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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549 
 
 
FORM 10-K 
 
 
  
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
or 
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-35872 
 
  
EVERTEC, Inc.
(Exact name of registrant as specified in its charter) 
 
  
Puerto Rico
 
66-0783622
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. employer
identification number)
 
 
 
Cupey Center Building,
Road 176, Kilometer 1.3,
 
 
San Juan,
Puerto Rico
 
00926
(Address of principal executive offices)
 
(Zip Code)

(787) 759-9999
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value per share
EVTC
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ☒
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  ☒    No  ☐
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  ☒    No  ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filer
 
☒
  
Accelerated filer
 
☐
Non-accelerated filer
 
☐
  
Smaller reporting 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  ☒
The aggregate market value of the common stock held by non-affiliates of EVERTEC, Inc. was approximately $1,451,933,072 based on the closing price of $32.70 as of the close of business on June 30, 2019.
As of February 19, 2020, there were 72,000,261 outstanding shares of common stock of EVERTEC, Inc.
Documents Incorporated by Reference:
Specifically identified portions of the Proxy Statement for the 2020 Annual Meeting of Shareholders are incorporated by reference in Part III.




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EVERTEC, Inc.
2019 Annual Report on Form 10-K
TABLE OF CONTENTS
 
 
 
 
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Forward-Looking Statements

This Annual Report on Form 10-K, or Report, contains “forward-looking statements” within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “estimates,” “will,” “should,” “plans” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements as a result of various factors. Among the factors that significantly impact our business and could impact our business in the future are:

•
our reliance on our relationship with Popular, Inc. (“Popular”) for a significant portion of our revenues pursuant to our master services agreement with them and to grow our merchant acquiring business;
•
as a regulated institution, the likelihood we will be required to obtain regulatory approval before engaging in certain new activities or businesses, whether organically or by acquisition, and our potential inability to obtain such approval on a timely basis or at all, which may make transactions more expensive or impossible to complete, or make us less attractive to potential sellers;
•
our ability to renew our client contracts on terms favorable to us, including our contract with Popular, and any significant concessions we may have to grant to Popular with respect to pricing, services or other key terms in anticipation of the negotiation of the terms of the MSA and the services we provide thereunder to Popular, both in respect of the current term and any extension of the MSA;
•
our dependence on our processing systems, technology infrastructure, security systems and fraudulent payment detection systems, as well as on our personnel and certain third parties with whom we do business, and the risks to our business if our systems are hacked or otherwise compromised;
•
our ability to develop, install and adopt new software, technology and computing systems;
•
a decreased client base due to consolidations and failures in the financial services industry;
•
the credit risk of our merchant clients, for which we may also be liable;
•
the continuing market position of the ATH network;
•
a reduction in consumer confidence, whether as a result of a global economic downturn or otherwise, which leads to a decrease in consumer spending;
•
our dependence on credit card associations, including any adverse changes in credit card association or network rules or fees;
•
changes in the regulatory environment and changes in international, legal, tax, political, administrative or economic conditions;
•
the effects of legislative initiatives or proposals, statutory changes, governmental or other applicable regulations or changes in industry requirements, including privacy and cybersecurity laws and regulations;
•
the geographical concentration of our business in Puerto Rico, including our business with the government of Puerto Rico and its instrumentalities, which are facing severe fiscal challenges;
•
additional adverse changes in the general economic conditions in Puerto Rico, whether as a result of the government’s debt crisis or otherwise, including the continued migration of Puerto Ricans to the U.S. mainland, which could negatively affect our customer base, general consumer spending, our cost of operations and our ability to hire and retain qualified employees;
•
a protracted federal government shutdown may affect our financial performance;
•
operating an international business in Latin America and the Caribbean, in jurisdictions with potential political and economic instability, political changes and civil unrest;
•
our ability to execute our geographic expansion and acquisition strategies, including challenges in successfully acquiring new businesses and integrating and growing acquired businesses;
•
our ability to protect our intellectual property rights against infringement and to defend ourselves against claims of infringement brought by third parties;
•
our ability to recruit and retain the qualified personnel necessary to operate our business;
•
our ability to comply with U.S. federal, state, local and foreign regulatory requirements;
•
evolving industry standards and adverse changes in global economic, political and other conditions;
•
adverse developments with respect to the payment card industry, including change in use of card as a payment mechanism;
•
our high level of indebtedness and restrictions contained in our debt agreements, including the senior secured credit facilities, as well as debt that could be incurred in the future;
•
our ability to prevent a cybersecurity attack or breach in our information security;
•
our ability to generate sufficient cash to service our indebtedness and to generate future profits;
•
our ability to refinance our debt;
•
the possibility that we could lose our preferential tax rate in Puerto Rico;

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•
the risk that the counterparty to our interest rate swap agreements fails to satisfy its obligations under the agreement;
•
uncertainty of the pending debt restructuring process under Title III of the Puerto Rico Oversight, Management and Economic Stability Act (“PROMESA”), as well as actions taken by the Puerto Rico government or by the PROMESA Board to address the Puerto Rico fiscal crisis;
•
uncertainty related to Hurricanes Irma and Maria as well as recent earthquakes and other natural disasters and their impact on the economies of Puerto Rico and the Caribbean;
•
the possibility of future catastrophic hurricanes and other potential natural disasters affecting Latin America and the Caribbean;
•
the nature, timing and amount of any restatement; and
•
other risks and uncertainties detailed in Part I, Item IA “Risk Factors” in this Report.

These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements should, therefore, be considered in light of various factors, including those set forth under “Item 1A. Risk Factors,” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Report. These forward-looking statements speak only as of the date of this Report, and we do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Report or to reflect the occurrence of unanticipated events.




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INDUSTRY AND MARKET DATA
This Form 10-K includes industry data that we obtained from periodic industry publications, including the September 2019 Nilson Report and the 2019 World Payments Report. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable. This Form 10-K also includes market share and industry data that were prepared primarily based on management’s knowledge of the industry and industry data. Unless otherwise noted, statements as to our market share and market position relative to our competitors are approximated and based on management estimates using the above-mentioned latest-available third-party data and our internal analysis and estimates. While we are not aware of any misstatements regarding any industry data presented herein, our estimates, in particular as they relate to market share and our general expectations, involve risks and uncertainties and are subject to change based on various factors, including those discussed under “Risk Factors,” “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K.


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Part I
Item 1. Business

Except as otherwise indicated or unless the context otherwise requires, (a) the terms “EVERTEC,” “we,” “us,” “our,” “our Company” and “the Company” refer to EVERTEC, Inc. and its subsidiaries on a consolidated basis, (b) the term “Holdings” refers to EVERTEC Intermediate Holdings, LLC, but not any of its subsidiaries and (c) the term “EVERTEC Group” refers to EVERTEC Group, LLC and its predecessor entities and their subsidiaries on a consolidated basis, including the operations of its predecessor entities prior to the Merger (as defined below). EVERTEC Inc.’s subsidiaries include Holdings, EVERTEC Group, EVERTEC Dominicana, SAS, Evertec Chile Holdings SpA (formerly known as Tecnopago SpA), Evertec Chile SpA (formerly known as EFT Group SpA), Evertec Chile Global SpA (formerly known as EFT Global Services SpA), Evertec Chile Servicios Profesionales SpA (formerly known as EFT Servicios Profesionales SpA), EFT Group S.A., Tecnopago España SL, Paytrue S.A., Caleidon, S.A., Evertec Brasil Solutions Informática Ltda. (formerly known as Paytrue Solutions Informática Ltda.), EVERTEC Panamá, S.A., EVERTEC Costa Rica, S.A. (“EVERTEC CR”), EVERTEC Guatemala, S.A., Evertec Colombia, SAS (formerly known as Processa, SAS), EVERTEC USA, LLC, EGM Ingeniería sin Fronteras, S.A.S. ("PlacetoPay") and EVERTEC México Servicios de Procesamiento, S.A. de C.V. Neither EVERTEC nor Holdings conducts any operations other than with respect to its indirect or direct ownership of EVERTEC Group.

Company Overview

EVERTEC is a leading full-service transaction processing business in Latin America and the Caribbean, providing a broad range of merchant acquiring, payment services and business process management services. According to the September 2019 Nilson Report, we are one of the largest merchant acquirers in Latin America based on total number of transactions and we believe we are the largest merchant acquirer in the Caribbean and Central America. We serve 26 countries in the region out of 11 offices, including our headquarters in Puerto Rico. We manage a system of electronic payment networks that process more than two billion transactions annually, and offer a comprehensive suite of services for core bank processing, cash processing and technology outsourcing. In addition, we own and operate the ATH network, one of the leading personal identification number (“PIN”) debit networks in Latin America. We serve a diversified customer base of leading financial institutions, merchants, corporations and government agencies with “mission-critical” technology solutions that enable them to issue, process and accept transactions securely. We believe our business is well-positioned to continue to expand across the fast-growing Latin American region.

We are differentiated, in part, by our diversified business model, which enables us to provide our varied customer base with a broad range of transaction-processing services from a single source across numerous channels and geographic markets. We believe this capability provides several competitive advantages that will enable us to continue to penetrate our existing customer base with complementary new services, win new customers, develop new sales channels and enter new markets. We believe these competitive advantages include:
 
•
Our ability to provide competitive products;
•
Our ability to provide in one package a range of services that traditionally had to be sourced from different vendors;
•
Our ability to serve customers with disparate operations in several geographies with technology solutions that enable them to manage their business as one enterprise; and
•
Our ability to capture and analyze data across the transaction processing value chain and use that data to provide value-added services that are differentiated from those offered by pure-play vendors that serve only one portion of the transaction processing value chain (such as only merchant acquiring or payment services).

Our broad suite of services spans the entire transaction processing value chain and includes a range of front-end customer-facing solutions such as the electronic capture and authorization of transactions at the point-of-sale, as well as back-end support services such as the clearing and settlement of transactions and account reconciliation for card issuers. These include: (i) merchant acquiring services, which enable point of sales (“POS”) and e-commerce merchants to accept and process electronic methods of payment such as debit, credit, prepaid and electronic benefit transfer (“EBT”) cards; (ii) payment processing services, which enable financial institutions and other issuers to manage, support and facilitate the processing for credit, debit, prepaid, automated teller machines (“ATM”) and EBT card programs; and (iii) business process management solutions, which provide “mission-critical” technology solutions such as core bank processing, as well as IT outsourcing and cash management services to financial institutions, corporations and governments. We provide these services through scalable, end-to-end technology platforms that we manage and operate in-house and that generate significant operating efficiencies that enable us to maximize profitability.

We sell and distribute our services primarily through a proprietary direct sales force with established customer relationships. We continue to pursue joint ventures and merchant acquiring alliances. We benefit from an attractive business model, the

4

hallmarks of which are recurring revenue, scalability, significant operating margins and moderate capital expenditure requirements. Our revenue is predominantly recurring in nature because of the mission-critical and embedded nature of the services we provide. In addition, we generally negotiate multi-year contracts with our customers. We believe our business model should enable us to continue to grow our business organically in the primary markets we serve without significant incremental capital expenditures.

Corporate Background

EVERTEC, Inc. ("EVERTEC", formerly known as Carib Latam Holdings, Inc.) is a Puerto Rico corporation organized in April 2012. Our main operating subsidiary, EVERTEC Group, LLC (formerly known as EVERTEC, LLC and EVERTEC, Inc., hereinafter “EVERTEC Group”), was organized in Puerto Rico in 1988. EVERTEC Group was formerly a wholly-owned subsidiary of Popular. On September 30, 2010, pursuant to an Agreement and Plan of Merger (as amended, the “Merger Agreement”), AP Carib Holdings, Ltd. (“Apollo”), an affiliate of Apollo Global Management LLC, acquired a 51% indirect ownership interest in EVERTEC Group as part of a merger (the “Merger”) and EVERTEC Group became a wholly-owned subsidiary of Holdings.

On April 17, 2012, EVERTEC Group was converted from a Puerto Rico corporation to a Puerto Rico limited liability company (the “Conversion”) for the purpose of improving its consolidated tax efficiency by taking advantage of changes to the Puerto Rico Internal Revenue Code, as amended (the “PR Code”), that permit limited liability companies to be treated as partnerships that are pass-through entities for Puerto Rico tax purposes. Concurrent with the Conversion, Holdings, which is our direct subsidiary, was also converted from a Puerto Rico corporation to a Puerto Rico limited liability company. Prior to these conversions, EVERTEC, Inc. was formed in order to act as the new parent company of Holdings and its subsidiaries, including EVERTEC Group. The transactions described above in this paragraph are collectively referred to as the “Reorganization.”

History

We have over a 25 year operating history in the transaction processing industry. Prior to the Merger, EVERTEC Group was 100% owned by Popular, the largest financial institution in the Caribbean, and operated substantially as an independent entity within Popular. As mentioned above, following the Merger, Apollo owned a 51% interest in us and shortly thereafter, we began the transition to a separate, stand-alone entity. As a stand-alone company, we have made substantial investments in our technology and infrastructure, recruited various senior executives with significant transaction processing experience in Latin America, enhanced our profitability through targeted productivity and cost savings actions and broadened our footprint beyond the markets historically served.

We continue to benefit from our relationship with Popular, our largest customer. Popular acts as one of our largest merchant referral partners and sponsors us with the card associations (such as Visa or MasterCard), enabling merchants to accept these card associations’ credit card transactions. Popular also provides merchant sponsorship as one of the participants of the ATH network, enabling merchants to connect to the ATH network and accept ATH debit card transactions. We provide a number of critical products and services to Popular, which are governed by a 15-year Amended and Restated Master Services Agreement (the “Master Services Agreement”) that runs through 2025.

On April 17, 2013, the Company completed its initial public offering.

Principal Stockholder

Popular, Inc. (NASDAQ: BPOP), whose principal banking subsidiary’s history dates back to 1893, is the No. 1 bank holding company by both assets and deposits based in Puerto Rico, and, as of September 30, 2019, ranks 47 by assets among U.S. bank holding companies. As of December 31, 2019, Popular owned approximately 16.2% of our common stock.

Industry Trends

Shift to Electronic Payments

The ongoing migration from cash, check and other paper methods of payment to electronic payments continues to benefit the transaction processing industry globally. This migration is driven by factors including customer convenience, marketing efforts by financial institutions, card issuer rewards and the development of new forms of payment. We believe that the penetration of electronic payments in the markets where we principally operate is significantly lower relative to more mature U.S. and European markets and that this ongoing shift will continue to generate important growth opportunities for our business. In addition, in an effort to better capture taxes over generated revenue, legislation in Puerto Rico has required most licensed

5

professionals to provide an electronic payment option to their customers, and that all consumer businesses that generate revenues in excess of $50,000 provide an electronic payment option, with the exception of certain businesses, further expanding the need for an electronic payment network in Puerto Rico.

Fast Growing Latin American and Caribbean Financial Services and Payments Markets

Currently, the penetration of banking products, including electronic payments, in the Latin American and Caribbean region is lower relative to the mature U.S. and European markets. As these markets continue to grow, and financial inclusion increases, the emergence of a larger and more sophisticated consumer base will influence and drive an increase in card (e.g., debit, credit, prepayment, and EBT) and electronic payments usage. According to the 2019 World Payments Report, non-cash payment volumes in Latin America increased to 43.1 billion in 2017 from 39.8 billion in 2016, representing a growth rate of 8%. A growing base of young and Internet-savvy customers and e-commerce growth are defining the Latin America payments landscape with credit card penetration, digital wallets, and other value-added offerings. Debit card transactions in Latin America grew 14% in 2017. Latin American non-cash markets continued to be poised for growth despite recovering economies, as non-cash transactions are expected to grow 6% through 2022. The region's FinTech sector is driving change via new financial inclusion initiatives and mobile payment platforms that are becoming popular alternatives to cash payments. In North America, non-cash payments grew by 5.1% in 2017, are projected to grow 4.7% through 2022 and North America is expected to cede the position as the region with the largest number of non-cash transactions to emerging Asia by 2020. We continue to believe that the attractive characteristics of our markets and our position across multiple services and sectors will continue to drive growth and profitability in our businesses.

Ongoing Technology Outsourcing Trends

Financial institutions globally are facing significant challenges including the entrance of non-traditional competitors, the compression of margins on traditional products, significant channel proliferation and increasing regulation that could potentially curb profitability. Many of these institutions have traditionally fulfilled their IT needs through legacy computer systems, operated by the institution itself. Legacy systems are generally highly proprietary, inflexible and costly to operate and maintain and we believe the trend to outsource in-house technology systems and processes by financial institutions will continue.

Industry Innovation

The electronic payments industry experiences ongoing technology innovation. Emerging payment technologies such as prepaid cards, contactless payments, payroll cards, mobile commerce, mobile “wallets” and innovative POS devices continue to drive the shift away from cash, check and other paper methods of payment. The increasing demand for new and flexible payment options catering to a wider range of consumer segments is driving growth in the electronic payment processing sector.

Our Competitive Strengths

Market Leadership in Latin America and the Caribbean

We believe we have an inherent competitive advantage relative to U.S. competitors based on our first-hand knowledge of the Latin American and Caribbean markets and technological needs, language and culture. We have built leadership positions across the transaction processing value chain in the key geographic markets that we serve, which we believe will enable us to continue to penetrate our core markets and provide advantages to enter new markets. According to the September 2019 Nilson Report, we are one of the largest merchant acquirers in Latin America based on total number of transactions and we believe we are the largest merchant acquirer in the Caribbean and Central America. We own and operate the ATH network, one of the leading ATM and PIN debit networks in Latin America. EVERTEC processed approximately 2.4 billion transactions in 2019. According to management's estimates, ATH branded products are the most frequently used electronic method of payment in Puerto Rico. We offer compelling value to our merchants, as noted in the most recent report published by the Federal Reserve Board regarding debit network fees, which ranked the ATH network as one of the most economical networks for merchants. Given our scale and customer base of top tier financial institutions and government entities, we believe we are the leading card issuer processor and core bank processor in the Caribbean and the only non-bank provider of cash processing services to the U.S. Federal Reserve in the Caribbean. We believe our competitive position and brand recognition increases card acceptance, driving usage of our proprietary network, and presents opportunities for future strategic relationships.


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Broad and Deep Customer Relationships and Recurring Revenue Business Model

We have built a strong and long-standing portfolio of financial institution, merchant, corporate and government customers across Latin America and the Caribbean, which provides us with a reliable, recurring revenue base and powerful references that have helped us expand into new channels and geographic markets. Our Payment Services - Puerto Rico & Caribbean, Payment Services - Latin America and Merchant Acquiring segments, as well as certain business lines representing the majority of our business solutions segment, generate recurring revenues that collectively accounted for approximately 94% of our total revenues in 2019. We receive recurring revenues from services based on our customers’ on-going daily commercial activity such as processing loans, hosting accounts and information on our servers, and processing everyday payments at grocery stores, gas stations and similar establishments. We generally provide these services under one to five year contracts, often with automatic renewals. We also provide a few project-based services that generate non-recurring revenues in our business solutions segment and our Payment Services - Latin America segment, such as IT consulting for a specific project or integration or one-time license sales. Additionally, we entered into a 15-year Master Services Agreement with Popular on September 30, 2010. We provide a number of critical payment services and business solutions products and services to Popular and benefit from the bank’s distribution network and continued support. Through our long-standing and diverse customer relationships, we are able to gain valuable insight into trends in the marketplace that allows us to identify new market opportunities. In addition, we believe the recurring nature of our business model provides us with revenue and earnings stability.

