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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-34177
disca-20220930_g1.jpg
Warner Bros. Discovery, Inc.
(Exact name of registrant as specified in its charter)
Delaware35-2333914
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
230 Park Avenue South10003
New York, New York
(Zip Code)
(Address of principal executive offices)
(212) 548-5555
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolsName of Each Exchange on Which Registered
Series A Common StockWBDThe Nasdaq Global Select Market



Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  o
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    Yes  ý    No  ¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerýAccelerated filer¨
Non-accelerated fileroSmaller reporting company☐
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. ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ý

Total number of shares outstanding of each class of the Registrant’s common stock as of October 21, 2022:
Series A Common Stock, par value $0.01 per share2,428,396,015 



WARNER BROS. DISCOVERY, INC.
FORM 10-Q
TABLE OF CONTENTS
 
 Page

3

PART I. FINANCIAL INFORMATION
ITEM 1. Unaudited Financial Statements.
WARNER BROS. DISCOVERY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in millions, except per share amounts)
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Revenues:
Advertising$2,042 $1,453 $6,239 $4,496 
Distribution4,990 1,328 11,180 3,898 
Content2,531 352 4,918 564 
Other260 17 472 46 
Total revenues9,823 3,150 22,809 9,004 
Costs and expenses:
Costs of revenues, excluding depreciation and amortization5,627 1,529 13,488 3,553 
Selling, general and administrative2,589 944 7,167 2,947 
Depreciation and amortization2,233 341 5,024 1,043 
Restructuring and other charges1,521 7 2,559 29 
Asset impairment and loss (gain) on disposition and disposal groups43 — 47 (72)
Total costs and expenses12,013 2,821 28,285 7,500 
Operating (loss) income(2,190)329 (5,476)1,504 
Interest expense, net(555)(159)(1,219)(479)
Loss from equity investees, net(78)(9)(135)(20)
Other (expense) income, net(28)72 411 245 
(Loss) income before income taxes(2,851)233 (6,419)1,250 
Income tax benefit (expense)566 (36)1,201 (144)
Net (loss) income(2,285)197 (5,218)1,106 
Net income attributable to noncontrolling interests(21)(32)(44)(116)
Net income attributable to redeemable noncontrolling interests(2)(9)(8)(22)
Net (loss) income available to Warner Bros. Discovery, Inc.$(2,308)$156 $(5,270)$968 
Net (loss) income per share allocated to Warner Bros. Discovery, Inc. Series A common stockholders:
Basic
$(0.95)$0.24 $(3.00)$1.47 
Diluted$(0.95)$0.24 $(3.00)$1.46 
Weighted average shares outstanding:
Basic2,428 589 1,775 588 
Diluted2,428 663 1,775 665 
The accompanying notes are an integral part of these consolidated financial statements.


4

WARNER BROS. DISCOVERY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(unaudited; in millions)

Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net (loss) income$(2,285)$197 $(5,218)$1,106 
Other comprehensive (loss) income adjustments, net of tax:
Currency translation(690)(144)(1,277)(203)
Derivatives24 12 (12)137 
Comprehensive (loss) income(2,951)65 (6,507)1,040 
Comprehensive income attributable to noncontrolling interests
(21)(32)(44)(116)
Comprehensive income attributable to redeemable noncontrolling interests
(2)(9)(8)(22)
Comprehensive (loss) income attributable to Warner Bros. Discovery, Inc.$(2,974)$24 $(6,559)$902 
The accompanying notes are an integral part of these consolidated financial statements.
5
WARNER BROS. DISCOVERY, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited; in millions, except par value)
September 30, 2022December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents$2,422 $3,905 
Receivables, net6,669 2,446 
Prepaid expenses and other current assets3,581 913 
Total current assets12,672 7,264 
Film and television content rights and games, net28,288 3,832 
Property and equipment, net5,143 1,336 
Goodwill34,450 12,912 
Intangible assets, net46,744 6,317 
Other noncurrent assets8,752 2,766 
Total assets$136,049 $34,427 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable$1,534 $412 
Accrued liabilities10,197 2,230 
Deferred revenues1,688 478 
Current portion of debt1,257 339 
Total current liabilities14,676 3,459 
Noncurrent portion of debt, net48,612 14,420 
Deferred income taxes12,317 1,225 
Other noncurrent liabilities10,364 1,927 
Total liabilities85,969 21,031 
Commitments and contingencies (See Note 19)
Redeemable noncontrolling interests318 363 
Warner Bros. Discovery, Inc. stockholders’ equity:
Series A common stock: $0.01 par value; 10,800 and 0 shares authorized; 2,658 and 0 shares issued; and 2,428 and 0 shares outstanding
27 — 
Preferred stock: $0.01 par value; 1,200 and 0 shares authorized, 0 shares issued and outstanding
— — 
Discovery Series A-1 convertible preferred stock: $0.01 par value; 0 and 8 shares authorized, issued and outstanding
— — 
Discovery Series C-1 convertible preferred stock: $0.01 par value; 0 and 6 shares authorized; 0 and 4 shares issued and outstanding
— — 
Discovery Series A common stock: $0.01 par value; 0 and 1,700 shares authorized; 0 and 170 shares issued; and 0 and 169 shares outstanding
— 2 
Discovery Series B convertible common stock: $0.01 par value; 0 and 100 shares authorized; 0 and 7 shares issued and outstanding
— — 
Discovery Series C common stock: $0.01 par value; 0 and 2,000 shares authorized; 0 and 559 shares issued; and 0 and 330 shares outstanding
— 5 
Additional paid-in capital54,547 11,086 
Treasury stock, at cost: 230 and 230 shares
(8,244)(8,244)
Retained earnings4,306 9,580 
Accumulated other comprehensive loss(2,119)(830)
Total Warner Bros. Discovery, Inc. stockholders’ equity48,517 11,599 
Noncontrolling interests1,245 1,434 
Total equity49,762 13,033 
Total liabilities and equity$136,049 $34,427 
The accompanying notes are an integral part of these consolidated financial statements.
6

WARNER BROS. DISCOVERY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)
 Nine Months Ended September 30,
 20222021
Operating Activities
Net (loss) income$(5,218)$1,106 
Adjustments to reconcile net income to cash provided by operating activities:
Content rights amortization and impairment11,441 2,735 
Depreciation and amortization5,024 1,043 
Deferred income taxes (2,105)(502)
Preferred stock conversion premium789 — 
Share-based compensation expense317 134 
Gain on disposition45 (72)
Equity in losses of equity method investee companies and cash distributions178 57 
Gain on sale of investments(144)(20)
Gain from derivative instruments, net(479)— 
Other, net142 (137)
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Receivables, net(139)44 
Film and television content rights, games and payables, net(8,612)(2,578)
Accounts payable, accrued liabilities, deferred revenues and other noncurrent liabilities(182)124 
Foreign currency, prepaid expenses and other assets, net401 (20)
Cash provided by operating activities1,458 1,914 
Investing Activities
Purchases of property and equipment(623)(273)
Cash acquired from business acquisition and working capital settlement3,609 — 
Proceeds from sales and maturities of investments162 498 
Investments in and advances to equity investments(137)(137)
Proceeds from derivative instruments, net722 (102)
Purchases of investments— (103)
Other investing activities, net9 87 
Cash provided by (used in) investing activities3,742 (30)
Financing Activities
Principal repayments of term loans(6,000)— 
Principal repayments of debt, including premiums to par value(327)(574)
Distributions to noncontrolling interests and redeemable noncontrolling interests(286)(231)
Purchase of redeemable noncontrolling interests— (31)
Securitization receivables collected but not remitted236 — 
Borrowings under commercial paper program885 — 
Repayments under commercial paper program(885)— 
Other financing activities, net(93)25 
Cash used in financing activities(6,470)(811)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(122)(69)
Net change in cash, cash equivalents, and restricted cash(1,392)1,004 
Cash, cash equivalents, and restricted cash, beginning of period3,9052,122 
Cash, cash equivalents, and restricted cash, end of period$2,513 $3,126 
The accompanying notes are an integral part of these consolidated financial statements.
7
WARNER BROS. DISCOVERY, INC.
CONSOLIDATED STATEMENT OF EQUITY
(unaudited; in millions)
Discovery, Inc.
Preferred Stock		Discovery, Inc.
Common Stock		Warner Bros. Discovery, Inc. Common StockAdditional
Paid-In
Capital		Treasury
Stock		Retained
Earnings		Accumulated
Other
Comprehensive
Loss		Warner Bros. Discovery, Inc.
Stockholders’ Equity		Noncontrolling
Interests		Total
Equity
SharesPar ValueSharesPar ValueSharesPar Value
December 31, 202112 $— 736 $7 — $— $11,086 $(8,244)$9,580 $(830)$11,599 $1,434 $13,033 
Net income available to Warner Bros. Discovery, Inc. and attributable to noncontrolling interests— — — — — — — — 456 — 456 16 472 
Other comprehensive loss— — — — — — — — — (117)(117)— (117)
Share-based compensation— — — — — — 53 — — — 53 — 53 
Tax settlements associated with share-based plans
— — — — — — (38)— — — (38)— (38)
Dividends paid to noncontrolling interests
— — — — — — — — — — — (192)(192)
Issuance of stock in connection with share-based plans
— — 3 — — — 19 — — — 19 — 19 
Redeemable noncontrolling interest adjustments to redemption value
— — — — — — — — (3)— (3)— (3)
March 31, 202212 $— 739 $7 — $— $11,120 $(8,244)$10,033 $(947)$11,969 $1,258 $13,227 
Net (loss) income available to Warner Bros. Discovery, Inc. and attributable to noncontrolling interests— — — — — — — — (3,418)— (3,418)7 (3,411)
Other comprehensive loss— — — — — — — — — (506)(506)— (506)
Share-based compensation— — — — — — 143 — — — 143 — 143 
Conversion and issuance of common stock and noncontrolling interest in connection with the acquisition of the WarnerMedia Business(12)— (739)(7)2,658 27 43,173 — — — 43,193 2 43,195 
Dividends paid to noncontrolling interests— — — — — — — — — — — (31)(31)
Issuance of stock in connection with share-based plans— — — — — — 3 — — — 3 — 3 
Redeemable noncontrolling interest adjustments to redemption value— — — — — — — — (1)— (1)— (1)
June 30, 2022— $— — $— 2,658 $27 $54,439 $(8,244)$6,614 $(1,453)$51,383 $1,236 $52,619 
Net (loss) income available to Warner Bros. Discovery, Inc. and attributable to noncontrolling interests— — — — — — — — (2,308)— (2,308)21 (2,287)
Other comprehensive loss— — — — — — — — — (666)(666)— (666)
Share-based compensation— — — — — — 111 — — — 111 — 111 
Tax settlements associated with share-based plans— — — — — — (5)— — — (5)— (5)
Dividends paid to noncontrolling interests— — — — — — — — — — — (12)(12)
Issuance of stock in connection with share-based plans— — — — — — 2 — — — 2 — 2 
September 30, 2022— $— — $— 2,658 $27 $54,547 $(8,244)$4,306 $(2,119)$48,517 $1,245 $49,762 
The accompanying notes are an integral part of these consolidated financial statements.
8
WARNER BROS. DISCOVERY, INC.
CONSOLIDATED STATEMENT OF EQUITY
(unaudited; in millions)
Discovery, Inc.
Preferred Stock		Discovery, Inc.
Common Stock		Additional
Paid-In
Capital		Treasury
Stock		Retained
Earnings		Accumulated
Other
Comprehensive
Loss		Warner Bros. Discovery,
Inc. 
Stockholders’
Equity		Noncontrolling
Interests		Total
Equity
SharesPar ValueSharesPar Value
December 31, 202013 $— 717 $7 $10,809 $(8,244)$8,543 $(651)$10,464 $1,536 $12,000 
Net income available to Warner Bros. Discovery, Inc. and attributable to noncontrolling interests — — — — — — 140 — 140 46 186 
Other comprehensive income— — — — — — — 70 70 — 70 
Share-based compensation— — — — 32 — — — 32 — 32 
Preferred stock conversion(1)— 11 — — — — — — — — 
Tax settlements associated with share-based compensation— — — — (68)— — — (68)— (68)
Dividends paid to noncontrolling interest— — — — — — — — — (178)(178)
Issuance of stock in connection with share-based plans— — 8 — 186 — — — 186 — 186 
Redeemable noncontrolling interest
adjustments to redemption value		— — — — (8)— (1)— (9)— (9)
March 31, 202112 $— 736 $7 $10,951 $(8,244)$8,682 $(581)$10,815 $1,404 $12,219 
Net income available to Discovery, Inc. and attributable to noncontrolling interests
— — — — — — 672 — 672 38 710 
Other comprehensive loss— — — — — — — (4)(4)— (4)
Share-based compensation— — — — 41 — — — 41 — 41 
Tax settlements associated with share-based plans — — — — (1)— — — (1)— (1)
Dividends paid to noncontrolling interests— — — — — — — — — (29)(29)
Issuance of stock in connection with share-based plans
— — — — 9 — — — 9 — 9 
Redeemable noncontrolling interest
adjustments to redemption value		— — — — — — 6 — 6 — 6 
June 30, 202112 $— 736 $7 $11,000 $(8,244)$9,360 $(585)$11,538 $1,413 $12,951 
Net income available to Discovery, Inc. and attributable to noncontrolling interests
— — — — — — 156 — 156 32 188 
Other comprehensive loss— — — — — — — (132)(132)— (132)
Share-based compensation— — — — 43 — — — 43 — 43 
Tax settlements associated with share-based compensation
— — — — (1)— — — (1)— (1)
Dividends paid to noncontrolling interests
— — — — — — — — — (16)(16)
Issuance of stock in connection with share-based plans
— — — — 1 — — — 1 — 1 
Redeemable noncontrolling interest
adjustments to redemption value		— — — — — — 6 — 6 — 6 
September 30, 202112 $— 736 $7 $11,043 $(8,244)$9,522 $(717)$11,611 $1,429 $13,040 
The accompanying notes are an integral part of these consolidated financial statements.
9

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of Business
Warner Bros. Discovery, Inc. (“Warner Bros. Discovery”, “WBD”, the “Company”, “we”, “us” or “our”) 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, DC, Eurosport, HBO, HBO Max, HGTV, Food Network, OWN, Investigation Discovery, TLC, Magnolia Network, TNT, TBS, truTV, Travel Channel, MotorTrend, Animal Planet, Science Channel, Warner Bros. Pictures, Warner Bros. Television, Warner Bros. Games, New Line Cinema, Cartoon Network, Adult Swim, Turner Classic Movies, Discovery en Español, Hogar de HGTV and others.
Merger with the WarnerMedia Business of AT&T
On April 8, 2022 (the “Closing Date”), Discovery, Inc. (“Discovery”) completed its merger (the “Merger”) with the WarnerMedia business (the “WarnerMedia Business”, “WM Business” or “WM”) of AT&T Inc. (“AT&T”) and changed its name to “Warner Bros. Discovery, Inc.”. On April 11, 2022, the Company’s shares started trading on the Nasdaq Global Select Market (the “Nasdaq”) under the trading symbol WBD.
The Merger was executed through a Reverse Morris Trust type transaction, under which WM was distributed to AT&T’s shareholders via a pro rata distribution, and immediately thereafter, combined with Discovery. (See Note 2 and Note 3). Prior to the Merger, WarnerMedia Holdings, Inc. distributed $40.5 billion to AT&T (subject to working capital and other adjustments) in a combination of cash, debt securities, and WM's retention of certain debt. Discovery transferred purchase consideration of $42.4 billion in equity to AT&T shareholders. In August 2022, the Company and AT&T finalized the post-closing working capital settlement process, pursuant to section 1.3 of the Separation and Distribution Agreement, which resulted in the Company receiving a $1.2 billion payment from AT&T in the third quarter of 2022. AT&T shareholders received shares of WBD Series A common stock (“WBD common stock”) in the distribution representing 71% of the combined company and the Company's pre-Merger shareholders continued to own 29% of the combined company, in each case on a fully diluted basis.
Discovery was deemed to be the accounting acquirer of the WM Business for accounting purposes under U.S. generally accepted accounting principles (“U.S. GAAP”); therefore, Discovery is considered WBD’s predecessor and the historical financial statements of Discovery prior to April 8, 2022, are reflected in this Quarterly Report on Form 10-Q as WBD’s historical financial statements. Accordingly, the financial results of WBD as of and for any periods prior to April 8, 2022 do not include the financial results of the WM Business and current and future results will not be comparable to historical results.
Segments
In connection with the Merger, the Company reevaluated and changed its segment presentation during the quarter ended June 30, 2022. Accordingly, beginning in the quarter ended June 30, 2022, and for all periods presented, we are reporting results based on the following segments:
Studios - Our Studios segment primarily consists of the production and release of feature films for initial exhibition in theaters, production and initial licensing of television programs to third parties and our networks/direct-to-consumer (“DTC”) services, distribution of our films and television programs to various third party and internal television and streaming services, distribution through the home entertainment market (physical and digital), related consumer products and themed experience licensing, and interactive gaming.
Networks - Our Networks segment primarily consists of our domestic and international television networks.
DTC - Our DTC segment primarily consists of our premium pay TV and digital content services.
Impact of COVID-19
The Company continues to closely monitor the ongoing impact of COVID-19 on all aspects of its business and geographies, including the impact on its customers, employees, suppliers, vendors, distribution and advertising partners, production facilities, and various other third parties. Certain key sources of revenue for the Studios segment, including theatrical revenues, television production, studio operations and themed entertainment, have been adversely impacted by governmentally imposed shutdowns and related labor interruptions and constraints on consumer activity, particularly in the context of public entertainment venues, such as cinemas and theme parks.
10

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The nature and full extent of COVID-19’s effects on our operations and results are not yet known and will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity and the extent of future variants or surges of COVID-19, vaccine distribution and efficacy and other actions to contain the virus or treat its impact, among others. The consolidated financial statements reflect management’s estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures as of the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented. Actual results may differ significantly from these estimates and assumptions.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries in which a controlling interest is maintained, including variable interest entities (“VIE”) for which the Company is the primary beneficiary. Intercompany accounts and transactions between consolidated entities have been eliminated.
Unaudited Interim Financial Statements
These consolidated financial statements are unaudited; however, in the opinion of management, they reflect all adjustments consisting only of normal recurring adjustments necessary to state fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods. The results of operations for the interim periods presented are not necessarily indicative of results for the full year or future periods. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”).
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from these estimates.
Significant estimates and judgments inherent in the preparation of the consolidated financial statements include accounting for asset impairments, revenue recognition, estimated credit losses, content rights, leases, depreciation and amortization, business combinations, share-based compensation, income taxes, other financial instruments, contingencies, estimated defined benefit plan liabilities, and the determination of whether the Company should consolidate certain entities.
Summary of Significant Accounting Policies
There have been no changes to the Company's significant accounting policies described in the 2021 Form 10-K, other than updates to policies as a result of the Merger as described below.
Film and Television Content Rights
The Company groups its film and television content rights by monetization strategy. For films and television programs predominantly monetized individually, the amount of capitalized film and television production costs and the amount of participations and residuals to be recognized as expense in a particular period are determined using the individual film forecast method. Under this method, the amortization of capitalized costs and the accrual of participations and residuals are based on the proportion of the film’s or television program’s revenues recognized for such period to the film’s or television program’s estimated remaining ultimate revenues (i.e., the total revenue to be received throughout a film’s or television program’s remaining life cycle).
The process of estimating ultimate revenues requires us to make a series of judgments related to future revenue-generating activities associated with a particular film. Prior to the theatrical release of a film, our estimates are based on factors such as the historical performance of similar films, the star power of the lead actors, the rating and genre of the film, pre-release market research (including test market screenings), international distribution plans and the expected number of theaters in which the film will be released. Subsequent to release, ultimate revenues are updated to reflect initial performance, which is often predictive of future performance. For a film or television program that is predominantly monetized on its own but also monetized with other films and/or programs (such as our DTC or linear services), we make a reasonable estimate of the value attributable to the film or program’s exploitation while monetized with other films/programs and expense such costs as the film or television program is exhibited. For theatrical films, the period over which ultimate revenues from all applicable sources and exhibition windows are estimated does not exceed 10 years from the date of the film’s initial release. For television programs, the ultimate period does not exceed 10 years from delivery of the first episode, or, if still in production, five years from delivery of the most recent episode, if later. For games, the ultimate period does not exceed two years from the date of the game’s initial release. Ultimates for produced content monetized on an individual basis are reviewed and updated (as applicable) on a quarterly basis; any adjustments are applied prospectively as of the beginning of the fiscal year of the change.
11

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

For programs monetized as a group, including licensed programming, the Company’s film groups are generally aligned along the Company’s networks and digital content offerings, except for certain international territories wherein content assets are shared across the various networks in the territory and therefore, the territory is the film group. Amortization expense for each period is generally based on the revenue forecast model, which approximates the proportion that estimated distribution and advertising revenues for the current period represent in relation to the estimated remaining total lifetime revenues. Digital content and premium pay TV amortization for each period is recognized based on estimated viewing patterns as there are generally no direct revenues to associate to the individual content assets and therefore number of views is most representative of the use of the title. Licensed rights to film and television programming are typically amortized over the useful life of the program’s license period on a straight-line basis (or per-play basis, if greater, for certain programming on our ad-supported networks), or accelerated basis for licensed original programs.
Quarterly, the Company prepares analyses to support its content amortization expense. Critical assumptions used in determining content amortization for programming predominately monetized as a group include: (i) the grouping of content with similar characteristics, (ii) the application of a quantitative revenue forecast model or viewership model based on the adequacy of historical data, (iii) determining the appropriate historical periods to utilize and the relative weighting of those historical periods in the forecast model, and (iv) incorporating secondary streams. The Company then considers the appropriate application of the quantitative assessment given forecasted content use, expected content investment and market trends. Content use and future revenues may differ from estimates based on changes in expectations related to market acceptance, network affiliate fee rates, advertising demand, the number of cable and satellite television subscribers receiving the Company’s networks, the number of subscribers to its digital services, and program usage. Accordingly, the Company continually reviews its estimates and planned usage and revises its assumptions if necessary. Any material adjustments from the Company’s review of the amortization rates for assets in film groups are applied prospectively in the period of the change.
Unamortized film costs are tested for impairment whenever events or changes in circumstances indicate that the fair value of a film (or television program) predominately monetized on its own, or a film group, may be less than its unamortized costs. In addition, a change in the predominant monetization strategy is considered a triggering event for impairment testing before a title is accounted for as part of a film group. If the carrying value of an individual feature film or television program, or film group, exceeds the estimated fair value, an impairment charge will be recorded in the amount of the difference. For content that is predominately monetized individually, we utilize estimates including ultimate revenues and additional costs to be incurred (including exploitation and participation costs), in order to determine whether the carrying value of a film or television program is impaired.
Game development costs are expensed as incurred before the applicable games reach technological feasibility, or for online hosted arrangements, before the preliminary project phase is complete and it is probable the project will be completed and the software will be used to perform the function intended. Upon release, the capitalized game development costs are amortized based on the proportion of the game’s revenues recognized for such period to the game’s total current and anticipated revenues. Unamortized capitalized game production and development costs are stated at the lower of cost, less accumulated amortization, or net realizable value and reported in “Film and television content rights and games, net” on the consolidated balance sheets.
Inventory
Inventory is comprised primarily of DVDs, Blu-ray Discs and game units and is stated at the lower of cost or net realizable value in prepaid expenses and other current assets on the consolidated balance sheets. Cost is determined using the average cost method for the majority of our inventory, with the remaining inventory valued using the standard cost method, which approximates average cost. Returned goods included in inventory are valued at estimated realizable value, but not in excess of cost. The Company periodically reviews its inventory for excess and obsolete inventory. The Company's inventory consisted of the following (in millions).
September 30, 2022December 31, 2021
Raw materials$6 $— 
Work in process6 — 
Finished goods137 1 
Total inventory$149 $1 
Defined Benefit Plan
The Company maintains a defined benefit pension plan covering certain employees. Defined benefit plan obligations are based on various assumptions used by our actuaries in calculating these amounts. These assumptions include discount rates, compensation rate increases, expected return on plan assets, retirement rates and mortality rates. Actual results that differ from the assumptions and changes in assumptions could affect future expenses and obligations.
12

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Accounting and Reporting Pronouncements Adopted
LIBOR
In March 2020, the Financial Accounting Standards Board (“FASB”) issued guidance providing optional expedients and exceptions for applying U.S. GAAP to contract modifications, hedging relationships, and other transactions associated with the expected market transition away from the London Interbank Offered Rate and other interbank offered rates to alternative reference rates. The guidance is for March 12, 2020 through December 31, 2022 and may not be applied to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The Company applied the relevant provisions of the guidance to hedge relationships that were subsequently terminated in the first quarter of 2022.
Convertible Instruments
In August 2020, the FASB issued guidance simplifying the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and convertible preferred stock. This guidance amends the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions, requires the use of the if-converted method for calculating earnings per share for convertible instruments, and makes targeted improvements to the disclosures for convertible instruments and related earnings per share guidance. The Company adopted the guidance effective January 1, 2022, and there was no material impact on its consolidated financial statements.
Accounting and Reporting Pronouncements Not Adopted
Government Assistance
In November 2021, the FASB issued guidance requiring disclosure for transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy to other guidance. The annual disclosures include terms and conditions, accounting treatment and impacted financial statement lines reflecting the impact of the transactions. The guidance is effective for annual periods beginning after December 15, 2021. While the guidance will not have an effect on the Company’s consolidated statement of operations or consolidated balance sheets, the Company is currently assessing the impact this guidance will have on its financial statement disclosures.
Supplier Finance Programs
In September 2022, the FASB issued guidance updating the disclosure requirements for supplier finance program obligations. This guidance provides specific authoritative guidance for disclosure of supplier finance programs, including key terms of such programs, amounts outstanding, and where the obligations are presented in the statement of financial position. The guidance is effective for annual periods beginning after December 15, 2022, including interim periods, except for the disclosure of roll forward information, which is effective for annual periods beginning after December 15, 2023. Certain components of this guidance must be applied retrospectively, while others may be applied prospectively. Early adoption is permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures.
NOTE 2. EQUITY AND EARNINGS PER SHARE
Common Stock Issued in Connection with the WarnerMedia Merger
In connection with the Merger, each issued and outstanding share of Discovery Series A common stock, Discovery Series B common stock, and Discovery Series C common stock, was reclassified and automatically converted into one share of WBD common stock, and each issued and outstanding share of Discovery Series A-1 convertible preferred stock (“Series A-1 Preferred Stock”) and Series C-1 convertible preferred stock was reclassified and automatically converted into 13.1135 and 19.3648 shares of WBD common stock, respectively.
The Merger required the consent of Advance/Newhouse Programming Partnership under Discovery's certificate of incorporation as the sole holder of the Series A-1 Preferred Stock. In connection with Advance/Newhouse Programming Partnership’s entry into the consent agreement and related forfeiture of the significant rights attached to the Series A-1 Preferred Stock in the reclassification of the shares of Series A-1 Preferred Stock into common stock, it received an increase to the number of shares of common stock of the Company into which the Series A-1 Preferred Stock converted. The impact of the issuance of such additional shares of common stock was $789 million and was recorded as a transaction expense in selling, general and administrative expense upon the closing of the Merger.
On April 8, 2022, the Company issued 1.7 billion shares of WBD common stock as consideration paid for the acquisition of WM. (See Note 3).
13

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Earnings Per Share
All share and per share amounts have been retrospectively adjusted to reflect the reclassification and automatic conversion into WBD common stock, except for Series A-1 Preferred Stock, which has not been recast because the conversion of Series A-1 Preferred Stock into WBD common stock in connection with the Merger was considered a discrete event and treated prospectively.
The table below sets forth the Company's calculated earnings per share. Earnings per share amounts may not recalculate due to rounding.
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Numerator:
Net (loss) income$(2,285)$197 $(5,218)$1,106 
Less:
Allocation of undistributed income to Series A-1 convertible preferred stock— (17)(49)(104)
Net income attributable to noncontrolling interests(21)(32)(44)(116)
Net income attributable to redeemable noncontrolling interests(2)(9)(8)(22)
Net (loss) income allocated to Warner Bros. Discovery, Inc. Series A common stockholders for basic and diluted net (loss) income per share$(2,308)$139 $(5,319)$864 
Add:
Allocation of undistributed income to Series A-1 convertible preferred stockholders$— $17 $— $104 
Net (loss) income allocated to Warner Bros. Discovery, Inc. Series A common stockholders for diluted net (loss) income per share$(2,308)$156 $(5,319)$968 
Denominator — weighted average:
Common shares outstanding — basic2,428 589 1,775 588 
Impact of assumed preferred stock conversion— 71 — 71 
Dilutive effect of share-based awards— 3 — 6 
Common shares outstanding — diluted2,428 663 1,775 665 

Basic net (loss) income per share allocated to common stockholders$(0.95)$0.24 $(3.00)$1.47 
Diluted net (loss) income per share allocated to common stockholders$(0.95)$0.24 $(3.00)$1.46 
The table below presents the details of share-based awards that were excluded from the calculation of diluted earnings per share (in millions).
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Anti-dilutive share-based awards
59 32 48 10 
NOTE 3. ACQUISITIONS AND DISPOSITIONS
Acquisitions
WarnerMedia
On April 8, 2022, the Company completed its Merger with the WarnerMedia Business of AT&T. The Merger was executed through a Reverse Morris Trust type transaction, under which WM was distributed to AT&T’s shareholders via a pro-rata distribution, and immediately thereafter, combined with Discovery. Discovery was deemed to be the accounting acquirer of WM.
14

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The Merger combined WM’s content library of popular and valuable intellectual property with Discovery’s global footprint, collection of local-language content and deep regional expertise across more than 220 countries and territories. The Company expects this broad, worldwide portfolio of brands, coupled with its DTC potential and the attractiveness of the combined assets, to result in increased market penetration globally. The Merger is also expected to create significant cost synergies for the Company.
Purchase Price
The following table summarizes the components of the aggregate purchase consideration paid to acquire WM (in millions).
Fair value of WBD common stock issued to AT&T shareholders (1)
$42,309 
Estimated fair value of share-based compensation awards attributable to pre-combination services (2)
94 
Settlement of preexisting relationships (3)
(27)
Purchase consideration $42,376 
(1) The fair value of WBD common stock issued to AT&T shareholders represents approximately 1,732 million shares of the Company’s common stock multiplied by the closing share price for Discovery Series A common stock of $24.43 on the Nasdaq on the Closing Date. The number of shares of WBD common stock issued in the Merger was determined based on the number of fully diluted shares of Discovery, Inc. common stock immediately prior to the closing of the Merger, multiplied by the quotient of 71%/29%.
(2) This amount represents the value of AT&T restricted stock unit awards that were not vested and were replaced by WBD restricted stock unit awards with similar terms and conditions as the original AT&T awards. The conversion was based on the ratio of the volume-weighted average per share closing price of AT&T common stock on the ten trading days prior to the Closing Date and the volume-weighted average per share closing price of WBD common stock on the ten trading days following the Closing Date. The fair value of replacement equity-based awards attributable to pre-Merger service was recorded as part of the consideration transferred in the Merger. See Note 14 for additional information.
(3) The amount represents the effective settlement of outstanding payables and receivables between the Company and WM. No gain or loss was recognized upon settlement as amounts were determined to be reflective of fair market value.
Balances reflect rounding of dollar and share amounts to millions, which may result in differences for recalculated standalone amounts compared with the amounts presented above. In August 2022, the Company and AT&T finalized the post-closing working capital settlement process, pursuant to section 1.3 of the Separation and Distribution Agreement, which resulted in the Company receiving a $1.2 billion payment from AT&T in the third quarter of 2022.
Preliminary Purchase Price Allocation
The Company applied the acquisition method of accounting to WM, whereby the excess of the fair value of the purchase price paid over the fair value of identifiable net assets acquired and liabilities assumed was allocated to goodwill. Goodwill reflects the assembled workforce of WM as well as revenue enhancements, cost savings and operating synergies that are expected to result from the Merger. The goodwill recorded as part of the Merger has been provisionally allocated to the Studios, Networks and DTC reportable segments in the amount of $8,938 million, $7,015 million and $5,909 million, respectively, and is not deductible for tax purposes.
15

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The purchase price allocation is preliminary and subject to change. The Company is still evaluating the fair value of film and television library, intangible assets, and income taxes, in addition to ensuring all other assets and liabilities and contingencies have been identified and recorded. The Company has estimated the preliminary fair value of assets acquired and liabilities assumed based on information currently available and will continue to adjust those estimates as additional information pertaining to events or circumstances present at the Closing Date becomes available during the measurement period. The Company reflects measurement period adjustments in the period in which the adjustments occur, and the Company will finalize its accounting for the Merger within one year of the Closing Date. The current period adjustments were primarily related to content, taxes, investments, and capitalized interest. The cumulative impact on the consolidated statements of operations for these measurement period adjustments was $129 million for the three months ended September 30, 2022. The preliminary allocation of the purchase price to the assets acquired and liabilities assumed, measurement period adjustments, and a reconciliation to total consideration transferred is presented in the table below (in millions).
Preliminary
April 8, 2022		Measurement Period
Adjustments		Updated Preliminary
April 8, 2022
Cash$2,419 $(10)$2,409 
Accounts receivable4,224 (1)4,223 
Other current assets4,619 (217)4,402 
Film and television library28,729 (294)28,435 
Property and equipment4,260 17 4,277 
Goodwill21,513 349 21,862 
Intangible assets44,889 — 44,889 
Other noncurrent assets5,206 442 5,648 
Current liabilities (10,544)(14)(10,558)
Debt assumed(41,671)(9)(41,680)
Deferred income taxes(13,264)107 (13,157)
Other noncurrent liabilities(8,004)(370)(8,374)
Total consideration paid$42,376 $— $42,376 
16

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The fair values of the assets acquired, and liabilities assumed were preliminarily determined using the income, cost, and market approaches. The fair value measurements were primarily based on significant inputs that are not observable in the market, such as discounted cash flow analyses, and thus represent a Level 3 measurement. Significant inputs used in the discounted cash flow analyses and other areas of judgment include (i) historical and projected financial information, (ii) discount rates used to present value future cash flows, (iii) royalty rates, (iv) number of renewals for affiliate contracts, (v) synergies, including cost savings, (vi) tax rates, (vii) economic useful life of assets, and (viii) attrition rates, as relevant, that market participants would consider when estimating fair values. The following are the preliminary fair value approaches followed:
CategoryValuation Method
Trade namesRelief from royalty method of the income approach
Film and TV content library
Multi-period excess earnings method of the income approach; net book value
Affiliate contractsMulti-period excess earnings method of the income approach
FranchisesMulti-period excess earnings method of the income approach
Other intangible assetsMulti-period excess earnings method of the income approach
Licensed contentNet book value method
Licensed sports rightsDifferential method, a form of the incremental income approach
Recovery rate for advertiser relationships
With-or-without method, a form of the income approach, recovery rate of 4 years
In-place advertising networksWith-or-without method, a form of the income approach
Subscriber relationshipsReplacement cost method of the cost approach
Real estate, property and equipmentCost approach or the income approach, which estimates the value of property based on the income it generates or the market approach, which determines values based on comparable assets purchased under similar conditions
Current and noncurrent debt assumed comprising existing debt of WM, the Term Loan, and the NotesQuoted prices for identical or similar securities in active markets
The table below presents a summary of intangible assets acquired, exclusive of content assets, and the weighted average useful life of these assets.
Fair ValueWeighted Average Useful Life in Years
Trade names$21,084 25
Affiliate, advertising and subscriber relationships14,700 6
Franchises7,900 35
Other intangible assets 1,205 
Total intangible assets acquired$44,889 
The Company incurred transaction-related costs of $59 million and $340 million for the three and nine months ended September 30, 2022, respectively. These costs were associated with legal and professional services and were recognized as operating expenses on the consolidated statement of operations. Additionally, the expense related to the issuance of additional shares of common stock in connection with the conversion of Advance/Newhouse Programming's Series A-1 Preferred Stock was $789 million and was recorded as a transaction expense in selling, general and administrative expense upon the closing of the Merger. (See Note 2.)
17

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

As a result of the Merger, WM's assets, liabilities, and operations were included in the Company's consolidated financial statements from the Closing Date. The following table presents WM revenue and earnings as reported within the consolidated financial statements (in millions).
Three Months Ended June 30, 2022Three Months Ended September 30, 2022Nine Months Ended September 30, 2022
Revenues:
Advertising$1,163 $761 $1,924 
Distribution3,526 3,730 7,256 
Content 2,835 3,147 5,982 
Other208 245 453 
Total revenues7,732 7,883 15,615 
Inter-segment eliminations(840)(699)(1,539)
Net revenues$6,892 $7,184 $14,076 
Net loss available to Warner Bros. Discovery, Inc.$(3,020)$(2,135)$(5,155)
Pro Forma Combined Financial Information
The following unaudited pro forma combined financial information presents the combined results of the Company and WM as if the Merger had been completed on January 1, 2021. The unaudited pro forma combined financial information is presented for informational purposes and is not indicative of the results of operations that would have been achieved if the Merger had occurred on January 1, 2021, nor is it indicative of future results. The following table presents the Company's pro forma combined revenues and net income (in millions).
Three Months Ended September 30,Nine Months Ended September 30,
202120222021
Revenues$10,980 $32,087 $32,913 
Net loss available to Warner Bros. Discovery, Inc.(659)(4,132)(2,795)
The unaudited pro forma combined financial information includes, where applicable, adjustments for (i) additional costs of revenues from the fair value step up of film and television library, (ii) additional amortization expense related to acquired intangible assets, (iii) additional depreciation expense from the fair value of property and equipment, (iv) transaction costs and other one-time non-recurring costs, (v) additional interest expense for borrowings related to the Merger and amortization associated with fair value adjustments of debt assumed, (vi) changes to align accounting policies, (vii) elimination of intercompany activity, and (viii) associated tax-related impacts of adjustments. These pro forma adjustments are based on available information as of the date hereof and upon assumptions that the Company believes are reasonable to reflect the impact of the Merger with WM on the Company's historical financial information on a supplemental pro forma basis. Adjustments do not include costs related to integration activities, cost savings or synergies that have been or may be achieved by the combined business.
Dispositions
In September 2022, the Company sold 75% of its interest in The CW Network to Nexstar Media Inc. (“Nexstar”), in exchange for Nexstar agreeing to fund a majority of The CW Network’s expenses and the retention of the Company’s share of certain receivables that existed prior to the transaction. There was no cash consideration exchanged in the transaction. The Company recorded an immaterial gain and retained a 12.5% ownership interest in The CW Network, which is accounted for as an equity method investment.
In April 2022, the Company completed the sale of its minority interest in Discovery Education for a sale price of $138 million and recorded a gain of $133 million.
In June 2021, the Company completed the sale of its Great American Country network to Hicks Equity Partners for a sale price of $90 million and recorded a gain of $76 million.
18

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 4. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The carrying value and changes in the carrying value of goodwill attributable to each reportable segment were as follows (in millions).
U.S.
Networks		International
Networks		StudiosNetworksDTCTotal
December 31, 2021$10,813 $2,099 $— $— $— $12,912 
Segment recast (See Note 20)
(10,813)(2,059)— 10,555 2,317 — 
Acquisitions (See Note 3)
— — 8,938 7,015 5,909 21,862 
Foreign currency translation and other— (40)(16)(220)(48)(324)
September 30, 2022$— $— $8,922 $17,350 $8,178 $34,450 
The Networks segment included accumulated goodwill impairments of $1.6 billion as of September 30, 2022 and December 31, 2021. The Studios and DTC segments did not include any accumulated goodwill impairments as of September 30, 2022 and December 31, 2021.
Intangible Assets
Finite-lived intangible assets consisted of the following (in millions, except years).
 Weighted
Average
Amortization
Period (Years)		September 30, 2022December 31, 2021
GrossAccumulated 
Amortization		NetGrossAccumulated
Amortization		Net
Intangible assets subject to amortization:
Trademarks and trade names32$22,872 $(1,246)$21,626 $1,716 $(858)$858 
Affiliate, advertising and subscriber relationships823,927 (7,839)16,088 9,433 (4,303)5,130 
Franchises357,900 (108)7,792 — — — 
Character rights14995 (35)960 — — — 
Other6544 (266)278 395 (227)168 
Total$56,238 $(9,494)$46,744 $11,544 $(5,388)$6,156 
Amortization expense relating to finite-lived intangible assets was $1,937 million and $266 million for the three months ended September 30, 2022 and 2021, respectively, and $4,376 million and $814 million for the nine months ended September 30, 2022 and 2021, respectively.
Amortization expense relating to intangible assets subject to amortization for each of the next five years and thereafter is estimated to be as follows (in millions).
Remaining 20222023202420252026Thereafter
Amortization expense$1,845 $6,479 $4,967 $3,595 $2,592 $27,266 
Indefinite-lived intangible assets not subject to amortization (in millions):
 September 30, 2022December 31, 2021
Trademarks$— $161 
19

