been furnished to the Administrative Agent and the Group Agents, present fairly in all material respects the consolidated financial position of the Parent and its consolidated Subsidiaries for the period ended on such date, all in accordance with GAAP.

 

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(u)    Reserved

(v)    Reserved.

(w)    Opinions. The facts regarding the Seller, the Servicer, the Pledgor, each Originator, (prior to the Spin-Off Date) AT&T as Performance Guarantor, the Receivables, the Related Security and the related matters set forth or assumed in the opinion of counsel regarding true sale and substantive consolidation matters delivered in connection with this Agreement and the Transaction Documents are true and correct in all material respects.

(x)    Other Transaction Documents. Each representation and warranty made by the Servicer under each other Transaction Document to which it is a party is true and correct in all material respects as of the date when made.

Notwithstanding any other provision of this Agreement or any other Transaction Document, the representations and warranties contained in this Section shall be continuing and remain in full force and effect until the Final Payout Date.

ARTICLE VIII

COVENANTS

Section 8.01.    Covenants of the Seller. At all times from the Closing Date until the Final Payout Date:

(a)    Pledgor Purchaser Assignment. Prior to the Spin-Off Date, the Seller shall comply, and shall cause the Pledgor to comply, with all directions of the Administrative Agent with respect to the Pledgor Purchaser Assignment including, but not limited to (i) all requests for information and inspections in accordance with Section 8.01(g) with respect to the Pledged Collateral and (ii) following the occurrence and continuance of an Event of Termination, exercising all rights of the Pledgor under the Pledgor Purchase and Sale Agreement, including foreclosing on the Pledged Receivables, or taking such other actions as the Administrative Agent may request with the Pledged Collateral or the proceeds thereof, the Pledgor Purchase and Sale Agreement or the Pledgor Purchaser Assignment.

(b)    Existence. The Seller shall keep in full force and effect its existence and rights as a limited liability company under the laws of the State of Delaware and shall obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement, the other Transaction Documents, the Sold Assets, and the Seller Collateral.

(c)    Financial Reporting. The Seller will maintain a system of accounting established and administered in accordance with GAAP, and the Seller (or the Servicer on its behalf) shall furnish to the Administrative Agent and each Group Agent:

 

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(i)    Annual Financial Statements of the Seller. Promptly upon completion and in no event later than 90 days after the close of each fiscal year of the Seller (or, if applicable, the date on which the audited financial statements of the Parent are delivered in accordance with Section 8.01(c)(v)), annual unaudited financial statements of the Seller certified by a Financial Officer of the Seller that they fairly present in all material respects, in accordance with GAAP, the financial condition of the Seller as of the date indicated and the results of its operations for the periods indicated.

(ii)    Information Packages. As soon as available and in any event not later than two (2) Business Days prior to each Settlement Date, an Information Package as of the most recently completed Fiscal Month; provided, however, that at any time when an Event of Termination has occurred and is continuing, the Seller shall furnish to the Administrative Agent promptly upon request an interim report with respect to the Pool Receivables containing such information as the Administrative Agent may reasonably request.

(iii)    Other Information. Such other information (including non-financial information) as the Administrative Agent or any Group Agent may from time to time reasonably request.

(iv)    Quarterly Financial Statements of Parent. As soon as available and in no event later than 45 days following the end of each of the first three fiscal quarters in each of Parent’s fiscal years (or, if applicable, the date on which the Parent is required to file its quarterly report on Form 10-Q by the SEC), (i) the unaudited consolidated balance sheet and statements of income of Parent and its consolidated Subsidiaries as at the end of such fiscal quarter and the related unaudited consolidated statements of earnings and cash flows for such fiscal quarter and for the elapsed portion of the fiscal year ended with the last day of such fiscal quarter, in each case setting forth comparative figures for the corresponding fiscal quarter in the prior fiscal year, all of which shall be certified by a Financial Officer of Parent that they fairly present in all material respects, in accordance with GAAP, the financial condition of Parent and its consolidated Subsidiaries as of the dates indicated and the results of their operations for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal quarter.

(v)    Annual Financial Statements of Parent. Within 90 days after the close of each of Parent’s fiscal years (or, if applicable, the date on which the Parent is required to file its quarterly report on Form 10-K by the SEC), the consolidated balance sheet of Parent and its consolidated Subsidiaries as at the end of such fiscal year and the related consolidated statements of earnings and cash flows for such fiscal year setting forth comparative figures for the preceding fiscal year, all reported on by independent certified public accountants of recognized national standing (without (x) a “going concern” or like qualification

 

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or exception or (y) a qualification as to the scope of the audit) to the effect that such consolidated financial statements present fairly in all material respects, in accordance with GAAP, the financial condition of Parent and its consolidated Subsidiaries as of the dates indicated and the results of their operations for the periods indicated.

(vi)    Unless otherwise set forth herein, any financial information or other material required to be delivered pursuant to this paragraph (c) with respect to the Parent shall be deemed to have been furnished to each of the Administrative Agent and each Group Agent on the earlier of (A) the date that such financial information or other material is posted on the SEC’s website at www.sec.gov and (B) the date on which the Parent posts such financial information or other material on its website on the Internet at www.att.com or at such other website identified by the Seller in a notice to the Administrative Agent and the Purchasers and that is accessible by the Purchasers without charge.

(d)    Notices. The Seller (or the Servicer on its behalf) will notify the Administrative Agent and each Group Agent in writing of any of the following events promptly upon (but in no event later than three (3) Business Days after) a Financial Officer or other officer learning of the occurrence thereof, with such notice describing the same, and if applicable, the steps being taken by the Person(s) affected with respect thereto:

(i)    Notice of Events of Termination or Unmatured Events of Termination. A statement of a Financial Officer of the Seller setting forth details of any Event of Termination or Unmatured Event of Termination that has occurred and is continuing and the action which the Seller proposes to take with respect thereto.

(ii)    Representations and Warranties. The failure of any representation or warranty made or deemed to be made by the Seller or the Pledgor under this Agreement or any other Transaction Document to be true and correct in any material respect when made or deemed made.

(iii)    Litigation. The institution of any litigation, arbitration proceeding or governmental proceeding with respect to the Seller, the Servicer, the Performance Guarantor, the Pledgor, or any Originator, which with respect to any Person other than the Seller, could reasonably be expected to have a Material Adverse Effect.

(iv)    Adverse Claim. (A) Any Person shall obtain an Adverse Claim upon the Sold Assets or Seller Collateral or any portion thereof other than Permitted Liens, (B) any Person other than the Seller, the Servicer, the Pledgor, the Administrative Agent or, with respect to any Excluded Collection Account, the related Excluded Collection Account Owner shall obtain any rights or direct any action with respect to any Collection Account (or related Lock-Box) or

 

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(C) any Obligor shall receive any change in payment instructions with respect to Pool Receivable(s) from a Person other than the Servicer or the Administrative Agent.

(v)    Name Changes. At least thirty (30) days (or such shorter period of time as the Administrative Agent may agree) before any change in either of the Seller’s or the Pledgor’s name, jurisdiction of organization or any other change requiring the amendment of UCC financing statements.

(vi)    Reserved.

(vii)    Termination Event. The occurrence of any of (A) a Purchase and Sale Termination Event under the Purchase and Sale Agreement or (B) prior to the Spin-Off Date, a Pledgor Purchase and Sale Termination Event under the Pledgor Purchase and Sale Agreement.

(viii)    Material Adverse Change. Promptly after the occurrence thereof, notice of any Material Adverse Effect with respect to any Originator, the Pledgor, the Servicer, the Performance Guarantor or the Seller.

(e)    Conduct of Business. The Seller will carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and will do all things necessary to remain duly organized, validly existing and in good standing as a domestic organization in its jurisdiction of organization and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted.

(f)    Compliance with Laws. The Seller will comply with all Applicable Laws to which it may be subject including, without limitation, Anti-Corruption Laws, Sanctions, ERISA and the PATRIOT Act, if the failure to comply could reasonably be expected to have a Material Adverse Effect.

(g)    Furnishing of Information and Inspection of Receivables. The Seller will furnish or cause to be furnished to the Administrative Agent and each Group Agent from time to time such information with respect to the Pool Receivables and the other Sold Assets and the Seller Collateral as the Administrative Agent or any Group Agent may reasonably request. Once a year (or more frequently, which may be as often as the Administrative Agent may determine, while an Event of Termination shall have occurred and be continuing) the Seller will, at the Seller’s expense, during regular business hours with reasonable prior written notice (i) permit the Administrative Agent and each Group Agent or their respective agents or representatives to (A) examine and make copies of and abstracts from all books and records relating to the Pool Receivables or other Sold Assets and the Seller Collateral, (B) visit the offices and properties of the Seller for the purpose of examining such books and records and (C) upon execution of a confidentiality agreement, discuss matters relating to the Pool Receivables, the other Sold Assets, the Seller Collateral, or the Seller’s performance hereunder or under the other Transaction

 

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Documents to which it is a party with any of the designated Financial Officers or independent public accountants of the Seller having knowledge of such matters and (ii) without limiting the provisions of clause (i) above, during regular business hours, at the Seller’s expense, upon prior written notice from the Administrative Agent, permit certified public accountants or other auditors acceptable to the Administrative Agent to conduct a review of its books and records with respect to such Pool Receivables, other Sold Assets, and the Seller Collateral; provided, that the Seller shall be required to reimburse the Administrative Agent for only one (1) such review pursuant to clause (ii) above in any twelve-month period, unless an Event of Termination has occurred and is continuing; provided, notwithstanding the foregoing or any provision of any Transaction Document, none of the Administrative Agent, any Purchaser Party or any beneficiary thereof shall have the right to hold, review, view, audit or otherwise possess (x) any Contract, or (y) any financial reporting or other books or records specifically relating to such Contract and the Receivables generated thereunder, the disclosure of which is precluded by the applicable terms of such Contract; provided, further, however, that during the occurrence and continuance of an Event of Termination, to the extent that the related Obligor has defaulted in the payment of any Receivable, upon the request of the Administrative Agent the Seller shall provide the Administrative Agent with such information reasonably requested with respect to any such Contract (which may be redacted versions of or excerpts of any Contract) to the extent needed for the Administrative Agent to enforce such Contract against the applicable Obligor.

(h)    Payments on Receivables, Collection Accounts. (i) The Seller (or the Servicer on its behalf) will at all times, instruct all Obligors to deliver payments on the Pool Receivables to a Collection Account or a Lock-Box. The Seller (or the Servicer on its behalf) will at all times, ensure that only payments and Collections with respect to Pledged Receivables and the other Pledged Collateral are deposited into the Pledgor Collection Account. The Seller (or the Servicer on its behalf) will, and will cause each Originator and the Pledgor to, at all times, maintain such books and records necessary to identify Collections received from time to time on Pool Receivables and to segregate such Collections from other property of the Servicer, the Pledgor and the Originators. If any payments on the Pool Receivables or other Collections are received by the Seller, the Servicer, the Pledgor, or an Originator, it shall hold such payments in trust for the benefit of the Administrative Agent, the Group Agents and the other Secured Parties and promptly (but in any event within one (1) Business Day after receipt) remit such funds into a Collection Account.

(ii)    The Seller (or the Servicer on its behalf) will cause, and will cause the Pledgor to cause, each Collection Account Bank to comply with the terms of each applicable Account Control Agreement other than with respect to (x) the TD Account unless the TD Account becomes subject to an Account Control Agreement in accordance with Section 9.03, (y) any Excluded Collection Account, and (z) until the date the Pledgor is in compliance with Section 7.14 of the Pledgor Purchaser Assignment, the Pledgor Collection Account. Except with respect to any Excluded Collection Account which shall be subject to Section 8.01(dd) and Section 8.02(j), the Seller shall not permit funds other than

 

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Collections on Pool Receivables and other Sold Assets and Seller Collateral to be deposited into any Collection Account except with respect to any amounts received in respect of Excluded Receivables; provided that in the event the Parent long-term credit rating is downgraded to below BB by S&P or Ba2 by Moody’s, the Seller shall, and shall cause the Pledgor to, use commercially reasonable efforts to cause all such funds not representing Collections on Pool Receivables and other Sold Assets and Seller Collateral to no longer be deposited into any Collection Account promptly upon the request of the Administrative Agent. The Seller (or the Servicer on its behalf) shall, and shall cause the Pledgor to, identify and transfer any funds not representing Collections on Pool Receivables and other Sold Assets and Seller Collateral, deposited into any Collection Account other than an Excluded Collection Account to the appropriate Person entitled to such funds within two (2) Business Days of such deposit. The Seller will not, and will not permit the Servicer, the Pledgor, any Originator or any other Person to commingle Collections or other funds to which the Administrative Agent, any Group Agent or any other Secured Party is entitled, with any other funds except as set forth herein.

(iii)    The Seller shall only add a Collection Account (or a related Lock-Box) or a Collection Account Bank to those listed on Schedule II to this Agreement, if the Administrative Agent has received notice of such addition and an executed and acknowledged copy of an Account Control Agreement (or an amendment thereto) in form and substance acceptable to the Administrative Agent from the applicable Collection Account Bank. The Seller shall, and shall cause the Pledgor to, only terminate a Collection Account Bank or close a Collection Account (or a related Lock-Box) with the prior written consent of the Administrative Agent. The Servicer shall ensure that no disbursements are made from any Collection Account, other than such disbursements that are made at the direction and for the account of the Seller or Pledgor, as applicable, or, with respect to any Excluded Collection Account, the related Excluded Collection Account Owner.

(i)    Sales, Liens, Etc. Except as otherwise provided herein, the Seller will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Pool Receivable, Sold Assets, or any Seller Collateral other than Permitted Liens, or assign any right to receive income in respect thereof.

(j)    Extension or Amendment of Pool Receivables. Except as otherwise permitted in Section 9.02, the Seller will not, and will not permit the Servicer or the Pledgor to, alter the delinquency status or adjust the Outstanding Balance or otherwise modify the terms of any Pool Receivable in any material respect, or amend, modify or waive, in any material respect, any term or condition of any related Contract. The Seller shall at its expense, timely and fully perform and comply in all material respects with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Pool Receivables, and timely and fully comply with the Credit and Collection Policy with regard to each Pool Receivable and the related Contract.

 

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(k)    Change in Credit and Collection Policy. The Seller will not (and will not permit the Servicer or the Pledgor to) make any change in the Credit and Collection Policy that could reasonably be expected to materially adversely affect the underwriting standards, the collectability of the Receivables, the credit quality of any Receivable, the enforceability of any related contract or the Seller’s or the Servicer’s ability to perform its obligations under the related contract or the Transaction Documents without the prior written consent of the Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed).

(l)    Fundamental Changes. The Seller shall not, without the prior written consent of the Administrative Agent and the Majority Group Agents, permit itself (i) to merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, any Person or (ii) undertake any division of its rights, assets, obligations, or liabilities pursuant to a plan of division or otherwise pursuant to Applicable Law or (iii) to be directly owned by any Person other than an Originator.

(m)    Books and Records. The Seller shall keep and maintain (or cause the Servicer and the Pledgor (solely with respect to the Pledged Receivables) to keep and maintain) all documents, books, records, computer tapes and disks and other information reasonably necessary or advisable for the collection of all Pool Receivables (including records adequate to permit the daily identification of each Pool Receivable and all Collections of and adjustments to each existing Pool Receivable).

(n)    Reserved.

(o)    Reserved.

(p)    Security Interest, Etc. The Seller shall (and shall cause the Servicer or the Pledgor to), at its expense, take all action necessary or reasonably desirable to establish and maintain (i) with respect to the Sold Assets and Seller Collateral, a valid and enforceable ownership or security interest in the Sold Assets and Seller Collateral, and a first priority perfected security interest in the Sold Assets and Seller Collateral and (ii) with respect to the Pledged Receivables and Pledged Collateral, a valid and enforceable security interest in the Pledged Receivables and Pledged Collateral, and a first priority perfected security interest in the Pledged Receivables and Pledged Collateral, in each case free and clear of any Adverse Claim other than Permitted Liens, in favor of the Administrative Agent (on behalf of the Secured Parties), including taking such action to perfect, protect or more fully evidence the security interest of the Administrative Agent (on behalf of the Secured Parties) as the Administrative Agent or any Secured Party may reasonably request. In order to evidence the security interests of the Administrative Agent under this Agreement, the Seller shall, from time to time take such action, or

 

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execute and deliver such instruments as may be necessary (including, without limitation, such actions as are reasonably requested by the Administrative Agent) to maintain and perfect, as a first-priority interest, the Administrative Agent’s security interest in the Receivables, Related Security and Collections. The Seller shall, from time to time and within the time limits established by law, prepare and present to the Administrative Agent for the Administrative Agent’s authorization and approval, all financing statements, amendments, continuations or initial financing statements in lieu of a continuation statement, or other filings necessary to continue, maintain and perfect the Administrative Agent’s security interest as a first-priority interest. The Administrative Agent’s approval of such filings shall authorize the Seller to file such financing statements under the UCC without the signature of the Seller, the Pledgor, any Originator or the Administrative Agent where allowed by Applicable Law. Notwithstanding anything else in the Transaction Documents to the contrary, the Seller shall not have any authority to file a termination, partial termination, release, partial release, or any amendment that deletes the name of a debtor or excludes any Sold Assets or Seller Collateral, of any such financing statements filed in connection with the Transaction Documents, without the prior written consent of the Administrative Agent.

(q)    Certain Agreements. Without the prior written consent of the Administrative Agent and the Majority Group Agents, the Seller will not (and will not permit any Originator, the Pledgor, or the Servicer to) amend, modify, waive, revoke or terminate any Transaction Document to which it is a party (which, for clarification, shall not include the addition or removal of an Originator without the consent of the Administrative Agent or any Group Agent to the extent not required pursuant to the terms of the Purchase and Sale Agreement) or any provision of the Seller’s organizational documents which requires the consent of the “Independent Director” (as such term is used in the Seller’s Certificate of Formation and Limited Liability Company Agreement).

(r)    Restricted Payments. (i) Except pursuant to clause (ii) below, the Seller will not: (A) purchase or redeem any of its membership interests, (B) declare or pay any dividend or set aside any funds for any such purpose, (C) prepay, purchase or redeem any Debt, (D) lend or advance any funds or (E) repay any loans or advances to, for or from any of its Affiliates (the amounts described in clauses (A) through (E) being referred to as “Restricted Payments”).

(ii)    Subject to the limitations set forth in clause (iii) below, the Seller may make Restricted Payments so long both immediately before and immediately after giving effect thereto, the Seller’s Net Worth is not less than the Required Capital Amount.

(iii)    The Seller may make Restricted Payments only out of (A) the funds, if any, it receives pursuant to Section 4.01 of this Agreement or (B) funds held in the Pledged Deposit Account and the Pledged Investment Account; provided that the Seller shall not pay, make or declare any Restricted Payment (including any dividend) if, after giving effect thereto, any Event of Termination or Unmatured Event of Termination shall have occurred and be continuing.

 

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(s)    Other Business. The Seller will not: (i) engage in any business other than the transactions contemplated by the Transaction Documents, (ii) create, incur or permit to exist any Debt of any kind (or cause or permit to be issued for its account any letters of credit or bankers’ acceptances) other than pursuant to this Agreement or the Subordinated Notes or (iii) form any Subsidiary or make any investments in any other Person; provided, however, that the Seller shall be permitted to incur minimal obligations to the extent necessary for the day-to-day operations of the Seller.

(t)    Use of Collections Available to the Seller. The Seller shall apply the Collections available to the Seller to make payments in the following order of priority: (i) the payment of its obligations under this Agreement and each of the other Transaction Documents (other than the Subordinated Notes) and (ii) other legal and valid purposes.

(u)    Further Assurances; Change in Name or Jurisdiction of Origination, Etc. (i) The Seller hereby authorizes and hereby agrees from time to time, at its own expense, promptly to execute (if necessary) and deliver all further instruments and documents, and to take all further actions, that may be necessary or desirable, or that the Administrative Agent may reasonably request, to perfect, protect or more fully evidence the security interest granted pursuant to this Agreement or any other Transaction Document, or to enable the Administrative Agent (on behalf of the Secured Parties) to exercise and enforce the Secured Parties’ rights and remedies under this Agreement and the other Transaction Document. Without limiting the foregoing, the Seller hereby authorizes, and will, upon the request of the Administrative Agent, at the Seller’s own expense, execute (if necessary) and file such financing statements or continuation statements, or amendments thereto, and such other instruments and documents, that may be necessary or desirable, or that the Administrative Agent may reasonably request, to perfect, protect or evidence any of the foregoing.

(ii)    The Seller authorizes the Administrative Agent to file financing statements, continuation statements and amendments thereto and assignments thereof, relating to the Receivables, the Related Security, the related Contracts, Collections with respect thereto and the other Sold Assets and Seller Collateral without the signature of the Seller. A photocopy or other reproduction of this Agreement shall be sufficient as a financing statement where permitted by law.

(iii)    The Seller shall at all times be organized under the laws of the State of Delaware and shall not take any action to change its jurisdiction of organization.

(iv)    The Seller shall not make any change in the Seller’s name, organization type, jurisdiction of formation or location or make any other change requiring an amendment of any UCC financing statements unless (x) the Seller shall have provided at least thirty (30) days (or such shorter period of time as the Administrative Agent may agree) prior written notice to the Administrative Agent and the Majority Group Agents, (y) the Seller, at its own expense, shall have taken all action necessary or appropriate to perfect or maintain the perfection of

 

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the security interest under this Agreement (including, without limitation, the filing of all financing statements and the taking of such other action as the Administrative Agent may request in connection with such change or relocation) and (z) if requested by the Administrative Agent, the Seller shall cause to be delivered to the Administrative Agent, an opinion, in form and substance satisfactory to the Administrative Agent as to such UCC perfection and priority matters as the Administrative Agent may request at such time.

(v)    Sanctions and Anti-Corruption. The Seller will not request any Investment, and Seller shall not directly or to its knowledge indirectly use the proceeds of any Investment, in each case (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, or (ii) to fund any activities or business of or with any Person, or in any country or territory that, at the time of such funding is, or whose government is, the subject of Sanctions or in any manner that would result in the violation of any Sanctions applicable to Seller or, to the knowledge of such Seller, any other party hereto.

(w)    Reserved.

(x)    Seller’s Net Worth. The Seller shall not permit the Seller’s Net Worth to be less than the Required Capital Amount.

(y)    Taxes. The Seller will (i) timely file all U.S. federal and other material tax returns (federal, state and local) required to be filed by it and (ii) pay, or cause to be paid, before the same shall become delinquent, all taxes, assessments and other governmental charges, if any, other than taxes, assessments and other governmental charges being contested in good faith by appropriate proceedings and as to which adequate reserves have been provided in accordance with GAAP, unless and until any Lien resulting therefrom attaches to its property and becomes enforceable against its other creditors, except in each case to the extent that such failure to file or pay could not reasonably be expected to have a Material Adverse Effect.

(z)    Seller’s Tax Status. The Seller shall not be characterized as an association (or publicly traded partnership) taxable as a corporation or as a taxable mortgage pool, for U.S. federal income tax purposes. The Seller shall not become subject to U.S. federal net income tax and its distributions or allocations of income are not subject to U.S. federal withholding tax under Section 1445 or 1446 of the Code. The Seller shall not become subject to any material Tax in any jurisdiction outside the United States.

(aa)    Minimum Funding Threshold. The Seller shall maintain Aggregate Capital equal to or greater than an amount that is equal to the lesser of (a) sixty-six and sixty-seven hundredths percent (66.67%) of the Facility Limit at such time and (b) the Capital Coverage Amount at such time.

(bb)    Liquidity Coverage Ratio. The Seller shall not issue any LCR Security.

 

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(cc)    Beneficial Ownership Regulation. Promptly following any change that would result in a change to the status as an excluded “Legal Entity Customer” under (and as defined in) the Beneficial Ownership Regulation, the Seller shall execute and deliver to the Administrative Agent and each Group Agent a Certificate of Beneficial Ownership complying with the Beneficial Ownership Regulation, in form and substance reasonably acceptable to the Administrative Agent.

(dd)    Excluded Collection Accounts. The Seller or the Servicer on its behalf shall cause (i) the related Excluded Collection Account Owner to cause or, (ii) solely with respect to Collections on Pledged Receivables and Pledged Collateral, shall cause the Pledgor to cause the related Excluded Collection Account Owner to cause, all Collections on Pool Receivables and other Sold Assets and Seller Collateral deposited into any Excluded Collection Account to be deposited into a Collection Account maintained in the name of the Seller and subject to an Account Control Agreement or, solely with respect to Collections on Pledged Receivables and Pledged Collateral, into the Pledgor Collection Account, by no later than (A) so long as neither (x) an Event of Termination has occurred and is continuing and (y) the Parent credit rating for long-term, unsecured and unsubordinated indebtedness or deposit obligations is not below BBB- by S&P or Baa3 by Moody’s, each Monthly Settlement Date; (B) at any time that the Parent credit rating for long-term, unsecured and unsubordinated indebtedness or deposit obligations is downgraded to below BBB- by S&P or Baa3 by Moody’s but prior to the occurrence and continuance of an Event of Termination, five (5) Business Days after receipt thereof; or (C) following the occurrence and continuance of an Event of Termination, one (1) Business Day after receipt thereof. The Seller shall not and shall cause the related Excluded Collection Account Owner not to permit any other Person to have any Adverse Claim, obtain any rights or direct any action with respect to any Excluded Collection Account.

Section 8.02.    Covenants of the Servicer. At all times from the Closing Date until the Final Payout Date:

(a)    Existence. The Servicer shall keep in full force and effect its existence and rights as a corporation or other entity. The Servicer shall obtain and preserve its qualification to do business in each jurisdiction in which the conduct of its business or the servicing of the Pool Receivables as required by this Agreement requires such qualification, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

(b)    Financial Reporting. The Servicer will maintain a system of accounting established and administered in accordance with GAAP, and the Servicer, on behalf of the Seller, shall furnish to the Administrative Agent and each Group Agent:

(i)    Compliance Certificates. (a) A compliance certificate promptly upon completion of the annual report of the Parent and in no event later than 90 days after the close of the Parent’s fiscal year, in form and substance substantially similar to Exhibit H signed by a Financial Officer of the Servicer

 

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stating that no Event of Termination or Unmatured Event of Termination has occurred and is continuing, or if any Event of Termination or Unmatured Event of Termination has occurred and is continuing, stating the nature and status thereof and (b) within 45 days after the close of each fiscal quarter of the Parent, a compliance certificate in form and substance substantially similar to Exhibit H signed by a Financial Officer of the Parent stating that no Event of Termination or Unmatured Event of Termination has occurred and is continuing, or if any Event of Termination or Unmatured Event of Termination has occurred and is continuing, stating the nature and status thereof.

(ii)    Information Packages. As soon as available and in any event not later than two (2) Business Days prior to each Settlement Date, an Information Package as of the most recently completed Fiscal Month; provided, however, that at any time when an Event of Termination has occurred and is continuing, the Servicer shall furnish to the Administrative Agent promptly upon request an interim report with respect to the Pool Receivables containing such information as the Administrative Agent may reasonably request.

(iii)    Other Information. Such other information (including non-financial information) as the Administrative Agent or any Group Agent may from time to time reasonably request.

(b)    Notices. The Servicer, on behalf of the Seller, will notify the Administrative Agent and each Group Agent in writing of any of the following events promptly upon (but in no event later than three (3) Business Days after) a Financial Officer or other officer learning of the occurrence thereof, with such notice describing the same, and if applicable, the steps being taken by the Person(s) affected with respect thereto:

(i)    Notice of Events of Termination or Unmatured Events of Termination. A statement of a Financial Officer of the Seller setting forth details of any Event of Termination or Unmatured Event of Termination that has occurred and is continuing and the action which the Seller proposes to take with respect thereto.

(ii)    Representations and Warranties. The failure of any representation or warranty made or deemed to be made by the Seller, the Pledgor, or the Servicer under this Agreement or any other Transaction Document to be true and correct in any material respect when made or deemed made.

(iii)    Litigation. The institution of any litigation, arbitration proceeding or governmental proceeding with respect to the Seller, the Servicer, the Performance Guarantor, the Pledgor, or any Originator, which with respect to any Person other than the Seller, could reasonably be expected to have a Material Adverse Effect.

 

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(iv)    Adverse Claim. (A) Any Person shall obtain an Adverse Claim upon the Sold Assets or the Seller Collateral or any portion thereof other than Permitted Liens, (B) any Person other than the Seller, the Servicer, the Pledgor, the Administrative Agent or, with respect to any Excluded Collection Account, the related Excluded Collection Account Owner shall obtain any rights or direct any action with respect to any Collection Account (or related Lock-Box) or (C) any Obligor shall receive any change in payment instructions with respect to Pool Receivable(s) from a Person other than the Servicer or the Administrative Agent.

(v)    Name Changes. (A) At least thirty (30) days (or such shorter period of time as the Administrative Agent may agree) before any change in the Seller’s name, jurisdiction of organization or any other change requiring the amendment of UCC financing statements and (B) not later than thirty (30) days following the effectiveness of any change in the Pledgor’s or any Originator’s name, jurisdiction of organization or any other change requiring the amendment of UCC financing statements.

(vi)    Reserved.

(vii)    Termination Event. The occurrence of any of (A) a Purchase and Sale Termination Event under the Purchase and Sale Agreement or (B) prior to the Spin-Off Date, a Pledgor Purchase and Sale Termination Event under the Pledgor Purchase and Sale Agreement.

(viii)    Material Adverse Change. Promptly after the occurrence thereof, notice of any Material Adverse Effect with respect to any Originator, the Pledgor, the Servicer, the Performance Guarantor or the Seller.

(c)    Conduct of Business. The Servicer will carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted, and will do all things necessary to remain duly organized, validly existing and in good standing as a domestic corporation in its jurisdiction of organization and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted if the failure to have such authority could reasonably be expected to have a Material Adverse Effect.

(d)    Compliance with Laws. The Servicer shall maintain in effect all qualifications required under Applicable Law in order to service each Pool Receivable and the related Contract, if any, in accordance with this Agreement except where the failure to do so would not have a Material Adverse Effect and will comply in all material respects with all other requirements of Applicable Law in connection with servicing each Pool Receivable and the related Contract.

(e)    Furnishing of Information and Inspection of Receivables. The Servicer will furnish or cause to be furnished to the Administrative Agent and each Group Agent

 

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from time to time such information with respect to the Pool Receivables and the other Sold Assets and the Seller Collateral as the Administrative Agent or any Group Agent may reasonably request. Once a year (or more frequently, which may be as often as the Administrative Agent may determine, while an Event of Termination shall have occurred and be continuing), the Servicer will, at the Servicer’s expense, during regular business hours with reasonable prior written notice, (i) permit the Administrative Agent and each Group Agent or their respective agents or representatives to (A) examine and make copies of and abstracts from all books and records relating to the Pool Receivables or the other Sold Assets and the Seller Collateral, (B) visit the offices and properties of the Servicer for the purpose of examining such books and records and (C) upon execution of a confidentiality agreement, discuss matters relating to the Pool Receivables, the other Sold Assets, the Seller Collateral, or the Servicer’s performance hereunder or under the other Transaction Documents to which it is a party with any of the designated Financial Officers or independent public accountants of the Servicer (provided that representatives of the Servicer are present during such discussions) having knowledge of such matters and (ii) without limiting the provisions of clause (i) above, during regular business hours, at the Servicer’s expense, upon prior written notice from the Administrative Agent, permit certified public accountants or other auditors acceptable to the Administrative Agent to conduct a review of its books and records with respect to the Pool Receivables, the other Sold Assets, and the Seller Collateral; provided, that the Servicer shall be required to reimburse the Administrative Agent for only one (1) such review pursuant to clause (ii) above in any twelve-month period unless an Event of Termination has occurred and is continuing; provided, notwithstanding the foregoing or any provision of any Transaction Document, none of the Administrative Agent, any Purchaser Party or any beneficiary thereof shall have the right to hold, review, view, audit or otherwise possess (x) any Contract, or (y) any financial reporting or other books or records specifically relating to such Contract and the Receivables generated thereunder, the disclosure of which is precluded by the applicable terms of such Contract; provided, further, however, that during the occurrence and continuance of an Event of Termination, to the extent that the related Obligor has defaulted in the payment of any Receivable, upon the request of the Administrative Agent, the Servicer shall provide the Administrative Agent with such information reasonably requested with respect to any such Contract (which may be redacted versions of or excerpts of any Contract) to the extent needed for the Administrative Agent to enforce such Contract against the applicable Obligor.

(f)    Payments on Receivables, Collection Accounts. (i) The Servicer will at all times, instruct all Obligors to deliver payments on the Pool Receivables to a Collection Account or a Lock-Box. The Servicer will at all times ensure that only payments and Collections with respect to Pledged Receivables and the other Pledged Collateral are deposited into the Pledgor Collection Account. The Servicer will, and will cause each Originator and the Pledgor to, at all times, maintain such books and records necessary to identify Collections received from time to time on Pool Receivables and to segregate such Collections from other property of the Servicer, the Pledgor, and the Originators. If any payments on the Pool Receivables or other Collections are received by the Seller, the Servicer, the Pledgor, or an Originator, it shall hold such payments in

 

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trust for the benefit of the Administrative Agent, the Group Agents and the other Secured Parties and promptly (but in any event within one (1) Business Day after receipt) remit such funds into a Collection Account.

(ii)    Except with respect to any Excluded Collection Account which shall be subject to Section 8.01(dd) and Section 8.02(j), the Servicer shall not permit funds other than Collections on Pool Receivables and other Sold Assets and Seller Collateral to be deposited into any Collection Account except with respect to any amounts received in respect of Excluded Receivables; provided that in the event the Parent long-term credit rating is downgraded to below BB by S&P or Ba2 by Moody’s, the Servicer shall use commercially reasonable efforts to cause all such funds not representing Collections on Pool Receivables and other Sold Assets and Seller Collateral to no longer be deposited into any Collection Account promptly upon the request of the Administrative Agent. The Servicer shall identify and transfer any funds not representing Collections on Pool Receivables and other Sold Assets and Seller Collateral deposited into any Collection Account other than an Excluded Collection Account to the appropriate Person entitled to such funds within two (2) Business Days of such deposit. The Servicer will not, and will not permit the Seller, the Pledgor, any Originator or any other Person to commingle Collections or other funds to which the Administrative Agent, any Group Agent or any other Secured Party is entitled, with any other funds except as set forth herein.

(iii)    The Servicer shall only add a Collection Account (or a related Lock-Box) or a Collection Account Bank to those listed on Schedule II to this Agreement, if the Administrative Agent has received notice of such addition and an executed and acknowledged copy of an Account Control Agreement (or an amendment thereto) in form and substance acceptable to the Administrative Agent from the applicable Collection Account Bank. The Servicer shall only terminate a Collection Account Bank or close a Collection Account (or a related Lock-Box) with the prior written consent of the Administrative Agent. The Servicer shall ensure that no disbursements are made from any Collection Account, other than such disbursements that are made at the direction and for the account of the Seller or, with respect to any Excluded Collection Account, the related Excluded Collection Account Owner.

(g)    Extension or Amendment of Pool Receivables. Except as otherwise permitted in Section 9.02, the Servicer will not, and will not permit the Pledgor to, alter the delinquency status or adjust the Outstanding Balance or otherwise modify the terms of any Pool Receivable in any material respect, or amend, modify or waive, in any material respect, any term or condition of any related Contract. The Servicer shall at its expense, timely and fully perform and comply in all material respects with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Pool Receivables, and timely and fully comply with the Credit and Collection Policy with regard to each Pool Receivable and the related Contract.

 

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(h)    Change in Credit and Collection Policy. The Servicer will not ,and will not permit the Pledgor to, make any change in the Credit and Collection Policy that could reasonably be expected to materially adversely affect the underwriting standards, the collectability of the Receivables, the credit quality of any Receivable, the enforceability of any related contract or the Seller’s or the Servicer’s ability to perform its obligations under the related contract or the Transaction Documents without the prior written consent of the Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed).

(i)    Records. The Servicer will, and with respect to the Pledged Receivables will cause the Pledgor to, maintain and implement administrative and operating procedures (including an ability to recreate records evidencing Pool Receivables and related Contracts in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records, computer tapes and disks and other information reasonably necessary or advisable for the collection of all Pool Receivables (including records adequate to permit the daily identification of each Pool Receivable and all Collections of and adjustments to each existing Pool Receivable).

(j)    Excluded Collection Accounts. The Servicer shall cause and shall cause (i) the related Excluded Collection Account Owner to cause or, (ii) solely with respect to Collections on Pledged Receivables and Pledged Collateral, shall cause the Pledgor to cause the related Excluded Collection Account Owner to cause, all Collections on Pool Receivables and other Sold Assets and Seller Collateral deposited into any Excluded Collection Account to be deposited into a Collection Account maintained in the name of the Seller and subject to an Account Control Agreement or, solely with respect to Collections on Pledged Receivables and Pledged Collateral, into the Pledgor Collection Account, by no later than (i) so long as neither (x) an Event of Termination has occurred and is continuing and (y) the Parent credit rating for long-term, unsecured and unsubordinated indebtedness or deposit obligations is not below BBB- by S&P or Baa3 by Moody’s, each Monthly Settlement Date; (ii) at any time that the Parent credit rating for long-term, unsecured and unsubordinated indebtedness or deposit obligations is downgraded to below BBB- by S&P or Baa3 by Moody’s but prior to the occurrence and continuance of an Event of Termination, five (5) Business Days after receipt thereof; or (iii) following the occurrence and continuance of an Event of Termination, one (1) Business Day after receipt thereof. The Servicer shall not and shall cause the related Excluded Collection Account Owner not to permit any other Person to have any Adverse Claim, obtain any rights or direct any action with respect to any Excluded Collection Account.

(k)    Reserved.

(l)    Security Interest, Etc. The Servicer shall, at its expense, take all action necessary or reasonably desirable to establish and maintain (i) with respect to the Sold Assets and Seller Collateral, valid and enforceable ownership or security interest in the Sold Assets and Seller Collateral, and first priority perfected security interest in the Sold Assets and Seller Collateral and (ii) with respect to the Pledged Receivables and Pledged

 

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Collateral, valid and enforceable security interest in the Pledged Receivables and Pledged Collateral, and first priority perfected security interest in the Pledged Receivables and Pledged Collateral, in each case free and clear of any Adverse Claim other than Permitted Liens, in favor of the Administrative Agent (on behalf of the Secured Parties), including taking such action to perfect, protect or more fully evidence the security interest of the Administrative Agent (on behalf of the Secured Parties) as the Administrative Agent or any Secured Party may reasonably request. In order to evidence the security interests of the Administrative Agent under this Agreement, the Servicer shall, from time to time take such action, or execute and deliver such instruments as may be necessary (including, without limitation, such actions as are reasonably requested by the Administrative Agent) to maintain and perfect, as a first-priority interest, the Administrative Agent’s security interest in the Receivables, Related Security and Collections. The Servicer shall, from time to time and within the time limits established by law, prepare and present to the Administrative Agent for the Administrative Agent’s authorization and approval, all financing statements, amendments, continuations or initial financing statements in lieu of a continuation statement, or other filings necessary to continue, maintain and perfect the Administrative Agent’s security interest as a first-priority interest. The Administrative Agent’s approval of such filings shall authorize the Servicer to file such financing statements under the UCC without the signature of the Seller, the Pledgor, any Originator or the Administrative Agent where allowed by Applicable Law. Notwithstanding anything else in the Transaction Documents to the contrary, the Servicer shall not have any authority to file a termination, partial termination, release, partial release, or any amendment that deletes the name of a debtor or excludes collateral of any such financing statements filed in connection with the Transaction Documents, without the prior written consent of the Administrative Agent.

(m)    Reserved.

(n)    Reserved.

(o)    Reserved.

(p)    Taxes. The Servicer will (i) timely file all U.S. federal and other material tax returns (federal, state and local) required to be filed by it and (ii) pay, or cause to be paid, before the same shall become delinquent, all taxes, assessments and other governmental charges, if any, other than taxes, assessments and other governmental charges being contested in good faith by appropriate proceedings and as to which adequate reserves have been provided in accordance with GAAP unless and until any Lien resulting therefrom attaches to its property and becomes enforceable against its other creditors, except in each case to the extent that such failure to file or pay could not reasonably be expected to have a Material Adverse Effect.

(q)    Seller’s Tax Status. The Servicer shall not take or cause any action to be taken that could result in the Seller (i) becoming characterized as an association (or publicly traded partnership) taxable as a corporation or as a taxable mortgage pool, for U.S. federal income tax purposes or (ii) becoming subject to U.S. federal net income tax and its distributions or allocations of income becoming subject to U.S. federal withholding tax under Section 1445 or 1446 of the Code.

 

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Section 8.03.    Separate Existence of the Seller. Each of the Seller and the Servicer hereby acknowledges that the Secured Parties, the Group Agents and the Administrative Agent are entering into the transactions contemplated by this Agreement and the other Transaction Documents in reliance upon the Seller’s identity as a legal entity separate from any Originator, the Pledgor, the Servicer, the Performance Guarantor and their Affiliates. Therefore, each of the Seller and Servicer shall take all steps specifically required by this Agreement or reasonably required by the Administrative Agent or any Group Agent to continue the Seller’s identity as a separate legal entity and to make it apparent to third Persons that the Seller is an entity with assets and liabilities distinct from those of the Performance Guarantor, the Originators, the Pledgor, the Servicer and any other Person, and is not a division of the Performance Guarantor, the Originators, the Pledgor, the Servicer, its Affiliates or any other Person. Without limiting the generality of the foregoing and in addition to and consistent with the other covenants set forth herein, each of the Seller and the Servicer shall take such actions as shall be required in order that:

(a)    Special Purpose Entity. The Seller will be a special purpose company whose primary activities are restricted in its Limited Liability Company Agreement to: (i) purchasing or otherwise acquiring from the Originators, owning, holding, collecting, granting security interests or selling interests in the Sold Assets and Seller Collateral (other than the Pledged Collateral), (ii) acquiring from the Pledgor a security interest in the Pledged Collateral and owning, holding, collecting or granting security interests in the Pledged Collateral, (iii) entering into agreements for the selling, servicing and financing of the Receivables Pool (including the Transaction Documents) and (iv) conducting such other activities as it deems necessary or appropriate to carry out its primary activities.

(b)    No Other Business or Debt. The Seller shall not engage in any business or activity except as set forth in this Agreement nor, incur any indebtedness or liability other than as expressly permitted by the Transaction Documents.

(c)    Independent Director. Not fewer than one member of the Seller’s board of directors (the “Independent Director”) shall be a natural person who (i) has never been, and shall at no time be, an equityholder, director, officer, manager, member, partner, officer, employee or associate, or any relative of the foregoing, of any member of the Parent Group (as hereinafter defined) (other than his or her service as an Independent Director of the Seller or an independent director of any other bankruptcy-remote special purpose entity formed for the sole purpose of securitizing, or facilitating the securitization of, financial assets of any member or members of the Parent Group), (ii) is not a customer or supplier of any member of the Parent Group (other than his or her service as an Independent Director of the Seller or an independent director of any other bankruptcy-remote special purpose entity formed for the sole purpose of securitizing, or facilitating the securitization of, financial assets of any member or members of the Parent Group), (iii) is not any member of the immediate family of a person described in (i) or (ii) above, and (iv) has (x) prior experience as an independent director for a corporation or limited liability company whose organizational or charter documents required the unanimous consent of all independent directors thereof before such corporation or

 

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limited liability company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (y) at least three years of employment experience with one or more entities that provide, in the ordinary course of their respective businesses, advisory, management or placement services to issuers of securitization or structured finance instruments, agreements or securities. For purposes of this clause (c), “Parent Group” shall mean (i) the Parent, the Servicer, the Performance Guarantor, the Pledgor, and each Originator, (ii) each person that directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, five percent (5%) or more of the membership interests in the Parent, (iii) each person that controls, is controlled by or is under common control with the Parent and (iv) each of such person’s officers, directors, managers, joint venturers and partners. For the purposes of this definition, “control” of a person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by contract or otherwise. A person shall be deemed to be an “associate” of (A) a corporation or organization of which such person is an officer, director, partner or manager or is, directly or indirectly, the beneficial owner of ten percent (10%) or more of any class of equity securities, (B) any trust or other estate in which such person serves as trustee or in a similar capacity and (C) any relative or spouse of a person described in clause (A) or (B) of this sentence, or any relative of such spouse.

The Seller shall (A) give written notice to the Administrative Agent of the election or appointment, or proposed election or appointment, of a new Independent Director of the Seller, which notice shall be given not later than ten (10) Business Days prior to the date such appointment or election would be effective (except when such election or appointment is necessary to fill a vacancy caused by the death, disability, or incapacity of the existing Independent Director, or the failure of such Independent Director to satisfy the criteria for an Independent Director set forth in this clause (c), in which case the Seller shall provide written notice of such election or appointment within one (1) Business Day) and (B) with any such written notice, certify to the Administrative Agent that the Independent Director satisfies the criteria for an Independent Director set forth in this clause (c).

The Seller’s Limited Liability Company Agreement shall provide that: (A) the Seller’s board of directors shall not approve, or take any other action to cause the filing of, a voluntary bankruptcy petition with respect to the Seller unless the Independent Director shall approve the taking of such action in writing before the taking of such action and (B) such provision and each other provision requiring an Independent Director cannot be amended without the prior written consent of the Independent Director.

The Independent Director shall not at any time serve as a trustee in bankruptcy for the Seller, the Parent, the Performance Guarantor, the Pledgor, any Originator, the Servicer or any of their respective Affiliates.

 

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(d)    Organizational Documents. The Seller shall maintain its organizational documents in conformity with this Agreement, such that it does not amend, restate, supplement or otherwise modify its ability to comply with the terms and provisions of any of the Transaction Documents, including, without limitation, Section 8.01(p).

(e)    Conduct of Business. The Seller shall conduct its affairs strictly in accordance with its organizational documents and observe all necessary, appropriate and customary company formalities, including, but not limited to, holding all regular and special members’ and board of directors’ meetings appropriate to authorize all company action, keeping separate and accurate minutes of its meetings, passing all resolutions or consents necessary to authorize actions taken or to be taken, and maintaining accurate and separate books, records and accounts, including, but not limited to, payroll and intercompany transaction accounts.

(f)    Compensation. Any employee, consultant or agent of the Seller will be compensated from the Seller’s funds for services provided to the Seller, and to the extent that Seller shares the same officers or other employees as the Servicer (or any other Affiliate thereof), the salaries and expenses relating to providing benefits to such officers and other employees shall be fairly allocated among such entities, and each such entity shall bear its fair share of the salary and benefit costs associated with such common officers and employees. The Seller will not engage any agents other than its attorneys, auditors and other professionals, and a servicer and any other agent contemplated by the Transaction Documents for the Receivables Pool, which servicer will be fully compensated for its services by payment of the Servicing Fee.

(g)    Servicing and Costs. The Seller will contract with the Servicer to perform for the Seller all operations required on a daily basis to service the Receivables Pool. The Seller will not incur any indirect or overhead expenses for items shared with the Servicer (or any other Affiliate thereof) that are not reflected in the Servicing Fee. To the extent, if any, that the Seller (or any Affiliate thereof) shares items of expenses not reflected in the Servicing Fee, such as legal, auditing and other professional services, such expenses will be allocated to the extent practical on the basis of actual use or the value of services rendered, and otherwise on a basis reasonably related to the actual use or the value of services rendered.

(h)    Operating Expenses. The Seller’s operating expenses will not be paid by the Servicer, the Parent, the Performance Guarantor, the Pledgor, any Originator or any Affiliate thereof.

(i)    Stationary. The Seller will have its own separate stationary.

(j)    Books and Records. The Seller’s books and records will be maintained separately from those of the Servicer, the Parent, the Performance Guarantor, the Pledgor, the Originators and any of their Affiliates and in a manner such that it will not be difficult or costly to segregate, ascertain or otherwise identify the assets and liabilities of the Seller.

 

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(k)    Disclosure of Transactions. All financial statements of the Servicer, the Parent, the Performance Guarantor, the Pledgor, the Originators or any Affiliate thereof that are consolidated to include the Seller will disclose that (i) the Seller’s sole business consists of (A) the purchase or acceptance through capital contributions of the Receivables and Related Rights from the applicable Originators and the subsequent retransfer of or granting of a security interest in such Receivables and Related Rights to the Administrative Agent pursuant to this Agreement, and (B) the acceptance through pledge of the Pledged Receivables and Related Rights from the Pledgor and the subsequent granting of a security interest in such Pledge Receivables and Related Rights to the Administrative Agent pursuant to this Agreement, (ii) the Seller is a separate legal entity with its own separate creditors who will be entitled, upon its liquidation, to be satisfied out of the Seller’s assets prior to any assets or value in the Seller becoming available to the Seller’s equity holders and (iii) the assets of the Seller are not available to pay creditors of the Servicer, the Parent, the Performance Guarantor, the Pledgor, the Originators or any Affiliate thereof.