Highly Scalable, End-to-End Technology Platform

Our diversified business model is supported by our scalable, end-to-end technology platforms that allow us to provide a broad range of transaction processing services and develop and deploy technology solutions to our customers at low incremental costs and increasing operating efficiencies. We have spent over $214 million over the last five years on technology investments, including POS, to continue to build the capacity and functionality of our platforms and we have been able to achieve attractive economies of scale with flexible product development capabilities. We believe that our platforms will allow us to provide differentiated services to our customers and facilitate further expansion into new sales channels and geographic markets.

Experienced Management Team with a Strong Track Record of Execution

We have grown our revenue organically by introducing new products and services and expanding our geographic footprint throughout Latin America. We have a proven track record of creating value from operational and technology improvements and capitalizing on cross-selling opportunities. We have combined new leadership at EVERTEC, bringing many years of industry experience, with long-standing leadership at the operating business level. Collectively, our management team benefits from an average of over 20 years of industry experience and we believe they are well positioned to continue to drive growth across business lines and regions.

Our Growth Strategy

We intend to grow our business by continuing to execute on the following business strategies:

Continue Cross-Sales to Existing Customers

We seek to grow revenue by continuing to sell additional products and services to our existing merchant, financial institution, corporate and government customers. We intend to broaden and deepen our customer relationships by leveraging our full suite of end-to-end technology solutions. For example, we believe that there is significant opportunity to cross-sell our card issuing and card acquiring platforms and services, network services, and ATM point-of-sale processing, as well as our risk management products to our over 180 existing financial institution customers, particularly in markets outside of Puerto Rico. We will also seek to continue to cross-sell value added services into our existing merchant base.

Leverage Our Franchise to Attract New Customers in the Markets We Currently Serve

We intend to attract new customers by leveraging our comprehensive product and services offering, the strength of our brand and our leading end-to-end technology platform. Furthermore, we believe we are well positioned to develop new products and services and to take advantage of our access to and position in markets we currently serve. For example, in markets we serve outside of Puerto Rico, we believe there is a good opportunity to penetrate small to medium and some larger financial institutions with our products and services.


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Expand in the Latin American Region

We believe there is substantial opportunity to expand our businesses in the Latin American region. We believe that we have a competitive advantage relative to U.S. competitors based on our first-hand knowledge of the Latin American and Caribbean markets and their technological needs, our physical presence in the region, language and culture. We believe significant growth opportunities exist in a number of large markets such as Colombia, México, and Chile, among others. We also believe that there is an opportunity to provide our services to existing financial institution customers in other regions where they operate. Additionally, we continually evaluate our strategic plans for geographic expansion, which can be achieved through strategic acquisitions, joint ventures, partnerships, or alliances. For a description of risks associated with obtaining regulatory approvals and other risks associated with strategic transactions, see “Item 1A. Risk Factors—Risks Related to Our Business—Our expansion and selective acquisition strategy exposes us to risks, including the risk that we may not be able to successfully integrate acquired businesses.”

Develop New Products and Services

Our experience with our customers provides us with insight into their needs and enables us to continuously develop new transaction processing services. We plan to continue growing our merchant, financial institution, corporate and government customer base by developing and offering additional value-added products and services to cross-sell along with our core offerings. We intend to continue to focus on these and other new product opportunities in order to take advantage of our leadership position in the transaction processing industry in the Latin American and Caribbean region.

Our Business

We offer our customers end-to-end products and solutions across the transaction processing value chain from a single source across numerous channels and geographic markets, as further described below.

Merchant Acquiring

According to the September 2019 Nilson Report, we are one of the largest merchant acquirers in Latin America based on total number of transactions and we believe we are the largest merchant acquirer in the Caribbean and Central America. Our merchant acquiring business provides services to merchants that allow them to accept electronic methods of payment such as debit, credit, prepaid and EBT cards carrying the ATH, Visa, MasterCard, Discover and American Express brands. Our full suite of merchant acquiring services includes, but is not limited to, the underwriting of each merchant’s contract, the deployment and rental of POS devices and other equipment necessary to capture merchant transactions, the processing of transactions at the point-of-sale, the settlement of funds with the participating financial institution, detailed sales reports and customer support. In 2019, our merchant acquiring business processed over 440 million transactions.

Payment Services

We believe we are the largest card processor and card network service provider in the Caribbean. We provide a diversified suite of payment processing products and services to blue chip regional and global corporate customers, government agencies, and financial institutions across Latin America and the Caribbean. These services provide the infrastructure technology necessary to facilitate the processing and routing of payments across the transaction processing value chain.

At the point-of-sale, we sell transaction processing technology solutions, similar to the services in our merchant acquiring business, to other merchant acquirers to enable them to service their own merchant customers. We also offer terminal driving solutions to merchants, merchant acquirers (including our merchant acquiring business) and financial institutions, which provide the technology to securely operate, manage and monitor POS terminals and ATMs. We also rent POS devices to financial institution customers who seek to deploy them across their own businesses.

To connect the POS terminals to card issuers, we own and operate the ATH network, one of the leading ATM and PIN debit networks in Latin America. The ATH network connects the merchant or merchant acquirer to the card issuer and enables transactions to be routed or “switched” across the transaction processing value chain. The ATH network offers the technology, communications standards, rules and procedures, security and encryption, funds settlement and common branding that allow consumers, merchants, merchant acquirers, ATMs, card issuer processors and card issuers to conduct commerce seamlessly, across a variety of channels, similar to the services provided by Visa and MasterCard. The ATH network and payment processing businesses processed approximately 2.0 billion transactions in 2019.


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To enable financial institutions, governments and other businesses to issue and operate a range of payment products and services, we offer an array of card processing and other payment technology services, such as Internet and mobile banking software services, bill payment systems and EBT solutions. Financial institutions and certain retailers outsource to us certain card processing services such as card issuance, processing card applications, cardholder account maintenance, transaction authorization and posting, high volume payment processing fraud and risk management services, and settlement. Our payment products include electronic check processing, automated clearing house (“ACH”), lockbox, online, interactive voice response and web-based payments through personalized websites, among others.

We have been the main provider of EBT services to the Puerto Rican government since 1998. Our EBT application allows certain agencies to deliver government benefits to participants through a magnetic card system and serves approximately 740,000 active participants.

Business Solutions

We provide our financial institutions, corporate and government customers with a wide suite of business process management solutions including specifically core bank processing, network hosting and management, IT consulting, business process outsourcing, item and cash processing, and fulfillment. In addition, we believe we are the only non-bank provider of cash processing services to the U.S. Federal Reserve in the Caribbean.

Competition

Competitive factors impacting the success of our services include the quality of the technology-based application or service, application features and functions, ease of delivery and integration, ability of the provider to maintain, enhance and support the applications or services, and price. We believe that we compete well in each of these categories. In addition, we believe that our relationship with Popular, scale and expertise, and financial institution industry expertise, combined with our ability to offer multiple applications, services and integrated solutions to individual customers, enhances our competitiveness against companies with more limited offerings and helps us compete with large global competitors with similar assets to ours.

In merchant acquiring, we compete with several other service providers and financial institutions, including Fidelity National Information Services, Inc., Fiserv, Inc., Global Payments, Inc., Elavon, Inc., EVO Payments, Inc., independent sales organizations and some local banks. Also, the card associations and payment networks are increasingly offering products and services that compete with ours. The main competitive factors are price, brand awareness, strength of the relationship with financial institutions, system functionality, integration service capabilities and innovation. Our business is also impacted by the expansion of new payments methods and devices, card association business model expansion, and bank consolidation.

In payment services, we compete with several other third party card processors, debit networks, and financial technology start-ups, including Tecnocom Telecomunicaciones y Energía, S.A., Fidelity National Information Services, Inc., Fiserv, Inc., Total System Services, Inc., MasterCard, Visa, American Express, Discover and Global Payments, Inc. Also, card associations and payment networks are increasingly offering products and services that compete with our products and services. The main competitive factors are price, system performance and reliability, system functionality, security, service capabilities and disaster recovery and business continuity capabilities.

In business solutions, our main competition includes internal technology departments within financial institutions, retailers, data processing or software development departments of large companies, large technology and consulting companies, and/or financial technology start-ups, such as Fidelity National Information Services, Inc. and Fiserv, Inc. The main competitive factors are price, system performance and reliability, system functionality, security, service capabilities, and disaster recovery and business continuity capabilities.

Intellectual Property

We own numerous registrations for several trademarks in different jurisdictions and own or have licenses to use certain software and technology, which are critical to our business and future success. For example, we own the ATH and EVERTEC trademarks in several jurisdictions, which are associated by the public, financial institutions and merchants with high quality and reliable electronic commerce, payments, and debit network solutions and services. Such goodwill allows us to be competitive, retain our customers and expand our business. Further, we also use a combination of (i) proprietary software, and (ii) duly licensed third party software to operate our business and deliver secure and reliable products and services to our customers. The licensed software is subject to terms and conditions that we considered within the industry standards. Most are perpetual licenses and the rest are term licenses with renewable terms. In addition, we monitor these license agreements and maintain close contact with our suppliers to ensure their continuity of service.

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We seek to protect our intellectual property rights by securing appropriate statutory intellectual property protection in the relevant jurisdictions. We also protect proprietary know-how and trade secrets through company confidentiality policies, licenses, programs and contractual agreements.

Employees

As of December 31, 2019, we had approximately 2,300 employees across 11 countries in the United States, Latin America and the Caribbean. In Brazil, we have two unionized employees covered by the terms of industry-specific collective agreements. None of our other employees are otherwise represented by any labor organization. We consider our relationships with our employees to be good. We have not experienced any work stoppages in connection with employee matters.

Government Regulation and Payment Network Rules

Federal Reserve Regulations

Popular is a bank holding company that has elected to be treated as a financial holding company under the provisions of the Gramm-Leach-Bliley Act of 1999. To the extent that we are deemed to be a “subsidiary” of Popular for purposes of the Bank Holding Company (“BHC”) Act, we will be subject to regulation and oversight by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) and our activities will be subject to several related significant restrictions, the more significant of which are discussed below.

Transactions with Affiliates

To the extent that we are deemed to be an affiliate of Popular for purpose of the affiliate transaction rules found in Section 23A and 23B of the Federal Reserve Act and Regulation W of the Federal Reserve Board, we will be subject to various restrictions on our ability to borrow from, and engage in certain other transactions with Popular’s bank subsidiaries, Banco Popular and Banco Popular North America (“BPNA”). In general, these rules require that any “covered transaction” that we enter into with Banco Popular or BPNA (or any of their respective operating subsidiaries), as the case may be, must be secured by designated amounts of specified collateral and must be limited to 10% of Banco Popular’s or BPNA’s, as the case may be, capital stock and surplus. In addition, all “covered transactions” between Banco Popular or BPNA, on the one hand, and Popular and all of its subsidiaries and affiliates on the other hand, must be limited to 20% of Banco Popular’s or BPNA’s, as the case may be, capital stock and surplus. “Covered transactions” are defined by statute to include a loan or extension of credit, as well as a purchase of securities issued by an affiliate, a purchase of assets (unless otherwise exempted by the Federal Reserve Board) from the affiliate, the acceptance of securities issued by the affiliate as collateral for a loan and the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate.

In addition, Section 23B and Regulation W require that to the extent that we are deemed an affiliate of Banco Popular or BPNA, all transactions between us and either Banco Popular or BPNA be on terms and conditions, including credit standards, that are substantially the same or at least as favorable to Banco Popular or BPNA, as the case may be, as those prevailing at the time for comparable transactions involving other non-affiliated companies or, in the absence of comparable transactions, on terms and conditions, including credit standards, that in good faith would be offered by Banco Popular or BPNA to, or would apply to, non-affiliated companies.

Permissible Activities

To the extent that we are deemed to be controlled by Popular for bank regulatory purposes, we may conduct only those activities that are authorized for a bank holding company or a financial holding company under the BHC Act, the Federal Reserve Board’s Regulation K and other relevant U.S. federal banking laws. These activities generally include activities that are related to banking, financial in nature or incidental to financial activities. In addition, restrictions placed on Popular as a result of supervisory or enforcement actions may restrict us or our activities in certain circumstances, even if these actions are unrelated to our conduct or business. To the extent that we are deemed to be a foreign subsidiary of a bank holding company under the Federal Reserve Board’s regulations, we will rely on the authority granted under the Federal Reserve Board’s Regulation K to conduct our data processing, management consulting and related activities outside the United States. The Federal Reserve Board’s Regulation K generally limits activities of a bank holding company outside the United States that are not banking or financial in nature, specifically permitted under Regulation K to foreign subsidiaries or necessary to carry on such activities that are not otherwise permissible for a foreign subsidiary under the banking regulations. We continue to engage in certain activities outside the scope of such permissible activities pursuant to authority under the Federal Reserve Board’s Regulation K, which allows a bank holding company to retain, in the context of an acquisition of a going concern, such

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otherwise impermissible activities if they account for not more than 5% of either the consolidated assets or consolidated revenues of the acquired organization.

New lines of business, other new activities, divestitures or acquisitions that we may wish to commence in the future may not be permissible for us under the BHC Act, the Federal Reserve Board’s Regulation K or other applicable U.S. federal banking laws. Further, as a result of being subject to regulation and supervision by the Federal Reserve Board, we may be required to obtain the approval of the Federal Reserve Board before engaging in certain new activities or businesses, whether organically or by acquisition, unless such activities are considered financial in nature. If we are unable to obtain any such approval on a timely basis, are delayed in receiving approval, are approved subject to regulatory conditions or do not receive approval, this may make transactions more expensive or may make us less attractive to potential sellers.

Examinations

As a technology service provider to financial institutions, we are also subject to regulatory oversight and examination by the Federal Financial Institutions Examination Council (the “FFIEC”), an interagency body of federal financial regulators that includes the Federal Reserve Board. The office of the Commissioner of Financial Institutions of Puerto Rico also participates in such examinations by the FFIEC. In addition, independent auditors annually review several of our operations to provide reports on internal controls for our clients’ auditors and regulators.

Regulatory Reform and Other Legislative Initiatives

The payment card industry has come under increased scrutiny from lawmakers and regulators. The Dodd-Frank Wall Street Reform and Protection Act (the “Dodd-Frank Act”) set forth significant structural and other changes to the regulation of the financial services industry, including the establishment of the Consumer Financial Protection Bureau (the “CFPB”). The CFPB has broad supervisory, enforcement and rulemaking authority over consumer financial products and services (including many offered by us and by our clients) and certain bank and non-bank providers of such products and services. In addition, Section 1075 of the Dodd-Frank Act (commonly referred to as the “Durbin Amendment”) imposed new restrictions on card networks and debit card issuers. More specifically, the Durbin Amendment provides that the interchange transaction fees that a card issuer or payment network may receive or charge for an electronic debit transaction must be “reasonable and proportional” to the cost incurred by the card issuer in authorizing, clearing and settling the transaction.

The Federal Reserve’s regulations (a) limit debit transaction interchange fees to $.21 + (5 bps times the value of the transactions) + $.01 (as a fraud adjustment for issuers that have in place policies and measures to address fraud); (b) require that issuers enable at least two unaffiliated payment card networks on their debit cards without regard to authentication method; and (c) prohibit card issuers and payment card networks from entering into exclusivity arrangements for debit card processing and restrict card issuers and payment networks from inhibiting the ability of merchants to direct the routing of debit card transactions over networks of their choice. The Dodd-Frank Act also allows merchants to set minimum dollar amounts (currently, not to exceed $10) for the acceptance of a credit card and provide discounts or incentives to entice consumers to pay with various payment methods, such as cash, checks, debit cards or credit cards, as the merchant prefers.

The CFPB is responsible for many of the regulatory functions with respect to consumer financial products and services. In addition to rulemaking authority over several enumerated federal consumer financial protection laws, the CFPB is authorized to issue rules prohibiting unfair, deceptive or abusive acts or practices in connection with the offering of a consumer financial product or service or any transaction with a consumer for such product or service. The CFPB also has authority to examine supervised entities for compliance with, and to enforce violations of, consumer financial protection laws.

To the extent that we are deemed an affiliate of Banco Popular-an insured depository institution with greater than $10 billion in total consolidated assets-and as a service provider to other insured depository institutions with $10 billion or more in total consolidated assets, as well as larger participants in markets for consumer financial products and services, as determined by the CFPB, we are subject to the supervision, enforcement and rulemaking authority of the CFPB. CFPB rules, examinations and enforcement actions may require us to adjust our activities and may increase our compliance costs.

From time to time, various legislative initiatives are introduced in Congress and state legislatures, and changes in regulations or agency policies, or in the interpretation of such regulations and policies, are proposed by regulatory agencies. Such initiatives may include proposals to modify the powers of bank holding companies and their affiliates. Such legislation or changes in regulation could affect our operating environment in substantial and unpredictable ways. If adopted, such legislation or changes in regulation could increase the cost of doing business or limit permissible activities. We cannot predict whether any such legislation will be enacted, and, if enacted, the effect that it, or any implementing regulations or related policies and guidance, would have on our financial condition or results of operations.

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Other Government Regulations

Our services are also subject to a broad range of complex federal, state, Puerto Rico and foreign regulation, including privacy laws, international trade regulations, the Bank Secrecy Act and other anti-money laundering laws, anti-trust and competition laws, the U.S. Internal Revenue Code, the PR Code, the Employee Retirement Income Security Act, the Health Insurance Portability and Accountability Act and other Puerto Rico laws and regulations. Failure of our services to comply with applicable laws and regulations could result in restrictions on our ability to provide such services, as well as the imposition of civil fines and/or criminal penalties. The principal areas of regulation (in addition to oversight by the Federal Reserve Board) that impact our business are described below.

Privacy and Information Security Regulations

We and our financial institution clients are required to comply with various U.S. state, federal and foreign privacy laws and regulations, including those imposed under the Gramm-Leach-Bliley Act of 1999 which applies directly to a broad range of financial institutions and to companies that provide services to financial institutions. These laws and regulations place restrictions on the collection, processing, storage, use and disclosure of certain personal information, require disclosure to individuals of detailed privacy practices and provide them with certain rights to prevent the use and disclosure of protected information. The regulations, however, permit financial institutions to share information with non-affiliated parties who perform services for the financial institutions. These laws also impose requirements for safeguarding personal information through the issuance of data security standards or guidelines. Certain state laws impose similar privacy obligations, as well as, in certain circumstances, obligations to provide notification to affected individuals, states officers and consumer reporting agencies, as well as businesses and governmental agencies that own data, of security breaches of computer databases that contain personal information. In addition, U.S. state and federal government agencies have been contemplating or developing new initiatives to safeguard privacy and enhance data and information security. Some foreign privacy laws are stricter than those applicable under U.S. federal, state or Puerto Rican law. As a provider of services to financial institutions, we are required to comply with applicable privacy and cybersecurity regulations and are bound by the same limitations on disclosure of the information received from our customers as apply to the financial institutions themselves. See “Item 1A. Risk Factors-Risks Related to Our Business-We are subject to security breaches or other confidential data theft from our systems, which can adversely affect our reputation and business."
 