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Impairment Analysis
During the second quarter of 2022, the Company performed a qualitative goodwill impairment assessment for all reporting units in conjunction with the change in its segment presentation, and determined that it was more likely than not that the fair value of those reporting units exceeded their carrying values; therefore, no quantitative goodwill impairment analysis was performed. Due to global macro-economic conditions, the Company will continue to monitor its reporting units for changes that could impact recoverability.
NOTE 5. RESTRUCTURING AND OTHER CHARGES
In connection with the Merger, the Company has announced and has taken actions to implement projects to achieve cost synergies for the Company. The Company finalized the framework supporting its ongoing restructuring and transformation initiatives during the three months ended September 30, 2022, which will include, among other things, strategic content programming assessments, organization restructuring, facility consolidation activities, and other contract termination costs. While the Company’s restructuring efforts are ongoing, including the strategic analysis of content programming, the restructuring program is expected to be substantially completed by the end of 2024.
Restructuring and other charges by reportable segments and corporate were as follows (in millions).
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Studios$562 $— $762 $— 
Networks354 6 666 27 
DTC517 1 992 2 
Corporate93 — 162 — 
Inter-segment eliminations (5)— (23)— 
Total restructuring and other charges$1,521 $7 $2,559 $29 
Total restructuring charges for the three months ended September 30, 2022 included content impairments of $891 million, organization restructuring costs of $238 million, other content development costs and write-offs of $377 million, and contract terminations costs of $15 million, and for the nine months ended September 30, 2022 included content impairments of $1,392 million, organization restructuring costs of $446 million, other content development costs and write-offs of $706 million, and contract terminations costs of $15 million.
Changes in restructuring and other liabilities recorded in accrued liabilities by major category and by reportable segment and corporate were as follows (in millions).
U.S. NetworksInternational NetworksStudiosNetworksDTCCorporate and Inter-Segment EliminationsTotal
December 31, 2021$4 $13 $— $— $— $2 $19 
Segment recast (See Note 20)
(4)(13)— 15 — 2 — 
Acquisitions (See Note 3)— — 40 — 14 55 109 
Employee termination accruals, net— — 88 95 45 218 446 
Cash paid— — (19)(15)(13)(48)(95)
September 30, 2022$— $— $109 $95 $46 $229 $479 
20

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 6. REVENUES
The following table presents the Company’s revenues disaggregated by revenue source (in millions).
Three Months Ended September 30, 2022
StudiosNetworksDTCCorporate and Inter-segment EliminationsTotal
Revenues:
Advertising$8 $1,944 $106 $(16)$2,042 
Distribution4 2,924 2,062 — 4,990 
Content2,884 277 145 (775)2,531 
Other192 69 4 (5)260 
Total$3,088 $5,214 $2,317 $(796)$9,823 
Three Months Ended September 30, 2021
StudiosNetworksDTCCorporate and Inter-segment EliminationsTotal
Revenues:
Advertising$— $1,416 $37 $— $1,453 
Distribution— 1,118 210 — 1,328 
Content6 339 7 — 352 
Other— 16 1 — 17 
Total$6 $2,889 $255 $— $3,150 
Nine Months Ended September 30, 2022
StudiosNetworksDTCCorporate and Inter-segment EliminationsTotal
Revenues:
Advertising$18 $5,998 $248 $(25)$6,239 
Distribution8 6,885 4,287 — 11,180 
Content5,525 813 279 (1,699)4,918 
Other338 133 9 (8)472 
Total$5,889 $13,829 $4,823 $(1,732)$22,809 
Nine Months Ended September 30, 2021
StudiosNetworksDTCCorporate and Inter-segment EliminationsTotal
Revenues:
Advertising$— $4,409 $87 $— $4,496 
Distribution— 3,399 499 — 3,898 
Content13 541 10 — 564 
Other— 44 2 — 46 
Total$13 $8,393 $598 $— $9,004 
21

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Reserves for Credit Losses
Reserves for accounts receivable reflect expected credit losses, which are estimated based on historical experience, as well as current and expected economic conditions and industry trends. The allowance for credit losses was $126 million at September 30, 2022 and $54 million at December 31, 2021. The increase was primarily attributable to the acquisition of existing WM receivables in the Merger with WM. The corresponding expense for the expected credit losses is reflected in selling, general and administrative expenses.
Contract Assets and Liabilities
A contract asset is recorded when revenue is recognized in advance of the Company's right to bill and receive consideration and that right is conditioned upon something other than the passage of time. A contract liability, such as deferred revenue, is recorded when the Company has recorded billings in conjunction with its contractual right or when cash is received in advance of the Company's performance.
The following table presents contract assets and liabilities on the consolidated balance sheets (in millions).
CategoryBalance Sheet LocationSeptember 30, 2022December 31, 2021
Contract assetsPrepaid expenses and other current assets$15 $— 
Contract assetsOther noncurrent assets32 — 
Contract liabilitiesDeferred revenues1,688 478 
Contract liabilitiesOther noncurrent liabilities296 95 
The change in deferred revenue for the nine months ended September 30, 2022 primarily reflects an increase of $1,476 million related to the Merger and cash payments received for which the performance obligation was not satisfied prior to the end of the period, partially offset by $376 million of revenues recognized that were included in the deferred revenue balance at December 31, 2021. Revenue recognized for the nine months ended September 30, 2021 related to the deferred revenue balance at December 31, 2020 was $414 million.
Transaction Price Allocated to Remaining Performance Obligations
Most of the Company's distribution contracts are licenses of functional intellectual property where revenue is derived from royalty-based arrangements, for which the guidance allows the application of a practical expedient to record revenues as a function of royalties earned to date instead of estimating incremental royalty contract revenue. Accordingly, in these instances revenue is recognized based upon the royalties earned to date. However, there are certain other distribution arrangements that are fixed price or contain minimum guarantees that extend beyond one year. The Company recognizes revenue for fixed fee distribution contracts on a monthly basis based on minimum monthly fees; by calculating one twelfth of annual license fees specified in its distribution contracts; or based on the pro-rata fees earned calculated on the license fees specified in the distribution contract. The transaction price allocated to remaining performance obligations within these fixed price or minimum guarantee distribution revenue contracts was $4.9 billion as of September 30, 2022 and is expected to be recognized over the next seven years.
The Company's content licensing contracts and sports sublicensing deals are licenses of functional intellectual property. The transaction price allocated to remaining performance obligations on these contracts was $5.3 billion as of September 30, 2022 and is expected to be recognized over the next eight years.
The Company's brand licensing contracts are licenses of symbolic intellectual property. The transaction price allocated to remaining performance obligations on these contracts was $2.4 billion as of September 30, 2022 and is expected to be recognized over the next 21 years.
The Company's advertising contracts are principally generated from the sale of advertising campaigns comprised of multiple commercial units. In contracts with guaranteed impressions, we have identified the overall advertising campaign as the performance obligation to be satisfied over time, and impressions delivered against the satisfaction of our guarantee as the measure of progress. Certain of these arrangements extend beyond one year. The transaction price allocated to remaining performance obligations on these long-term contracts was $569 million as of September 30, 2022 and is expected to be recognized over the next three years.
The value of unsatisfied performance obligations disclosed above does not include: (i) contracts involving variable consideration for which revenues are recognized in accordance with the sales or usage-based royalty exception, and (ii) contracts with an original expected length of one year or less, such as most advertising contracts; however for content licensing revenues, including revenues associated with the licensing of theatrical and television product for television and streaming services, the Company has included all contracts regardless of duration.
22

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 7. SALES OF RECEIVABLES
Revolving Receivables Program
The Company has a revolving agreement to transfer up to $5,700 million of certain receivables through its bankruptcy-remote subsidiary Warner Bros. Discovery Receivables Funding, LLC to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred. The Company services sold receivables for a fee and pays fees to the financial institution in connection with this revolving agreement. This agreement is subject to renewal on an annual basis and the transfer limit may be expanded or reduced from time to time. As customers pay their balances, the Company’s available capacity under this revolving agreement increases and typically the Company transfers additional receivables into the program. Our bankruptcy-remote consolidated subsidiary held $3,242 million of pledged receivables as of September 30, 2022 in connection with this revolving agreement. The gross value of the proceeds received results in derecognition of receivables and the obligations assumed are recorded at fair value. The obligations assumed when proceeds are received relate to expected credit losses on sold receivables and estimated fee payments made on outstanding sold receivables already transferred. The obligations are subsequently adjusted for changes in estimated expected credit losses and interest rates, which are considered Level 3 fair value measurements since the inputs are unobservable. In some cases, the Company may have collections that have not yet been remitted to the bank, resulting in a liability. For the three and nine months ended September 30, 2022, the Company has recognized a $93 million and $134 million net loss in selling, general and administrative expense from the revolving receivables program in the consolidated statements of operations, respectively. The outstanding portfolio of receivables derecognized from our consolidated balance sheets was $5,191 million as of September 30, 2022.
The following table presents a summary of receivables sold (in millions).
Three Months Ended September 30, 2022Nine Months Ended September 30, 2022
Gross receivables sold/cash proceeds received$3,283 $6,488 
Collections reinvested under revolving agreement(3,792)(7,297)
Net cash proceeds received (a)
$(509)$(809)
Net receivables sold$3,272 $6,470 
Obligations recorded$129 $227 
(a) Includes the collections on receivables sold but not remitted of $236 million at period end.
The following table presents a summary of the amounts transferred or pledged (in millions):
September 30, 2022
Gross receivables pledged as collateral$3,242 
Balance sheet classification:
Receivables, net$3,041 
Other noncurrent assets$201 
Accounts Receivable Factoring
The Company has a factoring agreement to sell certain of its non-U.S. trade accounts receivable on a non-recourse basis to a third-party financial institution. The Company accounts for these transactions as sales in accordance with ASC 860, “Transfers and Servicing”, when its continuing involvement subsequent to the transfer is limited to providing certain servicing and collection actions on behalf of the purchaser of the designated trade accounts receivable. Proceeds from amounts factored are recorded as an increase to cash and cash equivalents and a reduction to receivables, net in the consolidated balance sheets. Cash received is also reflected as cash provided by operating activities in the consolidated statements of cash flows. Total trade accounts receivable sold under the factoring arrangements was $38 million as of September 30, 2022. The impact to the consolidated statements of operations was immaterial for the three and nine months ended September 30, 2022. This accounts receivable factoring agreement is separate and distinct from the revolving receivables program.
23

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 8. CONTENT RIGHTS
For purposes of amortization and impairment, capitalized content costs are grouped based on their predominant monetization strategy: individually or as a group. Programming rights include internally developed and licensed content predominately monetized as a group by our Networks and DTC segments. The table below presents the components of content rights (in millions).
September 30, 2022
Predominantly Monetized Individually
Predominantly Monetized as a Group
Total
Theatrical film production costs:
Released, less amortization$3,196 $— $3,196 
Completed and not released588 — 588 
In production1,875 — 1,875 
Development and pre-production96 — 96 
Television production costs:
Released, less amortization908 6,560 7,468 
Completed and not released978 491 1,469 
In production453 3,773 4,226 
Development and pre-production45 20 65 
Total theatrical film and television production costs$8,139 $10,844 $18,983 
Programming rights, less amortization9,196 
Game development costs, less amortization724 
Total film and television content rights and games28,903 
Less: Current content rights and prepaid license fees, net(615)
Total noncurrent film and television content rights and games, net$28,288 

24

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

December 31, 2021
Predominantly Monetized Individually
Predominantly Monetized as a Group
Total
Theatrical film production costs:
Released, less amortization$— $— $— 
Completed and not released— — — 
In production— — — 
Development and pre-production— — — 
Television production costs:
Released, less amortization9 2,432 2,441 
Completed and not released— — — 
In production— 770 770 
Development and pre-production— 17 17 
Total theatrical film and television production costs$9 $3,219 $3,228 
Programming rights, less amortization849 
Game development costs, less amortization— 
Total film and television content rights4,077 
Less: Current content rights and prepaid license fees, net(245)
Total noncurrent film and television content rights, net$3,832 
Content expense consisted of the following (in millions).
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Monetized individually
Content amortization$1,357 $469 $3,534 $518 
Content impairments322 — 416 — 
Total content expense monetized individually$1,679 $469 $3,950 $518 
Monetized as a group
Content amortization$2,584 $748 $6,492 $2,214 
Content impairments587 2 999 3 
Total content expense monetized as a group$3,171 $750 $7,491 $2,217 
Total content expense$4,850 $1,219 $11,441 $2,735 
Content expense includes amortization, impairments, and development expense and is generally a component of costs of revenues on the consolidated statements of operations. Content impairments for the three and nine months ended September 30, 2022 of $891 million and $1,392 million, respectively, and content development write-offs for the three and nine months ended September 30, 2022 of $234 million and $563 million, respectively, were due to the abandonment of certain content categories in connection with the strategic realignment of content following the Merger and are reflected in restructuring and other charges in the Studios, Networks and DTC segments. No content impairments were recorded as a component of restructuring and other charges for the three and nine months ended September 30, 2021.
Other content development costs not previously capitalized as content assets for the three and nine months ended September 30, 2022 were $220 million and $292 million, respectively, of which $143 million for the three and nine months ended September 30, 2022 was due to the abandonment of certain content categories in connection with the strategic realignment of content following the Merger and is reflected in restructuring and other charges in the Studios, Networks, and DTC segments.
25

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 9. INVESTMENTS
The Company’s equity investments consisted of the following, net of investments recorded in other noncurrent liabilities (in millions).
CategoryBalance Sheet LocationOwnershipSeptember 30, 2022December 31, 2021
Equity method investments:
The Chernin Group (TCG) 2.0-A, LPOther noncurrent assets44%$327 $— 
nC+Other noncurrent assets32%115 151 
OtherOther noncurrent assets703 390 
Total equity method investments1,145 541 
Investments with readily determinable fair valuesOther noncurrent assets36 80 
Investments with readily determinable fair valuesPrepaid expenses and other current assets— 40 
Total investments with readily determinable fair values36 120 
Investments without readily determinable fair valuesOther noncurrent assets635 496 
Total investments$1,816 $1,157 
Equity Method Investments
Investments in equity method investees are those for which the Company has the ability to exercise significant influence but does not control and is not the primary beneficiary or the entity is not a VIE and the Company does not have a controlling financial interest. In connection with the Merger, the Company acquired $807 million of equity method investments. Impairment losses are recorded in loss from equity investees, net on the consolidated statements of operations. Impairment losses for the three and nine months ended September 30, 2022 were not material.
During the three months ended September 30, 2022, the Company entered into an agreement with British Telecommunications Plc (“BT”) to form a 50:50 joint venture to create a new premium sports offering for the United Kingdom and Ireland, with each party directly contributing or sublicensing its respective operating business and related sports rights and distribution to the joint venture. The Company has determined the joint venture is a VIE, as the Company and BT have equal governance and voting rights and the Company’s 50% equity interest in the joint venture gives it the ability to exercise significant influence over the entity’s operating and financial policies; however, BT is the primary beneficiary given its disproportionate share of earnings compared to its voting rights during the first four years of the joint venture. Accordingly, the Company accounts for its investment in the joint venture as an equity method investment. Additionally, the Company has a call option to obtain the remaining 50% equity interest in September 2024 and September 2026, at the then fair market value plus the expected earnings that BT would have received in the two years following the call option.
Certain of the Company's other equity method investments are VIEs, for which the Company is not the primary beneficiary. As of September 30, 2022, the Company’s maximum exposure for all of its unconsolidated VIEs, including the investment carrying values and unfunded contractual commitments made on behalf of VIEs, was approximately $867 million. The Company's maximum estimated exposure excludes the non-contractual future funding of VIEs. The aggregate carrying values of these VIE investments were $827 million as of September 30, 2022 and $126 million as of December 31, 2021. VIE gains and losses are recorded in loss from equity investees, net on the consolidated statements of operations, and were not material for the three and nine months ended September 30, 2022 and 2021.
Investments with Readily Determinable Fair Value
Investments in entities or other securities in which the Company has no control or significant influence, is not the primary beneficiary, and have a readily determinable fair value are classified as equity investments with readily determinable fair value. The investments are measured at fair value based on a quoted market price per unit in active markets multiplied by the number of units held without consideration of transaction costs (Level 1). Gains and losses are recorded in other (expense) income, net on the consolidated statements of operations.
26

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The gains and losses related to the Company's investments with readily determinable fair values for the three and nine months ended September 30, 2022 and 2021 are summarized in the table below (in millions).
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net (losses) gains recognized during the period on equity securities$(9)$(31)$(70)$31 
Less: Net gains recognized on equity securities sold— — — 16 
Unrealized (losses) gains recognized during reporting period on equity securities still held at the reporting date$(9)$(31)$(70)$15 
Equity investments without readily determinable fair values assessed under the measurement alternative
Equity investments without readily determinable fair value include ownership rights that either (i) do not meet the definition of in-substance common stock or (ii) do not provide the Company with control or significant influence and these investments do not have readily determinable fair values.
In connection with the Merger, the Company acquired $156 million in equity method investments without readily determinable fair values. During the nine months ended September 30, 2022, the Company did not invest in any material equity investments without readily determinable fair values and concluded there were no indicators that a change in fair value had taken place. As of September 30, 2022, the Company had recorded cumulative upward adjustments of $9 million and cumulative impairments of $88 million for its equity investments without readily determinable fair values.
NOTE 10. DEBT
The table below presents the components of outstanding debt (in millions).
Weighted-Average
Interest Rate as of
September 30, 2022		September 30, 2022December 31, 2021
Term loans with maturities of 3 years or less3.83 %$4,000 $— 
Floating rate senior notes with maturities of 5 years or less4.71 %500 — 
Senior notes with maturities of 5 years or less3.62 %13,627 4,314 
Senior notes with maturities between 5 and 10 years4.25 %10,373 4,128 
Senior notes with maturities greater than 10 years5.11 %21,644 6,745 
Total debt50,144 15,187 
Unamortized discount, premium, debt issuance costs, and fair value adjustments for acquisition accounting, net(275)(428)
Debt, net of unamortized discount, premium, debt issuance costs, and fair value adjustments for acquisition accounting49,869 14,759 
Current portion of debt(1,257)(339)
Noncurrent portion of debt$48,612 $14,420 
During the three months ended September 30, 2022, the Company repaid $2.5 billion of aggregate principal amount outstanding of its term loan prior to its due date of April 2025.
During the three months ended June 30, 2022, the Company repaid $3.5 billion of aggregate principal amount outstanding of its term loans prior to the due dates of October 2023 and April 2025. The Company also assumed $41.5 billion of senior notes (at par value) and term loans during the Merger.
During the three months ended March 31, 2022, the Company repaid in full at maturity $327 million aggregate principal amount outstanding of its 2.375% Euro Denominated Senior Notes due March 2022.
During the three months ended September 30, 2021, the Company redeemed in full $168 million aggregate principal amount outstanding of its 3.300% Senior Notes due May 2022 and $62 million aggregate principal amount outstanding of its 3.500% Senior Notes due June 2022. In the first quarter of 2021, the Company redeemed in full $335 million aggregate principal amount outstanding of its 4.375% Senior Notes due June 2021.
The redemptions during 2022 and 2021 resulted in an immaterial loss on extinguishment of debt.
27

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

As of September 30, 2022, all senior notes are fully and unconditionally guaranteed by the Company, Scripps Networks Interactive, Inc. (“Scripps Networks”), Discovery Communications, LLC (“DCL”) (to the extent it is not the primary obligor on such senior notes), and WarnerMedia Holdings, Inc. (to the extent it is not the primary obligor on such senior notes), except for $1.5 billion of senior notes of the legacy WarnerMedia Business assumed by the Company in connection with the Merger and $23 million of un-exchanged senior notes issued by Scripps Networks. Additionally, the term loans of WarnerMedia Holdings, Inc., made under the $10.0 billion term loan credit agreement (the “Term Loan Credit Agreement”), are fully and unconditionally guaranteed by the Company, Scripps Networks, and DCL.
Revolving Credit Facility and Commercial Paper Programs
In June 2021, DCL entered into a multicurrency revolving credit agreement (the “Revolving Credit Agreement”), replacing the existing $2.5 billion credit agreement, dated February 4, 2016, as amended. Following the Merger, DCL has the capacity to borrow up to $6.0 billion under the Revolving Credit Agreement (the “Credit Facility”). The Revolving Credit Agreement includes a $150 million sublimit for the issuance of standby letters of credit. DCL may also request additional commitments up to $1.0 billion from the lenders upon satisfaction of certain conditions. Obligations under the Revolving Credit Agreement are unsecured and are fully and unconditionally guaranteed by the Company, Scripps Networks, and WarnerMedia Holdings, Inc. The Credit Facility will be available on a revolving basis until June 2026, with an option for up to two additional 364-day renewal periods subject to the lenders' consent. The Revolving Credit Agreement contains customary representations and warranties as well as affirmative and negative covenants.
Additionally, the Company's commercial paper program is supported by the Credit Facility. Under the commercial paper program, the Company may issue up to $1.5 billion, including up to $500 million of euro-denominated borrowings. Borrowing capacity under the Credit Facility is effectively reduced by any outstanding borrowings under the commercial paper program.
As of September 30, 2022 and December 31, 2021, the Company had no outstanding borrowings under the Credit Facility or the commercial paper program.
Credit Agreement Financial Covenants
The Revolving Credit Agreement and Term Loan Credit Agreement (together, the “Credit Agreements”) include financial covenants that require the Company to maintain a minimum consolidated interest coverage ratio of 3.00 to 1.00 and a maximum adjusted consolidated leverage ratio of 5.75 to 1.00 following the closing of the Merger, with step-downs to 5.00 to 1.00 and 4.50 to 1.00 on the first and second anniversaries of the closing, respectively. As of September 30, 2022, DCL and WarnerMedia Holdings, Inc. were in compliance with all covenants and there were no events of default under the Credit Agreements.
NOTE 11. LEASES
The Company has operating and finance leases for transponders, office space, studio facilities, and other equipment. Our leases have remaining lease terms of up to 30 years, some of which include options to extend the leases for up to 10 years. Most leases are not cancelable prior to their expiration. In connection with the Merger, the Company acquired $2,493 million and $47 million of operating and finance lease right-of-use assets, respectively.
The components of lease cost were as follows (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Operating lease cost$116 $25 $254 $78 
Finance lease cost:
Amortization of right-of-use assets$21 $16 $58 $44 
Interest on lease liabilities2 2 6 6 
Total finance lease cost$23 $18 $64 $50 
Variable lease cost$43 $2 $50 $6 
Total lease cost $182 $45 $368 $134 
28

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Supplemental cash flow information related to leases was as follows (in millions):
Nine Months Ended September 30,
20222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$(250)$(86)
Operating cash flows from finance leases$(11)$(6)
Financing cash flows from finance leases$(54)$(49)
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$428 $39 
Finance leases$30 $87 
Supplemental balance sheet information related to leases was as follows (in millions):
CategoryLocation on
Balance Sheet		September 30, 2022December 31, 2021
Operating Leases
Operating lease right-of-use assetsOther noncurrent assets$3,222 $535 
Operating lease liabilities (current)Accrued liabilities$337 $62 
Operating lease liabilities (noncurrent)Other noncurrent liabilities3,003 567 
Total operating lease liabilities$3,340 $629 
Finance Leases
Finance lease right-of-use assetsProperty and equipment, net$246 $249 
Finance lease liabilities (current)Accrued liabilities$81 $58 
Finance lease liabilities (noncurrent)Other noncurrent liabilities187 197 
Total finance lease liabilities$268 $255 
September 30, 2022December 31, 2021
Weighted average remaining lease term (in years):
Operating leases1212
Finance leases55
Weighted average discount rate:
Operating leases4.10 %2.94 %
Finance leases3.19 %3.57 %

29

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Maturities of lease liabilities as of September 30, 2022 were as follows (in millions):
Operating LeasesFinance Leases
2022 (excluding the three quarters ended September 30, 2022)$173 $74 
2023450 70 
2024407 55 
2025354 34 
2026323 25 
Thereafter2,610 31 
Total lease payments4,317 289 
Less: Imputed interest(977)(21)
Total$3,340 $268 
As of September 30, 2022, the Company has additional leases that have not yet commenced with total minimum lease payments of $477 million, primarily related to facility leases. The remaining leases will commence between 2022 and 2023, have lease terms of 3 to 17 years, and include options to extend the terms for up to 10 additional years.
NOTE 12. DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses derivative financial instruments to modify its exposure to market risks from changes in foreign currency exchange rates and interest rates. The Company does not enter into or hold derivative financial instruments for speculative trading purposes.
Cash Flow Hedges
On January 1, 2022, the Company discontinued hedge accounting for certain forward starting interest rate swap contracts with a total notional value of $2 billion. The Company previously recognized a gain of $33 million in accumulated other comprehensive loss that will be amortized as an adjustment to interest expense, net over the respective terms of future issuances of debt. Subsequently, the Company unwound and settled the contracts and received cash of $122 million, including an $89 million realized gain for changes in fair market value between the dedesignation date and settlement date that was recognized in other (expense) income, net in the consolidated statements of operations.
In connection with the Merger, the Company acquired two cash flow hedging programs to mitigate foreign currency risk including $922 million notional of production expense hedges and $776 million notional of production rebate hedges. These cash flow hedging programs are carried at fair market value using the spot method, with fair market value changes recorded in other comprehensive income until the production is released. Excluded components of the fair market value, including forward points, are included in current earnings.
During the three months ended September 30, 2022, the Company executed a fixed-to-fixed cross-currency swap with a total notional value of $435 million and an expiration date of 2024 to mitigate foreign currency risk associated with the Company’s British pound sterling (“GBP”) denominated debt, which was previously designated as a net investment hedge prior to the execution of this cash flow hedge.
Net Investment Hedges
During the three months ended March 31, 2022, the Company dedesignated, unwound, and settled certain fixed-to-fixed cross-currency swaps with a total notional value of $705 million associated with the Company's Euro functional subsidiaries. The Company recognized a realized gain of $10 million related to the excluded component of the hedge relationship in other (expense) income, net in the consolidated statements of operations, and recognized a gain of $6 million in accumulated other comprehensive loss.
Also during the three months ended March 31, 2022, the Company executed cross currency swaps with a notional value of $664 million with expiration dates in 2025 to replace the aforementioned swaps that matured.
During the three months ended June 30, 2022, the Company unwound and settled certain cross-currency swaps with a total notional value of $2 billion and recorded a gain of $78 million.
During the three months ended September 30, 2022, the Company executed a fixed-to-fixed cross-currency swap with a total notional value of $194 million and an expiration date of 2024 to mitigate foreign currency risk associated with the Company’s Euro functional subsidiaries.
30

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The Company previously designated its GBP-denominated debt as the hedging instrument in a net investment hedge of the variability in the value of its GBP-functional subsidiaries due to fluctuations in foreign currency exchange rates. During the three months ended September 30, 2022, the Company dedesignated the GBP-denominated debt net investment hedge. Contemporaneously, the Company entered into the aforementioned fixed-to-fixed cross-currency swap and designated it as the hedging instrument in a cash flow hedge of functional-currency equivalent cash flows associated with its GBP-denominated debt between the designation date and September 2024, the maturity date of the GBP-denominated debt.
In connection with the Merger, the Company also acquired $173 million of Euro denominated debt that is designated as the hedging instrument in a net investment hedge of the variability in the value of its Euro-functional subsidiaries with all foreign exchange spot changes accounted for as currency translation adjustments.
No Hedging Designation
During the three months ended March 31, 2022, the Company dedesignated, unwound and settled forward starting interest rate swap contracts with a total notional value of $5.0 billion, swaption collars with a total notional value of $2.5 billion, and purchase payer swaptions with a total notional value of $7.5 billion. The Company received cash of $474 million upon settlement, including $142 million in premiums paid at execution during 2021, resulting in a gain of $332 million that was recognized in other (expense) income, net in the consolidated statements of operations.
Also during the three months ended March 31, 2022, the Company executed and subsequently settled treasury locks with a total notional value of $14.5 billion. The Company received cash of $90 million upon settlement, resulting in a gain of $90 million that was recognized in other (expense) income, net in the consolidated statements of operations.
Finally, during the three months ended March 31, 2022, the Company unwound and settled a foreign exchange forward contract with a notional value of $375 million associated with the Company's Euro denominated debt that was paid in full at maturity. The Company recognized a loss of $48 million in other (expense) income, net in the consolidated statements of operations.
In connection with the Merger, the Company acquired $322 million of economic hedges to mitigate foreign currency risk for production expenses that are not designated for hedge accounting. The fair market value changes of these derivatives are expensed to other (expense) income, net.
The following table summarizes the impact of derivative financial instruments on the Company's consolidated balance sheets (in millions). There were no amounts eligible to be offset under master netting agreements as of September 30, 2022 and December 31, 2021. The fair value of the Company's derivative financial instruments was determined using a market-based approach (Level 2).
September 30, 2022December 31, 2021
Fair ValueFair Value
NotionalPrepaid expenses and other current assetsOther non-
current assets		Accounts payable and accrued liabilitiesOther non-
current liabilities		NotionalPrepaid expenses and other current assetsOther non-
current assets		Accounts payable and accrued liabilitiesOther non-
current liabilities
Cash flow hedges:
Foreign exchange$1,649 $42 $79 $82 $33 $777 $14 $— $2 $— 
Interest rate swaps — — — — — 2,000 44 — 11 — 
Cross-currency swaps435 3 14 — — — — — — — 
Net investment hedges: (a)
Cross-currency swaps1,651 19 14 — 104 3,512 54 61 20 76 
No hedging designation:
Foreign exchange906 6 1 3 118 1,020 — — 34 66 
Interest rate swaps— — — — — 15,000 126 28 9 5 
Cross-currency swaps139 3 9 — — 139 3 — — 5 
Total$73 $117 $85 $255 $241 $89 $76 $152 
(a) Excludes €164 million of euro-denominated notes ($160 million equivalent at September 30, 2022) designated as net investment hedges and £400 million of sterling notes designated as net investment hedges at December 31, 2021 (dedesignated during the three months ended September 30, 2022). (See Note 10.)
31

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The following table presents the pre-tax impact of derivatives designated as cash flow hedges on income and other comprehensive income (loss) (in millions).
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Gains (losses) recognized in accumulated other comprehensive loss:
Foreign exchange - derivative adjustments
$30 $15 $10 $45 
Interest rate - derivative adjustments
— 3 — 129 
Gains (losses) reclassified into income from accumulated other comprehensive loss:
Foreign exchange - advertising revenue
— 1 1 1 
Foreign exchange - distribution revenue
(2)2 — 1 
Foreign exchange - costs of revenues
8 — 27 — 
Interest rate - interest expense, net— — (1)(1)
If current fair values of designated cash flow hedges as of September 30, 2022 remained static over the next twelve months, the Company would reclassify $1 million of net deferred losses from accumulated other comprehensive loss into income in the next twelve months. The maximum length of time the Company is hedging exposure to the variability in future cash flows is 33 years.
The following table presents the pre-tax impact of derivatives designated as net investment hedges on other comprehensive income (loss) (in millions). Other than amounts excluded from effectiveness testing, there were no other gains (losses) reclassified from accumulated other comprehensive loss to income during the three and nine months ended September 30, 2022 and 2021.
Three Months Ended September 30,
Amount of gain (loss) recognized in AOCILocation of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
2022202120222021
Cross currency swaps$(63)$46 Interest expense, net$5 $10 
Foreign exchange contracts— 4 Other (expense) income, net— — 
Euro-denominated notes (foreign denominated debt)13 — N/A— — 
Sterling notes (foreign denominated debt)58 14 N/A— — 
Total$8 $64 $5 $10 
Nine Months Ended September 30,
Amount of gain (loss) recognized in AOCILocation of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
2022202120222021
Cross currency swaps$8 $93 Interest expense, net$27 $31 
Foreign exchange contracts— 4 Other (expense) income, net— — 
Euro denominated notes (foreign denominated debt)19 — N/A— — 
Sterling notes (foreign denominated debt)112 6 N/A— — 
Total$139 $103 $27 $31 
32

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The following table presents the pretax gains (losses) on derivatives not designated as hedges and recognized in other (expense) income, net in the consolidated statements of operations (in millions).
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Interest rate swaps$— $106 $512 $106 
Cross-currency swaps5 2 12 8 
Foreign exchange derivatives (24)(20)(70)(47)
Total in other (expense) income, net
$(19)$88 $454 $67 
NOTE 13. FAIR VALUE MEASUREMENTS
Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants. Assets and liabilities carried at fair value are classified in the following three categories:
Level 1–Quoted prices for identical instruments in active markets.
Level 2–Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
Level 3–Valuations derived from techniques in which one or more significant inputs are unobservable.
The tables below present assets and liabilities measured at fair value on a recurring basis (in millions).
  September 30, 2022
CategoryBalance Sheet LocationLevel 1Level 2Level 3Total
Assets
Cash equivalents:
Time depositsCash and cash equivalents$— $47 $— $47 
Equity securities:
Mutual fundsPrepaid expenses and other current assets13 — — 13 
Company-owned life insurance contractsPrepaid expenses and other current assets— 1 — 1 
Mutual fundsOther noncurrent assets225 — — 225 
Company-owned life insurance contractsOther noncurrent assets— 96 — 96 
Total$238 $144 $— $382 
Liabilities
Deferred compensation planAccrued liabilities$71 $— $— $71 
Deferred compensation planOther noncurrent liabilities576 — — 576 
Total$647 $— $— $647 
33

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

December 31, 2021
CategoryBalance Sheet LocationLevel 1Level 2Level 3Total
Assets
Cash equivalents:
Time depositsCash and cash equivalents$— $426 $— $426 
Equity securities:
Money market fundsCash and cash equivalents425 — — 425 
Mutual fundsPrepaid expenses and other current assets12 — — 12 
Company-owned life insurance contractsPrepaid expenses and other current assets— 1 — 1 
Mutual fundsOther noncurrent assets215 — — 215 
Company-owned life insurance contractsOther noncurrent assets— 32 — 32 
Total$652 $459 $— $1,111 
Liabilities
Deferred compensation planAccrued Liabilities$21 $— $— $21 
Deferred compensation planOther noncurrent liabilities238 — — 238 
Total$259 $— $— $259 
Equity securities include money market funds, investments in mutual funds held in separate trusts, which are owned as part of the Company's supplemental retirement plans, and company-owned life insurance contracts. The fair value of Level 1 equity securities was determined by reference to the quoted market price per share in active markets multiplied by the number of shares held without consideration of transaction costs. The fair value of the deferred compensation plan liability was determined based on the fair value of the related investments elected by employees. Changes in the fair value of the investments are recorded in other (expense) income, net and changes in the deferred compensation liability are recorded in selling, general and administrative expense. Company-owned life insurance contracts are recorded at their cash surrender value, which approximates fair value (Level 2).
In addition to the financial instruments listed in the tables above, the Company has other financial instruments, including cash deposits, accounts receivable, accounts payable, term loans, and senior notes. The carrying values for such financial instruments, other than the senior notes, each approximated their fair values as of September 30, 2022 and December 31, 2021. The estimated fair value of the Company’s outstanding senior notes using quoted prices from over-the-counter markets, considered Level 2 inputs, was $38.2 billion and $17.2 billion as of September 30, 2022 and December 31, 2021, respectively.
The Company's derivative financial instruments are discussed in Note 12, its investments with readily determinable fair value are discussed in Note 9, and the obligation for its revolving receivable program is discussed in Note 7.
34

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 14. SHARE-BASED COMPENSATION
The Company has various incentive plans under which performance-based restricted stock units (“PRSUs”), service-based restricted stock units (“RSUs”), stock options, and stock appreciation rights (“SARs”) have been issued. In connection with the Merger, AT&T RSUs subject to time based vesting held by WM employees were replaced with WBD RSUs granted on comparable terms upon closing of the Merger, increasing RSU expense, grants and unrecognized compensation expense for the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021.
The table below presents the components of share-based compensation expense (in millions), which is recorded in selling, general and administrative expense in the consolidated statements of operations.
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
PRSUs$— $(2)$2 $10 
RSUs91 29 257 80 
Stock options15 17 56 43 
SARs1 (5)2 1 
Total share-based compensation expense$107 $39 $317 $134 
Tax benefit recognized$20 $6 $60 $21 
The table below presents awards granted (in millions, except weighted-average grant price).
Nine Months Ended September 30, 2022
AwardsWeighted-Average Grant Price
Awards granted:
PRSUs0.4 $28.11 
RSUs32.3 $24.04 
Stock options0.4 $32.90 
The table below presents unrecognized compensation cost related to non-vested share-based awards and the weighted-average amortization period over which these expenses will be recognized as of September 30, 2022 (in millions, except years).
Unrecognized Compensation CostWeighted-Average Amortization Period
(years)
PRSUs$1 0.3
RSUs591 2.4
Stock options172 3.5
Total unrecognized compensation cost$764 
Of the $591 million of unrecognized compensation cost related to RSUs, $38 million is related to cash-settled RSUs. Stock-settled RSUs are expected to be recognized over a weighted-average period of 2.2 years and cash-settled RSUs are expected to be recognized over a weighted-average period of 2.6 years.
NOTE 15. INCOME TAXES
The income tax balances as of September 30, 2022 are inclusive of the WM Business as a result of the Merger. Income tax benefit was $566 million and $1,201 million for the three and nine months ended September 30, 2022, respectively, and income tax expense was $36 million and $144 million for the three and nine months ended September 30, 2021, respectively. The decrease in the three and nine months ended September 30, 2022 was primarily attributable to a decrease in pre-tax book income, and to a smaller extent, an uncertain tax benefit remeasurement recorded in the three months ended September 30, 2022 as a result of a multi-year tax audit agreement. These decreases are partially offset by an unfavorable tax adjustment related to the 2022 preferred stock conversion transaction expense discussed in Note 2, which was not deductible for tax purposes, and the effect of foreign operations, which included taxation and allocation of income and losses among multiple foreign jurisdictions. The decrease in the nine months ended September 30, 2022 was further offset by a deferred tax benefit of $151 million recorded in the nine months ended September 30, 2021 as a result of the UK Finance Act 2021 that was enacted in June 2021.
35