(l)    Segregation of Assets. The Seller’s assets will be maintained in a manner that facilitates their identification and segregation from those of the Servicer, the Parent, the Performance Guarantor, the Pledgor, the Originators or any Affiliates thereof.

(m)    Corporate Formalities. The Seller will strictly observe limited liability company formalities in its dealings with the Servicer, the Parent, the Performance Guarantor, the Pledgor, the Originators or any Affiliates thereof, and funds or other assets of the Seller will not be commingled with those of the Servicer, the Parent, the Performance Guarantor, the Pledgor, the Originators or any Affiliates thereof except as permitted by this Agreement. The Seller shall not maintain joint bank accounts or other depository accounts to which the Servicer, the Parent, the Performance Guarantor, the Pledgor, the Originators or any Affiliate thereof (other than the Servicer solely in its capacity as such) has independent access. The Seller is not named, and has not entered into any agreement to be named, directly or indirectly, as a direct or contingent beneficiary or loss payee on any insurance policy with respect to any loss relating to the property of the Servicer, the Parent, the Performance Guarantor, the Pledgor, the Originators or any Subsidiaries or other Affiliates thereof. The Seller will pay to the appropriate Affiliate the marginal increase or, in the absence of such increase, the market amount of its portion of the premium payable with respect to any insurance policy that covers the Seller and such Affiliate.

(n)    Arm’s-Length Relationships. The Seller will maintain arm’s-length relationships with the Servicer, the Parent, the Performance Guarantor, the Pledgor, the Originators and any Affiliates thereof. Any Person that renders or otherwise furnishes services to the Seller will be compensated by the Seller at market rates for such services it renders or otherwise furnishes to the Seller. Neither the Seller on the one hand, nor the Servicer, the Parent, the Performance Guarantor, the Pledgor, any Originator or any Affiliate thereof, on the other hand, will be or will hold itself out to be responsible for the debts of the other or the decisions or actions respecting the daily business and affairs of the other. The Seller, the Servicer, the Parent, the Performance Guarantor, the Pledgor,

 

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the Originators and their respective Affiliates will immediately correct any known misrepresentation with respect to the foregoing, and they will not operate or purport to operate as an integrated single economic unit with respect to each other or in their dealing with any other entity.

(o)    Allocation of Overhead. To the extent that Seller, on the one hand, and the Servicer, the Parent, the Performance Guarantor, the Pledgor, any Originator or any Affiliate thereof, on the other hand, have offices in the same location, there shall be a fair and appropriate allocation of overhead costs between them, and the Seller shall bear its fair share of such expenses, which may be paid through the Servicing Fee or otherwise.

Section 8.04.    Post-Closing Covenant. Within 2 Business Days after the Restatement Effective Date, the Seller shall deliver or cause the delivery of, the following documents: (i) favorable written opinions of Debevoise & Plimpton LLP, as to certain corporate and enforceability matters relating to Discovery, Inc. and the Performance Guaranty, which shall be in form and substance satisfactory to the Administrative Agent; (ii) favorable written opinions of The Delaware Counsel Group LLC, as special Delaware counsel, as to certain corporate matters relating to Discovery, Inc. and the Performance Guaranty, which shall be in form and substance satisfactory to the Administrative Agent; and (iii) an officer’s certificate of an authorized officer of Discovery, Inc., certifying as to its (a) organizational documents, (b) authorizing resolutions, (c) good standing, and (d) incumbency.

ARTICLE IX

ADMINISTRATION AND COLLECTION OF RECEIVABLES

Section 9.01.    Appointment of the Servicer. (a) The servicing, administering and collection of the Pool Receivables shall be conducted by the Person so designated from time to time as the Servicer in accordance with this Section 9.01. Until the Administrative Agent gives notice to Turner (in accordance with this Section 9.01) of the designation of a new Servicer, Turner is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer pursuant to the terms hereof. Upon the occurrence of an Event of Termination, the Administrative Agent may (with the consent of the Majority Group Agents) and shall (at the direction of the Majority Group Agents), designate as Servicer the Parent or an Affiliate thereof to succeed Turner or any successor Servicer, on the condition in each case that the Parent or such Affiliate shall agree to perform the duties and obligations of the Servicer pursuant to the terms hereof.

(b)    Upon the designation of a successor Servicer as set forth in clause (a) above, Turner agrees that it will terminate its activities as Servicer hereunder in a manner that the Administrative Agent reasonably determines will facilitate the transition of the performance of such activities to the new Servicer, and Turner shall cooperate with and assist such new Servicer.    Such cooperation shall include access to and transfer of records related to Pool Receivables and use by the new Servicer of all licenses (or the obtaining of new licenses), hardware or software necessary or reasonably desirable to collect the Pool Receivables and the Related Security.

 

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(c)    Turner acknowledges that, in making its decision to execute and deliver this Agreement, the Administrative Agent and each member in each Group have relied on Turner’s agreement to act as Servicer hereunder. Accordingly, Turner agrees that it will not voluntarily resign as Servicer without the prior written consent of the Administrative Agent and the Majority Group Agents.

(d)    The Servicer may, and hereby does, delegate its duties and obligations hereunder to each Originator as subservicer with respect to the Receivables generated by such Originator or, solely with respect to a GDS Receivable, to GDS, and may further delegate its duties and obligations hereunder to any other subservicer (each a “Sub-Servicer”); provided, that, in each such delegation: (i) the Servicer shall remain liable for the performance of the duties and obligations so delegated, (ii) the Seller, the Administrative Agent, each Purchaser and each Group Agent shall have the right to look solely to the Servicer for performance, and (iii) if such Sub-Servicer is not an Affiliate of the Parent, (A) the Administrative Agent and the Majority Group Agents shall have consented in writing in advance to such delegation and (B) such Sub-Servicer shall agree in writing to perform the delegated duties and obligations of the Servicer pursuant to the terms hereof.

Section 9.02.    Duties of the Servicer. (a) The Servicer shall take or cause to be taken all such action as may be necessary or reasonably advisable to service, administer and collect each Pool Receivable from time to time, all in accordance with this Agreement and all Applicable Laws, with reasonable care and diligence, and in accordance with the Credit and Collection Policy and consistent with the past practices of the Originators. The Servicer shall set aside, for the accounts of each Group, the amount of Collections to which each such Group is entitled in accordance with Article IV hereof. The Servicer may, in accordance with the Credit and Collection Policy and consistent with past practices of the Originators, take such action, including modifications, waivers or restructurings of Pool Receivables and related Contracts, as the Servicer may reasonably determine to be appropriate to maximize Collections thereof or reflect adjustments expressly permitted under the Credit and Collection Policy or as expressly required under Applicable Laws or the applicable Contract; provided, that for purposes of this Agreement: (i) such action shall not, and shall not be deemed to, change the number of days such Pool Receivable has remained unpaid from the date of the original due date related to such Pool Receivable, (ii) such action shall not alter the status of such Pool Receivable as a delinquent Receivable or limit the rights of any Secured Party under this Agreement or any other Transaction Document and (iii) if an Event of Termination has occurred and is continuing and neither the Parent nor an Affiliate thereof is the Servicer at such time, the Servicer may take such action only upon the prior written consent of the Administrative Agent. The Seller shall deliver to the Servicer and the Servicer shall hold for the benefit of the Administrative Agent (individually and for the benefit of each Group), in accordance with their respective interests, all records and documents (including computer tapes or disks) with respect to each Pool Receivable. Notwithstanding anything to the contrary contained herein, if an Event of Termination has occurred and is continuing, the Administrative Agent may direct the Servicer to commence or settle any legal action to enforce collection of any Pool Receivable that is a defaulted Receivable or to foreclose upon or repossess any Related Security with respect to any such defaulted Receivable.

 

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(b)    The Servicer’s obligations hereunder shall terminate on the Final Payout Date. Promptly following the Final Payout Date, the Servicer shall deliver to the Seller all books, records and related materials that the Seller previously provided to the Servicer, or that have been obtained by the Servicer, in connection with this Agreement.

Section 9.03.    Collection Account Arrangements. The Seller shall have, or shall cause the Pledgor to have, entered into Account Control Agreements with all of the applicable Collection Account Banks and delivered executed counterparts of each to the Administrative Agent except with respect to (i) each Excluded Collection Account, (ii) until the Pledgor is in compliance with Section 7.14 of the Pledgor Purchaser Assignment, the Pledgor Collection Account, and (iii) the TD Account; provided that in the event the Parent long-term credit rating is downgraded to below BB by S&P or Ba2 by Moody’s, the Seller shall enter into an Account Control Agreement with respect to the TD Account within 30 days of the request of the Administrative Agent (or such greater amount of time agreed to by the Seller and the Administrative Agent). Upon the occurrence and during the continuance of an Event of Termination, the Administrative Agent may (with the consent of the Majority Group Agents) and shall (upon the direction of the Majority Group Agents) at any time thereafter give notice to each Collection Account Bank that the Administrative Agent is exercising its rights under the Account Control Agreements to do any or all of the following: (a) to have the exclusive ownership and control of the Collection Accounts transferred to the Administrative Agent (for the benefit of the Secured Parties) and to exercise exclusive dominion and control over the funds deposited therein (for the benefit of the Secured Parties), (b) to have the proceeds that are sent to the respective Collection Accounts redirected pursuant to the Administrative Agent’s instructions rather than deposited in the applicable Collection Account and (c) to take any or all other actions permitted under the applicable Account Control Agreement. The Seller hereby agrees that if the Administrative Agent at any time takes any action set forth in the preceding sentence, the Administrative Agent shall have exclusive control (for the benefit of the Secured Parties) of the proceeds (including Collections) of all Pool Receivables and the Seller hereby further agrees to take any other action that the Administrative Agent may reasonably request to transfer such control. Any proceeds of Pool Receivables received by the Seller or the Servicer thereafter shall be sent immediately to, or as otherwise instructed by, the Administrative Agent.

Section 9.04.    Enforcement Rights. (a) At any time following the occurrence and during the continuation of an Event of Termination:

(i)    the Administrative Agent may instruct the Seller or the Servicer to give notice of the Secured Parties’ interest in Pool Receivables to each Obligor or, with respect to the Pledged Receivables, to the Pledgor and each related Obligor, which notice shall direct that payments be made directly to the Administrative Agent or its designee (on behalf of the Secured Parties), and the Seller or the Servicer, as the case may be, shall give such notice at the expense of the Seller or the Servicer, as the case may be; provided, that the Administrative Agent or such designee shall, as promptly as practicable, return to the Seller all amounts that it receives from such Obligors to the extent such amounts do not constitute Collections; provided, further, that if the Seller or the Servicer, as the case may be, fails to so notify each Obligor and the Pledgor (if applicable) within two (2) Business Days following instruction by the Administrative Agent, the Administrative

 

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Agent (at the Seller’s or the Servicer’s, as the case may be, expense) may so notify the Obligors and the Pledgor, if applicable; provided, that the Administrative Agent or such designee shall, as promptly as practicable, return to the Seller all amounts that it receives from such Obligors to the extent such amounts do not constitute Collections.

(ii)    the Administrative Agent may request the Servicer to, and upon such request the Servicer shall: (A) assemble all of the records necessary or desirable to collect the Pool Receivables and the Related Security, and transfer or license to a successor Servicer the use of all software necessary or desirable to collect the Pool Receivables and the Related Security, and make the same available to the Administrative Agent or its designee (for the benefit of the Secured Parties) at a place selected by the Administrative Agent; provided, notwithstanding the foregoing or any provision of any Transaction Document, none of the Administrative Agent, any Purchaser Party or any beneficiary thereof shall have the right to hold, review, view, audit or otherwise possess (x) any Contract; or (y) any financial reporting or other books or records specifically relating to such Contract and the Receivables generated thereunder, the disclosure of which is precluded by the applicable terms of such Contract, provided, further, however, that during the occurrence and continuance of an Event of Termination, to the extent that the related Obligor has defaulted in the payment of any Receivable, upon the request of the Administrative Agent the Seller shall provide the Administrative Agent with such information reasonably requested with respect to any such Contract (which may be redacted versions of or excerpts of any Contract) to the extent needed for the Administrative Agent to enforce such Contract against the applicable Obligor; and (B) segregate all cash, checks and other instruments received by it from time to time constituting Collections in a manner reasonably acceptable to the Administrative Agent and, promptly upon receipt, remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to the Administrative Agent or its designee;

(iii)    the Administrative Agent may notify the Collection Account Banks that the Seller, the Pledgor, and the Servicer will no longer have any access to the Collection Accounts;

(iv)    the Administrative Agent may (or, at the direction of the Majority Group Agents shall) replace the Person then acting as Servicer; and

(v)    the Administrative Agent may collect any amounts due from (A) an Originator under the Purchase and Sale Agreement or prior to the Spin-Off Date, the Pledgor Purchase and Sale Agreement, as applicable, (B) prior to the Spin-Off Date, the Pledgor under the Pledgor Purchaser Assignment, or (C) the Performance Guarantor under the Performance Guaranty.

For the avoidance of doubt, the foregoing rights and remedies of the Administrative Agent upon an Event of Termination are in addition to and not exclusive of the rights and remedies contained herein and under the other Transaction Documents.

 

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(b)    The Seller hereby authorizes the Administrative Agent (on behalf of the Secured Parties), and irrevocably appoints the Administrative Agent as its attorney-in-fact with full power of substitution and with full authority in the place and stead of the Seller, which appointment is coupled with an interest, to take any and all steps in the name of the Seller and on behalf of the Seller necessary or desirable, in the reasonable determination of the Administrative Agent, after the occurrence and during the continuation of an Event of Termination, to collect any and all amounts or portions thereof due under any and all Sold Assets and Seller Collateral, including endorsing the name of the Seller on checks and other instruments representing Collections and enforcing such Sold Assets and Seller Collateral. Notwithstanding anything to the contrary contained in this subsection, none of the powers conferred upon such attorney-in-fact pursuant to the preceding sentence shall subject such attorney-in-fact to any liability if any action taken by it shall prove to be inadequate or invalid, nor shall they confer any obligations upon such attorney-in-fact in any manner whatsoever.

(c)    The Servicer hereby authorizes the Administrative Agent (on behalf of the Secured Parties), and irrevocably appoints the Administrative Agent as its attorney-in-fact with full power of substitution and with full authority in the place and stead of the Servicer, which appointment is coupled with an interest, to take any and all steps in the name of the Servicer and on behalf of the Servicer necessary or desirable, in the reasonable determination of the Administrative Agent, after the occurrence and during the continuation of an Event of Termination, to collect any and all amounts or portions thereof due under any and all Sold Assets and Seller Collateral, including endorsing the name of the Servicer on checks and other instruments representing Collections and enforcing such Sold Assets and Seller Collateral. Notwithstanding anything to the contrary contained in this subsection, none of the powers conferred upon such attorney-in-fact pursuant to the preceding sentence shall subject such attorney-in-fact to any liability if any action taken by it shall prove to be inadequate or invalid, nor shall they confer any obligations upon such attorney-in-fact in any manner whatsoever.

Section 9.05.    Responsibilities of the Seller. (a) Anything herein to the contrary notwithstanding, the Seller shall: (i) perform all of its obligations, if any, under the Contracts related to the Pool Receivables to the same extent as if interests in such Pool Receivables had not been transferred hereunder, and the exercise by the Administrative Agent, or any other Purchaser Party of their respective rights hereunder shall not relieve the Seller from such obligations and (ii) pay when due any material taxes, including any material sales taxes payable in connection with the Pool Receivables and their creation and satisfaction. None of the Purchaser Parties shall have any obligation or liability with respect to any Sold Assets or Seller Collateral, nor shall any of them be obligated to perform any of the obligations of the Seller, the Servicer, the Pledgor, or any Originator thereunder.

(b)    Turner hereby irrevocably agrees that if at any time it shall cease to be the Servicer hereunder, it shall act (if the then-current Servicer so requests) as the data-processing agent of the Servicer and, in such capacity, Turner shall conduct the data-processing functions of the administration of the Receivables and the Collections thereon in substantially the same way that Turner conducted such data-processing functions while it acted as the Servicer. In connection with any such processing functions, the Seller shall pay to Turner its reasonable out-of-pocket costs and expenses from the Seller’s own funds (subject to the priority of payments set forth in Section 4.01).

 

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Section 9.06.    Servicing Fee. (a) Subject to clause (b) below, the Seller shall pay the Servicer a fee (the “Servicing Fee”) equal to 1.00% per annum (the “Servicing Fee Rate”) of the daily average aggregate Outstanding Balance of the Pool Receivables. Accrued Servicing Fees shall be payable from Collections to the extent of available funds in accordance with Section 4.01.

(b)    If the Servicer is neither the Parent nor an Affiliate thereof, the Servicing Fee shall be the greater of: (i) the amount calculated pursuant to clause (a) above and (ii) an alternative amount specified by the successor Servicer not to exceed 110% of the aggregate reasonable costs and expenses incurred by such successor Servicer in connection with the performance of its obligations as Servicer hereunder.

ARTICLE X

EVENTS OF TERMINATION

Section 10.01.    Events of Termination. If any of the following events (each an “Event of Termination”) shall occur:

(a)    (i) the Seller, the Pledgor, any Originator, the Performance Guarantor or the Servicer shall fail to perform or observe any term, covenant or agreement under this Agreement or any other Transaction Document (other than any such failure which would constitute an Event of Termination under clause (ii) or (iii) of this paragraph (a)), and such failure, solely to the extent capable of cure, shall continue for thirty (30) days after the earlier of (x) written notice to the Seller, the Pledgor, any Originator, the Performance Guarantor, or the Servicer by the Administrative Agent or any Purchaser, and (y) actual knowledge of the Seller, the Pledgor, any Originator, the Performance Guarantor, or the Servicer, (ii) the Seller, the Pledgor, any Originator, the Performance Guarantor or the Servicer shall fail to make when due any payment or deposit to be made by it under this Agreement or any other Transaction Document and such failure shall continue unremedied for three (3) Business Days or (iii) Turner shall resign as Servicer, and if the Parent or an Affiliate thereof has not been appointed as Servicer hereunder, no successor Servicer reasonably satisfactory to the Administrative Agent shall have been appointed;

(b)    any written representation or warranty made or deemed made by the Seller, the Pledgor, any Originator, the Performance Guarantor or the Servicer (or any of their respective officers) under or in connection with this Agreement or any other Transaction Document or any information or report delivered by the Seller, the Pledgor, any Originator, the Performance Guarantor or the Servicer pursuant to this Agreement or any other Transaction Document, shall prove to have been incorrect or untrue in any material respect when made or deemed made or delivered, provided, however, any breach of any representation or warranty set forth in Section 7.01(m), 7.01(u), 7.02(i) or 7.02(l) shall not constitute an Event of Termination if a Deemed Collection payment is timely and fully made in connection therewith in accordance with Section 4.01(d);

 

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(c)    the Seller or the Servicer shall fail to deliver an Information Package pursuant to this Agreement, and such failure shall remain unremedied for three (3) Business Days after written notice of such failure has been given to the Seller or the Servicer;

(d)    this Agreement or any security interest granted pursuant to this Agreement or any other Transaction Document shall for any reason cease to create, or for any reason cease to be, a valid and enforceable first priority perfected security interest in favor of the Administrative Agent with respect to the Pool Receivables or any of the other Sold Assets or Seller Collateral, free and clear of any Adverse Claim other than Permitted Liens;

(e)    the Seller, the Pledgor, any Originator, the Performance Guarantor or the Servicer shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any Insolvency Proceeding shall be instituted by or against the Seller, the Pledgor, any Originator, the Performance Guarantor or the Servicer and, in the case of any such proceeding instituted against such Person (but not instituted by such Person), either such proceeding shall remain undismissed or unstayed for a period of sixty (60) consecutive days, or any of the actions sought in such proceeding (including the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Seller, the Pledgor, any Originator, the Performance Guarantor or the Servicer shall take any corporate or organizational action to authorize any of the actions set forth above in this paragraph;

(f)    (i) the average for three consecutive Fiscal Months of:

(A) the Default Ratio shall exceed (1) prior to the Spin-Off Date, 4.0%, and (2) on and after the Spin-Off Date, 7.5%,

(B) the Delinquency Ratio shall exceed (1) prior to the Spin-Off Date, 11.5%, and (2) on and after the Spin-Off Date, 12.0%, or

(C) the Dilution Ratio shall exceed (1) prior to the Spin-Off Date, 6.5%, and (2) on and after the Spin-Off Date, 7.5%, or

(ii) the Days’ Sales Outstanding shall exceed (A) prior to the Spin-Off Date, 60 days, and (B) on and after the Spin-Off Date, 85 days;

(g)    a Change in Control shall occur;

 

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(h)    a Capital Coverage Deficit shall occur, and shall not have been cured within three (3) Business Days;

(i)    (i) the Seller or the Pledgor shall fail to pay any principal of or premium or interest on any Debt when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement, mortgage, indenture or instrument relating to such Debt (whether or not such failure shall have been waived under the related agreement); (ii) any Originator, the Performance Guarantor or the Servicer, or any of their respective Subsidiaries, individually or in the aggregate, shall fail to pay any principal of or premium or interest on any of its Debt under the Parent Senior Credit Agreement (whether or not funded) or any other Debt that is outstanding in a principal amount of at least $1,000,000,000 in the aggregate when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement, mortgage, indenture or instrument relating to such Debt (whether or not such failure shall have been waived under the related agreement); (iii) any other event shall occur or condition shall exist under any agreement, mortgage, indenture or instrument relating to any such Debt (as referred to in clause (i) or (ii) of this paragraph and shall continue after the applicable grace period (not to exceed 30 days), if any, specified in such agreement, mortgage, indenture or instrument (whether or not such failure shall have been waived under the related agreement), if the effect of such event or condition is to give the applicable debtholders the right (whether acted upon or not) to accelerate the maturity of such Debt (as referred to in clause (i) or (ii) of this paragraph) or to terminate the commitment of any lender thereunder, or (iv) any such Debt (as referred to in clause (i) or (ii) of this paragraph) shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to repay, redeem, purchase or defease such Debt shall be required to be made or the commitment of any lender thereunder terminated, in each case before the stated maturity thereof;

(j)    the Performance Guarantor shall fail to perform any of its material obligations under the Performance Guaranty;

(k)    (i) the Seller shall fail (x) at any time (other than for ten (10) Business Days following notice of the death or resignation of any Independent Director) to have an Independent Director who satisfies each requirement and qualification specified in Section 8.03(c) of this Agreement for Independent Directors, on the Seller’s board of directors or (y) to timely notify the Administrative Agent of any replacement or appointment of any director that is to serve as an Independent Director on the Seller’s board of directors as required pursuant to Section 8.03(c) of this Agreement or (ii) the Pledgor shall fail (x) at any time (other than for ten (10) Business Days following notice of the death or resignation of any Independent Director) to have an Independent Director who satisfies each requirement and qualification specified in Section 5.1(c) of the Pledgor Purchaser Assignment, which shall be substantially similar to Section 8.03(c) of this Agreement for Independent Directors, on the Pledgor’s board of directors or (y) to

 

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timely notify the Seller and the Administrative Agent of any replacement or appointment of any director that is to serve as an Independent Director on the Pledgor’s board of directors as required pursuant to Section 5.1(c) of the Pledgor Purchaser Assignment, which shall be substantially similar to Section 8.03(c) of this Agreement;

(l)    there shall have occurred any event which materially adversely impairs, in the reasonable discretion of Administrative Agent, the collectability of the Pool Receivables generally or any material portion thereof and such event or events either individually or in the aggregate would reasonably be expected to result in a Material Adverse Effect;

(m)    either (i) the Internal Revenue Service shall file notice of a lien pursuant to Section 6323 of the Code with regard to any assets of the Seller, the Pledgor, any Originator or the Parent or (ii) the PBGC shall, or shall indicate its intention to, file notice of a lien pursuant to Section 4068 of ERISA with regard to any of the assets of the Seller, the Pledgor, the Servicer, any Originator or the Parent with respect to liabilities in the aggregate in excess of $400,000,000;

(n)    the Parent or any ERISA Affiliate shall fail to satisfy minimum funding requirements under Section 412 of the Internal Revenue Code or Section 302 of ERISA to any Plan, or apply for a waiver of such requirements, and such failure could reasonably be expected to subject the Parent or any of its Subsidiaries to any liabilities in the aggregate in excess of $1,000,000,000;

(o)    prior to the Spin-Off Date, a Pledgor Purchase and Sale Termination Event shall occur under the Pledgor Purchase and Sale Agreement;

(p)    a Purchase and Sale Termination Event shall occur under the Purchase and Sale Agreement;

(q)    (i) the Seller shall (x) be required to register as an “investment company” within the meaning of the Investment Company Act or (y) the transactions contemplated by this Agreement and the Transaction Documents result in the Administrative Agent or any Purchaser having an “ownership interest” (as defined in §             .10(d)(6) of the Volcker Rule) in the Seller or (ii) the Pledgor shall (x) be required to register as an “investment company” within the meaning of the Investment Company Act or (y) the transactions contemplated by the Pledgor Purchaser Assignment, this Agreement and the Transaction Documents result in the Seller, the Administrative Agent or any Purchaser having an “ownership interest” (as defined in §             .10(d)(6) of the Volcker Rule) in the Pledgor;

(r)    any material provision of this Agreement or any other Transaction Document shall cease to be in full force and effect or any of the Seller, the Pledgor, any Originator, the Performance Guarantor or the Servicer (or any of their respective Affiliates) shall so state in writing; or

 

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(s)    one or more judgments or decrees shall be entered against the Seller, the Pledgor, any Originator, the Performance Guarantor or the Servicer, or any Affiliate of any of the foregoing involving in the aggregate a liability (not paid or to the extent not covered by a reputable and solvent insurance company) and such judgments and decrees either shall be final and non-appealable or shall not be vacated, discharged or stayed or bonded pending appeal for any period of 30 consecutive days, and the aggregate amount of all such judgments equals or exceeds $250,000,000 (or solely with respect to the Seller or the Pledgor, $15,775);

then, and in any such event, unless such event has been waived in accordance with this Agreement, the Administrative Agent may (or, at the direction of the Majority Group Agents shall) by notice to the Seller (w) foreclose on the Pledged Collateral or direct the Seller to foreclose on the Pledged Collateral, (x) declare the Termination Date to have occurred (in which case the Termination Date shall be deemed to have occurred), (y) declare the Seller Obligation Final Due Date to have occurred (in which case the Seller Obligation Final Due Date shall be deemed to have occurred) and (z) declare the Aggregate Capital and all other Seller Obligations to be immediately due and payable (in which case the Aggregate Capital and all other Seller Obligations shall be immediately due and payable); provided that, automatically upon the occurrence of any event (without any requirement for the giving of notice) described in subsection (e) of this Section 10.01 with respect to the Seller, the Termination Date shall occur and the Aggregate Capital and all other Seller Obligations shall be immediately due and payable. Upon any such declaration or designation or upon such automatic termination, the Administrative Agent and the other Secured Parties shall have, in addition to the rights and remedies which they may have under this Agreement and the other Transaction Documents, all other rights and remedies provided after default under the UCC and under other Applicable Law, which rights and remedies shall be cumulative. Any proceeds from liquidation of the Sold Assets and Seller Collateral shall be applied in the order of priority set forth in Section 4.01.

ARTICLE XI

THE ADMINISTRATIVE AGENT

Section 11.01.    Authorization and Action. Each Purchaser Party hereby appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto. The Administrative Agent shall not have any duties other than those expressly set forth in the Transaction Documents, and no implied obligations or liabilities shall be read into any Transaction Document, or otherwise exist, against the Administrative Agent. The Administrative Agent does not assume, nor shall it be deemed to have assumed, any obligation to, or relationship of trust or agency with, the Seller or any Affiliate thereof or any Purchaser Party except for any obligations expressly set forth herein. Notwithstanding any provision of this Agreement or any other Transaction Document, in no event shall the Administrative Agent ever be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to any provision of any Transaction Document or Applicable Law.

 

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Section 11.02.    Administrative Agent’s Reliance, Etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them as Administrative Agent under or in connection with this Agreement (including, without limitation, the Administrative Agent’s servicing, administering or collecting Pool Receivables in the event it replaces the Servicer in such capacity pursuant to Section 9.01), in the absence of its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, the Administrative Agent: (a) may consult with legal counsel (including counsel for any Purchaser Party or the Servicer), independent certified public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (b) makes no warranty or representation to any Purchaser Party (whether written or oral) and shall not be responsible to any Purchaser Party for any statements, warranties or representations (whether written or oral) made by any other party in or in connection with this Agreement; (c) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of any Purchaser Party or to inspect the property (including the books and records) of any Purchaser Party; (d) shall not be responsible to any Purchaser Party for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (e) shall be entitled to rely, and shall be fully protected in so relying, upon any notice (including notice by telephone), consent, certificate or other instrument or writing (which may be by facsimile) believed by it to be genuine and signed or sent by the proper party or parties.

Section 11.03.    Administrative Agent and Affiliates. With respect to any Investment or interests therein owned by any Purchaser Party that is also the Administrative Agent, such Purchaser Party shall have the same rights and powers under this Agreement as any other Purchaser Party and may exercise the same as though it were not the Administrative Agent. The Administrative Agent and any of its Affiliates may generally engage in any kind of business with the Seller or any Affiliate thereof and any Person who may do business with or own securities of the Seller or any Affiliate thereof, all as if the Administrative Agent were not the Administrative Agent hereunder and without any duty to account therefor to any other Secured Party.

Section 11.04.    Indemnification of Administrative Agent. Each Committed Purchaser agrees to indemnify the Administrative Agent (to the extent not reimbursed by the Seller or any Affiliate thereof), ratably according to the respective Percentage of such Committed Purchaser, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any other Transaction Document or any action taken or omitted by the Administrative Agent under this Agreement or any other Transaction Document; provided that no Committed Purchaser shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct.

Section 11.05.    Delegation of Duties. The Administrative Agent may execute any of its duties through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

 

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Section 11.06.    Action or Inaction by Administrative Agent. The Administrative Agent shall in all cases be fully justified in failing or refusing to take action under any Transaction Document unless it shall first receive such advice or concurrence of the Group Agents or the Majority Group Agents, as the case may be, and assurance of its indemnification by the Committed Purchasers, as it deems appropriate. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Transaction Document in accordance with a request or at the direction of the Group Agents or the Majority Group Agents, as the case may be, and such request or direction and any action taken or failure to act pursuant thereto shall be binding upon all Purchaser Parties. The Purchaser Parties and the Administrative Agent agree that unless any action to be taken by the Administrative Agent under a Transaction Document (i) specifically requires the advice or concurrence of all Group Agents or (ii) may be taken by the Administrative Agent alone or without any advice or concurrence of any Group Agent, then the Administrative Agent may take action based upon the advice or concurrence of the Majority Group Agents.

Section 11.07.    Notice of Events of Termination; Action by Administrative Agent. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Unmatured Event of Termination or Event of Termination unless the Administrative Agent has received notice from any Purchaser Party or the Seller stating that an Unmatured Event of Termination or Event of Termination has occurred hereunder and describing such Unmatured Event of Termination or Event of Termination. If the Administrative Agent receives such a notice, it shall promptly give notice thereof to each Group Agent, whereupon each Group Agent shall promptly give notice thereof to its respective Conduit Purchaser(s) and Related Committed Purchaser(s). The Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, concerning an Unmatured Event of Termination or Event of Termination or any other matter hereunder as the Administrative Agent deems advisable and in the best interests of the Secured Parties.

Section 11.08.    Non-Reliance on Administrative Agent and Other Parties. Each Purchaser Party expressly acknowledges that neither the Administrative Agent nor any of its directors, officers, agents or employees has made any representations or warranties to it and that no act by the Administrative Agent hereafter taken, including any review of the affairs of the Seller or any Affiliate thereof, shall be deemed to constitute any representation or warranty by the Administrative Agent. Each Purchaser Party represents and warrants to the Administrative Agent that, independently and without reliance upon the Administrative Agent or any other Purchaser Party and based on such documents and information as it has deemed appropriate, it has made and will continue to make its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of the Seller, the Pledgor, each Originator, the Performance Guarantor or the Servicer and the Pool Receivables and its own decision to enter into this Agreement and to take, or omit, action under any Transaction Document. Except for items expressly required to be delivered under any Transaction Document by the Administrative Agent to any Purchaser Party, the Administrative Agent shall not have any duty or responsibility to provide any Purchaser Party with any

 

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information concerning the Seller, the Pledgor, any Originator, the Performance Guarantor or the Servicer that comes into the possession of the Administrative Agent or any of its directors, officers, agents, employees, attorneys-in-fact or Affiliates.

Section 11.09.    Successor Administrative Agent. (a) The Administrative Agent may, upon at least thirty (30) days’ notice to the Seller, the Servicer and each Group Agent, resign as Administrative Agent. Except as provided below, such resignation shall not become effective until a successor Administrative Agent is appointed by the Majority Group Agents as a successor Administrative Agent and has accepted such appointment. If no successor Administrative Agent shall have been so appointed by the Majority Group Agents, within thirty (30) days after the departing Administrative Agent’s giving of notice of resignation, the departing Administrative Agent may, on behalf of the Secured Parties, appoint a successor Administrative Agent as successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Majority Group Agents within sixty (60) days after the departing Administrative Agent’s giving of notice of resignation, the departing Administrative Agent may, on behalf of the Secured Parties, petition a court of competent jurisdiction to appoint a successor Administrative Agent.

(b)    Upon such acceptance of its appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall succeed to and become vested with all the rights and duties of the resigning Administrative Agent, and the resigning Administrative Agent shall be discharged from its duties and obligations under the Transaction Documents. After any resigning Administrative Agent’s resignation hereunder, the provisions of this Article XI and Article XIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent.

Section 11.10.    Structuring Agent. Each of the parties hereto hereby acknowledges and agrees that the Structuring Agent shall not have any right, power, obligation, liability, responsibility or duty under this Agreement, other than the Structuring Agent’s right to receive fees pursuant to Section 2.03. Each Purchaser Party acknowledges that it has not relied, and will not rely, on the Structuring Agent in deciding to enter into this Agreement and to take, or omit to take, any action under any Transaction Document.

Section 11.11.    Erroneous Payments. (a) Each Purchaser hereby agrees that (i) if the Administrative Agent notifies such Purchaser that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any Erroneous Payment Notice) that any funds received by such Purchaser from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Purchaser (whether or not known to such Purchaser) (any such funds, whether received as a payment, prepayment or repayment of Capital, Yield, Fees or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Purchaser shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Purchaser to the date such amount is repaid to

 

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the Administrative Agent in same day funds at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect, and (ii) such Purchaser shall not assert any right or claim to the Erroneous Payment, and hereby waives any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payments received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine. A notice of the Administrative Agent to any Purchaser under this Section 11.11(a) shall be conclusive, absent manifest error.

(b)    Without limiting the immediately preceding Section 11.11(a), each Purchaser hereby further agrees that if it receives an Erroneous Payment from the Administrative Agent (or any of its Affiliates) (i) that is in an amount different than (other than a de minimis difference), or on a different date from, that specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such Erroneous Payment (an “Erroneous Payment Notice”), or (ii) that was not preceded or accompanied by an Erroneous Payment Notice, it shall be on notice that, in each such case, an error has been made with respect to such Erroneous Payment. Each Purchaser further agrees that, in each such case, or if it otherwise becomes aware an Erroneous Payment (or portion thereof) may have been sent in error, such Purchaser shall promptly notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in no event later than one (1) Business Day thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) that was received by such Purchaser to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect.

(c)    Each Purchaser hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Purchaser under any Transaction Document, or otherwise payable or distributable by the Administrative Agent to such Purchaser from any source, against any amount due to the Administrative Agent under the immediately preceding clause (b) or under the indemnification provisions of this Agreement.

(d)    The parties hereto hereby agree that (i) in the event an Erroneous Payment (or portion thereof) is not recovered from any Purchaser that has received such Erroneous Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of such Purchaser with respect to such amount and (ii) an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Seller Obligations to the extent the amount of such Erroneous Payment is in excess of funds received by the Administrative Agent from the Seller or any of its Affiliates for the purpose of satisfying Seller Obligations.

(e)    Each party’s obligations, agreements and waivers under this Section 11.11 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Purchaser, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Seller Obligations (or any portion thereof) under any Transaction Document.

 

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ARTICLE XII

THE GROUP AGENTS

Section 12.01.    Authorization and Action. Each Purchaser Party that belongs to a Group hereby appoints and authorizes the Group Agent for such Group to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to such Group Agent by the terms hereof, together with such powers as are reasonably incidental thereto. No Group Agent shall have any duties other than those expressly set forth in the Transaction Documents, and no implied obligations or liabilities shall be read into any Transaction Document, or otherwise exist, against any Group Agent. No Group Agent assumes, nor shall it be deemed to have assumed, any obligation to, or relationship of trust or agency with the Seller or any Affiliate thereof, any Purchaser except for any obligations expressly set forth herein. Notwithstanding any provision of this Agreement or any other Transaction Document, in no event shall any Group Agent ever be required to take any action which exposes such Group Agent to personal liability or which is contrary to any provision of any Transaction Document or Applicable Law.

Section 12.02.    Group Agent’s Reliance, Etc. No Group Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them as a Group Agent under or in connection with this Agreement or any other Transaction Documents in the absence of its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, a Group Agent: (a) may consult with legal counsel (including counsel for the Administrative Agent, the Seller or the Servicer), independent certified public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (b) makes no warranty or representation to any Purchaser Party (whether written or oral) and shall not be responsible to any Purchaser Party for any statements, warranties or representations (whether written or oral) made by any other party in or in connection with this Agreement or any other Transaction Document; (c) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any other Transaction Document on the part of the Seller or any Affiliate thereof or any other Person or to inspect the property (including the books and records) of the Seller or any Affiliate thereof; (d) shall not be responsible to any Purchaser Party for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Transaction Documents or any other instrument or document furnished pursuant hereto; and (e) shall be entitled to rely, and shall be fully protected in so relying, upon any notice (including notice by telephone), consent, certificate or other instrument or writing (which may be by facsimile) believed by it to be genuine and signed or sent by the proper party or parties.

Section 12.03.    Group Agent and Affiliates. With respect to any Investment or interests therein owned by any Purchaser Party that is also a Group Agent, such Purchaser Party shall have the same rights and powers under this Agreement as any other Purchaser and may exercise the same as though it were not a Group Agent. A Group Agent and any of its Affiliates may generally engage in any kind of business with the Seller or any Affiliate thereof and any Person who may do business with or own securities of the Seller or any Affiliate thereof or any of their respective Affiliates, all as if such Group Agent were not a Group Agent hereunder and without any duty to account therefor to any other Secured Party.

 

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Section 12.04.    Indemnification of Group Agents. Each Committed Purchaser in any Group agrees to indemnify the Group Agent for such Group (to the extent not reimbursed by the Seller or any Affiliate thereof), ratably according to the proportion of the Percentage of such Committed Purchaser to the aggregate Percentages of all Committed Purchasers in such Group, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against such Group Agent in any way relating to or arising out of this Agreement or any other Transaction Document or any action taken or omitted by such Group Agent under this Agreement or any other Transaction Document; provided that no Committed Purchaser shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Group Agent’s gross negligence or willful misconduct.

Section 12.05.    Delegation of Duties. Each Group Agent may execute any of its duties through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Group Agent shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

Section 12.06.    Notice of Events of Termination. No Group Agent shall be deemed to have knowledge or notice of the occurrence of any Unmatured Event of Termination or Event of Termination unless such Group Agent has received notice from the Administrative Agent, any other Group Agent, any other Purchaser Party, the Servicer or the Seller stating that an Unmatured Event of Termination or Event of Termination has occurred hereunder and describing such Unmatured Event of Termination or Event of Termination. If a Group Agent receives such a notice, it shall promptly give notice thereof to the Purchaser Parties in its Group and to the Administrative Agent (but only if such notice received by such Group Agent was not sent by the Administrative Agent). A Group Agent may take such action concerning an Unmatured Event of Termination or Event of Termination as may be directed by Committed Purchasers in its Group representing a majority of the Commitments in such Group (subject to the other provisions of this Article XII), but until such Group Agent receives such directions, such Group Agent may (but shall not be obligated to) take such action, or refrain from taking such action, as such Group Agent deems advisable and in the best interests of the Conduit Purchasers and Committed Purchasers in its Group.

Section 12.07.    Non-Reliance on Group Agent and Other Parties. Each Purchaser Party expressly acknowledges that neither the Group Agent for its Group nor any of such Group Agent’s directors, officers, agents or employees has made any representations or warranties to it and that no act by such Group Agent hereafter taken, including any review of the affairs of the Seller or any Affiliate thereof, shall be deemed to constitute any representation or warranty by such Group Agent. Each Purchaser Party represents and warrants to the Group Agent for its Group that, independently and without reliance upon such Group Agent, any other Group Agent, the Administrative Agent or any other Purchaser Party and based on such documents and information as it has deemed appropriate, it has made and will continue to make its own

 

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appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of the Seller or any Affiliate thereof and the Receivables and its own decision to enter into this Agreement and to take, or omit, action under any Transaction Document. Except for items expressly required to be delivered under any Transaction Document by a Group Agent to any Purchaser Party in its Group, no Group Agent shall have any duty or responsibility to provide any Purchaser Party in its Group with any information concerning the Seller or any Affiliate thereof that comes into the possession of such Group Agent or any of its directors, officers, agents, employees, attorneys-in-fact or Affiliates.

Section 12.08.    Successor Group Agent. Any Group Agent may, upon at least thirty (30) days’ notice to the Administrative Agent, the Seller, the Servicer and the Purchaser Parties in its Group, resign as Group Agent for its Group. Such resignation shall not become effective until a successor Group Agent is appointed by the Purchaser(s) in such Group. Upon such acceptance of its appointment as Group Agent for such Group hereunder by a successor Group Agent, such successor Group Agent shall succeed to and become vested with all the rights and duties of the resigning Group Agent, and the resigning Group Agent shall be discharged from its duties and obligations under the Transaction Documents. After any resigning Group Agent’s resignation hereunder, the provisions of this Article XII and Article XIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was a Group Agent.

Section 12.09.    Reliance on Group Agent. Unless otherwise advised in writing by a Group Agent or by any Purchaser Party in such Group Agent’s Group, each party to this Agreement may assume that (i) such Group Agent is acting for the benefit and on behalf of each of the Purchaser Parties in its Group, as well as for the benefit of each assignee or other transferee from any such Person and (ii) each action taken by such Group Agent has been duly authorized and approved by all necessary action on the part of the Purchaser Parties in its Group.

ARTICLE XIII

INDEMNIFICATION

Section 13.01.    Indemnities by the Seller. (a) Without limiting any other rights that the Administrative Agent, the Purchaser Parties, the Affected Persons and their respective assigns, officers, directors, agents and employees (each, a “Seller Indemnified Party”) may have hereunder or under Applicable Law, the Seller hereby agrees to indemnify each Seller Indemnified Party from and against any and all claims, losses and liabilities (including reasonable Attorney Costs) (all of the foregoing being collectively referred to as “Seller Indemnified Amounts”) arising out of or resulting from this Agreement or any other Transaction Document or the use of proceeds of the Investments or the security interest in respect of any Pool Receivable or any other Sold Assets or Seller Collateral; excluding, however, (a) Seller Indemnified Amounts to the extent a court of competent jurisdiction holds that such Seller Indemnified Amounts resulted from the bad faith, gross negligence or willful misconduct by the Seller Indemnified Party seeking indemnification, (b) Taxes (other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim), (c) Seller Indemnified Amounts to the extent the same includes losses in respect of Pool Receivables that are uncollectible solely on account of the insolvency, bankruptcy, lack of creditworthiness or other financial inability to pay

 

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of the related Obligor and (d) such Seller Indemnified Amounts result from a legal action in which the Servicer, the Seller or any of their Affiliates is the plaintiff and any Seller Indemnified Party is the defendant, unless such Seller Indemnified Party prevails in such legal action. Without limiting or being limited by the foregoing, the Seller shall pay on demand (it being understood that if any portion of such payment obligation is made from Collections, such payment will be made at the time and in the order of priority set forth in Section 4.01), to each Seller Indemnified Party any and all amounts necessary to indemnify such Seller Indemnified Party from and against any and all Seller Indemnified Amounts relating to or resulting from any of the following (but excluding Seller Indemnified Amounts and Taxes described in clauses (a) through (d) above):

(i)    any Pool Receivable which the Seller or the Servicer includes as an Eligible Receivable as part of the Net Receivables Pool Balance but which is not an Eligible Receivable at such time;

(ii)    any representation, warranty or statement made or deemed made by the Seller (or any of its respective officers) under or in connection with this Agreement, any of the other Transaction Documents, any Information Package or any other information or report delivered by or on behalf of the Seller pursuant hereto which shall have been untrue or incorrect in any material respect when made or deemed made;

(iii)    the failure by the Seller to materially comply with any Applicable Law with respect to any Pool Receivable or the related Contract; or the failure of any Pool Receivable or the related Contract to conform to any such Applicable Law;

(iv)    the failure to vest in the Administrative Agent a first priority perfected ownership or security interest in all or any portion of the Sold Assets or Seller Collateral, in each case free and clear of any Adverse Claim (other than to the extent resulting from the affirmative action of the Administrative Agent) other than Permitted Liens;

(v)    the failure to have filed, or any delay in filing, financing statements, financing statement amendments, continuation statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other Applicable Laws with respect to any Pool Receivable, any other Sold Assets or any Seller Collateral, whether at the time of any Investment or at any subsequent time;

(vi)    any dispute, claim or defense (other than discharge in bankruptcy) of an Obligor to the payment of any Pool Receivable (including, without limitation, a defense based on such Pool Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from or relating to collection activities with respect to such Pool Receivable;

(vii)    any failure of the Seller to perform any of its duties or obligations in accordance with the provisions hereof and of each other Transaction Document related to Pool Receivables or to timely and fully comply with the Credit and Collection Policy in regard to each Pool Receivable;

 

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(viii)    the commingling of Collections of Pool Receivables at any time with other funds;

(ix)    any investigation, litigation or proceeding (actual or threatened) related to this Agreement or any other Transaction Document or the use of proceeds of any Investments or in respect of any Pool Receivable, any other Sold Assets or any Seller Collateral or any related Contract;

(x)    any failure of the Seller to comply with its covenants, obligations and agreements contained in this Agreement or any other Transaction Document;

(xi)    any setoff with respect to any Pool Receivable;

(xii)    any claim brought by any Person other than a Seller Indemnified Party arising from any activity by the Seller or any Affiliate of the Seller in servicing, administering or collecting any Pool Receivable;

(xiii)    the failure by the Seller to pay when due any material taxes, including, without limitation, material sales, excise or personal property taxes;

(xv)    any failure of a Collection Account Bank to comply with the terms of the applicable Account Control Agreement, the termination by a Collection Account Bank of any Account Control Agreement or any amounts (including in respect of any indemnity) payable by the Administrative Agent to a Collection Account Bank under any Account Control Agreement;

(xvi)    any claim resulting from the sale of goods or the rendering of services related to such Pool Receivable or the furnishing or failure to furnish any such goods or services or other similar claim or defense not arising from the financial inability of any Obligor to pay undisputed indebtedness;

(xvii)    any action taken by the Administrative Agent as attorney-in-fact for the Seller, the Pledgor, any Originator or the Servicer pursuant to this Agreement or any other Transaction Document using the same degree of skill and attention that the Administrative Agent exercises when acting for its own account;

(xviii)    the failure or delay to provide any Obligor with an invoice or other evidence of indebtedness;

(xix)    the use of proceeds of any Investment; or

 

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(xx)    any reduction in Capital as a result of the distribution of Collections if all or a portion of such distributions shall thereafter be rescinded or otherwise must be returned for any reason.

(b)    [Reserved].

(c)    If for any reason the foregoing indemnification is unavailable to any Seller Indemnified Party or insufficient to hold it harmless, then the Seller shall contribute to such Seller Indemnified Party the amount paid or payable by such Seller Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative economic interests of the Seller and its Affiliates on the one hand and such Seller Indemnified Party on the other hand in the matters contemplated by this Agreement as well as the relative fault of the Seller and its Affiliates and such Seller Indemnified Party with respect to such loss, claim, damage or liability and any other relevant equitable considerations. The reimbursement, indemnity and contribution obligations of the Seller under this Section shall be in addition to any liability which the Seller may otherwise have, shall extend upon the same terms and conditions to each Seller Indemnified Party, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Seller and the Seller Indemnified Parties.

(d)    Any indemnification or contribution under this Section shall survive the termination of this Agreement.