Anti-Money Laundering and Office of Foreign Assets Control Regulation

Since we provide data processing services to both foreign and domestic financial institutions, we are required to comply with certain anti-money laundering and terrorist financing laws and economic sanctions imposed on designated foreign countries, nationals and others. Specifically, we must adhere to the requirements of the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001 (collectively, the “BSA”) regarding processing and facilitation of financial transactions, as well as other state, local and foreign laws relating to money laundering. Furthermore, as a data processing company that provides services to foreign parties and facilitates financial transactions between foreign parties, we are obligated to screen transactions for compliance with the sanctions programs administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”). These regulations prohibit us from entering into or facilitating a transaction to or from or dealings with specified countries, their governments and, in certain circumstances, their nationals and others, such as narcotics traffickers and terrorists or terrorist organizations designated by the U.S. Government under one or more sanctions regimes.

A major focus of governmental policy in recent years has been aimed at combating money laundering and terrorist financing. Preventing and detecting money laundering and other related suspicious activities at their earliest stages warrants careful monitoring. The BSA, along with a number of other anti-money laundering laws, imposes various reporting and record-keeping requirements concerning currency and other types of monetary instruments. Similar anti-money laundering, counter-terrorist financing and proceeds of crime laws apply to movements of currency and payments through electronic transactions and to dealings with persons specified on lists maintained by organizations similar to OFAC in several other countries and which may impose specific data retention obligations or prohibitions on intermediaries in the payment process. These laws and regulations impose obligations to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their customers. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for us. We may also be subject to enforcement actions and as a result may incur losses and liabilities that may impact our business.

Federal Trade Commission Act and Other Laws Impacting our Customers' Business


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All persons engaged in commerce, including, but not limited to, us and our merchant and financial institution customers are subject to Section 5 of the Federal Trade Commission Act prohibiting Unfair or Deceptive Acts or Practices (“UDAP”). In addition, there are other laws, rules and/or regulations, including the Telemarketing Sales Act, that may directly impact the activities of our merchant customers and in some cases may subject us, as the merchant's payment processor, to investigations, fees, fines and disgorgement of funds in the event we are deemed to have aided and abetted or otherwise provided the means and instrumentalities to facilitate the illegal activities of the merchant through our payment processing services. Federal and state regulatory enforcement agencies including the Federal Trade Commission, or FTC, and the states' attorneys general have authority to take action against nonbanks that engage in UDAP or violate other laws, rules and regulations. To the extent we process payments for a merchant that may be in violation of these laws, rules and regulations, we may be subject to enforcement actions and as a result may incur losses and liabilities that may impact our business.

Anti-trust and Competition Laws

We are required to comply with various federal, local and foreign competition and anti-trust laws, including the Sherman Act, Clayton Act, Hart-Scott-Rodino Antitrust Improvements Act, Robinson-Patman Act, Federal Trade Commission Act and Puerto Rico Anti-Monopoly Act. In general, competition laws are designed to protect businesses and consumers from anti-competitive behavior. Competition and anti-trust law investigations can be lengthy, and violations are subject to civil and/or criminal fines and other sanctions for both corporations and individuals that participate in the prohibited conduct. Class action civil anti-trust lawsuits can result in significant judgments, including in some cases, payment of treble damages and/or attorneys' fees to the successful plaintiff. See “Item 1A. Risk Factors-Risks Related to Our Business-Failure to comply with U.S. state and federal antitrust requirements, or the Puerto Rico Anti-Monopoly Act, and government investigations into our compliance, could adversely affect our business.”

Foreign Corrupt Practices Act (“FCPA”), Export Administration and Other

As a data processing company that services both foreign and domestic clients, our business activities in foreign countries, and in particular our transactions with foreign governmental entities, subject us to the anti-bribery provisions of the FCPA, as well as the laws and regulations of the foreign jurisdiction where we operate. Pursuant to applicable anti-bribery laws, our transactions with foreign government officials and political candidates are subject to certain limitations. Finally, in the course of business with foreign clients and subsidiaries, we export certain software and hardware that is regulated by the Export Administration Regulations from the United States to the foreign parties. Together, these regulations place restrictions on who we can transact with, what transactions may be facilitated, how we may operate in foreign jurisdictions and what we may export to foreign countries.

The preceding list of laws and regulations is not exhaustive, and the regulatory framework governing our operations changes continuously. The enactment of new laws and regulations may increasingly affect directly and indirectly the operation of our business, which could result in substantial regulatory compliance costs, litigation expense, loss of revenue, decreased profitability and/or adverse publicity.

 Association and Network Rules

Several of our subsidiaries are registered with or certified by card associations and payment networks, including the ATH network, MasterCard, Visa, American Express, Discover and numerous debit and EBT networks as members or as service providers for member institutions in connection with the services we provide to our customers. As such, we are subject to applicable card association and network rules, which could subject us to a variety of fines or penalties that may be levied by the card associations or networks for certain acts and/or omissions by us, our acquirer customers, processing customers and/or merchants. For example, “EMV” is a credit and debit card authentication methodology that the card associations are mandating to processors, issuers and acquirers in the payment industry. Compliance deadlines for EMV mandates vary by country and by payment network. We have invested significant resources and man-hours to develop and implement this methodology in all our payment related platforms. However, we are not certain if or when our financial institution customers will use or accept the methodology and the time it will take for this technology to be rolled-out to all customer ATM and POS devices connected to our platforms or adopted by our card issuing clients. Non-compliance with EMV mandates could result in lost business or financial losses from fraud or fines from network operators. We are also subject to network operating rules promulgated by the National Automated Clearing House Association relating to payment transactions processed by us using the Automated Clearing House Network and to various government laws regarding such operations, including laws pertaining to EBT.
 

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Geographic Concentration

Our revenue composition by geographical area is based in Latin America and the Caribbean. Latin America includes, among others, Costa Rica, México, Guatemala, Colombia, Chile, Uruguay, Brazil and Panamá. The Caribbean primarily represents Puerto Rico, the Dominican Republic and the Virgin Islands. See Note 23 to Audited Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information related to geographic areas.

Seasonality

Our payment businesses generally experience increased activity during the traditional holiday shopping periods and around other nationally recognized holidays.

Available Information

EVERTEC’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to such reports (if applicable) filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are available free of charge, through our website, http://www.evertecinc.com, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. In addition, we make available on our website under the heading of “Corporate Information” our: (i) Code of Ethics; (ii) Code of Ethics for Service Providers; (iii) Corporate Governance Guidelines; (iv) the charters of the Audit, Compensation and Nominating and Corporate Governance committees, and also we intend to disclose any amendments to the Code of Ethics. The aforementioned reports and materials can also be obtained free of charge upon written request or telephoning to the following address or telephone number:

EVERTEC, Inc.
Cupey Center Building
Road, 176, Kilometer 1.3
San Juan, Puerto Rico 00926
(787) 759-9999
 
Our filings with the SEC are also available to the public from commercial document retrieval services and at the web site maintained by the SEC at http://www.sec.gov.

Item 1A. Risk Factors

Readers should carefully consider, in connection with other information disclosed in this Annual Report on Form 10-K, the risks and uncertainties described below. The following discussion sets forth risks that we believe are material to our stockholders and prospective stockholders. The occurrence of any of the following risks might cause our stockholders to lose all or a part of their investment in our Company. We cannot assure you that the risk factors described below or elsewhere in this document are a complete set of all potential risks we may face; additional risks and uncertainties not presently known to us or not believed by us to be material may also affect our business results, financial condition, results of operations, cash flows, and the trading price of our common stock. Some statements in this report, including statements in the following risk factors section, constitute forward-looking statements. Please also refer to the section titled “Forward Looking Statements” at the beginning of this Annual Report on Form 10-K.

Risks Related to Our Business

We expect to continue to derive a significant portion of our revenue from Popular.

Our services to Popular account for a significant portion of our revenues, and we expect that our services to Popular will continue to represent a significant portion of our revenues for the foreseeable future. In 2019, products and services billed to Popular accounted for approximately 43% of our total revenues. The majority of Popular’s business is presented in the Business Solutions segment. If Popular were to terminate, fail to perform under (in whole or in part), or fail to renew the Master Services Agreement (“MSA”), which currently expires in 2025, or our other material agreements with Popular, our revenues could be materially reduced and our profitability and cash flows could also be materially reduced, all of which would have a material adverse impact on our financial condition and results of operations.

We depend, in part, on our merchant relationships and our alliance with Banco Popular, a wholly-owned subsidiary of Popular, to grow our merchant acquiring business. If we are unable to maintain these relationships and this alliance, our business may be adversely affected.

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Growth in our merchant acquiring business is derived primarily from acquiring new merchant relationships, new and enhanced product and service offerings, cross selling products and services into existing relationships, the shift of consumer spending to increased usage of electronic forms of payment, and the strength of our relationship with Banco Popular. A substantial portion of our business is generated from our Independent Sales Organization Sponsorship and Services Agreement (the “ISO Agreement”) with Banco Popular, which expires in 2025.

Banco Popular acts as a merchant referral source and provides sponsorship into the ATH, Visa, Discover and MasterCard networks for merchants, as well as card association sponsorship, clearing and settlement services. We provide transaction processing and related functions. Both we and Popular as alliance partners may provide management, sales, marketing, and other administrative services to merchants. We rely on the continuing growth of our merchant relationships, which in turn is dependent upon our alliance with Banco Popular and other distribution channels. There can be no guarantee that this growth will continue and the loss or deterioration of these relationships, whether due to the termination of the ISO Agreement or otherwise, could negatively impact our business and result in a reduction of our revenue and income.

Our MSA with Popular, our ISO Agreement with Banco Popular and our ATH Network Participation Agreement and ATH Support Agreement with Banco Popular (the “BPPR ATH Agreements”) have initial terms ending in 2025. If Popular or Banco Popular decide not to renew one or more of these agreements, or if we are unable to negotiate extensions, or if we must provide significant concessions to Popular or Banco Popular to secure extensions or otherwise, our results of operations, financial condition and trading price of our common stock may be materially adversely affected, and it could also potentially limit our ability to renegotiate our debt.

Our MSA with Popular has an initial term that ends in 2025. For 2019, we derived approximately 43% of our revenue from such contract, which makes the MSA our most significant client contract. We regularly discuss with Popular the terms of the MSA and the services we provide thereunder to Popular. We cannot be certain that we will be able to negotiate an extension to the MSA. In addition, even if we are able to negotiate an extension of the MSA, any new master services agreement may be materially different from the existing MSA. Further, Popular may require significant concessions from us with respect to pricing, services and other key terms, both in respect of the current term and any extension of the MSA, particularly as we approach 2025. Any such events may materially negatively impact our financial condition, results of operations and trading price of our common stock, as well as potentially limit our ability to renegotiate our debt.

Pursuant to our ISO Agreement with Banco Popular, Banco Popular sponsors us as an independent sales organization with respect to certain credit card associations and is required to exclusively refer to us any merchant that inquires about, requests or otherwise evidences interest in merchant and other services. If the ISO Agreement is not renewed, we will have to seek other card association sponsors, we will not benefit from Banco Popular referral of merchants and we may experience the loss of some merchants if Banco Popular itself enters the merchant acquiring business or agrees to sponsor another independent sales organization.  Any of these may negatively impact our financial condition and results of operations.

Similarly, the BPPR ATH Agreements have initial terms ending in 2025. Under such agreements, among other things, we provide Banco Popular certain ATM and POS services in connection with our ATH network; we grant a license to use the ATH logo, word mark and associated trademarks; and Banco Popular agrees to support, promote and market the ATH network and brand and to issue debit cards bearing the symbol of the ATH network. If one or both of the BPPR ATH Agreements are not extended, our ATH brand and network could be negatively impacted and our financial condition and results of operations adversely affected.

A protracted government shutdown could negatively affect our financial condition.

During any protracted federal government shutdown, the federal government may reduce or cut funding for certain welfare and disaster relief programs. Beneficiaries of certain federal programs, such as the Supplemental Nutrition Assistance Program (SNAP), obtain their benefits through electronic benefits transfer (EBT) accounts. A temporary or permanent reduction in federal welfare and relief programs could lead to a decrease in electronic benefit card volume. The effect of a protracted government shutdown now or in the future may affect our revenues, profitability and cash flows.


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If we are unable to renew client contracts on favorable terms or at all, our results of operations and financial condition may be adversely affected.

Failure to achieve favorable renewals of client contracts could negatively impact our business. Our contracts with private clients generally run for a period of one to five years, except for our Master Services Agreement with Popular. Our government contracts generally run for one year and do not include automatic renewal periods due to government procurement rules and related fiscal funding requirements. Our standard merchant contract has an initial term of up to three years, with automatic one-year renewal periods. At the end of the contract term, clients can renew or renegotiate their contracts with us, but may also consider whether to engage one of our competitors to provide products and services. If we are not successful in achieving high renewal rates and/or contract terms that are favorable to us, our results of operations and financial condition may be adversely affected.

Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under our notes and senior secured credit facilities, and, if we incur additional amounts of debt, it could exacerbate the risks associated with our substantial indebtedness.

We are highly leveraged. As of December 31, 2019, the total principal amount of our indebtedness was approximately $530.9 million. Our high degree of leverage could have a significant impact on us, including:

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increasing our vulnerability to adverse economic, industry or competitive developments;
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requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow for other purposes, including for our operations, capital expenditures and future business opportunities;
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exposing us to the risk of increases in interest rates because our borrowings are predominantly at variable rates of interest;
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making it difficult for us to satisfy our obligations with respect to our indebtedness generally, including complying with restrictive covenants and borrowing conditions, our noncompliance with which could result in an event of default under the agreements setting forth the terms such of other indebtedness;
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restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;
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limiting our ability to obtain additional debt or equity financing for working capital, capital expenditures, business development, debt service requirements, acquisitions and general corporate or other purposes; and
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limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to competitors who may be less highly leveraged and who therefore, may be able to take advantage of opportunities that our leverage prevents us from exploiting.
 
We rely on our systems, employees and certain suppliers and counterparties, and certain failures could materially adversely affect our operations.

Many of our services are based on sophisticated software, technology and computing systems, and we may encounter delays when developing new technology solutions and services. Further, the technology solutions underlying our services have occasionally contained, and may in the future contain, undetected errors or defects when first introduced or when new versions are released. In addition, we may experience difficulties in installing or integrating our technologies on platforms used by our customers.

Our businesses are dependent on our ability to reliably process, record and monitor a large number of transactions. For example, we settle funds on behalf of financial institutions, other businesses and consumers and process funds transactions from clients, card issuers, payment networks and consumers on a daily basis for a variety of transaction types. Transactions facilitated by us include debit card, credit card, electronic bill payment transactions, ACH payments, electronic benefits transfer transactions and check clearing that supports consumers, financial institutions and other businesses. These payment activities rely upon the technology infrastructure that facilitates the verification of activity with counterparties, the facilitation of the payment and, in some cases, the detection or prevention of fraudulent payments. If any of our financial, accounting, or other data processing systems or applications fail or experience other significant shortcomings or limitations, our ability to serve our clients and accordingly our results of operations could be materially adversely affected. Such failures or shortcomings could be the result of events that are wholly or partially beyond our control, which may include, for example, computer viruses, fires, electrical or telecommunications outages, natural disasters, disease pandemics, terrorist acts or other unanticipated damage to property or physical assets. Any such failure or shortcoming could also damage our reputation, require us to expend significant resources to correct the defect, and may result in liability to third parties, especially since some of our contractual agreements with financial institutions require the crediting of certain fees if our systems do not meet certain specified service levels.

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Although we have taken steps to protect against data loss and system failures, there is still risk that we may lose critical data or experience system failures. We perform the vast majority of disaster recovery operations ourselves, though we utilize select third parties for some aspects of recovery. To the extent we outsource our disaster recovery, we are at risk of the vendor’s unresponsiveness in the event of breakdowns in our systems. Furthermore, our property and business interruption insurance may not be adequate to compensate us for all losses or failures that may occur.

We are similarly dependent on our employees. Our operations could be materially adversely affected if one or more employees cause a significant operational breakdown or failure, either intentionally or as a result of human error. Suppliers and third parties with which we do business could also be sources of operational risk to us, including relating to breakdowns or failures of such parties’ own systems or employees. Any of these occurrences could diminish our ability to operate one or more of our businesses, or result in potential liability to clients, reputational damage and regulatory intervention or fines, any of which could materially adversely affect our financial condition or results of operations.

In December 2019, a strain of coronavirus surfaced in Wuhan, China and resulted in an outbreak with infections throughout China and abroad, which has affected operations and global supply chains. During the first months of 2020, we were notified of potential delays in the delivery of POS devices from suppliers whose operations have been affected by the coronavirus. At this time, the coronavirus has not caused major disruptions to our operations, nor has it affected our employees or client base. However, if the coronavirus outbreak continues to spread and becomes a global pandemic, it may affect our employees, our clients and our suppliers in ways which could materially adversely affect our financial condition or results of operations.

Laws and regulations regarding the handling of personal data and information may impede our services or result in increased costs, legal claims, or fines against us.

Our business relies on the processing of data in multiple jurisdictions and the movement of data across national borders. Legal requirements relating to the collection, storage, handling, use, disclosure, transfer, and security of personal data continues to evolve, and regulatory scrutiny in this area is increasing around the world. Significant uncertainty exists as privacy and data protection laws may differ from country to country and may create inconsistent or conflicting requirements. Our ongoing efforts to comply with privacy, cybersecurity, and data protection laws may entail expenses, may divert resources from other initiatives and projects, and could limit the services we are able to offer. Enforcement actions and investigations by regulatory authorities related to data security incidents and privacy actions or investigations could damage our reputation and impact us through increased costs or restrictions on our business, and noncompliance could result in regulatory penalties and significant legal liability.

If our amortizable intangible assets or goodwill become impaired, it may adversely affect our financial condition and operating results.

If our amortizable intangible assets or goodwill were to become impaired, we may be required to record a significant charge to earnings. Under U.S. generally accepted accounting principles (“GAAP”), definitive useful life intangibles are evaluated periodically for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.

Goodwill is tested for impairment at least annually. The goodwill impairment evaluation process requires us to make estimates and assumptions with regards to the fair value of our reporting units. Actual values may differ significantly from these estimates. Such differences could result in future impairment of goodwill that would, in turn, negatively impact our results of operations and the reporting unit where the goodwill is recorded.

Our risk management procedures may not be fully effective in identifying or helping us mitigate our risk exposure against all types of risks.

We operate in a rapidly changing industry, and we have experienced significant change in the past ten years, including our separation from Popular following the Merger, our initial public offering in April 2013 and our listing on the New York Stock Exchange (“NYSE”). Accordingly, we may not be fully effective in identifying, monitoring and managing our risks. In some cases, the information we use to perform our risk assessments may not be accurate, complete or up-to-date. In other cases, our risk assessments may depend upon information that we may not have or cannot obtain. If we are not fully effective or we are not always successful in identifying all risks to which we are or may be exposed, we could be subject to losses, penalties, litigation or regulatory actions that could harm our reputation or have a material adverse effect on our business, financial conditions and results of operations.