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Income tax benefit for the three and nine months ended September 30, 2022 reflects an effective income tax rate that differs from the federal statutory tax rate primarily attributable to the effect of foreign operations, state and local income taxes, and the non-tax deductible preferred stock conversion transaction expense discussed above.
On April 8, 2022, the Company completed its merger with the WM business. In connection with the merger, the Company entered into a tax matters agreement (“TMA”) with AT&T. Pursuant to the TMA, the Company is responsible for tax liabilities related to the periods prior to AT&T's ownership of the business (June 14, 2018), and AT&T is responsible for tax liabilities related to the period for which they owned the business (June 15, 2018 through April 8, 2022). The Company is fully indemnified by AT&T for any tax liabilities arising for the period June 15, 2018 through April 8, 2022. As of September 30, 2022, the Company has recorded reserves for uncertain tax positions and the associated interest and penalties payable related to WM of $1,201 million and $260 million, respectively, through purchase accounting. Indemnification receivables of $381 million were also recorded through purchase accounting during the nine months ended September 30, 2022.
With respect to uncertain tax positions related to jurisdictions that have joint and several liability among members of the AT&T tax filing group during the AT&T ownership period, the Company recognizes only the amount they expect to pay to the taxing authorities after considering the contractual indemnification agreement with AT&T and AT&T’s ability to settle any disputed positions with the taxing authorities. As of September 30, 2022, the Company has not recorded any liabilities for uncertain tax positions or indemnification receivables related to matters that were attributable to jurisdictions that have joint and several liability among members of the AT&T filing group since AT&T was determined to be the primary obligor.
As of September 30, 2022 and December 31, 2021, the Company's reserves for uncertain tax positions totaled $1,723 million and $420 million, respectively. The increase in the reserve for uncertain tax positions at September 30, 2022 is primarily attributable to the Merger. It is reasonably possible that the total amount of unrecognized tax benefits related to certain of the Company's uncertain tax positions could decrease by as much as $261 million within the next twelve months as a result of ongoing audits, lapses of statutes of limitations or regulatory developments.
As of September 30, 2022 and December 31, 2021, the Company had accrued approximately $334 million and $60 million, respectively, of total interest and penalties payable related to unrecognized tax benefits. The increase in the accrual for interest and penalties payable at September 30, 2022 is primarily attributable to the Merger. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.
In August 2022, the U.S. government enacted the Inflation Reduction Act (“IRA”) which, among other changes, created a new corporate alternative minimum tax (“CAMT”) of 15% for corporations whose average annual adjusted financial statement income for any consecutive 3 tax year periods ending after December 31, 2021 and preceding the tax year exceeds $1 billion, and a 1% excise tax on stock repurchases made by publicly traded U.S. corporations. The effective date of these provisions is January 1, 2023. The Company will continue to monitor for additional guidance issued with respect to the IRA to determine whether there is a material impact to the Company’s financial statements.
NOTE 16. BENEFIT PLANS
The Company has a defined benefit pension plan that covers certain U.S.-based employees and a non-qualified unfunded Supplemental Executive Retirement Plan that provides defined pension benefits to eligible executives. In connection with the Merger, the Company also assumed four additional U.S. nonqualified pension plans that are noncontributory and unfunded and several non-U.S. pension plans. The four U.S. plans consist of the Time Warner Excess Benefit Plan (the “Excess plan”), the Retirement Accumulation Plan (“RAP”), the Supplemental Executive Retirement Plan (“SERP”) and the Wealth Accumulation Plan (“WAP”) (together, the “U.S. Nonqualified Plans”). The U.S. Nonqualified Plans were closed to new entrants during 2010. The Excess plan and RAP are both frozen to new benefit accruals. SERP and WAP only have retirees remaining. The pension formula for the Excess plan captured pay above compensation limits or benefit limits. RAP is a cash balance type formula and now provides only interest credits.
The Company also holds net assets and net liabilities on behalf of other U.S. and non-U.S. pension plans. The plan provisions vary by plan and by country. Some of these plans are unfunded and all are noncontributory.
Obligations and Funded Status
For all of the acquired defined benefit pension plans, the benefit obligation is the projected benefit obligation, the actuarial present value, as of our April 8, 2022 measurement date, of all benefits attributed by the pension benefit formula to employee service rendered to that date. The amount of benefits to be paid depends on a number of future events incorporated into the pension benefit formula, including estimates of the average life of employees and their beneficiaries and average years of service rendered. It is measured based on assumptions concerning future interest rates and future employee compensation levels, as applicable.
36

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The unfunded status of the acquired U.S. Nonqualified Plans as of April 8, 2022 was a liability of $278 million. The unfunded status represents a pension benefit obligation of $278 million, with no plan assets. The funded status of the acquired non-U.S. pension plans as of April 8, 2022 was a net asset of $146 million. The funded status represents a pension benefit obligation of $659 million less the fair value of the plan assets of $805 million.
Total assets (liabilities) recognized for all acquired pension plans on our consolidated balance sheets were as follows (in millions).
April 8, 2022
Plan assets, net$200 
Current portion of employee benefit obligation(27)
Noncurrent portion of employee benefit obligation(305)
Net amount recognized$(132)
Net Periodic Pension Cost
The service cost component of net periodic pension cost is recorded in operating expenses in the consolidated statements of operations, while the remaining components are recorded in other (expense) income, net. Net periodic pension cost was not material for the three and nine months ended September 30, 2022 and 2021.
Assumptions
In determining the projected benefit obligation and the net pension and postretirement benefit cost for the acquired plans, the Company used the following significant weighted-average assumptions.
April 8, 2022
U.S. Nonqualified PlansNon-U.S. Pension Plans
Discount rate3.89 %2.51 %
Long-term rate of return on plan assetsN/A1.61 %
Rate of compensation increasesN/A5.82 %
NOTE 17. SUPPLEMENTAL DISCLOSURES
The following tables present supplemental information related to the consolidated financial statements (in millions).
Accrued Liabilities
Accrued liabilities consisted of the following (in millions):
September 30, 2022December 31, 2021
Accrued participation and residuals$3,019 $— 
Accrued production1,336 4 
Content rights payable1,004 772 
Accrued payroll and related benefits1,644 533 
Other accrued liabilities3,194 921 
Total accrued expenses and other current liabilities$10,197 $2,230 
Prepaid expenses and other current assets
Prepaid expenses and other current assets consisted of the following (in millions):
September 30, 2022December 31, 2021
Production receivables$1,288 $— 
Other current assets2,293 913 
Total prepaid expenses and other current assets$3,581 $913 

37

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Other (Expense) Income, net
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Foreign currency (losses) gains, net$(36)$26 $(106)$73 
(Losses) gains on derivative instruments, net(19)88 454 67 
Change in the value of investments with readily determinable fair value(16)(31)(106)15 
Gain on sale of equity method investments8 — 141 4 
Change in fair value of equity investments without readily determinable fair value— (7)— 74 
Other income (expense), net35 (4)28 12 
Total other (expense) income, net
$(28)$72 $411 $245 
Supplemental Cash Flow Information
Nine Months Ended September 30,
20222021
Cash paid for taxes, net$859 $555 
Cash paid for interest, net1,305 515 
Non-cash investing and financing activities:
Equity issued for the acquisition of WarnerMedia42,309 — 
Non-cash consideration related to the sale of The CW Network126 — 
Accrued consideration for the joint venture with BT82 — 
Accrued purchases of property and equipment29 22 
Assets acquired under finance lease and other arrangements40 119 
Cash, Cash Equivalents, and Restricted Cash
 September 30, 2022December 31, 2021
Cash and cash equivalents$2,422 $3,905 
Restricted cash - recorded in prepaid expenses and other current assets (1)
91 — 
Total cash, cash equivalents, and restricted cash $2,513 $3,905 
(1) Restricted cash primarily includes cash posted as collateral related to the Company’s hedging program. (See Note 12.)
Assets Held for Sale
As of September 30, 2022, the Company classified its Ranch Lot and Knoxville office building and land as assets held for sale. The Company reclassified $216 million to prepaid expenses and other assets on the consolidated balance sheet at September 30, 2022 and stopped recording depreciation on the assets. An immaterial write-down to the estimated fair value, less costs to sell, was recorded during the three months ended September 30, 2022 and included in loss (gain) on disposition and disposal groups in the consolidated statements of operations.
38

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Other Comprehensive Income (Loss) Adjustments
The table below presents the tax effects related to each component of other comprehensive income (loss) and reclassifications made in the consolidated statements of operations (in millions).
Three Months Ended September 30, 2022Three Months Ended September 30, 2021

Pretax
Tax benefit (expense)

Net-of-tax

Pretax
Tax benefit (expense)

Net-of-tax
Currency translation adjustments:
Unrealized gains (losses):
Foreign currency$(684)$3 $(681)$(187)$1 $(186)
Net investment hedges5 (14)(9)59 (17)42 
Total currency translation adjustments
(679)(11)(690)(128)(16)(144)
Derivative adjustments:
Unrealized gains (losses)30 (2)28 18 (3)15 
Reclassifications from other comprehensive income to net income(6)2 (4)(3)— (3)
Total derivative adjustments
24 — 24 15 (3)12 
Other comprehensive income (loss) adjustments$(655)$(11)$(666)$(113)$(19)$(132)

Nine Months Ended September 30, 2022Nine Months Ended September 30, 2021
PretaxTax benefit (expense)Net-of-taxPretaxTax benefit (expense)Net-of-tax
Currency translation adjustments:
Unrealized gains (losses):
Foreign currency$(1,349)$5 $(1,344)$(296)$15 $(281)
Net investment hedges124 (55)69 88 (10)78 
Reclassifications:
Loss on disposition(2)— (2)— — — 
Total currency translation adjustments(1,227)(50)(1,277)(208)5 (203)
Derivative adjustments:
Unrealized gains (losses)10 (1)9 174 (36)138 
Reclassifications from other comprehensive income to net income(27)6 (21)(1)— (1)
Total derivative adjustments(17)5 (12)173 (36)137 
Other comprehensive income (loss) adjustments$(1,244)$(45)$(1,289)$(35)$(31)$(66)
39

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Accumulated Other Comprehensive Loss
The table below presents the changes in the components of accumulated other comprehensive loss, net of taxes (in millions).
Three Months Ended September 30, 2022
Currency Translation DerivativesPension Plan and SERP LiabilityAccumulated
Other
Comprehensive Loss
Beginning balance$(1,432)$(8)$(13)$(1,453)
Other comprehensive income (loss) before reclassifications
(690)28 — (662)
Reclassifications from accumulated other comprehensive loss to net income
— (4)— (4)
Other comprehensive income (loss)
(690)24 — (666)
Ending balance
$(2,122)$16 $(13)$(2,119)

Three Months Ended September 30, 2021
Currency Translation DerivativesPension Plan and SERP LiabilityAccumulated
Other
Comprehensive Loss
Beginning balance$(614)$44 $(15)$(585)
Other comprehensive income (loss) before reclassifications
(144)15 — (129)
Reclassifications from accumulated other comprehensive loss to net income
— (3)— (3)
Other comprehensive income (loss)
(144)12 — (132)
Ending balance
$(758)$56 $(15)$(717)

Nine Months Ended September 30, 2022
Currency TranslationDerivativesPension Plan and SERP LiabilityAccumulated Other Comprehensive Loss
Beginning balance$(845)$28 $(13)$(830)
Other comprehensive income (loss) before reclassifications
(1,275)9 — (1,266)
Reclassifications from accumulated other comprehensive loss to net income(2)(21)— (23)
Other comprehensive income (loss)
(1,277)(12)— (1,289)
Ending balance$(2,122)$16 $(13)$(2,119)

Nine Months Ended September 30, 2021
Currency TranslationDerivativesPension Plan and SERP LiabilityAccumulated Other Comprehensive Loss
Beginning balance$(555)$(81)$(15)$(651)
Other comprehensive income (loss) before reclassifications
(203)138 — (65)
Reclassifications from accumulated other comprehensive loss to net income— (1)— (1)
Other comprehensive income (loss)
(203)137 — (66)
Ending balance$(758)$56 $(15)$(717)
40

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 18. RELATED PARTY TRANSACTIONS
In the normal course of business, the Company enters into transactions with related parties. Related parties include entities that share common directorship, such as Liberty Global plc (“Liberty Global”), Liberty Broadband Corporation (“Liberty Broadband”) and their subsidiaries and equity method investees (collectively the “Liberty Group”). The Company’s Board of Directors includes Dr. John Malone, who is Chairman of the Board of Liberty Global and Liberty Broadband and beneficially owns approximately 30% and 49% of the aggregate voting power with respect to the election of directors of Liberty Global and Liberty Broadband, respectively. The majority of the revenue earned from the Liberty Group relates to multi-year network distribution arrangements. Related party transactions also include revenues and expenses for content and services provided to or acquired from equity method investees, or minority partners of consolidated subsidiaries. The table below presents a summary of the transactions with related parties (in millions).
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Revenues and service charges:
Liberty Group$549 $167 $1,242 $507 
Equity method investees111 57 348 181 
Other48 23 237 74 
Total revenues and service charges$708 $247 $1,827 $762 
Expenses$(72)$(62)$(314)$(176)
Distributions to noncontrolling interests and redeemable noncontrolling interests$(22)$(18)$(286)$(231)
The table below presents receivables due from and payables due to related parties (in millions).
September 30, 2022December 31, 2021
Receivables$625 $172 
Payables$25 $23 
In September 2022, the Company sold 75% of its interest in The CW Network to Nexstar, a related party, and recorded an immaterial gain not included in the table above. (See Note 3.)
NOTE 19. COMMITMENTS AND CONTINGENCIES
Commitments
In the normal course of business, the Company enters into various commitments, which primarily include programming, film licensing, talent arrangements and other agreements, operating and finance leases (see Note 11), arrangements to purchase various goods and services, long-term debt (see Note 10) and future funding commitments to equity method investees (see Note 9) (in millions).
Long-Term Debt
Year Ending December 31,ContentOther Purchase ObligationsPension and Other Employee ObligationsPrincipalInterestTotal
2022 (remaining three months)$2,527 $1,053 $163 $— $210 $3,953 
20237,084 1,256 497 1,335 2,223 12,395 
20245,220 640 265 4,220 2,135 12,480 
20253,862 316 129 7,147 1,855 13,309 
20262,591 122 79 790 1,728 5,310 
Thereafter10,433 130 235 36,652 27,486 74,936 
Total$31,717 $3,517 $1,368 $50,144 $35,637 $122,383 
41

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Content purchase obligations include commitments and liabilities associated with third-party producers and sports associations for content that airs on our television networks. Production contracts generally require purchase of a specified number of episodes, and/or payments over the term of the license, and include both programs that have been delivered and are available for airing and programs that have not yet been produced or sporting events that have not yet taken place. The commitments disclosed above exclude content liabilities recognized on the consolidated balance sheets.
Other purchase obligations include agreements with certain vendors and suppliers for the purchase of goods and services whereby the underlying agreements are enforceable, legally binding and specify all significant terms. Significant purchase obligations include transmission services, television rating services, marketing commitments and research, equipment purchases, and information technology and other services. Some of these contracts do not require the purchase of fixed or minimum quantities and generally may be terminated with a 30-day to 60-day advance notice without penalty, and are not included in the table above past the 30-day to 60-day advance notice period. The commitments disclosed above exclude liabilities recognized on the consolidated balance sheets.
Other purchase obligations also include future funding commitments to equity method investees. Although the Company had funding commitments to equity method investees as of September 30, 2022, the Company may also provide uncommitted additional funding to its equity method investments in the future. (See Note 9.)
Pension and other employee obligations include payments to meet minimum funding requirements of our pension plans in 2022, estimated benefit payments for our SERP that exceed plan assets, and employment agreements primarily with creative talent for the WM broadcast networks. Payments for the SERP have been estimated over a ten-year period. While benefit payments under these plans are expected to continue beyond 2031, we believe it is not practicable to estimate payments beyond this period. (See Note 16.)
Six Flags Guarantee
In connection with WM’s former investment in the Six Flags (as defined below) theme parks located in Georgia and Texas (collectively, the “Parks”), in 1997, certain subsidiaries of the Company agreed to guarantee (the “Six Flags Guarantee”) certain obligations of the partnerships that hold the Parks (the “Partnerships”) for the benefit of the limited partners in such Partnerships, including, annual payments made to the Parks or to the limited partners and additional obligations at the end of the respective terms for the Partnerships in 2027 and 2028 (the “Guaranteed Obligations”). The aggregate gross undiscounted estimated future cash flow requirements covered by the Six Flags Guarantee over the remaining term (through 2028) are $544 million. To date, no payments have been made by us pursuant to the Six Flags Guarantee.
Six Flags Entertainment Corporation (formerly known as Six Flags, Inc. and Premier Parks Inc.) (“Six Flags”), which has the controlling interest in the Parks, has agreed, pursuant to a subordinated indemnity agreement (the “Subordinated Indemnity Agreement”), to guarantee the performance of the Guaranteed Obligations when due and to indemnify the Company, among others, if the Six Flags Guarantee is called upon. If Six Flags defaults on its indemnification obligations, we have the right to acquire control of the managing partner of the Parks. Six Flags’ obligations to us are further secured by its interest in all limited partnership units held by Six Flags.
Based on our evaluation of the current facts and circumstances surrounding the Guaranteed Obligations and the Subordinated Indemnity Agreement, the Company is unable to predict the loss, if any, that may be incurred under the Guaranteed Obligations, and no liability for the arrangements has been recognized as of September 30, 2022. Because of the specific circumstances surrounding the arrangements, and the fact that no active or observable market exists for this type of financial guarantee, the Company is unable to determine a current fair value for the Guaranteed Obligations and related Subordinated Indemnity Agreement.
Contingencies
Other Contingent Commitments
Other contingent commitments primarily include contingent payments for post-production term advance obligations on certain co-financing arrangements, as well as operating lease commitment guarantees, letters of credit, bank guarantees and surety bonds, which generally support performance and payments for a wide range of global contingent and firm obligations, including insurance, litigation appeals, real estate leases and other operational needs.
42

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The Company's other contingent commitments at September 30, 2022 were $258 million, with $252 million estimated due in 2026. For other contingent commitments where payment obligations are outside our control, the timing of amounts represents the earliest period in which the payment could be requested. For the remaining other contingent commitments, the timing of amounts presented represents when the maximum contingent commitment will expire but does not mean that we expect to incur an obligation to make any payments within that time period. In addition, these amounts do not reflect the effects of any indemnification rights we might possess.
Put Rights
The Company has granted put rights to non-controlling interest holders in certain consolidated subsidiaries.
Legal Matters
From time to time, in the normal course of its operations, the Company is subject to various litigation matters and claims, including claims related to employees, vendors, other business partners or patent issues. However, a determination as to the amount of the accrual required for such contingencies is highly subjective and requires judgment about future events. Although the outcome of these matters cannot be predicted with certainty and the impact of the final resolution of these matters on the Company's results of operations in a particular subsequent reporting period is not known, management does not believe that the resolution of these matters will have a material adverse effect on the Company's future consolidated financial position, future results of operations or cash flows.
NOTE 20. REPORTABLE SEGMENTS
The Company’s operating segments are determined based on: (i) financial information reviewed by its chief operating decision maker, the Chief Executive Officer (“CEO”), (ii) internal management and related reporting structure, and (iii) the basis upon which the CEO makes resource allocation decisions. In connection with the Merger, the Company reevaluated and changed its segment presentation and reportable segments during the quarter ended June 30, 2022. As of June 30, 2022, we classified our operations in three reportable segments: Studios, primarily consisting of the production and release of feature films for initial exhibition in theaters, production and initial licensing of television programs to third parties and our networks/DTC services, distribution of our films and television programs to various third party and internal television and streaming services, distribution through the home entertainment market (physical and digital), related consumer products and themed experience licensing, and interactive gaming; Networks, consisting primarily of our domestic and international television networks; and DTC, consisting primarily of our premium pay TV and digital content services. Goodwill was reallocated to the new segments based on relative fair value. Prior periods have been recast to conform to the current period presentation.
The accounting policies of the reportable segments are the same as the Company’s, except that certain inter-segment transactions that are eliminated for consolidation are not eliminated at the segment level. Inter-segment transactions primarily include advertising and content licenses. The Company records inter-segment transactions of content licenses at the gross amount. Prior year amounts have been recast to reflect the current presentation. The Company does not report assets by segment because it is not used to allocate resources or evaluate segment performance.
The Company evaluates the operating performance of its operating segments based on financial measures such as revenues and Adjusted EBITDA. Adjusted EBITDA is defined as operating income excluding:
•employee share-based compensation;
•depreciation and amortization;
•restructuring, facility consolidation, and other charges;
•certain impairment charges;
•gains and losses on business and asset dispositions;
•certain inter-segment eliminations;
• third-party transaction and integration costs;
•amortization of purchase accounting fair value step-up for content;
•amortization of capitalized interest for content; and
•other items impacting comparability.
43

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The Company uses this measure to assess the operating results and performance of its segments, perform analytical comparisons, identify strategies to improve performance, and allocate resources to each segment. The Company believes Adjusted EBITDA is relevant to investors because it allows them to analyze the operating performance of each segment using the same metric management uses. The Company excludes employee share-based compensation, restructuring and other charges, certain impairment charges, gains and losses on business and asset dispositions, and transaction and integration costs from the calculation of Adjusted EBITDA due to their impact on comparability between periods. The Company also excludes the depreciation of fixed assets and amortization of intangible assets, amortization of purchase accounting fair value step-up for content, and amortization of capitalized interest for content, as these amounts do not represent cash payments in the current reporting period. Certain corporate expenses and inter-segment eliminations related to production studios are excluded from segment results to enable executive management to evaluate segment performance based upon the decisions of segment executives. Adjusted EBITDA should be considered in addition to, but not a substitute for, operating income, net income, and other measures of financial performance reported in accordance with U.S. GAAP.
The tables below present summarized financial information for each of the Company's reportable segments and corporate and inter-segment eliminations (in millions).
Revenues
 Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Studios$3,088 $6 $5,889 $13 
Networks5,214 2,889 13,829 8,393 
DTC2,317 255 4,823 598 
Corporate(11)— 2 — 
Inter-segment eliminations (785)— (1,734)— 
Total revenues$9,823 $3,150 $22,809 $9,004 
Adjusted EBITDA
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Studios$762 $4 $1,004 $8 
Networks2,630 1,093 6,247 4,040 
DTC(634)(276)(1,379)(1,095)
Corporate(340)(95)(749)(273)
Inter-segment eliminations 6 — (8)— 
Adjusted EBITDA$2,424 $726 $5,115 $2,680 
44

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Reconciliation of Net (Loss) Income available to Warner Bros. Discovery, Inc. to Adjusted EBITDA
 Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net (loss) income available to Warner Bros. Discovery, Inc.$(2,308)$156 $(5,270)$968 
Net income attributable to redeemable noncontrolling interests2 9 8 22 
Net income attributable to noncontrolling interests21 32 44 116 
Income tax (benefit) expense(566)36 (1,201)144 
(Loss) income before income taxes(2,851)233 (6,419)1,250 
Other expense (income), net28 (72)(411)(245)
Loss from equity investees, net78 9 135 20 
Interest expense, net555 159 1,219 479 
Operating (loss) income(2,190)329 (5,476)1,504 
Asset impairment and loss (gain) on disposition and disposal groups43 — 47 (72)
Restructuring and other charges1,521 7 2,559 29 
Depreciation and amortization2,233 341 5,024 1,043 
Employee share-based compensation113 36 317 124 
Transaction and integration costs59 13 1,129 52 
Amortization of fair value step-up for content645 — 1,515 — 
Adjusted EBITDA$2,424 $726 $5,115 $2,680 
NOTE 21. SUBSEQUENT EVENTS
In October 2022, the Company sold its 49% stake in Golden Maple Limited (known as Tencent Video VIP) for proceeds of $143 million and recorded a gain of $55 million.
In connection with the MotorTrend Group, LLC joint venture between the Company and GoldenTree (“GT”), GT acquired a put right that requires the Company to either purchase GT’s 32.5% noncontrolling interest in the joint venture at fair value or participate in an initial public offering for the joint venture. In October 2022, GT exercised its put right and will require the Company to purchase GT’s 32.5% noncontrolling interest at fair value, which cannot be estimated at this time.
45
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Management’s discussion and analysis of financial condition and results of operations is a supplement to and should be read in conjunction with the accompanying consolidated financial statements and related notes. This section provides additional information regarding our businesses, current developments, results of operations, cash flows and financial condition. Additional context can also be found in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”).
BUSINESS OVERVIEW
On April 8, 2022, Discovery, Inc., a global media company that provides content across multiple distribution platforms including linear, free-to-air and broadcast television, authenticated GO applications, digital distribution arrangements, content licensing arrangements and direct-to-consumer (“DTC”) subscription products, completed its merger (the “Merger”) with the WarnerMedia business (the “WarnerMedia Business”, “WM Business”, or “WM”) of AT&T Inc. (“AT&T”) and changed its name from “Discovery, Inc.” to “Warner Bros. Discovery, Inc.” (“Warner Bros. Discovery”, “WBD”, the “Company”, “we”, “us”, or “our”). On April 11, 2022, the Company’s shares started trading on the Nasdaq Global Select Market (the “Nasdaq”) under the trading symbol WBD. (See Note 2 and Note 3 to the accompanying consolidated financial statements.)
Warner Bros. Discovery 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, DC, Eurosport, HBO, HBO Max, HGTV, Food Network, OWN, Investigation Discovery, TLC, Magnolia Network, TNT, TBS, truTV, Travel Channel, MotorTrend, Animal Planet, Science Channel, Warner Bros. Pictures, Warner Bros. Television, Warner Bros. Games, New Line Cinema, Cartoon Network, Adult Swim, Turner Classic Movies, Discovery en Español, Hogar de HGTV and others.
In connection with the Merger, the Company has announced and has taken actions to implement projects to achieve cost synergies for the Company. The Company finalized the framework supporting its ongoing restructuring and transformation initiatives during the three months ended September 30, 2022, which will include, among other things, strategic content programming assessments, organization restructuring, facility consolidation activities, and other contract termination costs. The Company expects that it will incur approximately $3.2 - $4.3 billion in pre-tax restructuring charges. Of the total expected pre-tax restructuring charges, the Company expects total cash expenditures will be $1.0 - $1.5 billion. The Company incurred $1.5 billion and $2.6 billion of pre-tax restructuring charges for the three and nine months ended September 30, 2022, respectively. While the Company’s restructuring efforts are ongoing, including the strategic analysis of content programming, the restructuring program is expected to be substantially completed by the end of 2024.
In connection with the Merger, the Company reevaluated and changed its segment presentation and reportable segments for the quarter ending June 30, 2022. As of June 30, 2022, we classified our operations in three reportable segments:
Studios, consisting primarily of the production and release of feature films for initial exhibition in theaters, production and initial licensing of television programs to third parties and our networks/DTC services, distribution of our films and television programs to various third party and internal television and streaming services, distribution through the home entertainment market (physical and digital), related consumer products and themed experience licensing, and interactive gaming;
Networks, consisting principally of our domestic and international television networks; and
DTC, consisting primarily of our premium pay TV and digital content services.
Our segment presentation aligned with our management structure and the financial information management uses to make decisions about operating matters, such as the allocation of resources and business performance assessments. Prior periods have been recast to conform to the current period presentation.
During the three months ended March 31, 2022, we exited our operations in Russia and removed all of our channels and services from the market. We do not expect these actions will have a material effect on our consolidated financial statements.
Impact of COVID-19
We continue to closely monitor the ongoing impact of COVID-19 on all aspects of our business and geographies, including the impact on our customers, employees, suppliers, vendors, distribution and advertising partners, production facilities, and various other third parties. Certain key sources of revenue for the Studios segment, including theatrical revenues, television production, studio operations and themed entertainment, have been adversely impacted by governmentally imposed shutdowns and related labor interruptions and constraints on consumer activity, particularly in the context of public entertainment venues, such as cinemas and theme parks.
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The nature and full extent of COVID-19’s effects on our operations and results are not yet known and will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity and the extent of future variants or surges of COVID-19, vaccine distribution and efficacy and other actions to contain the virus or treat its impact, among others. Our consolidated financial statements reflect management’s estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures as of the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented. Actual results may differ significantly from these estimates and assumptions.
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RESULTS OF OPERATIONS
The discussion below compares our actual and pro forma combined results, as if the Merger occurred on January 1, 2021, for the three and nine months ended September 30, 2022 to the three and nine months ended September 30, 2021. Management believes reviewing our pro forma combined operating results in addition to actual operating results is useful in identifying trends in, or reaching conclusions regarding, the overall operating performance of our businesses. Our combined Studios, Networks, DTC, Corporate, and inter-segment eliminations pro forma information is based on the historical operating results of the respective segments and includes adjustments in accordance with Article 11 of Regulation S-X to illustrate the effects of the Merger as if it had occurred on January 1, 2021. The unaudited pro forma combined results include, where applicable, adjustments for (i) additional costs of revenues from the fair value step up of film and television library, (ii) additional amortization expense related to acquired intangible assets, (iii) additional depreciation expense from the fair value of property and equipment, (iv) adjustments for transaction costs and other one-time non-recurring costs, (v) changes to align accounting policies, and (vi) adjustments to eliminate intercompany activity.
Adjustments do not include costs related to integration activities, cost savings or synergies that have been or may be achieved by the combined business. Pro forma amounts are not necessarily indicative of what our results would have been had we operated the combined businesses since January 1, 2021 and should not be taken as indicative of the Company’s future consolidated results of operations.
Actual amounts for the three and nine months ended September 30, 2022 include results of operations for Discovery for the entire period and WM for the period subsequent to the completion of the Merger on April 8, 2022.
Foreign Exchange Impacting Comparability
In addition to the Merger, the impact of exchange rates on our business is an important factor in understanding period-to-period comparisons of our results. For example, our international revenues are favorably impacted as the U.S. dollar weakens relative to other foreign currencies, and unfavorably impacted as the U.S. dollar strengthens relative to other foreign currencies. We believe the presentation of results on a constant currency basis (“ex-FX”), in addition to results reported in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) provides useful information about our operating performance because the presentation ex-FX excludes the effects of foreign currency volatility and highlights our core operating results. The presentation of results on a constant currency basis should be considered in addition to, but not a substitute for, measures of financial performance reported in accordance with U.S. GAAP.
The ex-FX change represents the percentage change on a period-over-period basis adjusted for foreign currency impacts. The ex-FX change is calculated as the difference between the current year amounts translated at a baseline rate, which is a spot rate for each of our currencies determined early in the fiscal year as part of our forecasting process (the “2022 Baseline Rate”), and the prior year amounts translated at the same 2022 Baseline Rate. In addition, consistent with the assumption of a constant currency environment, our ex-FX results exclude the impact of our foreign currency hedging activities, as well as realized and unrealized foreign currency transaction gains and losses. Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies.
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Consolidated Results of Operations
The table below presents our consolidated results of operations (in millions).
Three Months Ended September 30,
20222021% Change
ActualPro Forma
Adjustments		Pro Forma
Combined
Actual (a)
Pro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma Combined
(Actual)		Pro Forma
Combined
(ex-FX)
Revenues:
Advertising$2,042 $— $2,042 $1,453 $890 $2,343 41 %(13)%(10)%
Distribution4,990 — 4,990 1,328 3,985 5,313 NM(6)%(4)%
Content2,531 — 2,531 352 2,756 3,108 NM(19)%(15)%
Other260 — 260 17 199 216 NM20 %24 %
Total revenues9,823 — 9,823 3,150 7,830 10,980 NM(11)%(8)%
Costs of revenues, excluding depreciation and amortization5,627 (132)5,495 1,529 4,437 5,966 NM(8)%(4)%
Selling, general and administrative2,589 — 2,589 944 2,047 2,991 NM(13)%(11)%
Depreciation and amortization2,233 (475)1,758 341 1,653 1,994 NM(12)%(11)%
Restructuring and other charges1,521 — 1,521 7 — 7 NMNMNM
Asset impairment and loss (gain) on disposition and disposal groups43 — 43 — (223)(223)NMNMNM
Total costs and expenses12,013 (607)11,406 2,821 7,914 10,735 NM6 %9 %
Operating (loss) income(2,190)607 (1,583)329 (84)245 NMNMNM
Interest expense, net(555)(159)NM
Loss from equity investees, net(78)(9)NM
Other (expense) income, net(28)72 NM
(Loss) income before income taxes(2,851)233 NM
Income tax benefit (expense)566 (36)NM
Net (loss) income(2,285)197 NM
Net income attributable to noncontrolling interests(21)(32)(34)%
Net income attributable to redeemable noncontrolling interests(2)(9)(78)%
Net (loss) income available to Warner Bros. Discovery, Inc.$(2,308)$156 NM
(a) Prior year actual results have been recast to conform to the current period presentation as a result of the Merger and segment recast.
NM - Not meaningful
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Nine Months Ended September 30,
20222021% Change
ActualPro Forma
Adjustments		Pro Forma
Combined
Actual (a)
Pro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma Combined
(Actual)		Pro Forma
Combined
(ex-FX)
Revenues:
Advertising$6,239 $1,412 $7,651 $4,496 $3,332 $7,828 39 %(2)%— %
Distribution11,180 4,339 15,519 3,898 11,767 15,665 NM(1)%1 %
Content4,918 3,297 8,215 564 8,321 8,885 NM(8)%(5)%
Other472 230 702 46 489 535 NM31 %33 %
Total revenues22,809 9,278 32,087 9,004 23,909 32,913 NM(3)%— %
Costs of revenues, excluding depreciation and amortization13,488 5,869 19,357 3,553 15,349 18,902 NM2 %5 %
Selling, general and administrative7,167 1,733 8,900 2,947 6,551 9,498 NM(6)%(5)%
Depreciation and amortization5,024 512 5,536 1,043 5,175 6,218 NM(11)%(10)%
Restructuring and other charges2,559 (90)2,469 29 91 120 NMNMNM
Asset impairment and loss (gain) on disposition and disposal groups47 — 47 (72)(223)(295)NMNMNM
Total costs and expenses28,285 8,024 36,309 7,500 26,943 34,443 NM5 %7 %
Operating (loss) income(5,476)1,254 (4,222)1,504 (3,034)(1,530)NMNMNM
Interest expense, net(1,219)(479)NM
Loss from equity investees, net(135)(20)NM
Other income (expense), net411 245 68 %
(Loss) Income before income taxes(6,419)1,250 NM
Income tax benefit (expense)1,201 (144)NM
Net (loss) income(5,218)1,106 NM
Net income attributable to noncontrolling interests(44)(116)(62)%
Net income attributable to redeemable noncontrolling interests(8)(22)(64)%
Net (loss) income available to Warner Bros. Discovery, Inc.$(5,270)$968 NM
(a) Prior year actual results have been recast to conform to the current period presentation as a result of the Merger and segment recast.
The discussion through operating income below is on a pro forma combined basis, ex-FX, since the actual increases year over year for revenues, cost of revenue, selling, general and administrative expenses and adjusted EBITDA are substantially attributable to the Merger.
Revenues
Advertising revenue is dependent upon a number of factors, including the stage of development of television markets, the number of subscribers to our channels, viewership demographics, the popularity of our content, our ability to sell commercial time over a group of channels, market demand, the mix in sales of commercial time between the upfront and scatter markets, and economic conditions. These factors impact the pricing and volume of our advertising inventory.
Advertising revenue decreased 10% and was flat for the three and nine months ended September 30, 2022, respectively. The decrease for the three months ended September 30, 2022 was primarily attributable to declines in general entertainment, news, and sports in the U.S. and the prior year Olympics in Europe at Networks, partially offset by subscriber growth on our DTC ad-supported tiers. For the nine months ended September 30, 2022, subscriber growth on our DTC ad-supported tiers was offset by lower news and general entertainment in the U.S.
Distribution revenue consists principally of fees from affiliates for distributing our linear networks and DTC subscription services.
Distribution revenue decreased 4% and increased 1% for the three and nine months ended September 30, 2022, respectively. The decrease for the three months ended September 30, 2022 was primarily attributable to a decline in wholesale revenues primarily due to the Amazon Channels expiration in September 2021, a decline in linear subscribers in the U.S., and lower contractual affiliate rates in some European markets, partially offset by global retail subscriber gains on our DTC platforms, higher contractual affiliate rates in the U.S. and premium sports packages in Latin America. The increase for the nine months ended September 30, 2022 was primarily attributable to global retail subscriber gains on our DTC platforms, an increase in contractual affiliate rates in the U.S., and premium sports packages in Latin America, partially offset by a decline in wholesale revenues primarily due to the Amazon Channels expiration in September 2021.
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Content revenue consists primarily of licensing feature films for initial theatrical exhibition, licensing television programs for initial television broadcast or streaming, and licensing of sports rights; additionally, film and television content is licensed through distribution channels including international free-to-air, basic and premium pay television, television syndication, and further streaming services. Content revenue also includes home entertainment sales and rentals of film and television products (physical and digital, including premium video-on-demand, transactional video-on-demand and electronic sell-through), interactive entertainment sales (physical and digital) across various platforms, and consumer products and themed experience licensing.
Content revenue decreased 15% and 5% for the three and nine months ended September 30, 2022, respectively. The decrease for the three months ended September 30, 2022 was primarily attributable to third party licensing of sports rights internationally, mainly related to Olympic sports rights to broadcast networks throughout Europe in 2021 and lower home entertainment and TV licensing revenues. The decrease for the nine months ended September 30, 2022 was primarily attributable to the proportion of inter-segment licensing increasing as a percentage of total content revenue.
Other revenue increased 24% and 33% for the three and nine months ended September 30, 2022, respectively, primarily attributable to the reopening of Warner Bros. Studio Tour London and Warner Bros. Studio Tour Hollywood. In addition, the nine months ended September 30, 2022 was favorably impacted by the opening of the Harry Potter flagship store in New York in June 2021.
Costs of Revenues
The Company’s principal component of costs of revenues is content expense. Content expense includes television series, television specials, films, sporting events, and digital products. The costs of producing a content asset and bringing that asset to market consist of production costs, participation costs, and exploitation costs.
Cost of revenues decreased 4% and increased 5% for the three and nine months ended September 30, 2022, respectively. The decrease for the three months ended September 30, 2022 was primarily attributable to lower sports rights related to the broadcast of the Olympics in Europe in 2021 and lower content expense for theatrical and television products, partially offset by increased DTC programming expenses and the impact of measurement period adjustments to the fair value of content assets acquired during the Merger. (See Note 3 to the accompanying consolidated financial statements.) The increase for the nine months ended September 30, 2022 was primarily attributable to increased DTC programming expenses, the impact of measurement period adjustments to the fair value of content assets acquired during the Merger, higher sports rights in the U.S., and increased expenses at CNN, partially offset by lower sports rights related to the broadcast of the Olympics in Europe in 2021 and lower content expense for television product due to lower television production revenues.
Selling, General and Administrative
Selling, general and administrative expenses consist principally of employee costs, marketing costs, research costs, occupancy and back office support fees.
Selling, general and administrative expenses decreased 11% and 5% for the three and nine months ended September 30, 2022, respectively, primarily attributable to lower marketing and personnel expenses.
Depreciation and Amortization
Depreciation and amortization expense includes depreciation of fixed assets and amortization of finite-lived intangible assets. Depreciation and amortization decreased 11% and 10%, respectively, primarily attributable to a change in amortization method from the straight-line method to the sum of the years' digits method for some of the WM assets acquired.
Restructuring and Other Charges
In connection with the Merger, the Company has announced and has taken actions to implement projects to achieve cost synergies for the Company. Restructuring and other charges increased $1,540 million and $2,376 million for the three and nine months ended September 30, 2022, respectively, primarily attributable to strategic content programming assessments, organization restructuring, facility consolidation activities, and other contract termination costs. (See Note 5 to the accompanying consolidated financial statements.)
Asset Impairment and Loss (Gain) on Dispositions and Disposals Groups
As reported asset impairment and loss (gain) on disposition and disposal groups was a $43 million loss for the three months ended September 30, 2022 and a $47 million loss for the nine months ended September 30, 2022, primarily attributable to the write-down to the estimated fair value, less costs to sell, of the Ranch Lot and Knoxville office building and land in connection with the classification as assets held for sale. (See Note 17 to the accompanying consolidated financial statements.)
As reported asset impairment and loss (gain) on disposition and disposal groups was a $72 million gain for the nine months ended September 30, 2021, primarily attributable to the sale of our Great American Country network. (See Note 3 to the accompanying consolidated financial statements.)
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Interest Expense, net
As reported interest expense, net increased $396 million and $740 million for the three and nine months ended September 30, 2022, respectively, primarily attributable to debt assumed as a result of the Merger. (See Note 10 and Note 12 to the accompanying consolidated financial statements.)
Loss From Equity Investees, net
We reported losses from our equity method investees of $78 million and $135 million for the three and nine months ended September 30, 2022, respectively, as compared to losses of $9 million and $20 million for the three and nine months ended September 30, 2021, respectively. The changes are attributable to our share of earnings and losses from our equity investees. (See Note 9 to the accompanying consolidated financial statements.)
Other (Expense) Income, net
The table below presents the details of other (expense) income, net (in millions).
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Foreign currency (losses) gains, net$(36)$26 $(106)$73 
(Losses) gains on derivative instruments, net(19)88 454 67 
Change in the value of investments with readily determinable fair value(16)(31)(106)15 
Gain on sale of equity method investments8 — 141 4 
Change in fair value of equity investments without readily determinable fair value— (7)— 74 
Other income (expense), net35 (4)28 12 
Total other (expense) income, net
$(28)$72 $411 $245 
Income Tax Benefit (Expense)
The income tax balances as of September 30, 2022 are inclusive of the WM Business as a result of the Merger. Income tax benefit was $566 million and $1,201 million for the three and nine months ended September 30, 2022, respectively, and income tax expense was $36 million and $144 million for the three and nine months ended September 30, 2021, respectively. The decrease in the three and nine months ended September 30, 2022 was primarily attributable to a decrease in pre-tax book income, and to a smaller extent, an uncertain tax benefit remeasurement recorded in the three months ended September 30, 2022 as a result of a multi-year tax audit agreement. These decreases are partially offset by an unfavorable tax adjustment related to the 2022 preferred stock conversion transaction expense discussed in Note 2, which was not deductible for tax purposes, and the effect of foreign operations, which included taxation and allocation of income and losses among multiple foreign jurisdictions. The decrease in the nine months ended September 30, 2022 was further offset by a deferred tax benefit of $151 million recorded in the nine months ended September 30, 2021 as a result of the UK Finance Act 2021 that was enacted in June 2021.
Income tax benefit for the three and nine months ended September 30, 2022 reflects an effective income tax rate that differs from the federal statutory tax rate primarily attributable to the effect of foreign operations, state and local income taxes, and the non-tax deductible preferred stock conversion transaction expense discussed above.
Segment Results of Operations
The Company evaluates the operating performance of its operating segments based on financial measures such as revenues and Adjusted EBITDA. Adjusted EBITDA is defined as operating income excluding:
•employee share-based compensation;
•depreciation and amortization;
•restructuring, facility consolidation, and other charges;
•certain impairment charges;
•gains and losses on business and asset dispositions;
•certain inter-segment eliminations;
• third-party transaction and integration costs;
•amortization of purchase accounting fair value step-up for content;
•amortization of capitalized interest for content; and
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•other items impacting comparability.
The Company uses this measure to assess the operating results and performance of its segments, perform analytical comparisons, identify strategies to improve performance, and allocate resources to each segment. The Company believes Adjusted EBITDA is relevant to investors because it allows them to analyze the operating performance of each segment using the same metric management uses. The Company excludes employee share-based compensation, restructuring and other charges, certain impairment charges, gains and losses on business and asset dispositions, and transaction and integration costs from the calculation of Adjusted EBITDA due to their impact on comparability between periods. The Company also excludes the depreciation of fixed assets and amortization of intangible assets, amortization of purchase accounting fair value step-up for content, and amortization of capitalized interest for content, as these amounts do not represent cash payments in the current reporting period. Certain corporate expenses and inter-segment eliminations related to production studios are excluded from segment results to enable executive management to evaluate segment performance based upon the decisions of segment executives. Adjusted EBITDA should be considered in addition to, but not a substitute for, operating income, net income, and other measures of financial performance reported in accordance with U.S. GAAP.
The table below presents our reconciliation of consolidated net income available to Warner Bros. Discovery, Inc. to Adjusted EBITDA and Adjusted EBITDA by segment (in millions).
 Three Months Ended September 30,Nine Months Ended September 30,
 20222021% Change20222021% Change
Net (loss) income available to Warner Bros. Discovery, Inc.$(2,308)$156 NM$(5,270)$968 NM
Net income attributable to redeemable noncontrolling interests2 9 (78)%8 22 (64)%
Net income attributable to noncontrolling interests21 32 (34)%44 116 (62)%
Income tax (benefit) expense(566)36 NM(1,201)144 NM
(Loss) income before income taxes(2,851)233 NM(6,419)1,250 NM
Other expense (income), net28 (72)NM(411)(245)68 %
Loss from equity investees, net78 9 NM135 20 NM
Interest expense, net555 159 NM1,219 479 NM
Operating (loss) income(2,190)329 NM(5,476)1,504 NM
Asset impairment and loss (gain) on disposition and disposal groups43 — NM47 (72)NM
Restructuring and other charges1,521 7 NM2,559 29 NM
Depreciation and amortization2,233 341 NM5,024 1,043 NM
Employee share-based compensation113 36 NM317 124 NM
Transaction and integration costs59 13 NM1,129 52 NM
Amortization of fair value step-up for content 645 — NM1,515 — NM
Adjusted EBITDA$2,424 $726 NM$5,115 $2,680 91 %
Studios$762 $4 NM$1,004 $8 NM
Networks2,630 1,093 NM6,247 4,040 55 %
DTC(634)(276)NM(1,379)(1,095)26 %
Corporate(340)(95)NM(749)(273)NM
Inter-segment eliminations 6 — NM(8)— NM
Adjusted EBITDA$2,424 $726 NM$5,115 $2,680 91 %
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The table below presents the calculation of Adjusted EBITDA (in millions).
 Three Months Ended September 30, Nine Months Ended September 30,
 20222021% Change20222021% Change
Revenues:
Studios$3,088 $6 NM$5,889 $13 NM
Networks5,214 2,889 80 %13,829 8,393 65 %
DTC2,317 255 NM4,823 598 NM
Corporate(11)— NM2 — NM
Inter-segment eliminations (785)— NM(1,734)— NM
Total revenues9,823 3,150 NM22,809 9,004 NM
Costs of revenues, excluding depreciation and amortization4,982 1,529 NM11,973 3,553 NM
Selling, general and administrative (a)
2,417 895 NM5,721 2,771 NM
Adjusted EBITDA$2,424 $726 NM$5,115 $2,680 91 %
(a) Selling, general and administrative expenses excludes employee share-based compensation and third-party transaction and integration costs.
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 Studios Segment
The following tables present, for our Studio segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating income (in millions).
 Three Months Ended September 30,
 20222021% Change
ActualPro Forma
Adjustments		Pro Forma
Combined
Actual (a)
Pro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma Combined
(Actual)		Pro Forma
Combined
(ex-FX)
Revenues:
Advertising$8 $— $8 $— $35 $35 NM(77)%(77)%
Distribution4 — 4 — 2 2 NMNMNM
Content2,884 — 2,884 6 3,167 3,173 NM(9)%(6)%
Other192 — 192 — 143 143 NM34 %34 %
Total revenues3,088 — 3,088 6 3,347 3,353 NM(8)%(5)%
Costs of revenues, excluding depreciation and amortization1,756 — 1,756 — 2,050 2,050 NM(14)%(11)%
Selling, general and administrative570 — 570 2 745 747 NM(24)%(21)%
Adjusted EBITDA762 — 762 4 552 556 NM37 %43 %
Depreciation and amortization174 (38)136 — 173 173 
Employee share-based compensation1 — 1 — 12 12 
Restructuring and other charges562 — 562 — — — 
Transaction and integration costs 1 — 1 — — — 
Asset impairment and loss (gain) on disposition and disposal groups15 — 15 — — — 
Amortization of fair value step-up for content271 (35)236 — 361 361 
Operating (loss) income$(262)$73 $(189)$4 $6 $10 
(a) Prior year actual results have been recast to conform to the current period presentation as a result of the Merger and segment recast.
 Nine Months Ended September 30,
 20222021% Change
ActualPro Forma
Adjustments		Pro Forma
Combined
Actual (a)
Pro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma Combined
(Actual)		Pro Forma
Combined
(ex-FX)
Revenues:
Advertising$18 $9 $27 $— $83 $83 NM(67)%(67)%
Distribution8 6 14 — 10 10 NM40 %40 %
Content5,525 3,898 9,423 13 9,426 9,439 NM— %2 %
Other338 154 492 — 328 328 NM50 %50 %
Total revenues5,889 4,067 9,956 13 9,847 9,860 NM1 %4 %
Costs of revenues, excluding depreciation and amortization3,763 2,392 6,155 2 6,384 6,386 NM(4)%(2)%
Selling, general and administrative1,122 698 1,820 3 2,046 2,049 NM(11)%(9)%
Adjusted EBITDA1,004 977 1,981 8 1,417 1,425 NM39 %45 %
Depreciation and amortization332 77 409 — 518 518 
Employee share-based compensation1 26 27 — 73 73 
Restructuring and other charges762 (38)724 — 38 38 
Transaction and integration costs 1 — 1 — — — 
Asset impairment and loss (gain) on disposition and disposal groups15 — 15 — — — 
Amortization of fair value step-up for content834 (78)756 — 1,199 1,199 
Operating (loss) income$(941)$990 $49 $8 $(411)$(403)
(a) Prior year actual results have been recast to conform to the current period presentation as a result of the Merger and segment recast.
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The discussion below is on a pro forma combined basis, ex-FX, since the actual increases year over year for revenues, cost of revenue, selling, general and administrative expenses and adjusted EBITDA are substantially attributable to the Merger.
Revenues
Content revenue decreased 6% and increased 2% for the three and nine months ended September 30, 2022, respectively. The decrease for the three months ended September 30, 2022 was primarily attributable to lower home entertainment and TV licensing revenues. Home entertainment revenue across theatrical and television products was lower due to strong COVID-induced demand in the prior year, as well as fewer new releases of theatrical products. The decrease in TV licensing revenue was primarily due to fewer new release availabilities of theatrical product.
The increase for the nine months ended September 30, 2022 was primarily attributable to higher theatrical film rental revenue and higher games revenue with the release of LEGO Star Wars: The Skywalker Saga, partially offset by lower home entertainment and TV licensing revenue. Theatrical performance was favorably impacted by the performance of The Batman, which was released in the first quarter of 2022, as well as improved audience attendance at movie theaters. Home entertainment revenue across theatrical and television products was lower due to strong COVID-induced demand in the prior year. The decrease in TV licensing revenue was primarily due to lower TV production revenue, partially offset by favorable timing and mix of television availabilities.
Other revenue increased 34% and 50% for the three and nine months ended September 30, 2022, respectively. The increase for the three months ended September 30, 2022 was primarily attributable to the reopening of Warner Bros. Studio Tour London and Warner Bros. Studio Tour Hollywood. In addition, the nine months ended September 30, 2022 was favorably impacted by the opening of the Harry Potter flagship store in New York in June 2021.
Costs of Revenues
Costs of revenues decreased 11% and 2% for the three and nine months ended September 30, 2022, respectively. The decrease for the three months ended September 30, 2022 was primarily attributable to lower content expense for theatrical and television products. The decrease for the nine months ended September 30, 2022 was primarily attributable to lower content expense for television product due to lower television production revenues, partially offset by higher content expense associated with new games and theatrical releases.
Selling, General and Administrative
Selling, general and administrative expenses decreased 21% and 9% for the three and nine months ended September 30, 2022, respectively. The decrease for the three months ended September 30, 2022 was primarily attributable to lower marketing expenses due to fewer theatrical releases. The decrease for the nine months ended September 30, 2022, was primarily attributable to lower marketing expenses due to fewer theatrical releases, partially offset by higher bad debt expense.
Adjusted EBITDA
Adjusted EBITDA increased 43% and 45% for the three and nine months ended September 30, 2022, respectively.