Section 13.02.    Indemnification by the Servicer. (a) The Servicer hereby agrees to indemnify and hold harmless the Seller, the Administrative Agent, the Purchaser Parties, the Affected Persons and their respective assigns, officers, directors, agents and employees (each, a “Servicer Indemnified Party”), from and against any loss, liability, expense, damage or injury suffered or sustained, including any judgment, award, settlement, reasonable Attorney Costs and other costs or expenses incurred in connection with the defense of any actual or threatened action, proceeding or claim (all of the foregoing being collectively referred to as, “Servicer Indemnified Amounts”), arising out of:

(i)    any Pool Receivable which the Servicer includes as an Eligible Receivable as part of the Net Receivables Pool Balance but which is not an Eligible Receivable at such time;

(ii)    any representation, warranty or statement made or deemed made by the Servicer (or any of its respective officers) under or in connection with this Agreement, any of the other Transaction Documents, any Information Package or any other information or report delivered by or on behalf of the Servicer pursuant hereto which shall have been untrue or incorrect in any material respect when made or deemed made;

(iii)    the failure by the Servicer to materially comply with any Applicable Law with respect to any Pool Receivable or the related Contract; or the failure of any Pool Receivable or the related Contract to conform to any such Applicable Law;

 

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(iv)    the commingling of Collections of Pool Receivables at any time with other funds;

(v)    the failure or delay to provide any Obligor with an invoice or other evidence of indebtedness; or

(vi)    any failure of the Servicer to comply with its covenants, obligations and agreements contained in this Agreement or any other Transaction Document;

excluding Servicer Indemnified Amounts (i) to the extent a court of competent jurisdiction holds that such Servicer Indemnified Amounts resulted from the bad faith, gross negligence or willful misconduct by the Servicer Indemnified Party seeking indemnification, (ii) Taxes (other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim), (iii) Servicer Indemnified Amounts to the extent the same includes losses in respect of Pool Receivables that are uncollectible solely on account of the insolvency, bankruptcy, lack of creditworthiness or other financial inability to pay of the related Obligor and (iv) such Servicer Indemnified Amounts result from a legal action in which the Servicer, the Seller or any of their Affiliates is the plaintiff and any Servicer Indemnified Party is the defendant, unless such Servicer Indemnified Party prevails in such legal action.

(b)    If for any reason the foregoing indemnification is unavailable to any Servicer Indemnified Party or insufficient to hold it harmless, then the Servicer shall contribute to the amount paid or payable by such Servicer Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative economic interests of the Servicer and its Affiliates on the one hand and such Servicer Indemnified Party on the other hand in the matters contemplated by this Agreement as well as the relative fault of the Servicer and its Affiliates and such Servicer Indemnified Party with respect to such loss, claim, damage or liability and any other relevant equitable considerations. The reimbursement, indemnity and contribution obligations of the Servicer under this Section shall be in addition to any liability which the Servicer may otherwise have, shall extend upon the same terms and conditions to Servicer Indemnified Party, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Servicer and the Servicer Indemnified Parties.

(c)    Any indemnification or contribution under this Section shall survive the termination of this Agreement.

ARTICLE XIV

MISCELLANEOUS

Section 14.01.    Amendments, Etc. (a) No failure on the part of any Purchaser Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. No amendment or waiver of any provision of this Agreement or consent to any departure by any of the Seller or any Affiliate thereof shall be effective unless in a writing signed by the Administrative Agent and the Majority Group Agents (and, in the case of any amendment, also signed by the Seller), and then such amendment, waiver or consent shall be

 

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effective only in the specific instance and for the specific purpose for which given; provided, however, that (A) no amendment, waiver or consent shall, unless in writing and signed by the Servicer, affect the rights or duties of the Servicer under this Agreement; (B) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent and each Group Agent:

(i)    change (directly or indirectly) the definitions of, Capital Coverage Deficit, Eligible Receivable, Facility Limit, Seller Obligation Final Due Date or Net Receivables Pool Balance contained in this Agreement, or change the calculation of the Capital Coverage Amount;

(ii)    reduce the amount of Capital or Yield that is payable hereunder or delay any scheduled date for payment thereof;

(iii)    change any Event of Termination;

(iv)    release all or a material portion of the Sold Assets or Seller Collateral from the Administrative Agent’s security interest created hereunder; provided that, for the avoidance of doubt, the release of any Sold Assets or Seller Collateral in accordance with the terms of the Purchase and Sale Agreement or this Agreement without the consent of the Group Agents or the Administrative Agent shall not be deemed to be a release of a material portion of Sold Assets or Seller Collateral;

(v)    release the Performance Guarantor from any of its obligations under the Performance Guaranty or terminate the Performance Guaranty;

(vi)    change any of the provisions of this Section 14.01 or the definition of “Majority Group Agents”; or

(vii)    change the order of priority in which Collections are applied pursuant to Section 4.01.

Notwithstanding the foregoing, (A) no amendment, waiver or consent shall increase any Committed Purchaser’s Commitment hereunder without the consent of such Committed Purchaser, (B) no amendment, waiver or consent shall reduce any Fees payable by the Seller to any member of any Group or delay the dates on which any such Fees are payable, in either case, without the consent of the Group Agent for such Group and (C) no consent with respect to any amendment, waiver or other modification of this Agreement or any other Transaction Document shall be required of any Defaulting Purchaser, except that (x) the Commitment of any Defaulting Purchaser may not be increased or extended without the consent of such Defaulting Purchaser and (y) any amendment, waiver or other modification referred to in clauses (i) through (vii) above that by its terms affects any Defaulting Purchaser disproportionately adversely relative to other affected Purchasers shall require the consent of such Defaulting Purchaser.

 

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Section 14.02.    Notices, Etc. All notices and other communications hereunder shall, unless otherwise stated herein, be in writing (which shall include email and facsimile communication) and emailed, faxed or delivered, to each party hereto, at its address set forth under its name on Schedule III hereto or at such other address as shall be designated by such party in a written notice to the other parties hereto. Notices and communications by facsimile shall be effective when sent (and shall be followed by hard copy sent by regular mail), and notices and communications sent by other means shall be effective when received; provided that any notice or communication sent after the recipient’s normal business hours will be effective upon the opening of the recipient’s next Business Day.

Section 14.03.    Assignability; Addition of Purchasers.

(a)    Assignment by Conduit Purchasers. This Agreement and the rights of each Conduit Purchaser hereunder (including its right to receive payments of Capital and Yield) shall be assignable by such Conduit Purchaser and its successors and permitted assigns (i) to any Program Support Provider of such Conduit Purchaser or any other Conduit Purchaser within such Conduit Purchaser’s Group without prior notice to or consent from the Seller or any other party, or any other condition or restriction of any kind, (ii) to any other Purchaser with prior notice to the Seller but without consent from the Seller or (iii) with the prior written consent of the Seller (such consent not to be unreasonably withheld, conditioned or delayed; provided, however, that such consent shall not be required if an Event of Termination or Unmatured Event of Termination has occurred and is continuing), to any other Eligible Assignee. Each assignor of Capital (or any portion thereof) or any interest therein may, in connection with the assignment or participation, disclose to the assignee or Participant any information relating to the Seller and its Affiliates, including the Receivables, furnished to such assignor by or on behalf of the Seller and its Affiliates or by the Administrative Agent; provided that, prior to any such disclosure, the assignee or Participant agrees to preserve the confidentiality of any confidential information relating to the Seller and its Affiliates received by it from any of the foregoing entities in a manner consistent with Section 14.06(b).

(b)    Assignment by Committed Purchasers. Each Committed Purchaser may assign to any Eligible Assignee or to any other Committed Purchaser all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment and any Capital or interests therein owned by it); provided, however that

(i)    except for an assignment by a Committed Purchaser to either an Affiliate of such Committed Purchaser or any other Committed Purchaser, each such assignment shall require the prior written consent of the Seller (such consent not to be unreasonably withheld, conditioned or delayed; provided, however, that such consent shall not be required if an Event of Termination or an Unmatured Event of Termination has occurred and is continuing);

(ii)    each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement;

 

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(iii)    the amount being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance Agreement with respect to such assignment) shall in no event be less than the lesser of (x) $5,000,000 and (y) all of the assigning Committed Purchaser’s Commitment; and

(iv)    the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance Agreement.

Upon such execution, delivery, acceptance and recording from and after the effective date specified in such Assignment and Acceptance Agreement, (x) the assignee thereunder shall be a party to this Agreement, and to the extent that rights and obligations under this Agreement have been assigned to it pursuant to such Assignment and Acceptance Agreement, have the rights and obligations of a Committed Purchaser hereunder and (y) the assigning Committed Purchaser shall, to the extent that rights and obligations have been assigned by it pursuant to such Assignment and Acceptance Agreement, relinquish such rights and be released from such obligations under this Agreement (and, in the case of an Assignment and Acceptance Agreement covering all or the remaining portion of an assigning Committed Purchaser’s rights and obligations under this Agreement, such Committed Purchaser shall cease to be a party hereto).

(c)    Register. The Administrative Agent shall, acting solely for this purpose as an agent of the Seller, maintain at its address referred to on Schedule III of this Agreement (or such other address of the Administrative Agent notified by the Administrative Agent to the other parties hereto) a copy of each Assignment and Acceptance Agreement delivered to and accepted by it and a register for the recordation of the names and addresses of the Committed Purchasers and the Conduit Purchasers, the Commitment of each Committed Purchaser and the aggregate outstanding Capital (and stated Yield) of each Conduit Purchaser and Committed Purchaser from time to time (the “Register”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Seller, the Servicer, the Administrative Agent, the Group Agents, and the other Purchaser Parties may treat each Person whose name is recorded in the Register as a Committed Purchaser or Conduit Purchaser, as the case may be, under this Agreement for all purposes of this Agreement. The Register shall be available for inspection by the Seller, the Servicer, any Group Agent, any Conduit Purchaser or any Committed Purchaser at any reasonable time and from time to time upon reasonable prior notice.

(d)    Procedure. Upon its receipt of an Assignment and Acceptance Agreement executed and delivered by an assigning Committed Purchaser and an Eligible Assignee or assignee Committed Purchaser, the Administrative Agent shall, if such Assignment and Acceptance Agreement has been duly completed, (i) accept such Assignment and Acceptance Agreement, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Seller and the Servicer.

(e)    Participations. Each Committed Purchaser may sell participations to one or more Eligible Assignees (each, a “Participant”) in or to all or a portion of its rights and/or obligations under this Agreement (including, without limitation, all or a portion of its Commitment and its Capital and Yield thereon); provided, however, that

 

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(i)    such Committed Purchaser’s obligations under this Agreement (including, without limitation, its Commitment to the Seller hereunder) shall remain unchanged, and

(ii)    such Committed Purchaser shall remain solely responsible to the other parties to this Agreement for the performance of such obligations.

The Administrative Agent, the Group Agents, the Conduit Purchasers, the other Committed Purchasers, the Seller and the Servicer shall have the right to continue to deal solely and directly with such Committed Purchaser in connection with such Committed Purchaser’s rights and obligations under this Agreement. The Seller agrees that each Participant shall be entitled to the benefits of Sections 5.01 and 5.03 (subject to the requirements and limitations therein, including the requirements under Section 5.03(f) (it being understood that the documentation required under Section 5.03(f) shall be delivered to the participating Purchaser)) to the same extent as if it were a Purchaser and had acquired its interest by assignment pursuant to clause (b) of this Section; provided that such Participant shall not be entitled to receive any greater payment under Section 5.01 or 5.03, with respect to any participation, than its participating Purchaser would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation.

(f)    Participant Register. Each Committed Purchaser that sells a participation shall, acting solely for this purpose as an agent of the Seller, maintain a register on which it enters the name and address of each Participant and the Capital (and stated Yield) participated to each Participant, together with each Participant’s interest in the other obligations under this Agreement (the “Participant Register”); provided that no Committed Purchaser shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Capital, Yield or its other obligations under any this Agreement) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Capital, Yield or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Committed Purchaser shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(g)    Assignments by Agents. This Agreement and the rights and obligations of the Administrative Agent and each Group Agent herein shall be assignable by the Administrative Agent or such Group Agent, as the case may be, and its successors and assigns; provided that in the case of an assignment to a Person that is not an Affiliate of the Administrative Agent or such Group Agent, so long as no Event of Termination or Unmatured Event of Termination has occurred and is continuing, such assignment shall require the Seller’s consent (not to be unreasonably withheld, conditioned or delayed).

(h)    Assignments by the Seller or the Servicer. Neither the Seller nor, except as provided in Section 9.01, the Servicer may assign any of its respective rights or obligations hereunder or any interest herein without the prior written consent of the Administrative Agent and each Group Agent (such consent to be provided or withheld in the sole discretion of such Person).

 

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(i)    Addition of Purchasers or Groups. The Seller may, with written notice to the Administrative Agent and each Group Agent, add additional Persons as Purchasers (by creating a new Group) or cause an existing Purchaser to increase its Commitment; provided, however, that the Commitment of any existing Purchaser may only be increased with the prior written consent of such Purchaser. Each new Purchaser (or Group) shall become a party hereto, by executing and delivering to the Administrative Agent and the Seller, an assumption agreement (each, an “Assumption Agreement”) in the form of Exhibit D hereto (which Assumption Agreement shall, in the case of any new Purchaser, be executed by each Person in such new Purchaser’s Group).

(j)    Pledge to a Federal Reserve Bank. Notwithstanding anything to the contrary set forth herein, (i) any Purchaser, Program Support Provider or any of their respective Affiliates may at any time pledge or grant a security interest in all or any portion of its interest in, to and under this Agreement (including, without limitation, rights to payment of Capital and Yield) and any other Transaction Document to secure its obligations to a Federal Reserve Bank or The Bank of Canada, without notice to or the consent of the Seller, the Servicer, any Affiliate thereof or any Purchaser Party; provided, however, that that no such pledge shall relieve such assignor of its obligations under this Agreement.

(k)    Pledge to a Security Trustee. Notwithstanding anything to the contrary set forth herein, any Conduit Purchaser may at any time pledge or grant a security interest in all or any portion of its interest in, to and under this Agreement (including, without limitation, rights to payment of Capital and Yield) and any other Transaction Document to a collateral trustee (or Person acting in a similar capacity) as collateral security in connection with such Conduit Purchaser’s asset-backed commercial paper note program, without notice to or the consent of the Seller, the Servicer, any Affiliate thereof or any Purchaser Party; provided, however, that that no such pledge shall relieve such assignor of its obligations under this Agreement.

(l)    Notwithstanding anything to the contrary herein, no sale, pledge, assignment or other transfer contemplated in this Section 14.03 may be made by any Purchaser to any entity that is a variable interest entity as defined in FASB Accounting Standards Codification Topic 810 unless (i) such entity’s source of funding for its Investments hereunder does not and will not be repayable or redeemable solely from 90% or more of such entity’s interest in the Pool Receivables and (ii) such entity’s s outstanding Capital does not and will not exceed 50% of the fair value of such entity’s total assets.

Section 14.04.    Costs and Expenses. In addition to the rights of indemnification granted under Section 13.01 hereof, the Seller agrees to pay on demand all reasonable and documented out-of-pocket costs and expenses in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Transaction Documents (together with all amendments, restatements, supplements, consents and waivers, if any, from time to time hereto and thereto), including, without limitation, (i) the reasonable Attorney Costs for the Administrative Agent and the other Purchaser Parties and any of their respective Affiliates with respect thereto and with respect to advising the Administrative Agent and the other Purchaser

 

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Parties and their respective Affiliates as to their rights and remedies under this Agreement and the other Transaction Documents (in each case, limited to a single counsel for all Purchaser Parties and their respective Affiliates) and (ii) subject to Section 8.01(g), reasonable and documented accountants’, auditors’ and consultants’ fees and expenses for the Administrative Agent and the other Purchaser Parties and any of their respective Affiliates (in each case, limited to a single accountant, auditor or consultant for all Purchaser Parties and their respective Affiliates) incurred in connection with the administration and maintenance of this Agreement or advising the Administrative Agent or any other Purchaser Party as to their rights and remedies under this Agreement or as to any actual or reasonably claimed breach of this Agreement or any other Transaction Document. In addition, the Seller agrees to pay on demand all reasonable and documented out-of-pocket costs and expenses (including reasonable Attorney Costs (in each case, limited to a single counsel for all Purchaser Parties and their respective Affiliates)), of the Administrative Agent and the other Purchaser Parties and their respective Affiliates, incurred in connection with the enforcement of any of their respective rights or remedies under the provisions of this Agreement and the other Transaction Documents.

Section 14.05.    No Proceedings; Limitation on Payments. (a) Each of the Seller, the Administrative Agent, the Servicer, each Group Agent, each Purchaser and each assignee of Capital or any Yield thereof or of any other Seller Obligations agrees that it will not institute against, or join any other Person in instituting against, any Conduit Purchaser any Insolvency Proceeding so long as any Notes or other senior indebtedness issued by such Conduit Purchaser shall be outstanding or there shall not have elapsed one year plus one day since the last day on which any such Notes or other senior indebtedness shall have been outstanding.

(b)    Each of the Servicer, each Group Agent, each Purchaser and each assignee of Capital or any Yield thereof or of any other Seller Obligations, hereby covenants and agrees that it will not institute against, or join any other Person in instituting against, the Seller or the Pledgor any Insolvency Proceeding until one year and one day after the Final Payout Date; provided, that the Administrative Agent may take any such action in its sole discretion following the occurrence of an Event of Termination. Notwithstanding the foregoing and without limiting any of the rights of the Administrative Agent and the Purchasers set forth in Article X (including, without limitation, the rights of foreclosure and liquidation of the Sold Assets and Seller Collateral and all proceeds thereof, the right to declare the Termination Date and the right to declare the Seller Obligation Final Due Date to have occurred), if any amounts due on the Seller Obligation Final Due Date or on the date on which the Administrative Agent declares the Aggregate Capital and all other Seller Obligations to be immediately due and payable pursuant to Section 10.01 cannot be fully satisfied from funds from the Sold Assets and Seller Collateral, such deficiency shall not constitute a claim (as defined in Section 101 of the Bankruptcy Code) against the Seller.

(c)    Notwithstanding any provisions contained in this Agreement to the contrary, a Conduit Purchaser shall not, and shall be under no obligation to, pay any amount, if any, payable by it pursuant to this Agreement or any other Transaction Document unless (i) such Conduit Purchaser has received funds which may be used to make such payment and which funds are not required to repay such Conduit Purchaser’s Notes when due and (ii) after giving effect to such payment, either (x) such Conduit Purchaser could issue Notes to refinance all of its outstanding

 

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Notes (assuming such outstanding Notes matured at such time) in accordance with the program documents governing such Conduit Purchaser’s securitization program or (y) all of such Conduit Purchaser’s Notes are paid in full. Any amount which any Conduit Purchaser does not pay pursuant to the operation of the preceding sentence shall not constitute a claim (as defined in Section 101 of the Bankruptcy Code) against or company obligation of such Conduit Purchaser for any such insufficiency unless and until such Conduit Purchaser satisfies the provisions of clauses (i) and (ii) above. The provisions of this Section 14.05 shall survive any termination of this Agreement.

Section 14.06.    Confidentiality. (a) Each of the Seller and the Servicer, severally and with respect to itself only, covenants and agrees to hold in confidence, and not disclose to any Person, the terms of this Agreement or the Fee Letter (including any fees payable in connection with this Agreement, the Fee Letter or any other Transaction Document or the identity of the Administrative Agent or any other Purchaser Party), except as the Administrative Agent and each Group Agent may have consented to in writing prior to any proposed disclosure; provided, however, that it may disclose such information (i) to its Advisors and Representatives, (ii) to the extent such information has become available to the public other than as a result of a disclosure by or through the Seller, the Servicer or their Advisors and Representatives or (iii) to the extent it should be (A) required by Applicable Law, or in connection with any legal or regulatory proceeding or (B) requested by any Governmental Authority to disclose such information; provided, that, in the case of clause (iii) above, the Seller and the Servicer will use reasonable efforts to maintain confidentiality and will (unless otherwise prohibited by Applicable Law) notify the Administrative Agent and the affected Purchaser Party of making any such disclosure as promptly as reasonably practicable thereafter; provided, further, the Parent or any of its Affiliates may file copies of the Transaction Documents with the SEC to the extent that such Person is required by Applicable Law to do so. Each of the Seller and the Servicer agrees to be responsible for any breach of this Section by its Representatives and Advisors and agrees that its Representatives and Advisors will be advised by it of the confidential nature of such information and shall agree to comply with this Section. Notwithstanding the foregoing, it is expressly agreed that each of the Seller, the Servicer and their respective Affiliates may publish a press release or otherwise publicly announce the existence and principal amount of the Commitments under this Agreement and the transactions contemplated hereby; provided that the Administrative Agent shall be provided a reasonable opportunity to review such press release or other public announcement prior to its release and provide comment thereon; and provided, further, that no such press release shall name or otherwise identify the Administrative Agent, any other Purchaser Party or any of their respective Affiliates without such Person’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed).

(b)    Each of the Administrative Agent and each other Purchaser Party, severally and with respect to itself only, agrees to hold in confidence, and not disclose to any Person, any confidential and proprietary information concerning the Seller, the Servicer and their respective Affiliates and their businesses or the terms of this Agreement (including any fees payable in connection with this Agreement or the other Transaction Documents), except as the Seller or the Servicer may have consented to in writing prior to any proposed disclosure; provided, however, that it may disclose such information (i) to its Advisors and Representatives and to any related Program Support Provider, (ii) to its assignees and Participants and potential assignees and

 

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Participants and their respective counsel if they agree in writing to hold it confidential, (iii) to the extent such information has become available to the public other than as a result of a disclosure by or through it or its Representatives or Advisors or any related Program Support Provider, (iv) to any nationally recognized statistical rating organization in connection with obtaining or maintaining the rating of any Conduit Purchaser’s Notes or as contemplated by 17 CFR 240.17g-5(a)(3), (v) at the request of a bank examiner or other regulatory authority or in connection with an examination of any of the Administrative Agent, any Group Agent or any Purchaser or their respective Affiliates or Program Support Providers or (vi) to the extent it should be (A) required by Applicable Law, or in connection with any legal or regulatory proceeding or (B) requested by any Governmental Authority to disclose such information; provided, that, in the case of clauses (v) and (vi) above, the Administrative Agent, each Group Agent and each Purchaser will use reasonable efforts to maintain confidentiality and will (unless otherwise prohibited by Applicable Law) notify the Seller and the Servicer of its making any such disclosure as promptly as reasonably practicable thereafter. Each of the Administrative Agent, each Group Agent and each Purchaser, severally and with respect to itself only, agrees to be responsible for any breach of this Section by its Representatives, Advisors and Program Support Providers and agrees that its Representatives, Advisors and Program Support Providers will be advised by it of the confidential nature of such information and shall agree to comply with this Section.

(c)    As used in this Section, (i) “Advisors” means, with respect to any Person, such Person’s accountants, attorneys and other confidential advisors and (ii) “Representatives” means, with respect to any Person, such Person’s Affiliates, Subsidiaries, directors, managers, officers, employees, members, investors, financing sources, insurers, professional advisors, representatives and agents; provided that such Persons shall not be deemed to Representatives of a Person unless (and solely to the extent that) confidential information is furnished to such Person.

(d)    Notwithstanding the foregoing, to the extent not inconsistent with applicable securities laws, each party hereto (and each of its employees, representatives or other agents) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure (as defined in Section 1.6011-4 of the Treasury Regulations) of the transactions contemplated by the Transaction Documents and all materials of any kind (including opinions or other tax analyses) that are provided to such Person relating to such tax treatment and tax structure.

Section 14.07.    GOVERNING LAW. THIS AGREEMENT, INCLUDING THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO ANY OTHER CONFLICTS OF LAW PROVISIONS THEREOF, EXCEPT TO THE EXTENT THAT THE PERFECTION, THE EFFECT OF PERFECTION OR PRIORITY OF THE INTERESTS OF ADMINISTRATIVE AGENT OR ANY PURCHASER IN THE SOLD ASSETS OR SELLER COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK).

 

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Section 14.08.    Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart hereof by facsimile or other electronic means shall be equally effective as delivery of an originally executed counterpart.

Section 14.09.    Integration; Binding Effect; Survival of Termination. This Agreement and the other Transaction Documents contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until the Final Payout Date; provided, however, that the provisions of Sections 3.08, 3.09, 3.10, 5.01, 5.02, 5.03, 11.04, 11.06, 12.04, 13.01, 13.02, 14.04, 14.05, 14.06, 14.09, 14.11 and 14.13 shall survive any termination of this Agreement.

Section 14.10.    CONSENT TO JURISDICTION. (a) EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK CITY, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND EACH PARTY HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED, IN EACH CASE, IN SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. NOTHING IN THIS SECTION 14.10 SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY OTHER PURCHASER PARTY TO BRING ANY ACTION OR PROCEEDING AGAINST THE SELLER OR THE SERVICER OR ANY OF THEIR RESPECTIVE PROPERTY IN THE COURTS OF OTHER JURISDICTIONS. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

(b)    EACH PARTY HERETO CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO IT AT ITS ADDRESS SPECIFIED IN SECTION 14.02. NOTHING IN THIS SECTION 14.10 SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY OTHER PURCHASER PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

Section 14.11.    WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.

 

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Section 14.12.    Ratable Payments. If any Purchaser Party, whether by setoff or otherwise, has payment made to it with respect to any Seller Obligations in a greater proportion than that received by any other Purchaser Party entitled to receive a ratable share of such Seller Obligations, such Purchaser Party agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of such Seller Obligations held by the other Purchaser Parties so that after such purchase each Purchaser Party will hold its ratable proportion of such Seller Obligations; provided that if all or any portion of such excess amount is thereafter recovered from such Purchaser Party, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.

Section 14.13.    Limitation of Liability. (a) No claim may be made by the Seller or any Affiliate thereof or any other Person against any Purchaser Party or their respective Affiliates, members, directors, officers, employees, incorporators, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement or any other Transaction Document, or any act, omission or event occurring in connection herewith or therewith; and each of the Seller and the Servicer hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. None of the Purchaser Parties and their respective Affiliates shall have any liability to the Seller or any Affiliate thereof or any other Person asserting claims on behalf of or in right of the Seller or any Affiliate thereof in connection with or as a result of this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby, except to the extent that any losses, claims, damages, liabilities or expenses incurred by the Seller or any Affiliate thereof result from the breach of contract, gross negligence or willful misconduct of such Purchaser Party in performing its duties and obligations hereunder and under the other Transaction Documents to which it is a party.

(b)    The obligations of the Administrative Agent and each of the other Purchaser Parties under this Agreement and each of the Transaction Documents are solely the corporate obligations of such Person. No recourse shall be had for any obligation or claim arising out of or based upon this Agreement or any other Transaction Document against any member, director, officer, employee or incorporator of any such Person.

Section 14.14.    Intent of the Parties. The Seller has structured this Agreement with the intention that the obligations of the Seller hereunder (including the obligation to return Capital to the Purchasers and make payments of Yield thereon) will be treated under United States federal, and applicable state, local and foreign tax law as debt (the “Intended Tax Treatment”). The Seller, the Servicer, the Administrative Agent and the other Purchaser Parties agree to file no tax return, or take any action, inconsistent with the Intended Tax Treatment unless required by law. Each assignee and each Participant acquiring an interest in an Investment, by its acceptance of such assignment or participation, agrees to comply with the immediately preceding sentence.

Section 14.15.    USA Patriot Act. Each of the Administrative Agent and each of the other Purchaser Parties hereby notifies the Seller and the Servicer that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the

 

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“PATRIOT Act”), the Administrative Agent and the other Purchaser Parties may be required to obtain, verify and record information that identifies the Seller, the Pledgor, the Originators, the Servicer and the Performance Guarantor, which information includes the name, address, tax identification number and other information regarding the Seller, the Pledgor, the Originators, the Servicer and the Performance Guarantor that will allow the Administrative Agent and the other Purchaser Parties to identify the Seller, the Pledgor, the Originators, the Servicer and the Performance Guarantor in accordance with the PATRIOT Act. This notice is given in accordance with the requirements of the PATRIOT Act. Each of the Seller and the Servicer agrees to promptly provide the Administrative Agent and each of the other Purchaser Parties, from time to time, with all documentation and other information required by bank regulatory authorities under “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act.

Section 14.16.    Reserved.

Section 14.17.    Severability. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 14.18.    Mutual Negotiations. This Agreement and the other Transaction Documents are the product of mutual negotiations by the parties thereto and their counsel, and no party shall be deemed the draftsperson of this Agreement or any other Transaction Document or any provision hereof or thereof or to have provided the same. Accordingly, in the event of any inconsistency or ambiguity of any provision of this Agreement or any other Transaction Document, such inconsistency or ambiguity shall not be interpreted against any party because of such party’s involvement in the drafting thereof.

Section 14.19.    Captions and Cross References. The various captions (including the table of contents) in this Agreement are provided solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement. Unless otherwise indicated, references in this Agreement to any Section, Schedule or Exhibit are to such Section Schedule or Exhibit to this Agreement, as the case may be, and references in any Section, subsection, or clause to any subsection, clause or subclause are to such subsection, clause or subclause of such Section, subsection or clause.

Section 14.20.    Purchaser Representation. Each Purchaser hereby represents, warrants and agrees that either (A) such Purchaser is not a variable interest entity as defined in FASB Accounting Standards Codification Topic 810 or (B) (i) such Purchaser’s source of funding for its Investments hereunder does not and will not be repayable or redeemable solely from 90% or more of such Purchaser’s interest in the Receivables and (ii) such Purchaser’s outstanding Capital does not and will not exceed 50% of the fair value of such Purchaser’s total assets. Each Pool Purchaser shall promptly notify the Seller and the Servicer if it becomes aware that any of the statements in the foregoing sentence are not correct.

 

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Section 14.21.    Amendment and Restatement. This Agreement shall become effective on the Restatement Effective Date and shall supersede all provisions of the Existing Receivables Purchase Agreement as of such date and the Existing Receivables Purchase Agreement shall thereafter be of no further force and effect, except to evidence (i) the incurrence by each of the Seller and the Servicer of the obligations under the Existing Receivables Purchase Agreement (whether or not such obligations are contingent as of the Restatement Effective Date), (ii) the representations and warranties made by each of the Seller and the Servicer prior to the Restatement Effective Date and (iii) any action or omission performed or required to be performed pursuant to such Existing Receivables Purchase Agreement prior to the Restatement Effective Date. From and after the Restatement Effective Date all references made to the Existing Receivables Purchase Agreement in any Transaction Document or in any other instrument or document shall, without further action, be deemed to refer to this Agreement. This Agreement amends and restates the Existing Receivables Purchase Agreement and is not intended to be or operate as a novation or an accord and satisfaction of the Existing Receivables Purchase Agreement or the obligations and liabilities of Seller evidenced or provided for thereunder. Without limiting the generality of the foregoing, the Seller agrees that notwithstanding the execution and delivery of this Agreement, the security interest, lien, collateral security or supporting obligations previously granted to the Administrative Agent in its individual capacity pursuant to the Transaction Documents shall be and remain in full force and effect and that any rights and remedies of the Administrative Agent in its individual capacity thereunder and obligations of the Seller thereunder shall be and remain in full force and effect, shall not be affected, impaired or discharged thereby and shall secure all of Seller’s Guaranteed Obligations and liabilities to Administrative Agent and the Purchasers under the Existing Receivables Purchase Agreement as amended and restated hereby. Without limiting the foregoing, the parties to this Agreement hereby acknowledge and agree that the “Receivables Purchase Agreement” referred to in the Transaction Documents shall from and after the date hereof be deemed references to this Agreement.

On the Restatement Effective Date, all outstanding Capital of the Purchaser under the Existing Receivables Purchase Agreement (collectively, the “Outstanding Capital”) shall be deemed automatically and immediately converted into outstanding Capital of the Purchaser in the Sold Receivables set forth on the Initial Schedule of Sold Receivables accruing Yield based on Daily Simple SOFR plus the applicable SOFR Adjustment (collectively, the “Converted Investments”), and, for the avoidance of doubt, all Yield and Fees (each as defined in and calculated in accordance with the Existing Receivables Purchase Agreement), accrued and unpaid under the Existing Receivables Purchase Agreement as of the Restatement Effective Date, and Breakage Fees (as defined in and calculated in accordance with the Existing Receivables Purchase Agreement), if any, with respect to the conversion of the Outstanding Capital into the Converted Investments, shall be due and payable on the first Settlement Date that occurs after the Restatement Effective Date in accordance with the terms and priorities for payment set forth in Section 4.01 (with such Yield, Fees and Breakage Fees accorded the same priorities for payment as Yield, Fees and Breakage Fees under this Agreement).

Section 14.22.    Effect of Spin-Off Date. Upon the occurrence of the Spin-Off Date: (i) the Secured Parties shall have automatically released their lien and security interest in the Pledged Collateral without further action being necessary on the part of the Administrative Agent or any

 

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other Secured Party, (ii) the Pledgor Purchase and Sale Agreement and the Pledgor Purchaser Assignment shall automatically terminate without further action or consent being necessary on the part of the Servicer, the Mobility Originator, the Pledgor, the Seller, the Administrative Agent or any other Secured Party, and (iii) all references herein and in any other Transaction Document to Mobility Originator, Mobility Receivables, Pledged Collateral, Pledged Receivables, the Pledgor, Pledgor Collection Accounts, Pledgor Purchase and Sale Agreement, Pledgor Purchase and Sale Termination Event, and Pledgor Purchase Assignment, and any representation, covenant or other provision solely to the extent incorporating or referencing such terms (in each case other than this Section 14.22) shall automatically cease to be of any further force and effect. For the avoidance of doubt, notwithstanding anything to the contrary herein or in any other Transaction Document, upon the occurrence of the Spin-Off Date, the Mobility Receivables and “Related Rights” (as defined in Section 1.1 of the Pledgor Purchase and Sale Agreement), Collections thereon and other proceeds thereof shall no longer be available to be used to cover shortfalls in Collections on Sold Receivables and Unsold Receivables in the event that Collections on Sold Receivables and Unsold Receivables available to the Seller are insufficient to make the distributions required under Section 4.01. Upon the Spin-Off Date, the Amended and Restated Performance Guaranty, dated as of March 27, 2020, by AT&T in favor of the Administrative Agent for the benefit of the Secured Parties shall terminate and the Administrative Agent shall release AT&T from any of its obligations thereunder from and after the Spin Off Date, provided, however, that the foregoing release shall not relieve AT&T for any obligations that it may have incurred prior to the Spin Off Date. Upon the Spin-Off Date, the Administrative Agent and the other secured parties shall execute and deliver or otherwise authorize such documents, instruments and other items reasonably requested by the Servicer to effectuate the releases and other agreements set forth in the preceding sentence. Notwithstanding the foregoing, if the Spin-Off Date has not occurred by 5:00 EST on April 24, 2022 this Section 14.22 shall be of no further force and effect.

[SIGNATURE PAGES FOLLOW]

 

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

 

AT&T RECEIVABLES FUNDING II, LLC
By:  

/s/ Charles A. Mostella

  Name: Charles A. Mostella
  Title: Vice President & Assistant Treasurer

TURNER BROADCASTING SYSTEM, INC.,

as the Servicer

By:  

/s/ Charles A. Mostella

  Name: Charles A. Mostella
  Title: Vice President & Assistant Treasurer

Second Amended and Restated Receivables Purchase Agreement


Acknowledged and agreed as of the day and

year first above written solely for the purposes

set forth in Section 14.22(ii):

AT&T RECEIVABLES FUNDING III, LLC
By:  

/s/ Andrew B. Keiser

  Name: Andrew B. Keiser
  Title: Chief Financial Officer and Treasurer
NEW CINGULAR WIRELESS PCS, LLC D/B/A
  AT&T MOBILITY, AS SERVICER
 

By: AT&T MOBILITY CORPORATION, ITS

MANAGER

By:  

/s/ Andrew B. Keiser

  Name: Andrew B. Keiser
  Title: Treasurer

Second Amended and Restated Receivables Purchase Agreement


PNC BANK, NATIONAL ASSOCIATION,

    as Administrative Agent

By:  

/s/ Imad Naja

  Name: Imad Naja
  Title: Senior Vice President

PNC BANK, NATIONAL ASSOCIATION,

    as Group Agent for the PNC Group

By:  

/s/ Imad Naja

  Name: Imad Naja
  Title: Senior Vice President

PNC BANK, NATIONAL ASSOCIATION,

    as a Committed Purchaser

By:  

/s/ Imad Naja

  Name: Imad Naja
  Title: Senior Vice President

PNC CAPITAL MARKETS LLC,

    as Structuring Agent and as Sustainability

    Agent

By:  

/s/ Imad Naja

  Name: Imad Naja
  Title: Managing Director

Second Amended and Restated Receivables Purchase Agreement


EXHIBIT A

FORM OF INVESTMENT REQUEST

[Letterhead of Seller]

[Date]

[Administrative Agent]

[Group Agents]

Re:                             Investment Request

Ladies and Gentlemen:

Reference is hereby made to that certain Second Amended and Restated Receivables Purchase Agreement, dated as of April 7, 2022, among AT&T Receivables Funding II, LLC (the “Seller”), Turner Broadcasting System, Inc., as Servicer (the “Servicer”), the Purchasers party thereto, the Group Agents party thereto, PNC Bank, National Association, as Administrative Agent (in such capacity, the “Administrative Agent”), and PNC Capital Markets LLC, as Structuring Agent and as Sustainability Agent (as amended, supplemented or otherwise modified from time to time, the “Agreement”). Capitalized terms used in this Investment Request and not otherwise defined herein shall have the meanings assigned thereto in the Agreement.

This letter constitutes an Investment Request pursuant to Section 2.02(a) of the Agreement. The Seller hereby request an Investment of Capital in the aggregate amount of [$                ] to be made on [            , 202    ] (of which $[        ] of Capital will be funded by the PNC Group and $[        ] of Capital will be funded by the [        ] Group. Such Capital should be deposited to [Account number], at [Name, Address and ABA Number of Bank]. After giving effect to such Investment, the Aggregate Capital will be [$                ].

The Seller hereby represents and warrants as of the date hereof, and after giving effect to such Investment, as follows:

(i)    the representations and warranties of the Seller and the Servicer contained in Sections 7.01 and 7.02 of the Agreement are true and correct in all material respects on and as of the date of such Investment as though made on and as of such date unless such representations and warranties by their terms refer to an earlier date, in which case they shall be true and correct in all material respects on and as of such earlier date;

(ii)    no Event of Termination or Unmatured Event of Termination has occurred and is continuing, and no Event of Termination or Unmatured Event of Termination would result from such Investment;

 

EXHIBIT A


(iii)    no Capital Coverage Deficit exists or would exist after giving effect to such Investment;

(iv)    the Aggregate Capital will be equal to or greater than an amount that is equal to the lesser of (a) sixty-six and sixty-seven hundredths percent (66.67%) of the Facility Limit at such time and (b) the Capital Coverage Amount at such time;

(v)    the Termination Date has not occurred;

(vi)    the Sold Receivables are identified on the Schedule of Sold Receivables attached hereto; and

(vii)    the Pledged Receivables are identified on the Schedule of Pledged Receivables attached hereto.

 

A-2


IN WITNESS WHEREOF, the undersigned has executed this letter by its duly authorized officer as of the date first above written.

 

Very truly yours,
AT&T RECEIVABLES FUNDING II, LLC
By:  

 

  Name:
  Title:

 

A-3


EXHIBIT B

FORM OF REDUCTION NOTICE

[LETTERHEAD OF SELLER]

[Date]

[Administrative Agent]

[Group Agents]

Re:                                 Reduction Notice

Ladies and Gentlemen:

Reference is hereby made to that certain Second Amended and Restated Receivables Purchase Agreement, dated as of April 7, 2022, among AT&T Receivables Funding II, LLC, as seller (the “Seller”), Turner Broadcasting System, Inc., as Servicer (the “Servicer”), the Purchasers party thereto, PNC Bank, National Association, as Administrative Agent (in such capacity, the “Administrative Agent”), and PNC Capital Markets LLC, as Structuring Agent and as Sustainability Agent (as amended, supplemented or otherwise modified from time to time, the “Agreement”). Capitalized terms used in this Reduction Notice and not otherwise defined herein shall have the meanings assigned thereto in the Agreement.

This letter constitutes a Reduction Notice pursuant to Section 2.02(d) of the Agreement. The Seller hereby notifies the Administrative Agent and the Purchasers that it shall reduce the outstanding Capital of the Purchasers [in the [                    ] Group] in the amount of [$                ] to be made on [            , 20    ]. After giving effect to such reduction, the [outstanding Capital of the Purchasers in the [                    ] Group will be [$                ]] and the Aggregate Capital will be [$                ].

The Seller hereby represents and warrants as of the date hereof, and after giving effect to such reduction, as follows:

(i)    the representations and warranties of the Seller and the Servicer contained in Sections 7.01 and 7.02 of the Agreement are true and correct in all material respects on and as of the date of such reduction as though made on and as of such date unless such representations and warranties by their terms refer to an earlier date, in which case they shall be true and correct in all material respects on and as of such earlier date;

(ii)    no Event of Termination or Unmatured Event of Termination has occurred and is continuing, and no Event of Termination or Unmatured Event of Termination would result from such reduction;

 

EXHIBIT B


(iii)    no Capital Coverage Deficit exists or would exist after giving effect to such reduction; and

(iv)    the Termination Date has not occurred.

 

B-2


IN WITNESS WHEREOF, the undersigned has executed this letter by its duly authorized officer as of the date first above written.

 

Very truly yours,
AT&T RECEIVABLES FUNDING II, LLC
By:  

 

  Name:
  Title:

 

B-3


EXHIBIT C

[FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT]

Dated as of                         , 20    

Section 1.

 

Commitment assigned:

   $ [            ]  

Assignor’s remaining Commitment:

   $ [            ]  

Capital allocable to Commitment assigned:

   $ [            ]  

Assignor’s remaining Capital:

   $ [            ]  

Yield (if any) allocable to Capital assigned:

   $ [            ]  

Yield (if any) allocable to Assignor’s remaining Capital:

   $ [            ]  

Section 2.

Effective Date of this Assignment and Acceptance Agreement: [                    ]

Upon execution and delivery of this Assignment and Acceptance Agreement by the assignee and the assignor and the satisfaction of the other conditions to assignment specified in Section 14.03(b) of the Agreement (as defined below), from and after the effective date specified above, the assignee shall become a party to, and, to the extent of the rights and obligations thereunder being assigned to it pursuant to this Assignment and Acceptance Agreement, shall have the rights and obligations of a Committed Purchaser under that certain Second Amended and Restated Receivables Purchase Agreement, dated as of April 7, 2022, among AT&T Receivables Funding II, LLC, as Seller, Turner Broadcasting System, Inc., as Servicer, the Purchasers party thereto, the Group Agents party thereto, PNC Bank, National Association, as Administrative Agent, and PNC Capital Markets LLC, as Structuring Agent and as Sustainability Agent (as amended, supplemented or otherwise modified from time to time, the “Agreement”).

[Signature Pages Follow]

 

EXHIBIT C


ASSIGNOR:

   

[                 ]

   

By:

 

 

     

Name:

     

Title

ASSIGNEE:

   

[                 ]

   

By:

 

 

     

Name:

     

Title

     

[Address]

Accepted as of date first above

written:

PNC BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

By:  

 

  Name:
  Title:

AT&T RECEIVABLES FUNDING II, LLC,

  as Seller

By:  

 

  Name:
  Title:

 

C-2


EXHIBIT D

[FORM OF ASSUMPTION AGREEMENT]

THIS ASSUMPTION AGREEMENT (this “Agreement”), dated as of [                     ,             ], is among AT&T Receivables Funding II, LLC (the “Seller”), [                ], as conduit purchaser (the “[            ] Conduit Purchaser”), [                ], as the Related Committed Purchaser (the “[                ] Committed Purchaser” and together with the Conduit Purchaser, the “[            ] Purchasers”), and [                    ], as group agent for the [            ] Purchasers (the “[                ] Group Agent” and together with the [            ] Purchasers, the “[                ] Group”).

BACKGROUND

The Seller and various others are parties to a certain Second Amended and Restated Receivables Purchase Agreement, dated as of April 7, 2022 (as amended through the date hereof and as the same may be amended, amended and restated, supplemented or otherwise modified from time to time, the “Receivables Purchase Agreement”). Capitalized terms used and not otherwise defined herein have the respective meaning assigned to such terms in the Receivables Purchase Agreement.

NOW, THEREFORE, the parties hereto hereby agree as follows:

Section 1. This letter constitutes an Assumption Agreement pursuant to Section 14.03(i) of the Receivables Purchase Agreement. The Seller desires [the [            ] Purchasers] [the [                ] Committed Purchaser] to [become a Group] [increase its existing Commitment] under the Receivables Purchase Agreement, and upon the terms and subject to the conditions set forth in the Receivables Purchase Agreement, the [[                    ] Purchasers] [[                    ] Committed Purchaser] agree[s] to [become Purchasers within a Group thereunder] [increase its Commitment to the amount set forth as its “Commitment” under the signature of such [                ] Committed Purchaser hereto].

The Seller hereby represents and warrants to the [                    ] Purchasers and the [                ] Group Agent as of the date hereof, as follows:

(i)    the representations and warranties of the Seller contained in Section 7.01 of the Receivables Purchase Agreement are true and correct on and as of such date as though made on and as of such date;

(ii)    no Event of Termination or Unmatured Event of Termination has occurred and is continuing, or would result from the assumption contemplated hereby; and

(iii)    the Termination Date shall not have occurred.

Section 2. Upon execution and delivery of this Agreement by the Seller and each member of the [                ] Group, satisfaction of the other conditions with respect to the addition

 

EXHIBIT D


of a Group specified in Section 14.03(i) of the Receivables Purchase Agreement (including the written consent of the Administrative Agent and the Majority Group Agents) and receipt by the Administrative Agent of counterparts of this Agreement (whether by facsimile or otherwise) executed by each of the parties hereto, [the [            ] Purchasers shall become a party to, and have the rights and obligations of Purchasers under, the Receivables Purchase Agreement and the “Commitment” with respect to the Committed Purchasers in such Group as shall be as set forth under the signature of each such Committed Purchaser hereto] [the [            ] Committed Purchaser shall increase its Commitment to the amount set forth as the “Commitment” under the signature of the [            ] Committed Purchaser hereto].

Section 3. Each party hereto hereby covenants and agrees that it will not institute against, or join any other Person in instituting against, any Conduit Purchaser, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law, for one year and one day after the latest maturing commercial paper notes or other senior indebtedness issued by such Conduit Purchaser is paid in full. The covenant contained in this paragraph shall survive any termination of the Receivables Purchase Agreement.

Section 4. THIS AGREEMENT, INCLUDING THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO ANY OTHER CONFLICTS OF LAW PROVISIONS THEREOF). This Agreement may not be amended or supplemented except pursuant to a writing signed be each of the parties hereto and may not be waived except pursuant to a writing signed by the party to be charged. This Agreement may be executed in counterparts, and by the different parties on different counterparts, each of which shall constitute an original, but all together shall constitute one and the same agreement.

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized officers as of the date first above written.

 

[                    ], as a Conduit Purchaser
By:  

 

  Name Printed:                                                                    
  Title:                                                                                     
  [Address]
[                    ], as a Committed Purchaser
By:  

 

  Name Printed:                                                                    
  Title:                                                                                   
  [Address]
  [Commitment]

[                    ], as Group Agent for

   [                     ]

By:  

 

  Name Printed:                                                                    
  Title:                                                                                    
  [Address]

 

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AT&T RECEIVABLES FUNDING II, LLC

as Seller

 

By:  

 

  Name Printed:                                                                    
  Title:                                                                                   

 

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EXHIBIT E

[RESERVED]

 

EXHIBIT E


EXHIBIT F

[RESERVED]

 

EXHIBIT F


EXHIBIT G

FORM OF INFORMATION PACKAGE

(Attached)

 

EXHIBIT G


EXHIBIT H

FORM OF COMPLIANCE CERTIFICATE

To: PNC Bank, National Association, as Administrative Agent

This Compliance Certificate is furnished pursuant to that certain Second Amended and Restated Receivables Purchase Agreement, dated as of April 7, 2022, among AT&T Receivables Funding II, LLC (the “Seller”), Turner Broadcasting System, Inc., as Servicer (the “Servicer”), the Purchasers party thereto, the Group Agents party thereto, PNC Bank, National Association, as Administrative Agent (in such capacity, the “Administrative Agent”), and PNC Capital Markets LLC, as Structuring Agent and as Sustainability Agent (as amended, supplemented or otherwise modified from time to time, the “Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Agreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

1.    I am the duly elected                             of the Servicer.

2.    I have reviewed the terms of the Agreement and each of the other Transaction Documents and I have made, or have caused to be made under my supervision, a detailed review of the transactions and condition of the Seller during the accounting period covered by the attached financial statements.

3.    The examinations described in paragraph 2 above did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes an Event of Termination or an Unmatured Event of Termination, as each such term is defined under the Agreement, during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate[, except as set forth in paragraph 5 below].

4.    Schedule I attached hereto sets forth financial statements of the Parent and its Subsidiaries for the period referenced on such Schedule I.