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We are subject to security breaches or other confidential data theft from our systems, which can adversely affect our reputation and business.

As part of our business, we electronically receive, process, store and transmit a wide range of confidential information, including sensitive customer information and personal consumer data, such as names and addresses, social security numbers, driver’s license numbers, cardholder data and payment history records. We also operate payment, cash access and electronic card systems. Attacks on information technology systems continue to grow in frequency, complexity and sophistication, a trend we expect will continue. The objectives of these attacks include, among other things, gaining unauthorized access to systems to facilitate financial fraud, disrupt operations, cause denial of service events, corrupt data, and steal non-public information. Such attacks have become a point of focus for individuals, businesses and governmental entities.

Despite the safeguards we have in place, unauthorized access to our computer systems or databases could result in the theft or publication of confidential information, the deletion or modification of records or could otherwise cause interruptions in the successful operations of our businesses. These risks are increased when we transmit information over the Internet as our visibility in the global payments industry may attract hackers to conduct attacks on our systems. Our security measures may also be breached due to the mishandling or misuse of information; for example, if such information were erroneously provided to parties who are not permitted to have the information, either by employees acting contrary to our policies or as a result of a fault in our systems.

Actual or perceived vulnerabilities or data breaches may lead to claims against us, which may require us to spend significant additional resources to remediate by addressing problems caused by breaches and further protect against security or privacy breaches. Additionally, while we maintain insurance policies specifically for cyber-attacks, our current insurance policies may not be adequate to reimburse us for losses caused by security breaches, and we may not be able to collect fully, if at all, under these insurance policies. A significant security breach, such as loss of credit card numbers and related information, could have a material adverse effect on our reputation and could result in a loss of customers throughout the years. Some of our systems have experienced past security breaches and, although they did not have a material adverse effect on our operating results or reputation, there can be no assurance of a similar result in the future. We cannot assure you that our security measures will prevent security breaches or that failure to prevent them will not have a material adverse effect on our business, results of operations, financial condition and reputation. In addition, any breaches of network or data security at our customers, partners or vendors could have similar negative effects.

The ability to adopt technology to changing industry and customer needs or trends may affect our competitiveness or demand for our products, which may adversely affect our operating results.
 
Changes in technology may limit the competitiveness of and demand for our services. Our businesses operate in industries that are subject to technological advancements, developing industry standards and changing customer needs and preferences. Also, our customers continue to adopt new technology for business and personal uses. We must anticipate and respond to these industry and customer changes in order to remain competitive within our relative markets. Our inability to respond to new competitors and technological advancements could impact all of our businesses. For example, the ability to adopt technological advancements surrounding POS technology available to merchants could have an impact on our merchant acquiring business.
 
Consolidations in the banking and financial services industry could adversely affect our revenues by eliminating existing or potential clients and making us more dependent on a more limited number of clients.

In recent years, there have been a number of mergers and consolidations in the banking and financial services industry. Mergers and consolidations of financial institutions reduce the number of our clients and potential clients, which could adversely affect our revenues. Further, if our clients fail or merge with or are acquired by other entities that are not our clients, or that use fewer of our services, they may discontinue or reduce their use of our services. It is also possible that the larger banks or financial institutions resulting from mergers or consolidations would have greater leverage to negotiate terms less favorable to us or could decide to perform in-house some or all of the services which we currently provide or could provide. Any of these developments could have a material adverse effect on our business, financial condition and results of operations.

We are subject to the credit risk that our merchants will be unable to satisfy obligations for which we may also be liable.

We are subject to the credit risk of our merchants being unable to satisfy obligations for which we also may be liable. For example, as the merchant acquirer, we are contingently liable for transactions originally acquired by us that are disputed by the cardholder and charged back to the merchants. For certain merchants, if we are unable to collect amounts paid to cardholders in the form of refunds or chargebacks from the merchant, we bear the loss for those amounts. Notwithstanding our adherence to

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industry standards with regards to the acceptance of new merchants and certain steps to screen for merchant credit risk, a default on payment obligations by one or more of our merchants could have a material adverse effect on our business.

We depend on our payment processing clients to comply with their contractual obligations, as well as any applicable laws, regulatory requirements and credit card associations rules or standards.
 
Our contracts with our payment processing clients generally require that they comply with all applicable laws and regulatory requirements, as well as any applicable credit card associations rules or standards.  A client’s failure to comply with any such laws or requirements could force us to declare a breach of contract and terminate the client relationship.  The termination of such contracts or relationships, as well as any inability to collect any damages caused, could have a material adverse effect on our business, financial condition and results of operations.  Additionally, any such failure by clients to comply could also result in fines, penalties or obligations imputed to EVERTEC, which could also have a material adverse effect on our business.

Increased competition could adversely affect our business.

A decline in the market for our services as a result of increased competition could have a material adverse effect on our business. We may face increased competition in the future as new companies enter the market and existing competitors expand their services. Some of these competitors could have greater overall financial, technical and marketing resources than us, which could enhance their ability to finance acquisitions, fund internal growth and respond more quickly to professional and technological changes. Some competitors could have or may develop a lower cost structure. New competitors or alliances among competitors could emerge, resulting in a loss of business for us and a corresponding decline in revenues and profit margin.


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Changes in consumer spending or payment preferences could adversely affect our business.

A decline in the market for our services, either as a result of continued migration of Puerto Ricans to the U.S. mainland, a further deterioration in the Puerto Rico economy, a decrease in consumer spending or a shift in consumer payment preferences, could have a material adverse effect on our business. If consumer confidence decreases in a way that adversely affects consumer spending, whether in conjunction with a global economic downturn or otherwise, we could experience a reduction in the volume of transactions we process. In addition, if we fail to respond to changes in technology or consumer payment preferences, we could lose business.

There may be a change in the use of cards as a payment mechanism or adverse developments with respect to card industry in general.

If the number of electronic and digital payment transactions of the type we process does not continue to grow or if businesses or consumers do not continue to adopt our services, it could have a material adverse effect on the profitability of our business, financial position and results of operations. We believe future growth in the use of credit, debit and other electronic and digital payments will be driven by the cost, ease-to-use, and quality of products and services offered to customers and businesses. In order to consistently increase and maintain our profitability, businesses and consumers must continue to use electronic and digital payment methods that we process, including credit and debit cards.

Changes in credit card association or other network rules or standards could adversely affect our business.

In order to provide our transaction processing services, several of our subsidiaries are registered with or certified by Visa, Discover and MasterCard and other networks as members or as service providers for member institutions. As such, we and many of our customers are subject to card association and network rules that could subject us or our customers to a variety of fines or penalties that may be levied by the card associations or networks for certain acts or omissions by us, acquirer customers, processing customers and merchants. Visa, Discover, MasterCard and other networks, some of which are our competitors, set the standards with which we must comply. The termination of Banco Popular’s or our subsidiaries’ member registration or our subsidiaries’ status as a certified service provider, or any changes in card association or other network rules or standards, including interpretation and implementation of the rules or standards, that increase the cost of doing business or limit our ability to provide transaction processing services to or through our customers, could have an adverse effect on our business, operating results and financial condition.

Changes in interchange fees or other fees charged by card associations and debit networks could increase our costs or otherwise adversely affect our business.

From time to time, card associations and debit networks change interchange, processing and other fees, which could impact our merchant acquiring and payment services businesses. Competitive pressures could result in our merchant acquiring and payment services businesses absorbing a portion of such increases in the future, which would increase our operating costs, reduce our profit margin and adversely affect our business, operating results and financial condition.

For purposes of the Bank Holding Company Act of 1956 (the “BHC Act”), to the extent that we are deemed to be controlled by Popular, we will be subject to regulation, supervision and examination by the U.S. Federal Reserve Board, and our activities will be limited to those permissible under the BHC Act and related regulations. We may be required to obtain regulatory approval before engaging in certain new activities or businesses, whether organically or by acquisition.

To the extent that we are deemed to be controlled by Popular pursuant to regulation and guidance under the BHC Act, we will be subject to regulation, supervision and examination by the Federal Reserve Board. The BHC Act defines “control” differently than GAAP, and “control” can be found based on a variety of facts and circumstances.
 
New lines of business, other new activities and acquisitions that we may wish to commence or undertake in the future, including the manner in which we conduct our business or may undertake such activities or acquisitions, may not be permissible for us under the BHC Act, the Federal Reserve Board’s Regulation K or other applicable U.S. federal banking laws or may require the approval of the Federal Reserve Board or another applicable U.S. federal banking regulator. In addition, potential acquisitions may take longer, be more costly, or make us less attractive as a buyer. There can be no assurance that any required regulatory approvals will be obtained, or that they will be obtained without regulatory conditions. Additional regulatory requirements may be imposed on our activities or acquisitions to the extent we are controlled by Popular and Popular is subject to any supervisory or enforcement action, even if the supervisory actions are unrelated to us or to our business.


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As a technology service provider to regulated financial institutions, we are subject to additional regulatory oversight and examination.

In general, financial institution regulators require their supervised institutions to cause their service providers to agree to certain terms and to agree to supervision and oversight by applicable financial regulators, primarily to protect the safety and soundness of the financial institution. We have agreed to such terms and provisions in many of our service agreements with financial institutions. In particular, we are subject to regulatory oversight and examination by applicable U.S. federal regulators as a technology service provider to regulated U.S. financial institutions, including Banco Popular.

Changes in laws, regulations and enforcement activities may adversely affect the products and services we provide and markets in which we operate.

We and our customers are subject to U.S. federal, Puerto Rico and other countries’ laws, rules and regulations that affect the electronic payments industry. Our customers are subject to numerous laws, rules and regulations applicable to banks, financial institutions, processors and card issuers in the United States and abroad. We are subject to regulation because of our activities in the countries where we carry them out and because of our relationship with Popular, and at times we are also affected by the laws, rules and regulations to which our customers are subject. Failure to comply with any of these laws, rules and regulations may result in the suspension or revocation of licenses or registrations, the limitation, suspension or termination of one or more of the services we provide, and/or the imposition of civil and criminal penalties, including fines, all of which could have an adverse effect on our financial condition. In addition, even an inadvertent failure by us to comply with laws, rules and regulations, as well as rapidly evolving social expectations of corporate fairness, could damage our reputation or brands.

Regulation of the electronic payment card industry, including regulations applicable to us and our customers, has increased significantly in recent years. There is also continued scrutiny by the U.S. Congress of the manner in which payment card networks and card issuers set various fees, from which some of our customers derive significant revenue. Further, banking regulators have been strengthening their examination guidelines with respect to relationships between banks and their third-party service providers, such as us. Any such heightened supervision of our relationship with Popular could have an effect on our contractual relationship with Popular as well as on the standards applied in the evaluation of our services. See “Item 1. Business-Government Regulation and Payment Network Rules-Regulatory Reform and Other Legislative Initiatives.”

Further changes to laws, rules and regulations, or interpretation or enforcement thereof, could have a negative financial effect on us.

The Government of Puerto Rico’s fiscal crisis continues. The expiration of the automatic stay on litigation to collect claims against the Government on May 1, 2017, the initiation of creditor litigation promptly thereafter and the Government’s filing for bankruptcy protection on May 3, 2017, are all expected to further slow the Puerto Rico economy, increase emigration from Puerto Rico, increase the risk of non-payment of Government obligations and negatively affect the economy and consumer spending, which could have a material adverse effect on our business and the trading price of our common stock.

For the years ended December 31, 2019 and 2018, approximately 81% and 79%, respectively, of our total revenues were generated from our operations in Puerto Rico. In addition, some revenues that are generated from our operations outside Puerto Rico are dependent upon our operations in Puerto Rico. As a result, our financial condition and results of operations are highly dependent on the economic and political conditions in Puerto Rico, and could be significantly impacted by adverse economic or political developments in Puerto Rico. Puerto Rico has been in economic recession since 2006. In August 2015, Puerto Rico defaulted for the first time on the Public Finance Corporation bonds. In April 2016, the Puerto Rico governor signed a debt moratorium law that gave the governor emergency powers to deal with the fiscal crisis, including the ability to declare a moratorium on any debt payment. On June 30, 2016, the U.S. President signed into law the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA). PROMESA establishes a fiscal oversight and management board (the “Oversight Board”) comprised of seven voting members appointed by the President. PROMESA also imposed an automatic stay on all litigation against Puerto Rico and its instrumentalities, as well as any other judicial or administrative actions or proceedings to enforce or collect claims against the Puerto Rico government.

On May 1, 2017, the automatic stay imposed by PROMESA expired and creditors of the Puerto Rico government filed various lawsuits involving defaults on more than $70 billion of bonds issued by Puerto Rico. On May 3, 2017, Puerto Rico filed for bankruptcy-like protection under Title III of PROMESA.

While the Title III filing does not foreclose negotiations between creditors and the Puerto Rico government toward a consensual restructuring agreement, there can be no assurance that meaningful negotiations will occur or that any consensual agreement will be reached or by what date. Importantly, there also can be no assurance as to the financial outcome or timing of

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the completion of the Title III processes. There also can be no assurance as to any favorable intervention by the U.S. Congress or the U.S. President.

The invocation of Title III is expected to potentially deepen Puerto Rico’s economic recession, and to further curtail the ability of the Commonwealth and its instrumentalities, subject to the oversight of the Oversight Board (collectively, the “Government”), to access capital markets to place new debt or roll future maturities. Additionally, potential Government actions such as further reductions in spending or the imposition of new taxes may further deepen the current economic crisis, lead to an increase in unemployment rates, and result in a continued decline in population and in the economy.

Over the past several months, the Oversight Board released and has been working on a restructuring plan intended to reduce Puerto Rico’s debt to sustainable levels and provide a path for Puerto Rico to exit the bankruptcy-like protections under PROMESA.  This was an important milestone, but the most recent version of the plan is facing legal and political challenges from various sectors.  The final plan will require the approval from the judge overseeing the case.  At this point, it is uncertain if or when a restructuring plan will get approved or when Puerto Rico will resolve its current debt situation.

Such recent events could potentially adversely impact the trading price of our common stock, adversely impact our customer base, depress general consumer spending and delay the Government’s payments thus increasing our Government accounts receivables, and potentially impair the collectability of those accounts receivable, all of which, individually or in the aggregate, could potentially have a material adverse effect on our business, financial condition and results of operations. As of December 31, 2019, we had net receivables of $8.9 million from Puerto Rico and certain public corporations.

Puerto Rico's economy, including its governmental financial crisis and the continuing effects of Hurricanes Irma and Maria and other natural disasters including recent earthquakes could have a prolonged negative impact on the countries in which we operate and a material adverse effect on our business and results of operations.

Puerto Rico’s location in the Caribbean exposes the island to increased risk of hurricanes and other severe tropical weather conditions and natural disasters. Hurricanes Irma and Maria and other natural disasters including the recent earthquakes, and their aftermaths, such as the widespread power outage in Puerto Rico, the damage to infrastructure and communications networks, and the temporary cessation and slow pace of reestablishment of regular day-to-day commerce, have severely impacted the economies of Puerto Rico and the Caribbean. It is unknown how long it will take for the business communities, resident populations and the economies to fully recover. Puerto Rico’s current situation following Hurricane Maria could further accelerate the ongoing emigration trend of Puerto Rico residents to the United States. A prolonged delay in the repairs to the islands’ infrastructures, decline in business volume and any other economic declines due to Hurricanes Irma and Maria and their aftermaths may impact demand for our services and could have a material adverse effect on our business and results of operations.

As a result of Puerto Rico's governmental financial crisis and the impacts of natural disasters, businesses may be reluctant to establish or expand their operations in Puerto Rico and the Caribbean, or might consider closing operations currently in such locations. The damage resulting from the hurricanes or other natural disasters to the operating conditions of our clients, and insufficient federal recovery and rebuilding assistance may cause lasting and severe damage to the island's economic base. The high cost of electricity, combined with Puerto Rico's high level of debt, may make Puerto Rico a less attractive place to expand existing operations or commence new business activities. In the event that companies in the financial services and related industries decide not to commence new operations or not to expand their existing operations in Puerto Rico, or consider closing operations in Puerto Rico, the demand for our services could be negatively affected.

Our presence in international markets includes operations in several Latin American and Caribbean countries. Although we have contingency plans in effect for natural disasters or other catastrophic events, the occurrence of a natural disaster such as, but not limited to, earthquakes, landslides, hurricanes, tornadoes, tsunamis, volcanic activity, droughts and floods, could still disrupt our operations outside the United States and Puerto Rico. For example, we conduct business in Chile, a country that is particularly susceptible to earthquakes. Any natural disaster or catastrophic event in the countries in which we do business could adversely affect our business, results of operations and financial condition.

We are exposed to risks associated with our presence in international markets, including political or economic instability.

Our financial performance may be significantly affected by general economic, political and social conditions in the emerging markets where we operate. Many countries in Latin America have suffered significant economic, political and social crises in the past, and these events may occur again in the future. Instability in Latin America has been caused by many different factors, including:


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exposure to foreign exchange variation;
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significant governmental influence over local economies;
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substantial fluctuations in economic growth;
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high levels of inflation;
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exchange controls or restrictions on expatriation of earnings;
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high domestic interest rates;
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wage and price controls;
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changes in governmental economic or tax policies;
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imposition of trade barriers;
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unexpected changes in regulation which may restrict the movement of funds or result in the deprivation of contract rights or the taking of property without fair compensation
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terrorist attacks and other acts of violence or war; and
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overall political, social and economic instability.

Adverse economic, political and social conditions in the Latin America markets where we operate may create uncertainty regarding our operating environment, which could have a material adverse effect on our results of operations.

Our business in countries outside the United States and transactions with foreign governments increase our compliance risks and exposes us to business risks.

Our operations outside the United States could expose us to trade and economic sanctions or other restrictions imposed by the United States or other local governments or organizations. In foreign countries in which we have operations, a risk exists that our associates, contractors or agents could, in contravention of our policies, engage in business practices prohibited by U.S. laws and regulations applicable to us, such as the Foreign Corrupt Practices Act ("FCPA"). We have existing safeguards in place designed to ensure compliance with these laws and regulations. Nevertheless, we remain subject to the risk that one or more of our associates, contractors or agents, including those based in or from countries where practices that violate such U.S. laws and regulations or the laws and regulations of other countries may be customary, will engage in business practices that are prohibited by our policies and, by doing so, violate such laws and regulations. Any such violations, even if prohibited by our internal policies, could adversely affect our business, operating results, financial condition and reputation and result in severe criminal or civil sanctions. In addition, we are also subject to compliance with local government regulations.

We are also subject to the Export Administration Regulations (“EAR”), which regulates the export, re-export and re-transfer abroad of covered items made or originating in the United States as well as the transfer of covered U.S.-origin technology abroad. We have adopted a compliance program to make sure our goods and technologies are exported in compliance with the requirements of the EAR. However, there can be no assurance that we have not violated the EAR in past transactions or that our new policies and procedures will prevent us from violating the EAR in every transaction in which we engage. Any such violations of the EAR could result in fines, penalties or other sanctions being imposed on us, which could negatively affect our business, operating results and financial condition.