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 Networks Segment
The tables below present, for our Networks segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating income (in millions).
 Three Months Ended September 30,
 20222021% Change
ActualPro Forma
Adjustments		Pro Forma
Combined
Actual (a)
Pro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma Combined
(Actual)		Pro Forma
Combined
(ex-FX)
Revenues:
Advertising$1,944 $— $1,944 $1,416 $852 $2,268 37 %(14)%(11)%
Distribution2,924 — 2,924 1,118 1,947 3,065 NM(5)%(2)%
Content277 — 277 339 117 456 (18)%(39)%(37)%
Other69 — 69 16 65 81 NM(15)%(6)%
Total revenues5,214 — 5,214 2,889 2,981 5,870 80 %(11)%(8)%
Costs of revenues, excluding depreciation and amortization1,906 — 1,906 1,349 1,043 2,392 41 %(20)%(16)%
Selling, general and administrative678 — 678 447 319 766 52 %(11)%(8)%
Adjusted EBITDA2,630 — 2,630 1,093 1,619 2,712 NM(3)%(2)%
Depreciation and amortization1,424 (291)1,133 260 1,009 1,269 
Employee share-based compensation— — — — 11 11 
Restructuring and other charges354 — 354 6 1 7 
Transaction and integration costs1 — 1 — — — 
Amortization of fair value step-up for content2 — 2 — 1 1 
Inter-segment eliminations30 — 30 — — — 
Operating income$819 $291 $1,110 $827 $597 $1,424 
(a) Prior year actual results have been recast to conform to the current period presentation as a result of the Merger and segment recast.
 Nine Months Ended September 30,
 20222021% Change
ActualPro Forma
Adjustments		Pro Forma
Combined
Actual (a)
Pro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma Combined
(Actual)		Pro Forma
Combined
(ex-FX)
Revenues:
Advertising$5,998 $1,380 $7,378 $4,409 $3,301 $7,710 36 %(4)%(2)%
Distribution6,885 2,183 9,068 3,399 5,915 9,314 NM(3)%(1)%
Content813 220 1,033 541 441 982 50 %5 %7 %
Other133 55 188 44 145 189 NM(1)%3 %
Total revenues13,829 3,838 17,667 8,393 9,802 18,195 65 %(3)%(1)%
Costs of revenues, excluding depreciation and amortization5,728 2,160 7,888 3,040 4,590 7,630 88 %3 %6 %
Selling, general and administrative1,854 352 2,206 1,313 983 2,296 41 %(4)%(1)%
Adjusted EBITDA6,247 1,326 7,573 4,040 4,229 8,269 55 %(8)%(8)%
Depreciation and amortization3,311 303 3,614 794 3,182 3,976 
Employee share-based compensation— 9 9 — 28 28 
Restructuring and other charges666 (5)661 27 6 33 
Transaction and integration costs1 — 1 4 — 4 
Amortization of fair value step-up for content3 419 422 — 402 402 
Inter-segment eliminations28 — 28 — — — 
Asset impairment and loss (gain) on disposition and disposal groups— — — (72)— (72)
Operating income$2,238 $600 $2,838 $3,287 $611 $3,898 
(a) Prior year actual results have been recast to conform to the current period presentation as a result of the Merger and segment recast.
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The discussion below is on a pro forma combined basis, ex-FX, since the actual increases year over year for revenues, cost of revenue, selling, general and administrative expenses and adjusted EBITDA are substantially attributable to the Merger.
Revenues
Advertising revenue decreased 11% and 2% for the three and nine months ended September 30, 2022, respectively. The decrease for the three months ended September 30, 2022 was primarily attributable to declines from general entertainment, news, and sports in the U.S. and the prior year Olympics in Europe. The decrease for the nine months ended September 30, 2022 was primarily attributable to lower news and general entertainment in the U.S., partially offset by increased sports advertising in the U.S. due to the NCAA Men’s Final Four in 2022, addition of the NHL in the fourth quarter of 2021, and a more normalized NBA playoff schedule.
Distribution revenue decreased 2% and 1% for the three and nine months ended September 30, 2022, respectively, primarily attributable to a decline in linear subscribers in the U.S. and lower contractual affiliate rates in some European markets, partially offset by an increase in contractual affiliate rates in the U.S. and premium sports packages in Latin America.
Content revenue decreased 37% and increased 7% for the three and nine months ended September 30, 2022, respectively. The decrease for the three months ended September 30, 2022 was primarily attributable to third party licensing of sports rights internationally, mainly related to Olympic sports rights to broadcast networks throughout Europe in 2021, partially offset by higher inter-segment licensing of content to DTC. The increase for the nine months ended September 30, 2022 was primarily attributable to higher inter-segment licensing of content to DTC, partially offset by overall net lower sub-licensing revenue for the Winter Olympics in 2022 compared to the Summer Olympics in 2021.
Other revenue decreased 6% and increased 3% for the three and nine months ended September 30, 2022, respectively.
Costs of Revenues
Cost of revenues decreased 16% and increased 6% for the three and nine months ended September 30, 2022, respectively. The decrease for the three months ended September 30, 2022 was primarily attributable to lower sports rights related to the broadcast of the Olympics in Europe in 2021 and lower content expense in the U.S. The increase for the nine months ended September 30, 2022 was primarily attributable to higher sports rights in the U.S. and increased expense at CNN, partially offset by lower sports rights related to the broadcast of the Olympics in Europe in 2021.
Selling, General and Administrative
Selling, general and administrative expenses decreased 8% and 1% for the three and nine months ended September 30, 2022, respectively. The decrease for the three months ended September 30, 2022 was primarily attributable to lower personnel and marketing expenses. The decrease for the nine months ended September 30, 2022 was primarily attributable to lower personnel costs, partially offset by higher marketing expenses.
Adjusted EBITDA
Adjusted EBITDA decreased 2% and 8% for the three and nine months ended September 30, 2022, respectively.
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 DTC Segment
The following tables present, for our DTC segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating income (in millions).
 Three Months Ended September 30,
 20222021% Change
ActualPro Forma
Adjustments		Pro Forma
Combined
Actual (a)
Pro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma Combined
(Actual)		Pro Forma
Combined
(ex-FX)
Revenues:
Advertising$106 $— $106 $37 $17 $54 NM96 %NM
Distribution2,062 — 2,062 210 2,036 2,246 NM(8)%(6)%
Content145 — 145 7 187 194 NM(25)%(25)%
Other4 — 4 1 2 3 NM33 %33 %
Total revenues2,317 — 2,317 255 2,242 2,497 NM(7)%(6)%
Costs of revenues, excluding depreciation and amortization2,118 — 2,118 178 1,590 1,768 NM20 %22 %
Selling, general and administrative833 — 833 353 685 1,038 NM(20)%(18)%
Adjusted EBITDA(634)— (634)(276)(33)(309)NMNMNM
Depreciation and amortization543 (117)426 58 425 483 
Employee share-based compensation(1)— (1)— 6 6 
Restructuring and other charges517 — 517 1 (1)— 
Amortization of fair value step-up for content191 (97)94 — 73 73 
Inter-segment eliminations(10)— (10)— — — 
Operating loss$(1,874)$214 $(1,660)$(335)$(536)$(871)
(a) Prior year actual results have been recast to conform to the current period presentation as a result of the Merger and segment recast.
 Nine Months Ended September 30,
 20222021% Change
ActualPro Forma
Adjustments		Pro Forma
Combined
Actual (a)
Pro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma Combined
(Actual)		Pro Forma
Combined
(ex-FX)
Revenues:
Advertising$248 $36 $284 $87 $23 $110 NMNMNM
Distribution4,287 2,150 6,437 499 5,842 6,341 NM2 %3 %
Content279 230 509 10 432 442 NM15 %15 %
Other9 3 12 2 10 12 NM— %— %
Total revenues4,823 2,419 7,242 598 6,307 6,905 NM5 %6 %
Costs of revenues, excluding depreciation and amortization4,200 1,977 6,177 513 4,406 4,919 NM26 %27 %
Selling, general and administrative2,002 909 2,911 1,180 1,943 3,123 70 %(7)%(6)%
Adjusted EBITDA(1,379)(467)(1,846)(1,095)(42)(1,137)(26)%(62)%(65)%
Depreciation and amortization1,193 150 1,343 179 1,335 1,514 
Employee share-based compensation(1)— (1)— 14 14 
Restructuring and other charges992 (3)989 2 3 5 
Transaction and integration costs 1 — 1 — — — 
Amortization of fair value step-up for content256 (21)235 — 220 220 
Asset impairment and loss (gain) on disposition and disposal groups4 — 4 — — — 
Operating loss$(3,824)$(593)$(4,417)$(1,276)$(1,614)$(2,890)
(a) Prior year actual results have been recast to conform to the current period presentation as a result of the Merger and segment recast.
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The discussion below is on a pro forma combined basis, ex-FX, since the actual increases year over year for revenues, cost of revenue, selling, general and administrative expenses and adjusted EBITDA are substantially attributable to the Merger.
Revenues
As of September 30, 2022, we had 94.9 million core DTC subscribers.1
Advertising revenue increased $53 million and $176 million for the three and nine months ended September 30, 2022, respectively, primarily attributable to subscriber growth on our DTC ad-supported tiers.
Distribution revenue decreased 6% for the three months ended September 30, 2022 and increased 3% for the nine months ended September 30, 2022. The decrease for the three months ended September 30, 2022 was primarily attributable to a decline in wholesale revenues primarily due to the Amazon Channels expiration in September 2021, partially offset by global retail subscriber gains. The increase for the nine months ended September 30, 2022 was primarily attributable to global retail subscriber gains, partially offset by a decline in wholesale revenues primarily due to the Amazon Channels expiration in September 2021.
Content revenue decreased 25% for the three months ended September 30, 2022 and increased 15% for the nine months ended September 30, 2022. The decrease for the three months ended September 30, 2022 was primarily attributable to third party licensing of HBO content in September 2021. The increase for the nine months ended September 30, 2022 was primarily attributable to higher third party licensing of HBO content.
Costs of Revenues
Costs of revenues increased 22% and 27% for the three and nine months ended September 30, 2022, respectively, primarily attributable to increased programming expenses and the impact of measurement period adjustments to the fair value of content assets acquired during the Merger. (See Note 3 to the accompanying consolidated financial statements.)
Selling, General, and Administrative Expenses
Selling, general and administrative expenses decreased 18% and 6% for the three and nine months ended September 30, 2022, respectively, primarily attributable to more efficient marketing-related spend.
Adjusted EBITDA
Adjusted EBITDA decreased $335 million and $733 million for the three and nine months ended September 30, 2022, respectively.
1 We define a “DTC Subscription” as:
a) a retail subscription to discovery+, HBO or HBO Max for which we have recognized subscription revenue, whether directly or through a third party, from a direct-to-consumer platform; b) a wholesale subscription to discovery+, HBO, or HBO Max for which we have recognized subscription revenue from a fixed-fee arrangement with a third party and where the individual user has activated their subscription; and c) a wholesale subscription to discovery+, HBO or HBO Max for which we have recognized subscription revenue on a per subscriber basis.
We may refer to the aggregate number of DTC Subscriptions as “subscribers.”
The reported number of “subscribers” included herein and the definition of “DTC Subscription” as used herein excludes:
a) individuals who subscribe to DTC products, other than discovery+, HBO and HBO Max, that may be offered by us or by certain joint venture partners or affiliated parties from time to time; b) a limited number of international discovery+ subscribers that are part of non-strategic partnerships or short-term arrangements as may be identified by the Company from time to time; c) domestic, and international Cinemax subscribers, and international basic HBO subscribers; and d) users on free trials.
60
Corporate
The following tables present Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating loss (in millions):
 Three Months Ended September 30, 
 20222021% Change
ActualPro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma Combined
(Actual)		Pro Forma
Combined
(ex-FX)
Adjusted EBITDA$(340)$— $(340)$(95)$(231)$(326)NM(4)%(7)%
Employee share-based compensation113 — 113 36 21 57 
Depreciation and amortization92 (29)63 23 46 69 
Restructuring and other charges93 — 93 — — — 
Transaction and integration costs57 — 57 13 111 124 
Asset impairment and loss (gain) on disposition and disposal groups28 — 28 — (223)(223)
Inter-segment eliminations(20)— (20)— — — 
Operating loss$(703)$29 $(674)$(167)$(186)$(353)
 Nine Months Ended September 30, 
 20222021% Change
ActualPro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma Combined
(Actual)		Pro Forma
Combined
(ex-FX)
Adjusted EBITDA$(749)$(353)$(1,102)$(273)$(672)$(945)NM(17)%(19)%
Employee share-based compensation317 (11)306 124 159 283 
Depreciation and amortization188 (18)170 70 140 210 
Restructuring and other charges162 (44)118 — 44 44 
Transaction and integration costs1,126 (564)562 48 901 949 
Asset impairment and loss (gain) on disposition and disposal groups28 — 28 — (223)(223)
Inter-segment eliminations(28)— (28)— — — 
Operating loss$(2,542)$284 $(2,258)$(515)$(1,693)$(2,208)
Corporate operations primarily consist of executive management and administrative support services, which are recorded in selling, general and administrative expense, as well as substantially all of our share-based compensation and third-party transaction and integration costs.
Selling, general and administrative expense was $358 million and $234 million for the three months ended September 30, 2022 and 2021, respectively, and $1,091 million and $692 million for the nine months ended September 30, 2022 and 2021, respectively. Adjusted EBITDA decreased 7% and 19% for the three and nine months ended September 30, 2022, respectively. The decreases were primarily attributable to increased securitization costs from higher interest rates, partially offset by lower personnel costs.
As reported transaction and integration costs for the nine months ended September 30, 2022 included the impact of the issuance of additional shares of common stock to Advance/Newhouse Programming Partnership of $789 million upon the closing of the Merger. (See Note 2 to the accompanying consolidated financial statements.)
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Inter-segment Eliminations
The following tables present our inter-segment eliminations, by revenue and expense (in millions):
 Three Months Ended September 30, 
 20222021% Change
ActualPro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma Combined
(Actual)		Pro Forma
Combined
(ex-FX)
Inter-segment revenue eliminations$(785)$— $(785)$— $(751)$(751)NM(5)%(5)%
Inter-segment expense eliminations(791)— (791)— (786)(786)NM(1)%(1)%
Adjusted EBITDA6 — 6 — — 35 35 NM(83)%(83)%
Restructuring and other charges(5)— (5)— — — 
Amortization of fair value step-up for content181 — 181 — — — 
Operating income (loss)$(170)$— $(170)$— $35 $35 
 Nine Months Ended September 30, 
 20222021% Change
ActualPro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma
Adjustments		Pro Forma
Combined		ActualPro Forma Combined
(Actual)		Pro Forma
Combined
(ex-FX)
Inter-segment revenue eliminations$(1,734)$(1,065)$(2,799)$— $(2,074)$(2,074)NM(35)%(35)%
Inter-segment expense eliminations(1,726)(1,038)(2,764)— (2,147)(2,147)NM(29)%(29)%
Adjusted EBITDA(8)(27)(35)— — 73 73 NMNMNM
Restructuring and other charges(23)— (23)— — — 
Amortization of fair value step-up for content422 — 422 — — — 
Operating income (loss)$(407)$(27)$(434)$— $73 $73 
Inter-segment revenue and expense eliminations primarily represent inter-segment content transactions and marketing and promotion activity between reportable segments. In our current segment structure, in certain instances, production and distribution activities are in different segments. Inter-segment content transactions are presented “gross” (i.e. the segment producing and/or licensing the content reports revenue and profit from inter-segment transactions in a manner similar to the reporting of third-party transactions, and the required eliminations are reported on the separate “Eliminations” line when presenting our summary of segment results). Generally, timing of revenue recognition is similar to the reporting of third-party transactions. The segment distributing the content, e.g. via our DTC or linear services, capitalizes the cost of inter-segment content transactions, including “mark-ups” and amortizes the costs over the shorter of the license term, if applicable, or the expected period of use. The content amortization expense related to the inter-segment profit is also eliminated on the separate “Eliminations” line when presenting our summary of segment results.
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LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Sources of Cash
Historically, we have generated a significant amount of cash from operations. During the nine months ended September 30, 2022, we funded our working capital needs primarily through cash flows from operations. As of September 30, 2022, we had $2.4 billion of cash and cash equivalents on hand. We are a well-known seasoned issuer and have the ability to conduct registered offerings of securities, including debt securities, common stock, and preferred stock, on short notice, subject to market conditions. Access to sufficient capital from the public market is not assured. As of September 30, 2022, we also have a $6.0 billion revolving credit facility and a $1.5 billion commercial paper program, as described below. In connection with the Merger, we incurred a substantial amount of additional third-party indebtedness, which has significantly increased our future financial commitments, including aggregate interest payments.
•Debt
Revolving Credit Facility and Commercial Paper
In June 2021, Discovery Communications, LLC (“DCL”) entered into a multicurrency revolving credit agreement (the “Revolving Credit Agreement”), replacing the existing $2.5 billion credit agreement, dated February 4, 2016, as amended. DCL has the capacity to borrow up to $6.0 billion under the Revolving Credit Agreement (the “Credit Facility”). The Revolving Credit Agreement includes a $150 million sublimit for the issuance of standby letters of credit. DCL may also request additional commitments up to $1.0 billion from the lenders upon satisfaction of certain conditions. Obligations under the Revolving Credit Agreement are unsecured and are fully and unconditionally guaranteed by the Company, Scripps Networks Interactive, Inc. (“Scripps Networks”), and WarnerMedia Holdings, Inc. The Credit Facility will be available on a revolving basis until June 2026, with an option for up to two additional 364-day renewal periods subject to the lenders’ consent. The Revolving Credit Agreement contains customary representations and warranties as well as affirmative and negative covenants. As of September 30, 2022, DCL was in compliance with all covenants and there were no events of default under the Revolving Credit Agreement.
Additionally, our commercial paper program is supported by the Credit Facility. Under the commercial paper program, we may issue up to $1.5 billion, including up to $500 million of euro-denominated borrowings. Borrowing capacity under the Credit Facility is effectively reduced by any outstanding borrowings under the commercial paper program.
During the nine months ended September 30, 2022, we borrowed and repaid $885 million under our commercial paper program. As of September 30, 2022 and December 31, 2021, the Company had no outstanding borrowings under the Credit Facility or the commercial paper program.
•Derivatives
We received investing proceeds of $722 million during the nine months ended September 30, 2022 from the unwind and settlement of derivative instruments. (See Note 12 to the accompanying consolidated financial statements.)
•Investments and Business Combinations
During the nine months ended September 30, 2022, we completed the sale of our minority interest in Discovery Education and other investments and received cash of $162 million.
In addition, we acquired $3.6 billion of cash in connection with the Merger and the post-closing working capital settlement process.
Uses of Cash
Our primary uses of cash include the creation and acquisition of new content, business acquisitions, income taxes, personnel costs, costs to develop and market HBO Max and discovery+, principal and interest payments on our outstanding senior notes, funding for various equity method and other investments, and repurchases of our capital stock.
•Content Acquisition
We plan to continue to invest significantly in the creation and acquisition of new content. Subsequent to the Merger, contractual commitments to acquire content have increased significantly compared to our commitments as set forth in “Material Cash Requirements from Known Contractual and Other Obligations” in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Form 10-K. (See Note 19 to the accompanying consolidated financial statements.)
63
•Debt
Term Loan
During the nine months ended September 30, 2022, the Company repaid $6.0 billion of aggregate principal amount outstanding of its term loans prior to the due dates of October 2023 and April 2025.
Senior Notes
During the nine months ended September 30, 2022, we repaid in full at maturity $327 million aggregate principal amount outstanding of our 2.375% Euro Denominated Senior Notes due March 2022. In addition, we have $106 million, $796 million, $192 million, and $159 million of senior notes coming due in February, March, April, and September 2023, respectively.
In anticipation of the Merger, WarnerMedia Holdings, Inc., formerly a wholly owned subsidiary of AT&T, entered into a $10.0 billion term loan credit agreement (the “Term Loan Credit Agreement”) and issued $30.0 billion aggregate principal amount of senior unsecured notes. The proceeds were used to fund the cash payments to AT&T and to otherwise fund the Merger and pay fees and expenses. Upon completion of the Merger, AT&T was released from all obligations and the debt was unconditionally guaranteed on a senior unsecured basis by WBD and each wholly owned domestic subsidiary of WBD that is a borrower or considered a subsidiary guarantor under the Term Loan Credit Agreement or the Revolving Credit Agreement, and will rank equally with all of the Company’s other unsecured senior debt.
On a consolidated basis, we also assumed an additional $1.5 billion of senior notes (at par value) issued by the WarnerMedia Business that existed prior to the Merger.
•Capital Expenditures and Investments in Next Generation Initiatives
We effected capital expenditures of $623 million during the nine months ended September 30, 2022, including amounts capitalized to support our next generation platforms, such as HBO Max and discovery+. In addition, we expect to continue to incur significant costs to develop and market HBO Max and discovery+ streaming products in the future.
•Investments and Business Combinations
Our uses of cash have included investments in equity method investments and equity investments without readily determinable fair value. (See Note 9 to the accompanying consolidated financial statements.) We also provide funding to our investees from time to time. During the nine months ended September 30, 2022, we contributed $137 million for investments in and advances to our investees.
We expect to incur significant, one-time transaction and integration costs during the first year following the Merger. (See Note 3 to the accompanying consolidated financial statements.)
•Redeemable Noncontrolling Interest and Noncontrolling Interest
Due to business combinations, we have redeemable equity balances of $318 million at September 30, 2022, which may require the use of cash in the event holders of noncontrolling interests put their interests to us. Distributions to noncontrolling interests and redeemable noncontrolling interests totaled $286 million and $231 million for the nine months ended September 30, 2022 and 2021, respectively.
•Common Stock Repurchases
Historically, we have funded our stock repurchases through a combination of cash on hand, cash generated by operations, and the issuance of debt. In February 2020, our Board of Directors authorized additional stock repurchases of up to $2.0 billion upon completion of our existing $1.0 billion repurchase authorization announced in May 2019. Under the new stock repurchase authorization, management is authorized to purchase shares from time to time through open market purchases at prevailing prices or privately negotiated purchases subject to market conditions and other factors. During the nine months ended September 30, 2022, we did not repurchase any of our common stock.
•Income Taxes and Interest
We expect to continue to make payments for income taxes and interest on our outstanding senior notes. During the nine months ended September 30, 2022, we made cash payments of $859 million and $1,305 million for income taxes and interest on our outstanding debt, respectively. We expect cash required for interest payments to increase significantly as a result of the Merger.
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Cash Flows
The following table presents changes in cash and cash equivalents (in millions).
 Nine Months Ended September 30,
 20222021
Cash, cash equivalents, and restricted cash, beginning of period$3,905 $2,122 
Cash provided by operating activities1,458 1,914 
Cash provided by (used in) investing activities3,742 (30)
Cash used in financing activities(6,470)(811)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(122)(69)
Net change in cash, cash equivalents, and restricted cash(1,392)1,004 
Cash, cash equivalents, and restricted cash, end of period$2,513 $3,126 
Operating Activities
Cash provided by operating activities was $1,458 million and $1,914 million during the nine months ended September 30, 2022 and 2021, respectively. The decrease in cash provided by operating activities was primarily attributable to a negative fluctuation in working capital activity, partially offset an increase in net income excluding non-cash items.
Investing Activities
Cash provided by (used in) investing activities was $3,742 million and $30 million during the nine months ended September 30, 2022 and 2021, respectively. The increase in cash provided by investing activities was primarily attributable to proceeds received from cash acquired during the Merger and the post-closing working capital settlement process and from the unwind and settlement of derivative instruments, partially offset by a reduction in cash received from the sales and maturities of investments and increased purchases of property and equipment during the nine months ended September 30, 2022.
Financing Activities
Cash used in financing activities was $6,470 million and $811 million during the nine months ended September 30, 2022 and 2021, respectively. The increase in cash used in financing activities was primarily attributable to principal repayments made on our term loans and senior notes and an increase in distributions to noncontrolling interests and redeemable noncontrolling interests, partially offset by securitization receivables collected but not remitted during the nine months ended September 30, 2022.
Capital Resources
As of September 30, 2022, capital resources were comprised of the following (in millions).
 September 30, 2022
 Total
Capacity		Outstanding
Indebtedness		Unused
Capacity
Cash and cash equivalents$2,422 $— $2,422 
Revolving credit facility and commercial paper program6,000 — 6,000 
Term loans4,000 4,000 — 
Senior notes (a)
46,144 46,144 — 
Total$58,566 $50,144 $8,422 
(a) Interest on the senior notes is paid annually or semi-annually. Our senior notes outstanding as of September 30, 2022 had interest rates that ranged from 1.90% to 9.15% and will mature between 2023 and 2062.
We expect that our cash balance, cash generated from operations and availability under the Credit Facility will be sufficient to fund our cash needs for both the short-term and the long-term. Our borrowing costs and access to capital markets can be affected by short and long-term debt ratings assigned by independent rating agencies which are based, in part, on our performance as measured by credit metrics such as interest coverage and leverage ratios.
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As of September 30, 2022, we held $2.2 billion of our $2.4 billion of cash and cash equivalents in our foreign subsidiaries. The Tax Cuts and Jobs Act of 2017 features a participation exemption regime with current taxation of certain foreign income and imposes a mandatory repatriation toll tax on unremitted foreign earnings. Notwithstanding the U.S. taxation of these amounts, we intend to continue to reinvest these funds outside of the U.S. Our current plans do not demonstrate a need to repatriate them to the U.S. However, if these funds are needed in the U.S., we would be required to accrue and pay non-U.S. taxes to repatriate them. The determination of the amount of unrecognized deferred income tax liability with respect to these undistributed foreign earnings is not practicable.
Summarized Guarantor Financial Information
Basis of Presentation
As of September 30, 2022 and December 31, 2021, all of the Company’s outstanding $14.6 billion registered senior notes have been issued by DCL, a wholly owned subsidiary of the Company, and guaranteed by the Company, Scripps Networks, and WarnerMedia Holdings, Inc. As of September 30, 2022, the Company also has outstanding $30.0 billion of senior notes issued by WarnerMedia Holdings, Inc. and guaranteed by the Company, Scripps and DCL; $1.5 billion of senior notes issued by the legacy WarnerMedia Business (not guaranteed); and approximately $23 million of un-exchanged senior notes issued by Scripps Networks (not guaranteed). (See Note 10 to the accompanying consolidated financial statements.) DCL primarily includes the Discovery Channel and TLC networks in the U.S. DCL is a wholly owned subsidiary of the Company. Scripps Networks is also 100% owned by the Company.
The tables below present the summarized financial information as combined for Warner Bros. Discovery, Inc. (the “Parent”), Scripps Networks, DCL, and WarnerMedia Holdings, Inc. (collectively, the “Obligors”). All guarantees of DCL and WarnerMedia Holdings, Inc.'s senior notes (the “Note Guarantees”) are full and unconditional, joint and several and unsecured, and cover all payment obligations arising under the senior notes.
Note Guarantees issued by Scripps Networks, DCL or WarnerMedia Holdings, Inc., or any subsidiary of the Parent that in the future issues a Note Guarantee (each, a “Subsidiary Guarantor”) may be released and discharged (i) concurrently with any direct or indirect sale or disposition of such Subsidiary Guarantor or any interest therein, (ii) at any time that such Subsidiary Guarantor is released from all of its obligations under its guarantee of payment, (iii) upon the merger or consolidation of any Subsidiary Guarantor with and into DCL, WarnerMedia Holdings, Inc. or the Parent or another Subsidiary Guarantor, as applicable, or upon the liquidation of such Subsidiary Guarantor and (iv) other customary events constituting a discharge of the Obligors’ obligations.
Summarized Financial Information
The Company has included the accompanying summarized combined financial information of the Obligors after the elimination of intercompany transactions and balances among the Obligors and the elimination of equity in earnings from and investments in any subsidiary of the Parent that is a non-guarantor (in millions). The summarized balance sheet information as of December 31, 2021 does not include information with respect to WarnerMedia Holdings, Inc., as WarnerMedia Holdings, Inc. was a wholly-owned subsidiary of AT&T with de minimis assets and no operating activities for the year ended December 31, 2021. The summarized income statement information for the nine months ended September 30, 2022 includes information with respect to WarnerMedia Holdings, Inc. beginning subsequent to the close of the Merger.
September 30, 2022December 31, 2021
Current assets$1,594 $4,452 
Non-guarantor intercompany trade receivables, net161 85 
Noncurrent assets5,880 5,969 
Current liabilities1,635 1,018 
Noncurrent liabilities48,694 15,778 
Nine Months Ended September 30, 2022
Revenues$1,603 
Operating income(623)
Net income(1,102)
Net income available to Warner Bros. Discovery, Inc.(1,108)
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MATERIAL CASH REQUIREMENTS FROM KNOWN CONTRACTUAL AND OTHER OBLIGATIONS
In the normal course of business, we enter into commitments for the purchase of goods or services that require us to make payments or provide funding in the event certain circumstances occur. Subsequent to the Merger, total contractual commitments, particularly in respect of long-term debt and content purchase obligations, have increased significantly compared to our commitments set forth in “Material Cash Requirements from Known Contractual and Other Obligations” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Form 10-K. (See Note 10 and Note 19 to the accompanying consolidated financial statements.)
RELATED PARTY TRANSACTIONS
In the ordinary course of business, we enter into transactions with related parties, primarily the Liberty Group and our equity method investees. (See Note 18 to the accompanying consolidated financial statements.)
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Except for updates to accounting policies as a result of the Merger described in Note 1 to the accompanying consolidated financial statements, our critical accounting policies and estimates have not changed since December 31, 2021. For a discussion of each of our critical accounting estimates listed below, including information and analysis of estimates and assumptions involved in their application, see “Critical Accounting Policies and Estimates” included in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Form 10-K:
•Uncertain tax positions;
•Goodwill and intangible assets;
•Content rights;
•Consolidation; and
•Revenue recognition
NEW ACCOUNTING AND REPORTING PRONOUNCEMENTS
We adopted certain new accounting and reporting standards during the nine months ended September 30, 2022. (See Note 1 to the accompanying consolidated financial statements.)
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q, as well as in other public statements we may make, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our business, marketing and operating strategies, integration of acquired businesses, new service offerings, financial prospects, anticipated sources and uses of capital and our recently completed acquisition of the WarnerMedia Business. Words such as “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “potential,” “predict,” “project,” “strategy,” “target” and similar terms, and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will” and “would,” among other terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be accomplished. The following is a list of some, but not all, of the factors that could cause actual results or events to differ materially from those anticipated:
•the effects of our recently completed acquisition of the WarnerMedia Business;
•changes in the distribution and viewing of television programming, including the continuing expanded deployment of personal video recorders, subscription video on demand, internet protocol television, mobile personal devices, personal tablets and user-generated content and their impact on television advertising revenue;
•continued consolidation of distribution customers and production studios;
•a failure to secure affiliate or distribution agreements or the renewal of such agreements or other wholesale subscription or bundled service arrangements on less favorable terms;
•rapid technological changes;
•the inability of advertisers or affiliates to remit payment to us in a timely manner or at all;
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•general economic and business conditions, including the impact of the ongoing COVID-19 pandemic;
•industry trends, including the timing of, and spending on, feature film, television and television commercial production;
•spending on domestic and foreign television advertising;
•disagreements with our distributors or other business partners over contract interpretation;
•fluctuations in foreign currency exchange rates, political unrest and regulatory changes in international markets, including any proposed or adopted regulatory changes that impact the operations of our international media properties and/or modify the terms under which we offer our services and operate in international markets;
•market demand for foreign first-run and existing content libraries;
•the regulatory and competitive environment of the industries in which we, and the entities in which we have interests, operate;
•uncertainties regarding the financial performance of our investments in unconsolidated entities;
•our ability to complete, integrate, maintain and obtain the anticipated benefits and synergies from our proposed business combinations and acquisitions, including our recently completed acquisition of the WarnerMedia Business, on a timely basis or at all;
•uncertainties associated with product and service development and market acceptance, including the development and provision of programming for new television and telecommunications technologies, and the success of our discovery+ and HBO Max streaming products;
•realizing direct-to-consumer subscriber goals, including through the activation of subscriptions by subscribers receiving access through bundled services or other wholesale subscription arrangements;
•future financial performance, including availability, terms, and deployment of capital;
•inherent uncertainties involved in the estimates and assumptions used in the preparation of financial forecasts;
•the ability of suppliers and vendors to deliver products, equipment, software, and services;
•the outcome of any pending or threatened or potential litigation, including any litigation that has been or may be instituted against us relating to our recently completed acquisition of the WarnerMedia Business;
•availability of qualified personnel and recruiting, motivating and retaining talent;
•the possibility or duration of an industry-wide strike or other job action affecting a major entertainment industry union or others involved in the development and production of our television programming, feature films and interactive entertainment (e.g., games) who are covered by collective bargaining agreements;
•changes in, or failure or inability to comply with, government regulations, including, without limitation, regulations of the Federal Communications Commission and similar authorities internationally and data privacy regulations and adverse outcomes from regulatory proceedings;
•changes in income taxes due to regulatory changes or changes in our corporate structure;
•changes in the nature of key strategic relationships with partners, distributors and equity method investee partners;
•competitor responses to our products and services and the products and services of the entities in which we have interests;
•threatened or actual cyber-attacks and cybersecurity breaches;
•threatened terrorist attacks and military action, including the intensification or expansion of the conflict in Ukraine;
•service disruptions or the failure of communications satellites or transmitter facilities;
•theft of our content and unauthorized duplication, distribution and exhibition of such content;
•changes in existing U.S. and foreign laws and regulations, as well as possible private rights of action, regarding intellectual property rights protection and privacy, personal data protection and user consent;
•potential changes to the electromagnetic spectrum currently used for broadcast television and satellite distribution being considered by the Federal Communications Commission could negatively impact our WarnerMedia Business’s ability to deliver pay-TV network feeds of our domestic pay-TV programming networks to our affiliates, and, in some cases, to produce high-value news and entertainment programming on location;
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•our level of debt, including the significant indebtedness incurred in connection with the acquisition of the WarnerMedia Business, and our future compliance with debt covenants;
•reduced access to capital markets or significant increases in costs to borrow, including as a result of higher interest rates and perceived, potential or actual inflation; and
•a reduction of advertising revenue associated with unexpected reductions in the number of subscribers.
These risks have the potential to impact the recoverability of the assets recorded on our balance sheets, including goodwill or other intangibles. Additionally, many of these risks are currently amplified by and may, in the future, continue to be amplified by the prolonged impact of the COVID-19 pandemic. For additional risk factors, refer to Part I, Item 1A, “Risk Factors,” in our 2021 Form 10-K, Part II, Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March 31, 2022 (the “Q1 10-Q”), and Part II, Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q for the period ended June 30, 2022 (the “Q2 10-Q”). These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Quarterly Report, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
Quantitative and qualitative disclosures about our existing market risk are set forth in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in the 2021 Form 10-K. Our exposures to market risk have not changed materially since December 31, 2021.
ITEM 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2022, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
On April 8, 2022, Discovery completed its merger with WM. (See Note 3 to the accompanying consolidated financial statements). We are currently integrating policies, processes, people, technology and operations for the combined company. Management will continue to evaluate our internal control over financial reporting as we execute integration activities. During the three months ended September 30, 2022, except as noted above, there were no changes in our internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
In the normal course of business, we experience routine claims and legal proceedings. It is the opinion of our management, based on information available at this time, that none of the current claims and proceedings will have a material adverse effect on our consolidated financial position, results of operations or cash flows. (See Note 19 to the accompanying consolidated financial statements.)
Between September 23, 2022 and October 24, 2022, two purported class action lawsuits (Collinsville Police Pension Board v. Discovery, Inc., et al., Case No. 1:22-cv-08171 and Todorovski v. Discovery, Inc., et al., Case No. 1:22-cv-09125) were filed in the United States District Court for the Southern District of New York. The complaints name Warner Bros. Discovery, Inc., Discovery, Inc., David Zaslav, and Gunnar Wiedenfels as defendants. The complaints generally allege that the defendants made false and misleading statements in SEC filings and in certain public statements relating to the Merger, in violation of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended. The complaints seek damages and other relief. The Company intends to vigorously defend these litigations.
ITEM 1A. Risk Factors
Investors should carefully review and consider the information regarding certain factors that could materially affect our business, results of operations, financial condition and cash flows as set forth under Part I, Item 1A “Risk Factors” of the Company’s 2021 Form 10-K, Part II, Item 1A "Risk Factors” of the Company’s Q1 Form 10-Q and Part II, Item 1A “Risk Factors” of the Company’s Q2 Form 10-Q.
Additional risks and uncertainties not presently known to us or that we currently believe not to be material may also adversely impact our business, results of operations, financial position and cash flows.
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ITEM 6. Exhibits.
Exhibit No.Description
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
22
31.1
31.2
32.1
32.2
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
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101.SCHInline XBRL Taxonomy Extension Schema Document (filed herewith)♦
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)♦
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)♦
101.LABInline XBRL Taxonomy Extension Label Linkbase Document (filed herewith)♦
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)♦
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
*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.
†Indicates management contract or compensatory plan, contract or arrangement.
♦Attached as Exhibit 101 to this Quarterly Report on Form 10-Q are the following formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, (ii) Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021, (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2022 and 2021, (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021, (v) Consolidated Statement of Equity for the three and nine months ended September 30, 2022 and 2021, and (vi) Notes to Consolidated Financial Statements.
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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 thereunto duly authorized.
 