[5.    Described below are the exceptions, if any, to paragraph 3 above by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which Seller has taken, is taking, or proposes to take with respect to each such condition or event:]

 

EXHIBIT H


The foregoing certifications are made and delivered this              day of                     , 20        .

TURNER BROADCASTING SYSTEM, INC.

 

By:  

 

  Name:  

 

  Title:  

 

 

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SCHEDULE I TO COMPLIANCE CERTIFICATE

A.    Schedule of Compliance as of                                     , 20         with Section 8.02(b)(i) of the Agreement. Unless otherwise defined herein, the terms used in this Compliance Certificate have the meanings ascribed thereto in the Agreement.

This schedule relates to the month ended:                                .

B.    The following financial statements of the Parent and its Subsidiaries for the period ending on                         , 20        , are attached hereto:

 

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EXHIBIT I

RESERVED

 

EXHIBIT I


EXHIBIT I-2

RESTATEMENT EFFECTIVE DATE

CLOSING MEMORANDUM

(Attached)

 

EXHIBIT I-2


EXHIBIT J

RESERVED

 

EXHIBIT J


EXHIBIT K

DEFINED TERMS (PRIOR TO SPIN-OFF)

“Account Control Agreement” means each agreement, in form and substance satisfactory to the Administrative Agent, among the Seller or, with respect to the Pledgor Collection Account, the Pledgor, the Servicer (if applicable), the applicable Originator (if applicable), the Administrative Agent and a Collection Account Bank, governing the terms of the related Collection Accounts, that (i) provides the Administrative Agent with control within the meaning of the UCC over the deposit accounts subject to such agreement and (ii) by its terms, may not be terminated or canceled by the related Collection Account Bank without the written consent of the Administrative Agent or upon no less than sixty (60) days prior written notice to the Administrative Agent or such lesser amount of time agreed to by the Administrative Agent and the applicable Collection Account Bank.

“Adjusted Receivables Pool Balance” means, at any time of determination: (a) the aggregate Outstanding Balance of all Pool Receivables as of such date, minus (b) the Excess Concentration determined in accordance with clause (g) of the definition thereof as of such date, minus (c) the Excess Concentration determined in accordance with clause (h) of the definition thereof as of such date, minus (d) without duplication, the aggregate Outstanding Balance of all Pool Receivables as to which any payment, or part thereof, remains unpaid for one (1) day or more from the original due date for such payment or 31 days or more after the original invoice date for such payment.

“Administrative Agent” means PNC, in its capacity as contractual representative for the Purchaser Parties, and any successor thereto in such capacity appointed pursuant to Article XI or Section 14.03(g).

“Adverse Claim” means any ownership interest or claim, mortgage, deed of trust, pledge, lien, security interest, hypothecation, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including, but not limited to, any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing); it being understood that any of the foregoing in favor of, or assigned to, the Administrative Agent (for the benefit of the Secured Parties) shall not constitute an Adverse Claim.

“Advisors” has the meaning set forth in Section 14.06(c).

“Affected Person” means each Purchaser Party, each Program Support Provider, each Liquidity Agent and each of their respective Affiliates.


“Affiliate” means, as to any Person: (a) any other Person that, directly or indirectly, is in control of, is controlled by or is under common control with such Person or (b) who is a director or officer: (i) of such Person or (ii) of any Person described in clause (a), except that, in the case of each Conduit Purchaser, Affiliate shall mean the holder(s) of its Capital Stock. For purposes of this definition, control of a Person shall mean the power, direct or indirect: (x) to vote 25% or more of the securities having ordinary voting power for the election of directors or managers of such Person or (y) to direct or cause the direction of the management and policies of such Person, in either case whether by ownership of securities, contract, proxy or otherwise.

“Aggregate Capital” means, at any time of determination, the aggregate outstanding Capital of all Purchasers at such time.

“Aggregate Yield” means, at any time of determination, the aggregate accrued and unpaid Yield on the aggregate outstanding Capital of all Purchasers at such time.

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

“Anti-Corruption Laws” means any laws, rules, and regulations of any jurisdiction applicable to the Seller, the Pledgor, the Servicer, each Originator, the Parent and each of Parent’s Subsidiaries from time to time concerning or relating to money laundering, bribery or corruption.

“Applicable Law” means, with respect to any Person, (x) all provisions of law, statute, treaty, constitution, ordinance, rule, regulation, ordinance, requirement, restriction, permit, executive order, certificate, decision, directive or order of any Governmental Authority applicable to such Person or any of its property and (y) all judgments, injunctions, orders, writs, decrees and awards of all courts and arbitrators in proceedings or actions in which such Person is a party or by which any of its property is bound. For the avoidance of doubt, FATCA shall constitute an “Applicable Law” for all purposes of this Agreement.

“Assignment and Acceptance Agreement” means an assignment and acceptance agreement entered into by a Committed Purchaser, an Eligible Assignee, such Committed Purchaser’s Group Agent and the Administrative Agent, and, if required, the Seller, pursuant to which such Eligible Assignee may become a party to this Agreement, in substantially the form of Exhibit C hereto.

“Assumption Agreement” has the meaning set forth in Section 14.03(i).

“AT&T” means AT&T Inc., a Delaware corporation.

“Attorney Costs” means and includes all fees, costs, expenses and disbursements of any law firm or other external counsel and all disbursements of internal counsel.

“AUD” means the lawful money of the Commonwealth of Australia.

 

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Bank Rate for any Portion of Capital funded by any Purchaser on any day, means an interest rate per annum equal to (a) the applicable SOFR Rate plus the applicable SOFR Adjustment with respect to such Purchaser for such Yield Period (or portion thereof) (provided that for such purpose, if such SOFR Rate is being determined by reference to Daily Simple SOFR for such Purchaser, the SOFR Rate for such day shall be Daily Simple SOFR in effect on such day); or (b) if the Base Rate is applicable to such Purchaser pursuant to Section 5.04, the Base Rate for such Purchaser on such day.

“Bankruptcy Code” means the United States Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq.), as amended from time to time.

“Base Rate” means, for any day and any Purchaser, a fluctuating interest rate per annum as shall be in effect from time to time, which rate shall be at all times equal to the greater of:

(a)    the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent or its Affiliate as its “reference rate” or “prime rate”, as applicable (such “reference rate” or “prime rate” is set by the Administrative Agent or its Affiliate based upon various factors, including such Person’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such announced rate, and is not necessarily the lowest rate charged to any customer); and

(b)    0.50% per annum above the latest Federal Funds Rate in effect on such day;

provided, however, if the Base Rate as determined above would be less than zero, then such rate shall be deemed to be zero.

“Beneficial Owner” means, for the Seller, each of the following: (a) each individual, if any, who, directly or indirectly, owns 25% or more of the Seller’s Capital Stock; and (b ) a single individual with significant responsibility to control, manage or direct the Seller.

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

“Breakage Fee” means (i) for any Yield Period for which Yield is computed by reference to Daily Simple SOFR or the Term SOFR Rate and a reduction of Capital is made for any reason on any day other than the last day of the related Yield Period (or Tranche Period, if applicable) or (ii) to the extent that the Seller shall for any reason, fail to accept any Investment on the date specified by the Seller in connection with any request for funding pursuant to Article II of this Agreement, the amount, if any, by which (A) the additional Yield (calculated without taking into account any Breakage Fee or any shortened duration of such Yield Period (or Tranche Period, if applicable) pursuant to the definition thereof) which would have accrued during such Yield Period (or Tranche Period, if applicable) on the reductions of Capital relating to such Yield Period (or Tranche Period, if applicable) had such reductions not been made (or, in the case of clause (ii) above, on the amounts so failed to be accepted in connection with any such request for funding by the Seller), exceeds (B) the income, if any, received by the applicable

 

K-3


Purchaser from the investment of the proceeds of such reductions of Capital (or such amounts failed to be accepted by the Seller). A certificate as to the amount of any Breakage Fee (including the computation of such amount) shall be submitted by the affected Purchaser (or the Administrative Agent on its behalf) to the Seller and shall be conclusive and binding for all purposes, absent manifest error.

Business Day means any day (other than a Saturday or Sunday) on which banks are not authorized or required to close in Dallas, Texas, Atlanta, Georgia, Pittsburgh, Pennsylvania, or New York City, New York provided that, when used in connection with an amount that accrues Yield at a rate based on SOFR or any direct or indirect calculation or determination of SOFR, the term “Business Day” means any such day that is also a U.S. Government Securities Business Day.

“CAD” means the lawful money of Canada.

“Capital” means, with respect to any Purchaser, the aggregate amounts paid to, or on behalf of, the Seller in connection with all Investments made by such Purchaser pursuant to Article II as reduced from time to time by Collections distributed and applied on account of reducing, returning or repaying such Capital pursuant to Section 2.02(d) or 4.01; provided, that if such Capital shall have been reduced by any distribution and thereafter all or a portion of such distribution is rescinded or must otherwise be returned for any reason, such Capital shall be increased by the amount of such rescinded or returned distribution as though it had not been made.

“Capital Coverage Amount” means, at any time of determination, the lesser of (i) the Facility Limit at such time and (ii) the amount equal to (a) the Net Receivables Pool Balance at such time, minus (b) the Total Reserves at such time, plus (c) the sum of (x) the principal amount of Permitted Investments on deposit in the Pledged Investment Account and (y) amounts on deposit in the Pledged Deposit Account.

“Capital Coverage Deficit” means, at any time of determination, the amount, if any, by which (a) the Aggregate Capital at such time, exceeds (b) the Capital Coverage Amount at such time.

“Capital Stock” means, with respect to any Person, any and all common shares, preferred shares, interests, participations, rights in or other equivalents (however designated) of such Person’s capital stock, partnership interests, limited liability company interests, membership interests or other equivalent interests and any rights (other than debt securities convertible into or exchangeable for capital stock), warrants or options exchangeable for or convertible into such capital stock or other equity interests.

“Certificate of Beneficial Ownership” means, for the Seller, a certificate in form and substance acceptable to the Administrative Agent (as amended or modified by the Administrative Agent from time to time in its sole discretion), certifying, among other things, the Beneficial Owner of the Seller.

 

K-4


“Change in Control” means the occurrence of any of the following:

(a)     Performance Guarantor ceases to own, directly or indirectly, 100% of the issued and outstanding Capital Stock and all other equity interests of the Seller free and clear of all Adverse Claims;

(b)    Performance Guarantor ceases to own, directly or indirectly, 100% of the issued and outstanding Capital Stock, membership interests or other equity interests of any Originator free and clear of all Adverse Claims;

(c)    prior to the Spin-Off Date, Parent ceases to own, directly or indirectly, 100% of the issued and outstanding Capital Stock and all other equity interests of the Pledgor free and clear of all Adverse Claims;

(d)    any Subordinated Note shall at any time cease to be owned by an Originator, free and clear of all Adverse Claims; or

(e)    with respect to Performance Guarantor:

(i)    any Person or two or more Persons acting in concert shall have acquired beneficial ownership (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Stock of the Performance Guarantor (or other securities convertible into such Voting Stock) representing more than 50% of the combined voting power of all Voting Stock of the Performance Guarantor; or

(ii)    during any period of 24 consecutive months, individuals who at the beginning of such 24-month period were directors of the Performance Guarantor shall cease for any reason (other than due to retirement, death or disability) to constitute a majority of the board of directors of the Performance Guarantor (except to the extent that such individuals were replaced by individuals (x) elected by 66-2/3% of the members of the board of directors of the Performance Guarantor or (y) nominated for election by a majority of the members of board of directors of the Performance Guarantor and thereafter elected as directors by the shareholders of the Performance Guarantor.

“Change in Law” means the occurrence, after the Restatement Effective Date, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

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“Closing Date” means March 27, 2019.

“Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.

“Collection Account” means each “deposit account” within the meaning of the applicable UCC listed on Schedule II to this Agreement (as such schedule may be modified from time to time in connection with the closing or opening of any Collection Account in accordance with the terms hereof) and maintained at a bank or other financial institution acting as a Collection Account Bank for the purpose of receiving Collections and subject to an Account Control Agreement except with respect to (i) the TD Account (unless the TD Account becomes subject to an Account Control Agreement in accordance with Section 9.03), (ii) any Excluded Collection Account, and (iii) until the date that the Pledgor is in compliance with Section 7.14 of the Pledgor Purchaser Assignment, the Pledgor Collection Account.

“Collection Account Bank” means any of the banks or other financial institutions holding one or more Collection Accounts.

“Collections” means, with respect to any Pool Receivable: (a) all funds that are received by any Originator, the Seller, the Pledgor, the Servicer or any other Person on their behalf in payment of any amounts owed in respect of such Pool Receivable (including purchase price, service charges, finance charges, interest, fees and all other charges), or applied to amounts owed in respect of such Pool Receivable (including insurance payments, proceeds of drawings under supporting letters of credit and net proceeds of the sale or other disposition of repossessed goods or other collateral or property of the related Obligor or any other Person directly or indirectly liable for the payment of such Pool Receivable and available to be applied thereon), (b) all Deemed Collections, (c) all proceeds of all Related Security with respect to such Pool Receivable and (d) all other proceeds of such Pool Receivable.

“Commitment” means, with respect to any Committed Purchaser (including a Related Committed Purchaser), the maximum aggregate amount of Capital which such Person is obligated to pay hereunder on account of all Investments, on a combined basis, as set forth on Schedule I or in the Assumption Agreement or other agreement pursuant to which it became a Purchaser, as such amount may be modified in connection with any subsequent assignment pursuant to Section 14.03 or in connection with a reduction in the Facility Limit pursuant to Section 2.02(e) or an increase in the Facility Limit pursuant to Section 2.02(g). If the context so requires, “Commitment” also refers to a Committed Purchaser’s obligation to fund Investments hereunder in accordance with this Agreement.

“Committed Purchasers” means PNC and each other Person that is or becomes a party to this Agreement in the capacity of a “Committed Purchaser”.

 

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“Concentration Percentage” means, (a) except as provided in clause (b) below, (i) for any Group A Obligor, 20.0%, (ii) for any Group B Obligor, 15.0%, (iii) for any Group C Obligor, 10.0%, and (iv) for any Group D Obligor, 3.0% and (b) for each of the Obligors listed in the chart on Schedule VI hereto or which the Administrative Agent, with the approval of the Seller and the consent, or at the direction, of the Majority Group Agents from time to time designates in writing to the Seller and the Servicer as a Special Obligor (each, a “Special Obligor”), the percentage specified in the chart on Schedule VI for such Special Obligor (the applicable “Special Concentration Limit”); provided, however, that the Administrative Agent may, in its sole discretion, or will, (x) at the direction of the Majority Group Agents upon not less than thirty (30) days’ prior written notice to the Seller or (y) at any time that the Performance Guarantor credit rating for long-term, unsecured and unsubordinated indebtedness or deposit obligations is below BB by S&P or Ba2 by Moody’s, cancel or reduce the Special Concentration Limit with respect to any or all Special Obligors, and in the case of a cancellation, the Concentration Percentage for such Special Obligor(s) shall be determined pursuant to clause (a) above. In the event that any other Obligor is or becomes an Affiliate of a Special Obligor, the Special Concentration Limit shall apply to both such Obligor and such Special Obligor and shall be calculated as if such Obligor and such Special Obligor were a single Obligor.

“Concentration Reserve Percentage” means, at any time of determination, the largest of: (a) the sum of the five (5) largest Obligor Percentages of the Group D Obligors, (b) the sum of the three (3) largest Obligor Percentages of the Group C Obligors, (c) the sum of the two (2) largest Obligor Percentage of the Group B Obligors and (d) the largest Obligor Percentage of the Group A Obligors.

“Conduit Purchaser” means each commercial paper conduit that is or becomes a party to this Agreement in the capacity of a “Conduit Purchaser”.

“Conforming Changes” means, with respect to the Term SOFR Rate, Daily Simple SOFR or any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Tranche Period,” the definition of “Yield Period,” timing and frequency of determining rates and making payments of Yield, timing of Investment Requests or return, prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent reasonably decides (in consultation with the Seller) may be appropriate to reflect the adoption and implementation of the Term SOFR Rate, Daily Simple SOFR or such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent reasonably decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent reasonably determines that no market practice for the administration of the Term SOFR Rate, Daily Simple SOFR or the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides (in consultation with the Seller) is reasonably necessary in connection with the administration of this Agreement and the other Transaction Documents).

 

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“Contract” means, with respect to any Receivable, any and all contracts, instruments, agreements, leases, invoices, notes, insertions or other writings pursuant to which such Receivable arises or that evidence such Receivable or under which an Obligor becomes or is obligated to make payment in respect of such Receivable, provided, notwithstanding the foregoing or any provision of any Transaction Document, none of the Administrative Agent, any Purchaser Party or any beneficiary thereof shall have the right to hold, review, view, audit or otherwise possess (x) any Contract; or (y) any financial reporting or other books or records specifically relating to such Contract and the Receivables generated thereunder, the disclosure of which is precluded by the applicable terms of such Contract, provided, further, however, that during the occurrence and continuance of an Event of Termination, to the extent that the related Obligor has defaulted in the payment of any Receivable, upon the request of the Administrative Agent the Seller shall provide (or cause the Pledgor to provide) the Administrative Agent with such information reasonably requested with respect to any such Contract (which may be redacted versions of or excerpts of any Contract) to the extent needed for the Administrative Agent to enforce such Contract against the applicable Obligor.

“Credit and Collection Policy” means, as the context may require, those receivables credit and collection policies and practices of (a) the Originators (other than the Mobility Originator) in effect on the Restatement Effective Date or (b) the Mobility Originator in effect on March 27, 2020, in each case, as modified in compliance with this Agreement.

“Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), the interest rate per annum equal to SOFR for the day (the “SOFR Determination Date”) that is 2 Business Days prior to (i) such SOFR Rate Day if such SOFR Rate Day is a Business Day or (ii) the Business Day immediately preceding such SOFR Rate Day if such SOFR Rate Day is not a Business Day. If Daily Simple SOFR as determined above would be less than the SOFR Floor, then Daily Simple SOFR shall be deemed to be the SOFR Floor. If SOFR for any SOFR Determination Date has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (New York City time) on the second Business Day immediately following such SOFR Determination Date, then SOFR for such SOFR Determination Date will be SOFR for the first Business Day preceding such SOFR Determination Date for which SOFR was published in accordance with the definition of “SOFR”; provided that SOFR determined pursuant to this sentence shall be used for purposes of calculating Daily Simple SOFR for no more than 3 consecutive SOFR Rate Days. If and when Daily Simple SOFR as determined above changes, any applicable rate of interest based on Daily Simple SOFR will change automatically without notice to the Seller, effective on the date of any such change.

“Days’ Sales Outstanding” means, for any Fiscal Month, an amount computed as of the last day of such Fiscal Month equal to: (a) the average of the Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) as of the last day of each of the three (3) most recent Fiscal Months ended on the last day of such Fiscal Month, divided by (b) an amount equal to (i) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the three (3) most recent Fiscal Months ended on the last day of such Fiscal Month, divided by (ii) 90.

 

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“Debt” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments and (c) all guarantees by such Person of Debt of others.

“Deemed Collections” has the meaning set forth in Section 4.01(d).

“Default Ratio” means the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each Fiscal Month by dividing: (a) the aggregate Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) that became Defaulted Receivables during such Fiscal Month, by (b) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by all Originators during the month that is five (5) Fiscal Months before such Fiscal Month (or such lesser amount of Fiscal Months as may be approved in writing by the Seller and the Administrative Agent with respect to all Pool Receivables generated by any specific Originator subject to the parenthetical appearing in clause (a) of the defined term “Defaulted Receivable”).

“Defaulted Receivable” means, without duplication, a Receivable:

(a)    as to which any payment, or part thereof, remains unpaid for (i) if such Receivable is not a Mobility Receivable, 121 days or more from the original due date for such payment or 151 days or more after the original invoice date for such payment (or such lesser amount of days as may be approved in writing by the Seller and the Administrative Agent (with notice of such approval delivered to the Group Agents) with respect to any Receivables originated by any specific Originator) or (ii) if such Receivable is a Mobility Receivable, 91 days or more from the original due date for such payment;

(b)    as to which an Insolvency Proceeding shall have occurred with respect to the Obligor thereof or any other Person obligated thereon or owning any Related Security with respect thereto; or

(c)    that has been written off in the applicable Originator’s, the Pledgor’s, or the Seller’s books as uncollectible consistent with the Credit and Collection Policy;

provided, however, that in each case above such amount shall be calculated without giving effect to any netting of credits that have not been matched to a particular Receivable for the purposes of aged trial balance reporting.

“Defaulting Purchaser” means any Committed Purchaser that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fund any portion of its Investments (or the Capital thereof) or (ii) pay over to any Purchaser Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Committed Purchaser notifies the Administrative Agent in writing that such failure is the result of such Committed Purchaser’s good faith determination that a condition precedent to funding

 

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(specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Seller or any Purchaser Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Committed Purchaser’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding an Investment under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three (3) Business Days after request by a Purchaser Party, acting in good faith, to provide a certification in writing from an authorized officer of such Committed Purchaser that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Investments under this Agreement, provided that such Committed Purchaser shall cease to be a Defaulting Purchaser pursuant to this clause (c) upon such Purchaser Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of an Insolvency Proceeding.

“Delinquency Ratio” means the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each Fiscal Month by dividing: (a) the aggregate Outstanding Balance of all Pool Receivables that were Delinquent Receivables on such day by (b) the aggregate Outstanding Balance of all Pool Receivables on such day.

“Delinquent Receivable” means a Receivable as to which any payment, or part thereof, remains unpaid for either (x) if such Receivable is not a Mobility Receivable, 121 days or more from the original due date for such payment or 151 days or more after the original invoice date for such payment or (y) if such Receivable is a Mobility Receivable, 61 days or more from the original due date for such payment.

“Dilution Horizon Ratio” means, for any Fiscal Month, the ratio (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of such Fiscal Month by dividing: (a) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the 1.5 most recent consecutive Fiscal Months, by (b) the aggregate Outstanding Balance of all Pool Receivables as of the last day of such Fiscal Month. Within thirty (30) days of the completion and the receipt by the Administrative Agent of the results of any annual audit or field exam of the Receivables and the servicing and origination practices of the Servicer and the Originators, the numerator of the Dilution Horizon Ratio may be adjusted by the Administrative Agent upon not less than five (5) Business Days’ notice to the Seller to reflect such number of Fiscal Months as the Administrative Agent reasonably believes best reflects the business practices of the Servicer and the Originators and the actual amount of dilution and Deemed Collections that occur with respect to Pool Receivables based on the weighted average dilution lag calculation completed as part of such audit or field exam.

“Dilution Ratio” means, for any Fiscal Month, the ratio (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward), computed as of the last day of each Fiscal Month by dividing: (a) the excess of (x) the aggregate amount of Deemed Collections during such Fiscal Month over (y) the Mobility Subject Dilution Deduction, by (b)

 

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the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the Fiscal Month that is one (1) month prior to such Fiscal Month.

“Dilution Reserve Percentage” means, at any time of determination, the product (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of (a) the sum of (i) the product of (A) the Stress Factor multiplied by (B) the average of the Dilution Ratios for the twelve (12) most recent Fiscal Months plus (ii) the Dilution Volatility Component, multiplied by (b) the Dilution Horizon Ratio.

“Dilution Volatility Component” means, for any Fiscal Month, the product (expressed as a percentage) and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of:

(a)    the positive difference, if any, between: (i) the highest Dilution Ratio during the twelve (12) most recent consecutive Fiscal Months and (ii) the arithmetic average of the Dilution Ratios for such twelve (12) consecutive Fiscal Months; multiplied by

(b)    the quotient of (i) the highest Dilution Ratio during the twelve (12) most recent consecutive Fiscal Months divided by (ii) the arithmetic average of the Dilution Ratios for such twelve (12) consecutive Fiscal Months.

“Dollar Equivalent” means, on any date on which a determination thereof is to be made, with respect to (a) any amount denominated in Dollars, such amount and (b) any amount denominated in a Foreign Currency, the Dollar equivalent of such amount of such Foreign Currency determined by referenced to the Spot Rate determined as of such determination date.

“Dollars” and “$” each mean the lawful currency of the United States of America.

“Eligible Assignee” means (i) any Committed Purchaser or any of its Affiliates, (ii) any Person managed by a Committed Purchaser or any of its Affiliates and (iii) any other financial or other institution.

“Eligible Foreign Currency” means AUD, CAD, EUR, GBP, NZD and SEK.

“Eligible Foreign Currency VaR Percentage” means 6.0%, or such other percentage designated by all Group Agents from time to time upon ten (10) Business Days’ notice.

“Eligible Foreign Obligor” means an Obligor that is organized in or that has a head office (domicile), registered office, and chief executive office located in a country that is not the United States or a country or territory that is, or whose government is, the subject of any Sanctions.

 

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“Eligible Receivable” means, at any time of determination, a Receivable:

(a)    the Obligor of which is: (i) (A) if such Receivable is not a Mobility Receivable, either a U.S. Obligor or an Eligible Foreign Obligor or (B) if such Receivable is a Mobility Receivable, a U.S. Obligor; (ii) not the target or subject of any Sanctions; (iii) not a consolidated Affiliate of the Seller, the Pledgor, the Servicer, the Parent or any Originator; (iv) if such Receivable is not a Mobility Receivable, not a natural person; and (v) not the Obligor with respect to which more than 50% of the aggregate Outstanding Balance of all of such Obligor’s Pool Receivables consist of Defaulted Receivables or Delinquent Receivables;

(b)    that is neither a Defaulted Receivable (other than with respect to clause (a) of such definition) nor a Delinquent Receivable;

(c)    that is denominated and payable only in Dollars or an Eligible Foreign Currency and the Obligor with respect to which has been instructed to remit Collections in respect thereof directly to a Lock-Box or Collection Account in the United States of America or Canada;

(d)    that does not have a due date which is more than either (i) if such Receivable is not a Mobility Receivable, 125 days after the original invoice date of such Receivable or (ii) if such Receivable is a Mobility Receivable, 30 days after the original invoice date of such Receivable;

(e)    that (i) arises under a Contract for the sale or licensing of goods or services entered into on an arm’s length basis in the ordinary course of the applicable Originator’s business and (ii) does not constitute a loan or other similar financial accommodation being provided by the applicable Originator;

(f)    that arises under a duly authorized Contract that (i) is in full force and effect, and (ii) is a legal, valid and binding obligation of the related Obligor, enforceable against such Obligor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity regardless of whether enforceability is considered in a proceeding in equity or at law;

(g)    (i) if such Receivable is not a Mobility Receivable, that has been transferred by an Originator to the Seller pursuant to the Purchase and Sale Agreement with respect to which transfer all conditions precedent under the Purchase and Sale Agreement have been met or explicitly waived in writing by the Administrative Agent or (ii) if such Receivable is a Mobility Receivable, that (A) has been transferred by the Mobility Originator to the Pledgor pursuant to the Pledgor Purchase and Sale Agreement with respect to which transfer all conditions precedent under the Pledgor Purchase and Sale Agreement have been met or explicitly waived in writing by the Administrative Agent and (ii) that has been pledged to the Seller by the Pledgor pursuant to the Pledgor Purchaser Assignment with respect to which pledge all conditions precedent under the Pledgor Purchaser Assignment have been met or explicitly waived in writing by the Administrative Agent;

 

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(h)    that, together with the Contract related thereto, conforms in all material respects with all Applicable Laws (including any applicable laws relating to usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy);

(i)    with respect to which all consents, licenses, approvals or authorizations of, or registrations or declarations with or notices to, any Governmental Authority or other Person required to be obtained, effected or given by an Originator in connection with the creation of such Receivable, the execution, delivery and performance by such Originator of the related Contract or the assignment thereof under the Purchase and Sale Agreement or Pledgor Purchase and Sale Agreement, as applicable, have been duly obtained, effected or given and are in full force and effect and, if such Receivable is a Mobility Receivable, with respect to which all consents, licenses, approvals or authorizations of, or registrations or declarations with or notices to, any Governmental Authority or other Person required to be obtained, effected or given by the Pledgor in connection with the execution, delivery and performance by the Pledgor of the related Contract or the assignment thereof under the Pledgor Purchaser Assignment have been duly obtained, effected or given and are in full force and effect;

(j)    that is not subject to any existing dispute, litigation, right of rescission, set-off, counterclaim, any other defense against the applicable Originator (or any assignee of such Originator) or the Pledgor (or any assignee of the Pledgor), as applicable, or Adverse Claim other than Permitted Liens, and the Obligor of which holds no right as against the applicable Originator or the Pledgor, as applicable, to cause such Originator or the Pledgor, as applicable, to repurchase the goods or merchandise, the sale of which shall have given rise to such Receivable, it being understood that a Receivable shall not be ineligible under this clause (j) solely because the related Contract contains a contractual right of set-off of the Obligor;

(k)    that satisfies all applicable requirements of the Credit and Collection Policy;

(l)    that, together with the Contract related thereto, has not been modified, waived or restructured since its creation, except as permitted pursuant to Section 9.02 of this Agreement;

(m)    (i) if such Receivable is not a Mobility Receivable, in which the Seller owns good and marketable title, free and clear of any Adverse Claims other than Permitted Liens, and that is freely assignable (including without any consent of the related Obligor or any Governmental Authority), and the payments thereon are free and clear of any, or increased to account for any applicable, withholding Taxes; or (ii) if such Receivable is a Mobility Receivable, the Seller has a valid and enforceable first priority perfected security interest therein and in the Related Security (other than each Excluded

 

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Collection Account) and Collections with respect thereto, free and clear of any Adverse Claims other than Permitted Liens, and that is freely assignable (including without any consent of the related Obligor or any Governmental Authority);

(n)    for which the Administrative Agent (on behalf of the Secured Parties) shall have a valid and enforceable first priority perfected ownership or security interest therein and in the Related Security (other than with respect to the TD Account (unless the TD Account becomes subject to an Account Control Agreement in accordance with Section 9.03), each Excluded Collection Account and, until the Pledgor is in compliance with Section 7.14 of the Pledgor Purchaser Assignment, the Pledgor Collection Account) and Collections with respect thereto, in each case free and clear of any Adverse Claim other than Permitted Liens;

(o)    that (x) constitutes an “account” or “general intangible” (as defined in the UCC), (y) is not evidenced by instruments or chattel paper and (z) does not constitute, or arise from the sale of, as-extracted collateral (as defined in the UCC);

(p)    with respect to which there are no unapplied payments that have been excluded from the Seller’s or the Pledgor’s accounts receivable aging reports but that remains unapplied as of the end of the month in which such payments were received;

(q)    for which none of any Originator, the Seller, the Pledgor, the Parent, the Performance Guarantor or the Servicer has established any offset or netting arrangements with the related Obligor in connection with the ordinary course of payment of such Receivable, it being understood that a Receivable shall not be ineligible under this clause (q) solely because the related Contract contains a contractual right of set-off of the Obligor;

(r)    that represents amounts earned and payable by the Obligor that are not subject to the performance of additional services by the Originator thereof, the Pledgor (if applicable) or by the Seller and such Receivable shall have been billed or invoiced and the related goods or merchandise shall have been shipped and/or services performed, other than, in the case of an Eligible Unbilled Receivable, the billing or invoicing of such Receivable; provided, that if such Receivable is subject to the performance of additional services, only the portion of such Receivable attributable to such additional services shall be ineligible; provided, further that any Receivable that (i) arises under a Contract for the licensing of goods or services or (ii) is a Mobility Receivable shall not be subject to this clause (r);

(s)    which (i) does not arise from a sale of accounts made as part of a sale of a business or constitute an assignment for the purpose of collection only, (ii) is not a transfer of a single account made in whole or partial satisfaction of a preexisting indebtedness or an assignment of a right to payment under a contract to an assignee that is also obligated to perform under the contract and (iii) is not a transfer of an interest in or an assignment of a claim under a policy of insurance;

 

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(t)    which does not relate to the sale of any consigned goods or finished goods which have incorporated any consigned goods into such finished goods;

(u)    for which the related Originator has recognized the related revenue on its financial books and records in accordance with GAAP;

(v)    for which neither the related Originator, the Pledgor (if applicable), nor any Affiliate thereof is holding any deposits, retainers or other advance payments received by or on behalf of the related Obligor; provided that only the portion of such Pool Receivable in an amount equal to such deposits shall be ineligible;

(w)    that, if such Receivable is an Unbilled Receivable, is an Eligible Unbilled Receivable;

(x)    is not an Excluded Receivable;

(y)    that is not subject to any future withholding tax to a U.S. person; provided that to the extent such Pool Receivable is subject to any future withholding tax to a U.S. person, only a portion of such Pool Receivable that is an amount equal to such future withholding tax shall be ineligible; and

(z)    if such Receivable is a Mobility Receivable, the Obligor of which is a low or medium credit risk per the Credit and Collection Policy.

“Eligible Unbilled Receivable” means, at any time, any Unbilled Receivable if the related Originator has recognized the related revenue on its financial books and records under GAAP.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated, and rulings issued thereunder.

“ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a member of the Parent’s controlled group, or under common control with the Parent, within the meaning of Section 414 of the Code.

“Erroneous Payment” has the meaning assigned to it in Section 11.11(a).

“Erroneous Payment Notice” has the meaning assigned to it in Section 11.11(a).

“Euro-Rate Reserve Percentage” means, the maximum effective percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including without limitation, supplemental, marginal, and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”).

“Euro” means the unit of single currency of the Participating Member States.

 

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“Event of Termination” has the meaning specified in Section 10.01. For the avoidance of doubt, any Event of Termination that occurs shall be deemed to be continuing at all times thereafter unless and until waived in accordance with Section 14.01.

“Excess Concentration” means, as of any date of determination, the sum of the following amounts, without duplication:

(a)    the sum of the amounts calculated for each of the Obligors equal to the excess (if any) of (i) the aggregate Outstanding Balance of the Eligible Receivables of such Obligor, over (ii) the product of (x) such Obligor’s applicable Concentration Percentage, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

(b)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables, the Obligor of which is an Eligible Foreign Obligors that is a resident of a country that maintains a sovereign debt rating of greater than (A) “BB+” by S&P and (B) “Ba1” by Moody’s, over (ii) the product of (x) 20.0%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

(c)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables, the Obligor of which is an Eligible Foreign Obligors that is a resident of a country that maintains a sovereign debt rating less than or equal to (A) “BB+” by S&P or (B) “Ba1” by Moody’s, over (ii) the product of (x) 5.0%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

(d)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables that are denominated in an Eligible Foreign Currency, over (ii) the product of (x) 7.5%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

(e)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables, the Obligors of which are Governmental Authorities, over (ii) the product of (x) 2.0%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

(f)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables that are Eligible Unbilled Receivables which have an expected billing date of 365 days or less, over (ii) the product of (x) 35.0%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

(g)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables that are Eligible Unbilled Receivables which have an expected billing date of greater than 365 days but less than or equal to 730 days, over (ii) the product of (x) 15.0%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

 

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(h)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables that are Eligible Unbilled Receivables which have an expected billing date of greater than 730 days, over (ii) the product of (x) 0.0%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

(i)    the excess (if any) of (i) the aggregate Outstanding Balance of all Pool Receivables as to which any payment, or part thereof, remains unpaid for either (A) one day or more but less than 31 days past the original due date for such payment or (B) more than 30 days but less than 61 days after the original invoice date for such payment, over (ii) the product of (x) 60.0%, multiplied by (y) aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the Fiscal Month that is one (1) Fiscal Month before the then-current Fiscal Month as of such date of determination; plus

(j)    the excess (if any) of (i) the aggregate Outstanding Balance of all Pool Receivables as to which any payment, or part thereof, remains unpaid for either (A) more than 30 days but less than 61 days past the original due date for such payment or (B) more than 60 days but less than 91 days after the original invoice date for such payment, over (ii) the product of (x) 30.0%, multiplied by (y) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the Fiscal Month that is two (2) Fiscal Months before the then-current Fiscal Month as of such date of determination; plus

(k)    the excess (if any) of (i) the aggregate Outstanding Balance of all Pool Receivables as to which any payment, or part thereof, remains unpaid for either (A) more than 60 days but less than 91 days past the original due date for such payment or (B) more than 90 days but less than 121 days after the original invoice date for such payment, over (ii) the product of (x) 15.0%, multiplied by (y) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the Fiscal Month that is three (3) Fiscal Months before the then-current Fiscal Month as of such date of determination; plus

(l)    the excess (if any) of (i) the aggregate Outstanding Balance of all Pool Receivables as to which any payment, or part thereof, remains unpaid for either (A) more than 90 days but less than 121 days past the original due date for such payment or (B) more than 120 days but less than 151 days after the original invoice date for such payment, over (ii) the product of (x) 7.5%, multiplied by (y) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the Fiscal Month that is four (4) Fiscal Months before the then-current Fiscal Month as of such date of determination; plus

(m)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables as to which the due date thereof is more than 90 days after the original invoice date of such Eligible Receivable over (ii) the product of (x) 5.0%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool plus

 

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(n)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables as to which the Obligors of such Eligible Receivables are instructed to remit Collections related thereto into an Excluded Collection Account during the most recently ended Fiscal Month over (ii) the product of (x) 37.5%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; provided that the percentage set forth in the foregoing clause (x) shall be reduced to (A) 10.0% (1) at any time that the Parent credit rating for long-term, unsecured and unsubordinated indebtedness or deposit obligations is below BBB- by S&P or Baa3 by Moody’s or (2) at the request of the Majority Group Agents upon 30 days’ notice to the Seller or (B) 0.0% at any time that the Parent credit rating for long-term, unsecured and unsubordinated indebtedness or deposit obligations is below BB by S&P or Ba2 by Moody’s.

“Exchange Act” means the Securities Exchange Act of 1934, as amended or otherwise modified from time to time.

Excluded Cingular Wireless Receivables” means each receivable generated by New Cingular Wireless PCS, LLC (a) that was not originated by the Telegence biller of New Cingular Wireless PCS, LLC arising in connection with the sale of wireless services rendered or to be rendered, (b) that arises under a retail installment contract, credit sale contract, retail installment obligation, retail installment sale agreement or any other agreement pursuant to or under which an Obligor shall be obligated to pay for a wireless communication device or approved accessory purchase, (c) that was originated by a partnership or joint venture that is partially owned or controlled by New Cingular Wireless PCS, LLC, (d) the Obligor of which has a billing address in the U.S. Virgin Islands or Puerto Rico, or (e) solely to the extent the Obligor of which is a Governmental Authority, that arises under a Contract that contains an absolute prohibition on assignment.

“Excluded Collection Account” means each “deposit account” within the meaning of the applicable UCC that (i) receives Collections on Pool Receivables only if (A) such Pool Receivable is a Mobility Receivable, or (B) such Pool Receivable is a GDS Receivable, and (ii) is listed on Schedule II to this Agreement (as such schedule may be modified from time to time in connection with the closing or opening of any Collection Account in accordance with the terms hereof) and identified as an Excluded Collection Account.

“Excluded Collection Account Owner” means each of AT&T Mobility II LLC and GDS.

“Excluded GDS Receivable” means each receivable generated by GDS related to the distribution of HBOMax outside the United States and its territories and possessions.

“Excluded HBO Receivable” means each receivable generated by an HBO Originator under a Contract related to (1) historic pay-per-view sports events; (2) retail and/or merchandise licensing transactions; or (3) rental or other use of Home Box Office, Inc.’s studio facilities.

“Excluded Receivable” means each receivable (a) the Obligor of which is AT&T, any of its Affiliates or any joint venture that is partially owned or controlled by AT&T or any of its consolidated Affiliates; provided, for the purposes of this clause (a), “control” of a joint venture

 

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means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such joint venture, whether through the ownership of voting securities, by contract or otherwise; (b) that is an Excluded HBO Receivable; (c) that is an Excluded Turner Receivable; (d) that is an Excluded Cingular Wireless Receivable; or (e) that is an Excluded GDS Receivable.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to an Affected Person or required to be withheld or deducted from a payment to an Affected Person: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes and branch profits Taxes, in each case, (i) imposed as a result of such Affected Person being organized under the laws of, or having its principal office or, in the case of any Purchaser, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Purchaser, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Purchaser with respect to an applicable interest in its Capital or Commitment pursuant to a law in effect on the date on which (i) such Purchaser funds an Investment or its Commitment or (ii) such Purchaser changes its lending office, except in each case to the extent that amounts with respect to such Taxes were payable either to such Purchaser’s assignor immediately before such Purchaser became a party hereto or to such Purchaser immediately before it changed its lending office, (c) any withholding Taxes imposed pursuant to FATCA and (d) Taxes attributable to such Affected Person’s failure to comply with Section 5.03(f), (g) or (i).

“Excluded Turner Receivable” means each receivable generated by a Turner Originator under a Contract related to (1) owned programming television syndication; (2) the license of such Turner Originator’s owned programming brands and characters (or brands/businesses such Turner Originator manages for other companies) for consumer products and other business ventures; (3) subscription video on demand; (4) home video, DVD, and electronic sell-through; (5) festival tickets; or (6) streaming.

“Existing Receivables Purchase Agreement” has the meaning set forth in the preliminary statements to this Agreement.

“Facility Limit” means $6,000,000,000 as reduced from time to time pursuant to Section 2.02(e) or increased from time to time pursuant to Section 2.02(g). References to the unused portion of the Facility Limit shall mean, at any time of determination, an amount equal to (x) the Facility Limit at such time, minus (y) the Aggregate Capital at such time.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable 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, any applicable intergovernmental agreement entered into between the United States and any other Governmental Authority in connection with the implementation of the foregoing and any fiscal or regulatory legislation, rules or official practices adopted pursuant to any such intergovernmental agreement.

 

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“Federal Funds Rate” means, for any day, the per annum rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, “H.15(519)”) for such day opposite the caption “Federal Funds (Effective).” If on any relevant day such rate is not yet published in H. 15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the “Composite 3:30 p.m. Quotations”) for such day under the caption “Federal Funds Effective Rate.” If on any relevant day the appropriate rate is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic mean as determined by the Administrative Agent of the rates for the last transaction in overnight Federal funds arranged before 9:00 a.m. (New York City time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Administrative Agent.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its principal functions.

“Fee Letter” has the meaning set forth in Section 2.03(a).

“Fees” has the meaning specified in Section 2.03(a).

“Final Payout Date” means the date on or after the Termination Date when (i) the Aggregate Capital has been reduced to zero and the Aggregate Yield has been paid in full, (ii) all other Seller Obligations have been paid in full (other than unasserted or contingent indemnification claims), (iii) all other amounts owing to the Purchaser Parties and any other Seller Indemnified Party or Affected Person hereunder and under the other Transaction Documents have been paid in full other than unasserted or contingent indemnification claims) and (iv) all accrued Servicing Fees have been paid in full.

“Financial Officer” of any Person means, the chief executive officer, the chief financial officer, the chief accounting officer, the principal accounting officer, the controller, the treasurer or the assistant treasurer of such Person.

“Fiscal Month” means each calendar month.

“Fitch” means Fitch, Inc. and any successor thereto that is a nationally recognized statistical rating organization.

“Foreign Currency” means the lawful currency of any other country or territory other than the United States.

“FX Reserve” means, as of any date of determination, an amount equal to (i) the product of (a) the Dollar Equivalent of the aggregate outstanding balance of all Eligible Receivables denominated in an Eligible Foreign Currency at such time, times (b) the Eligible Foreign Currency VaR Percentage at such time divided by (ii) the Net Receivables Pool Balance at such time.

 

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

“GBP” means the lawful money of the United Kingdom.

“GDS” means WarnerMedia Global Digital Services, LLC, a Delaware limited liability company.

“GDS Assignment Agreement” means that certain Receivables Assignment Agreement dated as of March 15, 2021, between GDS and WarnerMedia Direct, LLC, a Delaware limited liability company.

“GDS Receivable” means a Receivable originated by GDS that has been assigned to WarnerMedia Direct, LLC, a Delaware limited liability company, pursuant to the GDS Assignment Agreement.

“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state, provincial, territorial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“Group” means, (i) for any Conduit Purchaser, such Conduit Purchaser, together with such Conduit Purchaser’s Related Committed Purchasers and related Group Agent, (ii) for PNC, PNC as a Committed Purchaser and as a Group Agent, (iii) for any other Purchaser that does not have a related Conduit Purchaser, such Purchaser, together with such Purchaser’s related Group Agent and each other Purchaser for which such Group Agent acts as a Group Agent hereunder.

“Group A Obligor” means any Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) with a short-term rating of at least: (a) “A-1” by S&P, or if such Obligor does not have a short-term rating from S&P, a rating of “A+” or better by S&P on such Obligor’s, its parent’s, or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-1” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Al” or better by Moody’s on such Obligor’s, its parent’s or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities; provided, however, if such Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) is rated by only one of such rating agencies, then such Obligor will be a “Group A Obligor” if it satisfies either clause (a) or clause (b) above; provided, further, that if such Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) receives a split rating from S&P and Moody’s and satisfies only one of clause (a) or clause (b) above, then such Obligor shall be deemed to have satisfied each of clause (a) or clause (b) above. Notwithstanding the foregoing, (i) any Obligor that is a Subsidiary of an Obligor that satisfies the definition of “Group A Obligor” shall be deemed to be a Group A Obligor and shall be aggregated with the Obligor that satisfies such definition for the purposes of determining the “Concentration Reserve Percentage”, the “Concentration Reserve” and clause (i) of the definition

 

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of “Excess Concentration” for such Obligors, unless such deemed Obligor separately satisfies the definition of “Group A Obligor”, “Group B Obligor”, or “Group C Obligor”, in which case such Obligor shall be separately treated as a Group A Obligor, a Group B Obligor or a Group C Obligor, as the case may be, and shall be aggregated and combined for such purposes with any of its Subsidiaries that are Obligors and (ii) any Obligor that is a Special Obligor that satisfies the definition of “Group A Obligor” shall be deemed to be a Group A Obligor solely for the purposes of determining the “Concentration Reserve Percentage”.

“Group Agent” means each Person acting as agent on behalf of a Group and designated as the Group Agent for such Group on the signature pages to this Agreement or any other Person who becomes a party to this Agreement as a Group Agent for any Group pursuant to an Assumption Agreement, an Assignment and Acceptance Agreement or otherwise in accordance with this Agreement.

“Group Agent’s Account” means, with respect to any Group, the account(s) from time to time designated in writing by the applicable Group Agent to the Seller and the Servicer for purposes of receiving payments to or for the account of the members of such Group hereunder.

“Group B Obligor” means an Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) that is not a Group A Obligor, with a short-term rating of at least: (a) “A-2” by S&P, or if such Obligor does not have a short-term rating from S&P, a rating of “BBB+” to “A” by S&P on such Obligor’s, its parent’s or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-2” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Baal” to “A2” by Moody’s on such Obligor’s, its parent’s or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities; provided, however, if such Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) is rated by only one of such rating agencies, then such Obligor will be a “Group B Obligor” if it satisfies either clause (a) or clause (b) above; provided, further, that if such Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) receives a split rating from S&P and Moody’s and satisfies only one of clause (a) or clause (b) above, then such Obligor shall be deemed to have satisfied each of clause (a) or clause (b) above. Notwithstanding the foregoing, (i) any Obligor that is a Subsidiary of an Obligor that satisfies the definition of “Group B Obligor” shall be deemed to be a Group B Obligor and shall be aggregated with the Obligor that satisfies such definition for the purposes of determining the “Concentration Reserve Percentage”, the “Concentration Reserve” and clause (i) of the definition of “Excess Concentration” for such Obligors, unless such deemed Obligor separately satisfies the definition of “Group A Obligor”, “Group B Obligor”, or “Group C Obligor”, in which case such Obligor shall be separately treated as a Group A Obligor, a Group B Obligor or a Group C Obligor, as the case may be, and shall be aggregated and combined for such purposes with any of its Subsidiaries that are Obligors and (ii) any Obligor that is a Special Obligor that satisfies the definition of “Group B Obligor” shall be deemed to be a Group B Obligor solely for the purposes of determining the “Concentration Reserve Percentage”.

“Group C Obligor” means an Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) that is not a Group A Obligor or a Group B Obligor, with a short-term

 

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rating of at least: (a) “A-3” by S&P, or if such Obligor does not have a short-term rating from S&P, a rating of “BBB-” to “BBB” by S&P on such Obligor’s, its parent’s or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-3” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Baa3” to “Baa2” by Moody’s on such Obligor’s, its parent’s or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities; provided, however, if such Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) is rated by only one of such rating agencies, then such Obligor will be a “Group C Obligor” if it satisfies either clause (a) or clause (b) above; provided, further, that if such Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) receives a split rating from S&P and Moody’s and satisfies only one of clause (a) or clause (b) above, then such Obligor shall be deemed to have satisfied each of clause (a) or clause (b) above. Notwithstanding the foregoing, (i) any Obligor that is a Subsidiary of an Obligor that satisfies the definition of “Group C Obligor” shall be deemed to be a Group C Obligor and shall be aggregated with the Obligor that satisfies such definition for the purposes of determining the “Concentration Reserve Percentage”, the “Concentration Reserve” and clause (i) of the definition of “Excess Concentration” for such Obligors, unless such deemed Obligor separately satisfies the definition of “Group A Obligor”, “Group B Obligor”, or “Group C Obligor”, in which case such Obligor shall be separately treated as a Group A Obligor, a Group B Obligor or a Group C Obligor, as the case may be, and shall be aggregated and combined for such purposes with any of its Subsidiaries that are Obligors and (ii) any Obligor that is a Special Obligor that satisfies the definition of “Group C Obligor” shall be deemed to be a Group C Obligor solely for the purposes of determining the “Concentration Reserve Percentage”.