Moreover, some financial institutions refuse, even in the absence of a regulatory requirement, to provide services to companies operating in certain countries or engaging in certain practices because of concerns that the compliance efforts perceived to be necessary may outweigh the usefulness of the service relationship. Our operations outside the United States make it more likely that financial institutions may refuse to conduct business with us for this type of reason. Any such refusal could negatively affect our business, operating results and financial condition.

We and our subsidiaries conduct business with financial institutions and/or card payment networks operating in countries whose nationals, including some of our customers’ customers, engage in transactions in countries that are the targets of U.S. economic sanctions and embargoes. If we are found to have failed to comply with applicable U.S. sanctions laws and regulations in these instances, we and our subsidiaries could be exposed to fines, sanctions and other penalties or other governmental investigations.

We and our subsidiaries conduct business with financial institutions and/or card payment networks operating in countries whose nationals, including some of our customers’ customers, engage in transactions in countries that are the target of U.S. economic sanctions and embargoes, including Cuba. As a U.S.-based entity, we and our subsidiaries are obligated to comply with the economic sanctions regulations administered by OFAC. These regulations prohibit U.S.-based entities from entering into or facilitating unlicensed transactions with, for the benefit of, or in some cases involving the property and property interests of, persons, governments, or countries designated by the U.S. government under one or more sanctions regimes. Failure to comply with these sanctions and embargoes may result in material fines, sanctions or other penalties being imposed on us or other governmental investigations. In addition, various state and municipal governments, universities and other

23

investors maintain prohibitions or restrictions on investments in companies that do business involving sanctioned countries or entities.

For these reasons, we have established risk-based policies and procedures designed to assist us and our personnel in complying with applicable U.S. laws and regulations and have in the past voluntarily submitted disclosures to OFAC in compliance with those policies and procedures when we have identified a potential violation. Our policies and procedures include the use of software to screen transactions we process for evidence of sanctioned-country and persons involvement. Consistent with a risk-based approach and the difficulties of identifying all transactions of our customers’ customers that may involve a sanctioned country, there can be no assurance that our policies and procedures will prevent us from violating applicable U.S. laws and regulations in every transaction in which we engage, and such violations could adversely affect our reputation, business, financial condition and results of operations.

Because we process transactions on behalf of financial institutions through the payment networks, we have processed a limited number of transactions potentially involving sanctioned countries and there can be no assurances that, in the future, we will not inadvertently process such transactions. Due to a variety of factors, including technical failures and limitations of our transaction screening process, conflicts between U.S. and local laws, political or other concerns in certain countries in which we and our subsidiaries operate, and/or failures in our ability to effectively control employees operating in certain non-U.S. subsidiaries, we have not rejected every transaction originating from or otherwise involving sanctioned countries, or persons and there can be no assurances that, in the future, we will not inadvertently fail to reject such transactions.


24

Our expansion and selective acquisition strategy exposes us to risks, including the risk that we may not be able to successfully integrate acquired businesses.

As part of our growth strategy, we evaluate opportunities for acquiring complementary businesses that may supplement our internal growth. However, there can be no assurance that we will be able to identify and purchase suitable operations. To the extent that we are deemed to be controlled by Popular for purposes of the BHC Act, we may conduct only activities authorized under the BHC Act and the Federal Reserve Board’s Regulation K and other related regulations for a bank holding company or a financial holding company. These restrictions may limit our ability to acquire other businesses or enter into other strategic transactions. In addition, in connection with any acquisitions, we must comply with U.S. federal and other antitrust and/or competition law requirements.

Further, the success of any acquisition depends in part on our ability to integrate the acquired company, which may involve unforeseen difficulties and may require a disproportionate amount of our management’s attention and our financial and other resources. Although we conduct due diligence investigations prior to each acquisition, there can be no assurance that we will discover all operational deficiencies or material liabilities of an acquired business for which we may be responsible as a successor owner or operator. The failure to successfully integrate these acquired businesses or to discover such liabilities could adversely affect our operating results.

Failure to protect our intellectual property rights and defend ourselves from potential intellectual property infringement claims may diminish our competitive advantages or restrict us from delivering our services.

Our trademarks, proprietary software, and other intellectual property, including technology/software licenses, are important to our future success. Limitations or restrictions on our ability to use such marks or a diminution in the perceived quality associated therewith could have an adverse impact on the growth of our businesses. We also rely on proprietary software and technology, including third party software that is used under licenses. It is possible that others will independently develop the same or similar software or technology, which would permit them to compete with us more efficiently. Furthermore, if any of the third party software or technology licenses are terminated or otherwise determined to be unenforceable, then we would have to obtain a comparable license, which may involve increased license fees and other costs.

Despite our efforts to protect our proprietary or confidential business know-how and other intellectual property rights, unauthorized parties may attempt to copy or misappropriate certain aspects of our services, infringe upon our rights, or to obtain and use information that we regard as proprietary. Policing such unauthorized use of our proprietary rights is often very difficult, and therefore, we are unable to guarantee that the steps we have taken will prevent misappropriation of our proprietary software/technology or that the agreements entered into for that purpose will be effective or enforceable in all instances. Misappropriation of our intellectual property or potential litigation concerning such matters could have a material adverse effect on our results of operations or financial condition. Our registrations and/or applications for trademarks, copyrights, and patents could be challenged, invalidated or circumvented by others and may not be of sufficient scope or strength to provide us with maximum protection or meaningful advantage. Managing any such challenges, even if they lack merit, could: (i) be expensive and time-consuming to defend; (ii) cause us to cease making, licensing or using software or applications that incorporate the challenged intellectual property; (iii) require us to redesign our software or applications, if feasible; (iv) divert management’s attention and resources; and (v) require us to enter into royalty or licensing agreements in order to obtain the right to use necessary technologies. Furthermore, the laws of certain foreign countries in which we do business or contemplate doing business in the future may not protect intellectual property rights to the same extent as do the laws of the United States or Puerto Rico. Adverse determinations in judicial or administrative proceedings related to intellectual property or licenses could prevent us from selling our services and products, or prevent us from preventing others from selling competing services, impose liability costs on us, or result in a non-favorable settlement, all of which could result in a material adverse effect on our business, financial condition and results of operations.

The ability to recruit, retain and develop qualified personnel is critical to our success and growth.

All of our businesses function at the intersection of rapidly changing technological, social, economic and regulatory developments that require a wide ranging set of expertise and intellectual capital. For us to successfully compete and grow, we must retain, recruit and develop the necessary personnel who can provide the needed expertise across the entire spectrum of our intellectual capital needs. In addition, we must develop our personnel to provide succession plans capable of maintaining continuity in the midst of the inevitable unpredictability of human capital. However, the market for qualified personnel is competitive and we may not succeed in recruiting additional personnel or may fail to effectively replace current personnel who depart with qualified or effective successors. Recruiting and retaining qualified personnel in Puerto Rico is particularly challenging, given the poor state of the Puerto Rican economy and the increased emigration of Puerto Ricans following Hurricanes Irma and Maria. Our effort to retain and develop personnel may also result in significant additional expenses, which

25

could adversely affect our profitability. We cannot assure you that key personnel, including executive officers, will continue to be employed or that we will be able to attract and retain qualified personnel in the future. Failure to retain or attract key personnel could have a material adverse effect on us.

Failure to comply with U.S. state and federal antitrust requirements, or the Puerto Rico Anti-Monopoly Act, and government investigations into our compliance, could adversely affect our business.

Due to our ownership of the ATH network and our merchant acquiring and payment services business in Puerto Rico, we are involved in a significant percentage of the debit and credit card transactions conducted in Puerto Rico each day. We have in the past been subject to regulatory investigations and any future regulatory scrutiny of, or regulatory enforcement action in connection with, compliance with U.S. state and federal antitrust requirements could potentially have a material adverse effect on our reputation and business.

Our subsidiary, EVERTEC Group, benefits from a preferential tax exemption grant from the Puerto Rico Government under the Tax Incentive Act No. 73 of 2008 that imposes certain commitments, conditions and representations on EVERTEC Group. If EVERTEC Group does not comply with the terms of the grant, EVERTEC Group may be subject to reduction of the benefits of the grant, tax penalties, other payment obligations or full revocation of the grant, which could have a material adverse effect on our financial condition, results of operations and our stock price.
 
EVERTEC Group has a tax exemption grant under the Tax Incentive Act No. 73 of 2008 from the Government of Puerto Rico. Under this grant, EVERTEC Group will benefit from a preferential income tax rate of 4% on industrial development income, as well as from tax exemptions with respect to its municipal and property tax obligations for certain activities derived from its data processing operations in Puerto Rico. The grant has a term of 15 years effective as of January 1, 2012 with respect to income tax obligations and July 1, 2013 and January 1, 2013 with respect to municipal and property tax obligations, respectively.

The grant contains customary commitments, conditions and representations that EVERTEC Group is required to comply with in order to maintain the grant. The more significant commitments include: (i) maintaining at least 750 employees in EVERTEC Group’s Puerto Rico data processing operations during 2012 and at least 700 employees for the remaining years of the grant, (ii) investing at least $200.0 million in building, machinery, equipment or computer programs to be used in Puerto Rico during the effective term of the grant (to be made over four year capital investment cycles in $50.0 million increments), (iii) an additional best efforts capital investments requirement of $75.0 million by December 31, 2026 (to be made over four year capital investment cycles in $20.0 million the first three increments and $15.0 million the last increment); and (iv) 80% of EVERTEC Group employees must be residents of Puerto Rico. Failure to meet the requirements could result, among other things, in reductions in the benefits of the grant, tax penalties, other payment obligations or revocation of the grant in its entirety, which could have a material adverse effect on our financial condition and results of operations.

Risks Related to Our Structure, Governance and Stock Exchange Listing

We are a holding company and rely on dividends and other payments, advances and transfers of funds from our subsidiaries to meet our obligations and pay any dividends.

We have no direct operations or significant assets other than the ownership of 100% of the membership interest of Holdings, which in turn has no significant assets other than ownership of 100% of the membership interest of EVERTEC Group. Because we conduct our operations through our subsidiaries, we depend on those entities for dividends and other payments to generate the funds necessary to meet our financial obligations, and to pay any dividends with respect to our common stock. Legal and contractual restrictions in our existing senior secured credit facilities and other agreements which may govern future indebtedness of our subsidiaries, as well as the financial condition and operating requirements of our subsidiaries, may limit our ability to obtain cash from our subsidiaries. We are prohibited from paying any cash dividend on our common stock unless we satisfy certain conditions. The senior secured credit facilities also include limitations on the ability of our subsidiaries to pay dividends to us. The earnings from, or other available assets of, our subsidiaries may not be sufficient to pay dividends or make distributions or loans or enable us to pay any dividends on our common stock or other obligations.
 
As a publicly traded company, we are exposed to risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley Act.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), the Dodd-Frank Act, and related regulations implemented by the SEC, have substantially increased legal and financial compliance costs. We expect that our ongoing compliance with applicable laws and regulations,

26

including the Exchange Act, the Dodd-Frank Act, and the Sarbanes-Oxley Act, will involve significant and potentially increasing costs. In particular, we must annually evaluate our internal controls systems to allow management to report on our internal controls. We must perform the system and process evaluation and testing (and any necessary remediation) required to comply with the management certification and, when applicable, auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If we are not able to continue to satisfy the requirements of the Exchange Act, the Dodd-Frank Act, and the Sarbanes-Oxley Act, we may default on our credit facility and be subject to sanctions or investigation by regulatory authorities, including the SEC. Any action of this type could adversely affect our financial condition, results of operations, and investors’ confidence in our company, and could cause our stock price to decline.

The price of our common stock may fluctuate significantly and you could lose all or part of your investment.

Volatility in the market price of our common stock may prevent you from being able to sell your common stock at or above the price you paid for your common stock. The market price for our common stock could fluctuate significantly for various reasons, including:

•
our operating and financial performance and prospects;
•
changes in earnings estimates or recommendations by securities analysts who track our common stock or industry;
•
market perception of our success, or lack thereof, in pursuing our growth strategy;
•
market perception of the challenges of operating a company in Puerto Rico; and
•
sales of common stock by us, our stockholders, Popular or members of our management team.

In addition, the stock market has experienced significant price and volume fluctuations historically and particularly in late 2018 and early 2019. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in our industries. The changes frequently appear to occur without regard to the operating performance of the affected companies. Hence, the price of our common stock could fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could materially reduce our share price.

Future sales or the possibility of future sales of a substantial amount of our common stock may depress the price of shares of our common stock.

We may sell additional shares of common stock in subsequent public offerings or otherwise, including financing acquisitions. Our amended and restated certificate of incorporation authorizes us to issue 206,000,000 shares of common stock, of which 72,000,261 are outstanding as of December 31, 2019. All of these shares, other than the 11,654,803 shares held by Popular and the shares held by our officers and directors, are freely transferable without restriction or further registration under the Securities Act.

We cannot predict the size of future issuances of our common stock or the effect, if any, that future issuances and sales of our common stock will have on the market price of our common stock. Sales of substantial amounts of our common stock (including any shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices for our common stock.
 
The interests of Popular may conflict with or differ from your interests as a stockholder.

Popular has the right to nominate two members of our Board and, therefore, may be able to influence our decisions. The interests of Popular could conflict with your interests as a holder of our common stock. For example, the concentration of ownership held by Popular, the terms of the Stockholder Agreement and our organizational documents (including Popular’s quorum rights and consent rights over amendments to our bylaws) and Popular’s right to terminate certain of its agreements with us in certain situations upon a change of control of EVERTEC Group, could delay, defer or prevent certain significant corporate actions that you as a stockholder may otherwise view favorably, including a change of control of us (whether by merger, takeover or other business combination). See “Certain Relationships and Related Party Transactions” in EVERTEC’s proxy statement for a description of the circumstances under which Popular may terminate certain of its agreements with us. A sale of a substantial number of shares of stock in the future by Popular could cause our stock price to decline.

Our organizational documents and Stockholder Agreement may impede or discourage a takeover, which could deprive our investors of the opportunity to receive a premium for their shares.


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Provisions of our amended and restated certificate of incorporation, amended and restated bylaws and the Stockholder Agreement may make it more difficult for, or prevent a third party from, acquiring control of us without the approval of our Board and/or Popular. These provisions include:
 
•
a voting agreement pursuant to which Popular agreed to vote its shares in favor of the Popular director nominees (which, constitute the right to appoint two of our nine directors), directors nominated by a committee of our Board in accordance with the Stockholder Agreement and the management director and to remove and replace any such directors in accordance with the terms of the Stockholder Agreement and applicable law and an agreement by us to take all actions within our control necessary and desirable to cause the election, removal and replacement of such directors in accordance with the Stockholder Agreement and applicable law;
•
requiring that a quorum for the transaction of business at any meeting of the Board (other than a reconvened meeting with the same agenda as the originally adjourned meeting) consist of (1) a majority of the total number of directors then serving on the Board and (2) at least one director nominated by Popular, for so long as it owns, together with its affiliates, 5% or more of our outstanding common stock;
•
prohibiting cumulative voting in the election of directors;
•
authorizing the issuance of “blank check” preferred stock without any need for action by stockholders other than Popular (as further described below);
•
prohibiting stockholders from acting by written consent unless the action is taken by unanimous written consent;
•
establishing advance notice requirements for nominations for election to our Board or for proposing matters that can be acted on by stockholders at stockholder meetings, which advance notice requirements are not applicable to any directors nominated in accordance with the terms of the Stockholder Agreement.
 
Our issuance of shares of preferred stock could delay or prevent a change in control of us. Our Board has authority to issue shares of preferred stock, subject to the approval of at least one director nominated by Popular for so long as Popular, together with its respective affiliates, owns at least 10% of our outstanding common stock. Our Board may issue preferred stock in one or more series, designate the number of shares constituting any series, and fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences of such series. In addition, Popular, under and subject to the Stockholder Agreement and our organizational documents, will retain significant influence over matters requiring board or stockholder approval, including the election of directors. Together, our amended and restated certificate of incorporation, bylaws and Stockholder Agreement could make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our common stock. Furthermore, the existence of the foregoing provisions, as well as the significant common stock owned by Popular and its individual right to nominate a specified number of directors in certain circumstances, could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of us, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.

Risks Related to Our Indebtedness

Despite our high indebtedness level, we and our subsidiaries still may be able to incur significant additional amounts of debt, which could further exacerbate the risks associated with our substantial indebtedness.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future, some of which may be secured. Although the agreement setting forth the terms of our senior secured credit facilities contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and under certain circumstances, the amount of indebtedness that could be incurred in compliance with these restrictions could be substantial. In addition to the $116.9 million which was available for borrowing under our revolving credit facility as of December 31, 2019, the terms of the senior secured credit facilities enable us to increase the amount available under the term loan and/or revolving credit facilities if we are able to obtain loan commitments from banks and satisfy certain other conditions. If new debt is added to our and our subsidiaries’ existing debt levels, the related risks that we face would increase.

If we are unable to comply with covenants in our debt instruments that limit our flexibility in operating our business, or obligate us to take action such as deliver financial reports, we may default under our debt instruments and our indebtedness may become due.

The agreement setting forth the terms of the senior secured credit facilities contain, and any future indebtedness we incur may contain, various covenants that limit our ability to engage in specified types of transactions. These covenants limit our ability and our restricted subsidiaries’ ability to, among other things:
 
•
incur additional indebtedness or issue certain preferred shares;

28

•
pay dividends on, repurchase or make distributions in respect of our capital stock or make other restricted payments;
•
make certain investments;
•
sell certain assets;
•
grant liens;
•
consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
•
enter into certain transactions with our affiliates; and
•
designate our subsidiaries as unrestricted subsidiaries.

As a result of these covenants, we are limited in the manner in which we conduct our business and we may be unable to engage in favorable business activities or finance future operations or capital needs. In addition, the covenants in the senior secured credit facilities require us to maintain a maximum total secured net leverage ratio and also limit our capital expenditures. A breach of any of these covenants could result in a default under one or more of these agreements, including as a result of cross default provisions and, in the case of our revolving credit facility, permit the lenders to cease making loans to us. Upon the occurrence of an event of default under the senior secured credit facilities, the lenders could elect to declare all amounts outstanding under the senior secured credit facilities to be immediately due and payable and terminate all commitments to extend further credit. Such actions by those lenders could cause cross defaults under our other indebtedness. If we were unable to repay those amounts, the lenders under our senior secured credit facilities could proceed against the collateral granted to them to secure that indebtedness. We have pledged a significant portion of our assets as collateral under the senior secured credit facilities. If the lenders under the senior secured credit facilities accelerate the repayment of borrowings, the proceeds from the sale or foreclosure upon such assets will first be used to repay debt under our senior secured credit facilities and we may not have sufficient assets to repay our unsecured indebtedness thereafter. As a result, our common stock could become worthless.

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives. In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.

The risks referenced above are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations.

Discontinuation, reform or replacement of LIBOR and other benchmark rates, or uncertainty related to the potential for any of the foregoing, may adversely affect our business.