  
WARNER BROS. DISCOVERY, INC.
(Registrant)
Date: November 3, 2022  By: /s/ David M. Zaslav
   David M. Zaslav
   President and Chief Executive Officer
Date: November 3, 2022  By: /s/ Gunnar Wiedenfels
   Gunnar Wiedenfels
   Chief Financial Officer


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Exhibit 10.5

Execution Version
Fourth Amended and Restated Receivables Purchase Agreement
Dated as of August 30, 2022
by and among
Warner Bros. Discovery Receivables Funding, 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
Section 1.01.    Certain Defined Terms
Section 1.02.    Other Interpretative Matters
Section 1.04.    SOFR Notification
Section 1.05.    Conforming Changes Relating to SOFR
Article II    Terms of the Purchases and Investments
Section 2.01.    Purchase Facility
Section 2.02.    Making Investments; Return of Capital
Section 2.03.    Yield and Fees
Section 2.04.    Records of Investments and Capital
Section 2.05.    Selection of Yield Rates and Tranche Periods
Section 2.06.    Defaulting Purchasers
Article III    Seller Guaranty
Section 3.01.    Guaranty of Payment
Section 3.02.    Unconditional Guaranty
Section 3.03.    Modifications
Section 3.04.    Waiver of Rights
Section 3.05.    Reinstatement
Section 3.06.    Remedies
Section 3.07.    Subrogation
Section 3.08.    Inducement
Section 3.09.    Security Interest
Section 3.10.    Further Assurances
Section 3.11.    Release of Seller Collateral and Reconveyance of Certain Sold Receivables
Article IV    Settlement Procedures and Payment Provisions
Section 4.01.    Settlement Procedures
Section 4.02.    Payments and Computations, Etc
Article V    Increased Costs; Funding Losses; Taxes; Illegality and Back-Up Security Interest
Section 5.01.    Increased Costs
Section 5.02.    Funding Losses
Section 5.03.    Taxes
Section 5.04.    Inability to Determine SOFR Rate; Change in Legality
Section 5.05.    Back-Up Security Interest
Article VI    Conditions to Effectiveness and Investments
Section 6.01.    Reserved
Section 6.02.    Conditions Precedent to All Investments
Section 6.03.    Conditions Precedent to All Releases
-i-

Section 6.04.    Conditions Precedent to Restatement Effective Date
Article VII    Representations and Warranties
Section 7.01.    Representations and Warranties of the Seller
Section 7.02.    Representations and Warranties of the Servicer
Article VIII    Covenants
Section 8.01.    Covenants of the Seller
Section 8.02.    Covenants of the Servicer
Section 8.03.    Separate Existence of the Seller
Article IX    Administration and Collection of Receivables
Section 9.01.    Appointment of the Servicer
Section 9.02.    Duties of the Servicer
Section 9.03.    Collection Account Arrangements
Section 9.04.    Enforcement Rights
Section 9.05.    Responsibilities of the Seller
Section 9.06.    Servicing Fee
Article X    Events of Termination
Section 10.01.    Events of Termination
Article XI    The Administrative Agent
Section 11.01.    Authorization and Action
Section 11.02.    Administrative Agent’s Reliance, Etc
Section 11.03.    Administrative Agent and Affiliates
Section 11.04.    Indemnification of Administrative Agent
Section 11.05.    Delegation of Duties
Section 11.06.    Action or Inaction by Administrative Agent
Section 11.07.    Notice of Events of Termination; Action by Administrative Agent
Section 11.08.    Non-Reliance on Administrative Agent and Other Parties
Section 11.09.    Successor Administrative Agent
Section 11.10.    Structuring Agent
Section 11.11.    Erroneous Payments
Article XII    The Group Agents
Section 12.01.    Authorization and Action
Section 12.02.    Group Agent’s Reliance, Etc
Section 12.03.    Group Agent and Affiliates
Section 12.04.    Indemnification of Group Agents
Section 12.05.    Delegation of Duties
Section 12.06.    Notice of Events of Termination
Section 12.07.    Non-Reliance on Group Agent and Other Parties
Section 12.08.    Successor Group Agent
Section 12.09.    Reliance on Group Agent
Article XIII    Indemnification
Section 13.01.    Indemnities by the Seller
-ii-

Section 13.02.    Indemnification by the Servicer
Article XIV    Miscellaneous
Section 14.01.    Amendments, Etc
Section 14.02.    Notices, Etc
Section 14.03.    Assignability; Addition of Purchasers
Section 14.04.    Costs and Expenses
Section 14.05.    No Proceedings; Limitation on Payments
Section 14.06.    Confidentiality
Section 14.07.    Governing Law
Section 14.08.    Execution in Counterparts
Section 14.09.    Integration; Binding Effect; Survival of Termination
Section 14.10.    Consent to Jurisdiction
Section 14.11.    Waiver of Jury Trial
Section 14.12.    Ratable Payments
Section 14.13.    Limitation of Liability
Section 14.14.    Intent of the Parties
Section 14.15.    USA Patriot Act
Section 14.16.    Reserved
Section 14.17.    Severability
Section 14.18.    Mutual Negotiations
Section 14.19.    Captions and Cross References
Section 14.20.    Purchaser Representation
Section 14.21.    Amendment and Restatement
Section 14.22.    Equalization of Aggregate Capital and Commitments
Section 14.23    Acknowledgement and Consent to Bail-In of Affected Financial Institutions


-iii-

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    —    [Reserved]
Exhibit L    —    Defined Terms
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

-iv-

This Fourth Amended and Restated Receivables Purchase Agreement (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) is entered into as of August 30, 2022, by and among the following parties:
    (i)    Warner Bros. Discovery Receivables Funding, LLC (formerly known as 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 Third Amended and Restated Receivables Purchase Agreement, dated as of July 5, 2022 (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. 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 1M 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 1M 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 1M 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 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
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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(a), 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 fundings of Capital to the Seller on a revolving basis, and if and to the extent any Conduit Purchaser does not make any such funding 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 funding 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 funding 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 date of each 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 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
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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.
    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 1:00 p.m. (New York City time) at least two (2) Business Days prior to the day the related requested Investment is to be made, it being
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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 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) and (v) all Pool Receivables that are or, effective upon the making of such Investment, will be, Sold Receivables.
    (b)    (i) The Administrative Agent shall, promptly after receipt by it of an Investment Request pursuant to Section 2.02(a), notify each Group Agent of its receipt of such Investment Request specifying the information provided by the Seller and the apportionment among the Groups (which shall be ratably based on the Group Commitments) of the requested Investment. 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, provided that if any Purchaser fails to remit such funds to the Administrative Agent in a timely manner, the Administrative Agent may elect in its sole discretion to fund with its own funds the share of the Investment of such Purchaser on such date, and such Purchaser shall be subject to the repayment obligation in Section 2.02(b)(ii).
    (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 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
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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 without premium or penalty (other than any associated Breakage Fees, if applicable), in whole or in part by payment only from Collections on Pool 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.
    (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
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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 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
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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 based on Daily 1M 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 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), 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 1M 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
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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 1M 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 Group Agents 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 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
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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.  Subject to Section 14.23, 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 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.
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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 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 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
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released in any manner whatsoever by an impairment, modification, change, release, increase or limitation of the liability of any Obligor, any Originator, the Servicer or the Performance Guarantor or by reason of the bankruptcy or insolvency of any Obligor, any Originator, 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 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, (F) any defenses, set-offs or counterclaims which the Seller, 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.
    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 Seller, the Servicer or the
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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 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 Servicer, the Performance Guarantor or any other Person, (ii) proceed against or exhaust any other security held from any Obligor, any Originator, 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 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 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 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
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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 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 Servicer, the Performance Guarantor or any other Person in respect of the Guaranteed Obligations.
    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.
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    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)    the Lock-Boxes and Collection Accounts, 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;
    (v)    all rights (but none of the obligations) of the Seller under the Purchase and Sale Agreement;
    (vi)    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);
(vii) 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
(viii)    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
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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 Administrative Agent or any Purchaser deems appropriate to evidence or perfect its security interest and lien on any of the Seller 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.
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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”). 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 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
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    (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, the balance, if any, to be paid to the Seller for its own account.
Amounts payable pursuant to clauses first through fifth 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. The Seller’s right to receive payments (if any) from time to time pursuant to clause fifth 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.
    (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:
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    (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, any Originator, the Servicer or any Affiliate of the Servicer, or any setoff, counterclaim or dispute between the Seller, 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 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.
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    (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.
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 1M 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.
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    (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 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
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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 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.
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    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 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
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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 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.
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    (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 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 copies 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 copies 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 copies of Internal Revenue Service Form W-8ECI;
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    (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” 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 copies 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 copies 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 copies 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.
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    (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 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 1M 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 1M
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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 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 1M 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 other 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.
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    (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, (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
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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.

“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:

(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
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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) 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.
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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.

“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
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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).
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;
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    (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.
    Section 6.03.    Conditions Precedent to All Releases. Each Release hereunder on or after the Closing Date 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):
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    (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 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
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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 have been duly executed and delivered and 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.
    (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
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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 30 Hudson Yards, New York, New York 10001 (or such other office as is notified to the Administrative Agent by the Seller in accordance with this Agreement). The legal name of the Seller is Warner Bros. Discovery Receivables Funding, LLC (or 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
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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 (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 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) the Seller’s sale of, and/or grant of a security interest in, the Sold Assets and Seller Collateral (solely to the extent perfection
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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.
    (ii)    Ownership. Except with respect to an Excluded 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.
    (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), and (y) each Excluded Collection Account. 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 TD Account becomes subject to an Account Control Agreement in accordance with Section 9.03), and (y) each Excluded Collection Account.
    (iv)    Instructions. None of the Seller, 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.
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    (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.
    (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, Discovery 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 other 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 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.
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    (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.
    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 have been duly executed and delivered and 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
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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 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,
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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.
    (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, 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, 2021, 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,
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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, 2021, 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.
    (u)    Reserved
    (v)    Reserved.
    (w)    Opinions. The facts regarding the Seller, the Servicer, each Originator, Discovery 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 other 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)    Reserved.
    (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.
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    (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:
    (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
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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 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 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, 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
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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. 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.
    (vi)    Reserved.
    (vii)    Termination Event. The occurrence of a Purchase and Sale Termination Event under the 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 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, and will cause the Originator 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 and the Originators. If any payments on the Pool Receivables or other Collections are received by the Seller, the Servicer, 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 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, and (y) any Excluded 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 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 use commercially reasonable efforts to cause all such funds not representing
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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 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, 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 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.
    (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 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.
    (k)    Change in Credit and Collection Policy. The Seller will not (and will not permit the Servicer 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
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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 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 to), at its expense, take all action necessary or reasonably desirable to establish and maintain 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 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 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 Applicable 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, any Originator or the Administrative Agent where allowed by Applicable
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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, 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.
    (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:
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(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 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
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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.
    (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 the related Excluded Collection Account Owner to cause all Collections on
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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 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 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 the first three fiscal quarters 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
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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, 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, 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 the Seller Collateral or any portion thereof other than Permitted Liens, (B) any Person other than the Seller, the Servicer, 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 any Originator’s name, jurisdiction
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of organization or any other change requiring the amendment of UCC financing statements.
    (vi)    Reserved.
    (vii)    Termination Event. The occurrence of any of a Purchase and Sale Termination Event under the 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 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 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,
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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, and will cause each Originator 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 and the Originators. If any payments on the Pool Receivables or other Collections are received by the Seller, the Servicer, 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)    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, any Originator or any other Person to commingle Collections or other funds to which the Administrative
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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 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.
    (h)    Change in Credit and Collection Policy. The Servicer will not 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 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 the related Excluded Collection Account Owner to cause all Collections on Pool Receivables and other Sold Assets and Seller Collateral deposited into any Excluded
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Collection Account to be deposited into a Collection Account maintained in the name of the Seller and subject to an Account Control Agreement 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 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 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, 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.
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    (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.
    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 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 Servicer and any other Person, and is not a division of the Performance Guarantor, the Originators, 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, (ii) entering into agreements for the selling, servicing and financing of the Receivables Pool (including the Transaction Documents) and (iii) 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.
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    (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 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, 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
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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, any Originator, the Servicer or any of their respective Affiliates.
    (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
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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, 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 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.
    (k)    Disclosure of Transactions. All financial statements of the Servicer, the Parent, the Performance Guarantor, the Originators or any Affiliate thereof that are consolidated to include the Seller will disclose that (i) the Seller’s sole business consists of 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, (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 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 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 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 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 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 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.
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    (n)    Arm’s-Length Relationships. The Seller will maintain arm’s-length relationships with the Servicer, the Parent, the Performance Guarantor, 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, 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 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, 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.
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.
    (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
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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.
    (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,
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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 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, and (ii) 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 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 (if applicable) within two (2) Business Days following instruction by the Administrative Agent, the Administrative Agent (at the Seller’s or the Servicer’s, as the case may be, expense) may so notify the Obligors; 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.
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    (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, 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 (B) 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.
    (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
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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, 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).
    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.
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    (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, 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, any Originator, the Performance Guarantor, or the Servicer by the Administrative Agent or any Purchaser, and (y) actual knowledge of the Seller, any Originator, the Performance Guarantor, or the Servicer, (ii) the Seller, 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, 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, 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);
    (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
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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, 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, 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, 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 7.5%,
(B)  the Delinquency Ratio shall exceed 12.0%, or
(C) the Dilution Ratio shall exceed 7.5%, or
(ii) the Days’ Sales Outstanding shall exceed 95 days;
    (g)    a Change in Control shall occur;
    (h)    a Capital Coverage Deficit shall occur, and shall not have been cured within three (3) Business Days;
    (i)    (i) the Seller 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
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(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)    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;
    (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, 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 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)    [reserved];
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    (p)    a Purchase and Sale Termination Event shall occur under the Purchase and Sale Agreement;
    (q)    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;
    (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, any Originator, the Performance Guarantor or the Servicer (or any of their respective Affiliates) shall so state in writing; or
    (s)    one or more judgments or decrees shall be entered against the Seller, 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, $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 (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
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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.
    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
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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.
    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
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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, 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 information concerning the Seller, 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.
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    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 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.
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    (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.
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
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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.
    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
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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 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.
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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 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,
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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;
    (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;
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    (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, 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
    (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:
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    (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;
    (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
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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 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
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    (vii)    change the order of priority in which Collections are applied pursuant to Section 4.01 or change any other provision requiring ratable repayments or prepayments in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Purchaser directly affected thereby.
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.
    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).
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    (b)    Assignment by Committed Purchasers. Each Committed Purchaser may assign to any Eligible Assignee 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;
    (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
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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
    (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
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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).
    (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.
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    (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 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 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
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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 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
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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 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 (including any self-regulatory authority such as the National Association of Insurance Commissioners) 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)
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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).
    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.
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    (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.
    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,
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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 “PATRIOT Act”), the Administrative Agent and the other Purchaser Parties may be required to obtain, verify and record information that identifies the Seller, the Originators, the Servicer and the Performance Guarantor, which information includes the name, address, tax identification number and other information regarding the Seller, the Originators, the Servicer and the Performance Guarantor that will allow the Administrative Agent and the other Purchaser Parties to identify the Seller, 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.
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    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.
    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.
Section 14.22.    Equalization of Aggregate Capital and Commitments. All Capital outstanding under the Existing Receivables Purchase Agreement on the Restatement Effective Date (and which has not been satisfied on the Restatement Effective Date) shall continue to remain outstanding under this Agreement and, in connection therewith, each of the Committed Purchasers hereto (or the Related Conduit Purchasers on their behalf) each agree to make such purchases and sales of the Capital of the other Purchasers as the Administrative Agent shall determine may be necessary in order for each Committed Purchaser (or its Related Conduit Purchasers on its behalf) to hold such Capital in accordance with its Percentage. Such purchases and sales shall be arranged through the Administrative Agent and each Purchaser hereby agrees
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to execute such further instruments and documents, if any, as the Administrative Agent may reasonably request in connection therewith. The Seller hereby consents to such transfers. The parties hereto agree that such transfers shall be deemed to be, and satisfy the conditions to, assignments under Section 14.03 of the Existing Receivables Purchase Agreement.
Section 14.23.    Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Solely to the extent any Purchaser that is an Affected Financial Institution is a party to this Agreement and notwithstanding anything to the contrary in any Transaction Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Purchaser that is an Affected Financial Institution arising under any Transaction 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 Purchaser 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 entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Transaction 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.
[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.

Warner Bros. Discovery Receivables Funding, LLC


By: /s/ Fraser Woodford     
    Name: Fraser Woodford     
    Title: Executive Vice President, Treasury
and Corporate Finance

Turner Broadcasting System, Inc.,
as the Servicer


By: /s/ Fraser Woodford     
    Name: Fraser Woodford
    Title: Executive Vice President, Treasury
and Corporate Finance
Fourth 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


Fourth Amended and Restated Receivables Purchase Agreement


Wells Fargo Bank, National Association,
as Group Agent for the Wells Group


By: /s/ Michael J. Landry     
    Name: Michael J. Landry
    Title: Director



Wells Fargo Bank, National Association,
as a Committed Purchaser


By: /s/ Michael J. Landry     
    Name: Michael J. Landry
    Title: Director

Fourth Amended and Restated Receivables Purchase Agreement


Mizuho Bank, Ltd.,
as Group Agent for the Mizuho Group


By: /s/ Richard A. Burke     
    Name: Richard A. Burke
    Title: Managing Director



Mizuho Bank, Ltd.,
as a Committed Purchaser


By: /s/ Richard A. Burke     
    Name: Richard A. Burke
    Title: Managing Director


Fourth Amended and Restated Receivables Purchase Agreement

The Toronto-Dominion Bank,
as Group Agent for the Toronto-Dominion Group


By: /s/ Jamie Giles     
    Name: Jamie Giles
    Title: Managing Director


The Toronto-Dominion Bank,
as a Committed Purchaser


By: /s/ Jamie Giles     
    Name: Jamie Giles
    Title: Managing Director


Computershare Trust Company of Canada, in its capacity as Trustee of Banner Trust, by its Financial Services Agent, TD Securities, Inc.,
as a Conduit Purchaser


By: /s/ Jamie Giles     
    Name: Jamie Giles
    Title: Managing Director


Fourth Amended and Restated Receivables Purchase Agreement

Santander Bank, N.A.,
as Group Agent for the Santander Group


By: /s/ Xavier Ruiz Sena     
    Name: Xavier Ruiz Sena
    Title: Managing Director


Santander Bank, N.A.,
as a Committed Purchaser


By: /s/ Xavier Ruiz Sena     
    Name: Xavier Ruiz Sena
    Title: Managing Director


Fourth Amended and Restated Receivables Purchase Agreement

Bank of America, National Association,
as Group Agent for the Bank of America Group


By: /s/ Scott Bell     
    Name: Scott Bell
    Title: SVP



Bank of America, National Association,
as a Committed Purchaser


By: /s/ Scott Bell     
    Name: Scott Bell
    Title: SVP

Fourth Amended and Restated Receivables Purchase Agreement

Truist Bank,
as Group Agent for the Truist Bank Group


By: /s/ Paul Cornely     
    Name: Paul Cornely
    Title: Vice President



Truist Bank,
as a Committed Purchaser


By: /s/ Paul Cornely     
    Name: Paul Cornely
    Title: Vice President


Fourth Amended and Restated Receivables Purchase Agreement


Fifth Third Bank, National Association,
as Group Agent for the Fifth Third Group


By: /s/ Matthew Glahn     
    Name: Matthew Glahn
    Title: Officer



Fifth Third Bank, National Association,
as a Committed Purchaser


By: /s/ Andrew D. Jones     
    Name: Andrew D. Jones
    Title: Managing Director


Fourth Amended and Restated Receivables Purchase Agreement


The Bank of Nova Scotia,
as Group Agent for the Scotia Group


By: /s/ Doug Noe     
    Name: Doug Noe
    Title: Managing Director



The Bank of Nova Scotia,
as a Committed Purchaser


By: /s/ Doug Noe     
    Name: Doug Noe
    Title: Managing Director


    Liberty Street Funding LLC, as Conduit Purchaser
By: /s/ Kevin J. Corrigan     
    Name: Kevin J. Corrigan
    Title: Vice President


Fourth 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 Fourth Amended and Restated Receivables Purchase Agreement, dated as of August 30, 2022, among Warner Bros. Discovery Receivables Funding, 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;
Exhibit A

    (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 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[.][; and]
    [(vi)    the Sold Receivables are identified on the Schedule of Sold Receivables attached hereto.]
Fourth Amended and Restated Receivables Purchase Agreement

In Witness Whereof, the undersigned has executed this letter by its duly authorized officer as of the date first above written.

Very truly yours,

Warner Bros. Discovery Receivables Funding, LLC


By:    
    Name:
    Title:


Fourth Amended and Restated Receivables Purchase Agreement

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 Fourth Amended and Restated Receivables Purchase Agreement, dated as of August 30, 2022, among Warner Bros. Discovery Receivables Funding, 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 [$_______] to be made on [_____, 202_]. After giving effect to such reduction, the [outstanding Capital of the Purchasers in the [__________] Group will be [$_______]] 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;
Exhibit B

    (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;
    (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,

Warner Bros. Discovery Receivables Funding, 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 Fourth Amended and Restated Receivables Purchase Agreement, dated as of August 30, 2022, among Warner Bros. Discovery Receivables Funding, 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:

Warner Bros. Discovery Receivables Funding, LLC,
as Seller


By:    
Name:
Title:

    C-2

Exhibit D
[Form of Assumption Agreement]
This Assumption Agreement (this “Agreement”), dated as of [______ __, ____], is among Warner Bros. Discovery Receivables Funding, 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 Fourth Amended and Restated Receivables Purchase Agreement, dated as of August 30, 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]
    D-2

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]    


    D-3

Warner Bros. Discovery Receivables Funding, LLC,
as Seller


By:    
Name Printed:    
Title:    


    D-4

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 Fourth Amended and Restated Receivables Purchase Agreement, dated as of August 30, 2022, among Warner Bros. Discovery Receivables Funding, 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:    



    H-2

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:



    H-3

Exhibit I

Reserved
Exhibit I

Exhibit I-2
Restatement Effective Date
Closing Memorandum

(Attached)
Exhibit I-2


Exhibit J

Reserved

Exhibit J

Exhibit K

Reserved



Exhibit L

Defined Terms
“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 Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“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 Capital 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).
“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.
“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.
    L-2

“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, regulation rule 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).
“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); 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 1M 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
    L-3

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.
“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, or acquired by such Purchaser pursuant to an Assignment and Acceptance Agreement, 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
    L-4

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;
    (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.
    L-5

“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.
“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
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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, (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 or (z) at the direction of any Group Agent upon not less than ten (10) Business Days’ prior written notice to the Seller following a downgrade of the credit rating on the applicable Special Obligor’s (or its parent’s or majority owner’s, as applicable, if such Special Obligor is not rated) short-term or long-term senior unsecured and uncredit-enhanced debt securities by S&P or Moody’s, cancel or reduce the Special Concentration Limit with respect to any such Special Obligor, and in the case of a cancellation, the Concentration Percentage for such Special Obligor 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 1M 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 1M 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 1M 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
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obligated to make payment in respect of such Receivable, provided, that 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 1M SOFR” means, for any day, the rate per annum equal to the Term SOFR Reference Rate for such day for a one (1) month period, as published by the Term SOFR Administrator; provided, that if Daily 1M SOFR, determined as provided above, would be less than the SOFR Floor, then Daily 1M SOFR shall be deemed to be the SOFR Floor. The rate of interest will be adjusted automatically as of each Business Day based on changes in Daily 1M SOFR without notice to the Seller.
“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 sum of (x) the aggregate initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables and Discovery 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
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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”) and (y) the aggregate initial Outstanding Balance of all Pool Receivables that are Discovery Receivables (other than Unbilled Receivables) generated by all Originators during the month that is seven (7) 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 (x) with respect to all Receivables other than Discovery Receivables, 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 (y) with respect to Discovery Receivables, 211 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);
    (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
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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)(i) has become the subject of an Insolvency Proceeding or (ii) has become the subject of a Bail-In Action.
“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.
“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%
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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.
“Discovery” means Warner Bros. Discovery, Inc. (f/k/a Discovery, Inc.), a Delaware corporation.
“Discovery Receivable” means, without duplication, a Receivable with respect to which the applicable Originator is Discovery.com LLC, Discovery Digital Ventures LLC, Discovery Wings, LLC, Discovery Times Channel, LLC, Discovery Communications, LLC, Animal Planet, LP, Discovery Health Ventures LLC, Cooking Channel, LLC, The Travel Channel, LLC, Television Food Network GP, Scripps Networks, LLC, or Discovery Licensing, Inc.
“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.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a Subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
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“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.
“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 90 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
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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)    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
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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;
    (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).
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“Euro” means the unit of single currency of the Participating Member States.
“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”).
“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
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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) 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) 67.5%, multiplied by (y) aggregate initial Outstanding Balance of
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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 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) 2.5%, 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.
    L-17

“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.
“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 $5,700,000,000 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
    L-18

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.
“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.
    L-19

“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.
“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, and (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
    L-20

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 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
    L-21

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 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”.
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“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).
“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 funding of Capital to the Seller by a Purchaser pursuant to Sections 2.01(a), 2.02 or 2.06.
“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.
    L-23

“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).
“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) 2.20; 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
    L-24

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 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.
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“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 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, Warner Bros. Discovery, Inc. (f/k/a 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).
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“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 Discovery.
“Performance Guaranty” means the Performance Guaranty, dated as of April 7, 2022, by Warner Bros. Discovery, Inc. (f/k/a 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
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    (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 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.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Restatement Effective Date” means August 30, 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 S&P Global Ratings, an S&P Global 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 August 29, 2023.
“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.
“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).
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“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 1M 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 1M 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 1M 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.
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“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.
“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 City 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).
“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 Section 3.1(b) of the Purchase and Sale Agreement.
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“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 1M 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 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.
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“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 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.
“UCC” means the Uniform Commercial Code as from time to time in effect in the applicable jurisdiction.
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“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from 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.
“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. Government Securities Business Day” means any day except for (a) a Saturday or Sunday or (b) 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 United States government securities.
“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.
“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-
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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.
“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.
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“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

AIRCRAFT TIME SHARING AGREEMENT

This Aircraft Time Sharing Agreement (“Agreement”) is effective as of the 1st day of August, 2022 (“Effective Date”), by and between Warner Media, LLC, with an address of 30 Hudson Yards, New York, NY 10001 (“Warner”), and David Zaslav, with an address of 230 Park Avenue South, New York, NY 10003 (“Executive”).

RECITALS

WHEREAS, Warner is the lessee of (i) that certain Dassault Falcon 900EX aircraft, bearing manufacturer’s serial number 304, currently registered with the Federal Aviation Administration (“FAA”) as N304K (the “900EX Aircraft”) in the name of Falcon 900EX-304, LLC and (ii) that certain Dassault Falcon 7X aircraft, bearing manufacturer’s serial number 75, currently registered with the FAA as N775E (the “7X Aircraft”, and together with the 900EX Aircraft, the “Aircraft” and each, individually, an “Aircraft”) in the name of Falcon 7X-75, LLC;

WHEREAS, Warner employs or retains a fully qualified flight crew to operate the Aircraft;

WHEREAS, Warner desires to sublease the Aircraft to Executive and to provide a fully qualified flight crew for all operations on a periodic, non-exclusive time sharing basis, as defined in Section 91.501(c)(1) of the Federal Aviation Regulations (“FAR”); and

WHEREAS, the use of the Aircraft by Executive shall at all times be pursuant to and in full compliance with the requirements of FAR Sections 91.501 (b) (6), 91.501 (c) (1) and 91.501 (d).

NOW, THEREFORE, in consideration of the mutual promises and considerations contained in this Agreement, the parties agree as follows:

1.Sublease; Term; Termination. Warner agrees to sublease the Aircraft to Executive on a periodic, non-exclusive basis, and to provide a fully qualified flight crew for all operations, pursuant and subject to the provisions of FAR Section 91.501 (c) (1) and the terms of this Agreement. The parties expressly acknowledge and agree that, regardless of any employment, contractual or other relationship of any kind or nature, at all times that the Aircraft is operated under this Agreement, Warner, as the party furnishing the Aircraft and flight crew and exercising complete control over all phases of aircraft operation, shall be deemed to have operational control of the Aircraft as such term is defined in 14 C.F.R. Section 1.1. This Agreement shall commence on the Effective Date and continue so long as Executive is employed by Warner Bros. Discovery, Inc., the ultimate parent of Warner, under the Employment Agreement entered into on January 2, 2014, as amended by the Amended and Restated Employment Agreement dated July 16, 2018 and as further amended by the Amended and Restated Employment Agreement dated May 16, 2021.



2.Payment Amount. Executive shall pay Warner an amount equal to 200% of the actual expenses for fuel for each flight conducted under this Agreement, as permitted by and in compliance with FAR Section 91.501 (d) (the “Time Sharing Charge”).

3.Payment Timing. Warner will pay all expenses related to the operation of the Aircraft when incurred, and will bill Executive on a quarterly basis as soon as practicable after the last day of each calendar quarter for the Time Sharing Charge for any and all flights for the account of Executive pursuant to this Agreement during the preceding quarter. Executive shall pay Warner for all flights for the account of Executive pursuant to this Agreement within thirty (30) days of receipt of the invoice therefor. For the avoidance of doubt, any federal excise tax that may be imposed under Internal Revenue Code Section 4261 or any similar excise taxes, if any, applicable to this Agreement will be paid by Executive to Warner in addition to the Time Sharing Charge.

4.Flight Requests. Executive will provide Warner with requests for flight time and proposed flight schedules as far in advance of any given flight as possible, and in any case, at least twenty-four (24) hours in advance of Executive’s planned departure unless Warner otherwise agrees. Requests for flight time shall be in a form, whether written or oral, mutually convenient to, and agreed upon by the parties. The parties intend that the use of the Aircraft pursuant to this Agreement will be for such purposes as Warner and Executive may agree from time to time.

5.Scheduling Authority. Warner shall have sole and exclusive authority over the scheduling of the Aircraft, including any limitations on the number of passengers on any flight; provided, however, that Warner will use commercially reasonable efforts to accommodate Executive’s needs and to avoid conflicts in scheduling.

6.Aircraft Maintenance. As between Warner and Executive, Warner shall be solely responsible for securing maintenance, preventive maintenance and required or otherwise necessary inspections on the Aircraft, and shall take such requirements into account in scheduling the Aircraft. No period of maintenance, preventative maintenance or inspection shall be delayed or postponed for the purpose of scheduling the Aircraft, unless said maintenance or inspection can be safely conducted at a later time in compliance with all applicable laws and regulations, and within the sound discretion of the pilot in command. The pilot in command shall have final and complete authority to cancel any flight for any reason or condition which in his judgment would compromise the safety of the flight.

7.Flight Crew. Warner shall employ or retain, pay for and provide a qualified flight crew for each flight undertaken under this Agreement.

8.Flight Crew Authority. In accordance with applicable FARs, the qualified flight crew provided by Warner will exercise all of its duties and responsibilities in regard to the safety of each flight conducted hereunder. Executive specifically agrees that the flight crew, in its sole discretion, may terminate any flight, refuse to commence any flight, or take other action which in the considered judgment of the pilot in command is necessitated by


considerations of safety. No such action of the pilot in command shall create or support any liability for loss, injury, damage or delay to Executive or any other person. The parties further agree that Warner shall not be liable for delay or failure to furnish the Aircraft and crew pursuant to this Agreement when such failure is caused by government regulation or authority, mechanical difficulty, war, civil commotion, strikes or labor disputes, weather conditions, or acts of God or any other event or circumstance beyond the reasonable control of Warner.