“Group Commitment” means, with respect to any Group, at any time of determination, the aggregate Commitments of all Committed Purchasers within such Group.

“Group D Obligor” means any Obligor that is not a Group A Obligor, Group B Obligor or Group C Obligor; provided, that (i) any Obligor (or its parent or majority owner, as applicable, if such Obligor is unrated) that is not rated by both Moody’s and S&P shall be a Group D Obligor and (ii) any Obligor that is a Special Obligor that satisfies the definition of “Group D Obligor” shall be deemed to be a Group D Obligor solely for the purposes of determining the “Concentration Reserve Percentage”.

“Guaranteed Obligations” has the meaning set forth in Section 3.01.

“HBO Originator” means each of Home Box Office, Inc., HBO Digital Services, Inc. and HBO Home Entertainment, Inc.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Seller or any of its Affiliates under any Transaction Document and (b) to the extent not otherwise described in clause (a) above, Other Taxes.

“Independent Director” has the meaning set forth in Section 8.03(c).

 

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“Information Package” means a report, in substantially the form of Exhibit G.

“Initial Investment Date” means March 27, 2019.

“Initial Schedule of Sold Receivables” means the list identifying all Sold Receivables as of the Initial Investment Date, which list is attached as Schedule IV hereto.

“Insolvency Proceeding” means (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors or (b) any general assignment for the benefit of creditors of a Person, composition, marshaling of assets for creditors of a Person, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in each of clauses (a) and (b) undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code.

“Intended Tax Treatment” has the meaning set forth in Section 14.14.

“Investment” means any payment of Capital to the Seller by a Purchaser pursuant to Sections 2.01(a) or 2.02.

“Investment Company Act” means the Investment Company Act of 1940, as amended or otherwise modified from time to time.

“Investment Request” means a letter in substantially the form of Exhibit A hereto executed and delivered by the Seller to the Administrative Agent and the Group Agents pursuant to Section 2.02(a).

“LCR Security” means any commercial paper or security (other than equity securities issued to Parent or any Originator that is a consolidated subsidiary of Parent, under GAAP) within the meaning of Paragraph __.32(e)(viii) of the final rules titled Liquidity Coverage Ratio; Liquidity Risk Measurement Standards, 79 Fed. Reg. 197, 61440 et seq. (October 10, 2014).

“Liquidity Agent” means any bank or other financial institution acting as agent for the various Liquidity Providers under each Liquidity Agreement.

“Liquidity Agreement” means any agreement entered into in connection with this Agreement pursuant to which a Liquidity Provider agrees to make purchases or advances to, or purchase assets from, any Conduit Purchaser in order to provide liquidity for such Conduit Purchaser’s Capital and Notes.

“Liquidity Provider” means each bank or other financial institution that provides liquidity support to any Conduit Purchaser pursuant to the terms of a Liquidity Agreement.

“Lock-Box” means each locked postal box with respect to which a Collection Account Bank has executed an Account Control Agreement pursuant to which it has been granted exclusive access for the purpose of retrieving and processing payments made on the Receivables and which is listed on Schedule II (as such schedule may be modified from time to time in connection with the addition or removal of any Lock-Box in accordance with the terms hereof).

 

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“Loss Horizon Ratio” means, as of the last day of any Fiscal Month, the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed by dividing:

(a)    the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the number of most recently ended Fiscal Months equal to the sum of (i) the Unbilled and Payment Terms Component as of such day plus (ii) 2.125; provided that with respect to any fraction of a Fiscal Month, the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during such fraction of a Fiscal Month shall be calculated as a percentage of the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the applicable Fiscal Month; by

(b)    the aggregate Outstanding Balance of all Pool Receivables as of such day.

“Loss Reserve Percentage” means, at any time of determination, the product (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of (a) the Stress Factor multiplied by (b) the highest average of the Default Ratios for any three (3) consecutive Fiscal Months during the twelve (12) most recent Fiscal Months, multiplied by (c) the Loss Horizon Ratio.

“Majority Group Agents” means at least two Group Agents which in their combined Groups have Committed Purchasers representing more than 50% of the aggregate Commitments of all Committed Purchasers in all Groups (or, if the Commitments have been terminated, have Purchasers representing more than 50% of the aggregate outstanding Capital held by all the Purchasers in all Groups).

“Material Adverse Effect” means relative to any Person (provided that if no particular Person is specified, “Material Adverse Effect” shall be deemed to be relative to the Seller, the Pledgor, the Servicer, the Performance Guarantor and the Originators, taken as a whole), a material adverse effect on (a) the financial condition, properties, assets, liabilities, business or results of operations of such Person and its Subsidiaries, taken as a whole, (b) the material rights and remedies of the Administrative Agent or any Purchaser under this Agreement or any other Transaction Document, (c) the ability of the such Person to perform its obligations under this Agreement or any other Transaction Document to which it is a party, (d) the validity or enforceability of this Agreement or any other Transaction Document, or the validity, enforceability, value or collectability of any material portion of the Pool Receivables, or (e) the status, perfection, enforceability or priority of the Administrative Agent’s ownership or security interest in the Sold Assets, Seller Collateral, or Pledged Collateral.

“Minimum Dilution Reserve Percentage” means, at any time of determination, the product (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of (a) the average of the Dilution Ratios for the twelve (12) most recent Fiscal Months, multiplied by (b) the Dilution Horizon Ratio.

 

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“Mobility Originator” means New Cingular Wireless PCS, LLC, a Delaware limited liability company.

“Mobility Receivable” means a Receivable originated by the Telegence biller of the Mobility Originator arising in connection with the sale of wireless services rendered or to be rendered.

“Mobility Subject Dilution Deduction” means (i) prior to the Spin-Off Date, eighty-six percent (86.00%) of the aggregate amount of dilution, Deemed Collections or other similar adjustments arising out of promotional and courtesy credits (such as volume rebates, terms discounts, indirect rebates, direct rebates (net of any direct rebate recovery) and key promotional programs which are customary for the Mobility Originator and specified in the related Contract or applicable marketing program) related to the applicable Receivable and Obligor thereof that are expected by the Servicer to be made or otherwise incurred with respect to the then outstanding Pool Receivables; provided that such percentage may be adjusted by the Administrative Agent at the direction of the Majority Purchaser Agents upon not less than five (5) Business Days’ notice to the Seller to reflect such lower percentage as the Administrative Agent reasonably believes best reflects the business practices of the Mobility Originator in connection with any testing or calculation, including any completed as part of any audit or field exam, and (ii) on and after the Spin-Off Date, zero.

“Modified Days’ Sales Outstanding” means, for any Fiscal Month, an amount computed as of the last day of such Fiscal Month equal to: (a) the average of the Adjusted Receivables Pool Balance as of the last day of each of the three (3) most recent Fiscal Months ended on the last day of such Fiscal Month, divided by (b) an amount equal to (i) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the three (3) most recent Fiscal Months ended on the last day of such Fiscal Month, divided by (ii) 90.

“Monthly Settlement Date” means the 25th day of each calendar month (or if such day is not a Business Day, the next occurring Business Day).

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that is a nationally recognized statistical rating organization.

“Multiple Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Parent or any ERISA Affiliate and at least one Person other than the Parent and the ERISA Affiliates or (b) was so maintained and in respect of which the Parent or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.

 

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“Net Receivables Pool Balance” means, at any time of determination: (a) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool, minus (b) the Excess Concentration.

“Notes” means short-term promissory notes issued, or to be issued, by any Conduit Purchaser to fund its investments in accounts receivable or other financial assets.

“NZD” means the lawful money of New Zealand.

“Obligor” means, with respect to any Receivable, the Person obligated to make payments pursuant to the Contract relating to such Receivable.

“Obligor Percentage” means, at any time of determination, for each Obligor, a fraction, expressed as a percentage, (a) the numerator of which is the aggregate Outstanding Balance of the Eligible Receivables of such Obligor and its Affiliates less the amount (if any) then included in the calculation of Excess Concentration with respect to such Obligor and its Affiliates and (b) the denominator of which is the aggregate Outstanding Balance of all Eligible Receivables at such time.

“OFAC” means the U.S. Department of Treasury’s Office of Foreign Assets Control.

“Originator” and “Originators” means (a) prior to the Spin-Off Date, the Mobility Originator and (b) the “Originators” as set forth in the Purchase and Sale Agreement, as the same may be modified from time to time by adding new Originators or removing Originators, in each case pursuant to the terms of the Purchase and Sale Agreement.

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

“Other Seller” has the meaning set forth in Section 5.01(f).

“Other Taxes” means any and all present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies or fees arising from any payment made hereunder or from the execution, delivery, filing, recording or enforcement of, or otherwise in respect of, this Agreement, the other Transaction Documents and the other documents or agreements to be delivered hereunder or thereunder.

“Outstanding Balance” means, at any time of determination, with respect to any Receivable, the Dollar Equivalent of the then outstanding principal balance thereof.

“Parent” means AT&T.

 

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“Parent Group” has the meaning set forth in Section 8.03(c).

“Parent Senior Credit Agreement” means that certain Five Year Credit Agreement dated as of December 11, 2018, by and among the Parent, as borrower, the lenders party thereto, the other parties thereto, and Citibank, N.A., as administrative agent.

“Participant” has the meaning set forth in Section 14.03(e).

“Participant Register” has the meaning set forth in Section 14.03(f).

“Participating Member State” means any member state of the European Community that adopts or has adopted the Euro as its lawful currency in accordance with the legislation of the European Union relating to the European Monetary Union.

“PATRIOT Act” has the meaning set forth in Section 14.15.

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

“Percentage” means, at any time of determination, with respect to any Committed Purchaser, a fraction (expressed as a percentage), (a) the numerator of which is (i) prior to the termination of all Commitments hereunder, its Commitment at such time or (ii) if all Commitments hereunder have been terminated, the aggregate outstanding Capital of all Purchasers in such Committed Purchaser’s Group at such time and (b) the denominator of which is (i) prior to the termination of all Commitments hereunder, the aggregate Commitments of all Committed Purchasers at such time or (ii) if all Commitments hereunder have been terminated, the Aggregate Capital at such time.

“Performance Guarantor” means (i) prior to the Spin-Off Date, AT&T, and (ii) thereafter, Discovery, Inc., a Delaware corporation.

“Performance Guaranty” means (i) prior to the Spin-Off Date, the Amended and Restated Performance Guaranty, dated as of March 27, 2020, by AT&T in favor of the Administrative Agent for the benefit of the Secured Parties, and (ii) thereafter, the Performance Guaranty, dated as of April 7, 2022, by Discovery, Inc. in favor of the Administrative Agent for the benefit of the Secured Parties.

“Permitted Investments” means

(a)    direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the U.S. (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the U.S.), in each case maturing within one year from the date of acquisition thereof;

(b)    investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s;

 

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(c)    investments in certificates of deposit, bankers’ acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the U.S. or any state thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;

(d)    fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and

(e)    money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.

“Permitted Liens” means all liens attaching to specific motion pictures or television programming, created solely for the purpose of securing obligations to producers, distributors, exhibitors or other participants of such programming, in each case, incurred in the ordinary course of business in connection with the production, acquisition, distribution, or exhibition of such programming.

“Person” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or any Governmental Authority.

“Plan” means a Single Employer Plan or a Multiple Employer Plan.

“Pledged Collateral” means a first priority perfected security interest in all Pledged Receivables, all Related Rights with respect to such Pledged Receivables, all Collections with respect to such Pledged Receivables, all rights (but none of the obligations) of the Pledgor under the Pledgor Purchase and Sale Agreement, the Pledgor Collection Account, and all proceeds of any of the foregoing, in each case that has been pledged by the Pledgor to the Seller pursuant to the Pledgor Purchaser Assignment and assigned and pledged by the Seller to the Administrative Agent hereunder.

“Pledged Deposit Account” means that certain deposit account number 3009097279 maintained with PNC Bank, National Association in the name of the Seller which shall at all times be subject to the control of and a first priority perfected security interest in favor of the Administrative Agent.

“Pledged Investment Account” means that certain securities account number 1107001054 maintained with PNC Capital Markets LLC in the name of the Seller which shall at all times be subject to the control of and a first priority perfected security interest in favor of the Administrative Agent.

 

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“Pledged Receivables” means all of the then outstanding Receivables owned by the Pledgor that are pledged by the Pledgor to the Seller pursuant to the Pledgor Purchaser Assignment and with respect to which the Administrative Agent has a first priority perfected security interest.

“Pledgor” means AT&T Receivables Funding III, LLC, a Delaware limited liability company.

“Pledgor Collection Account” means a Collection Account that (i) is in the name of the Pledgor, (ii) following the date that the Pledgor is in compliance with Section 7.14 of the Pledgor Purchaser Assignment, is subject to an Account Control Agreement, and (iii) is listed on Schedule II to this Agreement (as such schedule may be modified from time to time in connection with the closing or opening of any Collection Account in accordance with the terms hereof) and identified as a Pledgor Collection Account.

“Pledgor Purchase and Sale Agreement” means the Purchase and Sale Agreement, dated as of March 27, 2020, among the Servicer, the Mobility Originator, and the Pledgor.

“Pledgor Purchase and Sale Termination Event” means a “Purchase and Sale Termination Event” as defined in the Pledgor Purchase and Sale Agreement.

“Pledgor Purchaser Assignment” means the Purchaser Assignment, among the Servicer, the Pledgor, and the Seller.

“PNC” has the meaning set forth in the preamble to this Agreement.

“Pool Receivable” means a Receivable in the Receivables Pool. For the avoidance of doubt, the Pool Receivables shall include Sold Receivables, Unsold Receivables, and Pledged Receivables.

“Portion of Capital” means, with respect to any Purchaser and its related Capital, the portion of such Capital being funded or maintained by such Purchaser by reference to a particular interest rate basis.

“Program Support Agreement” means and includes any Liquidity Agreement and any other agreement entered into by any Program Support Provider providing for: (a) the issuance of one or more letters of credit for the account of any Conduit Purchaser, (b) the issuance of one or more surety bonds for which any Conduit Purchaser is obligated to reimburse the applicable Program Support Provider for any drawings thereunder, (c) the sale by any Conduit Purchaser to any Program Support Provider of any Capital (or portions thereof or participation interest therein) maintained by such Conduit Purchaser and/or (d) the making of loans and/or other extensions of credit to any Conduit Purchaser in connection with such Conduit Purchaser’s receivables-securitization program contemplated in this Agreement, together with any letter of credit, surety bond or other instrument issued thereunder.

 

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“Program Support Provider” means and includes, with respect to any Conduit Purchaser, any Liquidity Provider and any other Person (other than any customer of such Conduit Purchaser) now or hereafter extending credit or having a commitment to extend credit to or for the account of, or to make purchases from, such Conduit Purchaser pursuant to any Program Support Agreement.

“Purchase and Sale Agreement” means the Purchase and Sale Agreement, dated as of the Closing Date, among the Servicer, the Originators other than the Mobility Originator, and the Seller.

“Purchase and Sale Termination Event” has the meaning set forth in the Purchase and Sale Agreement.

“Purchaser Party” means each Purchaser, the Administrative Agent and each Group Agent.

“Purchasers” means the Conduit Purchasers and the Committed Purchasers.

“Rating Agency” mean each of S&P, Fitch and Moody’s (and/or each other rating agency then rating the Notes of any Conduit Purchaser).

“Receivable” means any right to payment of a monetary obligation, whether or not earned by performance, owed to any Originator, the Seller (as assignee of an Originator), or Pledgor (as assignee of an Originator), whether constituting an account, chattel paper, payment intangible, instrument or general intangible, in each instance arising in connection with the sale of goods that have been or are to be sold, the licensing of property that has been or will be licensed, or for services rendered or to be rendered, in each case, by an Originator to an Obligor, and includes, without limitation, the obligation to pay any service charges, finance charges, interest, fees and other charges with respect thereto; provided, however, no Excluded Receivable shall constitute a Receivable. Any such right to payment arising from any one transaction, including, without limitation, any such right to payment represented by an individual invoice or agreement, shall constitute a Receivable separate from a Receivable consisting of any such right to payment arising from any other transaction.

“Receivables Pool” means, at any time of determination, (i) all of the then outstanding Receivables (including both Sold Receivables and Unsold Receivables) transferred (or purported to be transferred) to the Seller pursuant to the Purchase and Sale Agreement and (ii) all of the then outstanding Pledged Receivables, in each case prior to the Termination Date.

“Register” has the meaning set forth in Section 14.03(c).

“Related Committed Purchaser” means with respect to any Conduit Purchaser, each Committed Purchaser listed as such for each Conduit Purchaser as set forth on the signature pages of this Agreement or in any Assumption Agreement.

 

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“Related Conduit Purchaser” means, with respect to any Committed Purchaser, each Conduit Purchaser which is, or pursuant to any Assignment and Acceptance Agreement or Assumption Agreement or otherwise pursuant to this Agreement becomes, included as a Conduit Purchaser in such Committed Purchaser’s Group, as designated on its signature page hereto or in such Assignment and Acceptance Agreement, Assumption Agreement or other agreement executed by such Committed Purchaser, as the case may be.

“Related Rights” means (i) with respect to any Receivable other than a Mobility Receivable, the “Related Rights” as defined in Section 1.1 of the Purchase and Sale Agreement and (ii) with respect to any Mobility Receivable, the “Related Rights” as defined in Section 1.1 of the Pledgor Purchase and Sale Agreement.

“Related Security” means, with respect to any Receivable:

(a)    all of the Seller’s, the Pledgor’s and each Originator’s interest in any goods (including Returned Goods), and documentation of title evidencing the shipment or storage of any goods (including Returned Goods), the sale of which gave rise to such Receivable;

(b)    all instruments and chattel paper that may evidence such Receivable;

(c)    all other security interests or liens and property subject thereto from time to time purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all UCC financing statements or similar filings relating thereto;

(d)    solely to the extent applicable necessary to irrevocably collect and enjoy the benefits of such Receivable, all of the Seller’s, the Pledgor’s and each Originator’s rights, interests and claims under the related Contracts and all supporting obligations, guaranties, indemnities, letters of credit (including any letter-of-credit rights), insurance and other agreements (including the related Contract) or arrangements of whatever character from time to time supporting or securing payment of such Receivable or otherwise relating to such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, subject, in each case, to any applicable terms of such Contract that may adversely impact the sale or assignment of such Contract (as opposed to the sale of the assignment of the Receivables or other proceeds arising thereunder);

(e)    all rights, remedies, powers, privileges, title and interest (but not obligations) in and to each Lock-Box and all Collection Accounts, into which any Collections or other proceeds with respect to such Receivables may be deposited, and any related investment property acquired with any such Collections or other proceeds (as such term is defined in the applicable UCC);

(f)    all of the Seller’s rights, interests and claims under the Purchase and Sale Agreement, the Pledgor Purchaser Assignment, and the other Transaction Documents to the extent applicable;

 

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(g)     all of the Pledgor’s rights, interests and claims under the Pledgor Purchase and Sale Agreement and the other Transaction Documents to the extent applicable; and

(h)    all Collections and other proceeds (as defined in the UCC) of any of the foregoing;

provided, notwithstanding the foregoing or any provision of any Transaction Document, none of the Administrative Agent, any Purchaser Party or any beneficiary thereof shall have the right to hold, review, view, audit or otherwise possess (x) any Contract; or (y) any financial reporting or other books or records specifically relating to such Contract and the Receivables generated thereunder, the disclosure of which is precluded by the applicable terms of such Contract, provided, further, however, that during the occurrence and continuance of an Event of Termination, to the extent that the related Obligor has defaulted in the payment of any Receivable, upon the request of the Administrative Agent the Seller shall provide the Administrative Agent with such information reasonably requested with respect to any such Contract (which may be redacted versions of or excerpts of any Contract) to the extent needed for the Administrative Agent to enforce such Contract against the applicable Obligor.

“Release” has the meaning set forth in Section 4.01(a).

“Replacement Person” has the meaning set forth in Section 5.01(g).

“Representatives” has the meaning set forth in Section 14.06(c).

“Required Capital Amount” means $240,000,000.

“Restatement Effective Date” means April 7, 2022.

“Restricted Payments” has the meaning set forth in Section 8.01(r).

“Returned Goods” means all right, title and interest in and to returned, repossessed or foreclosed goods and/or merchandise the sale of which gave rise to a Receivable; provided that such goods shall no longer constitute Returned Goods after a Deemed Collection has been deposited in a Collection Account with respect to the full Outstanding Balance of the related Receivables.

“S&P” means Standard & Poor’s Rating Services, a Standard & Poor’s Financial Services LLC business, and any successor thereto that is a nationally recognized statistical rating organization.

“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.

 

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“Scheduled Termination Date” means (i) initially, June 9, 2022, and (ii) upon the payment of the extension fee pursuant to Section 2.01(f), the Scheduled Termination Date shall be extended to December 9, 2022.

“SEC” means the U.S. Securities and Exchange Commission or any governmental agencies substituted therefor.

“Secured Parties” means each Purchaser Party, each Seller Indemnified Party and each Affected Person.

“Securities Act” means the Securities Act of 1933, as amended or otherwise modified from time to time.

“SEK” means the lawful money of Sweden.

“Seller” has the meaning specified in the preamble to this Agreement.

“Seller Collateral” has the meaning set forth in Section 3.09.

“Seller Guaranty” has the meaning set forth in Section 3.01.

“Seller Indemnified Amounts” has the meaning set forth in Section 13.01(a).

“Seller Indemnified Party” has the meaning set forth in Section 13.01(a).

“Seller Obligation Final Due Date” means (i) the date that is one hundred eighty (180) days following the occurrence of the Scheduled Termination Date or (ii) such earlier date on which the Aggregate Capital becomes due and payable pursuant to Section 10.01.

“Seller Obligations” means all present and future indebtedness, reimbursement obligations, and other liabilities and obligations (howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, or due or to become due) of the Seller to any Purchaser Party, Seller Indemnified Party and/or any Affected Person, arising under or in connection with this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby, and shall include, without limitation, all obligations of the Seller in respect of the Seller Guaranty and the payment of all Capital, Yield, Fees and other amounts due or to become due under the Transaction Documents (whether in respect of fees, costs, expenses, indemnifications or otherwise), including, without limitation, interest, fees and other obligations that accrue after the commencement of any Insolvency Proceeding with respect to the Seller (in each case whether or not allowed as a claim in such proceeding).

“Seller’s Net Worth” means, at any time of determination, an amount equal to (i) the sum of (A) the Outstanding Balance of all Pool Receivables at such time, plus (B) all cash then held in the Collection Accounts maintained in the name of the Seller other than any Excluded Collection Account, minus (ii) the sum of (A) the Aggregate Capital at such time, plus (B) the Aggregate Yield at such time, plus (C) the aggregate accrued and unpaid Fees at such time, plus

 

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(D) the aggregate outstanding principal balance of all Subordinated Notes at such time, plus (E) the aggregate accrued and unpaid interest on all Subordinated Notes at such time, plus (F) without duplication, the aggregate accrued and unpaid other Seller Obligations at such time.

“Separation Agreement” means the Separation and Distribution Agreement, dated May 17, 2021, by and among AT&T Inc., Magallanes, Inc. and Discovery, Inc.

“Servicer” has the meaning set forth in the preamble to this Agreement.

“Servicer Indemnified Amounts” has the meaning set forth in Section 13.02(a).

“Servicer Indemnified Party” has the meaning set forth in Section 13.02(a).

“Servicing Fee” means the fee referred to in Section 9.06(a) of this Agreement.

“Servicing Fee Rate” means the rate referred to in Section 9.06(a) of this Agreement.

“Settlement Date” means with respect to any Portion of Capital for any Yield Period or any Yield or Fees, (i) so long as no Event of Termination has occurred and is continuing and the Termination Date has not occurred, the Monthly Settlement Date and (ii) on and after the Termination Date or if an Event of Termination has occurred and is continuing, each day selected from time to time by the Administrative Agent (with the consent or at the direction of the Majority Group Agents) (it being understood that the Administrative Agent (with the consent or at the direction of the Majority Group Agents) may select such Settlement Date to occur as frequently as daily), or, in the absence of such selection, the Monthly Settlement Date.

“Single Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Parent or any ERISA Affiliate and no Person other than the Parent and the ERISA Affiliates or (b) was so maintained and in respect of which the Parent or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated.

“SOFR” shall mean, for any day, a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).

“SOFR Adjustment” shall mean an interest rate per annum equal to (a) with respect to Daily Simple SOFR or the Term SOFR Rate for a 1-month Tranche Period, ten basis points (0.10%) and (b) with respect to the Term SOFR Rate for a 3-month Tranche Period, fifteen basis points (0.15%).

“SOFR Floor” means a rate of interest per annum equal to 0 basis points (0.00%).

“SOFR Rate” means, at any time of determination, with respect to any Purchaser, Daily Simple SOFR or the Term SOFR Rate, as determined pursuant to Section 2.05, provided, however, that the SOFR Rate applicable to any Term SOFR Tranche funded pursuant to an

 

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Investment that occurs other than on a Monthly Settlement Date shall be Daily Simple SOFR for each day during the initial Yield Period applicable to such Term SOFR Tranche from the date such Investment is made pursuant to Section 2.01 until the next occurring Monthly Settlement Date.

“Sold Assets” has the meaning set forth in Section 2.01(b).

“Sold Receivables” means, collectively, (i) the Pool Receivables specified as “Sold Receivables” on the Initial Schedule of Sold Receivables and (ii) all additional Pool Receivables specified as “Sold Receivables” on the Investment Requests delivered with respect to all subsequent Investments made hereunder. For the avoidance of doubt, no Pledged Receivable shall constitute a Sold Receivable.

“Solvent” means, with respect to any Person and as of any particular date, (i) the present fair market value (or present fair saleable value) of the assets of such Person is not less than the total amount required to pay the probable liabilities of such Person on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured, (ii) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business, (iii) such Person is not incurring debts or liabilities beyond its ability to pay such debts and liabilities as they mature and (iv) such Person is not engaged in any business or transaction, and is not about to engage in any business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged.

“Special Obligor” has the meaning set forth in the definition of Concentration Percentage.

“Spin-Off Date” means the Closing Date (as defined in the Separation Agreement).

“Spot Rate” means, on any day, with respect to the determination of the Dollar Equivalent of any amount denominated in Foreign Currency, the exchange rate at which such Foreign Currency may be exchanged into Dollars as set forth at approximately 11:00 a.m. New York City time, on such day as published on the Bloomberg Key Cross-Currency Rates Page for such Foreign Currency; provided that in the event that such rate does not appear on any Bloomberg Key Cross Currency Rates Page, the Spot Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be selected by the Administrative Agent and is reasonably satisfactory to the Seller, or, in the absence of such an agreement, such Spot Rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about 11:00 a.m. New York time, on such date for the purchase of Dollars with the applicable Foreign Currency for delivery two (2) Business Days later; provided, that if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent may use any reasonable method it deems appropriate to determine such rate, and such determination shall be conclusive absent manifest error.

 

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“Stress Factor” means 2.5.

“Structuring Agent” means PNC Capital Markets LLC, a Pennsylvania limited liability company.

“Sub-Servicer” has the meaning set forth in Section 9.01(d).

“Subject Originator” means, at any time of determination, any Subsidiary (organized under the laws of the United States or any state thereof) of Parent for which the aggregate Outstanding Balance of all Receivables of such Subsidiary of Parent does not exceed 3.0% of the aggregate Outstanding Balance of all Receivables in the Receivables Pool at such time.

“Subordinated Note” has the meaning set forth in the Purchase and Sale Agreement.

“Subsidiary” means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock of each class or other interests having ordinary voting power (other than stock or other interests having such power only by reason of the happening of a contingency) to elect a majority of the Board of Directors or other managers of such entity are at the time owned, or management of which is otherwise controlled: (a) by such Person, (b) by one or more Subsidiaries of such Person or (c) by such Person and one or more Subsidiaries of such Person.

“Sustainability Agent” means PNC Capital Markets LLC, a Pennsylvania limited liability company.

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

“TD Account” means account #11040302499 maintained in the name of Seller at The Toronto-Dominion Bank.

“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).

“Term SOFR Rate” means with respect to any Tranche Period, the interest rate per annum equal to the Term SOFR Reference Rate for a tenor comparable to such Tranche Period, as such rate is published by the Term SOFR Administrator on the day (the “Term SOFR Determination Date”) that is two (2) Business Days prior to the first day of such Tranche Period; provided, however, that with respect to the initial Tranche Period for the Capital of an Investment made on a date that is not a Monthly Settlement Date, the Term SOFR Rate shall be the interest rate per annum equal to Daily Simple SOFR for each day during such initial Tranche Period from the date that such Investment is made pursuant to Section 2.01 until the next occurring Monthly Settlement Date. If the Term SOFR Reference Rate for the applicable tenor

 

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has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (New York City time) on the Term SOFR Determination Date, then the Term SOFR Reference Rate, for purposes of clause (A) in the preceding sentence, shall be the Term SOFR Reference Rate for such tenor on the first Business Day preceding such Term SOFR Determination Date for which such Term SOFR Reference Rate for such tenor was published in accordance herewith, so long as such first preceding Business Day is not more than three (3) Business Days prior to such Term SOFR Determination Date. If the Term SOFR Rate, determined as provided above, would be less than the SOFR Floor, then the Term SOFR Rate shall be deemed to be the SOFR Floor. The Term SOFR Rate shall be adjusted automatically without notice to the Seller on and as of the first day of each Tranche Period.

“Term SOFR Reference Rate” shall mean the forward-looking term rate based on SOFR.

“Term SOFR Tranche” means any Capital (or portion thereof) accruing Yield at the Term SOFR Rate.

“Termination Date” means the earliest to occur of (a) the Scheduled Termination Date, (b) the date on which the “Termination Date” is declared or deemed to have occurred under Section 10.01 and (c) the date selected by the Seller on which all Commitments have been reduced to zero pursuant to Section 2.02(e).

“Total Reserves” means, at any time of determination, an amount equal to the greater of (i) the product of (A) the Net Receivables Pool Balance at such time times (B) the sum of: (x) the Yield Reserve Percentage, plus (y) the greater of (I) the sum of the Concentration Reserve Percentage plus the Minimum Dilution Reserve Percentage and (II) the sum of the Loss Reserve Percentage plus the Dilution Reserve Percentage plus (z) the FX Reserve and (ii) the Net Receivables Pool Balance at such time times 21.0%; provided, however that the Administrative Agent may, in its sole discretion, reduce the percentage set forth in clause (ii) by the amount that the Special Concentration Limit is reduced or canceled in accordance with the proviso set forth in the definition of “Concentration Percentage”.

“Tranche Period” means, with respect to any Term SOFR Tranche, a period of one or three months selected by the Seller pursuant to Section 2.05. Each Tranche Period shall commence on a Monthly Settlement Date and end on (but not including) the Monthly Settlement Date occurring one, two or three calendar months thereafter, as selected by the Seller pursuant to Section 2.05; provided, however, that if the date any Capital (or portion thereof) is funded pursuant to an Investment made on a date that is not a Monthly Settlement Date pursuant to Section 2.01, the initial Tranche Period for such Capital (or such portion thereof) shall commence on the date such Investment is made pursuant to Section 2.01 and end on the next Monthly Settlement Date occurring after the day in the applicable succeeding calendar month which corresponds numerically to the beginning day of such initial Tranche Period; provided, further, that if any Tranche Period would end after the Termination Date, such Tranche Period (including a period of one day) shall end on the Termination Date.

“Transaction Documents” means this Agreement, the Purchase and Sale Agreement, the Pledgor Purchase and Sale Agreement, the Pledgor Purchaser Assignment, the GDS Assignment

 

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Agreement, the Account Control Agreements, the Fee Letter, each Subordinated Note, the Performance Guaranty and all other certificates, instruments, UCC financing statements, reports, notices, agreements and documents executed or delivered under or in connection with this Agreement. For the avoidance of doubt, upon the occurrence of the Spin-Off Date, the Pledgor Purchase and Sale Agreement and the Pledgor Purchaser Assignment shall no longer be Transaction Documents hereunder.

“Turner” has the meaning specified in the preamble to this Agreement.

“Turner Originator” means each of Turner Broadcasting System, Inc., AC Holdings, Inc., Bleacher Report, Inc., Cable News Network, Inc., Cartoon Interactive Group, Inc., CNN Interactive Group, Inc., Courtroom Television Network, LLC, Great Big Story, LLC, TBS Interactive Group, Inc., The Cartoon Network, Inc., TNT Interactive Group, Inc., Turner Classic Movies, Inc., Turner Network, Television, Inc., Turner Sports, Inc. and Turner Sports Interactive, Inc.

“UCC” means the Uniform Commercial Code as from time to time in effect in the applicable jurisdiction.

“Unbilled and Payment Terms Component” means, for any Fiscal Month, an amount computed as of the last day of such Fiscal Month equal to the ratio of (a) the Modified Days Sales Outstanding as of such date divided by (b) 30.

“Unbilled Receivable” means, at any time, any Receivable as to which the invoice or bill with respect thereto has not yet been sent to the Obligor thereof.

“Unmatured Event of Termination” means an event that but for notice or lapse of time or both would constitute an Event of Termination.

“Unsold Receivables” means, at any time, all Pool Receivables that are not then Sold Receivables.

“U.S. Obligor” means an Obligor that is a corporation or other business organization and is organized under the laws of the United States of America (or of a United States of America territory, district, state, commonwealth, or possession, including, without limitation, Puerto Rico and the U.S. Virgin Islands) or any political subdivision thereof.

“U.S. Tax Compliance Certificate” has the meaning set forth in Section 5.03(f)(ii)(B)(3).

“Volcker Rule” means Section 13 of the U.S. Bank Holding Company Act of 1956, as amended, and the applicable rules and regulations thereunder.

“Voting Stock” means Capital Stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right to so vote has been suspended by the happening of such a contingency.

 

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“Yield” means an amount payable to each Purchaser in respect of its Capital accruing on each day when such Purchaser has Capital outstanding, which amount for any Purchaser’s Capital (or portion thereof) for any day during any Yield Period (or portion thereof) is the amount accrued on such Capital (or portion thereof) during such Yield Period (or portion thereof) in accordance with Section 2.03(b).

“Yield Period” means, with respect to any Purchaser’s Capital (or any portion thereof), (a) before the Termination Date: (i) initially, the period commencing on the date of the Investment pursuant to which such Capital (or portion thereof) is funded by a Purchaser to the Seller pursuant to Section 2.01 and ending on (but not including) the next Monthly Settlement Date and (ii) thereafter, each period commencing on such Monthly Settlement Date and ending on (but not including) the next Monthly Settlement Date and (b) on and after the Termination Date, such period (including a period of one day) as shall be selected from time to time by the Administrative Agent (with the consent or at the direction of the Majority Group Agents) or, in the absence of any such selection, each period of 30 days from the last day of the preceding Yield Period.

“Yield Rate” means, for any day in any Yield Period for any Purchaser’s Capital (or any portion thereof) the applicable Bank Rate;

provided, however, that the “Yield Rate” for any Purchaser’s Capital (or any portion thereof) on any day while an Unmatured Event of Termination or Event of Termination has occurred and is continuing shall be an interest rate per annum equal to the sum of 2.0% per annum plus the greater of (i) the Base Rate in effect on such day, and (ii) the Term SOFR Rate for a Tranche Period of one month plus the applicable SOFR Adjustment with respect to such Purchaser for such Yield Period; provided, further, that no provision of this Agreement shall require the payment or permit the collection of Yield in excess of the maximum permitted by Applicable Law; and provided, further, that Yield for any Capital shall not be considered paid by any distribution to the extent that at any time all or a portion of such distribution is rescinded or must otherwise be returned for any reason.

“Yield Reserve Percentage” means at any time of determination, the result (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of the following:

1.50 x DSO x (BR + the Servicing Fee Rate)

360

where:

BR        =        the Base Rate at such time; and

DSO     =        the Days’ Sales Outstanding for the most recently ended Fiscal Month.

 

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EXHIBIT L

DEFINED TERMS (AFTER SPIN-OFF)

“Account Control Agreement” means each agreement, in form and substance satisfactory to the Administrative Agent, among the Seller, the Servicer (if applicable), the applicable Originator (if applicable), the Administrative Agent and a Collection Account Bank, governing the terms of the related Collection Accounts, that (i) provides the Administrative Agent with control within the meaning of the UCC over the deposit accounts subject to such agreement and (ii) by its terms, may not be terminated or canceled by the related Collection Account Bank without the written consent of the Administrative Agent or upon no less than sixty (60) days prior written notice to the Administrative Agent or such lesser amount of time agreed to by the Administrative Agent and the applicable Collection Account Bank.

“Adjusted Receivables Pool Balance” means, at any time of determination: (a) the aggregate Outstanding Balance of all Pool Receivables as of such date, minus (b) the Excess Concentration determined in accordance with clause (g) of the definition thereof as of such date, minus (c) the Excess Concentration determined in accordance with clause (h) of the definition thereof as of such date, minus (d) without duplication, the aggregate Outstanding Balance of all Pool Receivables as to which any payment, or part thereof, remains unpaid for one (1) day or more from the original due date for such payment or 31 days or more after the original invoice date for such payment.

“Administrative Agent” means PNC, in its capacity as contractual representative for the Purchaser Parties, and any successor thereto in such capacity appointed pursuant to Article XI or Section 14.03(g).

“Adverse Claim” means any ownership interest or claim, mortgage, deed of trust, pledge, lien, security interest, hypothecation, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including, but not limited to, any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing); it being understood that any of the foregoing in favor of, or assigned to, the Administrative Agent (for the benefit of the Secured Parties) shall not constitute an Adverse Claim.

“Advisors” has the meaning set forth in Section 14.06(c).

“Affected Person” means each Purchaser Party, each Program Support Provider, each Liquidity Agent and each of their respective Affiliates.

“Affiliate” means, as to any Person: (a) any other Person that, directly or indirectly, is in control of, is controlled by or is under common control with such Person or (b) who is a director or officer: (i) of such Person or (ii) of any Person described in clause (a), except that, in the case


of each Conduit Purchaser, Affiliate shall mean the holder(s) of its Capital Stock. For purposes of this definition, control of a Person shall mean the power, direct or indirect: (x) to vote 25% or more of the securities having ordinary voting power for the election of directors or managers of such Person or (y) to direct or cause the direction of the management and policies of such Person, in either case whether by ownership of securities, contract, proxy or otherwise.

“Aggregate Capital” means, at any time of determination, the aggregate outstanding Capital of all Purchasers at such time.

“Aggregate Yield” means, at any time of determination, the aggregate accrued and unpaid Yield on the aggregate outstanding Capital of all Purchasers at such time.

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

“Anti-Corruption Laws” means any laws, rules, and regulations of any jurisdiction applicable to the Seller, the Servicer, each Originator, the Parent and each of Parent’s Subsidiaries from time to time concerning or relating to money laundering, bribery or corruption.

“Applicable Law” means, with respect to any Person, (x) all provisions of law, statute, treaty, constitution, ordinance, rule, regulation, ordinance, requirement, restriction, permit, executive order, certificate, decision, directive or order of any Governmental Authority applicable to such Person or any of its property and (y) all judgments, injunctions, orders, writs, decrees and awards of all courts and arbitrators in proceedings or actions in which such Person is a party or by which any of its property is bound. For the avoidance of doubt, FATCA shall constitute an “Applicable Law” for all purposes of this Agreement.

“Assignment and Acceptance Agreement” means an assignment and acceptance agreement entered into by a Committed Purchaser, an Eligible Assignee, such Committed Purchaser’s Group Agent and the Administrative Agent, and, if required, the Seller, pursuant to which such Eligible Assignee may become a party to this Agreement, in substantially the form of Exhibit C hereto.

“Assumption Agreement” has the meaning set forth in Section 14.03(i).

“AT&T” means AT&T Inc., a Delaware corporation.

“Attorney Costs” means and includes all fees, costs, expenses and disbursements of any law firm or other external counsel and all disbursements of internal counsel.

“AUD” means the lawful money of the Commonwealth of Australia.

Bank Rate for any Portion of Capital funded by any Purchaser on any day, means an interest rate per annum equal to (a) the applicable SOFR Rate plus the applicable SOFR Adjustment with respect to such Purchaser for such Yield Period (or portion thereof) (provided that for such purpose, if such SOFR Rate is being determined by reference to Daily Simple SOFR for such Purchaser, the SOFR Rate for such day shall be Daily Simple SOFR in effect on such day); or (b) if the Base Rate is applicable to such Purchaser pursuant to Section 5.04, the Base Rate for such Purchaser on such day.

 

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“Bankruptcy Code” means the United States Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq.), as amended from time to time.

“Base Rate” means, for any day and any Purchaser, a fluctuating interest rate per annum as shall be in effect from time to time, which rate shall be at all times equal to the greater of:

(a)    the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent or its Affiliate as its “reference rate” or “prime rate”, as applicable (such “reference rate” or “prime rate” is set by the Administrative Agent or its Affiliate based upon various factors, including such Person’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such announced rate, and is not necessarily the lowest rate charged to any customer); and

(b)    0.50% per annum above the latest Federal Funds Rate in effect on such day;

provided, however, if the Base Rate as determined above would be less than zero, then such rate shall be deemed to be zero.

“Beneficial Owner” means, for the Seller, each of the following: (a) each individual, if any, who, directly or indirectly, owns 25% or more of the Seller’s Capital Stock; and (b ) a single individual with significant responsibility to control, manage or direct the Seller.

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

“Breakage Fee” means (i) for any Yield Period for which Yield is computed by reference to Daily Simple SOFR or the Term SOFR Rate and a reduction of Capital is made for any reason on any day other than the last day of the related Yield Period (or Tranche Period, if applicable) or (ii) to the extent that the Seller shall for any reason, fail to accept any Investment on the date specified by the Seller in connection with any request for funding pursuant to Article II of this Agreement, the amount, if any, by which (A) the additional Yield (calculated without taking into account any Breakage Fee or any shortened duration of such Yield Period (or Tranche Period, if applicable) pursuant to the definition thereof) which would have accrued during such Yield Period (or Tranche Period, if applicable) on the reductions of Capital relating to such Yield Period (or Tranche Period, if applicable) had such reductions not been made (or, in the case of clause (ii) above, on the amounts so failed to be accepted in connection with any such request for funding by the Seller), exceeds (B) the income, if any, received by the applicable Purchaser from the investment of the proceeds of such reductions of Capital (or such amounts failed to be accepted by the Seller). A certificate as to the amount of any Breakage Fee (including the computation of such amount) shall be submitted by the affected Purchaser (or the Administrative Agent on its behalf) to the Seller and shall be conclusive and binding for all purposes, absent manifest error.

 

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“Business Day” means any day (other than a Saturday or Sunday) on which banks are not authorized or required to close in Dallas, Texas, Atlanta, Georgia, Pittsburgh, Pennsylvania, or New York City, New York provided that, when used in connection with an amount that accrues Yield at a rate based on SOFR or any direct or indirect calculation or determination of SOFR, the term “Business Day” means any such day that is also a U.S. Government Securities Business Day.

“CAD” means the lawful money of Canada.

“Capital” means, with respect to any Purchaser, the aggregate amounts paid to, or on behalf of, the Seller in connection with all Investments made by such Purchaser pursuant to Article II as reduced from time to time by Collections distributed and applied on account of reducing, returning or repaying such Capital pursuant to Section 2.02(d) or 4.01; provided, that if such Capital shall have been reduced by any distribution and thereafter all or a portion of such distribution is rescinded or must otherwise be returned for any reason, such Capital shall be increased by the amount of such rescinded or returned distribution as though it had not been made.

“Capital Coverage Amount” means, at any time of determination, the lesser of (i) the Facility Limit at such time and (ii) the amount equal to (a) the Net Receivables Pool Balance at such time, minus (b) the Total Reserves at such time, plus (c) the sum of (x) the principal amount of Permitted Investments on deposit in the Pledged Investment Account and (y) amounts on deposit in the Pledged Deposit Account.

“Capital Coverage Deficit” means, at any time of determination, the amount, if any, by which (a) the Aggregate Capital at such time, exceeds (b) the Capital Coverage Amount at such time.

“Capital Stock” means, with respect to any Person, any and all common shares, preferred shares, interests, participations, rights in or other equivalents (however designated) of such Person’s capital stock, partnership interests, limited liability company interests, membership interests or other equivalent interests and any rights (other than debt securities convertible into or exchangeable for capital stock), warrants or options exchangeable for or convertible into such capital stock or other equity interests.

“Certificate of Beneficial Ownership” means, for the Seller, a certificate in form and substance acceptable to the Administrative Agent (as amended or modified by the Administrative Agent from time to time in its sole discretion), certifying, among other things, the Beneficial Owner of the Seller.

“Change in Control” means the occurrence of any of the following:

(a)     Performance Guarantor ceases to own, directly or indirectly, 100% of the issued and outstanding Capital Stock and all other equity interests of the Seller free and clear of all Adverse Claims;

 

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(b)    Performance Guarantor ceases to own, directly or indirectly, 100% of the issued and outstanding Capital Stock, membership interests or other equity interests of any Originator free and clear of all Adverse Claims;

(c)    [reserved]

(d)    any Subordinated Note shall at any time cease to be owned by an Originator, free and clear of all Adverse Claims; or

(e)    with respect to Performance Guarantor, any Person or two or more Persons acting in concert shall have acquired beneficial ownership (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Stock of the Performance Guarantor (or other securities convertible into such Voting Stock) representing more than 50% of the combined voting power of all Voting Stock of the Performance Guarantor.

“Change in Law” means the occurrence, after the Restatement Effective Date, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“Closing Date” means March 27, 2019.

“Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.

“Collection Account” means each “deposit account” within the meaning of the applicable UCC listed on Schedule II to this Agreement (as such schedule may be modified from time to time in connection with the closing or opening of any Collection Account in accordance with the terms hereof) and maintained at a bank or other financial institution acting as a Collection Account Bank for the purpose of receiving Collections and subject to an Account Control Agreement except with respect to (i) the TD Account (unless the TD Account becomes subject to an Account Control Agreement in accordance with Section 9.03) and (ii) any Excluded Collection Account.

“Collection Account Bank” means any of the banks or other financial institutions holding one or more Collection Accounts.

 

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“Collections” means, with respect to any Pool Receivable: (a) all funds that are received by any Originator, the Seller, the Servicer or any other Person on their behalf in payment of any amounts owed in respect of such Pool Receivable (including purchase price, service charges, finance charges, interest, fees and all other charges), or applied to amounts owed in respect of such Pool Receivable (including insurance payments, proceeds of drawings under supporting letters of credit and net proceeds of the sale or other disposition of repossessed goods or other collateral or property of the related Obligor or any other Person directly or indirectly liable for the payment of such Pool Receivable and available to be applied thereon), (b) all Deemed Collections, (c) all proceeds of all Related Security with respect to such Pool Receivable and (d) all other proceeds of such Pool Receivable.

“Commitment” means, with respect to any Committed Purchaser (including a Related Committed Purchaser), the maximum aggregate amount of Capital which such Person is obligated to pay hereunder on account of all Investments, on a combined basis, as set forth on Schedule I or in the Assumption Agreement or other agreement pursuant to which it became a Purchaser, as such amount may be modified in connection with any subsequent assignment pursuant to Section 14.03 or in connection with a reduction in the Facility Limit pursuant to Section 2.02(e) or an increase in the Facility Limit pursuant to Section 2.02(g). If the context so requires, “Commitment” also refers to a Committed Purchaser’s obligation to fund Investments hereunder in accordance with this Agreement.

“Committed Purchasers” means PNC and each other Person that is or becomes a party to this Agreement in the capacity of a “Committed Purchaser”.