The U.K. Financial Conduct Authority announced in 2017 that it intends to phase out LIBOR by the end of 2021. In addition, other regulators have suggested reforming or replacing other benchmark rates. The discontinuation, reform or replacement of LIBOR or any other benchmark rates may have an unpredictable impact on contractual mechanics in the credit markets or cause disruption to the broader financial markets. Uncertainty as to the nature of such potential discontinuation, reform or replacement may negatively impact the volatility of LIBOR rates, liquidity, our access to funding required to operate our business, our ability to hedge our interest rate risk, or the trading market for our existing senior secured credit facilities.

At December 31, 2019, we had $530.8 million of borrowings under our senior secured credit facilities bearing interest at LIBOR plus an applicable margin. Together with the administrative agent for those facilities, we may replace LIBOR with a comparable or successor rate in a manner that gives due consideration to any evolving or then existing convention for similar U.S. dollar denominated syndicated credit facilities.  The replacement of LIBOR with a comparable or successor rate could

29

cause the amount of interest payable on our senior secured credit facilities to be materially different than expected.  We may choose in the future to pursue amendments to our senior secured credit facilities to provide for a comparable or successor rate, but we can give no assurance that we will be able to reach agreement with our lenders on any such amendments.

At December 31, 2019, we also had two interest rate swap agreements which are designed to protect us from changes in interest rates. If LIBOR becomes unavailable and market quotations for specified inter-bank lending are not available, it is unclear how payments under such agreements would be calculated, which could cause these agreements to no longer offer us the protection we expect. Relevant industry groups are seeking to create a standard protocol addressing the expected discontinuation of LIBOR, to which parties to then-existing swaps will be able to adhere. There can be no assurance that such a protocol will be developed or that our swap counterparties will adhere to it. It is uncertain whether amending our then-existing swap agreements may provide us with effective protection from changes in the then-applicable interest rate on our senior secured credit facility indebtedness or other indebtedness. Similarly, while industry groups have announced that they anticipate amending standard documentation to facilitate a market in swaps on one or more successor rates to LIBOR, it is uncertain whether and to what extent a market for interest rate swaps on the successor rate selected for our senior secured credit facility indebtedness or other indebtedness will develop, which may affect our ability to effectively hedge our interest rate exposure.

Item 1B. Unresolved Staff Comments

None.
Item 2. Properties
Our principal operations are conducted in Puerto Rico. Our principal executive offices are leased and located at Cupey Center Building, Road 176, Kilometer 1.3, San Juan, Puerto Rico 00926.
We own one property in Costa Rica, in the province of San Jose, which is used by our Costa Rican subsidiary for its payment services business. We also lease space in 14 other locations across Latin America and the Caribbean, including various data centers and office facilities to meet our sales and operating needs. We believe that our properties are in good operating condition and adequately serve our current business operations. We also anticipate that suitable additional or alternative space, including those under lease options, will be available at commercially reasonable terms for future expansion.
Item 3. Legal Proceedings
We are defendants in various lawsuits or arbitration proceedings arising in the ordinary course of business. Management believes, based on the opinion of legal counsel and other factors, that the aggregated liabilities, if any, arising from such actions will not have a material adverse effect on the financial condition, results of operations and the cash flows of the Company.
Item 4. Mine Safety Disclosures
Not applicable.

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Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock trades on the NYSE under the symbol "EVTC".

Dividends

The Company has a history of paying cash dividends. Any declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board and will depend on many factors, including our financial condition, earnings, available cash, business opportunities, legal requirements, restrictions in our debt agreements and other contracts, capital requirements, level of indebtedness and other factors that our Board deems relevant. The covenants of our senior secured credit facilities may limit our ability to pay dividends on our common stock and limit the ability of our subsidiaries to pay dividends to us if we do not meet required performance metrics contained in our debt agreements. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Obligations.”

We are a holding company and have no direct operations. We will only be able to pay dividends from our available cash on hand and funds received from our subsidiaries, Holdings and EVERTEC Group, whose ability to make any payments to us will depend upon many factors, including their operating results and cash flows. In addition, the senior secured credit facilities limit EVERTEC Inc.’s ability to pay distributions on its equity interests. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Obligations.”

Issuer Purchases of Equity Securities
 
 
 
Total number of
shares
 
Average price paid
 
Total number of shares
purchased as part of a publicly
 
Approximate dollar value of
shares that may yet be purchased
Period
 
purchased
 
per share
 
announced program (1)
 
under the program
10/1/2019-10/31/2019
 
21,720

 
$
30.644

 
21,720

 
 
11/1/2019-11/30/2019
 
76,283

 
30.543

 
76,283

 
 
12/1/2019-12/31/2019
 
11,400

 
30.914

 
11,400

 
 
Total
 
109,403

 
$
30.602

 
109,403

 
$
30,550,139

 
 
(1)
On February 17, 2016, the Company announced that its Board approved an increase and extension to the current stock repurchase program, authorizing the purchase of up to $120 million of the Company’s common stock and extended the expiration to December 31, 2017. On November 2, 2017, the Company's Board approved an extension to the expiration date of the current stock repurchase program to December 31, 2020.

Securities Authorized for Issuance under Equity Compensation Plans

On September 30, 2010, the board of directors of Holdings adopted the 2010 Plan. Holdings reserved 5,843,208 shares of its Class B Non-Voting Common Stock for issuance upon exercise and grants of stock options, restricted stock and other equity awards under the Plan. On April 17, 2012, in connection with the Reorganization, the Company assumed the 2010 Plan and all of the outstanding equity awards issued thereunder or subject thereto. As a result, each of the then outstanding stock options to purchase shares of Holdings’ Class B Non-Voting Common Stock became a stock option to purchase the same number and class of shares of the Company’s Class B Non-Voting Common Stock, in each case on the same terms (including exercise price) as the original stock option. In connection with our initial public offering in April 2013, all of the outstanding shares of the Company’s Class B Non-Voting Common Stock and stock options to purchase shares of the Company’s Class B Non-Voting Common Stock were converted into and deemed exercisable for, respectively, shares of our common stock on a one-to-one basis. Similarly, each of the then outstanding shares of restricted stock of Holdings was converted into the same number of shares of restricted stock of the Company.

In connection with our initial public offering, we adopted the 2013 Plan and reserved 5,956,882 shares of our Common Stock for issuance upon exercise and grants of stock options, restricted stock and other equity awards. We have filed a Form S-8 under the Securities Act covering 12,089,382 shares of our common stock reserved for issuance under the Equity Plans and certain options and restricted stock granted outside of the Equity Plans but subject to the terms and conditions of the 2010 Plan.
The following table summarizes equity compensation plans approved by security holders and equity compensation plans that were not approved by security holders as of December 31, 2019:

31

 
Plan Category
 
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(A)
 
Weighted-average
exercise price of
outstanding options,
warrants and rights
(B)
 
Number of securities remaining available for future issuance
 under equity compensation plans  (excluding securities reflected
in column (A))
(C)
Equity compensation plans approved by security holders (1)
 
1,592,755

 
$0.00
 
3,380,212

Equity compensation plans not approved by security holders
 
N/A

 
N/A
 
N/A

 
(1)
The Company's equity plans were approved by the two sole stockholders prior to the Company's initial public offering, Apollo and Popular.

Stock Performance Graph

The following Performance Graph shall not be deemed incorporated by reference and shall not constitute soliciting material or otherwise considered filed under the Securities Act of 1933 or the Exchange Act.

The following graph shows a comparison from April 12, 2013 (the date our common stock commenced trading on the NYSE) through December 31, 2019 of the cumulative total return for our common stock, the S&P 500 Index and the S&P Technology Index. The graph assumes that $100 was invested on April 12, 2013 in our common stock and each index and that all dividends were reinvested.

Note that historical stock price performance is not necessarily indicative of future stock price performance.

Comparison of eighty-one months cumulative total return of EVERTEC Inc.

EVERTECCHART2019.JPG

32


Item 6. Selected Financial Data

The following table sets forth our selected historical consolidated financial data as of the dates and for the periods indicated. The selected consolidated financial data as of and for the years ended December 31, 2019, 2018, 2017, 2016 and 2015 have been derived from the audited consolidated financial statements of EVERTEC, included in our Annual Reports on Form 10-K.

The results of operations for any period are not necessarily indicative of the results to be expected for any future period. The selected historical consolidated financial data set forth below should be read in conjunction with, and are qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes thereto appearing elsewhere in this Annual Report on Form 10-K.
 
 
 
Year ended December 31,
(Dollar amounts in thousands, except per share data)
 
2019
 
2018
 
2017
 
2016
 
2015
Statements of Income Data:
 
 
 
 
 
 
 
 
 
 
Revenues
 
$
487,374

 
$
453,869

 
$
407,144

 
$
389,507

 
$
373,528

Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
Cost of revenues, exclusive of depreciation and amortization shown below
 
213,379

 
196,957

 
200,650

 
175,809

 
167,916

Selling, general and administrative expenses
 
61,411

 
68,717

 
56,161

 
46,986

 
37,278

Depreciation and amortization
 
68,082

 
63,067

 
64,250

 
59,567

 
64,974

Total operating costs and expenses
 
342,872

 
328,741

 
321,061

 
282,362

 
270,168

Income from operations
 
144,502

 
125,128

 
86,083

 
107,145

 
103,360

Interest income
 
1,217

 
787

 
716

 
377

 
495

Interest expense
 
(28,811
)
 
(30,044
)
 
(29,861
)
 
(24,617
)
 
(24,266
)
Earnings (losses) of equity method investment
 
936

 
692

 
604

 
(52
)
 
147

Other (expenses) income
 
(1,169
)
 
2,602

 
2,657

 
544

 
2,306

Income before income taxes
 
116,675

 
99,165

 
60,199

 
83,397

 
82,042

Income tax expense (benefit)
 
12,975

 
12,596

 
4,780

 
8,271

 
(3,335
)
Net income
 
103,700

 
86,569

 
55,419

 
75,126

 
85,377

Less: Net income attributable to non-controlling interest
 
231

 
299

 
365

 
90

 
—

Net income attributable to EVERTEC, Inc.’s common stockholders
 
$
103,469

 
$
86,270

 
$
55,054

 
$
75,036

 
$
85,377

Net income per common share—basic
 
$
1.44

 
$
1.19

 
$
0.76

 
$
1.01

 
$
1.11

Net income per common share—diluted
 
$
1.41

 
$
1.16

 
$
0.76

 
$
1.01

 
$
1.11



 
 
December 31,
 
 
2019
 
2018
 
2017
 
2016
 
2015
Balance Sheet Data:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$111,030
 
$69,973
 
$50,423
 
$51,920
 
$28,747
Total assets
 
1,011,676

 
927,292

 
902,788

 
885,662

 
863,654

Total long-term liabilities
 
595,739

 
574,981

 
607,596

 
648,324

 
662,939

Total debt
 
527,603

 
538,606

 
616,740

 
650,759

 
662,699

Total equity
 
271,623

 
215,606

 
147,976

 
108,175

 
98,214



33

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) covers: (i) the results of operations for the years ended December 31, 2019, 2018 and 2017 and (ii) the financial condition as of December 31, 2019 and 2018. See Note 1 of the Notes to Audited Consolidated Financial Statements for additional information about the Company and the basis of presentation of our financial statements. You should read the following discussion and analysis in conjunction with the financial statements and related notes appearing elsewhere herein. This MD&A contains forward-looking statements that involve risks and uncertainties. Our actual results may differ from those indicated in the forward-looking statements. See “Forward-Looking Statements” for a discussion of the risks, uncertainties and assumptions associated with these statements.

Overview

EVERTEC is a leading full-service transaction processing business in Latin America and the Caribbean, providing a broad range of merchant acquiring, payment services and business process management services. According to the September 2019 Nilson Report, we are one of the largest merchant acquirers in Latin America based on total number of transactions and we believe we are the largest merchant acquirer in the Caribbean and Central America. We serve 26 countries in the region out of 11 offices, including our headquarters in Puerto Rico. We manage a system of electronic payment networks that process more than two billion transactions annually, and offer a comprehensive suite of services for core bank processing, cash processing and technology outsourcing. In addition, we own and operate the ATH network, one of the leading personal identification number (“PIN”) debit networks in Latin America. We serve a diversified customer base of leading financial institutions, merchants, corporations and government agencies with “mission-critical” technology solutions that enable them to issue, process and accept transactions securely. We believe our business is well-positioned to continue to expand across the fast-growing Latin American region.

We are differentiated, in part, by our diversified business model, which enables us to provide our varied customer base with a broad range of transaction-processing services from a single source across numerous channels and geographic markets. We believe this capability provides several competitive advantages that will enable us to continue to penetrate our existing customer base with complementary new services, win new customers, develop new sales channels and enter new markets. We believe these competitive advantages include:
 
•
Our ability to provide competitive products;
•
Our ability to provide in one package a range of services that traditionally had to be sourced from different vendors;
•
Our ability to serve customers with disparate operations in several geographies with technology solutions that enable them to manage their business as one enterprise; and
•
Our ability to capture and analyze data across the transaction processing value chain and use that data to provide value-added services that are differentiated from those offered by pure-play vendors that serve only one portion of the transaction processing value chain (such as only merchant acquiring or payment services).

Our broad suite of services spans the entire transaction processing value chain and includes a range of front-end customer-facing solutions such as the electronic capture and authorization of transactions at the point-of-sale, as well as back-end support services such as the clearing and settlement of transactions and account reconciliation for card issuers. These include: (i) merchant acquiring services, which enable point of sales (“POS”) and e-commerce merchants to accept and process electronic methods of payment such as debit, credit, prepaid and electronic benefit transfer (“EBT”) cards; (ii) payment processing services, which enable financial institutions and other issuers to manage, support and facilitate the processing for credit, debit, prepaid, automated teller machines (“ATM”) and EBT card programs; and (iii) business process management solutions, which provide “mission-critical” technology solutions such as core bank processing, as well as IT outsourcing and cash management services to financial institutions, corporations and governments. We provide these services through scalable, end-to-end technology platforms that we manage and operate in-house and that generates significant operating efficiencies that enable us to maximize profitability.

We sell and distribute our services primarily through a proprietary direct sales force with established customer relationships. We continue to pursue joint ventures and merchant acquiring alliances. We benefit from an attractive business model, the hallmarks of which are recurring revenue, scalability, significant operating margins and moderate capital expenditure requirements. Our revenue is predominantly recurring in nature because of the mission-critical and embedded nature of the services we provide. In addition, we generally negotiate multi-year contracts with our customers. We believe our business model should enable us to continue to grow our business organically in the primary markets we serve without significant incremental capital expenditures.


34

Separation from and Key Relationship with Popular

Prior to the Merger on September 30, 2010, EVERTEC Group was 100% owned by Popular, the largest financial institution in the Caribbean, and operated substantially as an independent entity within Popular. After the consummation of the Merger, Popular retained an approximately 49% indirect ownership interest in EVERTEC Group and is our largest customer. In connection with, and upon consummation of, the Merger, EVERTEC Group entered into a 15-year Master Services Agreement, and several related agreements with Popular. Under the terms of the Master Services Agreement, Popular agreed to continue to use EVERTEC services on an ongoing exclusive basis, for the duration of the agreement, on commercial terms consistent with those of our historical relationship. Additionally, Popular granted us a right of first refusal on the development of certain new financial technology products and services for the duration of the Master Services Agreement. As of December 31, 2019, Popular retained a 16.2% interest in EVERTEC.

Our MSA with Popular has an initial term that ends in 2025. For 2019, we derived approximately 43% of our revenue from such contract, which makes the MSA our most significant client contract. We anticipate that we will enter into a negotiation with Popular prior to the expiration of the initial term of the MSA. We cannot be certain that we will be able to negotiate an extension to the MSA. In addition, even if we are able to negotiate an extension of the MSA, any new master services agreement may be materially different from the existing MSA. Further, the anticipated negotiation of the MSA extension may result in Popular obtaining significant concessions from us with respect to pricing and other key terms, both in respect of the current term and any extension of the MSA, particularly as we approach 2025. See “Item 1A. Risk Factors—Risks Related to Our Business—We expect to continue to derive a significant portion of our revenue from Popular."

2019 Developments

The Company's Board of Directors approved regular quarterly dividends of $0.05 per common share in February, April, July and October of 2019. The Board anticipates declaring this dividend in future quarters on a regular basis; however future declarations of dividends are subject to the Board’s approval and may be adjusted as business needs or market conditions change.

On December 2, 2019, the Company completed the acquisition of 100% of the shares of capital stock of EGM Ingeniería Sin Fronteras, S.A.S., commercially known as PlacetoPay. PlacetoPay is a gateway and payment service provider based in Medellin, Colombia.

Factors and Trends Affecting the Results of Our Operations

The ongoing migration from cash and paper methods of payment to electronic payments continues to benefit the transaction- processing industry globally. We believe that the penetration of electronic payments in the markets in which we operate is significantly lower relative to the U.S. market, and that this ongoing shift will continue to generate growth opportunities for our business. For example, currently the adoption of banking products, including electronic payments, in the Latin American and Caribbean region is lower relative to the mature U.S. and European markets. We believe that the unbanked and underbanked population in our markets will continue to shrink, and therefore drive incremental penetration and growth of electronic payments in Puerto Rico and other Latin American regions. We also benefit from the trend for financial institutions and government agencies to outsource technology systems and processes. Many medium- and small-size institutions in the Latin American markets in which we operate have outdated computer systems and updating these IT legacy systems is financially and logistically challenging, which presents a business opportunity for us.

Finally, our financial condition and results of operations are, in part, dependent on the economic and general conditions of the geographies in which we operate.

On June 30, 2016, the U.S. President signed into law PROMESA. PROMESA establishes a fiscal oversight and the Oversight Board comprised of seven voting members appointed by the President. The Oversight Board has broad budgetary and financial powers over Puerto Rico’s budget, laws, financial plans and regulations, including the power to approve restructuring agreements with creditors, file petitions for restructuring and reform the electronic system for the tax collection. The Oversight Board has ultimate authority in preparing the Puerto Rico government’s budget and any issuance of future debt by the government and its instrumentalities. In addition, PROMESA imposes an automatic stay on all litigation against Puerto Rico and its instrumentalities, as well as any other judicial or administrative actions or proceedings to enforce or collect claims against the Puerto Rico government. On May 1, 2017, the automatic stay expired. Promptly after the expiration of the stay, creditors of the Puerto Rico government filed various lawsuits involving defaults on more than $70 billion of bonds issued by Puerto Rico, having failed to reach a negotiated settlement on such defaults with the Puerto Rico government during the period of the automatic stay. On May 3, 2017, the Oversight Board filed a voluntary petition of relief on behalf of the Commonwealth

35

pursuant to Title III of PROMESA for the restructuring of the Commonwealth’s debt. Subsequently, the Oversight Board filed voluntary petitions of relief pursuant to Title III of PROMESA on behalf certain public corporations and instrumentalities. Title III is an in-court debt restructuring proceeding similar to protections afforded debtors under Chapter 11 of the United States Code (the “Bankruptcy Code”); the Bankruptcy Code is not available to the Commonwealth or its instrumentalities.