9.Insurance.

(a)At all times during the term of this Agreement, Warner shall cause to be carried and maintained, at Warner's cost and expense, aircraft public and passenger legal liability coverage, commercial general liability covering bodily injury, property damage and personal injury liability, and all risk hull insurance in such amounts and on such terms and conditions as Warner shall determine in its sole discretion. Warner shall also bear the cost of paying any deductible amount on any policy of insurance in the event of a claim or loss.
(b)Any policies of insurance carried in accordance with this Agreement: (i) shall name Executive as an additional insured; (ii) shall contain a waiver by the underwriter thereof of any right of subrogation against Executive; and (iii) shall require the insurers to provide at least 30 days’ prior written notice (or at least seven days’ in the case of any war-risk insurance) to Executive if the insurers cancel insurance for any reason whatsoever, provided that the insurers shall provide at least 10 days prior written notice if the same is allowed to lapse for non-payment of premium. Each liability policy shall be primary without right of contribution from any other insurance which is carried by Executive or Warner and shall expressly provide that all of the provisions thereof, except the limits of liability, shall operate in the same manner as if there were a separate policy covering each insured.

(c)Warner shall obtain the approval of this Agreement by the insurance carrier for each policy of insurance on the Aircraft. If requested by Executive, Warner shall arrange for a Certificate of Insurance evidencing the insurance coverage with respect to the Aircraft carried and maintained by Warner to be given by its insurance carriers to Executive or will provide Executive with a copy of such insurance policies. Warner will give Executive reasonable advance notice of any material modifications to insurance coverage relating to the Aircraft.

10.Damages.

(a)Executive agrees that the proceeds of insurance will be Executive’s sole recourse against Warner with respect to any claims that Executive may have under this Agreement.
(b)IN NO EVENT SHALL WARNER BE LIABLE TO EXECUTIVE OR HIS EMPLOYEES, AGENTS, GUESTS, OR INVITEES (AND THE LAWFUL SUCCESSORS AND ASSIGNS THEROF) FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL OR INCIDENTAL DAMAGES AND/OR PUNITIVE DAMAGES OF ANY


KIND OR NATURE, UNDER ANY CIRCUMSTANCES OR FOR ANY REASON, INCLUDING AND NOT LIMITED TO ANY DELAY OR FAILURE TO FURNISH THE AIRCRAFT, OR CAUSED BY THE PERFORMANCE OR NON-PERFORMANCE BY WARNER OF THIS AGREEMENT.

(c)The provisions of this Section 10 shall survive indefinitely the termination or expiration of the Agreement.
11. Executive Warranties. Executive warrants that:

(a)He will not use the Aircraft for the purpose of providing transportation of passengers or cargo in air commerce for compensation or hire, for any illegal purpose, or in violation of any insurance policies with respect to the Aircraft;

(b)He will refrain from incurring any mechanics, international interest, prospective international interest or other lien and shall not attempt to convey, mortgage, assign, lease or grant or obtain an international interest or prospective international interest or in any way alienate the Aircraft or create any kind of lien or security interest involving the Aircraft or do anything or take any action that might mature into such a lien; and

(c)He will comply with all applicable laws, governmental and airport orders, rules and regulations, as shall from time to time be in effect relating in any way to the operation and use of the Aircraft under this Agreement.

12. Base of Operations. For purposes of this Agreement, the base of operation of the 900EX Aircraft shall be Teterboro, NJ (KTEB), and the base of operation of the 7X Aircraft shall be Burbank, CA (KBUR), in each case, as may be changed from time to time by the agreement of the parties hereto.

13.Copies of Agreement. A copy of this Agreement shall be carried in the Aircraft and available for review upon the request of the Federal Aviation Administration on all flights conducted pursuant to this Agreement.
14.No Executive Further Sublease or Assignment. Executive shall not assign this Agreement or its interest herein to any other person or entity, nor shall Executive enter into any further subleases or make any other disposition of the Aircraft, without the prior written consent of Warner, which may be granted or denied in Warner’s sole discretion; provided, however, that Executive may permit members of his immediate family to use the Aircraft pursuant to this Agreement and will provide Warner with advance notice of such permission being granted. Subject to the preceding sentence, this Agreement shall inure to the benefit of and be binding upon the parties hereto, and their respective heirs, representatives, successors and assigns, and does not confer any rights on any other person.

15.Miscellaneous. This Agreement constitutes the entire understanding between the parties with respect to the subject matter hereof and supersedes any prior understandings and agreements between the parties respecting such subject matter. This Agreement may be amended or supplemented and any provision hereof waived only by a written instrument signed by all parties. The failure or delay on the part of any party to insist on strict


performance of any of the terms and conditions of this Agreement or to exercise any rights or remedies hereunder shall not constitute a waiver of any such provisions, rights or remedies. This Agreement may be executed in counterparts, which shall, singly or in the aggregate, constitute a fully executed and binding Agreement.

16.image_0.jpgDelivery of Notices. Except as otherwise set forth in Section 4, all communications and notices provided for herein shall be in writing and shall become effective when delivered by facsimile transmission or by personal delivery, Federal Express or other overnight courier or four (4) days following deposit in the United States mail, with correct postage for first-class mail prepaid, addressed to Warner or Executive at their respective addresses set forth above, or else as otherwise directed by the other party from time to time in writing.
17.image_1.jpgEnforceability. If any one or more provisions of this Agreement shall be held invalid, illegal, or unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall be unimpaired, and the invalid, illegal, or unenforceable provisions shall be replaced by a mutually acceptable provision, which, being valid, legal, and enforceable, comes closest to the intention of the parties underlying the invalid, illegal, or unenforceable provision. To the extent permitted by applicable law, the parties hereby waive any provision of law, which renders any provision of this Agreement prohibited or unenforceable in any respect.

18.Governing Law. This Agreement is entered into under, and is to be construed in accordance with, the laws of the State of Maryland, without reference to conflicts of laws.

19. TRUTH IN LEASING STATEMENT UNDER FAR SECTION 91.23

EACH AIRCRAFT, A DASSAULT FALCON 900EX, MANUFACTURER'S SERIAL NO. 304, CURRENTLY REGISTERED WITH THE FEDERAL AVIATION ADMINISTRATION AS N304K AND A DASSAULT FALCON 7X, MANUFACTURER’S SERIAL NO. 75, CURRENTLY REGISTERED WITH THE FEDERAL AVIATION ADMINISTRATION AS N775E, HAS BEEN MAINTAINED AND INSPECTED UNDER FAR PART 91 DURING THE 12 MONTH PERIOD (OR PORTION THEREOF DURING WHICH THE AIRCRAFT HAS BEEN SUBJECT TO U.S. REGISTRATION) PRECEDING THE DATE OF THIS LEASE.

EACH AIRCRAFT HAS BEEN AND WILL BE MAINTAINED AND INSPECTED UNDER FAR PART 91 FOR OPERATIONS TO BE CONDUCTED UNDER THIS LEASE. DURING THE DURATION OF THIS AIRCRAFT TIME SHARING AGREEMENT, WARNER MEDIA, LLC IS RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT.

AN EXPLANATION OF THE FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE.



THE “INSTRUCTIONS FOR COMPLIANCE WITH TRUTH IN LEASING REQUIREMENTS” ATTACHED HERETO ARE INCORPORATED HEREIN BY REFERENCE.

WARNER MEDIA, LLC THROUGH ITS UNDERSIGNED AUTHORIZED SIGNATORY BELOW, CERTIFIES THAT WARNER IS RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT AND THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS.

20. Agreement Subject to Leases. Warner and Executive acknowledge and agree that: (i) the terms of this Agreement are in all cases subject to and subordinate to the terms and conditions of that certain (A) Aircraft Dry Lease Agreement (the “900EX Lease”) dated as of February 11, 2022, between Falcon 900EX-304, LLC (“900EX Lessor”) and Warner covering the lease of the 900EX Aircraft by Warner from 900EX Lessor and (B) Aircraft Dry Lease Agreement (the “7X Lease”) dated as of February 11, 2022, between Falcon 7X-75, LLC (“7X Lessor”) and Warner covering the lease of the 7X Aircraft by Warner from 7X Lessor; (ii) this Agreement will terminate with respect to the applicable Aircraft automatically upon the expiration or earlier termination of the 900EX Lease or the 7X Lease, as applicable; (iii) nothing herein permits the deregistration of the Aircraft from the US registry or the registration of the Aircraft with the aviation authority of any other country.




IN WITNESS WHEREOF, the parties have executed this Aircraft Time Sharing Agreement to be effective as of the date first above written.


WARNER                        EXECUTIVE

WARNER MEDIA, LLC        DAVID ZASLAV


By: /s/ Gunnar Wiedenfels                By: /s/ David Zaslav
Name: Gunnar Wiedenfels                Name: David Zaslav
Title: Chief Financial Officer                                
                






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INSTRUCTIONS FOR COMPLIANCE WITH “TRUTH IN LEASING” REQUIREMENTS

1.Mail a copy of the lease to the following address via certified mail, return receipt requested, immediately upon execution of the lease (14 C.F.R. 91.23 requires that the copy be sent within twenty four hours after it is signed):

Federal Aviation Administration Aircraft Registration Branch ATTN: Technical Section
P.O. Box 25724
Oklahoma City, Oklahoma 73125

2.Telephone the nearest Flight Standards District Office at least forty-eight hours prior to the first flight under this lease.

3.Carry a copy of the lease in the aircraft at all times.
            
        EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement (“Agreement”) is made as of the date set forth on the signature page hereof (the “Effective Date), by and between Discovery Communications, LLC (“Company”), a wholly-owned subsidiary of Warner Bros. Discovery, Inc., and JB Perrette (“Executive”).
W I T N E S S E T H:
WHEREAS, Company and Executive wish to enter into this Agreement to provide for Executive’s continued service to Company;
WHEREAS, Executive and Discovery Corporate Services Limited were party to that certain Employment Agreement, dated as of June 13, 2016, as well the amendment thereto, dated as of February 1, 2019 (collectively, the “Prior Employment Agreement”); and
WHEREAS, Executive and Company desire for this Agreement to supersede and replace in all respects the Prior Employment Agreement with respect to the Term of Employment (as defined below)
NOW, THEREFORE, as a condition to and in consideration of the mutual promises and covenants set forth in this Agreement, Company hereby offers Executive and Executive hereby accepts employment upon the terms and conditions set forth herein:
I.DUTIES, ACCEPTANCE, LOCATION
A.Company hereby employs Executive to render exclusive and full-time services as President and CEO, Global Streaming and Games, on the terms and conditions set forth herein. Executive’s duties shall be consistent with his title and as directed by Company. Executive’s primary work location shall be Company’s offices in Los Angeles, California, but Executive shall make himself available for travel to other locations as business needs reasonably require.
B.Subject to Section IV(D)(1) hereof, if Company deems it necessary, Company reserves the right to change the location where Executive works, and the individual and/or position to whom/which Executive reports; provided that Executive shall not report to a position at a level lower than Chief Executive Officer of Warner Bros. Discovery, Inc.
C.Executive hereby accepts such employment and agrees to render the services described above. Throughout his employment with Company, Executive agrees to serve Company faithfully and to the best of his ability, and to devote his full business time and energy to perform the duties arising under this Agreement in a professional manner that does not discredit, but furthers the interests of Company.

II.TERM OF EMPLOYMENT
D.Subject to Section IV, Executive’s term of employment under this Agreement shall be three (3) years beginning on the Effective Date and
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ending on the day prior to the third anniversary of the Effective Date (the “End Date”) (“Term of Employment”).
E.Company shall have the option to enter negotiations with Executive to renew this Agreement with Executive for an additional term. If Company wishes to exercise its option to enter negotiations with Executive to renew this Agreement, it shall give Executive written notice of its intent to enter such negotiations to renew no later than one hundred and fifty (150) days prior to the end of the Term of Employment. Executive and Company agree then to negotiate with each other exclusively and in good faith until the date seventy-five (75) days prior to the end of the Term of Employment. However, Executive shall continue to negotiate in good faith with Company and comply with the terms of this Agreement, including, but not limited to his fiduciary and confidentiality obligations, until the end of the Term of Employment notwithstanding Executive’s right to negotiate with third parties. The Term of Employment may not, however, be extended unless by mutual written agreement of Company and Executive as to all of the material terms and conditions of the extension. In the event the parties do not enter into an agreement to extend the Term of Employment for an additional term, this Agreement shall expire and the Term of Employment shall end on the End Date; provided, however, that if Company does not make a Qualifying Renewal Offer (as defined below), Executive shall be eligible for a severance payment pursuant to Section IV(D)(2) herein in connection with his Separation from Service (as defined herein) at the end of the Term of Employment (and assuming that he was willing and able at the end of the Term of Employment to perform future services, whether for Company or any other party). For these purposes, a Qualifying Renewal Offer is an offer to renew the Term of Employment with a meaningful increase in base salary and an annual bonus target that is at least the same level as in effect at the end of the Term of Employment, with other material terms that are at least as favorable in the aggregate to Executive as the material terms of this Agreement.
III.COMPENSATION
F.Base Salary. Company shall pay Executive an annual base salary of Two Million Five Hundred Thousand Dollars ($2,500,000), effective as of April 8, 2022. The Base Salary shall, with respect to each year during the Term of Employment, be paid over the course of twelve (12) months in increments paid on regular Company paydays, less such sums as law requires Company to deduct or withhold. Executive’s future Base Salary increases shall be reviewed and decided in accordance with Company’s standard practices and procedures as generally applied to similarly situated senior executives of Company (“Senior Executives”). The Chief Executive Officer of Warner Bros. Discovery, Inc. shall not be considered a Senior Executive. The annual base salary payable to Executive under this Section III(A), as may be increased from time to time, shall hereinafter be referred to as the “Base Salary.”
G.Bonus/Incentive Payment. In addition to the Base Salary paid to Executive pursuant to Section III(A), Executive shall be eligible to
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participate in Company’s then-effective annual incentive compensation plan with an annual incentive payment target of Two Hundred Percent (200%) of Base Salary (“Target”), effective as of April 8, 2022. The percentage of the Target amount payable to Executive shall be determined and paid in accordance with Company’s then-effective annual incentive compensation plan (e.g., subject to reduction for Company/division under-performance and increase for Company/division over-performance).
H.Benefits/Vacation. During the Term of Employment, Executive shall be entitled to participate in and receive benefits under Company’s employee benefit plans, programs and arrangements in (including Discovery Cares paid leave) which Executive is eligible for participation (and, for those plans which require a voluntary election, Executive elects such participation). In addition, Executive shall be entitled to vacation days pursuant to Company’s vacation policy, provide that Executive shall be eligible to receive no less than twenty-five (25) vacation days per full calendar year, plus Company holidays. In addition to the foregoing, Executive shall be entitled to (x) relocation benefits under Company’s 2021 International Permanent Relocation Policy as applied to Senior Executives (as defined below) in connection with his relocation to Los Angeles, California, and (y) tax consultation and preparation provided by Company with respect to the United Kingdom, United States and California for the period Executive continues to incur UK tax obligations related to his employment in the UK. The Company will reimburse Executive to the extent that, in the determination of the tax preparer used to prepare Executive’s tax filings, any income from the Company earned in the UK is not eligible for offset on Executive’s federal and state taxes (CA).
I.Equity Program. Executive shall receive an award of restricted stock units under the Warner Bros. Discovery, Inc. Stock Incentive Plan or a successor plan (the “Stock Plan”) on the next business day following the Effective Date (the “Promotion RSUs”). The Promotion RSUs shall vest over a period of almost three (3) years, in three (3) substantially equal installments beginning on the first anniversary of the Effective Date, the second anniversary of the Effective Date, and with the third installment vesting on a date no later than the day before the third anniversary of the Effective Date. The Promotion RSUs shall otherwise be subject to the terms and conditions of the Stock Plan and implementing award agreement. In all cases the Promotion RSUs shall vest by the end of the Term of Employment. The number of Promotion RSUs shall be calculated by dividing the target value of Two Million Dollars ($2,000,000) by the closing price of Warner Bros Discovery, Inc. shares on July 14, 2022, rounded up to the nearest whole share. Subject to the approval of the Compensation Committee of the Board of Directors of Warner Bros. Discovery, Inc., which Company shall use good faith efforts to obtain, beginning in 2023 (i.e., the first annual grant shall be made during the normal grant cycle in 2023) and for the balance of the Term of Employment, Executive shall receive an annual equity award under the Stock Plan at an annual target value of Eight Million Five Hundred Thousand Dollars ($8,500,000) during the normal annual grant cycle in accordance with Company’s then-standard practices and
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procedures for awards to Senior Executives (the “Annual Equity Grant”). The equity instruments, terms and conditions, and calculation of number of awards shall be based on Company’s then-standard practices and procedures for awards to Senior Executives. In the award agreements granting the Promotion RSUs and any Annual Equity Grant, Company hereby agrees to provide that if an Approved Transaction, Control Purchase, or Board Change, as such terms are defined in the Stock Plan (each a “Change in Control”), occurs before such equity award has vested and provided that there is an equitable substitution or replacement for the equity award in connection with a Change in Control, the vesting of the equity award shall fully accelerate as a result of the Change in Control only if (i) within 12 months after the Change in Control, (A) the Company or a Subsidiary (as defined in the Stock Plan) terminates Executive’s employment other than for Cause, or (B) if Executive resigns for Good Reason, or (ii) during such 12-month period after the Change in Control, Executive is given notice by the Company that, in connection with a termination of Executive’s employment by the Company other than for Cause, Executive shall no longer be required to provide services for the Company or its affiliates or subsidiaries as an employee and Executive ceases to provide such services, but due to the length of any statutorily or contractually required notice period, Executive’s employment actually terminates following the expiration of such 12-month period. Any accelerated vesting as described in the preceding sentence shall occur only if and to the extent permitted under Section 409A of the Code and the regulations thereunder.
J.Expenses. Company shall reimburse Executive for business, travel and entertainment expenses reasonably and actually incurred during the performance of Executive’s duties pursuant to this Agreement to the extent such reimbursement is sought in accordance with Company’s business, travel, and entertainment policies and procedures.
K.Travel. Executive will be entitled to business travel benefits and opportunities under Company’s travel policies. In addition to the foregoing, two (2) times per calendar year for the duration of the Term of Employment, Executive shall be permitted to utilize Company’s corporate airplane, and bring along his spouse and children, for roundtrip business travel to Europe in connection with Executive’s actual business responsibilities.
L.Director and Officer Liability Insurance. Executive shall be eligible for and entitled to insurance coverage under Company’s director and officer liability insurance and employment practices liability insurance policies in accordance with those policies and in amounts similar to coverage afforded other Senior Executives for activities on behalf of Company or any entity that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with Company (“control” of Company or any other entity meaning the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities or other interests, by contract or otherwise) (an “Affiliate”; provided, however, that no stockholder of Warner Bros. Discovery, Inc. shall be an Affiliate of Company for
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purposes of this Agreement) and otherwise shall be eligible for and entitled to indemnification in accordance with Company’s corporate governance requirements.
IV.TERMINATION OF EMPLOYMENT
M.Death. If Executive should die during the Term of Employment, the Term of Employment shall automatically terminate. No further amounts or benefits shall be payable except earned but unpaid Base Salary, accrued but unused vacation, unreimbursed business expenses, and those benefits that may vest in accordance with the controlling documents for other relevant Company benefit programs, which shall be paid in accordance with the terms of this Agreement and such other Company benefit programs, including the terms governing the time and manner of payment (the “Accrued Benefits”). Company also shall pay a prorated portion of Executive’s annual bonus at Target for the calendar year of Executive’s death based on the amount of time Executive was employed during that calendar year (and subject to adjustment based on achievement of the applicable plan year’s performance metrics), payable at the time annual bonuses are ordinarily paid to Senior Executives, but in no event shall it be paid later than March 15th of the year following the calendar year of Executive’s death. Executive’s then-outstanding equity awards under the Stock Plan shall be treated in accordance with the applicable plan documents and implementing award agreements1.
N.Inability To Perform Duties. If, during the Term of Employment, Executive should become physically or mentally disabled, such that he is unable to perform his duties under Sections I (A) and (C) hereof for (i) a period of six (6) consecutive months or (ii) for shorter periods that add up to six (6) months in any eight (8)-month period, by written notice to Executive, Company may terminate the Term of Employment. Notwithstanding the foregoing, the Term of Employment shall terminate upon Executive incurring a “separation from service” under the medical leave rules of Code Section 409A (as defined in Section VIII(I)). In such case, no further amounts or benefits shall be payable to Executive, except that Executive shall (i) receive the Accrued Benefits, (ii) receive a prorated portion of Executive’s annual bonus at Target for the calendar year of Executive’s separation of service based on the amount of time Executive was employed during that calendar year (and subject to adjustment based on achievement of the applicable plan year’s performance metrics), payable at the time annual bonuses are ordinarily paid to Senior Executives, but in no event shall it be paid later than March 15th of the year following the calendar year, and (iii) be eligible to elect to (x) receive continued coverage under Company’s relevant medical or disability plans to the extent permitted by, and under the terms of, such plans and to the extent such benefits continue to be provided to other former Senior Executives generally or (y) receive COBRA continuation of the group health benefits previously provided to Executive and his dependents (provided Executive timely elects such COBRA coverage) in which case Company shall pay the premiums for such COBRA coverage up to the maximum applicable COBRA period, provided that if Company determines that the provision of continued

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group health coverage at Company’s expense may result in Federal taxation of the benefit provided thereunder to Executive (e.g., because such benefits are provided by a self-insured basis by Company), then Executive shall be obligated to pay the full monthly premium for such coverage and, in such event, Company shall pay Executive, in monthly installments, an amount equivalent to the monthly premium for COBRA coverage for the remaining balance of the maximum applicable COBRA period (provided, that Company shall cease to pay such COBRA premiums at such time that Executive obtains new employment and is eligible for health insurance benefits from a new employer). Executive’s then-outstanding equity awards under the Stock Plan shall be treated in accordance with the applicable plan documents and implementing award agreements.
O.Termination For Cause.
1.Company may, subject to Section IV(C)(2), terminate the Term of Employment for Cause by written notice. “Cause” shall mean: (i) the conviction of, or nolo contendere or guilty plea, to a felony (whether any right to appeal has been or may be exercised); (ii) conduct constituting embezzlement, misappropriation or fraud, whether or not related to Executive’s employment with Company; (iii) conduct constituting a financial crime, material act of dishonesty or conduct in material violation of Company’s Code of Ethics or other Company written policies of which Executive has knowledge; (iv) improper conduct substantially prejudicial to Company’s business (whether financial or otherwise); (v) willful unauthorized disclosure or use of Company confidential information; (vi) material improper destruction of Company property; or (vii) willful misconduct in connection with the performance of Executive’s duties.
2.In the event that Executive materially neglects his duties under Section I(A) or Section I(C) hereof or engages in other conduct that constitutes a breach by Executive of this Agreement, including any conduct constituting Cause (collectively, “Breach”), Company shall so notify Executive in writing. Other than a Breach that is not susceptible to cure, Executive shall be afforded a one-time-only opportunity to cure the noted Breach within ten (10) business days from receipt of such notice. If no cure is achieved within this time, or if Executive engages in the same Breach a second time after once having been given the opportunity to cure, Company may terminate the Term of Employment by written notice to Executive.
3.Any termination of the Term of Employment pursuant to Sections IV(C)(1) or Section IV(C)(2) hereof shall be considered a termination of Executive’s employment for “Cause” and upon such termination, Executive shall only be entitled to receive any amounts or benefits hereunder that have been earned or vested at the time of such termination in accordance with the terms of the applicable governing Company plan(s) (including the provisions of such plan(s) governing the time and manner of payment), and/or as may be required by law. “Cause” as used in any such Company plan shall be deemed to mean solely the commission of acts described in Section IV(C)(1) or Section
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IV(C)(2) hereof (after giving effect to the cure opportunity described in Section IV(C)(2)).
P.Termination Of Employment By Executive for Good Reason/Termination of Employment by Company Not For Cause.
1.Company may terminate the Term of Employment not for Cause (as defined above), and Executive may terminate the Term of Employment for “Good Reason” as defined herein. “Good Reason” for purposes of this Agreement shall only mean the occurrence of any of the following events without Executive’s consent: (a) a material reduction in Executive’s duties or responsibilities; (b) Company’s material change in the location of Company’s office where Executive works (i.e., relocation to a location outside the Los Angeles, CA metropolitan area); or (c) a material breach of this Agreement by Company, including a diminution of Executive’s title as set forth in Section I(A) or a change in the position to which Executive reports as set forth in Section I(B); provided however, that Executive must provide Company with written notice of the existence of the reduction, change or breach constituting Good Reason within ninety (90) days of any such event having occurred or Executive learning thereof, whichever is later, and allow Company thirty (30) days to cure the same. If Company so cures the reduction, change or breach, Executive shall have no basis for terminating the Term of Employment for Good Reason with respect to such cured reduction, change or breach. Executive must terminate his employment in writing within twenty (20) business days following the expiration of Company’s cure period for the termination to be on account of Good Reason or such right shall be deemed waived. For clarity, Company is not obligated to actually utilize Executive’s services on a full-time regular basis for the entire Term of Employment, and payment of Executive’s Base Salary and all payments and provision of group benefit plans and programs, subject to any obligations of mitigation and rights of offset consistent with Sections IV(E) and (F) herein, will fully discharge its obligations under this Agreement. While employed in an inactive status, Executive’s obligation to provide exclusive and full-time services to Company pursuant to Sections 1(A) and (C) shall remain in full force and effect unless Executive is directed by Company in writing to mitigate. For purposes of Code Section 409A (as defined herein), Executive’s “Services Cessation Date” is the date Executive stops rendering active services, and “Service Cessation Date” means a “separation of service” under Code Section 409A. In no event shall Executive be employed in an inactive status for more than three (3) months under this provision.
2.(i) If Company terminates the Term of Employment not for Cause, (ii) if Company elects not to renew the Term of Employment in circumstances that trigger Executive’s entitlement to severance under Section II(B), or (iii) if Executive terminates the Term of Employment for Good Reason, then Company shall pay Executive the Accrued Benefits. In addition, Company shall make the following payments (collectively, the “Severance Payment”):

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(a) Commencing on the Release Deadline (as defined below), Company shall pay Executive his Base Salary for the period beginning on Executive’s termination date through the period which is the longest of (i) the balance of the Term of Employment up to a maximum of twenty-four (24) months, (ii) twelve (12) months, and (iii) the number of weeks of severance to which Executive would have been entitled had Company’s then-current redundancy severance plan applied to Executive’s termination, except that the first installment payment shall include any installments that would have been payable between the date of termination and the Release Deadline had the release requirement under Section (IV)(D)(3) hereof been satisfied on the date of termination (the “Base Salary Continuation”).  For the avoidance of doubt, in no event shall the Base Salary Continuation period be longer than twenty-four (24) months. In the event the Base Salary Continuation period is calculated under Section 2(a)(ii) or 2(a)(iii) of this paragraph and Company relieves Executive of all of Executive’s work responsibilities for some period of time prior to the effective date of Executive’s termination of employment, this period of “garden leave” shall be offset against the number of weeks of Base Salary Continuation. During this period of garden leave Executive’s obligations as a Company employee, including pursuant to the terms of this Agreement, shall remain in effect except that Executive shall be permitted to seek and accept other employment (subject to the restrictions set forth in Section VI below), but may not commence performance for any other employer prior to the effective date of Executive’s official termination of employment with Company. Notwithstanding the foregoing, the Base Salary Continuation period may in no event be less than thirteen (13) weeks.

Except as provided in this Section IV(D)(2) with respect to the first installment payment, the Base Salary Continuation shall be paid in substantially equal increments on regular Company paydays, less required deductions and withholdings, until the balance is paid in full.
(b) Notwithstanding anything in Company’s then-effective annual incentive compensation plan to the contrary, Executive shall be paid a bonus at Target under Section III(B) for each full calendar year within the Base Salary Continuation period. For any partial calendar year within which the Base Salary Continuation period ends, Executive shall only be entitled to a prorated Target bonus based on the elapsed time from January 1 of such partial year through the last day of the Base Salary Continuation period. The bonus/incentive payment portions of the Severance Payment shall be paid to Executive in a single lump sum on the date that Company pays bonuses/incentive payments to its other Senior Executives for the applicable then-effective annual incentive compensation plan year.
(c) Company shall reimburse Executive for up to eighteen (18) months of post-termination continued health coverage (medical, dental, and vision) under the applicable Company medical plan pursuant to COBRA, should Executive be eligible for and elect COBRA. These
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reimbursements shall be subject to required withholdings. If Company determines the provision of continued medical coverage at Company’s sole or partial expense may result in Federal taxation of the benefit provided thereunder to Executive or his dependents because such benefits are provided by a self-insured basis by Company, then Executive shall be obligated to pay the full monthly or similar premium for such coverage under COBRA. In such event, Company shall pay Executive, in monthly installments over the eighteen (18) month COBRA period (or the remaining portion thereof) an amount equivalent to the monthly premium for COBRA coverage for the balance of the eighteen (18) month COBRA period (based on the COBRA rates then in effect).
3.No Severance Payment shall be made if Executive fails to sign a release substantially in the form attached hereto as Exhibit A. Such release must be executed and become effective within the sixty (60) calendar day period following the date of Executive’s “separation from service” within the meaning of Code Section 409A (the last day of such period being the “Release Deadline”). No Severance Payment shall be made if Executive violates Section VI hereof, in which case all Severance Payment shall cease, and Company may seek forfeiture of Severance Payments already made.
4.Company agrees that if, at the time the Term of Employment is terminated not for Cause, or Executive terminates the Term of Employment for Good Reason, and Company has a standard severance policy (“Severance Policy”) in effect that would be applicable in the absence of this Agreement (i.e., applicable to the circumstances surrounding the termination) and that would result in Executive receiving a sum greater than the Severance Payment, Executive shall receive whichever is the greater of the two payments; provided, that if (i) the standard severance policy would provide for a sum greater than the Severance Payment, and (ii) the payment schedule under the Severance Policy is different from the payment schedules for the Severance Payment and would result in an impermissible acceleration or delay in payment in violation of the time and manner of payment requirements of Code Section 409A, then the payment schedule provided in Company’s Severance Policy shall apply only to the portion of the amount payable under the Severance Policy that exceeds the Severance Payment. For the avoidance of doubt, in no event shall the Severance Payment exceed twenty-four (24) months of Base Salary Continuation and annual bonus.
5.If Executive terminates the Term of Employment before it has expired for a reason other than one or more of those stated in Section IV(D)(1) hereof, it shall be deemed a material breach of this Agreement. Executive agrees that, in that event, in addition to any other rights and remedies which Company may have as a result of such breach, he shall forfeit all rights to be compensated for any remaining portion of his Base Salary, Severance Payment and/or bonus/incentive payment that may otherwise be due and unpaid under this Agreement, pursuant to other Company plans or policies, or otherwise, except for Accrued Benefits or as may be required by law.
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Q.Right To Offset. In the event that Executive secures employment or any consulting or contractor or business arrangement for services he performs during the period that any payment from Company is continuing or due under Section IV(D) hereof, Executive shall have the obligation to timely notify Company of the source and amount of payment (“Offset Income”). Company shall have the right to reduce the Severance Payment by the Offset Income. Executive acknowledges and agrees that any deferred compensation for his services from another source that are performed while receiving Severance Payments from Company will be treated as Offset Income (regardless of when Executive chooses to receive such compensation). In addition, to the extent that Executive’s compensation arrangement for the services include elements that are required to be paid later in the term of the arrangement (e.g., bonus or other payments that are unconditionally vested and earned in full or part based on performance or service requirements for the period during which the Severance Payment is made), Company may calculate the Offset Income by annualizing or by using any other reasonable methodology to attribute the later unconditionally earned and vested payments to the applicable period of the Severance Payment. Executive agrees to provide Company with information sufficient to determine the calculation of the Offset Income, including compensation excerpts of any employment agreement or other contract for services, Form W-2s, and any other documentation that Company reasonably may require, and that failure to provide timely notice to Company of Offset Income or to respond to inquiries from Company regarding any such Offset Income shall be deemed a material breach of this Agreement. Executive also agrees that Company shall have the right to inquire of third-party individuals and entities regarding potential Offset Income and to inform such parties of Company’s right of offset under this Agreement with Executive. Accordingly, Executive agrees that no further Severance Payment from Company will be made until or unless this breach is cured and that Company may seek forfeiture of all payments from Company already made to Executive, during the time he failed to disclose his Offset Income, up to the amount of Offset Income attributable to such period. Any offsets made by Company pursuant to this Section IV(E) shall be made at the same time and in the same amount as a Severance Payment amount is otherwise payable (applying the Offset Income to Company’s payments in the order each are paid) so as not to accelerate or delay the payment of any Severance Payment installment.
R.Mitigation. In the event of Executive’s termination of employment pursuant to Section IV(D) herein, and during the period that any payment from Company is continuing or due under Section IV(D), Executive shall be under a continuing obligation to seek other comparable employment, including taking all reasonable steps to identify and apply for any comparable, available jobs for which Executive is qualified.  At Company’s request and with prior notice to Executive, Executive may be required to furnish to Company proof that Executive has engaged in efforts consistent with this paragraph, and Executive agrees to comply with any such request.  Executive further agrees that Company, with reasonable prior notice to Executive, may follow-up with reasonable inquiries to third parties to confirm Executive’s mitigation efforts.  Should Company determine in good faith that Executive failed to take reasonable steps to secure alternative
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employment consistent with this paragraph, with reasonable notice to Executive, Company may cease any payments due to Executive pursuant to Section IV(D)(2) and the foregoing shall be without waiver of Executive’s right to challenge Company’s election and basis for doing so.
V.CONFIDENTIAL INFORMATION
S.Executive acknowledges his fiduciary duty to Company. As a condition of employment, Executive agrees to protect and hold in a fiduciary capacity for the benefit of Company all confidential information, knowledge or data, including the terms of this Agreement and, without limitation, all trade secrets relating to Company and its Affiliates, and their respective businesses, (i) obtained by Executive during his employment by Company or otherwise and (ii) that is not otherwise publicly known (other than by reason of an unauthorized act by Executive). After termination of Executive's employment with Company, Executive shall not communicate or divulge any such information, knowledge or data to anyone other than Company and those designated by it, without the prior written consent of Company. For the avoidance of doubt, and notwithstanding the foregoing, nothing herein or in this Agreement shall (x) prohibit Executive from communicating with a government agency, regulator or legal authority concerning any possible violations of federal or state law or regulation, or (y) prevent or limit Executive from discussing his terms and conditions of employment.  Nothing herein or in this Agreement, however, authorizes the disclosure of information Executive obtained through a communication that was subject to the attorney-client privilege, unless disclosure of the information would otherwise be permitted by an applicable law or rule. As a condition of employment, Executive is required to sign a Confidential Information and Assignment of Inventions Agreement, which is attached hereto as Exhibit B and incorporated herein by reference. Notwithstanding the foregoing, Executive shall be able to share Company’s confidential information under this Section V with his financial, legal, business representatives, and with any arbiter and/or court adjudicating a dispute between Executive and Company so long as Executive receives reasonable assurances that such persons will also keep such information confidential.
T.In the event that Executive is compelled, pursuant to a subpoena or other order of a court or other body having jurisdiction over such matter, to produce any information relevant to Company, whether confidential or not, Executive agrees to provide Company with such written notice of this subpoena or order so that Company may timely move to quash if appropriate unless such notice to Company is prohibited by law or procedure.
U.Executive also agrees to reasonably cooperate with Company in any legal action for which his participation is needed. Company agrees to try to schedule all such meetings so that they do not unduly interfere with Executive’s pursuits after he is no longer in Company’s employ.
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VI.RESTRICTIVE COVENANTS
V.During the period Executive is employed by Company, Executive covenants and agrees not to engage in any other business activities whatsoever, or to directly or indirectly render services of a business, commercial or professional nature to any other business entity or organization (other than non-interfering civic and charitable activities), regardless of whether Executive is compensated for these services, unless Executive obtains the prior written consent of the Chief Executive Officer of Company or Warner Bros. Discovery, Inc.
W.Executive acknowledges that during his employment, he will learn confidential, non-public information about the skills, abilities and compensation of other Company and Affiliate employees. In order to protect this information, during Executive’s employment and for a period of twelve (12) months following the conclusion of Executive’s employment with Company, Executive covenants that he will not directly or indirectly solicit, recruit, interfere with or otherwise attempt to entice, any employees of Company (other than Executive’s then-assistant) or any of its Affiliates to leave their employment with Company or such Affiliate.
X.Executive understands and acknowledges that because of Executive’s employment with Company, Executive will have access to Company’s and its Affiliate’s trade secrets and confidential information. During Executive’s employment and for an twelve (12) month period following the conclusion of Executive’s employment with Company, Executive covenants that he will not use Company’s and its Affiliate’s trade secrets or confidential information to directly or indirectly solicit, recruit, interfere with or otherwise attempt to entice, solicit, induce or encourage any vendor, producer, independent contractor, or business partner to terminate its business relationship with Company or its Affiliates.
Y.Throughout the period that Executive is an employee of Company, Executive agrees to disclose to Company any direct investments (i.e., any investment in which Executive has made the decision to invest in a particular company) he has in a company that is a competitor of Company or its Affiliates (“Competitor”) or that Company or its Affiliates is doing business with during the Term of Employment (“Partner”), if such direct investments result in Executive or Executive’s immediate family members, and/or a trust established by Executive or Executive’s immediate family members, owning five (5) percent or more of such a Competitor or Partner. This Section VI(F) shall not prohibit Executive, however, from making passive investments (i.e., where Executive does not make the decision to invest in a particular mutual fund or similar entity, even if such entity, in turn, invests in such a Competitor or Partner). Regardless of the nature of Executive’s investments, Executive herein agrees that his investments may not materially interfere with Executive’s obligations and ability to provide services under this Agreement.
Z.Prior to the conclusion of Executive’s employment with Company, Executive shall return all Company property and materials, including
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equipment, such as laptop computers and mobile telephones, and documentation, such as files (including originals and copies), notes, e-mail accounts and computer disks.
AA.In the event that Executive violates any provision of this Section VI, in addition to any injunctive relief and damages to which Executive acknowledges Company would be entitled, with reasonable prior notice to Executive, all Severance Payments to Executive, if any, shall cease, and Company may seek forfeiture of Severance Payments already made. The foregoing shall be without waiver of Executive’s right to challenge Company’s election and basis for doing so.
VII.ARBITRATION
AB.Submission To Arbitration. Company and Executive agree to submit to arbitration all claims, disputes, issues or controversies between Company and Executive or between Executive and other employees of Company or its Affiliates (collectively “Claims”) directly or indirectly relating to or arising out of Executive's employment with Company or the termination of such employment including Claims under Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans With Disabilities Act of 1990, Section 1981 of the Civil Rights Act of 1966, as amended, the Family Medical Leave Act, the Employee Retirement Income Security Act, and any Claim arising under any similar federal, state or local law, statute, regulation or common law doctrine or out of this Agreement.
AC.Use Of AAA; Choice of Law. All Claims for arbitration shall be presented to the American Arbitration Association (“AAA”) in accordance with its applicable rules (“Rules”). The seat or place of arbitration shall be Los Angeles, California. The arbitrator(s) shall be directed to apply the substantive law of federal and state courts sitting in California, without regard to conflict of law principles. Any arbitration pursuant to this Agreement shall be deemed an arbitration proceeding subject to the Federal Arbitration Act.
AD.Binding Effect. Arbitration shall be binding and shall afford parties the same options for damage awards as would be available in court. Executive and Company agree that discovery shall be allowed, and all discovery disputes shall be decided, exclusively by arbitration in accordance with the Rules.
AE.Damages and Costs. Each party shall pay its own costs and attorneys’ fees; however, the arbitrator may award costs and reasonable outside attorneys’ fees to the prevailing party to the extent permitted by law. If the claim concerns an alleged violation of a public policy or a statutory or constitutional provision, the Company will pay all costs unique to the arbitration to the extent such costs would not otherwise be incurred in a court proceeding – for instance, the Company will, if required, pay the arbitrator’s fees to the extent they exceed court filing fees. If the claim does not concern an alleged violation of a public policy or a statutory or
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constitutional provision, the parties shall share equally the arbitrator’s fees and costs. Any damages shall be awarded only in accord with applicable law. Reinstatement shall only be awarded if monetary damages are insufficient.
VIII.CONTROLLING LAW AND ADDITIONAL COVENANTS
AF.The validity and construction of this Agreement or any of its provisions shall be determined under the laws of the State of California. The invalidity or unenforceability of any provision of this Agreement shall not affect or limit the validity and enforceability of the other provisions.
AG.If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall nevertheless continue in full force and effect without being impaired or invalidated. The section headings of this Agreement are for convenience only and shall not in any way affect the interpretation of any section hereof or of the Agreement itself. Any provision of this Agreement which refers to the words “include,” “includes,” or “including” shall be deemed to be followed by the words “without limitation.”
AH.Executive warrants that (1) his employment under this Agreement will not violate or conflict in any way with any other contract or agreement to which Executive is bound; (2) Executive will do nothing on behalf of Company that violates or conflicts with any such contract or agreement; and (3) Executive will indemnify Company for any liability, damages, costs, or reasonable outside attorneys’ fees that Company suffers as a result of any such violation or conflict.
AI.Executive expressly acknowledges that Company has advised Executive to consult with independent legal counsel of his choosing prior to Executive’s signing this Agreement to review and explain to Executive the legal effect of the terms and conditions of this Agreement.
AJ.Without limiting anything to the contrary in this Agreement, Executive agrees not to disclose the terms hereof to any person or entity, other than Executive’s attorneys, accountants, financial advisors, government authorities who require it, or members of Executive’s immediate family who need to know this information and agree to keep it confidential.
AK.This Agreement supersedes any and all other agreements, either oral or in writing, between the parties with respect to the employment of Executive by Company, and contains all of the covenants and agreements between the parties with respect to such employment in any manner whatsoever. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements have been made, orally or otherwise, by any party, or anyone acting on behalf of any party, that are not stated in this Agreement, and that no other agreement, statement or promise not contained in this Agreement shall be valid or binding. Notwithstanding either of the foregoing sentences, or any other provision of this Agreement, this Agreement shall not supersede, replace, invalidate or otherwise modify or affect any restrictive
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covenants in any previous, subsequent or other agreements or documents between Executive and Company, including, without limitation, any covenants regarding confidentiality, intellectual property, confidential and proprietary information, non-competition, non-solicitation of customers, non-solicitation or no hire of employees, and the like (collectively, “Other Restrictive Covenants”), and any such Other Restrictive Covenants will remain in effect and Executive shall remain bound by such Other Restrictive Covenants. To the extent any of the restrictions or covenants contained in this Agreement conflict in any way with any such Other Restrictive Covenants, such conflict shall be resolved in favor of this Agreement.
AL.Any modifications to this Agreement shall be effective only if in writing and signed by both parties.
AM.Any payments to be made by Company hereunder shall be made subject to applicable law, including required deductions and withholdings.
AN.Section 409A of the Code.
1.It is intended that the provisions of this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended, (the “Code”) and the regulations and guidance promulgated thereunder (collectively, “Code Section 409A”), and all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Code Section 409A. Notwithstanding the foregoing, Company shall have no liability to Executive with regard to any failure to comply with Code Section 409A so long as Company has acted in good faith with regard to compliance therewith.
2.If under this Agreement, an amount is to be paid in two or more installments, for purposes of Code Section 409A, each installment shall be treated as a separate payment.
3.A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of amounts or benefits upon or following a termination of employment unless such termination is also a “Separation from Service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “resignation,” “termination,” “termination of employment,” “separation” or like terms shall mean Separation from Service.
4.If Executive is deemed on the date of termination of his employment to be a “specified employee”, within the meaning of that term under Section 409A(a)(2)(B) of the Code and using the identification methodology selected by Company from time to time, or if none, the default methodology, then:
a.With regard to any payment, the providing of any benefit or any distribution of equity upon separation from service that constitutes “deferred compensation” subject to Code Section
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409A, such payment, benefit or distribution shall not be made or provided prior to the earlier of (i) the expiration of the six-month period measured from the date of Executive’s Separation from Service or (ii) the date of Executive’s death; and
b.On the first day of the seventh month following the date of Executive’s Separation from Service or, if earlier, on the date of his death, (x) all payments delayed pursuant to this Section VIII(I)(4) (whether they would otherwise have been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal dates specified from them herein and (y) all distributions of equity delayed pursuant to this Section VIII(I)(4) shall be made to Executive.
1.With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, of in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be violated without regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect and (iii) such payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense occurred.
2.Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination), the actual date of payment within the specified period shall be within the sole discretion of Company.
AO.This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, heirs (in the case of Executive) and assigns. The rights or obligations under this Agreement may not be assigned or transferred by either party, except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of Company; provided, however, that the assignee or transferee is the successor to all or substantially all of the assets of Company and such assignee or transferee assumes the liabilities, obligations and duties of Company, as contained in this Agreement, either contractually or as a matter of law. Notwithstanding the foregoing, this Agreement may be assigned to any Affiliate of Company which employs Executive.
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AP.This Agreement may be executed with electronic signatures and in any number of counterparts. The electronically signed Agreement shall constitute one original agreement. Duplicates and electronically signed copies of this Agreement shall be effective and fully enforceable as of the date signed and sent.
AQ.All notices and other communications to be made or otherwise given hereunder shall be in writing and shall be deemed to have been given when the same are (i) addressed to the other party at the mailing address or email address indicated below, and (ii) either: (a) personally delivered or mailed, registered or certified mail, first class postage prepaid return receipt requested, (b) delivered by a reputable private overnight courier service utilizing a written receipt or other written proof of delivery, to the applicable party, or (c) sent by electronic email. Any such notice sent in the manner set forth above by United States Mail shall be deemed to have been given and received three (3) days after it has been so deposited in the United States Mail, and any notice sent in any other manner provided above shall be deemed to be given when received. Until further notice given in accordance with the foregoing, the respective addresses and email addresses for the parties are as follows:
If to Company:                    
Discovery Communications, LLC        
8403 Colesville Road                
Silver Spring, MD 20910-6331                
Attention: Fabienne Clermont, Esq.                    
Email: fabienne_clermont@discovery.com    
                                    