“Concentration Percentage” means, (a) except as provided in clause (b) below, (i) for any Group A Obligor, 20.0%, (ii) for any Group B Obligor, 15.0%, (iii) for any Group C Obligor, 10.0%, and (iv) for any Group D Obligor, 3.0% and (b) for each of the Obligors listed in the chart on Schedule VI hereto or which the Administrative Agent, with the approval of the Seller and the consent, or at the direction, of the Majority Group Agents from time to time designates in writing to the Seller and the Servicer as a Special Obligor (each, a “Special Obligor”), the percentage specified in the chart on Schedule VI for such Special Obligor (the applicable “Special Concentration Limit”); provided, however, that the Administrative Agent may, in its sole discretion, or will, (x) at the direction of the Majority Group Agents upon not less than thirty (30) days’ prior written notice to the Seller or (y) at any time that the Performance Guarantor credit rating for long-term, unsecured and unsubordinated indebtedness or deposit obligations is below BB by S&P or Ba2 by Moody’s, cancel or reduce the Special Concentration Limit with respect to any or all Special Obligors, and in the case of a cancellation, the Concentration Percentage for such Special Obligor(s) shall be determined pursuant to clause (a) above. In the event that any other Obligor is or becomes an Affiliate of a Special Obligor, the Special Concentration Limit shall apply to both such Obligor and such Special Obligor and shall be calculated as if such Obligor and such Special Obligor were a single Obligor.

“Concentration Reserve Percentage” means, at any time of determination, the largest of: (a) the sum of the five (5) largest Obligor Percentages of the Group D Obligors, (b) the sum of the three (3) largest Obligor Percentages of the Group C Obligors, (c) the sum of the two (2) largest Obligor Percentage of the Group B Obligors and (d) the largest Obligor Percentage of the Group A Obligors.

 

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“Conduit Purchaser” means each commercial paper conduit that is or becomes a party to this Agreement in the capacity of a “Conduit Purchaser”.

“Conforming Changes” means, with respect to the Term SOFR Rate, Daily Simple SOFR or any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Tranche Period,” the definition of “Yield Period,” timing and frequency of determining rates and making payments of Yield, timing of Investment Requests or return, prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent reasonably decides (in consultation with the Seller) may be appropriate to reflect the adoption and implementation of the Term SOFR Rate, Daily Simple SOFR or such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent reasonably decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent reasonably determines that no market practice for the administration of the Term SOFR Rate, Daily Simple SOFR or the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides (in consultation with the Seller) is reasonably necessary in connection with the administration of this Agreement and the other Transaction Documents).

“Contract” means, with respect to any Receivable, any and all contracts, instruments, agreements, leases, invoices, notes, insertions or other writings pursuant to which such Receivable arises or that evidence such Receivable or under which an Obligor becomes or is obligated to make payment in respect of such Receivable, provided, notwithstanding the foregoing or any provision of any Transaction Document, none of the Administrative Agent, any Purchaser Party or any beneficiary thereof shall have the right to hold, review, view, audit or otherwise possess (x) any Contract; or (y) any financial reporting or other books or records specifically relating to such Contract and the Receivables generated thereunder, the disclosure of which is precluded by the applicable terms of such Contract, provided, further, however, that during the occurrence and continuance of an Event of Termination, to the extent that the related Obligor has defaulted in the payment of any Receivable, upon the request of the Administrative Agent the Seller shall provide the Administrative Agent with such information reasonably requested with respect to any such Contract (which may be redacted versions of or excerpts of any Contract) to the extent needed for the Administrative Agent to enforce such Contract against the applicable Obligor.

“Credit and Collection Policy” means, as the context may require, those receivables credit and collection policies and practices of the Originators in effect on the Restatement Effective Date.

“Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), the interest rate per annum equal to SOFR for the day (the “SOFR Determination Date”) that is 2 Business Days

 

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prior to (i) such SOFR Rate Day if such SOFR Rate Day is a Business Day or (ii) the Business Day immediately preceding such SOFR Rate Day if such SOFR Rate Day is not a Business Day. If Daily Simple SOFR as determined above would be less than the SOFR Floor, then Daily Simple SOFR shall be deemed to be the SOFR Floor. If SOFR for any SOFR Determination Date has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (New York City time) on the second Business Day immediately following such SOFR Determination Date, then SOFR for such SOFR Determination Date will be SOFR for the first Business Day preceding such SOFR Determination Date for which SOFR was published in accordance with the definition of “SOFR”; provided that SOFR determined pursuant to this sentence shall be used for purposes of calculating Daily Simple SOFR for no more than 3 consecutive SOFR Rate Days. If and when Daily Simple SOFR as determined above changes, any applicable rate of interest based on Daily Simple SOFR will change automatically without notice to the Seller, effective on the date of any such change.

“Days’ Sales Outstanding” means, for any Fiscal Month, an amount computed as of the last day of such Fiscal Month equal to: (a) the average of the Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) as of the last day of each of the three (3) most recent Fiscal Months ended on the last day of such Fiscal Month, divided by (b) an amount equal to (i) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the three (3) most recent Fiscal Months ended on the last day of such Fiscal Month, divided by (ii) 90.

“Debt” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments and (c) all guarantees by such Person of Debt of others.

“Deemed Collections” has the meaning set forth in Section 4.01(d).

“Default Ratio” means the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each Fiscal Month by dividing: (a) the aggregate Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) that became Defaulted Receivables during such Fiscal Month, by (b) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by all Originators during the month that is five (5) Fiscal Months before such Fiscal Month (or such lesser amount of Fiscal Months as may be approved in writing by the Seller and the Administrative Agent with respect to all Pool Receivables generated by any specific Originator subject to the parenthetical appearing in clause (a) of the defined term “Defaulted Receivable”).

“Defaulted Receivable” means, without duplication, a Receivable:

(a)    as to which any payment, or part thereof, remains unpaid for 121 days or more from the original due date for such payment or 151 days or more after the original invoice date for such payment (or such lesser amount of days as may be approved in writing by the Seller and the Administrative Agent (with notice of such approval delivered to the Group Agents) with respect to any Receivables originated by any specific Originator);

 

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(b)    as to which an Insolvency Proceeding shall have occurred with respect to the Obligor thereof or any other Person obligated thereon or owning any Related Security with respect thereto; or

(c)    that has been written off in the applicable Originator’s or the Seller’s books as uncollectible consistent with the Credit and Collection Policy;

provided, however, that in each case above such amount shall be calculated without giving effect to any netting of credits that have not been matched to a particular Receivable for the purposes of aged trial balance reporting.

“Defaulting Purchaser” means any Committed Purchaser that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fund any portion of its Investments (or the Capital thereof) or (ii) pay over to any Purchaser Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Committed Purchaser notifies the Administrative Agent in writing that such failure is the result of such Committed Purchaser’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Seller or any Purchaser Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Committed Purchaser’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding an Investment under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three (3) Business Days after request by a Purchaser Party, acting in good faith, to provide a certification in writing from an authorized officer of such Committed Purchaser that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Investments under this Agreement, provided that such Committed Purchaser shall cease to be a Defaulting Purchaser pursuant to this clause (c) upon such Purchaser Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of an Insolvency Proceeding.

“Delinquency Ratio” means the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each Fiscal Month by dividing: (a) the aggregate Outstanding Balance of all Pool Receivables that were Delinquent Receivables on such day by (b) the aggregate Outstanding Balance of all Pool Receivables on such day.

“Delinquent Receivable” means a Receivable as to which any payment, or part thereof, remains unpaid for 121 days or more from the original due date for such payment or 151 days or more after the original invoice date for such payment.

 

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“Dilution Horizon Ratio” means, for any Fiscal Month, the ratio (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of such Fiscal Month by dividing: (a) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the 1.5 most recent consecutive Fiscal Months, by (b) the aggregate Outstanding Balance of all Pool Receivables as of the last day of such Fiscal Month. Within thirty (30) days of the completion and the receipt by the Administrative Agent of the results of any annual audit or field exam of the Receivables and the servicing and origination practices of the Servicer and the Originators, the numerator of the Dilution Horizon Ratio may be adjusted by the Administrative Agent upon not less than five (5) Business Days’ notice to the Seller to reflect such number of Fiscal Months as the Administrative Agent reasonably believes best reflects the business practices of the Servicer and the Originators and the actual amount of dilution and Deemed Collections that occur with respect to Pool Receivables based on the weighted average dilution lag calculation completed as part of such audit or field exam.

“Dilution Ratio” means, for any Fiscal Month, the ratio (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward), computed as of the last day of each Fiscal Month by dividing: (a) the aggregate amount of Deemed Collections during such Fiscal Month, by (b) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the Fiscal Month that is one (1) month prior to such Fiscal Month.

“Dilution Reserve Percentage” means, at any time of determination, the product (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of (a) the sum of (i) the product of (A) the Stress Factor multiplied by (B) the average of the Dilution Ratios for the twelve (12) most recent Fiscal Months plus (ii) the Dilution Volatility Component, multiplied by (b) the Dilution Horizon Ratio.

“Dilution Volatility Component” means, for any Fiscal Month, the product (expressed as a percentage) and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of:

(a)    the positive difference, if any, between: (i) the highest Dilution Ratio during the twelve (12) most recent consecutive Fiscal Months and (ii) the arithmetic average of the Dilution Ratios for such twelve (12) consecutive Fiscal Months; multiplied by

(b)    the quotient of (i) the highest Dilution Ratio during the twelve (12) most recent consecutive Fiscal Months divided by (ii) the arithmetic average of the Dilution Ratios for such twelve (12) consecutive Fiscal Months.

“Dollar Equivalent” means, on any date on which a determination thereof is to be made, with respect to (a) any amount denominated in Dollars, such amount and (b) any amount denominated in a Foreign Currency, the Dollar equivalent of such amount of such Foreign Currency determined by referenced to the Spot Rate determined as of such determination date.

 

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“Dollars” and “$” each mean the lawful currency of the United States of America.

“Eligible Assignee” means (i) any Committed Purchaser or any of its Affiliates, (ii) any Person managed by a Committed Purchaser or any of its Affiliates and (iii) any other financial or other institution.

“Eligible Foreign Currency” means AUD, CAD, EUR, GBP, NZD and SEK.

“Eligible Foreign Currency VaR Percentage” means 6.0%, or such other percentage designated by all Group Agents from time to time upon ten (10) Business Days’ notice.

“Eligible Foreign Obligor” means an Obligor that is organized in or that has a head office (domicile), registered office, and chief executive office located in a country that is not the United States or a country or territory that is, or whose government is, the subject of any Sanctions.

“Eligible Receivable” means, at any time of determination, a Receivable:

(a)    the Obligor of which is: (i) either a U.S. Obligor or an Eligible Foreign Obligor; (ii) not the target or subject of any Sanctions; (iii) not a consolidated Affiliate of the Seller, the Servicer, the Parent or any Originator; (iv) not a natural person; and (v) not the Obligor with respect to which more than 50% of the aggregate Outstanding Balance of all of such Obligor’s Pool Receivables consist of Defaulted Receivables or Delinquent Receivables;

(b)    that is neither a Defaulted Receivable (other than with respect to clause (a) of such definition) nor a Delinquent Receivable;

(c)    that is denominated and payable only in Dollars or an Eligible Foreign Currency and the Obligor with respect to which has been instructed to remit Collections in respect thereof directly to a Lock-Box or Collection Account in the United States of America or Canada;

(d)    that does not have a due date which is more than either 125 days after the original invoice date of such Receivable;

(e)    that (i) arises under a Contract for the sale or licensing of goods or services entered into on an arm’s length basis in the ordinary course of the applicable Originator’s business and (ii) does not constitute a loan or other similar financial accommodation being provided by the applicable Originator;

(f)    that arises under a duly authorized Contract that (i) is in full force and effect, and (ii) is a legal, valid and binding obligation of the related Obligor, enforceable against such Obligor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity regardless of whether enforceability is considered in a proceeding in equity or at law;

 

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(g)    that has been transferred by an Originator to the Seller pursuant to the Purchase and Sale Agreement with respect to which transfer all conditions precedent under the Purchase and Sale Agreement have been met or explicitly waived in writing by the Administrative Agent;

(h)    that, together with the Contract related thereto, conforms in all material respects with all Applicable Laws (including any applicable laws relating to usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy);

(i)    with respect to which all consents, licenses, approvals or authorizations of, or registrations or declarations with or notices to, any Governmental Authority or other Person required to be obtained, effected or given by an Originator in connection with the creation of such Receivable, the execution, delivery and performance by such Originator of the related Contract or the assignment thereof under the Purchase and Sale Agreement have been duly obtained, effected or given and are in full force and effect;

(j)    that is not subject to any existing dispute, litigation, right of rescission, set-off, counterclaim, any other defense against the applicable Originator (or any assignee of such Originator), or Adverse Claim other than Permitted Liens, and the Obligor of which holds no right as against the applicable Originator to cause such Originator to repurchase the goods or merchandise, the sale of which shall have given rise to such Receivable, it being understood that a Receivable shall not be ineligible under this clause (j) solely because the related Contract contains a contractual right of set-off of the Obligor;

(k)    that satisfies all applicable requirements of the Credit and Collection Policy;

(l)    that, together with the Contract related thereto, has not been modified, waived or restructured since its creation, except as permitted pursuant to Section 9.02 of this Agreement;

(m)    in which the Seller owns good and marketable title, free and clear of any Adverse Claims other than Permitted Liens, and that is freely assignable (including without any consent of the related Obligor or any Governmental Authority), and the payments thereon are free and clear of any, or increased to account for any applicable, withholding Taxes;

(n)    for which the Administrative Agent (on behalf of the Secured Parties) shall have a valid and enforceable first priority perfected ownership or security interest therein and in the Related Security (other than with respect to the TD Account (unless the TD Account becomes subject to an Account Control Agreement in accordance with Section 9.03), each Excluded Collection Account) and Collections with respect thereto, in each case free and clear of any Adverse Claim other than Permitted Liens;

 

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(o)    that (x) constitutes an “account” or “general intangible” (as defined in the UCC), (y) is not evidenced by instruments or chattel paper and (z) does not constitute, or arise from the sale of, as-extracted collateral (as defined in the UCC);

(p)    with respect to which there are no unapplied payments that have been excluded from the Seller’s accounts receivable aging reports but that remains unapplied as of the end of the month in which such payments were received;

(q)    for which none of any Originator, the Seller, the Parent, the Performance Guarantor or the Servicer has established any offset or netting arrangements with the related Obligor in connection with the ordinary course of payment of such Receivable, it being understood that a Receivable shall not be ineligible under this clause (q) solely because the related Contract contains a contractual right of set-off of the Obligor;

(r)    that represents amounts earned and payable by the Obligor that are not subject to the performance of additional services by the Originator thereof or by the Seller and such Receivable shall have been billed or invoiced and the related goods or merchandise shall have been shipped and/or services performed, other than, in the case of an Eligible Unbilled Receivable, the billing or invoicing of such Receivable; provided, that if such Receivable is subject to the performance of additional services, only the portion of such Receivable attributable to such additional services shall be ineligible; provided, further that any Receivable that arises under a Contract for the licensing of goods or services;

(s)    which (i) does not arise from a sale of accounts made as part of a sale of a business or constitute an assignment for the purpose of collection only, (ii) is not a transfer of a single account made in whole or partial satisfaction of a preexisting indebtedness or an assignment of a right to payment under a contract to an assignee that is also obligated to perform under the contract and (iii) is not a transfer of an interest in or an assignment of a claim under a policy of insurance;

(t)    which does not relate to the sale of any consigned goods or finished goods which have incorporated any consigned goods into such finished goods;

(u)    for which the related Originator has recognized the related revenue on its financial books and records in accordance with GAAP;

(v)    for which neither the related Originator, nor any Affiliate thereof is holding any deposits, retainers or other advance payments received by or on behalf of the related Obligor; provided that only the portion of such Pool Receivable in an amount equal to such deposits shall be ineligible;

 

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(w)    that, if such Receivable is an Unbilled Receivable, is an Eligible Unbilled Receivable;

(x)    is not an Excluded Receivable; and

(y)    that is not subject to any future withholding tax to a U.S. person; provided that to the extent such Pool Receivable is subject to any future withholding tax to a U.S. person, only a portion of such Pool Receivable that is an amount equal to such future withholding tax shall be ineligible.

“Eligible Unbilled Receivable” means, at any time, any Unbilled Receivable if the related Originator has recognized the related revenue on its financial books and records under GAAP.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated, and rulings issued thereunder.

“ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a member of the Parent’s controlled group, or under common control with the Parent, within the meaning of Section 414 of the Code.

“Erroneous Payment” has the meaning assigned to it in Section 11.11(a).

“Erroneous Payment Notice” has the meaning assigned to it in Section 11.11(a).

“Euro-Rate Reserve Percentage” means, the maximum effective percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including without limitation, supplemental, marginal, and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”).

“Euro” means the unit of single currency of the Participating Member States.

“Event of Termination” has the meaning specified in Section 10.01. For the avoidance of doubt, any Event of Termination that occurs shall be deemed to be continuing at all times thereafter unless and until waived in accordance with Section 14.01.

“Excess Concentration” means, as of any date of determination, the sum of the following amounts, without duplication:

(a)    the sum of the amounts calculated for each of the Obligors equal to the excess (if any) of (i) the aggregate Outstanding Balance of the Eligible Receivables of such Obligor, over (ii) the product of (x) such Obligor’s applicable Concentration Percentage, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

 

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(b)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables, the Obligor of which is an Eligible Foreign Obligors that is a resident of a country that maintains a sovereign debt rating of greater than (A) “BB+” by S&P and (B) “Ba1” by Moody’s, over (ii) the product of (x) 20.0%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

(c)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables, the Obligor of which is an Eligible Foreign Obligors that is a resident of a country that maintains a sovereign debt rating less than or equal to (A) “BB+” by S&P or (B) “Ba1” by Moody’s, over (ii) the product of (x) 5.0%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

(d)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables that are denominated in an Eligible Foreign Currency, over (ii) the product of (x) 10.0%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

(e)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables, the Obligors of which are Governmental Authorities, over (ii) the product of (x) 2.0%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

(f)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables that are Eligible Unbilled Receivables which have an expected billing date of 365 days or less, over (ii) the product of (x) 35.0%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

(g)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables that are Eligible Unbilled Receivables which have an expected billing date of greater than 365 days but less than or equal to 730 days, over (ii) the product of (x) 15.0%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

(h)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables that are Eligible Unbilled Receivables which have an expected billing date of greater than 730 days, over (ii) the product of (x) 0.0%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

(i)    the excess (if any) of (i) the aggregate Outstanding Balance of all Pool Receivables as to which any payment, or part thereof, remains unpaid for either (A) one day or more but less than 31 days past the original due date for such payment or (B) more than 30 days but less than 61 days after the original invoice date for such payment, over (ii) the product of (x) 60.0%, multiplied by (y) aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the Fiscal Month that is one (1) Fiscal Month before the then-current Fiscal Month as of such date of determination; plus

 

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(j)    the excess (if any) of (i) the aggregate Outstanding Balance of all Pool Receivables as to which any payment, or part thereof, remains unpaid for either (A) more than 30 days but less than 61 days past the original due date for such payment or (B) more than 60 days but less than 91 days after the original invoice date for such payment, over (ii) the product of (x) 30.0%, multiplied by (y) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the Fiscal Month that is two (2) Fiscal Months before the then-current Fiscal Month as of such date of determination; plus

(k)    the excess (if any) of (i) the aggregate Outstanding Balance of all Pool Receivables as to which any payment, or part thereof, remains unpaid for either (A) more than 60 days but less than 91 days past the original due date for such payment or (B) more than 90 days but less than 121 days after the original invoice date for such payment, over (ii) the product of (x) 15.0%, multiplied by (y) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the Fiscal Month that is three (3) Fiscal Months before the then-current Fiscal Month as of such date of determination; plus

(l)    the excess (if any) of (i) the aggregate Outstanding Balance of all Pool Receivables as to which any payment, or part thereof, remains unpaid for either (A) more than 90 days but less than 121 days past the original due date for such payment or (B) more than 120 days but less than 151 days after the original invoice date for such payment, over (ii) the product of (x) 7.5%, multiplied by (y) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the Fiscal Month that is four (4) Fiscal Months before the then-current Fiscal Month as of such date of determination; plus

(m)    the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible Receivables as to which the due date thereof is more than 90 days after the original invoice date of such Eligible Receivable over (ii) the product of (x) 5.0%, multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool.

“Exchange Act” means the Securities Exchange Act of 1934, as amended or otherwise modified from time to time.

“Excluded Collection Account” means each “deposit account” within the meaning of the applicable UCC that (i) receives Collections on Pool Receivables only if such Pool Receivable is a GDS Receivable, and (ii) is listed on Schedule II to this Agreement (as such schedule may be modified from time to time in connection with the closing or opening of any Collection Account in accordance with the terms hereof) and identified as an Excluded Collection Account.

“Excluded Collection Account Owner” means GDS.

“Excluded GDS Receivable” means each receivable generated by GDS related to the distribution of HBOMax outside the United States and its territories and possessions.

 

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“Excluded HBO Receivable” means each receivable generated by an HBO Originator under a Contract related to (1) historic pay-per-view sports events; (2) retail and/or merchandise licensing transactions; or (3) rental or other use of Home Box Office, Inc.’s studio facilities.

“Excluded Receivable” means each receivable (a) the Obligor of which is the Parent, any of its Affiliates or any joint venture that is partially owned or controlled by the Parent or any of its consolidated Affiliates; provided, for the purposes of this clause (a), “control” of a joint venture means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such joint venture, whether through the ownership of voting securities, by contract or otherwise; (b) that is an Excluded HBO Receivable; (c) that is an Excluded Turner Receivable; or (d) that is an Excluded GDS Receivable.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to an Affected Person or required to be withheld or deducted from a payment to an Affected Person: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes and branch profits Taxes, in each case, (i) imposed as a result of such Affected Person being organized under the laws of, or having its principal office or, in the case of any Purchaser, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Purchaser, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Purchaser with respect to an applicable interest in its Capital or Commitment pursuant to a law in effect on the date on which (i) such Purchaser funds an Investment or its Commitment or (ii) such Purchaser changes its lending office, except in each case to the extent that amounts with respect to such Taxes were payable either to such Purchaser’s assignor immediately before such Purchaser became a party hereto or to such Purchaser immediately before it changed its lending office, (c) any withholding Taxes imposed pursuant to FATCA and (d) Taxes attributable to such Affected Person’s failure to comply with Section 5.03(f), (g) or (i).

“Excluded Turner Receivable” means each receivable generated by a Turner Originator under a Contract related to (1) owned programming television syndication; (2) the license of such Turner Originator’s owned programming brands and characters (or brands/businesses such Turner Originator manages for other companies) for consumer products and other business ventures; (3) subscription video on demand; (4) home video, DVD, and electronic sell-through; (5) festival tickets; or (6) streaming.

“Existing Receivables Purchase Agreement” has the meaning set forth in the preliminary statements to this Agreement.

“Facility Limit” means $6,000,000,000 as reduced from time to time pursuant to Section 2.02(e) or increased from time to time pursuant to Section 2.02(g). References to the unused portion of the Facility Limit shall mean, at any time of determination, an amount equal to (x) the Facility Limit at such time, minus (y) the Aggregate Capital at such time.

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

 

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interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code, any applicable intergovernmental agreement entered into between the United States and any other Governmental Authority in connection with the implementation of the foregoing and any fiscal or regulatory legislation, rules or official practices adopted pursuant to any such intergovernmental agreement.

“Federal Funds Rate” means, for any day, the per annum rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, “H.15(519)”) for such day opposite the caption “Federal Funds (Effective).” If on any relevant day such rate is not yet published in H. 15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the “Composite 3:30 p.m. Quotations”) for such day under the caption “Federal Funds Effective Rate.” If on any relevant day the appropriate rate is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic mean as determined by the Administrative Agent of the rates for the last transaction in overnight Federal funds arranged before 9:00 a.m. (New York City time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Administrative Agent.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its principal functions.

“Fee Letter” has the meaning set forth in Section 2.03(a).

“Fees” has the meaning specified in Section 2.03(a).

“Final Payout Date” means the date on or after the Termination Date when (i) the Aggregate Capital has been reduced to zero and the Aggregate Yield has been paid in full, (ii) all other Seller Obligations have been paid in full (other than unasserted or contingent indemnification claims), (iii) all other amounts owing to the Purchaser Parties and any other Seller Indemnified Party or Affected Person hereunder and under the other Transaction Documents have been paid in full other than unasserted or contingent indemnification claims) and (iv) all accrued Servicing Fees have been paid in full.

“Financial Officer” of any Person means, the chief executive officer, the chief financial officer, the chief accounting officer, the principal accounting officer, the controller, the treasurer or the assistant treasurer of such Person.

“Fiscal Month” means each calendar month.

“Fitch” means Fitch, Inc. and any successor thereto that is a nationally recognized statistical rating organization.

“Foreign Currency” means the lawful currency of any other country or territory other than the United States.

 

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“FX Reserve” means, as of any date of determination, an amount equal to (i) the product of (a) the Dollar Equivalent of the aggregate outstanding balance of all Eligible Receivables denominated in an Eligible Foreign Currency at such time, times (b) the Eligible Foreign Currency VaR Percentage at such time divided by (ii) the Net Receivables Pool Balance at such time.

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

“GBP” means the lawful money of the United Kingdom.

“GDS” means WarnerMedia Global Digital Services, LLC, a Delaware limited liability company.

“GDS Assignment Agreement” means that certain Receivables Assignment Agreement dated as of March 15, 2021, between GDS and WarnerMedia Direct, LLC, a Delaware limited liability company.

“GDS Receivable” means a Receivable originated by GDS that has been assigned to WarnerMedia Direct, LLC, a Delaware limited liability company, pursuant to the GDS Assignment Agreement.

“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state, provincial, territorial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“Group” means, (i) for any Conduit Purchaser, such Conduit Purchaser, together with such Conduit Purchaser’s Related Committed Purchasers and related Group Agent, (ii) for PNC, PNC as a Committed Purchaser and as a Group Agent, (iii) for any other Purchaser that does not have a related Conduit Purchaser, such Purchaser, together with such Purchaser’s related Group Agent and each other Purchaser for which such Group Agent acts as a Group Agent hereunder.

“Group A Obligor” means any Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) with a short-term rating of at least: (a) “A-1” by S&P, or if such Obligor does not have a short-term rating from S&P, a rating of “A+” or better by S&P on such Obligor’s, its parent’s, or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-1” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Al” or better by Moody’s on such Obligor’s, its parent’s or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities; provided, however, if such Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) is rated by only one of such rating agencies, then such Obligor will be a “Group A Obligor” if it satisfies either clause (a) or clause (b) above; provided, further, that if such Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) receives

 

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a split rating from S&P and Moody’s and satisfies only one of clause (a) or clause (b) above, then such Obligor shall be deemed to have satisfied each of clause (a) or clause (b) above. Notwithstanding the foregoing, (i) any Obligor that is a Subsidiary of an Obligor that satisfies the definition of “Group A Obligor” shall be deemed to be a Group A Obligor and shall be aggregated with the Obligor that satisfies such definition for the purposes of determining the “Concentration Reserve Percentage”, the “Concentration Reserve” and clause (i) of the definition of “Excess Concentration” for such Obligors, unless such deemed Obligor separately satisfies the definition of “Group A Obligor”, “Group B Obligor”, or “Group C Obligor”, in which case such Obligor shall be separately treated as a Group A Obligor, a Group B Obligor or a Group C Obligor, as the case may be, and shall be aggregated and combined for such purposes with any of its Subsidiaries that are Obligors and (ii) any Obligor that is a Special Obligor that satisfies the definition of “Group A Obligor” shall be deemed to be a Group A Obligor solely for the purposes of determining the “Concentration Reserve Percentage”.

“Group Agent” means each Person acting as agent on behalf of a Group and designated as the Group Agent for such Group on the signature pages to this Agreement or any other Person who becomes a party to this Agreement as a Group Agent for any Group pursuant to an Assumption Agreement, an Assignment and Acceptance Agreement or otherwise in accordance with this Agreement.

“Group Agent’s Account” means, with respect to any Group, the account(s) from time to time designated in writing by the applicable Group Agent to the Seller and the Servicer for purposes of receiving payments to or for the account of the members of such Group hereunder.

“Group B Obligor” means an Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) that is not a Group A Obligor, with a short-term rating of at least: (a) “A-2” by S&P, or if such Obligor does not have a short-term rating from S&P, a rating of “BBB+” to “A” by S&P on such Obligor’s, its parent’s or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-2” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Baal” to “A2” by Moody’s on such Obligor’s, its parent’s or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities; provided, however, if such Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) is rated by only one of such rating agencies, then such Obligor will be a “Group B Obligor” if it satisfies either clause (a) or clause (b) above; provided, further, that if such Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) receives a split rating from S&P and Moody’s and satisfies only one of clause (a) or clause (b) above, then such Obligor shall be deemed to have satisfied each of clause (a) or clause (b) above. Notwithstanding the foregoing, (i) any Obligor that is a Subsidiary of an Obligor that satisfies the definition of “Group B Obligor” shall be deemed to be a Group B Obligor and shall be aggregated with the Obligor that satisfies such definition for the purposes of determining the “Concentration Reserve Percentage”, the “Concentration Reserve” and clause (i) of the definition of “Excess Concentration” for such Obligors, unless such deemed Obligor separately satisfies the definition of “Group A Obligor”, “Group B Obligor”, or “Group C Obligor”, in which case such Obligor shall be separately treated as a Group A Obligor, a Group B Obligor or a Group C Obligor, as the case may be, and shall be aggregated and combined for such purposes with any of its Subsidiaries that are

 

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Obligors and (ii) any Obligor that is a Special Obligor that satisfies the definition of “Group B Obligor” shall be deemed to be a Group B Obligor solely for the purposes of determining the “Concentration Reserve Percentage”.

“Group C Obligor” means an Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) that is not a Group A Obligor or a Group B Obligor, with a short-term rating of at least: (a) “A-3” by S&P, or if such Obligor does not have a short-term rating from S&P, a rating of “BBB-” to “BBB” by S&P on such Obligor’s, its parent’s or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-3” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Baa3” to “Baa2” by Moody’s on such Obligor’s, its parent’s or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities; provided, however, if such Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) is rated by only one of such rating agencies, then such Obligor will be a “Group C Obligor” if it satisfies either clause (a) or clause (b) above; provided, further, that if such Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) receives a split rating from S&P and Moody’s and satisfies only one of clause (a) or clause (b) above, then such Obligor shall be deemed to have satisfied each of clause (a) or clause (b) above. Notwithstanding the foregoing, (i) any Obligor that is a Subsidiary of an Obligor that satisfies the definition of “Group C Obligor” shall be deemed to be a Group C Obligor and shall be aggregated with the Obligor that satisfies such definition for the purposes of determining the “Concentration Reserve Percentage”, the “Concentration Reserve” and clause (i) of the definition of “Excess Concentration” for such Obligors, unless such deemed Obligor separately satisfies the definition of “Group A Obligor”, “Group B Obligor”, or “Group C Obligor”, in which case such Obligor shall be separately treated as a Group A Obligor, a Group B Obligor or a Group C Obligor, as the case may be, and shall be aggregated and combined for such purposes with any of its Subsidiaries that are Obligors and (ii) any Obligor that is a Special Obligor that satisfies the definition of “Group C Obligor” shall be deemed to be a Group C Obligor solely for the purposes of determining the “Concentration Reserve Percentage”.

“Group Commitment” means, with respect to any Group, at any time of determination, the aggregate Commitments of all Committed Purchasers within such Group.

“Group D Obligor” means any Obligor that is not a Group A Obligor, Group B Obligor or Group C Obligor; provided, that (i) any Obligor (or its parent or majority owner, as applicable, if such Obligor is unrated) that is not rated by both Moody’s and S&P shall be a Group D Obligor and (ii) any Obligor that is a Special Obligor that satisfies the definition of “Group D Obligor” shall be deemed to be a Group D Obligor solely for the purposes of determining the “Concentration Reserve Percentage”.

“Guaranteed Obligations” has the meaning set forth in Section 3.01.

“HBO Originator” means each of Home Box Office, Inc., HBO Digital Services, Inc. and HBO Home Entertainment, Inc.

 

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“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Seller or any of its Affiliates under any Transaction Document and (b) to the extent not otherwise described in clause (a) above, Other Taxes.

“Independent Director” has the meaning set forth in Section 8.03(c).

“Information Package” means a report, in substantially the form of Exhibit G.

“Initial Investment Date” means March 27, 2019.

“Initial Schedule of Sold Receivables” means the list identifying all Sold Receivables as of the Initial Investment Date, which list is attached as Schedule IV hereto.

“Insolvency Proceeding” means (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors or (b) any general assignment for the benefit of creditors of a Person, composition, marshaling of assets for creditors of a Person, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in each of clauses (a) and (b) undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code.

“Intended Tax Treatment” has the meaning set forth in Section 14.14.

“Investment” means any payment of Capital to the Seller by a Purchaser pursuant to Sections 2.01(a) or 2.02.

“Investment Company Act” means the Investment Company Act of 1940, as amended or otherwise modified from time to time.

“Investment Request” means a letter in substantially the form of Exhibit A hereto executed and delivered by the Seller to the Administrative Agent and the Group Agents pursuant to Section 2.02(a).

“LCR Security” means any commercial paper or security (other than equity securities issued to Parent or any Originator that is a consolidated subsidiary of Parent, under GAAP) within the meaning of Paragraph         .32(e)(viii) of the final rules titled Liquidity Coverage Ratio; Liquidity Risk Measurement Standards, 79 Fed. Reg. 197, 61440 et seq. (October 10, 2014).

“Liquidity Agent” means any bank or other financial institution acting as agent for the various Liquidity Providers under each Liquidity Agreement.

“Liquidity Agreement” means any agreement entered into in connection with this Agreement pursuant to which a Liquidity Provider agrees to make purchases or advances to, or purchase assets from, any Conduit Purchaser in order to provide liquidity for such Conduit Purchaser’s Capital and Notes.

 

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“Liquidity Provider” means each bank or other financial institution that provides liquidity support to any Conduit Purchaser pursuant to the terms of a Liquidity Agreement.

“Lock-Box” means each locked postal box with respect to which a Collection Account Bank has executed an Account Control Agreement pursuant to which it has been granted exclusive access for the purpose of retrieving and processing payments made on the Receivables and which is listed on Schedule II (as such schedule may be modified from time to time in connection with the addition or removal of any Lock-Box in accordance with the terms hereof).

“Loss Horizon Ratio” means, as of the last day of any Fiscal Month, the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed by dividing:

(a)    the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the number of most recently ended Fiscal Months equal to the sum of (i) the Unbilled and Payment Terms Component as of such day plus (ii) 2.125; provided that with respect to any fraction of a Fiscal Month, the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during such fraction of a Fiscal Month shall be calculated as a percentage of the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the applicable Fiscal Month; by

(b)    the aggregate Outstanding Balance of all Pool Receivables as of such day.

“Loss Reserve Percentage” means, at any time of determination, the product (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of (a) the Stress Factor multiplied by (b) the highest average of the Default Ratios for any three (3) consecutive Fiscal Months during the twelve (12) most recent Fiscal Months, multiplied by (c) the Loss Horizon Ratio.

“Majority Group Agents” means at least two Group Agents which in their combined Groups have Committed Purchasers representing more than 50% of the aggregate Commitments of all Committed Purchasers in all Groups (or, if the Commitments have been terminated, have Purchasers representing more than 50% of the aggregate outstanding Capital held by all the Purchasers in all Groups).

“Material Adverse Effect” means relative to any Person (provided that if no particular Person is specified, “Material Adverse Effect” shall be deemed to be relative to the Seller, the Servicer, the Performance Guarantor and the Originators, taken as a whole), a material adverse effect on (a) the financial condition, properties, assets, liabilities, business or results of operations of such Person and its Subsidiaries, taken as a whole, (b) the material rights and remedies of the Administrative Agent or any Purchaser under this Agreement or any other Transaction Document, (c) the ability of the such Person to perform its obligations under this Agreement or any other Transaction Document to which it is a party, (d) the validity or enforceability of this Agreement or any other Transaction Document, or the validity,

 

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enforceability, value or collectability of any material portion of the Pool Receivables, or (e) the status, perfection, enforceability or priority of the Administrative Agent’s ownership or security interest in the Sold Assets or Seller Collateral.

“Minimum Dilution Reserve Percentage” means, at any time of determination, the product (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of (a) the average of the Dilution Ratios for the twelve (12) most recent Fiscal Months, multiplied by (b) the Dilution Horizon Ratio.

“Modified Days’ Sales Outstanding” means, for any Fiscal Month, an amount computed as of the last day of such Fiscal Month equal to: (a) the average of the Adjusted Receivables Pool Balance as of the last day of each of the three (3) most recent Fiscal Months ended on the last day of such Fiscal Month, divided by (b) an amount equal to (i) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the three (3) most recent Fiscal Months ended on the last day of such Fiscal Month, divided by (ii) 90.

“Monthly Settlement Date” means the 25th day of each calendar month (or if such day is not a Business Day, the next occurring Business Day).

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that is a nationally recognized statistical rating organization.

“Multiple Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Parent or any ERISA Affiliate and at least one Person other than the Parent and the ERISA Affiliates or (b) was so maintained and in respect of which the Parent or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.

“Net Receivables Pool Balance” means, at any time of determination: (a) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool, minus (b) the Excess Concentration.

“Notes” means short-term promissory notes issued, or to be issued, by any Conduit Purchaser to fund its investments in accounts receivable or other financial assets.

“NZD” means the lawful money of New Zealand.

“Obligor” means, with respect to any Receivable, the Person obligated to make payments pursuant to the Contract relating to such Receivable.

“Obligor Percentage” means, at any time of determination, for each Obligor, a fraction, expressed as a percentage, (a) the numerator of which is the aggregate Outstanding Balance of the Eligible Receivables of such Obligor and its Affiliates less the amount (if any) then included in the calculation of Excess Concentration with respect to such Obligor and its Affiliates and (b) the denominator of which is the aggregate Outstanding Balance of all Eligible Receivables at such time.

 

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“OFAC” means the U.S. Department of Treasury’s Office of Foreign Assets Control.

“Originator” and “Originators” means the “Originators” as set forth in the Purchase and Sale Agreement, as the same may be modified from time to time by adding new Originators or removing Originators, in each case pursuant to the terms of the Purchase and Sale Agreement.

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

“Other Seller” has the meaning set forth in Section 5.01(f).

“Other Taxes” means any and all present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies or fees arising from any payment made hereunder or from the execution, delivery, filing, recording or enforcement of, or otherwise in respect of, this Agreement, the other Transaction Documents and the other documents or agreements to be delivered hereunder or thereunder.

“Outstanding Balance” means, at any time of determination, with respect to any Receivable, the Dollar Equivalent of the then outstanding principal balance thereof.

“Parent” means the Performance Guarantor.

“Parent Group” has the meaning set forth in Section 8.03(c).

“Parent Senior Credit Agreement” means that certain Credit Agreement, dated as of June 9, 2021 (as amended, supplemented or otherwise modified from time to time), among Discovery Communications, LLC, certain wholly-owned subsidiaries of Discovery Communications, LLC, Discovery, Inc., as Facility Guarantor, Scripps Networks Interactive, Inc., as subsidiary guarantor, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent, swing line lender and L/C issuer.

“Participant” has the meaning set forth in Section 14.03(e).

“Participant Register” has the meaning set forth in Section 14.03(f).

“Participating Member State” means any member state of the European Community that adopts or has adopted the Euro as its lawful currency in accordance with the legislation of the European Union relating to the European Monetary Union.

 

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“PATRIOT Act” has the meaning set forth in Section 14.15.

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

“Percentage” means, at any time of determination, with respect to any Committed Purchaser, a fraction (expressed as a percentage), (a) the numerator of which is (i) prior to the termination of all Commitments hereunder, its Commitment at such time or (ii) if all Commitments hereunder have been terminated, the aggregate outstanding Capital of all Purchasers in such Committed Purchaser’s Group at such time and (b) the denominator of which is (i) prior to the termination of all Commitments hereunder, the aggregate Commitments of all Committed Purchasers at such time or (ii) if all Commitments hereunder have been terminated, the Aggregate Capital at such time.

“Performance Guarantor” means (i) prior to the Spin-Off Date, AT&T, and (ii) thereafter, Discovery, Inc., a Delaware corporation.

“Performance Guaranty” means (i) prior to the Spin-Off Date, the Amended and Restated Performance Guaranty, dated as of March 27, 2020, by AT&T in favor of the Administrative Agent for the benefit of the Secured Parties, and (ii) thereafter, the Performance Guaranty, dated as of April 7, 2022, by Discovery, Inc. in favor of the Administrative Agent for the benefit of the Secured Parties.

“Permitted Investments” means

(a)    direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the U.S. (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the U.S.), in each case maturing within one year from the date of acquisition thereof;

(b)    investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s;

(c)    investments in certificates of deposit, bankers’ acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the U.S. or any state thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;

(d)    fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and

(e)    money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.

 

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“Permitted Liens” means all liens attaching to specific motion pictures or television programming, created solely for the purpose of securing obligations to producers, distributors, exhibitors or other participants of such programming, in each case, incurred in the ordinary course of business in connection with the production, acquisition, distribution, or exhibition of such programming.

“Person” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or any Governmental Authority.

“Plan” means a Single Employer Plan or a Multiple Employer Plan.

“Pledged Deposit Account” means that certain deposit account number 3009097279 maintained with PNC Bank, National Association in the name of the Seller which shall at all times be subject to the control of and a first priority perfected security interest in favor of the Administrative Agent.

“Pledged Investment Account” means that certain securities account number 1107001054 maintained with PNC Capital Markets LLC in the name of the Seller which shall at all times be subject to the control of and a first priority perfected security interest in favor of the Administrative Agent.

“PNC” has the meaning set forth in the preamble to this Agreement.

“Pool Receivable” means a Receivable in the Receivables Pool. For the avoidance of doubt, the Pool Receivables shall include Sold Receivables and Unsold Receivables.

“Portion of Capital” means, with respect to any Purchaser and its related Capital, the portion of such Capital being funded or maintained by such Purchaser by reference to a particular interest rate basis.

“Program Support Agreement” means and includes any Liquidity Agreement and any other agreement entered into by any Program Support Provider providing for: (a) the issuance of one or more letters of credit for the account of any Conduit Purchaser, (b) the issuance of one or more surety bonds for which any Conduit Purchaser is obligated to reimburse the applicable Program Support Provider for any drawings thereunder, (c) the sale by any Conduit Purchaser to any Program Support Provider of any Capital (or portions thereof or participation interest therein) maintained by such Conduit Purchaser and/or (d) the making of loans and/or other extensions of credit to any Conduit Purchaser in connection with such Conduit Purchaser’s receivables-securitization program contemplated in this Agreement, together with any letter of credit, surety bond or other instrument issued thereunder.

 

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“Program Support Provider” means and includes, with respect to any Conduit Purchaser, any Liquidity Provider and any other Person (other than any customer of such Conduit Purchaser) now or hereafter extending credit or having a commitment to extend credit to or for the account of, or to make purchases from, such Conduit Purchaser pursuant to any Program Support Agreement.

“Purchase and Sale Agreement” means the Purchase and Sale Agreement, dated as of the Closing Date, among the Servicer, the Originators, and the Seller.

“Purchase and Sale Termination Event” has the meaning set forth in the Purchase and Sale Agreement.

“Purchaser Party” means each Purchaser, the Administrative Agent and each Group Agent.

“Purchasers” means the Conduit Purchasers and the Committed Purchasers.

“Rating Agency” mean each of S&P, Fitch and Moody’s (and/or each other rating agency then rating the Notes of any Conduit Purchaser).

“Receivable” means any right to payment of a monetary obligation, whether or not earned by performance, owed to any Originator or the Seller (as assignee of an Originator), whether constituting an account, chattel paper, payment intangible, instrument or general intangible, in each instance arising in connection with the sale of goods that have been or are to be sold, the licensing of property that has been or will be licensed, or for services rendered or to be rendered, in each case, by an Originator to an Obligor, and includes, without limitation, the obligation to pay any service charges, finance charges, interest, fees and other charges with respect thereto; provided, however, no Excluded Receivable shall constitute a Receivable. Any such right to payment arising from any one transaction, including, without limitation, any such right to payment represented by an individual invoice or agreement, shall constitute a Receivable separate from a Receivable consisting of any such right to payment arising from any other transaction.

“Receivables Pool” means, at any time of determination, all of the then outstanding Receivables (including both Sold Receivables and Unsold Receivables) transferred (or purported to be transferred) to the Seller pursuant to the Purchase and Sale Agreement, in each case prior to the Termination Date.

“Register” has the meaning set forth in Section 14.03(c).

“Related Committed Purchaser” means with respect to any Conduit Purchaser, each Committed Purchaser listed as such for each Conduit Purchaser as set forth on the signature pages of this Agreement or in any Assumption Agreement.

“Related Conduit Purchaser” means, with respect to any Committed Purchaser, each Conduit Purchaser which is, or pursuant to any Assignment and Acceptance Agreement or

 

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Assumption Agreement or otherwise pursuant to this Agreement becomes, included as a Conduit Purchaser in such Committed Purchaser’s Group, as designated on its signature page hereto or in such Assignment and Acceptance Agreement, Assumption Agreement or other agreement executed by such Committed Purchaser, as the case may be.

“Related Rights” means the “Related Rights” as defined in Section 1.1 of the Purchase and Sale Agreement.

“Related Security” means, with respect to any Receivable:

(a)    all of the Seller’s and each Originator’s interest in any goods (including Returned Goods), and documentation of title evidencing the shipment or storage of any goods (including Returned Goods), the sale of which gave rise to such Receivable;

(b)    all instruments and chattel paper that may evidence such Receivable;

(c)    all other security interests or liens and property subject thereto from time to time purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all UCC financing statements or similar filings relating thereto;

(d)    solely to the extent applicable necessary to irrevocably collect and enjoy the benefits of such Receivable, all of the Seller’s and each Originator’s rights, interests and claims under the related Contracts and all supporting obligations, guaranties, indemnities, letters of credit (including any letter-of-credit rights), insurance and other agreements (including the related Contract) or arrangements of whatever character from time to time supporting or securing payment of such Receivable or otherwise relating to such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, subject, in each case, to any applicable terms of such Contract that may adversely impact the sale or assignment of such Contract (as opposed to the sale of the assignment of the Receivables or other proceeds arising thereunder);

(e)    all rights, remedies, powers, privileges, title and interest (but not obligations) in and to each Lock-Box and all Collection Accounts, into which any Collections or other proceeds with respect to such Receivables may be deposited, and any related investment property acquired with any such Collections or other proceeds (as such term is defined in the applicable UCC);

(f)    all of the Seller’s rights, interests and claims under the Purchase and Sale Agreement and the other Transaction Documents to the extent applicable; and

(g)    all Collections and other proceeds (as defined in the UCC) of any of the foregoing;

provided, notwithstanding the foregoing or any provision of any Transaction Document, none of the Administrative Agent, any Purchaser Party or any beneficiary thereof shall have the right to

 

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hold, review, view, audit or otherwise possess (x) any Contract; or (y) any financial reporting or other books or records specifically relating to such Contract and the Receivables generated thereunder, the disclosure of which is precluded by the applicable terms of such Contract, provided, further, however, that during the occurrence and continuance of an Event of Termination, to the extent that the related Obligor has defaulted in the payment of any Receivable, upon the request of the Administrative Agent the Seller shall provide the Administrative Agent with such information reasonably requested with respect to any such Contract (which may be redacted versions of or excerpts of any Contract) to the extent needed for the Administrative Agent to enforce such Contract against the applicable Obligor.

“Release” has the meaning set forth in Section 4.01(a).

“Replacement Person” has the meaning set forth in Section 5.01(g).

“Representatives” has the meaning set forth in Section 14.06(c).

“Required Capital Amount” means $240,000,000.

“Restatement Effective Date” means April 7, 2022.

“Restricted Payments” has the meaning set forth in Section 8.01(r).

“Returned Goods” means all right, title and interest in and to returned, repossessed or foreclosed goods and/or merchandise the sale of which gave rise to a Receivable; provided that such goods shall no longer constitute Returned Goods after a Deemed Collection has been deposited in a Collection Account with respect to the full Outstanding Balance of the related Receivables.

“S&P” means Standard & Poor’s Rating Services, a Standard & Poor’s Financial Services LLC business, and any successor thereto that is a nationally recognized statistical rating organization.

“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.

“Scheduled Termination Date” means (i) initially, June 9, 2022, and (ii) upon the payment of the extension fee pursuant to Section 2.01(f), the Scheduled Termination Date shall be extended to December 9, 2022.

“SEC” means the U.S. Securities and Exchange Commission or any governmental agencies substituted therefor.

 

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“Secured Parties” means each Purchaser Party, each Seller Indemnified Party and each Affected Person.

“Securities Act” means the Securities Act of 1933, as amended or otherwise modified from time to time.

“SEK” means the lawful money of Sweden.

“Seller” has the meaning specified in the preamble to this Agreement.

“Seller Collateral” has the meaning set forth in Section 3.09.

“Seller Guaranty” has the meaning set forth in Section 3.01.

“Seller Indemnified Amounts” has the meaning set forth in Section 13.01(a).

“Seller Indemnified Party” has the meaning set forth in Section 13.01(a).