Over the past several months, the Oversight Board released and has been working on a restructuring plan intended to reduce Puerto Rico’s debt to sustainable levels and provide a path for Puerto Rico to exit the bankruptcy-like protections under PROMESA.  This was an important milestone, but the most recent version of the plan is facing legal and political challenges from various sectors.  The final plan will require the approval from the judge overseeing the case.  At this point, it is uncertain if or when a restructuring plan will get approved or when Puerto Rico will resolve its current debt situation.

As the solution to the Puerto Rican government’s debt crisis remains unclear, we continue to carefully monitor our receivables with the government as well as monitor general economic trends to understand the impact the crisis has on the economy of Puerto Rico and our card payment volumes. To date our receivables with the Puerto Rican government and overall payment transaction volumes have not been significantly affected by the debt crisis; however; we remain cautious.

The hurricanes that impacted Puerto Rico in 2017 led to an influx of funds for recovery efforts, primarily from private insurance companies and federal agencies and programs, that impacted the economy through 2018 and 2019. These funds have had a positive impact on Puerto Rico's economy and our business. Post hurricane recovery expectations by the local government and the Oversight Board consider a significant amount of disaster recovery funding that will impact the island and the economy over the next years. However, the actual amounts to be deployed, the timing in which they will become available and the impact to the Puerto Rico economy remain unclear. We will continue to monitor progress on these funds but remain cautious as to the amount and impact they will have in our business.

In addition to the macroeconomic trends described above, management currently estimates that we will continue to experience revenue attrition in Latin America of approximately $3 million to $5 million for previously disclosed migrations anticipated in 2020. Clients’ decision to migrate, which were made prior to 2015, were driven by a variety of historical factors, including primarily a desire to enhance customer service experience. Management believes that these customer decisions are unlikely to change; however, the timing of the migration is subject to change based on each customer’s conversion schedule.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our financial statements, we are required to make estimates and assumptions about future events, and apply judgments that affect the reported amounts of certain assets and liabilities, and in some instances, the reported amounts of revenues and expenses during the period.

We base our assumptions, estimates, and judgments on historical experience, current events and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. However, because future events are inherently uncertain and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. A summary of significant accounting policies is included in Note 1 of the Notes to Audited Consolidated Financial Statements appearing elsewhere in this Annual Report on Form 10-K. We believe that the following accounting estimates are the most critical; require the most difficult, subjective or complex judgments; and thus, result in estimates that are inherently uncertain.

Revenue recognition

The Company’s revenue recognition policy follows the guidance from Accounting Standards Codification ("ASC') 606, Revenue from Contracts with Customers, which provide guidance on the recognition, presentation, and disclosure of revenue in consolidated financial statements.

The Company recognizes revenue when (or as) control of goods or services are transferred to a customer. The transfer of control occurs when the customer can direct the use of and receive substantially all the benefits from the transferred good or service. Therefore, revenue is recognized over time (typically for services) or at a point in time (typically for goods).

The assessment of revenue recognition is performed by the Company based on the five-step model established in Topic 606, as follows: Step 1: Identify the contract with customer; Step 2: Identify the performance obligations in the contract; Step 3: Determine the transaction price; Step 4: Allocate the transaction price to the performance obligations in the contract; and Step 5: Recognize revenue when or as the entity satisfies a performance obligation.

36


At contract inception, the Company evaluates whether the contract (i) is legally enforceable; (ii) approved by both parties; (iii) properly defines rights and obligations of the parties, including payment terms; (iv) has commercial substance; and (v) collection of substantially all consideration entitled is probable, before proceeding with the assessment of revenue recognition. If any of these requirements is not met, the contract does not exist for purposes of the model and any consideration received is recorded as a liability. A reassessment may be performed in a later date upon change in facts and circumstances. The Company also evaluates within this step if contracts issued within a period of 6 months with the same customer should be accounted for as a single contract. The Company’s contracts with customers may be modified through amendments, change requests and waivers. Upon receipt, modifications of contracts with customers are evaluated to determine if these must be accounted for: (i) as a separate contract, (ii) a cumulative catch-up, or (iii) as a termination and creation of a new contract. Contract modifications must also comply with the requirements to determine if a contract with a customer exists for accounting purposes.

To identify performance obligations within contracts with customers, the Company first identifies all the promises in the contract (i.e., explicit and implicit). This includes the customer’s options to acquire additional goods or services for free or at a discount in exchange for an upfront payment. The Company then assesses if each material good or service (or bundle of goods or services) is distinct in nature (i.e., the customer can benefit from the good or service on its own or together with other readily available resources), and is capable of being distinct in the context of the contract (i.e., the promise to transfer the good or service is separately identifiable from other promises in the contract). A distinct good or service (or bundle of goods or services) constitutes a performance obligation.

The Company also applies the series guidance to distinct goods or services (either with a specified quantity of goods or services or a stand-ready service), with an over time revenue recognition, to determine whether they should be accounted for as a single performance obligation. These distinct goods or services are recognized as a single performance obligation when their nature and timely increments are substantially the same and have the same pattern of transfer to the customer (i.e., the distinct goods or services within the series use the same method to measure progress towards complete satisfaction). To determine if a performance obligation should be recognized over time, one or more of the following criteria must be met: (1) the customer simultaneously receives and consumes the benefits as the Company performs (i.e., routine or recurring services); (2) the customer controls the asset as the entity creates or enhances it (i.e., asset on customer’s site); or (3) the Company’s performance does not create an asset for which the Company has an alternative use and there is a right to payment for performance to date (i.e., asset built to order). Performance obligations that do not meet the over time criteria are recognized at a point in time.

In addition, in Step 2 of the model, the Company evaluates whether the practical expedient of right-to-invoice applies. If this practical expedient is applicable, steps 3, 4 and 5 are waived. For this practical expedient to apply, the right to consideration must correspond directly with the value received by the customer for the Company’s performance to date, no significant up-front payments or retroactive adjustments must exist, and specified minimums must be deemed non-substantive at the contract level. If the contract with the customer has multiple performance obligations and the practical expedient of right-to-invoice does not apply, the Company proceeds to determine the transaction price and allocate it on a stand-alone selling price basis among the different performance obligations identified in the Step 2.
The Company generally applies the expected cost-plus margin approach to determine the stand-alone selling price at the performance obligation level. In addition, for performance obligations that are satisfied over time and the right to invoice practical expedient is not available, the Company determines a method to measure progress (i.e., input or output method) based on current facts and circumstances. When these performance obligations have variable consideration within its transaction price and are part of a series, the Company allocates the variable consideration to each time increment.
As part of the revenue recognition analysis, when another party is involved in providing goods or services to a customer, the Company evaluates, for each performance obligation, whether it is providing the goods or services itself (i.e., as principal), or if it is only arranging on behalf of the other party. The Company acts as principal if it controls the specified good or service before that good or service is transferred to a customer. To determine if the Company acts as an agent, the Company considers indicators, such as: (i) the responsibility to fulfill a promise; (ii) the inventory risk; and (iii) the price determination.

Goodwill and other intangible assets

Goodwill represents the excess of the purchase price and related costs over the value assigned to net assets acquired. Goodwill is not amortized, but is tested for impairment at least annually, or more often if events or circumstances indicate there may be impairment.

The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative impairment test. If determined to be necessary, the quantitative impairment test shall be used to identify goodwill impairment and measure the

37

amount of a goodwill impairment loss to be recognized (if any). The Company may assess qualitative factors to determine whether it is more likely than not, that is, a likelihood of more than 50 percent that the fair value of the reporting unit is less than its carrying amount, including goodwill. The Company has an unconditional option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. The Company may resume performing the qualitative assessment in any subsequent period. With the early adoption in December 2017 of the accounting standards update that simplifies the goodwill impairment test, the quantitative goodwill impairment test, used to identify both the existence of impairment and the amount of impairment loss, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the Company determines to perform a quantitative impairment test, a third-party may be engaged to prepare an independent valuation of each reporting unit. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Additionally, the Company shall consider the income tax effect from any tax-deductible goodwill on the carrying amount of the reporting unit, if applicable, when measuring the goodwill impairment loss. For the years ended December 31, 2019, 2018 and 2017, no impairment losses associated with goodwill were recognized.

Other identifiable intangible assets with definitive useful lives are amortized using the straight-line method or accelerated methods. These intangibles are evaluated periodically for impairment when events or changes in circumstances indicate that the carrying amounts may not be recoverable.

Other identifiable intangible assets with definitive useful lives include customer relationships, trademarks, software packages and a non-compete agreement. Customer relationships were valued using the excess earnings method under the income approach. Trademark assets were valued using the relief-from-royalty method under the income approach. Internally developed software packages, which include capitalized software development costs, are recorded at cost, while software packages acquired as part of a business combination were valued using the relief-from-royalty method under the income approach. The non-compete agreement was valued based on the estimated impact that theoretical competition would have on revenues and expenses.

Income Tax

Income taxes are accounted for under the asset and liability method. A temporary difference refers to a difference between the tax basis of an asset or liability, determined based on recognition and measurement requirements for tax positions, and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively. Deferred tax assets and liabilities represent the future effects on income taxes that result from temporary differences and carryforwards that exist at the end of a period. Deferred tax assets and liabilities are measured using enacted tax rates and provisions of the enacted tax law and are not discounted to reflect the time-value of money. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of income and comprehensive income in the period that includes the enactment date. A deferred tax valuation allowance is established if it is considered more likely than not that all or a portion of the deferred tax asset will not be realized.

The Company recognizes the benefit of uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement or disposition of the underlying issue with the taxing authority. Accordingly, the amount of benefit recognized in the consolidated financial statements may differ from the amount taken or expected to be taken in the tax return resulting in unrecognized tax benefits (“UTBs”). The Company recognizes the interest and penalties associated with UTBs as part of the provision for income taxes on its consolidated statements of income and comprehensive income. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheets.

All companies within EVERTEC are legal entities which file separate income tax returns.

Recent Accounting Pronouncements

For a description of recent accounting standards, see Note 2 of the Notes to Audited Consolidated Financial Statements included in this Annual Report on Form 10-K.

Non-GAAP Financial Measures


38

EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share, as presented in this Annual Report on Form 10-K, are supplemental measures of our performance that are not required by, or presented in accordance with GAAP. They are not measurements of our financial performance under GAAP and should not be considered as alternatives to total revenues, net income or any other performance measures derived in accordance with GAAP or as alternatives to cash flows from operating activities as measures of our liquidity. Adjusted EBITDA at the segment level is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, Adjusted EBITDA, as it relates to our segments, is presented in conformity with Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under the Securities and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K.

For more information regarding EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share, including a quantitative reconciliation of EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share to the most directly comparable GAAP financial performance measure, which is net income, see “—Net Income Reconciliation to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share” and “—Covenant Compliance” below.

Results of Operations
 
Year ended December 31,
 
 
 
 
 
 
 
 
(In thousands)
2019
 
2018
 
2017
 
Variance 2019 vs. 2018
 
Variance 2018 vs. 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
487,374

 
$
453,869

 
$
407,144

 
$
33,505

 
7
 %
 
$
46,725

 
11
 %
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenues, exclusive of depreciation and amortization shown below
213,379

 
196,957

 
200,650

 
16,422

 
8
 %
 
(3,693
)
 
(2
)%
Selling, general and administrative expenses
61,411

 
68,717

 
56,161

 
(7,306
)
 
(11
)%
 
12,556

 
22
 %
Depreciation and amortization
68,082

 
63,067

 
64,250

 
5,015

 
8
 %
 
(1,183
)
 
(2
)%
Total operating costs and expenses
342,872

 
328,741

 
321,061

 
14,131

 
4
 %
 
7,680

 
2
 %
Income from operations
$
144,502

 
$
125,128

 
$
86,083

 
$
19,374

 
15
 %
 
$
39,045

 
45
 %

Revenues

Total revenues in 2019 increased by $33.5 million or 7% when compared with the prior year. The increase in revenues primarily reflects growth driven in ATH debit network transaction volumes, value added solutions, new managed services, pricing actions, as well as a one-time revenue related to an electronic benefits services contract of approximately $2.7 million and other completed projects.

Cost of revenues

Cost of revenues in 2019 increased $16.4 million or 8% when compared with the prior year. The increase is primarily related to an increase in professional fees driven by higher programming services, an increase in equipment expenses, cloud related expenses, and an increase in cost of sales associated with new managed services, and hardware and software sales.

Selling, general and administrative

Selling, general and administrative expenses in 2019 decreased $7.3 million or 11% when compared with 2018. The decrease is mainly driven by lower professional services as the prior year included fees in connection with due diligence for a potential transaction that the Company decided not to pursue, expenses incurred in the prior year in connection with the Company's debt refinancing that did not recur, a decrease in equipment expenses and a decrease in other operating taxes.

Depreciation and amortization

Depreciation and amortization expense increased by $5.0 million in 2019 compared to 2018. The increase is related to higher depreciation and amortization mainly driven by purchases of data processing equipment and development projects going into production.

39







Non-operating income (expenses)
 
Year ended December 31,
 
 
 
 
 
 
 
 
(In thousands)
2019
 
2018
 
2017
 
Variance 2019 vs. 2018
 
Variance 2018 vs. 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
1,217

 
$
787

 
$
716

 
$
430

 
55
 %
 
$
71

 
10
 %
Interest expense
(28,811
)
 
(30,044
)
 
(29,861
)
 
1,233

 
(4
)%
 
(183
)
 
1
 %
Earnings of equity method investment
936

 
692

 
604

 
244

 
35
 %
 
88

 
15
 %
Other (expenses) income
(1,169
)
 
2,602

 
2,657

 
(3,771
)
 
(145
)%
 
(55
)
 
(2
)%
Total non-operating expenses
$
(27,827
)
 
$
(25,963
)
 
$
(25,884
)
 
$
(1,864
)
 
7
 %
 
$
(79
)
 
—
 %

Total non-operating expenses in 2019 increased by $1.9 million or 7% to $27.8 million when compared to 2018. The increase is mainly driven by higher Other (expenses) income by $3.8 million, mainly due to increased foreign exchange losses, partially offset by a decrease in interest expense resulting from improved rates from the debt refinancing completed in the fourth quarter of the prior year.

Income tax expense
 
Year ended December 31,
 
 
 
 
 
 
 
 
(In thousands)
2019
 
2018
 
2017
 
Variance 2019 vs. 2018
 
Variance 2018 vs. 2017
Income tax expense
$
12,975

 
$
12,596

 
$
4,780

 
$
379

 
3
%
 
$
7,816

 
164
%

Income tax expense in 2019 increased by $0.4 million to $13.0 million. The effective tax rate for the period was 11% compared with 13% in the prior year. The decrease in the effective tax rate is mainly the result of tax deductions related to equity compensation and the impact from additional deductions related to withholdings.


Segment Results of Operations

The Company operates in four business segments: Payment Services - Puerto Rico & Caribbean, Payment Services - Latin America, Merchant Acquiring, and Business Solutions.

The Payment Services - Puerto Rico & Caribbean segment revenues are comprised of revenues related to providing access to the ATH debit network and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and point of sale ("POS") transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial institutions) and EBT (which principally consist of services to the government of Puerto Rico for the delivery of benefits to participants). For ATH debit network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the leasing of POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed and other processing services. For EBT services, revenues are primarily derived from the number of beneficiaries on file.


40

The Payment Services - Latin America segment revenues consist of revenues related to providing access to the ATH network of ATMs and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and POS transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial institutions), as well as licensed software solutions for risk and fraud management and card payment processing. For network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the leasing of POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed, and other processing services.

The Merchant Acquiring segment consists of revenues from services that allow merchants to accept electronic methods of payment. In the Merchant Acquiring segment, revenues include a discount fee and membership fees charged to merchants, debit network fees and rental fees from POS devices and other equipment, net of credit card interchange and assessment fees charged by credit cards associations (such as VISA or MasterCard) or payment networks. The discount fee is generally a percentage of the transaction value. EVERTEC also charges merchants for other services that are unrelated to the number of transactions or the transaction value.

The Business Solutions segment consists of revenues from a full suite of business process management solutions in various product areas such as core bank processing, network managed services, IT professional services, business process outsourcing, item processing, cash processing, and fulfillment. Core bank processing and network services revenues are derived in part from a recurrent fixed fee, from fees based on the number of accounts on file (i.e. savings or checking accounts, loans, etc.), transactions processed, number of users, or computer resources utilized. Revenues from other processing services within the Business Solutions segment are generally volume-based and depend on factors such as the number of accounts processed. In addition, EVERTEC is a reseller of hardware and software products and these resale transactions are generally non-recurring.

In addition to the four operating segments described above, Management identified certain functional cost areas that operate independently and do not constitute businesses in themselves. These areas could neither be concluded as operating segments nor could they be combined with any other operating segments. Therefore, these areas are aggregated and presented as “Corporate and Other” category in the financial statements alongside the operating segments. The Corporate and other category consists of corporate overhead expenses, intersegment eliminations, certain leveraged activities and other non-operating and miscellaneous expenses that are not included in the operating segments. The overhead and leveraged costs relate to activities such as:

•
marketing,
•
corporate finance and accounting,
•
human resources,
•
legal,
•
risk management functions,
•
internal audit,
•
corporate debt related costs,
•
non-operating depreciation and amortization expenses generated as a result of merger and acquisition activity,
•
intersegment revenues and expenses, eliminations, and
•
other non-recurring fees and expenses that are not considered when management evaluates financial performance at a segment level

The Chief Operating Decision Maker ("CODM") reviews the operating segments separate financial information to assess performance and to allocate resources. Management evaluates the operating results of each of its operating segments based upon revenues and Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA"). Adjusted EBITDA is defined as EBITDA further adjusted to exclude unusual items and other adjustments. Adjusted EBITDA, as it relates to operating segments, is presented in conformity with Accounting Standards Codification Topic 280, "Segment Reporting" given that it is reported to the CODM for purposes of allocating resources. Segment asset disclosure is not used by the CODM as a measure of segment performance since the segment evaluation is driven by revenues and adjusted EBITDA performance. As such, segment assets are not disclosed in the notes to the accompanying condensed consolidated financial statements.
See Note 23 of the Audited Consolidated Financial Statements appearing elsewhere in this Annual Report on Form 10-K for the reconciliation of EBITDA to consolidated net income.


41

The following tables set forth information about the Company’s operations by its four business segments for the periods indicated below.

Payment Services - Puerto Rico & Caribbean
 
Year ended December 31,
(In thousands)
2019
 
2018
 
2017
Revenues
$125,544
 
$114,119
 
$101,687
Adjusted EBITDA
78,609
 
75,104
 
58,534
Adjusted EBITDA margin
62.6
%
 
65.8
%
 
57.6
%

Payment Services - Puerto Rico & Caribbean revenues in 2019 increased $11.4 million when compared with 2018. The increase in revenues was primarily driven by higher transaction volumes, new transaction fees, as well as $2.7 million one-time revenue from the electronic benefits contract. Adjusted EBITDA increased by $3.5 million mainly as a result of the increase in revenues, partially offset by higher operating expenses for specific projects that went into production throughout the year.