If to Executive, at the home address then on file with Company, with a concurrent copy to:
Del Shaw Moonves Tanaka Finkelstein Lezcano Bobb & Dang
2029 Century Park East
Suite 1750
Los Angeles, CA 90067
Attn; Jeffrey Finkelstein, Esq.
Email: jfinkelstein@delshaw.com
[signature page follows]
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In witness whereof, the parties have caused this Agreement to be duly executed as set forth below.
EXECUTIVE:

/s/ JB Perrette
_________________________________
DATE:

August 2, 2022
JB Perrette

DISCOVERY COMMUNICATIONS, LLC:

/s/ Adria Alpert-Romm
____________________________________

Name: Adria Alpert-Romm
Title: Chief People and Culture Officer



DATE:

August 2, 2022








[signature page to Employment Agreement]
1008353785v1
            
EXHIBIT A

AGREEMENT AND GENERAL RELEASE
This Agreement and General Release (“Release”) is entered into by and between Discovery Communications, LLC (“Company”), and JB Perrette (“Executive”) to resolve any and all disputes concerning his employment with Company and his separation from employment on __________________ (the “Effective Date”). Accordingly, in exchange for the consideration and mutual promises set forth herein, the parties do hereby agree as follows:
1. Effective close of business on the Effective Date, Executive’s employment with Company will terminate, and all salary continuation and benefits will cease other than those to which Executive is entitled in consideration for this Release as set forth in Executive’s Employment Agreement with Company (“Agreement”), which is incorporated by reference, and/or as a matter of law (e.g., COBRA benefits).
2. In consideration for Executive’s executing this Release of any and all legal claims he might have against the Discovery Parties (as defined below), and the undertakings described herein, and to facilitate his transition to other employment, Company agrees to provide Executive with the consideration detailed in, as applicable, Section IV(D) (i.e., the “Severance Payment”), of the Agreement.
3. Neither Company nor Executive admits any wrongdoing of any kind, and Executive agrees that neither Executive nor anyone acting on his behalf will disclose this Release, or its terms and conditions. Notwithstanding the foregoing or anything to the contrary in the Agreement, Executive is not barred from disclosing this Release to his legal, financial and personal advisors or to those persons essential for Executive to (a) implement or enforce his rights under this Release and the Agreement pursuant to which this Release is given; (b) defend himself in a lawsuit, investigation or administrative proceeding; (c) file tax returns; or (d) advise a prospective employer, business partner or insurer of the contractual restrictions on his post-Company employment.
4. In exchange for the undertakings by Company described in the above paragraphs:
I.Executive, for himself, his heirs, executors, administrators and assigns, does hereby release, acquit and forever discharge Company and its Affiliates (as defined in the Agreement), as well as all of their respective officers, shareholders, shareholder representatives, directors, members, partners, trustees, employees, attorneys, representatives and agents in their respective capacities as such (collectively, the “Discovery Parties”), from any and all claims, demands, actions, causes of action, liabilities, obligations, covenants, contracts, promises, agreements, controversies, costs, expenses, debts, dues, or attorneys’ fees of every name and nature, whether known or unknown, without limitation, at law, in equity or administrative, against the Discovery Parties that he may have had, now has or may have against the Discovery Parties by reason of any matter or thing arising from the beginning of the world to the day and date of this Release relating to his employment with any Discovery Party or the termination thereof. Those claims, demands, liabilities and obligations from which Executive releases the Discovery Parties include any claim, demand or action, known or unknown, arising out of any transaction, act or omission related to Executive’s employment by any Discovery Party and Executive’s separation from such employment, sounding in tort or contract and/or any cause of action arising under federal, state or local statute or ordinance or common law, including the federal Age Discrimination In Employment Act of 1967 (“ADEA”), Title VII of the Civil Rights Act of 1964, as amended, the Americans With Disabilities Act, the Family and Medical Leave Act, the Equal Pay Act, the Worker Adjustment and Retraining Notification Act, the New York Human Rights Law, the California Fair Employment and Housing Act (FEHA), the California Labor Code, the California Constitution, and the California Family Rights Act (CFRA), as well as any similar state or local statute(s), in each case as any such law may be amended from time to
1008353785v1

time. Notwithstanding the foregoing, nothing contained herein shall release Company from (1) the obligations set forth in this Release, (2) claims for vested benefits under any benefit plan, (3) any claim that arises after the date Executive signs this Release, (4) Executive’s right to indemnification under applicable insurance policies and/or Company’s by-laws, (5) any claim that cannot by law be released, including claims for unemployment insurance benefits and workers’ compensation benefits.
II.Nothing in this Release, including its general release and non-disparagement or confidentiality provisions, shall be construed to (1) waive Executive’s right to testify in an administrative, legislative, or judicial proceeding concerning alleged sexual harassment or other unlawful conduct on the part of Company, or on the part of the agents or employees of Company, when Executive has been required or requested to attend such a proceeding pursuant to court order, subpoena, or written request from an administrative agency, legislature or other governmental authority (any such order, subpoena or request, an “Authority”) or otherwise prevent Executive from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that Executive has reason to believe is unlawful; (2) prevent Executive from filing a charge or complaint with or from participating in an investigation or proceeding conducted by the Equal Employment Opportunity Commission, the National Labor Relations Board (“NLRB”), the Securities and Exchange Commission, or any other federal, state, or local agency charged with the enforcement of any laws, including providing documents or other information (through otherwise lawful means); (3) prevent Executive from exercising Executive’s rights under Section 7 of the National Labor Relations Act to engage in protected, concerted activity with other employees, although by signing this Release Executive is waiving Executive’s right to recover any individual relief (including any backpay, frontpay, reinstatement, or other legal or equitable relief) in any charge, complaint, lawsuit, or other proceeding brought by Executive or on Executive’s behalf under said Section 7 by any third party, except for any right Executive may have to receive an award from an Authority (and not Company) for information provided to an Authority; or (4) if Executive is age forty (40) or over, limits or affects Executive’s right to challenge the validity of this Release under the ADEA or the Older Worker Benefits Protection Act.
III.Executive expressly acknowledges that his attorney has advised him regarding, and he is familiar with, the fact that certain state statutes provide that general releases do not extend to claims that the releasor does not know or suspect to exist in his favor at the time he executes such a release, which if known to him may have materially affected his execution of the release. Being aware of such statutes, Executive hereby expressly waives and relinquishes any rights or benefits he may have under such statutes, as well as any other state or federal statutes or common law principles of similar effect, and hereby acknowledges that no claim or cause of action against any Discovery Party shall be deemed to be outside the scope of this Release whether mentioned herein or not, except as otherwise expressly set forth herein. Executive also specifically knowingly waives the provisions of Section 1542 of the Civil Code of the State of California, which reads: “A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.” Notwithstanding the provisions of Civil Code Section 1542 stated above and for the purpose of implementing a full and complete release and discharge of the Discovery Parties, Executive expressly acknowledges that this Release is specifically intended to include in its effect all claims that he does not know or suspect to exist in his favor at the time he signs this Release.
IV.Executive hereby acknowledges that he is executing this Release pursuant to the Agreement, and that the consideration to be provided to Executive pursuant to Section IV(D) of the Agreement is in addition to what he would have been entitled to receive in the absence of this Release. Executive hereby acknowledges that he is
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executing this Release voluntarily and with full knowledge of all relevant information and any and all rights he may have. Executive hereby acknowledges that he has been hereby advised through this Release to consult with an independent attorney of his own choosing in connection with this Release to explain to him the legal effect of the terms and conditions of this Release and that Executive has consulted such an attorney for such purpose. Executive acknowledges that he has read this Release in its entirety. Executive further states that he fully understands the terms of this Release and that the only promises made to him in return for signing this Release are stated herein and in the Agreement pursuant to which this Release is given. Executive hereby acknowledges that he is voluntarily and knowingly agreeing to the terms and conditions of this Release without any threats, coercion or duress, whether economic or otherwise, and that Executive agrees to be bound by the terms of this Release. Executive acknowledges that he has been given twenty-one (21) days to consider, sign, and return this Release to Company’s designated representative, and that if Executive is age forty (40) or over, Executive understands that he has seven (7) days following his execution of this Release in which to revoke his agreement to comply with this Release by providing written notice of revocation to the General Counsel of Company no later than three business days following such period.
e.    Executive further hereby covenants and agrees that this Release shall be binding in all respects upon himself, his heirs, executors, administrators, assigns and transferees and all persons claiming under them, and shall inure to the benefit of all of the officers, directors, agents, employees, stockholders, members and partners and successors in interest of Company, as well as all Affiliates and representatives of any of the foregoing persons and entities.
f.    Except as permitted by applicable laws and the terms of the Agreement and this Release, Executive agrees that he will not disparage any Discovery Party or make or publish any communication with respect to the period of Executive’s employment by Company that reflects adversely upon any of them, including communications concerning Company itself and its current or former directors, officers, employees or agents. In the event of a termination of the “Term of Employment” other than a termination by Company for “Cause” (as those two terms are defined in the Agreement) under the Agreement, Executive and Company shall confer about a mutually agreeable announcement of Executive’s separation from Company.
g. Executive agrees to return all Company property and materials, including equipment, such as laptop computers and mobile telephones, and documentation, such as files (including all originals and copies), notes, e-mail accounts and computer disks prior to the conclusion of Executive’s employment with Company. Notwithstanding the foregoing, Executive shall be able to retain the mobile phone number he is provided by Company.
1.     a.    If any provision of this Release is found to be invalid, unenforceable or void for any reason, such provision shall be severed from the Release and shall not affect the validity or enforceability of the remaining provisions.
b.    Any provision of this Release which refers to the words “include,” “includes,” or “including” shall be deemed to be followed by the words “without limitation.”
c.    Company and Executive agree that this Release, consisting of four (4) pages, and the Agreement pursuant to which this Release is given, constitutes the entire agreement between them with respect to the subject matter hereof. Each party further warrants that he, she or it enters into this Release freely.
d.     This Release shall be interpreted, enforced and governed by the laws of the State of California without regard to the choice of law principles thereof.
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IN WITNESS WHEREOF, I have signed this Release this __ day of
_________________________, 202__.
By:                            

Print Name:                        

Subscribed and sworn to before me this ___ day of _______________, 202__.

                                                    
Notary Public
My Commission Expires             


ACCEPTED AND AGREED:

DISCOVERY COMMUNICATIONS, LLC
By: _________________________________
Name: ______________________________
Title: _______________________________
Date: ________________________________
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EXHIBIT B


Discovery Communications, LLC
Confidential Information and Assignment of Inventions Agreement
 
        As a condition of my employment with Discovery Communications, LLC (hereinafter, together with its Affiliates (as defined in the agreement to which this Exhibit B is attached), successors or assigns, the “Company”), and in consideration of my employment with Company and my receipt of the compensation now and hereafter paid to me by Company, I agree to the following provisions of this Discovery Communications, LLC Confidential Information and Invention Assignment Agreement (this “Agreement”):
 
1.     Confidential Information and Compliance with Policy.  I acknowledge that I am subject to the requirements of the Discovery Code of Ethics and other policies during my employment with Company, which are available to me on Company’s online portal and externally at www.wbd.com under Investor Relations/Corporate Governance.  I agree that during and after my employment with Company I will hold in the strictest confidence, and will not use (except for the benefit of Company during my employment) or disclose to any person, firm, or corporation any Company Confidential Information (as defined below), including any non-public information that relates to the actual or anticipated business, research or development of Company, or to Company’s proprietary data, trade secrets, or know-how, including research, content development plans, content ideas, product plans, or other information regarding Company’s products or services and markets therefor, customer lists and customers, distribution agreements and arrangements, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, finances, and other business information. For the avoidance of doubt, and notwithstanding the foregoing, nothing in this Agreement shall (x) prohibit me from communicating with any government agency, regulator or other legal authority of any nature concerning any possible violations of federal, state or local law or regulation, or (y) prevent or limit me from discussing my terms and conditions of employment.  Nothing in this Agreement, however, authorizes the disclosure of information I obtained through a communication that I was aware was subject to Company’s attorney-client privilege, unless disclosure of the information would otherwise be permitted by an applicable law or rule. For the purposes of this Agreement, Company Confidential Information means any data or information, without regard to form, that is valuable to Company and is not generally known by or available to the public. To the extent consistent with the preceding sentence, Company Confidential Information includes: (i) the identities of Company's customers and the specific individual customer representatives with whom Company works, the details of Company's relationships with such customers and customer representatives, the identities of distributors, contractors and vendors utilized in Company's business, the details of Company's relationships with such distributors, contractors and vendors, and the nature of fees and charges made to Company's customers; (ii) non-public information and materials describing or relating to Company’s business or financial affairs, including financial and/or investment performance information, personnel matters, products, operating procedures, organizational responsibilities, marketing matters, or policies or procedures of Company; or (iii) information and materials describing Company's existing or new products and services, including analytical data and techniques, and product, service or marketing concepts under development at or for Company, and the status of such development. Company Confidential Information does not include information that, other than as a result of a breach by Executive of this Agreement, (A) is or becomes generally known within the relevant industry, (B) is or becomes known to Executive other than through Executive’s work for Company, or (C) is or becomes generally known by or available to the public.
 
2.     Inventions.
 
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A.               Assignment of Inventions. Company shall own all right, title and interest (including patent rights, copyrights, trade secret rights, mask work rights, sui generis database rights and all other intellectual and industrial property rights of any sort throughout the world) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs, know-how, ideas and information made or conceived or reduced to practice, in whole or in part, by me in the scope and during the term of my employment with Company to and only to the fullest extent allowed by California Labor Code Section 2870 (which is attached as Appendix A) (collectively “Inventions”) and I will promptly disclose all Inventions to Company. I hereby make all assignments necessary to accomplish the foregoing. I shall further assist Company, at Company’s expense, to further evidence, record and perfect such assignments, and to perfect, obtain, maintain, enforce, and defend any rights specified to be so owned or assigned. I hereby irrevocably designate and appoint Company as my agent and attorney-in-fact, coupled with an interest and with full power of substitution, to act for and in my behalf to execute and file any document and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by me. If I wish to clarify that something created by me prior to my employment that relates to Company’s actual or proposed business is not within the scope of this Agreement, I have listed it on Appendix B in a manner that does not violate any third party rights. Without limiting Section 1 or Company’s other rights and remedies, if, when acting within the scope of my employment or otherwise on behalf of Company, I use or disclose my own or any third party’s confidential information or intellectual property (or if any Invention cannot be fully made, used, reproduced, distributed and otherwise exploited without using or violating the foregoing), Company will have and I hereby grant Company a perpetual, irrevocable, worldwide royalty-free, non-exclusive, sublicensable right and license to exploit and exercise all such confidential information and intellectual property rights.
 
 B.                 Maintenance of Records and Obligations.  I agree to keep and maintain adequate, current, accurate, and authentic written records for all Inventions made by me (solely or jointly with others) during the term of my employment with Company. The records will be in the form of notes, sketches, drawings, electronic files, reports, or any other format that may be specified by Company. The records are and will be available to and shall remain the sole property of Company at all times. I agree to assist Company, or its designee, at Company’s expense, in every proper way to secure Company’s rights in the Inventions and any rights relating thereto in any and all countries, including the disclosure to Company of all my written records (if any) and other pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments, and all other instruments or documents consistent herewith that Company shall reasonably deem proper or necessary in order to apply for, register, obtain, maintain, defend, and enforce such rights, and in order to assign and convey to Company, its successors, assigns, and nominees the sole and exclusive rights, title, and interest in and to such Inventions and any rights relating thereto, and testifying in a suit or other proceeding relating to such Inventions and any rights relating thereto. I further agree that my obligations under this section shall continue after the termination of my employment with Company. If Company is unable because of my mental or physical incapacity, or for any other reason, to secure my signature with respect to any Inventions, including to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering such Inventions, then I hereby irrevocably designate and appoint Company and its duly authorized officers and agents as my agent and attorney in fact, to act for and in my behalf and stead, to execute and file any papers and oaths, and to do all other lawfully permitted acts with respect to such Inventions with the same legal force and effect as if executed by me.

3.        Whistleblower Protections and Trade Secrets. Nothing in this Agreement prohibits me from reporting possible violations of federal law or regulation to any United States governmental agency or entity in accordance with the provisions of and rules promulgated under
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Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation (including the right to receive an award for information provided to any such governmental agencies). In accordance with 18 U.S.C. Section 1833: (i) I shall not be in breach of this Agreement and shall not be held criminally or civilly liable under any federal or state trade secret law (A) for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (B) for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (ii) if I file a lawsuit for retaliation by Company for reporting a suspected violation of law, I may disclose the trade secret to my attorney, and may use the trade secret information in the court proceeding, if I file any document containing the trade secret under seal, and do not disclose the trade secret, except pursuant to court order.

4.    I agree that my obligations under this Agreement shall continue in effect after termination of my employment, regardless of the reason or reasons for termination, and whether such termination is voluntary or involuntary on my part, and that Company is entitled to communicate my obligations under this Agreement to any future employer or potential employer of mine. Company may freely assign or transfer any or all of its rights or obligations hereunder.

    

Any provision of this Agreement which refers to the words “include,” “includes,” or “including” shall be deemed to be followed by the words “without limitation.”

Accepted and agreed:

Print Name:

JB Perrette
                
Signature:

/s/ JB Perrette
                
Date: August 2, 2022



APPENDIX A


California Labor Code Section 2870. Application of provision providing that employee shall assign or offer to assign rights in invention to employer.
1.    Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:
a)    Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or
b)    Result from any work performed by the employee for his employer.
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2.    To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.


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EMPLOYMENT AGREEMENT
This Employment Agreement (“Agreement”) is made as of the date set forth on the signature page hereof (the “Effective Date), by and between Discovery Communications, LLC (“Company”), a wholly-owned subsidiary of Warner Bros. Discovery, Inc. and David Leavy (“Executive”).
W I T N E S S E T H:
WHEREAS, Company and Executive wish to enter into this Agreement to provide for Executive’s continued service to Company;
WHEREAS, Executive and Company are party to that certain Employment Agreement, dated as of June 27, 2019 (the “Prior Employment Agreement”); and
WHEREAS, Executive and Company desire for this Agreement to supersede and replace in all respects the Prior Employment Agreement with respect to the Term of Employment (as defined below).
NOW, THEREFORE, as a condition to and in consideration of the mutual promises and covenants set forth in this Agreement, Company hereby offers Executive and Executive hereby accepts employment upon the terms and conditions set forth herein:
I.DUTIES, ACCEPTANCE, LOCATION
A.Company hereby employs Executive to render exclusive and full-time services as Chief Corporate Affairs Officer, on the terms and conditions set forth herein. Executive’s duties shall be consistent with his title and as directed by Company. Executive’s primary work location shall be Company’s offices in Silver Spring, MD, but Executive shall make himself available for travel to other locations as business needs reasonably require. Notwithstanding the foregoing, from the Effective Date through the day before the second anniversary of the Effective Date (such date, the “Relocation Expiration Date”), Executive, following consultation with the Chief Executive Officer of the Company, may elect to relocate his principal place of employment to Company’s offices in Los Angeles, California and such relocation must be completed on or prior to the Relocation Expiration Date. Upon the date of such relocation, if any (the “Relocation Date”), the parties agree to amend this Agreement to comply with applicable California law within 30 days of the Relocation Date.
B.Subject to Section IV(D)(1) hereof, if Company deems it necessary, Company reserves the right to change the location where Executive works, and the individual and/or position to whom/which Executive reports; provided that Executive shall not report to a position at a level lower than Chief Executive Officer of Warner Bros. Discovery, Inc.
C.Executive hereby accepts such employment and agrees to render the services described above. Throughout his employment with Company, Executive agrees to serve Company faithfully and to the best of his ability, and to devote his full business time and energy to perform the

        
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duties arising under this Agreement in a professional manner that does not discredit, but furthers the interests of Company.
II.TERM OF EMPLOYMENT
D.Subject to Section IV, Executive’s term of employment under this Agreement shall be three (3) years beginning on the Effective Date and ending on the day prior to the third anniversary of the Effective Date (the “End Date”) (“Term of Employment”).
E.Company shall have the option to enter negotiations with Executive to renew this Agreement with Executive for an additional term. If Company wishes to exercise its option to enter negotiations with Executive to renew this Agreement, it shall give Executive written notice of its intent to enter such negotiations to renew no later than one hundred and fifty (150) days prior to the end of the Term of Employment. Executive and Company agree then to negotiate with each other exclusively and in good faith until the date seventy-five (75) days prior to the end of the Term of Employment. However, Executive shall continue to negotiate in good faith with Company and comply with the terms of this Agreement, including, but not limited to his fiduciary and confidentiality obligations, until the end of the Term of Employment notwithstanding Executive’s right to negotiate with third parties. The Term of Employment may not, however, be extended unless by mutual written agreement of Company and Executive as to all of the material terms and conditions of the extension. In the event the parties do not enter into an agreement to extend the Term of Employment for an additional term, this Agreement shall expire and the Term of Employment shall end on the End Date; provided, however, that if Company does not make a Qualifying Renewal Offer (as defined below), Executive shall be eligible for a severance payment pursuant to Section IV(D)(2) herein in connection with his Separation from Service (as defined herein) at the end of the Term of Employment (and assuming that he was willing and able at the end of the Term of Employment to perform future services, whether for Company or any other party). If Company has made a Qualifying Renewal Offer, but Executive declines the offer and terminates employment at the end of the Term of Employment, Executive shall not be eligible for any Severance Payment (including any payment under the then-effective annual incentive compensation plan) from Company, but shall be eligible for a Noncompetition Payment (as defined by, and in accordance with, Section VI (G), below). For these purposes, a Qualifying Renewal Offer is an offer to renew the Term of Employment with a meaningful increase in base salary and an annual bonus target that is at least the same level as in effect at the end of the Term of Employment, with other material terms that are at least as favorable in the aggregate to Executive as the material terms of this Agreement.
III.COMPENSATION
F.Base Salary. Company shall pay Executive an annual base salary of One Million Five Hundred Thousand Dollars ($1,500,000), effective as of April 8, 2022. The Base Salary shall, with respect to each year during
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the Term of Employment, be paid over the course of twelve (12) months in increments paid on regular Company paydays, less such sums as law requires Company to deduct or withhold. Executive’s future Base Salary increases shall be reviewed and decided in accordance with Company’s standard practices and procedures as generally applied to similarly situated senior executives of Company (“Senior Executives”). The Chief Executive Officer of Warner Bros. Discovery, Inc. shall not be considered a Senior Executive. The annual base salary payable to Executive under this Section III(A), as may be increased from time to time, shall hereinafter be referred to as the “Base Salary.”
G.Bonus/Incentive Payment. In addition to the Base Salary paid to Executive pursuant to Section III(A), Executive shall be eligible to participate in Company’s then-effective annual incentive compensation plan with an annual incentive payment target of One Hundred Twenty-Five Percent (125%) of Base Salary (“Target”), effective as of April 8, 2022. The percentage of the Target amount payable to Executive shall be determined and paid in accordance with Company’s then-effective annual incentive compensation plan (e.g., subject to reduction for Company/division under-performance and increase for Company/division over-performance).
H.Benefits/Vacation. During the Term of Employment, Executive shall be entitled to participate in and receive benefits under Company’s employee benefit plans, programs and arrangements in (including Discovery Cares paid leave and relocation benefits, if applicable) which Executive is eligible for participation (and, for those plans which require a voluntary election, Executive elects such participation). In addition, Executive shall be entitled to vacation days pursuant to Company’s vacation policy, provide that Executive shall be eligible to receive no less than twenty-five (25) vacation days per full calendar year, plus Company holidays.
I.Equity Program. Executive shall receive an award of 73,368 restricted stock units under the Warner Bros. Discovery, Inc. Stock Incentive Plan or a successor plan (the “Stock Plan”) on the business day after the Effective Date (the “Promotion RSUs”). Subject to the terms and conditions of the Stock Plan and implementing award agreements, the Promotion RSUs shall vest over a period of three (3) years, in three (3) substantially equal installments beginning on the first anniversary of the Effective Date, with the third installment vesting on a date no later than the day before the third anniversary of the Effective Date. For the avoidance of doubt, subject to Executive’s continued employment through the day before the third anniversary of the Effective Date (the “Final Promotion RSU Vesting Date”), the Promotion RSUs shall vest no later than the Final Promotion RSU Vesting Date. Subject to the approval of the Compensation Committee of the Board of Directors of Warner Bros. Discovery, Inc., which Company shall use good faith efforts to obtain, beginning in 2023 (i.e., the first annual grant shall be made during the normal grant cycle in 2023) and for the balance of the Term of Employment, Executive shall receive an annual equity award under the Stock Plan at an annual target value of Three Million Dollars ($3,000,000) during the normal annual grant cycle in accordance with
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Company’s then-standard practices and procedures for awards to Senior Executives (the “Annual Equity Grant”). The equity instruments, terms and conditions, and calculation of number of awards shall be based on Company’s then-standard practices and procedures for awards to Senior Executives. In the award agreements granting the Promotion RSUs and any Annual Equity Grant, Company hereby agrees to provide that if an Approved Transaction, Control Purchase, or Board Change, as such terms are defined in the Stock Plan (each a “Change in Control”), occurs before such equity award has vested and provided that there is an equitable substitution or replacement for the equity award in connection with a Change in Control, the vesting of the equity award shall fully accelerate as a result of the Change in Control only if (i) within 12 months after the Change in Control, (A) the Company or a Subsidiary (as defined in the Stock Plan) terminates Executive’s employment other than for Cause, or (B) if Executive resigns for Good Reason, or (ii) during such 12-month period after the Change in Control, Executive is given notice by the Company that, in connection with a termination of Executive’s employment by the Company other than for Cause, Executive shall no longer be required to provide services for the Company or its affiliates or subsidiaries as an employee and Executive ceases to provide such services, but due to the length of any statutorily or contractually required notice period, Executive’s employment actually terminates following the expiration of such 12-month period. Any accelerated vesting as described in the preceding sentence shall occur only if and to the extent permitted under Section 409A of the Code and the regulations thereunder.
J.Expenses. Company shall reimburse Executive for business, travel and entertainment expenses reasonably and actually incurred during the performance of Executive’s duties pursuant to this Agreement to the extent such reimbursement is sought in accordance with Company’s business, travel, and entertainment policies and procedures.
K.Travel. Executive will be entitled to business travel benefits and opportunities under Company’s travel policies.
L.Director and Officer Liability Insurance. Executive shall be eligible for and entitled to insurance coverage under Company’s director and officer liability insurance and employment practices liability insurance policies in accordance with those policies and in amounts similar to coverage afforded other Senior Executives for activities on behalf of Company or any entity that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with Company (“control” of Company or any other entity meaning the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities or other interests, by contract or otherwise) (an “Affiliate”; provided, however, that no stockholder of Warner Bros. Discovery, Inc. shall be an Affiliate of Company for purposes of this Agreement) and otherwise shall be eligible for and entitled to indemnification in accordance with Company’s corporate governance requirements.
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IV.TERMINATION OF EMPLOYMENT
M.Death. If Executive should die during the Term of Employment, the Term of Employment shall automatically terminate. No further amounts or benefits shall be payable except earned but unpaid Base Salary, accrued but unused vacation, unreimbursed business expenses, and those benefits that may vest in accordance with the controlling documents for other relevant Company benefit programs, which shall be paid in accordance with the terms of this Agreement and such other Company benefit programs, including the terms governing the time and manner of payment (the “Accrued Benefits”). Company also shall pay a prorated portion of Executive’s annual bonus at Target for the calendar year of Executive’s death based on the amount of time Executive was employed during that calendar year (and subject to adjustment based on achievement of the applicable plan year’s performance metrics), payable at the time annual bonuses are ordinarily paid to Senior Executives, but in no event shall it be paid later than March 15th of the year following the calendar year of Executive’s death. Executive’s then-outstanding equity awards under the Stock Plan shall be treated in accordance with the applicable plan documents and implementing award agreements.
N.Inability To Perform Duties. If, during the Term of Employment, Executive should become physically or mentally disabled, such that he is unable to perform his duties under Sections I (A) and (C) hereof for (i) a period of six (6) consecutive months or (ii) for shorter periods that add up to six (6) months in any eight (8)-month period, by written notice to Executive, Company may terminate the Term of Employment. Notwithstanding the foregoing, the Term of Employment shall terminate upon Executive incurring a “separation from service” under the medical leave rules of Code Section 409A (as defined in Section VIII(I)). In such case, no further amounts or benefits shall be payable to Executive, except that Executive shall (i) receive the Accrued Benefits, (ii) receive a prorated portion of Executive’s annual bonus at Target for the calendar year of Executive’s separation of service based on the amount of time Executive was employed during that calendar year (and subject to adjustment based on achievement of the applicable plan year’s performance metrics), payable at the time annual bonuses are ordinarily paid to Senior Executives, but in no event shall it be paid later than March 15th of the year following the calendar year, and (iii) be eligible to elect to (x) receive continued coverage under Company’s relevant medical or disability plans to the extent permitted by, and under the terms of, such plans and to the extent such benefits continue to be provided to other former Senior Executives generally or (y) receive COBRA continuation of the group health benefits previously provided to Executive and his dependents (provided Executive timely elects such COBRA coverage) in which case Company shall pay the premiums for such COBRA coverage up to the maximum applicable COBRA period, provided that if Company determines that the provision of continued group health coverage at Company’s expense may result in Federal taxation of the benefit provided thereunder to Executive (e.g., because such benefits are provided by a self-insured basis by Company), then Executive shall be obligated to pay the full monthly
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premium for such coverage and, in such event, Company shall pay Executive, in monthly installments, an amount equivalent to the monthly premium for COBRA coverage for the remaining balance of the maximum applicable COBRA period (provided, that Company shall cease to pay such COBRA premiums at such time that Executive obtains new employment and is eligible for health insurance benefits from a new employer). Executive’s then-outstanding equity awards under the Stock Plan shall be treated in accordance with the applicable plan documents and implementing award agreements.
O.Termination For Cause.
1.Company may, subject to Section IV(C)(2), terminate the Term of Employment for Cause by written notice. “Cause” shall mean: (i) the conviction of, or nolo contendere or guilty plea, to a felony (whether any right to appeal has been or may be exercised); (ii) conduct constituting embezzlement, misappropriation or fraud, whether or not related to Executive’s employment with Company; (iii) conduct constituting a financial crime, material act of dishonesty or conduct in material violation of Company’s Code of Ethics or other Company written policies; (iv) improper conduct substantially prejudicial to Company’s business (whether financial or otherwise); (v) willful unauthorized disclosure or use of Company confidential information; (vi) material improper destruction of Company property; or (vii) willful misconduct in connection with the performance of Executive’s duties.
2.In the event that Executive materially neglects his duties under Section I(A) or Section I(C) hereof or engages in other conduct that constitutes a breach by Executive of this Agreement, including any conduct constituting Cause (collectively, “Breach”), Company shall so notify Executive in writing. Other than a Breach that is not susceptible to cure, Executive shall be afforded a one-time-only opportunity to cure the noted Breach within ten (10) business days from receipt of such notice. If no cure is achieved within this time, or if Executive engages in the same Breach a second time after once having been given the opportunity to cure, Company may terminate the Term of Employment by written notice to Executive.
3.Any termination of the Term of Employment pursuant to Sections IV(C)(1) or Section IV(C)(2) hereof shall be considered a termination of Executive’s employment for “Cause” and upon such termination, Executive shall only be entitled to receive any amounts or benefits hereunder that have been earned or vested at the time of such termination in accordance with the terms of the applicable governing Company plan(s) (including the provisions of such plan(s) governing the time and manner of payment), and/or as may be required by law. “Cause” as used in any such Company plan shall be deemed to mean solely the commission of acts described in Section IV(C)(1) or Section IV(C)(2) hereof (after giving effect to the cure opportunity described in Section IV(C)(2)).
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P.Termination Of Employment By Executive for Good Reason/Termination of Employment by Company Not For Cause.
1.Company may terminate the Term of Employment not for Cause (as defined above), and Executive may terminate the Term of Employment for “Good Reason” as defined herein. “Good Reason” for purposes of this Agreement shall only mean the occurrence of any of the following events without Executive’s consent: (a) a material reduction in Executive’s duties or responsibilities; (b) Company’s material change in the location of Company’s office where Executive works (i.e., relocation to a location outside the Washington, D.C. metropolitan area); or (c) a material breach of this Agreement by Company, including a change in the position to which Executive reports as set forth in Section I(B); provided however, that Executive must provide Company with written notice of the existence of the reduction, change or breach constituting Good Reason within ninety (90) days of any such event having occurred or Executive learning thereof, whichever is later, and allow Company thirty (30) days to cure the same. If Company so cures the reduction, change or breach, Executive shall have no basis for terminating the Term of Employment for Good Reason with respect to such cured reduction, change or breach. Executive must terminate his employment in writing within twenty (20) business days following the expiration of Company’s cure period for the termination to be on account of Good Reason or such right shall be deemed waived. For clarity, Company is not obligated to actually utilize Executive’s services on a full-time regular basis for the entire Term of Employment, and payment of Executive’s Base Salary and all payments and provision of group benefit plans and programs, subject to any obligations of mitigation and rights of offset consistent with Sections IV(E) and (F) herein, will fully discharge its obligations under this Agreement. While employed in an inactive status, Executive’s obligation to provide exclusive and full-time services to Company pursuant to Sections 1(A) and (C) shall remain in full force and effect unless Executive is directed by Company in writing to mitigate. For purposes of Code Section 409A (as defined herein), Executive’s “Services Cessation Date” is the date Executive stops rendering active services, and “Service Cessation Date” means a “separation of service” under Code Section 409A. In no event shall Executive be employed in an inactive status for more than three (3) months under this provision.
2.(i) If Company terminates the Term of Employment not for Cause, (ii) if Company elects not to renew the Term of Employment in circumstances that trigger Executive’s entitlement to severance under Section II(B), or (iii) if Executive terminates the Term of Employment for Good Reason, then Company shall pay Executive the Accrued Benefits. In addition, Company shall make the following payments (collectively, the “Severance Payment”):

(a) Commencing on the Release Deadline (as defined below), Company shall pay Executive his Base Salary for the period beginning on Executive’s termination date through the period which is the longest of (i) the balance of the Term of Employment up to a
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maximum of twenty-four (24) months, (ii) twelve (12) months, and (iii) the number of weeks of severance to which Executive would have been entitled had Company’s then-current redundancy severance plan applied to Executive’s termination, except that the first installment payment shall include any installments that would have been payable between the date of termination and the Release Deadline had the release requirement under Section (IV)(D)(3) hereof been satisfied on the date of termination (the “Base Salary Continuation”).  For the avoidance of doubt, in no event shall the Base Salary Continuation period be longer than twenty-four (24) months. In the event the Base Salary Continuation period is calculated under Section 2(a)(ii) or 2(a)(iii) of this paragraph and Company relieves Executive of all of Executive’s work responsibilities for some period of time prior to the effective date of Executive’s termination of employment, this period of “garden leave” shall be offset against the number of weeks of Base Salary Continuation. Notwithstanding the foregoing, the Base Salary Continuation period may in no event be less than thirteen (13) weeks.