“Seller Obligation Final Due Date” means (i) the date that is one hundred eighty (180) days following the occurrence of the Scheduled Termination Date or (ii) such earlier date on which the Aggregate Capital becomes due and payable pursuant to Section 10.01.

“Seller Obligations” means all present and future indebtedness, reimbursement obligations, and other liabilities and obligations (howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, or due or to become due) of the Seller to any Purchaser Party, Seller Indemnified Party and/or any Affected Person, arising under or in connection with this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby, and shall include, without limitation, all obligations of the Seller in respect of the Seller Guaranty and the payment of all Capital, Yield, Fees and other amounts due or to become due under the Transaction Documents (whether in respect of fees, costs, expenses, indemnifications or otherwise), including, without limitation, interest, fees and other obligations that accrue after the commencement of any Insolvency Proceeding with respect to the Seller (in each case whether or not allowed as a claim in such proceeding).

“Seller’s Net Worth” means, at any time of determination, an amount equal to (i) the sum of (A) the Outstanding Balance of all Pool Receivables at such time, plus (B) all cash then held in the Collection Accounts maintained in the name of the Seller other than any Excluded Collection Account, minus (ii) the sum of (A) the Aggregate Capital at such time, plus (B) the Aggregate Yield at such time, plus (C) the aggregate accrued and unpaid Fees at such time, plus (D) the aggregate outstanding principal balance of all Subordinated Notes at such time, plus (E) the aggregate accrued and unpaid interest on all Subordinated Notes at such time, plus (F) without duplication, the aggregate accrued and unpaid other Seller Obligations at such time.

“Separation Agreement” means the Separation and Distribution Agreement, dated May 17, 2021, by and among AT&T Inc., Magallanes, Inc. and Discovery, Inc.

 

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“Servicer” has the meaning set forth in the preamble to this Agreement.

“Servicer Indemnified Amounts” has the meaning set forth in Section 13.02(a).

“Servicer Indemnified Party” has the meaning set forth in Section 13.02(a).

“Servicing Fee” means the fee referred to in Section 9.06(a) of this Agreement.

“Servicing Fee Rate” means the rate referred to in Section 9.06(a) of this Agreement.

“Settlement Date” means with respect to any Portion of Capital for any Yield Period or any Yield or Fees, (i) so long as no Event of Termination has occurred and is continuing and the Termination Date has not occurred, the Monthly Settlement Date and (ii) on and after the Termination Date or if an Event of Termination has occurred and is continuing, each day selected from time to time by the Administrative Agent (with the consent or at the direction of the Majority Group Agents) (it being understood that the Administrative Agent (with the consent or at the direction of the Majority Group Agents) may select such Settlement Date to occur as frequently as daily), or, in the absence of such selection, the Monthly Settlement Date.

“Single Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Parent or any ERISA Affiliate and no Person other than the Parent and the ERISA Affiliates or (b) was so maintained and in respect of which the Parent or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated.

“SOFR” shall mean, for any day, a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).

“SOFR Adjustment” shall mean an interest rate per annum equal to (a) with respect to Daily Simple SOFR or the Term SOFR Rate for a 1-month Tranche Period, ten basis points (0.10%) and (b) with respect to the Term SOFR Rate for a 3-month Tranche Period, fifteen basis points (0.15%).

“SOFR Floor” means a rate of interest per annum equal to 0 basis points (0.00%).

“SOFR Rate” means, at any time of determination, with respect to any Purchaser, Daily Simple SOFR or the Term SOFR Rate, as determined pursuant to Section 2.05, provided, however, that the SOFR Rate applicable to any Term SOFR Tranche funded pursuant to an Investment that occurs other than on a Monthly Settlement Date shall be Daily Simple SOFR for each day during the initial Yield Period applicable to such Term SOFR Tranche from the date such Investment is made pursuant to Section 2.01 until the next occurring Monthly Settlement Date.

“Sold Assets” has the meaning set forth in Section 2.01(b).

 

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“Sold Receivables” means, collectively, (i) the Pool Receivables specified as “Sold Receivables” on the Initial Schedule of Sold Receivables and (ii) all additional Pool Receivables specified as “Sold Receivables” on the Investment Requests delivered with respect to all subsequent Investments made hereunder.

“Solvent” means, with respect to any Person and as of any particular date, (i) the present fair market value (or present fair saleable value) of the assets of such Person is not less than the total amount required to pay the probable liabilities of such Person on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured, (ii) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business, (iii) such Person is not incurring debts or liabilities beyond its ability to pay such debts and liabilities as they mature and (iv) such Person is not engaged in any business or transaction, and is not about to engage in any business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged.

“Special Obligor” has the meaning set forth in the definition of Concentration Percentage.

“Spin-Off Date” means the Closing Date (as defined in the Separation Agreement).

“Spot Rate” means, on any day, with respect to the determination of the Dollar Equivalent of any amount denominated in Foreign Currency, the exchange rate at which such Foreign Currency may be exchanged into Dollars as set forth at approximately 11:00 a.m. New York City time, on such day as published on the Bloomberg Key Cross-Currency Rates Page for such Foreign Currency; provided that in the event that such rate does not appear on any Bloomberg Key Cross Currency Rates Page, the Spot Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be selected by the Administrative Agent and is reasonably satisfactory to the Seller, or, in the absence of such an agreement, such Spot Rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about 11:00 a.m. New York time, on such date for the purchase of Dollars with the applicable Foreign Currency for delivery two (2) Business Days later; provided, that if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent may use any reasonable method it deems appropriate to determine such rate, and such determination shall be conclusive absent manifest error.

“Stress Factor” means 2.5.

“Structuring Agent” means PNC Capital Markets LLC, a Pennsylvania limited liability company.

“Sub-Servicer” has the meaning set forth in Section 9.01(d).

 

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“Subject Originator” means, at any time of determination, any Subsidiary (organized under the laws of the United States or any state thereof) of Parent for which the aggregate Outstanding Balance of all Receivables of such Subsidiary of Parent does not exceed 3.0% of the aggregate Outstanding Balance of all Receivables in the Receivables Pool at such time.

“Subordinated Note” has the meaning set forth in the Purchase and Sale Agreement.

“Subsidiary” means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock of each class or other interests having ordinary voting power (other than stock or other interests having such power only by reason of the happening of a contingency) to elect a majority of the Board of Directors or other managers of such entity are at the time owned, or management of which is otherwise controlled: (a) by such Person, (b) by one or more Subsidiaries of such Person or (c) by such Person and one or more Subsidiaries of such Person.

“Sustainability Agent” means PNC Capital Markets LLC, a Pennsylvania limited liability company.

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

“TD Account” means account #11040302499 maintained in the name of Seller at The Toronto-Dominion Bank.

“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).

“Term SOFR Rate” means with respect to any Tranche Period, the interest rate per annum equal to the Term SOFR Reference Rate for a tenor comparable to such Tranche Period, as such rate is published by the Term SOFR Administrator on the day (the “Term SOFR Determination Date”) that is two (2) Business Days prior to the first day of such Tranche Period; provided, however, that with respect to the initial Tranche Period for the Capital of an Investment made on a date that is not a Monthly Settlement Date, the Term SOFR Rate shall be the interest rate per annum equal to Daily Simple SOFR for each day during such initial Tranche Period from the date that such Investment is made pursuant to Section 2.01 until the next occurring Monthly Settlement Date. If the Term SOFR Reference Rate for the applicable tenor has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (New York City time) on the Term SOFR Determination Date, then the Term SOFR Reference Rate, for purposes of clause (A) in the preceding sentence, shall be the Term SOFR Reference Rate for such tenor on the first Business Day preceding such Term SOFR Determination Date for which such Term SOFR Reference Rate for such tenor was published in accordance herewith, so long as such first preceding Business Day is not more than three (3) Business Days prior to such Term SOFR Determination Date. If the Term SOFR Rate, determined as provided above, would be less than

 

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the SOFR Floor, then the Term SOFR Rate shall be deemed to be the SOFR Floor. The Term SOFR Rate shall be adjusted automatically without notice to the Seller on and as of the first day of each Tranche Period

“Term SOFR Reference Rate” shall mean the forward-looking term rate based on SOFR.

“Term SOFR Tranche” means any Capital (or portion thereof) accruing Yield at the Term SOFR Rate.

“Termination Date” means the earliest to occur of (a) the Scheduled Termination Date, (b) the date on which the “Termination Date” is declared or deemed to have occurred under Section 10.01 and (c) the date selected by the Seller on which all Commitments have been reduced to zero pursuant to Section 2.02(e).

“Total Reserves” means, at any time of determination, an amount equal to (A) the Net Receivables Pool Balance at such time times (B) the sum of: (x) the Yield Reserve Percentage, plus (y) the greater of (I) the sum of the Concentration Reserve Percentage plus the Minimum Dilution Reserve Percentage and (II) the sum of the Loss Reserve Percentage plus the Dilution Reserve Percentage plus (z) the FX Reserve.

“Tranche Period” means, with respect to any Term SOFR Tranche, a period of one or three months selected by the Seller pursuant to Section 2.05. Each Tranche Period shall commence on a Monthly Settlement Date and end on (but not including) the Monthly Settlement Date occurring one, two or three calendar months thereafter, as selected by the Seller pursuant to Section 2.05; provided, however, that if the date any Capital (or portion thereof) is funded pursuant to an Investment made on a date that is not a Monthly Settlement Date pursuant to Section 2.01, the initial Tranche Period for such Capital (or such portion thereof) shall commence on the date such Investment is made pursuant to Section 2.01 and end on the next Monthly Settlement Date occurring after the day in the applicable succeeding calendar month which corresponds numerically to the beginning day of such initial Tranche Period; provided, further, that if any Tranche Period would end after the Termination Date, such Tranche Period (including a period of one day) shall end on the Termination Date.

“Transaction Documents” means this Agreement, the Purchase and Sale Agreement, the GDS Assignment Agreement, the Account Control Agreements, the Fee Letter, each Subordinated Note, the Performance Guaranty and all other certificates, instruments, UCC financing statements, reports, notices, agreements and documents executed or delivered under or in connection with this Agreement.

“Turner” has the meaning specified in the preamble to this Agreement.

“Turner Originator” means each of Turner Broadcasting System, Inc., AC Holdings, Inc., Bleacher Report, Inc., Cable News Network, Inc., Cartoon Interactive Group, Inc., CNN Interactive Group, Inc., Courtroom Television Network, LLC, Great Big Story, LLC, TBS Interactive Group, Inc., The Cartoon Network, Inc., TNT Interactive Group, Inc., Turner Classic Movies, Inc., Turner Network, Television, Inc., Turner Sports, Inc. and Turner Sports Interactive, Inc.

 

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“UCC” means the Uniform Commercial Code as from time to time in effect in the applicable jurisdiction.

“Unbilled and Payment Terms Component” means, for any Fiscal Month, an amount computed as of the last day of such Fiscal Month equal to the ratio of (a) the Modified Days Sales Outstanding as of such date divided by (b) 30.

“Unbilled Receivable” means, at any time, any Receivable as to which the invoice or bill with respect thereto has not yet been sent to the Obligor thereof.

“Unmatured Event of Termination” means an event that but for notice or lapse of time or both would constitute an Event of Termination.

“Unsold Receivables” means, at any time, all Pool Receivables that are not then Sold Receivables.

“U.S. Obligor” means an Obligor that is a corporation or other business organization and is organized under the laws of the United States of America (or of a United States of America territory, district, state, commonwealth, or possession, including, without limitation, Puerto Rico and the U.S. Virgin Islands) or any political subdivision thereof.

“U.S. Tax Compliance Certificate” has the meaning set forth in Section 5.03(f)(ii)(B)(3).

“Volcker Rule” means Section 13 of the U.S. Bank Holding Company Act of 1956, as amended, and the applicable rules and regulations thereunder.

“Voting Stock” means Capital Stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right to so vote has been suspended by the happening of such a contingency.

“Yield” means an amount payable to each Purchaser in respect of its Capital accruing on each day when such Purchaser has Capital outstanding, which amount for any Purchaser’s Capital (or portion thereof) for any day during any Yield Period (or portion thereof) is the amount accrued on such Capital (or portion thereof) during such Yield Period (or portion thereof) in accordance with Section 2.03(b).

“Yield Period” means, with respect to any Purchaser’s Capital (or any portion thereof), (a) before the Termination Date: (i) initially, the period commencing on the date of the Investment pursuant to which such Capital (or portion thereof) is funded by a Purchaser to the Seller pursuant to Section 2.01 and ending on (but not including) the next Monthly Settlement Date and (ii) thereafter, each period commencing on such Monthly Settlement Date and ending on (but not including) the next Monthly Settlement Date and (b) on and after the Termination

 

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Date, such period (including a period of one day) as shall be selected from time to time by the Administrative Agent (with the consent or at the direction of the Majority Group Agents) or, in the absence of any such selection, each period of 30 days from the last day of the preceding Yield Period.

“Yield Rate” means, for any day in any Yield Period for any Purchaser’s Capital (or any portion thereof) the applicable Bank Rate;

provided, however, that the “Yield Rate” for any Purchaser’s Capital (or any portion thereof) on any day while an Unmatured Event of Termination or Event of Termination has occurred and is continuing shall be an interest rate per annum equal to the sum of 2.0% per annum plus the greater of (i) the Base Rate in effect on such day, and (ii) the Term SOFR Rate for a Tranche Period of one month plus the applicable SOFR Adjustment with respect to such Purchaser for such Yield Period; provided, further, that no provision of this Agreement shall require the payment or permit the collection of Yield in excess of the maximum permitted by Applicable Law; and provided, further, that Yield for any Capital shall not be considered paid by any distribution to the extent that at any time all or a portion of such distribution is rescinded or must otherwise be returned for any reason.

“Yield Reserve Percentage” means at any time of determination, the result (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of the following:

1.50 x DSO x (BR + the Servicing Fee Rate)

360

where:

BR        =        the Base Rate at such time; and

DSO     =        the Days’ Sales Outstanding for the most recently ended Fiscal Month.

 

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SCHEDULE I

COMMITMENTS

 

SCHEDULE I


SCHEDULE II

LOCK-BOXES, COLLECTION ACCOUNTS AND COLLECTION ACCOUNT BANKS

 

SCHEDULE II


SCHEDULE III

NOTICE ADDRESSES

 

SCHEDULE III


SCHEDULE IV

INITIAL SCHEDULE OF SOLD RECEIVABLES

 

SCHEDULE IV


SCHEDULE V

[Reserved]

 

SCHEDULE V


SCHEDULE VI

SPECIAL OBLIGORS

 

SCHEDULE VI

Exhibit 10.6

PERFORMANCE GUARANTY

This Performance Guaranty (this “Performance Guaranty”), dated as of April 7, 2022, is made by Discovery, Inc., a Delaware corporation (together with its successors and permitted assigns, the “Performance Guarantor”), in favor of PNC Bank, National Association (“PNC”), as administrative agent under the Receivables Purchase Agreement defined below (together with its successors and assigns in such capacity, the “Administrative Agent”), for the benefit of the Seller, the Administrative Agent, the Purchasers and the other Group Agents under the Receivables Purchase Agreement defined below. Capitalized terms used but not otherwise defined herein have the respective meanings assigned thereto in, or by reference in, the Receivables Purchase Agreement (defined below).

PRELIMINARY STATEMENTS

(1)    Turner Broadcasting System, Inc., a Delaware corporation and wholly-owned indirect subsidiary of (x) prior to the Closing Date, the Parent and (y) on and after the Closing Date, the Performance Guarantor (“Turner”), as servicer and as originator and certain other subsidiaries of the Performance Guarantor, as originators (collectively with Turner, the “Originators”) and AT&T Receivables Funding II, LLC, a Delaware limited liability company (the “Seller”), as buyer, entered into that certain Purchase and Sale Agreement, dated as of March 27, 2019 (as amended, restated, supplemented or otherwise modified from time to time, subject to compliance with Section 8(b), the “Purchase and Sale Agreement”).

(2)    The Seller, Turner, as initial Servicer (in such capacity, the “Servicer”), the Persons from time to time party thereto as Purchasers and as Group Agents, the Administrative Agent, and PNC Capital Markets, LLC, as Structuring Agent (the “Structuring Agent”) entered into that certain Second Amended and Restated Receivables Purchase Agreement, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, subject to compliance with Section 8(b), the “Receivables Purchase Agreement”), pursuant to which (i) the Purchasers may from time to time make Investments with respect to certain Pool Receivables, (ii) the Seller has granted to the Administrative Agent (for the benefit of the Secured Parties) a security interest in the Seller Collateral, and (iii) the Servicer will service the Pool Receivables.

(3)    As of the date hereof, the Parent is the direct or indirect owner of 100% of the outstanding Capital Stock of the Servicer, each Originator and the Seller. As of the Closing Date, the Performance Guarantor is the direct or indirect owner of 100% of the outstanding Capital Stock of the Servicer, each Originator and the Seller.

(4)    The Performance Guarantor has determined that its execution and delivery of this Performance Guaranty is in its best interests because, inter alia, the Performance Guarantor (individually) and the Performance Guarantor and its Affiliates (collectively) will, on and from the Closing Date, derive substantial direct and indirect benefit from (i) each Originator’s sales of Receivables to the Seller from time to time under the Purchase and Sale Agreement, (ii) the Servicer’s servicing of the Receivables under the Receivables Purchase Agreement, (iii) the financial accommodations made by the Purchasers to the Seller from time to time under the Receivables Purchase Agreement, and (v) the other transactions contemplated under the Purchase and Sale Agreement and the Receivables Purchase Agreement.


Now, Therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Performance Guarantor hereby agrees as follows:

SECTION 1.     UNCONDITIONAL UNDERTAKING; ENFORCEMENT.

On and from the Closing Date, the Performance Guarantor hereby unconditionally and irrevocably undertakes and assures for the benefit of the Seller, Administrative Agent (including, without limitation, as assignee of the Seller’s rights, interests and claims under the Purchase and Sale Agreement), the Purchasers and the Group Agents the due and punctual performance and observance by each Originator and the Servicer (together with their respective successors and assigns, collectively, the “Covered Entities,” and each, a “Covered Entity”), as applicable, of the terms, covenants, indemnities, conditions, agreements, undertakings and obligations on the part of such Covered Entity to be performed or observed by it under the Purchase and Sale Agreement; the Receivables Purchase Agreement; and each of the other Transaction Documents to which such Covered Entity is a party (excluding, for the avoidance of doubt, the Pledgor Purchase and Sale Agreement and the Pledgor Purchaser Assignment), including, without limitation, any agreement or obligation of such Covered Entity to pay any indemnity or make any payment in respect of any applicable purchase price adjustment, Deemed Collection or repurchase obligation under any such Transaction Document, Article, or Section, as applicable, in each case on the terms and subject to the conditions set forth in the applicable Transaction Documents (excluding, for the avoidance of doubt, the Pledgor Purchase and Sale Agreement and the Pledgor Purchaser Assignment) as the same shall be, subject to compliance with Section 8(b), amended, restated, supplemented or otherwise modified and in effect from time to time (all such terms, covenants, indemnities, conditions, agreements, undertakings and obligations on the part of the Covered Entities to be paid, performed or observed by them being collectively called the “Guaranteed Obligations”). For the avoidance of doubt and without limiting the foregoing, the Guaranteed Obligations shall not include the obligation of any Obligor to pay or perform its obligations under a Contract (including, for the avoidance of doubt, the Pledgor Purchase and Sale Agreement and the Pledgor Purchaser Assignment). Without limiting the generality of the foregoing, the Performance Guarantor agrees that if any Covered Entity shall fail in any manner whatsoever to perform or observe any of its Guaranteed Obligations when the same shall be required to be performed or observed under any applicable Transaction Document (excluding, for the avoidance of doubt, the Pledgor Purchase and Sale Agreement and the Pledgor Purchaser Assignment), then the Performance Guarantor will itself duly and punctually perform or observe such Guaranteed Obligations or cause to be performed or observed such Guaranteed Obligations within ten (10) days after the receipt by the Performance Guarantor of written notice of such Covered Entity’s failure to so observe or perform (each a “Guaranteed Obligations Notice”). The Covered Entities will not deliver a Guaranteed Obligations Notice to the Performance Guarantor unless the Servicer or any of the Originators have failed to so observe or perform following the expiration of any applicable grace or cure period. It shall not be a condition to the accrual of the obligation of the Performance Guarantor hereunder to perform or observe any Guaranteed Obligation or to cause to be performed or observed any Guaranteed Obligation that the Administrative Agent, any Purchaser, any Group Agent, the Seller or any other Person shall

 

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have first made any request of or demand upon or given any notice to the Performance Guarantor, any Covered Entity or any of their respective successors and assigns or have initiated any action or proceeding against the Performance Guarantor, any Covered Entity or any of their respective successors and assigns in respect thereof. The Seller and the Administrative Agent (on behalf of itself, the Purchasers and the Group Agents) may proceed to enforce the obligations of the Performance Guarantor under this Performance Guaranty without first pursuing or exhausting any right or remedy which the Administrative Agent, any Group Agent or any Purchaser may have against any Covered Entity, the Seller, any other Person, the Pool Receivables or any other property. The Performance Guarantor agrees that its obligations under this Performance Guaranty shall be irrevocable. It is expressly acknowledged that this Performance Guaranty is a guarantee of performance only and is not a guarantee of the payment of any Pool Receivables and there shall be no recourse to the Performance Guarantor for any non-payment or delay in payment of any Pool Receivables solely by reason of the bankruptcy, insolvency or lack of creditworthiness of the related Obligor or the uncollectability of any of such Pool Receivables or for any Guaranteed Obligations the payment of which could otherwise constitute recourse to the Performance Guarantor or any Covered Entity for uncollectable Pool Receivables.

SECTION 2.     VALIDITY OF OBLIGATIONS.

(a)    The Performance Guarantor agrees that its obligations under this Performance Guaranty are absolute and unconditional and shall not be subject to any limitation, impairment or discharge for any reason (other than payment in full of all Guaranteed Obligations or written settlement between the Covered Parties and an Originator or the Servicer, as applicable), irrespective of: (i) the validity, enforceability, avoidance, subordination, discharge, or disaffirmance by any Person (including a trustee in bankruptcy) of the Guaranteed Obligations, (ii) the absence of any attempt by any Secured Party (or by the Seller) to collect any Sold Assets or to realize upon any other Seller Collateral or any other property or collateral, or to obtain performance or observance of the Guaranteed Obligations from the Covered Entities or the Seller or any other Person, (iii) the waiver, consent, amendment, modification, extension, forbearance or granting of any indulgence by any Secured Party (or by the Seller) with respect to any provision of any agreement or instrument evidencing the Guaranteed Obligations other than a written settlement agreement as described above, (iv) any change of the time, manner or place of performance of, or in any other term of any of the Guaranteed Obligations, including, without limitation, subject to compliance with Section 8(b), any amendment to or modification of any of the Transaction Documents, (v) any law, rule, regulation or order of any jurisdiction affecting any term or provision of any of the Guaranteed Obligations, or rights of the Secured Parties (or of the Seller) with respect thereto, (vi) the failure by any Secured Party (or by the Seller) to take any steps to perfect and maintain perfected its interest in any Seller Collateral or other property or in any security or collateral related to the Guaranteed Obligations, (vii) any failure to obtain any consent, authorization or approval from or other action by, or to notify or file with, any Governmental Authority required in connection with the performance of the obligations hereunder by the Performance Guarantor, (viii) any impossibility or impracticability of performance, illegality, force majeure, any act of government, or other circumstances which might constitute a defense available to, or a discharge of any Covered Entity or the Performance Guarantor, or any other circumstance, event or happening whatsoever whether foreseen or

 

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unforeseen and whether similar to or dissimilar to anything referred to above, (ix) any manner of application of Collateral or any other assets of any Covered Entity, or proceeds thereof, to satisfy all or any of the Guaranteed Obligations or as otherwise permitted under the Transaction Documents, or any manner of sale or other disposition of any collateral for all or any of the Guaranteed Obligations or as otherwise permitted under the Transaction Documents, (x) any change, restructuring or termination of the corporate structure or existence of any Covered Entity or the Performance Guarantor or any other Person or the equity ownership, existence, control, merger, consolidation or sale, lease or transfer of any of the assets of any such Person, or any bankruptcy, insolvency, winding up, dissolution, liquidation, receivership, assignment for the benefit of creditors, arrangement, composition, readjustment or reorganization of, or similar proceedings affecting, any Covered Entity or any of their assets or obligations, and (xi) any failure to assert or enforce or agreement not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy with respect to the Guaranteed Obligations or any agreement relating thereto. The Performance Guarantor’s obligations under this Performance Guaranty shall not be limited if any Secured Party is precluded for any reason (including, without limitation, the application of the automatic stay under Section 362 of the Bankruptcy Code) from enforcing or exercising any right or remedy with respect to the Guaranteed Obligations, and the Performance Guarantor shall perform or observe, within ten (10) days after written demand, the Guaranteed Obligations that would otherwise have been due and performable or observable by any Covered Entity had such right and remedies been permitted to be exercised.

(b)    Should any money due or owing under this Performance Guaranty not be recoverable from the Performance Guarantor due to any of the matters specified in this Section 2, then, in any such case, such money shall nevertheless be recoverable from the Performance Guarantor as though the Performance Guarantor were principal debtor in respect thereof and not merely a Performance Guarantor and shall be paid by the Performance Guarantor forthwith.

SECTION 3.     REINSTATEMENT, ETC.

The Performance Guarantor agrees that this Performance Guaranty shall continue to be effective or shall be automatically reinstated, as the case may be, if and to the extent that for any reason any payment( in whole or in part) by or on behalf of any Person in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization (including, without limitation, upon the insolvency, bankruptcy or reorganization of any Covered Entity) or otherwise, as though such payment had not been made, and the Performance Guarantor agrees that it will indemnify Administrative Agent and each Purchaser within ten (10) days after written demand for all reasonable and documented out-of-pocket costs and expenses (including reasonable and documented out-of-pocket fees of counsel) incurred by such Person in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.

 

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SECTION 4.     WAIVER.

The Performance Guarantor expressly waives to the fullest extent permitted by Applicable Law diligence, and any and all notices or demands to which it may be entitled in connection with the pursuit of any remedy hereunder, under any other Transaction Document or under Applicable Law other than Guaranteed Obligation Notices to be delivered pursuant to Section 2 hereof and any requirement that the Administrative Agent or any Purchaser (or the Seller) exhaust any right or take any action against any Covered Entity, the Seller, any other Person or any property. The Performance Guarantor represents and warrants to the Seller, the Administrative Agent, the Purchasers and the Group Agents that it has adequate means to obtain from the Covered Entities, on a continuing basis, all information concerning the financial condition of the Covered Entities and the Seller, and that it is not relying on any Secured Party to provide such information either now or in the future.

SECTION 5.     SUBROGATION.

To the extent permitted by Applicable Law, the Performance Guarantor hereby waives all rights of subrogation (whether contractual or otherwise) to the claims, if any, of the Administrative Agent, the Purchasers and the other Secured Parties (or the Seller) against the Covered Entities and all contractual, statutory or common law rights of reimbursement, contribution or indemnity from the Covered Entities which may otherwise have arisen as a result of a payment by the Performance Guarantor in connection with this Performance Guaranty until the Final Payout Date.

SECTION 6.     REPRESENTATIONS AND WARRANTIES OF THE PERFORMANCE GUARANTOR.

The Performance Guarantor hereby represents and warrants to the Administrative Agent and each of the Purchasers and Group Agents as of the Closing Date, and on each Settlement Date, on each date on which any Information Package or other report is delivered to the Administrative Agent or Purchaser hereunder, on the date of each Release and on each day on which an Investment shall have occurred under the Receivables Purchase Agreement, in each case occurring on or after the Closing Date as follows:

(a) Organization and Good Standing. The Performance Guarantor (i) is a duly organized and validly existing corporation in good standing under the laws of the State of Delaware and (ii) has full power and authority to own its properties and to conduct its business except, in the case of clause (ii), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

(b) Power and Authority; Due Authorization. The Performance Guarantor has all necessary power and authority to (i) execute and deliver this Performance Guaranty and (ii) perform its obligations under this Performance Guaranty and the execution, delivery and performance of, and the consummation of the transactions provided for in, this Performance Guaranty have been duly authorized by the Performance Guarantor by all necessary corporate action.

 

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(c)    Binding Obligations. This Performance Guaranty constitutes legal, valid and binding obligations of the Performance Guarantor, enforceable against the Performance Guarantor in accordance with its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) as such enforceability may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(d)    No Conflict or Violation. The execution and delivery of this Performance Guaranty, the performance of the transactions contemplated by this Performance Guaranty and the fulfillment of the terms of this Performance Guaranty by the Performance Guarantor will not (i) conflict with, result in any breach of any of the terms or provisions of, or constitute (with or without notice or lapse of time or both) a default under, the organizational documents of the Performance Guarantor or any indenture, sale agreement, credit agreement, loan agreement, security agreement, mortgage, deed of trust or other agreement or instrument to which the Performance Guarantor is a party or by which it or any of its property is bound except where such conflict, breach or default could not reasonably be expected to have a Material Adverse Effect, or (ii) conflict with or violate any Applicable Law, except to the extent that any such conflict, breach, default, Adverse Claim or violation could not reasonably be expected to have a Material Adverse Effect.

(e)    No Consents. The Performance Guarantor is not required to obtain the consent of any other party or any consent, license, approval, registration, authorization or declaration of or with any Governmental Authority in connection with the execution, delivery, or performance of this Performance Guaranty that has not already been obtained or the failure of which to obtain could not reasonably be expected to have a material adverse effect on the performance by the Performance Guarantor of its material obligations hereunder, or the validity or enforceability of this Performance Guaranty (a “Material Adverse Effect”).

SECTION 7.     CERTAIN COVENANTS.

The Performance Guarantor covenants and agrees that, on and from the Closing Date until the Final Payout Date, the Performance Guarantor will observe and perform all of the following covenants.

(a)    Existence and Good Standing. The Performance Guarantor will preserve and do all things as are necessary to maintain its corporate existence, rights, franchises, qualifications, privileges and good standing, and will ensure that it has the right and is duly qualified to conduct its business as it is presently conducted in all applicable jurisdictions, in each case except to the extent that the failure to comply with any of the foregoing would not have a Material Adverse Effect.

(b)    Compliance with Laws. The Performance Guarantor will comply with all Applicable Laws to which it may be subject, including, without limitation, Anti-

 

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Corruption Laws, Sanctions and ERISA, except where the failure to comply could not reasonably be expected to have a material adverse effect on the performance by the Performance Guarantor of its material obligations hereunder, or the validity or enforceability of this Performance Guaranty against the Performance Guarantor.

(c)    Actions Contrary to Separateness. The Performance Guarantor will not take any action inconsistent with the terms of Section 8.03 of the Receivables Purchase Agreement.

(d)    Further Assurances. The Performance Guarantor hereby agrees from time to time, at its own expense, promptly to execute (if necessary) and deliver all further instruments and documents, and to take all further actions, that may be necessary or desirable, or that the Administrative Agent may reasonably request, to enable the Administrative Agent (on behalf of the Secured Parties) to exercise and enforce its respective rights and remedies under this Performance Guaranty.

SECTION 8.     AMENDMENTS, ETC.

(a)    No amendment or waiver of any provision of this Performance Guaranty shall be effective unless the same shall be in writing and signed by the Administrative Agent, each Purchaser and the Performance Guarantor, and no consent to any departure by the Performance Guarantor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

(b)    During the period from and including the date hereof to and including the Closing Date, the Administrative Agent shall not agree to any amendment or waiver of any provision of the Purchase and Sale Agreement, the Receivables Purchase Agreement or any other Transaction Document to which any Covered Entity is a party to, and shall not agree to any consent to any departure by any Covered Entity therefrom, in each case without the prior written consent of the Performance Guarantor.

 

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SECTION 9.     ADDRESSES FOR NOTICES.

All notices and other communications provided for hereunder shall be in writing (which shall not include facsimile communication, but shall include email communication) and mailed, sent or delivered to it (a) if to the Administrative Agent, to its address specified for notices in the Receivables Purchase Agreement, (b) if to any Purchaser or Group Agent, to such Purchaser or Group Agent’s address specified for notices in the Receivables Purchase Agreement, and (c) if to the Performance Guarantor, to its address set forth below, or in either case, to such other address as the relevant party specified to the other from time to time in writing:

Discovery, Inc.

230 Park Avenue South

New York, NY 10003

Attn: Fraser Woodford, Executive Vice President

Electronic Mail: [redacted]

With a copy to:

Discovery, Inc.

230 Park Avenue South

New York, NY 10003

Attention: Tara L. Smith, Senior Vice President

Electronic Mail: [redacted]

Notices and communications by facsimile shall be effective when sent (and shall be followed by hard copy sent by regular mail), notices and communications sent by email shall be effective when confirmed by electronic receipt or otherwise acknowledged, and notices and communications sent by other means shall be effective when received.

SECTION 10.     NO WAIVER; REMEDIES.

No failure on the part of the Seller, the Administrative Agent, any Purchaser or any Group Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by Applicable Law.

SECTION 11.     CONTINUING AGREEMENT; THIRD PARTY BENEFICIARIES; ASSIGNMENT.

This Performance Guaranty is a continuing agreement and shall (i) remain in full force and effect until the later of (x) the payment and performance in full of the Guaranteed Obligations and all other amounts payable under this Performance Guaranty and (y) the Final Payout Date, (ii) be binding upon the Performance Guarantor, its successors and assigns and (iii) inure to the benefit of, and be enforceable by, the Seller, the Administrative Agent, the Purchasers and the Group Agents and their respective successors and assigns. Without limiting the generality of the foregoing clause (iii), upon any assignment by a Purchaser or Group Agent permitted pursuant to the Receivables Purchase Agreement, the applicable assignee shall

 

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thereupon become vested with all the benefits in respect thereof granted to the Purchasers and Group Agents herein or otherwise. Each of the parties hereto hereby agrees that, on and from the Closing Date, each of the Purchasers and the Group Agents shall be a third-party beneficiary of this Performance Guaranty. The Performance Guarantor shall not assign, delegate or otherwise transfer any of its obligations or duties under this Performance Guaranty without the prior written consent of the Administrative Agent in its sole discretion. Any payments hereunder shall be made in U.S. dollars without any set-off or counterclaim and the Performance Guarantor’s obligations hereunder shall not be satisfied by any tender or recovery of another currency except to the extent such tender or recovery results in receipt of the full amount of U.S. dollars required hereunder.

SECTION 12.     MUTUAL NEGOTIATIONS.

This Performance Guaranty is the product of mutual negotiations by the parties thereto and their counsel, and no party shall be deemed the draftsperson of this Performance Guaranty or any provision hereof or to have provided the same. Accordingly, in the event of any inconsistency or ambiguity of any provision of this Performance Guaranty, such inconsistency or ambiguity shall not be interpreted against any party because of such party’s involvement in the drafting thereof.

SECTION 13.     COSTS AND EXPENSES.

The prevailing party shall be entitled to recover from the non-prevailing party the reasonable and documented out-of-pocket attorneys’ fees and reasonable and documented out-of-pocket litigation-related expenses incurred by the prevailing party in any litigation arising out of this Performance Guaranty. If the Performance Guarantor fails to honor this Performance Guaranty, then, in addition to making the payments of the Guaranteed Obligations required by this Performance Guaranty, the Performance Guarantor must also pay the Administrative Agent and the other Purchaser Parties and their respective Affiliates’ reasonable and documented out-of-pocket costs and expenses (including reasonable and documented out-of-pocket Attorney Costs) in collecting the money from the Performance Guarantor if the Administrative Agent and the other Purchaser Parties and their respective Affiliates are the prevailing parties in the litigation related to the Performance Guarantor’s failure to honor this Performance Guaranty.

SECTION 14.     GOVERNING LAW.

THIS PERFORMANCE GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO ANY OTHER CONFLICT OF LAWS PROVISIONS THEREOF).

SECTION 15.     CONSENT TO JURISDICTION.

(I)    EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK CITY, NEW YORK

 

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IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS PERFORMANCE GUARANTY, AND EACH PARTY HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED, IN EACH CASE, IN SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. NOTHING IN THIS SECTION 15 SHALL AFFECT THE RIGHT OF THE SELLER, THE ADMINISTRATIVE AGENT, ANY PURCHASER OR ANY GROUP AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST THE PERFORMANCE GUARANTOR OR ANY OF ITS RESPECTIVE PROPERTY IN THE COURTS OF OTHER JURISDICTIONS. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

(II)    EACH PARTY HERETO CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO IT AT ITS ADDRESS SPECIFIED IN SECTION 9. NOTHING IN THIS SECTION 15 SHALL AFFECT THE RIGHT OF THE SELLER, THE ADMINISTRATIVE AGENT, ANY PURCHASER OR ANY GROUP AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

SECTION 16.    WAIVER OF JURY TRIAL.

EACH PARTY HERETO HEREBY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS PERFORMANCE GUARANTY OR ANY OTHER TRANSACTION DOCUMENT.

 

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SECTION 17.     PAYMENTS.

All payments to be made by the Performance Guarantor hereunder shall be made at the principal office of the Administrative Agent set forth in the Receivables Purchase Agreement (or at such other place for the account of the Administrative Agent as it may from time to time specify to the Performance Guarantor) in immediately available funds at the place of payment, and, except as required by Applicable Law, all such payments shall be paid without deduction for, and free from, any and all present or future taxes, levies, imports, duties, fees, charges, deductions, withholding or liabilities with respect thereto or any restrictions or conditions of any nature. If the Performance Guarantor is required by Applicable Law to make any deduction or withholding on account of any tax (other than taxes imposed or based on the gross or net income or receipts of the recipient) from any sum payable by the Performance Guarantor hereunder, the Performance Guarantor shall make such deduction or withholding and if such tax is an Indemnified Tax, as such term is defined in the Receivables Purchase Agreement, and the Seller would otherwise be required to “gross-up” the recipient for such Indemnified Tax pursuant to Section 5.03(a) of the Receivables Purchase Agreement, the Performance Guarantor shall pay such additional amount as is necessary to ensure that, after making such deduction or withholding in respect of such Indemnified Tax, the Secured Parties and the Administrative Agent shall receive and retain (free of any liability in respect of any deduction or withholding a net sum equal to what it would have received and so retained hereunder had no such deduction, withholding or payment been required to have been made.

SECTION 18.     RESERVED.

SECTION 19.     SEVERABILITY.

If any term or provision of this Performance Guaranty shall be determined to be illegal or unenforceable to any extent with respect to any person or circumstance, the enforceability of such term or provision shall not be affected with respect to any other person or circumstance, and such term or provision shall be enforceable to the fullest extent permitted by Applicable Law.

SECTION 20.     COUNTERPARTS.

This Performance Guaranty may be executed in any number of counterparts and by the different parties hereto on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute one and the same Performance Guaranty.

SECTION 21.     EFFECTIVE TIME.

Notwithstanding anything to the contrary in this Performance Guaranty, the obligations of the Performance Guarantor under this Performance Guaranty shall become effective automatically upon the occurrence of the Closing Date without necessity of further action by any Person. Prior to the occurrence of the Closing Date, the Performance Guarantor shall have no obligations hereunder. For the purposes of this Performance Guaranty, “Closing Date” shall have the meaning given to such term in the Separation and Distribution Agreement.

 

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[Signature Pages Follow]

 

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In Witness Whereof, the Performance Guarantor has caused this Performance Guaranty to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

 

DISCOVERY, INC.,
  as Performance Guarantor
By:  

/s/ Fraser Woodford

  Name:   Fraser Woodford
  Title:   Executive Vice President, Treasury
and Corporate Finance

 

[Signature Page to Performance Guaranty]


Accepted as of the date hereof:

 

PNC BANK, NATIONAL ASSOCIATION,
  as Administrative Agent
By:  

/s/ Imad Naja

  Name: Imad Naja
  Title:    Senior Vice President

 

[Signature Page to Performance Guaranty]

Exhibit 10.7

Warner Bros. Discovery, Inc. Stock Incentive Plan

Article I

Purpose of Plan

1.1 Purpose. The purpose of the Plan is to promote the success of the Company by providing a method whereby (i) eligible employees of the Company and its Subsidiaries and (ii) independent contractors providing services to the Company and its Subsidiaries may be awarded additional remuneration for services rendered and encouraged to invest in capital stock of the Company, thereby increasing their proprietary interest in the Company’s businesses, encouraging them to remain in the employ or service of the Company or its Subsidiaries, and increasing their personal interest in the continued success and progress of the Company and its Subsidiaries. The Plan is also intended to aid in (i) attracting Persons of exceptional ability to become officers and employees of the Company and its Subsidiaries and (ii) inducing independent contractors to agree to provide services to the Company and its Subsidiaries.

1.2 Adoption of Plan. The Plan was approved by the board of directors of Discovery, Inc., a Delaware corporation, f/k/a Discovery Communications, Inc. (“Discovery”) on March 1, 2022 and by the stockholders of Discovery on April 8, 2022.

Article II

Definitions

2.1 Certain Defined Terms. Capitalized terms not defined elsewhere in the Plan shall have the following meanings (whether used in the singular or plural):

Affiliate” of the Company means any corporation, partnership or other business association that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the Company.

Agreement” means a stock option agreement, stock appreciation rights agreement, restricted shares agreement, stock units agreement, cash award agreement or an agreement evidencing another type of equity-based Award, or more than one type of Award, as any such Agreement may be supplemented or amended from time to time.

Approved Transaction” means any transaction in which the Board (or, if approval of the Board is not required as a matter of law, the stockholders of the Company) shall approve (i) any consolidation or merger of the Company, or binding share exchange, pursuant to which shares of Common Stock of the Company would be changed or converted into or exchanged for cash, securities, or other property, other than any such transaction in which the common stockholders of the Company immediately prior to such transaction have the same proportionate ownership of the Common Stock of, and voting power with respect to, the surviving corporation immediately after such transaction, (ii) any merger, consolidation or binding share exchange to which the Company is a party as a result of which the Persons who are common stockholders of the Company immediately prior thereto have less than a majority of the combined voting power of the outstanding capital stock of the Company ordinarily (and apart from the rights accruing under special circumstances) having the right to vote in the election of directors immediately following such merger, consolidation or binding share exchange, (iii) the adoption of any plan or proposal for the liquidation or dissolution of the Company, or (iv) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, provided that, with respect to clauses (i) through (iv), the Approved Transaction will not occur until the closing of the event described in such clause.

Award” means a grant of Options, SARs, Restricted Shares, Restricted Stock Units, Performance Awards, Cash Awards, or Other Stock-Based Awards.

Board” means the Board of Directors of the Company.


Board Change” means, during any period of two consecutive years, individuals who at the beginning of such period constituted the entire Board cease for any reason to constitute a majority thereof unless the election, or the nomination for election, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period.

Cash Award” means an Award made pursuant to Section 10.1 of the Plan to a Holder.

Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Code section shall include any successor section.

Committee” means the Compensation Committee (or another committee) of the Board (or a subcommittee of such committee) appointed pursuant to Section 3.1 to administer the Plan.

Common Stock” means the Series A common stock of the Company.

Company” means Warner Bros. Discovery, Inc., a Delaware corporation.

Control Purchase” means any transaction (or series of related transactions) in which (i) any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other than the Company, any Subsidiary of the Company or any employee benefit plan sponsored by the Company or any Subsidiary of the Company) shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the then outstanding securities of the Company ordinarily (and apart from the rights accruing under special circumstances) having the right to vote in the election of directors (calculated as provided in Rule 13d-3(d) under the Exchange Act in the case of rights to acquire the Company’s securities), other than in a transaction (or series of related transactions) approved by the Board.

Disability” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

Dividend Equivalents” means, with respect to Restricted Stock Units or Other Stock-Based Awards, to the extent specified by the Committee only, an amount equal to all dividends and other distributions (or the economic equivalent thereof) which are payable to stockholders of record during the Restriction Period on a like number and kind of shares of Common Stock.

Domestic Relations Order” means a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder.

Effective Date” means the Closing Date (as the term “Closing Date” is defined in that certain Agreement and Plan of Merger, dated as of May 17, 2021, by and among AT&T Inc., a Delaware corporation, Magallanes, Inc. a Delaware corporation, Discovery, Inc., a Delaware corporation, and Drake Subsidiary, Inc., a Delaware corporation).

Exchangemeans the Nasdaq Stock Market or any other exchange or marketplace on which Company stock is listed or traded.

Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Exchange Act section shall include any successor section.

Fair Market Value” of a share of any series of Common Stock on any day means the last sale price (or, if no last sale price is reported, the average of the high bid and low asked prices) for a share of such series of Common Stock on such day (or, if such day is not a trading day, on the next preceding trading day) as reported on the consolidated transaction reporting system for the principal national securities exchange on which shares of such series of Common Stock are listed on such day, or the Committee can, in its sole discretion, use averages or weighted averages either on a daily basis or such longer period as complies with Code Section 409A. If for any day the Fair Market Value of a share of the applicable series of Common Stock is not determinable by any of the foregoing means, then the Fair Market Value for such day shall be determined in good faith by the Committee on the basis of such quotations and other considerations as the Committee deems appropriate.

Holder” means a person who has received an Award under the Plan that has not been fully satisfied or terminated.

Nonqualified Stock Option” means a stock option granted under Article VI.


Option” means a Nonqualified Stock Option.

Performance Award” means an Award made pursuant to Article X of the Plan that is subject to the attainment of one or more Performance Objectives.

Performance Objective” means a standard established by the Committee to determine in whole or in part whether a Performance Award shall be earned.

Person” means an individual, corporation, limited liability company, partnership, trust, incorporated or unincorporated association, joint venture or other entity of any kind.

Plan” means this Warner Bros. Discovery, Inc. Stock Incentive Plan, as may be amended, restated or supplemented from time to time.

Prior Plan” means the Discovery Communications, Inc. 2013 Incentive Plan, as amended and restated from time to time.

Restricted Shares” means shares of any series of Common Stock awarded pursuant to Article VIII.

Restricted Stock Units” has the meaning ascribed thereto in Section 9.1.

Restriction Period” means a period of time beginning on the date of each Award of Restricted Shares or Restricted Stock Units and ending on the Vesting Date with respect to such Award.

SARs” means stock appreciation rights, awarded pursuant to Article VII, with respect to shares of any specified series of Common Stock.

Securities Act” means the Securities Act of 1933, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Securities Act section shall include any successor section.

Subsidiary” of a Person means any present or future subsidiary (as defined in Section 424(f) of the Code) of such Person or any business entity in which such Person owns, directly or indirectly, 50% or more of the voting, capital or profits interests. An entity shall be deemed a subsidiary of a Person for purposes of this definition only for such periods as the requisite ownership or control relationship is maintained.

Unvested Dividends” has the meaning ascribed thereto in Section 8.1.

Vesting Date,” with respect to any Restricted Shares or Restricted Stock Units awarded hereunder, means the date on which such Restricted Shares or Restricted Stock Units cease to be subject to a risk of forfeiture, as designated in or determined in accordance with the Agreement with respect to such Award of Restricted Shares pursuant to Article VIII or of Restricted Stock Units pursuant to Article IX. If more than one Vesting Date is designated for an Award, reference in the Plan to a Vesting Date in respect of such Award shall be deemed to refer to each part of such Award and the Vesting Date for such part.

Article III

Administration

3.1 Committee. The Plan shall be administered by the Committee. The Committee shall be comprised of not less than two Persons.

3.2 Powers. The Committee shall have full power and authority to grant Awards to eligible persons, to determine the terms and conditions (which need not be identical) of all Awards so granted, to interpret the provisions of the Plan and any Agreements relating to Awards granted under the Plan and to supervise the administration of the Plan. The Committee shall have sole authority in the selection of persons to whom Awards may be granted under the Plan and in the determination of the timing, pricing and amount of any such Award, subject only to the express provisions of the Plan. In making determinations hereunder, the Committee may take into account the nature of the services rendered by the respective employees and independent contractors, their present and potential contributions to the success of the Company and its Subsidiaries, and such other factors as the Committee in its discretion deems relevant.


3.3 Interpretation. The Committee is authorized, subject to the provisions of the Plan, to establish, amend and rescind such rules and regulations as it deems necessary or advisable for the proper administration of the Plan and to take such other action in connection with or in relation to the Plan as it deems necessary or advisable. Each action and determination made or taken pursuant to the Plan by the Committee, including any interpretation or construction of the Plan, shall be final and conclusive for all purposes and upon all persons.

Article IV

Shares Subject to the Plan

4.1 Number of Shares; Award Limits. Subject to the provisions of this Article IV, the maximum number of shares of Common Stock with respect to which Awards may be granted during the term of the Plan shall be the sum of (i) 135 million shares of Common Stock; plus (ii) (B) such additional number of shares of Common Stock as is equal to the sum of (i) the number of shares reserved for issuance under the Prior Plan that remain available for grant under the Prior Plan as of immediately prior to the Effective Date and (ii) the number of shares of Common Stock subject to awards granted under the Prior Plan, that (A) expire, terminate or are annulled for any reason without having been exercised, (B) that is a stock appreciation right under the Prior Plan that is exercised for cash and (C) any award of restricted shares or restricted stock units under the Prior Plan that are forfeited prior to becoming vested (provided that the holder received no benefits of ownership of such restricted shares or restricted stock units other than voting rights and the accumulation of unvested dividends and unpaid dividend equivalents that are likewise forfeited).

Shares of Common Stock will be made available from the authorized but unissued shares of the Company or from shares reacquired by the Company, including shares purchased in the open market. The shares of Common Stock subject to (i) any Award granted under the Plan that shall expire, terminate or be annulled for any reason without having been exercised, (ii) any Award of any SARs or Restricted Stock Units granted under the Plan that shall be exercised or settled, as the case may be, for cash, and (iii) any Award of Restricted Shares or Restricted Stock Units that shall be forfeited prior to becoming vested (provided that the Holder received no benefits of ownership of such Restricted Shares or Restricted Stock Units other than voting rights and the accumulation of Unvested Dividends and unpaid Dividend Equivalents that are likewise forfeited) shall again be available for purposes of the Plan. Notwithstanding the foregoing, (i) in the case of the exercise of a SAR for shares, the number of shares counted against the shares available under the Plan shall be the full number of shares subject to the SAR multiplied by the percentage of the SAR actually exercised, regardless of the number of shares actually used to settle such SAR upon exercise; (ii) shares of Common Stock delivered (either by actual delivery, attestation, or net exercise) to the Company by a Holder to (I) purchase shares of Common Stock upon the exercise of an Award or (II) satisfy tax withholding obligations (including shares retained from the Award creating the tax obligation) shall not be added back to the number of shares available for the future grant of Awards; and (iii) shares of Common Stock repurchased by the Company on the open market using the proceeds from the exercise of an Award shall not increase the number of shares available for future grant of Awards. Except for Awards described in Section 4.3 or 11.1, no person may be granted in any calendar year Awards covering more than 25 million shares of Common Stock (as such amount may be adjusted from time to time as provided in Section 4.2). No person shall be awarded Cash Awards during any calendar year that are designed to pay out in excess of $25,000,000 per calendar year covered by the Cash Award.

4.2 Adjustments. If the Company subdivides its outstanding shares of any series of Common Stock into a greater number of shares of such series of Common Stock (by stock dividend, stock split, reclassification, or otherwise) or combines its outstanding shares of any series of Common Stock into a smaller number of shares of such series of Common Stock (by reverse stock split, reclassification, or otherwise) or if the Committee determines that any stock dividend, extraordinary cash dividend, reclassification, recapitalization, reorganization, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase such series of Common Stock or other similar corporate event (including mergers or consolidations) affects any series of Common Stock so that an adjustment is required to preserve the benefits or potential benefits intended to be made available under the Plan, then the Committee, in such manner as the Committee, in its sole discretion, deems equitable and appropriate, shall make such adjustments to any or all of (i) the number and kind of shares of stock which thereafter may be awarded, optioned or otherwise made subject to the benefits contemplated by the Plan, (ii) the number and kind of shares of stock subject to outstanding Awards, and (iii) the purchase, exercise or base price and the relevant appreciation base with respect to any of the foregoing, provided, however, that the number of shares subject to any Award shall always be a whole number. Notwithstanding the foregoing, if all shares of any series of Common Stock are


redeemed, then each outstanding Award shall be adjusted to substitute for the shares of such series of Common Stock subject thereto the kind and amount of cash, securities or other assets issued or paid in the redemption of the equivalent number of shares of such series of Common Stock and otherwise the terms of such Award, including, in the case of Options or similar rights, the aggregate exercise price, and, in the case of SARs, the aggregate base price, shall remain constant before and after the substitution (unless otherwise determined by the Committee and provided in the applicable Agreement). The Committee may, if deemed appropriate, provide for a cash payment to any Holder of an Award in connection with any adjustment made pursuant to this Section 4.2.

4.3 Substitute Awards. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan. Substitute Awards shall not count against the overall share limit set forth in Section 4.1.

Article V

Eligibility

5.1 General. The persons who shall be eligible to participate in the Plan and to receive Awards under the Plan shall, subject to Section 5.2, be such persons who are employees (including officers) of, or independent contractors providing services to, the Company or its Subsidiaries as the Committee shall select. Awards may be made to employees or independent contractors who hold or have held Awards under the Plan or any similar or other awards under any other plan of the Company or any of its Affiliates.

5.2 Ineligibility. No member of the Committee, while serving as such, shall be eligible to receive an Award.

Article VI

Stock Options

6.1 Grant of Options. Subject to the limitations of the Plan, the Committee shall designate from time to time those eligible persons to be granted Options, the time when each Option shall be granted to such eligible persons, the series and number of shares of Common Stock subject to such Option, and, subject to Section 6.2, the exercise price of the shares of Common Stock subject to such Option.

6.2 Exercise Price. The price at which shares may be purchased upon exercise of an Option shall be fixed by the Committee and may be no less than the Fair Market Value of the shares of the applicable series of Common Stock subject to the Option as of the date the Option is granted.

6.3 Term of Options. Subject to the provisions of the Plan with respect to death, retirement and termination of employment or service, the term of each Option shall be for such period as the Committee shall determine as set forth in the applicable Agreement.

6.4 Exercise of Options. An Option granted under the Plan shall become (and remain) exercisable during the term of the Option to the extent provided in the applicable Agreement and the Plan and, unless the Agreement otherwise provides, may be exercised to the extent exercisable, in whole or in part, at any time and from time to time during such term; provided, however, that subsequent to the grant of an Option, the Committee, at any time before complete termination of such Option, may accelerate the time or times at which such Option may be exercised in whole or in part.

6.5 Manner of Exercise.

 

  (a)

Form of Payment. An Option shall be exercised by notice to the Company upon such terms and conditions as the Agreement may provide and in accordance with such other procedures for the exercise of Options as the Committee may establish from time to time. The method or methods of payment of the exercise price for the shares to be purchased upon exercise of an Option and of any amounts required by Section 11.9 shall be determined by the Committee and may consist of (i) cash, (ii) check, (iii) whole shares of any series of


  Common Stock (whether by delivery or attestation), (iv) the withholding of shares of the applicable series of Common Stock issuable upon such exercise of the Option, (v) the delivery, together with a properly executed exercise notice, of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds required to pay the exercise price, or (vi) any combination of the foregoing methods of payment, or such other consideration and method of payment as may be permitted for the issuance of shares under the Delaware General Corporation Law. The permitted method or methods of payment of the amounts payable upon exercise of an Option, if other than in cash, shall be set forth in the applicable Agreement and may be subject to such conditions as the Committee deems appropriate.

 

  (b)

Value of Shares. Unless otherwise determined by the Committee and provided in the applicable Agreement, shares of any series of Common Stock delivered in payment of all or any part of the amounts payable in connection with the exercise of an Option, and shares of any series of Common Stock withheld for such payment, shall be valued for such purpose at their Fair Market Value as of the exercise date.

 

  (c)

Issuance of Shares. The Company shall effect the transfer of the shares of Common Stock purchased under the Option as soon as practicable after the exercise thereof and payment in full of the exercise price therefor and of any amounts required by Section 11.9, and within a reasonable time thereafter, such transfer shall be evidenced on the books of the Company. Unless otherwise determined by the Committee and provided in the applicable Agreement, (i) no Holder or other person exercising an Option shall have any of the rights of a stockholder of the Company with respect to shares of Common Stock subject to an Option granted under the Plan until due exercise and full payment has been made, and (ii) no adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such due exercise and full payment. In no event shall any dividends or dividend equivalents be paid on or accrued on Options.

6.6 Limitation on Repricing. Unless such action is approved by the Company’s stockholders, the Company may not (except as provided for under Section 4.2): (1) amend any outstanding Option granted under the Plan to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Option, (2) cancel any outstanding option (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan (other than Awards granted pursuant to Section 4.3) covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled option, (3) cancel in exchange for a cash payment any outstanding Option with an exercise price per share above the then-current Fair Market Value, other than pursuant to Section 11.1(b), or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of the Exchange.

Article VII

SARs

7.1 Grant of SARs. Subject to the limitations of the Plan, SARs may be granted by the Committee to such eligible persons in such numbers, with respect to any specified series of Common Stock, and at such times during the term of the Plan as the Committee shall determine. Subject to the limitations of the Plan, SARs shall be exercisable in whole or in part upon notice to the Company upon such terms and conditions as are provided in the Agreement.

7.2 Exercise of SARs. SARs shall be exercisable at the time, to the extent and upon the terms and conditions set forth in the applicable Agreement; provided, however, that subsequent to the grant of an Award of SARs, the Committee, at any time before complete termination of any such SAR, may accelerate the time or times at which such SARs may be exercised in whole or in part. The base price of a SAR may be no less than the Fair Market Value of the applicable series of Common Stock with respect to which the SAR was granted as of the date the SAR is granted. Subject to the limitations of the Plan, upon the exercise of a SAR and unless otherwise determined by the Committee and provided in the applicable Agreement, the Holder thereof shall be entitled to receive from the Company, for each share of the applicable series of Common Stock with respect to which the SAR is being exercised, consideration (in the form determined as provided in Section 7.3) equal in value to the excess of the Fair Market Value of a share of the applicable series of Common Stock with respect to which the SAR was granted on the date of exercise over the base price per share of such SAR.

7.3 Consideration. The consideration to be received upon the exercise of a SAR by the Holder shall be paid in the applicable series of Common Stock with respect to which the SAR was granted (valued at Fair Market Value on the date of exercise of such SAR) or cash equivalent thereto, as determined by the Committee and provided in the applicable Agreement. No fractional shares of Common Stock shall be issuable upon exercise of a SAR, and unless otherwise provided in the applicable Agreement, the Holder will receive cash in lieu of fractional shares. In no event shall any dividends or dividend equivalents be paid on or accrued with respect to a SAR. Unless the Committee shall otherwise determine, to the extent a SAR is exercisable, it will be exercised automatically on its expiration date.

 


7.4 Limitations. The applicable Agreement may provide for a limit on the amount payable to a Holder upon exercise of SARs at any time or in the aggregate, for a limit on the time periods during which a Holder may exercise SARs, and for such other limits on the rights of the Holder and such other terms and conditions of the SAR, including a condition that the SAR may be exercised only in accordance with rules and regulations adopted from time to time, as the Committee may determine. Such rules and regulations may govern the right to exercise SARs granted prior to the adoption or amendment of such rules and regulations as well as SARs granted thereafter.

7.5 Exercise. For purposes of this Article VII, the date of exercise of a SAR shall mean the date on which the Company shall have received notice from the Holder of the SAR of the exercise of such SAR (unless otherwise determined by the Committee and provided in the applicable Agreement).

7.6 Limitation on Repricing. Unless such action is approved by the Company’s stockholders, the Company may not (except as provided for under Section 4.2): (1) amend any outstanding SAR granted under the Plan to provide a base price per share that is lower than the then-current base price per share of such outstanding SAR, (2) cancel any outstanding stock appreciation right (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan (other than Awards granted pursuant to Section 4.3) covering the same or a different number of shares of Common Stock and having a base price per share lower than the then-current base price per share of the cancelled stock appreciation right, (3) cancel in exchange for a cash payment any outstanding SAR with a base price per share above the then-current Fair Market Value, other than pursuant to Section 11.1(b), or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of the Exchange.

Article VIII

Restricted Shares

8.1 Grant. Subject to the limitations of the Plan, the Committee shall designate those persons eligible to be granted Awards of Restricted Shares, shall determine the time when each such Award shall be granted, and shall designate (or set forth the basis for determining) the Vesting Date or Vesting Dates for each Award of Restricted Shares, and may prescribe other restrictions, terms and conditions applicable to the vesting of such Restricted Shares in addition to those provided in the Plan. The Committee shall determine the price, if any, to be paid by the Holder for the Restricted Shares; provided, however, that the issuance of Restricted Shares shall be made for at least the minimum consideration necessary to permit such Restricted Shares to be deemed fully paid and nonassessable. All determinations made by the Committee pursuant to this Section 8.1 shall be specified in the Agreement.

Any dividends (whether paid in cash, stock or property) declared and paid by the Company with respect to shares of Restricted Shares (“Unvested Dividend”) shall be paid to the Holder only if and when such shares become free from the restrictions on transferability and forfeitability that apply to such shares. Each payment of previously Unvested Dividends will be made no later than the end of the calendar year in which the dividends are paid to stockholders of that specified series of Common Stock or, if later, the 15th day of the third month following the lapsing of the restrictions on transferability and the forfeitability provisions applicable to the underlying shares of Restricted Stock. No interest will be paid on the Unvested Dividends.

8.2 Issuance of Restricted Shares. When shares of the applicable series of Common Stock are issued at the beginning of the Restriction Period, book entry shares or any stock certificate or certificates representing such Restricted Shares shall be registered in the name of the Holder to whom such Restricted Shares shall have been awarded. During the Restriction Period, any certificates representing the Restricted Shares and any securities constituting Unvested Dividends shall bear a restrictive legend to the effect that ownership of the Restricted Shares (and such Unvested Dividend), and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms and conditions provided in the Plan and the applicable Agreement. Any such certificates shall remain in the custody of the Company or its designee, and the Holder shall deposit with the custodian stock powers or other instruments of assignment, each endorsed in blank, so as to permit retransfer to the Company of all or any portion of the Restricted Shares and any securities constituting Unvested Dividends that shall be forfeited or otherwise not become vested in accordance with the Plan and the applicable Agreement.


8.3 Restrictions. Restricted Shares issued at the beginning of the Restriction Period shall constitute issued and outstanding shares of the applicable series of Common Stock for all corporate purposes. The Holder will have the right to vote such Restricted Shares and to exercise all other rights, powers and privileges of a Holder of shares of the applicable series of Common Stock with respect to such Restricted Shares; except that, unless otherwise determined by the Committee and provided in the applicable Agreement, (i) the Holder will not be entitled to delivery of any stock certificate or certificates representing such Restricted Shares or to have the book entry ownership designation changed until the Restriction Period shall have expired and unless all other vesting requirements with respect thereto shall have been fulfilled or waived; (ii) the Company or its designee will retain custody of any stock certificate or certificates representing the Restricted Shares during the Restriction Period as provided in Section 8.2; (iii) the Holder may not sell, assign, transfer, pledge, exchange, encumber or dispose of the Restricted Shares or his or her interest in any of them during the Restriction Period; and (iv) a breach of any restrictions, terms or conditions provided in the Plan or established by the Committee with respect to any Restricted Shares will cause a forfeiture of such Restricted Shares with respect thereto.

8.4 Cash Payments. In connection with any Award of Restricted Shares, an Agreement may provide for the payment of a cash amount to the Holder of such Restricted Shares after such Restricted Shares shall have become vested. Such cash amounts shall be payable in accordance with such additional restrictions, terms and conditions as shall be prescribed by the Committee in the Agreement and shall be in addition to any other salary, incentive, bonus or other compensation payments which such Holder shall be otherwise entitled or eligible to receive from the Company.

8.5 Completion of Restriction Period. On the Vesting Date with respect to each Award of Restricted Shares and the satisfaction of any other applicable restrictions, terms and conditions, (i) all or the applicable portion of such Restricted Shares shall become vested, (ii) any Unvested Dividends with respect to such Restricted Shares shall become vested to the extent that the Restricted Shares related thereto shall have become vested, and (iii) any cash amount to be received by the Holder with respect to such Restricted Shares shall become payable, all in accordance with the terms of the applicable Agreement. Any such Restricted Shares and Unvested Dividends that shall not become vested shall be forfeited to the Company, and the Holder shall not thereafter have any rights (including dividend and voting rights) with respect to such Restricted Shares and Unvested Dividends that shall have been so forfeited. Notwithstanding the foregoing, subsequent to the grant of an Award of Restricted Shares, the Committee, at any time before complete vesting or forfeiture of any such Restricted Shares, may accelerate the time or times at which such Restricted Shares vest in whole or in part. The Committee may, in its discretion, provide that the delivery of any Restricted Shares and Unvested Dividends that shall have become vested, and payment of any related cash amounts that shall have become payable under this Article VIII, shall be deferred until such date or dates as the recipient may elect. Any election of a recipient pursuant to the preceding sentence shall be filed in writing with the Committee in accordance with such rules and regulations, including any deadline for the making of such an election, as the Committee may provide, and shall be made in compliance with Section 409A of the Code.

Article IX

Restricted Stock Units

9.1 Grant. In addition to granting Awards of Options, SARs and Restricted Shares, the Committee shall, subject to the limitations of the Plan, have authority to grant to eligible persons Awards of Restricted Stock Units which may be in the form of shares of any specified series of Common Stock or units, the value of which is based, in whole or in part, on the Fair Market Value of the shares of any specified series of Common Stock. Subject to the provisions of the Plan, including any rules established pursuant to Section 9.2, Awards of Restricted Stock Units shall be subject to such terms, restrictions, conditions, vesting requirements and payment rules as the Committee may determine in its discretion, which need not be identical for each Award. The terms of each Award need not be identical, and neither the Board nor the Committee need treat Holders uniformly. The determinations made by the Committee pursuant to this Section 9.1 shall be specified in the applicable Agreement.

9.2 Rules. The Committee may, in its discretion, establish any or all of the following rules for application to an Award of Restricted Stock Units:

 

  (a)

Any shares of Common Stock which are part of an Award of Restricted Stock Units may not be assigned, sold, transferred, pledged or otherwise encumbered prior to the date on which the shares are issued or, if later, the date provided by the Committee at the time of the Award.


  (b)

Such Awards may provide for the payment of cash consideration by the person to whom such Award is granted or provide that the Award, and any shares of Common Stock to be issued in connection therewith, if applicable, shall be delivered without the payment of cash consideration; provided, however, that the issuance of any shares of Common Stock in connection with an Award of Restricted Stock Units shall be for at least the minimum consideration necessary to permit such shares to be deemed fully paid and nonassessable.

 

  (c)

Awards of Restricted Stock Units may provide for deferred payment schedules, vesting over a specified period of employment or service, the payment after vesting (on a current or deferred basis) of amounts of Dividend Equivalents with respect to the number of shares of Common Stock covered by the Award, and elections by the employee to defer payment of the Award or the lifting of restrictions on the Award, if any, provided that any such deferrals shall comply with the requirements of Section 409A of the Code. Restricted Stock Units shall not constitute issued and outstanding shares of the applicable series of Common Stock, and the Holder shall not have any of the rights of a stockholder with respect to the shares of Common Stock covered by such an Award of Restricted Stock Units, in each case until Awards have paid out in shares of Common Stock after the end of the Restriction Period.

 

  (d)

The Awards of Restricted Stock Units may provide Holders with the right to receive Dividend Equivalents. Dividend Equivalents may be settled in cash and/or shares of Common Stock and will be subject to the same restrictions on transfer and forfeitability as the Restricted Stock Units with respect to which paid, as provided in the Agreement with respect to the Restricted Stock Units. No interest will be paid on the Dividend Equivalents.

 

  (e)

In such circumstances as the Committee may deem advisable, the Committee may waive or otherwise remove, in whole or in part, any restrictions or limitations to which a Restricted Stock Unit Award was made subject at the time of grant.

Article X

Cash Awards, other Stock-Based Awards, and Performance Awards

10.1 Cash Awards. In addition to granting Options, SARs, Restricted Shares, Restricted Stock Units, or Other Stock-Based Awards, the Committee shall, subject to the limitations of the Plan, have authority to grant to eligible persons Cash Awards. Each Cash Award shall be subject to such terms and conditions, restrictions and contingencies as the Committee shall determine. The determinations made by the Committee pursuant to this Section 10.1 shall be specified in the applicable Agreement. Notwithstanding the foregoing, subsequent to the grant of a Cash Award, the Committee, at any time before complete termination of any such Cash Award, may accelerate the time or times at which such Cash Award vests in whole or in part.

10.2 Other Stock-Based Awards. Other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock, may be granted hereunder to Holders (“Other Stock-Based Awards”). Such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Holder is otherwise entitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as the Board or the Committee may determine. Subject to the provisions of the Plan, the Board or the Committee shall determine the terms and conditions of each Other Stock-Based Award, including any purchase price applicable thereto. Other Stock-Based Awards may provide Holders with the right to receive Dividend Equivalents. Dividend Equivalents may be settled in cash and/or shares of Common Stock and will be subject to the same restrictions on transfer and forfeitability as the Other Stock-Based Awards with respect to which paid, as provided in the Agreement with respect to the Other Stock-Based Awards. No interest will be paid on the Dividend Equivalents. Subsequent to the grant of an Other Stock-Based Award, the Committee, at any time before complete termination of any such Other Stock-Based Award, may accelerate the time or times at which such Other Stock-Based Award vests in whole or in part.

10.3 Designation as a Performance Award. The Committee shall have the right to designate any Award of Options, SARs, Restricted Shares, Restricted Stock Units, Other Stock-Based Awards or Cash Awards as a Performance Award.

10.4 Performance Objectives. The grant or vesting of a Performance Award shall be subject to the achievement of Performance Objectives over a performance period established by the Committee based upon one or more of the


following business criteria that apply to the Holder, one or more business units, divisions or Subsidiaries of the Company or the applicable sector of the Company, or the Company as a whole, and if so desired by the Committee, by comparison with a peer group of companies: increased revenue; net income measures (including income after capital costs and income before or after taxes); stock price measures (including growth measures and total stockholder return); price per share of Common Stock; market share; audience metrics (such as program ratings, web impressions, and subscribers); earnings per share (actual or targeted growth); earnings before interest, taxes, depreciation, and amortization (EBITDA); economic value added; market value added; debt to equity ratio; cash flow measures (including cash flow return on capital, cash flow return on tangible capital, net cash flow and net cash flow before financing activities); return measures (including return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors’ capital and return on average equity); operating measures (including operating income, adjusted operating income before depreciation and amortization, funds from operations, cash from operations, after-tax operating income; sales volumes, production volumes and production efficiency); expense measures (including overhead cost and general and administrative expense); margins; stockholder value; total stockholder return; proceeds from dispositions; total market value and corporate values measures (including ethics compliance, environmental and safety) or any other business criteria established by the Committee. Unless otherwise stated, such a Performance Objective need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). The Committee shall have the authority to determine whether the Performance Objectives and other terms and conditions of the Award are satisfied, and the Committee’s determination as to the achievement of Performance Objectives relating to a Performance Award shall be made in writing.

The Committee may specify that such performance measures shall be adjusted to exclude any one or more of (i) non-recurring or unusual gains or losses, (ii) gains or losses on the dispositions of discontinued operations, (iii) the cumulative effects of changes in accounting principles, (iv) the writedown of any asset, (vi) fluctuation in foreign currency exchange rates, (vi) charges for restructuring and rationalization programs, and (vii) any other adjustment determined by the Committee. Such performance measures (i) may vary by Holder and may be different for different Awards and (ii) may be particular to a Holder or the department, branch, line of business, subsidiary or other unit in which the Holder works and may cover such period as may be specified by the Committee.

10.5 Waiver of Performance Objectives. The Committee shall have the discretion to modify or waive the Performance Objectives or conditions to the grant or vesting of a Performance Award unless the relevant Agreement states otherwise.

Article XI

General Provisions

11.1 Acceleration of Awards.

 

  (a)

Death or Disability. If a Holder’s employment shall terminate by reason of death or Disability, notwithstanding any contrary waiting period, installment period, vesting schedule or Restriction Period in any Agreement or in the Plan, unless the applicable Agreement provides otherwise: (i) in the case of an Option or SAR, each outstanding Option or SAR granted under the Plan shall immediately become exercisable in full in respect of the aggregate number of shares covered thereby; (ii) in the case of Restricted Shares, the Restriction Period applicable to each such Award of Restricted Shares shall be deemed to have expired and all such Restricted Shares and any related Unvested Dividends shall become vested and any related cash amounts payable pursuant to the applicable Agreement shall be adjusted in such manner as may be provided in the Agreement; and (iii) in the case of Restricted Stock Units, each such Award of Restricted Stock Units and any unpaid Dividend Equivalents shall become vested in full.

 

  (b)

Approved Transactions; Board Change; Control Purchase.

In the event of any Approved Transaction, Board Change or Control Purchase, notwithstanding any contrary waiting period, installment period, vesting schedule or Restriction Period in any Agreement or in the Plan, unless the applicable Agreement provides otherwise: (i) in the case of an Option or SAR, each such outstanding Option or SAR granted under the Plan shall become exercisable in full in respect of the aggregate number of shares covered thereby; (ii) in the case of Restricted Shares, the Restriction Period


applicable to each such Award of Restricted Shares shall be deemed to have expired and all such Restricted Shares and any related Unvested Dividends shall become vested and any related cash amounts payable pursuant to the applicable Agreement shall be adjusted in such manner as may be provided in the Agreement; and (iii) in the case of Restricted Stock Units, each such Award of Restricted Stock Units and any unpaid Dividend Equivalents shall become vested in full, in each case effective upon the Board Change or Control Purchase or immediately prior to consummation of the Approved Transaction. The effect, if any, on a Cash Award or Other Stock-Based Award of an Approved Transaction, Board Change or Control Purchase shall be prescribed in the applicable Agreement. Notwithstanding the foregoing, unless otherwise provided in the applicable Agreement, the Committee may, in its discretion, determine that any or all outstanding Awards of any or all types granted pursuant to the Plan will not vest or become exercisable on an accelerated basis in connection with an Approved Transaction if effective provision has been made for the taking of such action which, in the opinion of the Committee, is equitable and appropriate to substitute a new Award for such Award or to assume such Award and to make such new or assumed Award, as nearly as may be practicable, equivalent to the old Award (before giving effect to any acceleration of the vesting or exercisability thereof), taking into account, to the extent applicable, the kind and amount of securities, cash or other assets into or for which the applicable series of Common Stock may be changed, converted or exchanged in connection with the Approved Transaction.

Notwithstanding any provision of the Plan to the contrary, in the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Committee shall be authorized, in its discretion, (i) to provide, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, the Award and, if the transaction is a cash merger, provide for the termination of any portion of the Award that remains unexercised at the time of such transaction, or (ii) to cancel any such Awards and to deliver to the Holders cash in an amount that the Committee shall determine in its sole discretion is equal to the fair market value of such Awards on the date of such event, which in the case of Options or SARs shall be the excess of the Fair Market Value of Common Stock on such date over the exercise price of the Options or the base price of the SARs, as applicable.

No action pursuant to this Section 11.1(b) shall be made in a manner that results in noncompliance with the requirements of Section 409A of the Code, to the extent applicable.

11.2 Termination of Employment or Service.

 

  (a)

General. If a Holder’s employment or service shall terminate prior to an Option’s or SAR’s becoming exercisable or being exercised in full, or during the Restriction Period with respect to any Restricted Shares or Restricted Stock Units, then such Option or SAR shall thereafter become or be exercisable, the Holder’s rights to any unvested Restricted Shares, Restricted Stock Units, Unvested Dividends, unpaid Dividend Equivalents and related cash amounts shall thereafter vest, in each case solely to the extent provided in the applicable Agreement; provided, however, that, unless otherwise determined by the Committee and provided in the applicable Agreement, (i) no Option or SAR may be exercised after the scheduled expiration date thereof; (ii) if the Holder’s employment terminates by reason of death or Disability, the Option or SAR shall remain exercisable for a period of at least one year following such termination (but not later than the scheduled expiration of such Option or SAR); and (iii) any termination of the Holder’s employment or service for “cause” will be treated in accordance with the provisions of Section 11.2(b). The effect on a Cash Award or Other Stock-Based Award of the termination of a Holder’s employment or service for any reason, other than for “cause,” shall be prescribed in the applicable Agreement.

 

  (b)

Termination for Cause. If a Holder’s employment or service with the Company or a Subsidiary of the Company shall be terminated by the Company or such Subsidiary for “cause” during the Restriction Period with respect to any Restricted Shares or Restricted Stock Units or prior to any Option or SAR becoming exercisable or being exercised in full or prior to the payment in full of any Cash Award (for these purposes, “cause” shall have the meaning ascribed thereto in any employment agreement to which such Holder is a party or, in the absence thereof, shall include insubordination, dishonesty, incompetence, moral turpitude, other misconduct of any kind and the refusal to perform his duties and responsibilities for any reason other than illness or incapacity), then, unless otherwise determined by the Committee and provided in the applicable Agreement, (i) all Options and SARs and all unvested or unsettled Restricted Stock Units and all unpaid Cash Awards held by such Holder shall immediately terminate, and (ii) such Holder’s rights to all Restricted Shares, Unvested Dividends, any unpaid Dividend Equivalents and any related cash amounts shall be forfeited immediately. The Committee may determine retroactively, within one year after employment or service ends, that the Company or its Subsidiary had “cause” for termination of a Holder who has ceased to be employed or in service and may cause the forfeiture of any still outstanding Awards.

 


  (c)

Miscellaneous. The Committee may determine whether any given leave of absence constitutes a termination of employment; provided, however, that for purposes of the Plan, (i) a leave of absence, duly authorized in writing by the Company for military service or sickness, or for any other purpose approved by the Company if the period of such leave does not exceed 90 days, and (ii) a leave of absence in excess of 90 days, duly authorized in writing by the Company provided the employee’s right to reemployment is guaranteed either by statute or contract, shall not be deemed a termination of employment. Unless otherwise determined by the Committee and provided in the applicable Agreement, Awards made under the Plan shall not be affected by any change of employment so long as the Holder continues to be an employee of the Company. For this purpose, “Company” shall mean the Company and any Subsidiary or Affiliate thereof, the services providers of which are eligible to receive Awards under this Plan.

11.3 Right of Company to Terminate Employment or Service. Nothing contained in the Plan or in any Award, and no action of the Company or the Committee with respect thereto, shall confer or be construed to confer on any Holder any right to continue in the employ or service of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or any Subsidiary of the Company to terminate the employment or service of the Holder at any time, with or without cause, subject, however, to the provisions of any employment or other service-providing agreement between the Holder and the Company or any Subsidiary of the Company.

11.4 Nonalienation of Benefits; Nontransferability of Awards. Except as set forth below, no right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, hypothecation, pledge, exchange, transfer, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the Person entitled to such benefits. Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order, and, during the life of the Holder, shall be exercisable only by the Holder; provided, however, that, except with respect to Awards subject to Section 409A of the Code, the Board or the Committee may permit or provide in an Award for the gratuitous transfer of the Award by the Holder to or for the benefit of any immediate family member, family trust or other entity established for the benefit of the Holder and/or an immediate family member thereof if the Company would be eligible to use a Form S-8 under the Securities Act for the registration of the sale of the Common Stock subject to such Award to such proposed transferee; provided further, that the Company shall not be required to recognize any such permitted transfer until such time as such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award. References to a Holder, to the extent relevant in the context, shall include references to authorized transferees. For the avoidance of doubt, nothing contained in this Section 11.4 shall be deemed to restrict a transfer to the Company.

11.5 Documentation. Each Award shall be evidenced in such form (written, electronic or otherwise) as the Committee shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan. Any such documentation may contain (but shall not be required to contain) such provisions as the Committee deems appropriate to ensure that the penalty provisions of Section 4999 of the Code will not apply to any stock or cash received by the Holder from the Company. Any such Agreement may be supplemented or amended from time to time as approved by the Committee as contemplated by Section 11.7(b).

11.6 Designation of Beneficiaries. Each person who shall be granted an Award under the Plan may designate a beneficiary or beneficiaries and may change such designation from time to time by filing a written designation of beneficiary or beneficiaries with the Committee on a form to be prescribed by it, provided that no such designation shall be effective unless so filed prior to the death of such person.

11.7 Termination and Amendment.

 

  (a)

General. Unless the Plan shall theretofore have been terminated as hereinafter provided, no Awards may be made under the Plan on or after the tenth anniversary of the Effective Date. The Plan may be terminated at any time prior to the tenth anniversary of the Effective Date and may, from time to time, be suspended or discontinued or modified or amended if such action is deemed advisable by the Committee.


  (b)

Modification. No termination, modification or amendment of the Plan may, without the consent of the person to whom any Award shall theretofore have been granted, materially adversely affect the rights of such person with respect to such Award, except as otherwise permitted by Section 11.18. No modification, extension, renewal or other change in any Award granted under the Plan shall be made after the grant of such Award, unless the same is consistent with the provisions of the Plan. With the consent of the Holder, or as otherwise permitted under Section 11.18, and subject to the terms and conditions of the Plan (including Section 11.7(a)), the Committee may amend outstanding Agreements with any Holder, including any amendment which would (i) accelerate the time or times at which the Award may be exercised and/or (ii) extend the scheduled expiration date of the Award. Without limiting the generality of the foregoing, the Committee may, but solely with the Holder’s consent, unless otherwise provided in the Agreement, agree to cancel any Award under the Plan and grant a new Award in substitution therefor, provided that the Award so substituted shall satisfy all of the requirements of the Plan as of the date such new Award is made. Nothing contained in the foregoing provisions of this Section 11.7(b) shall be construed to prevent the Committee from providing in any Agreement that the rights of the Holder with respect to the Award evidenced thereby shall be subject to such rules and regulations as the Committee may, subject to the express provisions of the Plan, adopt from time to time or impair the enforceability of any such provision.

11.8 Government and Other Regulations. The obligation of the Company with respect to Awards shall be subject to all applicable laws, rules and regulations and such approvals by any governmental agencies as may be required, including the effectiveness of any registration statement required under the Securities Act, and the rules and regulations of any securities exchange or association on which the Common Stock may be listed or quoted. For so long as any series of Common Stock are registered under the Exchange Act, the Company shall use its reasonable efforts to comply with any legal requirements (i) to maintain a registration statement in effect under the Securities Act with respect to all shares of the applicable series of Common Stock that may be issued to Holders under the Plan and (ii) to file in a timely manner all reports required to be filed by it under the Exchange Act.

11.9 Withholding. The Company’s obligation to deliver shares of Common Stock or pay cash in respect of any Award under the Plan shall be subject to applicable federal, state and local tax withholding requirements. Federal, state and local withholding tax due at the time of an Award, upon the exercise of any Option or SAR or upon the vesting of, or expiration of restrictions with respect to, Restricted Shares or Restricted Stock Units or Other Stock-Based Awards or the satisfaction of the Performance Objectives applicable to a Performance Award, as appropriate, may, in the discretion of the Committee, be paid in shares of the applicable series of Common Stock already owned by the Holder or through the withholding of shares otherwise issuable to such Holder, upon such terms and conditions (including the conditions referenced in Section 6.5) as the Committee shall determine. If the Holder shall fail to pay, or make arrangements satisfactory to the Committee for the payment to the Company of, all such federal, state and local taxes required to be withheld by the Company, then the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to such Holder an amount equal to any federal, state or local taxes of any kind required to be withheld by the Company with respect to such Award.

If provided for in an Award or approved by the Board or the Committee in its sole discretion, a Holder may satisfy such tax obligations in whole or in part by delivery (either by actual delivery or attestation) of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value; provided, however, except as otherwise provided by the Board or the Committee, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income), except that, to the extent that the Company is able to retain shares of Common Stock having a Fair Market Value (determined by, or in a manner approved by, the Company) that exceeds the statutory minimum applicable withholding tax without financial accounting implications or the Company is withholding in a jurisdiction that does not have a statutory minimum withholding tax, the Company may retain such number of shares of Common Stock (up to the number of shares having a Fair Market Value equal to the maximum individual statutory rate of tax (determined by, or in a manner approved by, the Company)) as the Company shall determine in its sole discretion to satisfy the tax liability associated with any Award. Shares used to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.

11.10 Nonexclusivity of the Plan. The adoption of the Plan by the Board shall not be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as it may deem desirable, including the granting of stock options and the awarding of stock and cash otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.


11.11 Treatment with Respect to Other Benefit Programs. By acceptance of an Award, unless otherwise provided in the applicable Agreement or required by law, each Holder shall be deemed to have agreed that such Award is special incentive compensation that will not be taken into account, in any manner, as salary, compensation or bonus in determining the amount of any payment under any pension, retirement or other employee benefit plan, program or policy of the Company or any Subsidiary of the Company. In addition, each beneficiary of a deceased Holder shall be deemed to have agreed that such Award will not affect the amount of any life insurance coverage, if any, provided by the Company or its Subsidiary on the life of the Holder which is payable to such beneficiary under any life insurance plan covering employees of the Company or any Subsidiary of the Company.

11.12 Unfunded Plan. Neither the Company nor any Subsidiary of the Company shall be required to segregate any cash or any shares of Common Stock which may at any time be represented by Awards, and the Plan shall constitute an “unfunded” plan of the Company. Except as provided in Article VIII with respect to Awards of Restricted Shares and except as expressly set forth in an Agreement, no employee or independent contractor shall have voting or other rights with respect to the shares of Common Stock covered by an Award prior to the delivery of such shares. Neither the Company nor any Subsidiary of the Company shall, by any provisions of the Plan, be deemed to be a trustee of any shares of Common Stock or any other property, and the liabilities of the Company and any Subsidiary of the Company to any employee or independent contractor pursuant to the Plan shall be those of a debtor pursuant to such contract obligations as are created by or pursuant to the Plan, and the rights of any employee, former employee, independent contractor, former independent contractor or beneficiary under the Plan shall be limited to those of a general creditor of the Company or the applicable Subsidiary of the Company, as the case may be. In its sole discretion, the Board may authorize the creation of trusts or other arrangements to meet the obligations of the Company under the Plan, provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.

11.13 Governing Law. The Plan and all Awards made hereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware.

11.14 Accounts. The delivery of any shares of Common Stock and the payment of any amount in respect of an Award shall be for the account of the Company or the applicable Subsidiary of the Company, as the case may be, and any such delivery or payment shall not be made until the recipient shall have paid or made satisfactory arrangements for the payment of any applicable withholding taxes as provided in Section 11.9.

11.15 Legends. Each certificate evidencing shares of Common Stock subject to an Award shall bear such legends as the Committee deems necessary or appropriate to reflect or refer to any terms, conditions or restrictions of the Award applicable to such shares, including any to the effect that the shares represented thereby may not be disposed of unless the Company has received an opinion of counsel, acceptable to the Company, that such disposition will not violate any federal or state securities laws.

11.16 Company’s Rights. The grant of Awards pursuant to the Plan shall not affect in any way the right or power of the Company to make reclassifications, reorganizations or other changes of or to its capital or business structure or to merge, consolidate, liquidate, sell or otherwise dispose of all or any part of its business or assets.

11.17 Interpretation. The words “include,” “includes,” “included” and “including” to the extent used in the Plan shall be deemed in each case to be followed by the words “without limitation.”

11.18 Compliance with Section 409A of the Code. If and to the extent (i) any portion of any payment, compensation or other benefit provided to a Holder pursuant to the Plan in connection with his or her employment or service termination constitutes “nonqualified deferred compensation” within the meaning of Section 409A of the Code and (ii) the Holder is a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code, in each case as determined by the Company or its Subsidiary in accordance with its procedures, by which determinations, the Holder (through accepting the Award) agrees that he or she is bound, such portion of the payment, compensation or other benefit shall not be paid before the day that is six months plus one day after the date of “separation from service” (as determined under Section 409A of the Code) (the “New Payment Date”), except as Section 409A of the Code may then permit. The aggregate of any payments that otherwise would have been paid to the Holder during the period between the date of separation from service and the New Payment Date shall be paid to the Holder in a lump sum on such New Payment Date, and any remaining payments will be paid on their original schedule.

Neither the Company nor any of its Subsidiaries makes any representations or warranties and shall have no liability to the Holder or any other person if any provisions of or payments, compensation or other benefits under the Plan are determined to constitute nonqualified deferred compensation subject to Section 409A of the Code but do not to satisfy the conditions of that section.

 


11.19 Authorization of Sub-Plans (including for Grants to non-U.S. Employees and Independent Contractors). The Board or the Committee may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable securities, tax or other laws of various jurisdictions. The Board or the Committee shall establish such sub-plans by adopting supplements to the Plan containing (i) such limitations on the Board’s or the Committee’s discretion under the Plan as the Board or the Committee deems necessary or desirable or (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board or the Committee shall deem necessary or desirable. All supplements adopted by the Board or the Committee shall be deemed to be part of the Plan, but each supplement shall apply only to Holders within the affected jurisdiction and the Company shall not be required to provide copies of any supplement to Holders in any jurisdiction which is not the subject of such supplement.

11.20 Clawback Policy. Notwithstanding any other provisions in this Plan, any Award shall be subject to recovery or clawback by the Company under any clawback policy adopted by the Company in accordance with SEC regulations or other applicable law, as amended or superseded from time to time.

11.21 Stock Ownership Guidelines. Any Award shall be subject to any applicable stock ownership guidelines adopted by the Company, as amended or superseded from time to time.

11.22 Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, employee or agent of the Company or its Subsidiary will be liable to any Holder, former Holder, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan, nor will such individual be personally liable with respect to the Plan because of any contract or other instrument he or she executes in his or her capacity as a director, officer, employee or agent of the Company or its Subsidiary. The Company will indemnify and hold harmless each director, officer, employee or agent of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been or will be delegated, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Board’s approval) arising out of any act or omission to act concerning the Plan unless arising out of such person’s own fraud or bad faith.

Exhibit 99.1

LOGO    LOGO

Discovery and AT&T Close WarnerMedia Transaction

Combination of Discovery and WarnerMedia Creates Warner Bros. Discovery, Global Leader in Entertainment and Streaming

Warner Bros. Discovery to Begin Trading on the Nasdaq as “WBD” on Monday, April 11

NEW YORK and DALLAS, April 8, 2022 — Today Discovery, Inc. and AT&T Inc.* (NYSE:T) announced that they have closed their transaction to combine the WarnerMedia business with Discovery. The combination creates a premier standalone global media and entertainment company, Warner Bros. Discovery, Inc., which will begin trading on the Nasdaq with the start of trading on Monday, April 11, under the new ticker symbol “WBD.”

Warner Bros. Discovery will create and distribute the world’s most differentiated and complete portfolio of content, brands and franchises across television, film and streaming. The new company combines WarnerMedia’s premium entertainment, sports and news assets with Discovery’s leading non-fiction and international entertainment and sports businesses, including Discovery Channel, discovery+, Warner Bros. Entertainment, CNN, CNN+, DC, Eurosport, HBO, HBO Max, HGTV, Food Network, Investigation Discovery, TLC, TNT, TBS, truTV, Travel Channel, MotorTrend, Animal Planet, Science Channel, New Line Cinema, Cartoon Network, Adult Swim, Turner Classic Movies and others.

 

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“Today’s announcement marks an exciting milestone not just for Warner Bros. Discovery but for our shareholders, our distributors, our advertisers, our creative partners and, most importantly, consumers globally,” said David Zaslav, Warner Bros. Discovery chief executive officer. “With our collective assets and diversified business model, Warner Bros. Discovery offers the most differentiated and complete portfolio of content across film, television and streaming. We are confident that we can bring more choice to consumers around the globe while fostering creativity and creating value for shareholders. I can’t wait for both teams to come together to make Warner Bros. Discovery the best place for impactful storytelling.”

“We are at the dawn of a new age of connectivity, and today marks the beginning of a new era for AT&T,” said John Stankey, AT&T chief executive officer. “With the close of this transaction, we expect to invest at record levels in our growth areas of 5G and fiber, where we have strong momentum, while we work to become America’s best broadband company. At the same time, we’ll sharpen our focus on returns to shareholders. We expect to invest for growth, strengthen our balance sheet and reduce our debt, all while continuing to pay an attractive dividend that puts us among the top dividend paying stocks in America.

“In WarnerMedia, Discovery inherits a talented and innovative team and a dynamic growing and global company that is well positioned to lead the transformation that’s taking place across media and entertainment, direct-to-consumer distribution and technology. The combination of the two companies will strengthen WarnerMedia’s established and leading position in media and streaming. And our shareholders will now have a significant stake in Warner Bros. Discovery and its future successes. We look forward to seeing what the WBD team accomplishes with these industry-leading assets.”

 

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Under terms of the agreement, which was structured as a Reverse Morris Trust transaction, at close AT&T received $40.4 billion in cash and WarnerMedia’s retention of certain debt. Additionally, shareholders of AT&T received 0.241917 shares of WBD for each share of AT&T common stock they held at close. As a result, AT&T shareholders received 1.7 billion shares of WBD, representing 71% of WBD shares on a fully diluted basis. Discovery’s existing shareholders own the remainder of the new company. In addition to their new shares of WBD common stock, AT&T shareholders continue to hold the same number of shares of AT&T common stock they held immediately prior to close.

About DISCOVERY

Discovery, Inc. (Nasdaq: DISCA, DISCB, DISCK) is a global leader in real life entertainment, serving a passionate audience of superfans around the world with content that inspires, informs and entertains. Discovery delivers over 8,000 hours of original programming each year and has category leadership across deeply loved content genres around the world. Available in 220 countries and territories and nearly 50 languages, Discovery is a platform innovator, reaching viewers on all screens, including TV Everywhere products such as the GO portfolio of apps; direct-to-consumer streaming services such as discovery+, Food Network Kitchen and MotorTrend OnDemand; digital-first and social content from Group Nine Media; a landmark natural history and factual content partnership with the BBC; and a strategic alliance with PGA TOUR to create the international home of golf. Discovery’s portfolio of premium brands includes Discovery Channel, HGTV, Food Network, TLC, Investigation Discovery, Travel Channel, MotorTrend, Animal Planet, Science Channel, and the multi-platform JV with Chip and Joanna Gaines,

 

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Magnolia Network, as well as OWN: Oprah Winfrey Network in the U.S., Discovery Kids in Latin America, and Eurosport, the leading provider of locally relevant, premium sports and Home of the Olympic Games across Europe. For more information, please visit corporate.discovery.com and follow @DiscoveryIncTV across social platforms.

About Warner Bros. Discovery

Warner Bros. Discovery (NASDAQ: WBD) is a leading global media and entertainment company that creates and distributes the world’s most differentiated and complete portfolio of content and brands across television, film and streaming. Available in more than 220 countries and territories and 50 languages, Warner Bros. Discovery inspires, informs and entertains audiences worldwide through its iconic brands and products including: Discovery Channel, discovery+, CNN, CNN+, DC, Eurosport, HBO, HBO Max, HGTV, Food Network, Investigation Discovery, TLC, TNT, TBS, truTV, Travel Channel, MotorTrend, Animal Planet, Science Channel, Warner Bros. Pictures, New Line Cinema, Cartoon Network, Adult Swim, Turner Classic Movies and others. For more information, please visit www.wbd.com.

*About AT&T

We help more than 100 million U.S. families, friends and neighbors connect in meaningful ways every day. From the first phone call 140+ years ago to our 5G wireless and multi-gig internet offerings today, we @ATT innovate to improve lives. For more information about AT&T Inc. (NYSE:T), please visit us at about.att.com. Investors can learn more at investors.att.com.

 

© 2022 AT&T Intellectual Property. All rights reserved. AT&T and the Globe logo are registered trademarks of AT&T Intellectual Property.

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AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc. Additional information is available at about.att.com. © 2022 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

Statement Concerning Forward-Looking Statements

Information set forth in this communication, including any financial estimates and statements as to the expected timing, completion and effects of the transaction between AT&T, Magallanes, Inc. (“Spinco”), and Discovery constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These estimates and statements are subject to risks and uncertainties, and actual results might differ materially. Such estimates and statements include, but are not limited to, statements about the benefits of the transaction, including future financial and operating results, the combined Spinco and Discovery company’s plans, objectives, expectations and intentions, and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the management of AT&T and Discovery and are subject to significant risks and uncertainties outside of our control. Among the risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements are the following: risks that the anticipated tax treatment of the transaction is not obtained; risks related to litigation brought in connection with the transaction; the risk that the integration of Discovery and Spinco being more difficult, time consuming or costly than expected; risks related to financial community and rating agency perceptions of each of AT&T and Discovery and its business, operations, financial condition and the industry in which it operates; risks related to disruption of management time from ongoing business operations due to the merger; failure to realize the benefits expected from the merger; effects of the announcement, pendency or completion of the merger on the ability of AT&T, Spinco or Discovery to retain customers and retain and hire

 

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key personnel and maintain relationships with their suppliers, and on their operating results and businesses generally; and risks related to the potential impact of general economic, political and market factors on the companies or the transaction. The effects of the COVID-19 pandemic may give rise to risks that are currently unknown or amplify the risks associated with the foregoing factors.

These risks, as well as other risks associated with the transaction, are more fully discussed in the proxy statement/prospectus included in the registration statement on Form S-4 filed by Discovery with the SEC in connection with the transaction, the registration statement on Form 10 filed by Spinco with the SEC in connection with the transaction and the information statement made available to AT&T’s shareholders in connection with the transaction. Discussions of additional risks and uncertainties are contained in AT&T’s and Discovery’s filings with the Securities and Exchange Commission. Neither AT&T nor Discovery is under any obligation, and each expressly disclaims any obligation, to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise. Persons reading this announcement are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof.

 

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