Except as provided in this Section IV(D)(2) with respect to the first installment payment, the Base Salary Continuation shall be paid in substantially equal increments on regular Company paydays, less required deductions and withholdings, until the balance is paid in full.
(b) Notwithstanding anything in Company’s then-effective annual incentive compensation plan to the contrary, Executive shall be paid a bonus at Target under Section III(B) for each full calendar year within the Base Salary Continuation period. For any partial calendar year within which the Base Salary Continuation period ends, Executive shall only be entitled to a prorated Target bonus based on the elapsed time from January 1 of such partial year through the last day of the Base Salary Continuation period. The bonus/incentive payment portions of the Severance Payment shall be paid to Executive in a single lump sum on the date that Company pays bonuses/incentive payments to its other Senior Executives for the applicable then-effective annual incentive compensation plan year.
(c) Company shall reimburse Executive for up to eighteen (18) months of post-termination continued health coverage (medical, dental, and vision) under the applicable Company medical plan pursuant to COBRA, should Executive be eligible for and elect COBRA. These reimbursements shall be subject to required withholdings. If Company determines the provision of continued medical coverage at Company’s sole or partial expense may result in Federal taxation of the benefit provided thereunder to Executive or his dependents because such benefits are provided by a self-insured basis by Company, then Executive shall be obligated to pay the full monthly or similar premium for such coverage under COBRA. In such event, Company shall pay Executive, in monthly installments over the eighteen (18) month COBRA period (or the remaining portion thereof) an amount equivalent to the monthly premium for COBRA coverage
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for the balance of the eighteen (18) month COBRA period (based on the COBRA rates then in effect).
3.No Severance Payment shall be made if Executive fails to sign a release substantially in the form attached hereto as Exhibit A. Such release must be executed and become effective within the sixty (60) calendar day period following the date of Executive’s “separation from service” within the meaning of Code Section 409A (the last day of such period being the “Release Deadline”). No Severance Payment shall be made if Executive violates Section VI hereof, in which case all Severance Payments shall cease, and Company may seek forfeiture of Severance Payments already made.
4.Company agrees that if, at the time the Term of Employment is terminated not for Cause, or Executive terminates the Term of Employment for Good Reason, and Company has a standard severance policy (“Severance Policy”) in effect that would be applicable in the absence of this Agreement (i.e., applicable to the circumstances surrounding the termination) and that would result in Executive receiving a sum greater than the Severance Payment, Executive shall receive whichever is the greater of the two payments; provided, that if (i) the standard severance policy would provide for a sum greater than the Severance Payment, and (ii) the payment schedule under the Severance Policy is different from the payment schedules for the Severance Payment and would result in an impermissible acceleration or delay in payment in violation of the time and manner of payment requirements of Code Section 409A, then the payment schedule provided in Company’s Severance Policy shall apply only to the portion of the amount payable under the Severance Policy that exceeds the Severance Payment. For the avoidance of doubt, in no event shall the Severance Payment exceed twenty-four (24) months of Base Salary Continuation and annual bonus.
5.If Executive terminates the Term of Employment before it has expired for a reason other than one or more of those stated in Section IV(D)(1) hereof, it shall be deemed a material breach of this Agreement. Executive agrees that, in that event, in addition to any other rights and remedies which Company may have as a result of such breach, he shall forfeit all rights to be compensated for any remaining portion of his Base Salary, Severance Payment and/or bonus/incentive payment that may otherwise be due and unpaid under this Agreement, pursuant to other Company plans or policies, or otherwise, except for Accrued Benefits or as may be required by law.
Q.Right To Offset. In the event that Executive secures employment or any consulting or contractor or business arrangement for services he performs during the period that any payment from Company is continuing or due under Section IV(D) hereof, Executive shall have the obligation to timely notify Company of the source and amount of payment (“Offset Income”). Company shall have the right to reduce the Severance Payment by the Offset Income. Executive acknowledges and
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agrees that any deferred compensation for his services from another source that are performed while receiving Severance Payments from Company will be treated as Offset Income (regardless of when Executive chooses to receive such compensation). In addition, to the extent that Executive’s compensation arrangement for the services include elements that are required to be paid later in the term of the arrangement (e.g., bonus or other payments that are unconditionally vested and earned in full or part based on performance or service requirements for the period during which the Severance Payment is made), Company may calculate the Offset Income by annualizing or by using any other reasonable methodology to attribute the later unconditionally earned and vested payments to the applicable period of the Severance Payment. Executive agrees to provide Company with information sufficient to determine the calculation of the Offset Income, including compensation excerpts of any employment agreement or other contract for services, Form W-2s, and any other documentation that Company reasonably may require, and that failure to provide timely notice to Company of Offset Income or to respond to inquiries from Company regarding any such Offset Income shall be deemed a material breach of this Agreement. Executive also agrees that Company shall have the right to inquire of third-party individuals and entities regarding potential Offset Income and to inform such parties of Company’s right of offset under this Agreement with Executive. Accordingly, Executive agrees that no further Severance Payment from Company will be made until or unless this breach is cured and that Company may seek forfeiture of all payments from Company already made to Executive, during the time he failed to disclose his Offset Income, up to the amount of Offset Income attributable to such period. Any offsets made by Company pursuant to this Section IV(E) shall be made at the same time and in the same amount as a Severance Payment amount is otherwise payable (applying the Offset Income to Company’s payments in the order each are paid) so as not to accelerate or delay the payment of any Severance Payment installment.
R.Mitigation. In the event of Executive’s termination of employment pursuant to Section IV(D) herein, and during the period that any payment from Company is continuing or due under Section IV(D), Executive shall be under a continuing obligation to seek other comparable employment, including taking all reasonable steps to identify and apply for any comparable, available jobs for which Executive is qualified.  At Company’s request and with prior notice to Executive, Executive may be required to furnish to Company proof that Executive has engaged in efforts consistent with this paragraph, and Executive agrees to comply with any such request.  Executive further agrees that Company, with reasonable prior notice to Executive, may follow-up with reasonable inquiries to third parties to confirm Executive’s mitigation efforts.  Should Company determine in good faith that Executive failed to take reasonable steps to secure alternative employment consistent with this paragraph, with reasonable notice to Executive, Company may cease any payments due to Executive pursuant to Section IV(D)(2) and the foregoing shall be without waiver of Executive’s right to challenge Company’s election and basis for doing so.
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V.CONFIDENTIAL INFORMATION
S.Executive acknowledges his fiduciary duty to Company. As a condition of employment, Executive agrees to protect and hold in a fiduciary capacity for the benefit of Company all confidential information, knowledge or data, including the terms of this Agreement and, without limitation, all trade secrets relating to Company and its Affiliates, and their respective businesses, (i) obtained by Executive during his employment by Company or otherwise and (ii) that is not otherwise publicly known (other than by reason of an unauthorized act by Executive). After termination of Executive's employment with Company, Executive shall not communicate or divulge any such information, knowledge or data to anyone other than Company and those designated by it, without the prior written consent of Company. For the avoidance of doubt, and notwithstanding the foregoing, nothing herein or in this Agreement shall (x) prohibit Executive from communicating with a government agency, regulator or legal authority concerning any possible violations of federal or state law or regulation, or (y) prevent or limit Executive from discussing his terms and conditions of employment.  Nothing herein or in this Agreement, however, authorizes the disclosure of information Executive obtained through a communication that was subject to the attorney-client privilege, unless disclosure of the information would otherwise be permitted by an applicable law or rule. As a condition of employment, Executive is required to sign a Confidential Information and Assignment of Inventions Agreement, which is attached hereto as Exhibit B and incorporated herein by reference. Notwithstanding the foregoing, Executive shall be able to share Company’s confidential information under this Section V with his financial, legal, and business representatives, and with any arbiter and/or court adjudicating a dispute between Executive and Company so long as Executive receives reasonable assurances that such persons will also keep such information confidential.
T.In the event that Executive is compelled, pursuant to a subpoena or other order of a court or other body having jurisdiction over such matter, to produce any information relevant to Company, whether confidential or not, Executive agrees to provide Company with such written notice of this subpoena or order so that Company may timely move to quash if appropriate unless such notice to Company is prohibited by law or procedure.
U.Executive also agrees to reasonably cooperate with Company in any legal action for which his participation is needed. Company agrees to try to schedule all such meetings so that they do not unduly interfere with Executive’s pursuits after he is no longer in Company’s employ.
VI.RESTRICTIVE COVENANTS
V.Executive covenants that during the Term of Employment and, for a period of twelve (12) months after the conclusion thereof (the “Restricted Period”), he shall not, directly or indirectly, on his own behalf or on behalf of any entity or individual, engage in any business
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activities involving nonfiction, scripted, sports, lifestyle, news, interactive games, or general entertainment television (whether in cable, broadcast, free to air, digital, streaming, film, or any other distribution method) within the Restricted Territory (“Competitive Services”). The Restricted Territory is the United States and any other country for which Executive had management responsibilities (e.g., supervised employees located in that country or was involved in business or programming operations in that country) at any time during the three (3) years prior to Executive’s separation from employment. This provision shall not prevent Executive from owning stock in any publicly-traded company; provided, that, Executive’s ownership is equal to or less than three (3) percent of such entity’s outstanding stock. Executive agrees that this Section VI (A) is a material part of this Agreement, breach of which will cause Company irreparable harm and damages, the loss of which cannot be adequately compensated at law. In the event that the provisions of this paragraph should ever be deemed to exceed the limitations permitted by applicable laws, Executive and Company agree that such provisions shall be reformed to the maximum limitations permitted by the applicable laws. In the event that Executive is placed on “garden leave” pursuant to Section IV (D) prior to separation and the period of Base Salary Continuation is less than six months, the Restricted Period shall be six months or the period of Base Salary Continuation, whichever is shorter.
W.If Executive wishes to pursue Competitive Services during the Restricted Period and to obtain the written consent of Company before doing so, Executive may request consent from Company by providing written evidence, including assurances from Executive and his potential employer, that the fulfillment of Executive’s duties in such proposed work or activity would not involve any use, disclosure, or reliance upon the confidential information or trade secrets of Company or its Affiliates.
X.Executive acknowledges that during his employment, he will learn confidential, non-public information about the skills, abilities and compensation of other Company and Affiliate employees. In order to protect this information, during Executive’s employment and for a period of eighteen (18) months following the conclusion of Executive’s employment with Company, Executive covenants that he will not directly or indirectly solicit, recruit, interfere with or otherwise attempt to entice, any employees of Company (other than Executive’s then-assistant) or any of its Affiliates to leave their employment with Company or such Affiliate.
Y.Executive understands and acknowledges that because of Executive’s employment with Company, Executive will have access to Company’s and its Affiliate’s trade secrets and confidential information. During Executive’s employment and for an eighteen (18) month period following the conclusion of Executive’s employment with Company, Executive covenants that he will not use Company’s and its Affiliate’s trade secrets or confidential information to directly or indirectly solicit, recruit, interfere with or otherwise attempt to entice, solicit, induce or encourage any vendor, producer, independent contractor, or business
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partner to terminate its business relationship with Company or its Affiliates.
Z.During the period Executive is employed by Company, Executive covenants and agrees not to engage in any other business activities whatsoever, or to directly or indirectly render services of a business, commercial or professional nature to any other business entity or organization (other than non-interfering civic and charitable activities), regardless of whether Executive is compensated for these services, unless Executive obtains the prior written consent of the Chief Executive Officer of Company.
AA.Throughout the period that Executive is an employee of Company, Executive agrees to disclose to Company any direct investments (i.e., any investment in which Executive has made the decision to invest in a particular company) he has in a company that is a competitor of Company or its Affiliates (“Competitor”) or that Company or its Affiliates is doing business with during the Term of Employment (“Partner”), if such direct investments result in Executive or Executive’s immediate family members, and/or a trust established by Executive or Executive’s immediate family members, owning five (5) percent or more of such a Competitor or Partner. This Section VI(F) shall not prohibit Executive, however, from making passive investments (i.e., where Executive does not make the decision to invest in a particular mutual fund or similar entity, even if such entity, in turn, invests in such a Competitor or Partner). Regardless of the nature of Executive’s investments, Executive herein agrees that his investments may not materially interfere with Executive’s obligations and ability to provide services under this Agreement.
AB.If Company makes a Qualifying Renewal Offer, Executive declines such offer, and Executive terminates employment at the end of the Term of Employment, Executive shall be eligible for a Noncompetition Payment (as defined below). Provided that Executive signs a release in the form attached hereto as Exhibit A, and such release is executed and becomes effective on or before the Release Deadline, then, on the Release Deadline, Company will commence to pay Executive an amount equal to 50% of Executive’s Base Salary for the Restricted Period (the “Noncompetition Payment”). The Noncompetition Payment shall be paid in substantially equal increments on regular Company paydays (less required deductions and withholdings), except that the first installment payment shall also provide any installments that would have been payable between the date of termination and the Release Deadline had the release requirement under Section (IV)(D)(3) been satisfied on the date of termination (less required deductions and withholdings), until the balance is paid in full, provided that Executive complies with the provisions of this Section VI. For the avoidance of doubt, the Noncompetition Payment is intended to be paid in circumstances in which Executive is not eligible for the Severance Payment.
AC.Prior to the conclusion of Executive’s employment with Company, Executive shall return all Company property and materials, including
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equipment, such as laptop computers and mobile telephones, and documentation, such as files (including originals and copies), notes, e-mail accounts and computer disks.
AD.In the event that Executive violates any provision of this Section VI, in addition to any injunctive relief and damages to which Executive acknowledges Company would be entitled, with reasonable prior notice to Executive, all Severance Payments or Noncompetition Payments to Executive, if any, shall cease, and Company may seek forfeiture of Severance Payments or Noncompetition Payments already made. The foregoing shall be without waiver of Executive’s right to challenge Company’s election and basis for doing so.
VII.ARBITRATION
AE.Submission To Arbitration. Company and Executive agree to submit to arbitration all claims, disputes, issues or controversies between Company and Executive or between Executive and other employees of Company or its Affiliates (collectively “Claims”) directly or indirectly relating to or arising out of Executive's employment with Company or the termination of such employment including Claims under Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans With Disabilities Act of 1990, Section 1981 of the Civil Rights Act of 1966, as amended, the Family Medical Leave Act, the Employee Retirement Income Security Act, and any Claim arising under any similar federal, state or local law, statute, regulation or common law doctrine or out of this Agreement.
AF.Use Of AAA; Choice of Law. All Claims for arbitration shall be presented to the American Arbitration Association (“AAA”) in accordance with its applicable rules (“Rules”). The seat or place of arbitration shall be Maryland. The arbitrator(s) shall be directed to apply the substantive law of federal and state courts sitting in Maryland, without regard to conflict of law principles. Any arbitration pursuant to this Agreement shall be deemed an arbitration proceeding subject to the Federal Arbitration Act.
AG.Binding Effect. Arbitration shall be binding and shall afford parties the same options for damage awards as would be available in court. Executive and Company agree that discovery shall be allowed, and all discovery disputes shall be decided, exclusively by arbitration in accordance with the Rules.
AH.Damages and Costs. Any damages shall be awarded only in accord with applicable law. The arbitrator may only order reinstatement of Executive if money damages are insufficient. The parties shall share equally in all fees and expenses of arbitration. However, each party shall bear the expense of its own counsel, experts, witnesses and preparation and presentation of proof.
VIII.CONTROLLING LAW AND ADDITIONAL COVENANTS
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AI.The validity and construction of this Agreement or any of its provisions shall be determined under the laws of the State of Maryland. The invalidity or unenforceability of any provision of this Agreement shall not affect or limit the validity and enforceability of the other provisions.
AJ.If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall nevertheless continue in full force and effect without being impaired or invalidated. The section headings of this Agreement are for convenience only and shall not in any way affect the interpretation of any section hereof or of the Agreement itself. Any provision of this Agreement which refers to the words “include,” “includes,” or “including” shall be deemed to be followed by the words “without limitation.”
AK.Executive warrants that (1) his employment under this Agreement will not violate or conflict in any way with any other contract or agreement to which Executive is bound; (2) Executive will do nothing on behalf of Company that violates or conflicts with any such contract or agreement; and (3) Executive will indemnify Company for any liability, damages, costs, or reasonable outside attorneys’ fees that Company suffers as a result of any such violation or conflict.
AL.Executive expressly acknowledges that Company has advised Executive to consult with independent legal counsel of his choosing prior to Executive’s signing this Agreement to review and explain to Executive the legal effect of the terms and conditions of this Agreement.
AM.Without limiting anything to the contrary in this Agreement, Executive agrees not to disclose the terms hereof to any person or entity, other than Executive’s attorneys, accountants, financial advisors, government authorities who require it, or members of Executive’s immediate family who need to know this information and agree to keep it confidential.
AN.This Agreement supersedes any and all other agreements, either oral or in writing, between the parties with respect to the employment of Executive by Company, and contains all of the covenants and agreements between the parties with respect to such employment in any manner whatsoever. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements have been made, orally or otherwise, by any party, or anyone acting on behalf of any party, that are not stated in this Agreement, and that no other agreement, statement or promise not contained in this Agreement shall be valid or binding. Notwithstanding either of the foregoing sentences, or any other provision of this Agreement, this Agreement shall not supersede, replace, invalidate or otherwise modify or affect any restrictive covenants in any previous, subsequent or other agreements or documents between Executive and Company, including, without limitation, any covenants regarding confidentiality, intellectual property, confidential and proprietary information, non-competition, non-solicitation of customers, non-solicitation or no hire of employees, and the like (collectively, “Other Restrictive Covenants”), and any such Other Restrictive Covenants will remain in effect and Executive shall
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remain bound by such Other Restrictive Covenants. To the extent any of the restrictions or covenants contained in this Agreement conflict in any way with any such Other Restrictive Covenants, such conflict shall be resolved in favor of this Agreement.
AO.Any modifications to this Agreement shall be effective only if in writing and signed by both parties.
AP.Any payments to be made by Company hereunder shall be made subject to applicable law, including required deductions and withholdings.
AQ.Section 409A of the Code.
1.It is intended that the provisions of this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended, (the “Code”) and the regulations and guidance promulgated thereunder (collectively, “Code Section 409A”), and all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Code Section 409A. Notwithstanding the foregoing, Company shall have no liability to Executive with regard to any failure to comply with Code Section 409A so long as Company has acted in good faith with regard to compliance therewith.
2.If under this Agreement, an amount is to be paid in two or more installments, for purposes of Code Section 409A, each installment shall be treated as a separate payment.
3.A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of amounts or benefits upon or following a termination of employment unless such termination is also a “Separation from Service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “resignation,” “termination,” “termination of employment,” “separation” or like terms shall mean Separation from Service.
4.If Executive is deemed on the date of termination of his employment to be a “specified employee”, within the meaning of that term under Section 409A(a)(2)(B) of the Code and using the identification methodology selected by Company from time to time, or if none, the default methodology, then:
a.With regard to any payment, the providing of any benefit or any distribution of equity upon separation from service that constitutes “deferred compensation” subject to Code Section 409A, such payment, benefit or distribution shall not be made or provided prior to the earlier of (i) the expiration of the six-month period measured from the date of Executive’s Separation from Service or (ii) the date of Executive’s death; and
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b.On the first day of the seventh month following the date of Executive’s Separation from Service or, if earlier, on the date of his death, (x) all payments delayed pursuant to this Section VIII(I)(4) (whether they would otherwise have been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal dates specified from them herein and (y) all distributions of equity delayed pursuant to this Section VIII(I)(4) shall be made to Executive.
1.With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, of in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be violated without regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect and (iii) such payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense occurred.
2.Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination), the actual date of payment within the specified period shall be within the sole discretion of Company.
AR.This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, heirs (in the case of Executive) and assigns. The rights or obligations under this Agreement may not be assigned or transferred by either party, except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of Company; provided, however, that the assignee or transferee is the successor to all or substantially all of the assets of Company and such assignee or transferee assumes the liabilities, obligations and duties of Company, as contained in this Agreement, either contractually or as a matter of law. Notwithstanding the foregoing, this Agreement may be assigned to any Affiliate of Company which employs Executive.
AS.This Agreement may be executed with electronic signatures and in any number of counterparts. The electronically signed Agreement shall constitute one original agreement. Duplicates and electronically signed copies of this Agreement shall be effective and fully enforceable as of the date signed and sent.
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AT.All notices and other communications to be made or otherwise given hereunder shall be in writing and shall be deemed to have been given when the same are (i) addressed to the other party at the mailing address or email address indicated below, and (ii) either: (a) personally delivered or mailed, registered or certified mail, first class postage prepaid return receipt requested, (b) delivered by a reputable private overnight courier service utilizing a written receipt or other written proof of delivery, to the applicable party, or (c) sent by electronic email. Any such notice sent in the manner set forth above by United States Mail shall be deemed to have been given and received three (3) days after it has been so deposited in the United States Mail, and any notice sent in any other manner provided above shall be deemed to be given when received. Until further notice given in accordance with the foregoing, the respective addresses and email addresses for the parties are as follows:
If to Company:                    
Discovery Communications, LLC        
8403 Colesville Road                
Silver Spring, MD 20910-6331                
Attention: Fabienne Clermont, Esq.                    
Email: fabienne_clermont@discovery.com    
                                    
If to Executive, at the home address then on file with Company, with a concurrent copy to:
Del Shaw Moonves Tanaka Finkelstein Lezcano Bobb & Dang
2029 Century Park East
Suite 1750
Los Angeles, CA 90067
Attn; Jeffrey Finkelstein, Esq.
Email: jfinkelstein@delshaw.com


[signature page follows]
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In witness whereof, the parties have caused this Agreement to be duly executed as set forth below.
EXECUTIVE:

/s/ David Leavy
DATE:

August 26, 2022
David Leavy

DISCOVERY COMMUNICATIONS, LLC:

/s/ Adria Alpert-Romm

Name: Adria Alpert-Romm

Title: Chief People and Culture Officer



DATE:

August 26, 2022








[signature page to Employment Agreement]

            
EXHIBIT A

AGREEMENT AND GENERAL RELEASE
This Agreement and General Release (“Release”) is entered into by and between Discovery Communications, LLC (“Company”), and David Leavy (“Executive”) to resolve any and all disputes concerning his employment with Company and his separation from employment on __________________ (the “Effective Date”). Accordingly, in exchange for the consideration and mutual promises set forth herein, the parties do hereby agree as follows:
1. Effective close of business on the Effective Date, Executive’s employment with Company will terminate, and all salary continuation and benefits will cease other than those to which Executive is entitled in consideration for this Release as set forth in Executive’s Employment Agreement with Company (“Agreement”), which is incorporated by reference, and/or as a matter of law (e.g., COBRA benefits).
2. In consideration for Executive’s executing this Release of any and all legal claims he might have against the Discovery Parties (as defined below), and the undertakings described herein, and to facilitate his transition to other employment, Company agrees to provide Executive with the consideration detailed in, as applicable, Section IV(D) or Section VI(G)(i.e., the “Severance Payment”), of the Agreement.
3. Neither Company nor Executive admits any wrongdoing of any kind, and Executive agrees that neither Executive nor anyone acting on his behalf will disclose this Release, or its terms and conditions. Notwithstanding the foregoing or anything to the contrary in the Agreement, Executive is not barred from disclosing this Release to his legal, financial and personal advisors or to those persons essential for Executive to (a) implement or enforce his rights under this Release and the Agreement pursuant to which this Release is given; (b) defend himself in a lawsuit, investigation or administrative proceeding; (c) file tax returns; or (d) advise a prospective employer, business partner or insurer of the contractual restrictions on his post-Company employment.
4. In exchange for the undertakings by Company described in the above paragraphs:
I.Executive, for himself, his heirs, executors, administrators and assigns, does hereby release, acquit and forever discharge Company and its Affiliates (as defined in the Agreement), as well as all of their respective officers, shareholders, shareholder representatives, directors, members, partners, trustees, employees, attorneys, representatives and agents in their respective capacities as such (collectively, the “Discovery Parties”), from any and all claims, demands, actions, causes of action, liabilities, obligations, covenants, contracts, promises, agreements, controversies, costs, expenses, debts, dues, or attorneys’ fees of every name and nature, whether known or unknown, without limitation, at law, in equity or administrative, against the Discovery Parties that he may have had, now has or may have against the Discovery Parties by reason of any matter or thing arising from the beginning of the world to the day and date of this Release relating to his employment with any Discovery Party or the termination thereof. Those claims, demands, liabilities and obligations from which Executive releases the Discovery Parties include any claim, demand or action, known or unknown, arising out of any transaction, act or omission related to Executive’s employment by any Discovery Party and Executive’s separation from such employment, sounding in tort or contract and/or any cause of action arising under federal, state or local statute or ordinance or common law, including the federal Age Discrimination In Employment Act of 1967 (“ADEA”), Title VII of the Civil Rights Act of 1964, as amended, the Americans With Disabilities Act, the Family and Medical Leave Act, the Equal Pay Act, the Worker Adjustment and Retraining Notification Act and Maryland Fair Employment Practices Act, as well as any similar state or local statute(s), in each case as any such law may be amended from time to time.

        
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Notwithstanding the foregoing, nothing contained herein shall release Company from (1) the obligations set forth in this Release, (2) claims for vested benefits under any benefit plan, (3) any claim that arises after the date Executive signs this Release, (4) Executive’s right to indemnification under applicable insurance policies and/or Company’s by-laws, or (5) any claim that cannot by law be released, including claims for unemployment insurance benefits and workers’ compensation benefits.
II.Nothing in this Release, including its general release and non-disparagement or confidentiality provisions, shall be construed to (1) waive Executive’s right to testify in an administrative, legislative, or judicial proceeding concerning alleged sexual harassment or other unlawful conduct on the part of Company, or on the part of the agents or employees of Company, when Executive has been required or requested to attend such a proceeding pursuant to court order, subpoena, or written request from an administrative agency, legislature or other governmental authority (any such order, subpoena or request, an “Authority”) or otherwise prevent Executive from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that Executive has reason to believe is unlawful; (2) prevent Executive from filing a charge or complaint with or from participating in an investigation or proceeding conducted by the Equal Employment Opportunity Commission, the National Labor Relations Board (“NLRB”), the Securities and Exchange Commission, or any other federal, state, or local agency charged with the enforcement of any laws, including providing documents or other information (through otherwise lawful means); (3) prevent Executive from exercising Executive’s rights under Section 7 of the National Labor Relations Act to engage in protected, concerted activity with other employees, although by signing this Release Executive is waiving Executive’s right to recover any individual relief (including any backpay, frontpay, reinstatement, or other legal or equitable relief) in any charge, complaint, lawsuit, or other proceeding brought by Executive or on Executive’s behalf under said Section 7 by any third party, except for any right Executive may have to receive an award from an Authority (and not Company) for information provided to an Authority; or (4) if Executive is age forty (40) or over, limits or affects Executive’s right to challenge the validity of this Release under the ADEA or the Older Worker Benefits Protection Act.
III.Executive expressly acknowledges that his attorney has advised him regarding, and he is familiar with, the fact that certain state statutes provide that general releases do not extend to claims that the releasor does not know or suspect to exist in his favor at the time he executes such a release, which if known to him may have materially affected his execution of the release. Being aware of such statutes, Executive hereby expressly waives and relinquishes any rights or benefits he may have under such statutes, as well as any other state or federal statutes or common law principles of similar effect, and hereby acknowledges that no claim or cause of action against any Discovery Party shall be deemed to be outside the scope of this Release whether mentioned herein or not, except as otherwise expressly set forth herein. Executive also specifically knowingly waives the provisions of Section 1542 of the Civil Code of the State of California, which reads: “A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.” Notwithstanding the provisions of Civil Code Section 1542 stated above and for the purpose of implementing a full and complete release and discharge of the Discovery Parties, Executive expressly acknowledges that this Release is specifically intended to include in its effect all claims that he does not know or suspect to exist in his favor at the time he signs this Release.
IV.Executive hereby acknowledges that he is executing this Release pursuant to the Agreement, and that the consideration to be provided to Executive pursuant to Section IV(D) of the Agreement is in addition to what he would have been entitled to
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receive in the absence of this Release. Executive hereby acknowledges that he is executing this Release voluntarily and with full knowledge of all relevant information and any and all rights he may have. Executive hereby acknowledges that he has been hereby advised through this Release to consult with an independent attorney of his own choosing in connection with this Release to explain to him the legal effect of the terms and conditions of this Release and that Executive has consulted such an attorney for such purpose. Executive acknowledges that he has read this Release in its entirety. Executive further states that he fully understands the terms of this Release and that the only promises made to him in return for signing this Release are stated herein and in the Agreement pursuant to which this Release is given. Executive hereby acknowledges that he is voluntarily and knowingly agreeing to the terms and conditions of this Release without any threats, coercion or duress, whether economic or otherwise, and that Executive agrees to be bound by the terms of this Release. Executive acknowledges that he has been given twenty-one (21) days to consider, sign, and return this Release to Company’s designated representative, and that if Executive is age forty (40) or over, Executive understands that he has seven (7) days following his execution of this Release in which to revoke his agreement to comply with this Release by providing written notice of revocation to the General Counsel of Company no later than three business days following such period.
e.    Executive further hereby covenants and agrees that this Release shall be binding in all respects upon himself, his heirs, executors, administrators, assigns and transferees and all persons claiming under them, and shall inure to the benefit of all of the officers, directors, agents, employees, stockholders, members and partners and successors in interest of Company, as well as all Affiliates and representatives of any of the foregoing persons and entities.
f.    Except as permitted by applicable laws and the terms of the Agreement and this Release, Executive agrees that he will not disparage any Discovery Party or make or publish any communication with respect to the period of Executive’s employment by Company that reflects adversely upon any of them, including communications concerning Company itself and its current or former directors, officers, employees or agents. In the event of a termination of the “Term of Employment” other than a termination by Company for “Cause” (as those two terms are defined in the Agreement) under the Agreement, Executive and Company shall confer about a mutually agreeable announcement of Executive’s separation from Company.
g. Executive agrees to return all Company property and materials, including equipment, such as laptop computers and mobile telephones, and documentation, such as files (including all originals and copies), notes, e-mail accounts and computer disks prior to the conclusion of Executive’s employment with Company. Notwithstanding the foregoing, Executive shall be able to retain the mobile phone number he is provided by Company.
1.     a.    If any provision of this Release is found to be invalid, unenforceable or void for any reason, such provision shall be severed from the Release and shall not affect the validity or enforceability of the remaining provisions.
b.    Any provision of this Release which refers to the words “include,” “includes,” or “including” shall be deemed to be followed by the words “without limitation.”
c.    Company and Executive agree that this Release, consisting of four (4) pages, and the Agreement pursuant to which this Release is given, constitutes the entire agreement between them with respect to the subject matter hereof. Each party further warrants that he, she or it enters into this Release freely.
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d.     This Release shall be interpreted, enforced and governed by the laws of the State of Maryland without regard to the choice of law principles thereof.
IN WITNESS WHEREOF, I have signed this Release this __ day of
_________________________, 202__.
By:                            

Print Name:                        

Subscribed and sworn to before me this ___ day of _______________, 202__.

                                                    
Notary Public
My Commission Expires             






ACCEPTED AND AGREED:

DISCOVERY COMMUNICATIONS, LLC
By: _________________________________
Name: ______________________________
Title: _______________________________
Date: ________________________________
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Discovery Communications, LLC
Confidential Information and Assignment of Inventions Agreement
 
        As a condition of my employment with Discovery Communications, LLC (hereinafter, together with its Affiliates (as defined in the agreement to which this Exhibit B is attached), successors or assigns, the “Company”), and in consideration of my employment with Company and my receipt of the compensation now and hereafter paid to me by Company, I agree to the following provisions of this Discovery Communications, LLC Confidential Information and Invention Assignment Agreement (this “Agreement”):
 
1.     Confidential Information and Compliance with Policy.  I acknowledge that I am subject to the requirements of the Discovery Code of Ethics and other policies during my employment with Company, which are available to me on Company’s online portal and externally at www.wbd.com under Investor Relations/Corporate Governance.  I agree that during and after my employment with Company I will hold in the strictest confidence, and will not use (except for the benefit of Company during my employment) or disclose to any person, firm, or corporation any Company Confidential Information (as defined below), including any non-public information that relates to the actual or anticipated business, research or development of Company, or to Company’s proprietary data, trade secrets, or know-how, including research, content development plans, content ideas, product plans, or other information regarding Company’s products or services and markets therefor, customer lists and customers, distribution agreements and arrangements, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, finances, and other business information. For the avoidance of doubt, and notwithstanding the foregoing, nothing in this Agreement shall (x) prohibit me from communicating with any government agency, regulator or other legal authority of any nature concerning any possible violations of federal, state or local law or regulation, or (y) prevent or limit me from discussing my terms and conditions of employment.  Nothing in this Agreement, however, authorizes the disclosure of information I obtained through a communication that I was aware was subject to Company’s attorney-client privilege, unless disclosure of the information would otherwise be permitted by an applicable law or rule. For the purposes of this Agreement, Company Confidential Information means any data or information, without regard to form, that is valuable to Company and is not generally known by or available to the public. To the extent consistent with the preceding sentence, Company Confidential Information includes: (i) the identities of Company's customers and the specific individual customer representatives with whom Company works, the details of Company's relationships with such customers and customer representatives, the identities of distributors, contractors and vendors utilized in Company's business, the details of Company's relationships with such distributors, contractors and vendors, and the nature of fees and charges made to Company's customers; (ii) non-public information and materials describing or relating to Company’s business or financial affairs, including financial and/or investment performance information, personnel matters, products, operating procedures, organizational responsibilities, marketing matters, or policies or procedures of Company; or (iii) information and materials describing Company's existing or new products and services, including analytical data and techniques, and product, service or marketing concepts under development at or for Company, and the status of such development. Company Confidential Information does not include information that, other than as a result of a breach by Executive of this Agreement, (A) is or becomes generally known within the relevant industry, (B) is or becomes known to Executive other than through Executive’s work for Company, or (C) is or becomes generally known by or available to the public.
 
2.     Inventions.
 
A.               Assignment of Inventions. I agree that I will promptly make full written disclosure to Company, will hold in trust for the sole right and benefit of Company, and agree to assign and

        
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hereby do irrevocably assign to Company, or its designee, my entire right, title, and interest in and to any and all inventions, original works of authorship, developments, concepts, improvements, designs, discoveries, ideas, trademarks, or trade secrets, whether or not patentable or registrable under patent, copyright, or similar laws, which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of time I am in the employ of Company (including outside regular working hours), or with the use of Company’s equipment, supplies, facilities, or Company Confidential Information (collectively referred to as “Inventions”). I further acknowledge that all original works of authorship that are made by me (solely or jointly with others) within the scope of and during the period of my employment with Company and that are protectable by copyright are “works made for hire,” as that term is defined in the United States Copyright Act. I understand and agree that the decision whether or not to commercialize or market any Inventions is within Company’s sole discretion and for Company’s sole benefit, and that no royalty or other consideration will be due to me as a result of Company’s efforts to commercialize or market any such Inventions.

 B.                 Maintenance of Records and Obligations.  I agree to keep and maintain adequate, current, accurate, and authentic written records for all Inventions made by me (solely or jointly with others) during the term of my employment with Company. The records will be in the form of notes, sketches, drawings, electronic files, reports, or any other format that may be specified by Company. The records are and will be available to and shall remain the sole property of Company at all times. I agree to assist Company, or its designee, at Company’s expense, in every proper way to secure Company’s rights in the Inventions and any rights relating thereto in any and all countries, including the disclosure to Company of all my written records (if any) and other pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments, and all other instruments or documents consistent herewith that Company shall reasonably deem proper or necessary in order to apply for, register, obtain, maintain, defend, and enforce such rights, and in order to assign and convey to Company, its successors, assigns, and nominees the sole and exclusive rights, title, and interest in and to such Inventions and any rights relating thereto, and testifying in a suit or other proceeding relating to such Inventions and any rights relating thereto. I further agree that my obligations under this section shall continue after the termination of my employment with Company. If Company is unable because of my mental or physical incapacity, or for any other reason, to secure my signature with respect to any Inventions, including to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering such Inventions, then I hereby irrevocably designate and appoint Company and its duly authorized officers and agents as my agent and attorney in fact, to act for and in my behalf and stead, to execute and file any papers and oaths, and to do all other lawfully permitted acts with respect to such Inventions with the same legal force and effect as if executed by me.

3.        Whistleblower Protections and Trade Secrets. Nothing in this Agreement prohibits me from reporting possible violations of federal law or regulation to any United States governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation (including the right to receive an award for information provided to any such governmental agencies). In accordance with 18 U.S.C. Section 1833: (i) I shall not be in breach of this Agreement and shall not be held criminally or civilly liable under any federal or state trade secret law (A) for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (B) for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (ii) if I file a lawsuit for retaliation by Company for reporting a suspected violation of law, I may disclose the trade secret to my attorney, and may use the trade secret information in the court
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proceeding, if I file any document containing the trade secret under seal, and do not disclose the trade secret, except pursuant to court order.

4.    I agree that my obligations under this Agreement shall continue in effect after termination of my employment, regardless of the reason or reasons for termination, and whether such termination is voluntary or involuntary on my part, and that Company is entitled to communicate my obligations under this Agreement to any future employer or potential employer of mine. Company may freely assign or transfer any or all of its rights or obligations hereunder.

    

Any provision of this Agreement which refers to the words “include,” “includes,” or “including” shall be deemed to be followed by the words “without limitation.”

Accepted and agreed:

Print Name:

David Leavy
                
Signature:

/s/ David Leavy

Date: August 26, 2022

    
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EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a - 14(a) AND RULE 15d - 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David M. Zaslav, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Warner Bros. Discovery, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 3, 2022 By:/s/ David M. Zaslav
David M. Zaslav
President and Chief Executive Officer

EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a - 14(a) AND RULE 15d - 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gunnar Wiedenfels, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Warner Bros. Discovery, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 

 
Date: November 3, 2022By:/s/ Gunnar Wiedenfels
Gunnar Wiedenfels
Chief Financial Officer

EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Warner Bros. Discovery, Inc. (“Warner Bros. Discovery”), on Form 10-Q for the quarter ended September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David M. Zaslav, President and Chief Executive Officer of Warner Bros. Discovery, certify that to my knowledge:
 
1the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Warner Bros. Discovery.
 
Date: November 3, 2022By:/s/ David M. Zaslav
David M. Zaslav
President and Chief Executive Officer

EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Warner Bros. Discovery, Inc. (“Warner Bros. Discovery”), on Form 10-Q for the quarter ended September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gunnar Wiedenfels, Chief Financial Officer of Warner Bros. Discovery, certify that to my knowledge:
 
1the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Warner Bros. Discovery.
 
Date: November 3, 2022By:/s/ Gunnar Wiedenfels
Gunnar Wiedenfels
Chief Financial Officer