Payment Services - Latin America
 
Year ended December 31,
(In thousands)
2019
 
2018
 
2017
Revenues
$84,453
 
$80,899
 
$62,702
Adjusted EBITDA
30,679
 
27,727
 
17,558
Adjusted EBITDA margin
36.3
%
 
34.3
%
 
28.0
%

Payment Services - Latin America revenues increased $3.6 million in 2019 driven mainly by higher intercompany software sales and development revenues from the Payment Services - Latin America segment to the Payment Services - Puerto Rico & Caribbean segment, partially offset by anticipated client attrition. Adjusted EBITDA increased $3.0 million when compared to the prior year period, primarily due to the revenue associated to intercompany services and sales, partially offset by the impact of foreign exchange losses.

Merchant Acquiring
 
Year ended December 31,
(In thousands)
2019
 
2018
 
2017
Revenues
$106,388
 
$99,655
 
$85,778
Adjusted EBITDA
47,156
 
46,516
 
37,497
Adjusted EBITDA margin
44.3
%
 
46.7
%
 
43.7
%

Merchant acquiring segment revenue increased $6.7 million to $106.4 million in 2019 driven primarily by higher sales volume, as well as pricing actions impacting both spread and non-transactional revenue. Adjusted EBITDA increased by $0.6 million as a result of the increased revenues, partially offset by higher internal processing costs resulting from a declining average ticket.

Business Solutions
 
Year ended December 31,
(In thousands)
2019
 
2018
 
2017
Revenues
$216,662
 
$197,602
 
$189,077
Adjusted EBITDA
97,421
 
87,813
 
86,790
Adjusted EBITDA margin
45.0
%
 
44.4
%
 
45.9
%

Business solutions revenue was $216.7 million in 2019, an increase of $19.1 million when compared with the prior year. Revenue growth in the segment was driven by increased volumes and new services to Popular and the Government of Puerto Rico, in addition to increases in hardware and software sales completed during the year. Adjusted EBITDA increased by $9.6

42

million when compared with the prior year as a result of the higher revenues, partially offset by an increase in operating expenses, including increased cost of sales.


Liquidity and Capital Resources

Liquidity

Our principal source of liquidity is cash generated from operations, and our primary liquidity requirements are the funding of capital expenditures and working capital needs. We also have a $125.0 million revolving credit facility, of which $116.9 million was available as of December 31, 2019. The Company issues letters of credit against our revolving credit facility which reduce our availability of funds to be drawn.

At December 31, 2019, we had cash and cash equivalents of $111.0 million, of which $57.8 million resides in our subsidiaries located outside of Puerto Rico for purposes of (i) funding the respective subsidiary’s current business operations and (ii) funding potential future investment outside of Puerto Rico. We intend to indefinitely reinvest these funds outside of Puerto Rico, and based on our liquidity forecast, we will not need to repatriate this cash to fund the Puerto Rico operations or to meet debt-service obligations. However, if in the future we determine that we no longer need to maintain cash balances within our foreign subsidiaries, we may elect to distribute such cash to the Company in Puerto Rico. Distributions from the foreign subsidiaries to Puerto Rico may be subject to tax withholding and other tax consequences. Additionally, our credit agreement imposes certain restrictions on the distribution of dividends from subsidiaries.

Our primary use of cash is for operating expenses, working capital requirements, acquisitions, capital expenditures, dividend payments, share repurchases, debt service, and other transactions as opportunities present themselves.

Based on our current level of operations, we believe our cash flows from operations and the available secured Revolving Credit Facility will be adequate to meet our liquidity needs for the next twelve months. However, our ability to fund future operating expenses, dividend payments, capital expenditures, mergers and acquisitions, and our ability to make scheduled payments of interest, to pay principal on or refinance our indebtedness and to satisfy any other of our present or future debt obligations will depend on our future operating performance, which may be affected by general economic, financial and other factors beyond our control.

Comparison of the years ended December 31, 2019 and 2018

The following table presents our cash flows from operations for the years ended December 31, 2019 and 2018:  
 
 
Years ended December 31,
(In thousands)
 
2019
 
2018
Cash provided by operating activities
 
$
179,949

 
$
172,734

Cash used in investing activities
 
(65,347
)
 
(41,300
)
Cash used in financing activities
 
(70,227
)
 
(105,055
)
Increase in cash, cash equivalents and restricted cash
 
$
44,375

 
$
26,379

Net cash provided by operating activities for the year ended December 31, 2019 was $179.9 million, an increase of $7.2 million compared with 2018. The increase in cash provided by operating activities was primarily driven by the increase in net income coupled with more cash received from accounts receivable, partially offset by cash used to pay down accounts payable and accrued liabilities.
Net cash used in investing activities increased by $24.0 million to $65.3 million. The increase is mainly related to increased capital expenditures of $18.6 million. In 2019, capital expenditures amounted to $59.9 million, compared with $41.3 million in 2018. In addition, in the fourth quarter of 2019, the Company used $5.6 million in the acquisition of PlacetoPay, net of cash received.

Net cash used in financing activities for the year ended December 31, 2019 amounted to $70.2 million, a decrease of $34.8 million when compared with the prior year. The decrease is mainly a result of the prior year repayment of long-term debt concurrent with the issuance of new debt under the 2018 Credit Agreement. The decrease was partially offset by more cash

43

used for repurchases of common stock of $21.8 million, for cash dividends of $7.1 million and for withholding taxes on restricted stock compensation of $6.7 million, all when compared with amounts incurred in the prior year.

Capital Resources

Our principal use of capital resources include capital expenditures such as hardware and computer software (purchased and internally developed), additions to property and equipment and acquisitions. We invested approximately $59.9 million, $41.3 million, and $33.5 million on capital expenditures for hardware and computer software and property and equipment for the years ended December 31, 2019, 2018 and 2017, respectively. In terms of acquisitions, in 2019, we completed the purchase of PlacetoPay for $6.3 million, while in 2017, we completed the purchase of EVERTEC Chile for $42.8 million. Capital expenditures are expected to be funded by cash flow from operations and, if necessary, borrowings under our revolving credit facility.

Dividend Payments

The Company pays a regular quarterly dividend on common stock, subject to the declaration thereof by our Board each quarter. Any declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board and will depend on many factors, including our financial condition, earnings, available cash, business opportunities, legal requirements, restrictions in our debt agreements and other contracts, capital requirements, level of indebtedness and other factors that our Board deems relevant. Refer to the table below for details regarding our dividends in 2019 and 2018:
Declaration Date
 
Record Date
 
Payment Date
 
Dividend per share
July 26, 2018
 
August 6, 2018
 
September 7, 2018
 
$
0.05

October 25, 2018
 
November 5, 2018
 
December 7, 2018
 
0.05

February 15, 2019
 
February 26, 2019
 
March 22, 2019
 
0.05

April 25, 2019
 
May 6, 2019
 
June 7, 2019
 
0.05

July 25, 2019
 
August 5, 2019
 
September 6, 2019
 
0.05

October 23, 2019
 
November 4, 2019
 
December 6, 2019
 
0.05


Stock Repurchase

During 2019, the Company repurchased 1,104,389 shares of the Company’s common stock at a cost of $31.8 million. The Company funded such repurchase with cash on hand and borrowings under the existing revolving credit facility.

During 2018, the Company repurchased 367,403 shares of the Company’s common stock at a cost of $10.0 million. The Company funded such repurchase with cash on hand and borrowings under the existing revolving credit facility.

During 2017, the Company repurchased 465,240 shares of the Company’s common stock at a cost of $7.7 million. The Company funded such repurchase with cash on hand and borrowings under the existing revolving credit facility.

Repurchases may be accomplished through open market transactions, privately negotiated transactions, accelerated share repurchase programs and other means.

Financial Obligations

2018 Senior Secured Credit Facilities

On November 27, 2018, EVERTEC and EVERTEC Group (“Borrower”) entered into a credit agreement governing the senior secured credit facilities, consisting of a $220.0 million term loan A facility that matures on November 27, 2023 ("2023 Term A"), a $325.0 million term loan B facility that matures on November 27, 2024 ("2024 Term B") and a $125.0 million revolving credit facility (the "Revolving Facility") that matures on November 27, 2023, with a syndicate of lenders and Bank of America, N.A. (“Bank of America”), as administrative agent, collateral agent, swingline lender and line of credit issuer (collectively the “2018 Credit Agreement”). The material terms and conditions of the senior secured credit facilities are summarized below.

Scheduled Amortization Payments

The 2023 Term A provides for amortization in the amount of 1.25% of the original principal amount of the 2023 Term A during each of the first twelve quarters starting from the quarter ending March 31, 2019, 1.875% during each of the four subsequent

44

quarters and 2.50% during each of the final three quarters, with the balance payable on the final maturity date.

The 2024 Term B provides for quarterly amortization payments totaling 1.00% per annum of the original principal amount of the 2024 Term B, with the balance payable on the final maturity date.

Voluntary Prepayments and Reduction and Termination of Commitments

The terms of the 2018 senior secured credit facilities allow EVERTEC Group to prepay loans and permanently reduce the loan commitments under the senior secured credit facilities at any time, subject to the payment of customary LIBOR breakage costs, if any, provided that, in connection with certain refinancing or repricing of the 2024 Term B on or prior to the date which is six months after the closing date of the 2018 Credit Agreement, a prepayment premium of 1.00% will be required.

Additionally, the terms of the facilities require mandatory repayment of outstanding principal balances based on a percentage of excess cash flow provided that no such prepayment shall be due if the resulting amount of the excess cash flow times the applicable percentage is less than $10 million.

Interest

The interest rates under the 2023 Term A and revolving credit facility are based on, at EVERTEC Group’s option, (a) adjusted LIBOR plus an interest margin of 2.25% or (b) the greater of (i) Bank of America’s “prime rate,” (ii) the Federal Funds Effective Rate plus 0.5% and (iii) adjusted LIBOR plus 1.0% (“ABR”) plus an interest margin of 1.25%. The interest rates under the 2024 Term B are based on, at EVERTEC Group’s option, (a) adjusted LIBOR plus an interest margin of 3.50% or (b) ABR plus an interest margin of 2.50%. The interest margins under the 2023 Term A and Revolving Facility are subject to reduction based on achievement of specified total secured net leverage ratio.

Guarantees and Collateral

EVERTEC Group’s obligations under the senior secured credit facilities and under any cash management, interest rate protection or other hedging arrangements entered into with a lender or any affiliate thereof are guaranteed by EVERTEC and each of EVERTEC’s existing wholly-owned subsidiaries (other than EVERTEC Group) and subsequently acquired or organized subsidiaries, subject to certain exceptions.

Subject to certain exceptions, the senior secured credit facilities are secured to the extent legally permissible by substantially all of the assets of (1) EVERTEC, including a perfected pledge of all of the limited liability company interests of EVERTEC Intermediate Holdings, LLC (“Holdings”), (2) Holdings, including a perfected pledge of all of the limited liability company interests of EVERTEC Group and (3) EVERTEC Group and the subsidiary guarantors, including but not limited to: (a) a pledge of substantially all capital stock held by EVERTEC Group or any guarantor and (b) a perfected security interest in substantially all tangible and intangible assets of EVERTEC Group and each guarantor.





Covenants
 
The senior secured credit facilities contain affirmative and negative covenants that the Company believes are usual and customary for a senior secured credit agreement. The negative covenants in the senior secured credit facilities include, among other things, limitations (subject to exceptions) on the ability of EVERTEC and its restricted subsidiaries to:

•
declare dividends and make other distributions;
•
redeem or repurchase capital stock;
•
grant liens;
•
make loans or investments (including acquisitions);
•
merge or enter into acquisitions;
•
sell assets;
•
enter into any sale or lease-back transactions;
•
incur additional indebtedness;
•
prepay, redeem or repurchase certain indebtedness;
•
modify the terms of certain debt;

45

•
restrict dividends from subsidiaries;
•
change the business of EVERTEC or its subsidiaries; and
•
enter into transactions with their affiliates.
 
In addition, the 2023 Term A and the Revolving Facility require EVERTEC to maintain a maximum total secured net leverage ratio of 4.25 to 1.00 for any quarter ending on or prior to September 30, 2020 and for fiscal quarters ending thereafter, 4.00 to 1.00.

Concurrently with the execution of the 2018 Credit Agreement, the Company terminated the existing senior secured credit facilities. The net proceeds received by EVERTEC Group from the senior secured credit facilities under the 2018 Credit Agreement, together with other cash available to EVERTEC Group, were used, among other things, to refinance EVERTEC Group’s previous senior secured credit facilities, which consisted of a $191.4 million 2020 Term A and a $379.0 million Term B, under the credit agreement, dated as of April 17, 2013 and as subsequently amended, among EVERTEC Intermediate Holdings, LLC, EVERTEC Group, JPMorgan Chase Bank, N.A., as administrative agent, collateral agent, swingline lender and L/C issuer, and the lenders party thereto. In connection with this transaction the Company recognized a loss on extinguishment of $2.6 million.

The unpaid principal balance at December 31, 2019 of the 2023 Term A Loan and the 2024 Term B Loan was $209.0 million, and $321.8 million, respectively. The additional borrowing capacity for the Revolving Facility loan at December 31, 2019 was $116.9 million. The Company issues letters of credit against the revolving credit facility which reduce the additional borrowing capacity of the revolving credit facility.

Events of Default

The events of default under the senior secured credit facilities include, without limitation, nonpayment, material misrepresentation, breach of covenants, insolvency, bankruptcy, certain judgments, change of control (as defined in the 2018 Credit Agreement) and cross-events of default on material indebtedness.

Notes payable

In May 2016, EVERTEC Group entered into a non-interest bearing financing agreement amounting to $0.7 million to purchase software. As of December 31, 2019 and December 31, 2018, the outstanding principal balance of the note payable was $0.2 million and $0.3 million, respectively. The current portion of this note is recorded as part of accounts payable and the long-term portion is included in other long-term liabilities.

In December 2019, EVERTEC Group entered into two non-interest bearing financing agreements amounting to $2.4 million to purchase software and maintenance. As of December 31, 2019, the outstanding principal balance of the notes payable was $2.4 million, recorded as part of accounts payable and the long-term portion is included in other long-term liabilities.

Interest Rate Swaps

At December 31, 2019, the Company had two interest rate swap agreements, entered into in December 2015 and December 2018, which convert a portion of the interest rate payments on the Company's 2023 Term B Loan from variable to fixed: 
Swap Agreement
 
Effective date
  
Maturity Date
  
Notional Amount
  
Variable Rate
  
Fixed Rate
2015 Swap
 
January 2017
  
April 2020
  
$200 million
  
1-month LIBOR
  
1.9225%
2018 Swap
 
April 2020
  
November 2024
  
$250 million
  
1-month LIBOR
  
2.89%

The Company has accounted for these transactions as cash flow hedges.

At December 31, 2019 and 2018, the carrying amount of the derivatives on the Company’s balance sheets is as follows:
(In thousands)
 
December 31, 2019
 
December 31, 2018
Other long-term assets
 
$
—

 
$
1,683

Other long-term liabilities
 
14,452

 
4,059


For the year ended December 31, 2019, the Company recognized gains related to hedging activities on the Statement of Income and Comprehensive Income that offset the Company's interest expense as follows:

46

(In thousands)
 
December 31, 2019
Interest expense
 
$
677


During the year ended December 31, 2019, the Company reclassified gains of $0.7 million from accumulated other comprehensive loss into income through interest expense. Based on current LIBOR rates, the Company expects to reclassify losses of $2.2 million from accumulated other comprehensive loss into income through interest expense over the next 12 months. Refer to Note 13 for tabular disclosure of the fair value of the derivative and to Note 15 for tabular disclosure of gains (losses) recorded on cash flow hedging activities.

The cash flow hedges are considered highly effective.

Covenant Compliance

As of December 31, 2019, the total secured net leverage ratio was 2.07 to 1.00. As of the date of filing of this Form 10-K, no event has occurred that constitutes an Event of Default or Default.

In this Annual Report on Form 10-K, we refer to the term “Adjusted EBITDA” to mean EBITDA as so defined and calculated for purposes of determining compliance with the total secured net leverage ratio based on the financial information for the last twelve months at the end of each quarter.

Net Income Reconciliation to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share (Non-GAAP Measures)

We define “EBITDA” as earnings before interest, taxes, depreciation and amortization. We define “Adjusted EBITDA” as EBITDA further adjusted to exclude unusual items and other adjustments described below. Adjusted EBITDA by segment is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, Adjusted EBITDA, as it relates to our segments, is presented in conformity with Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under the Securities and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K. We define “Adjusted Net Income” as net income adjusted to exclude unusual items and other adjustments described below. We define “Adjusted Earnings per common share” as Adjusted Net Income divided by diluted shares outstanding.

We present EBITDA and Adjusted EBITDA because we consider them important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of ourselves and other companies in our industry. In addition, our presentation of Adjusted EBITDA is substantially consistent with the equivalent measurements that are contained in the senior secured credit facilities in testing EVERTEC Group’s compliance with covenants therein such as the total secured net leverage ratio. We use Adjusted Net Income to measure our overall profitability because we believe it better reflects our comparable operating performance by excluding the impact of the non-cash amortization and depreciation that was created as a result of the Merger. In addition, in evaluating EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share, you should be aware that in the future we may incur expenses such as those excluded in calculating them. Further, our presentation of these measures should not be construed as an inference that our future operating results will not be affected by unusual or nonrecurring items.

Some of the limitations of EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted earnings per common share are as follows:

•
they do not reflect cash outlays for capital expenditures or future contractual commitments;
•
they do not reflect changes in, or cash requirements for, working capital;
•
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements;
•
in the case of EBITDA and Adjusted EBITDA, they do not reflect interest expense, or the cash requirements necessary to service interest, or principal payments, on indebtedness;
•
in the case of EBITDA and Adjusted EBITDA, they do not reflect income tax expense or the cash necessary to pay income taxes; and
•
other companies, including other companies in our industry, may not use EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted Earnings per common share or may calculate EBITDA, Adjusted EBITDA, Adjusted Net

47

Income and Adjusted Earnings per common share differently than as presented in this Report, limiting their usefulness as a comparative measure.

EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share are not measurements of liquidity or financial performance under GAAP. You should not consider EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share as alternatives to cash flows from operating activities or any other performance measures determined in accordance with GAAP, as an indicator of cash flows, as a measure of liquidity or as an alternative to operating or net income determined in accordance with GAAP.

A reconciliation of net income to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share is provided below:
 
 
Year Ended December 31, 2019
(Dollar amounts in thousands)
 
 
Net income
 
$
103,700

Income tax expense
 
12,975

Interest expense, net
 
27,594

Depreciation and amortization
 
68,082

EBITDA
 
212,351

Equity income (1)
 
(451
)
Compensation and benefits (2)
 
13,798

Transaction, refinancing and other fees (3)
 
498

Adjusted EBITDA
 
226,196

Operating depreciation and amortization (4)
 
(34,880
)
Cash interest expense, net (5)
 
(27,016
)
Income tax expense (6)
 
(20,239
)
Non-controlling interest (7)
 
(347
)
Adjusted net income
 
$
143,714

Net income per common share (GAAP):
 
 
Diluted
 
$
1.41

Adjusted Earnings per common share (Non-GAAP):
 
 
Diluted
 
$
1.96

Shares used in computing adjusted earnings per common share:
 
 
Diluted
 
73,475,763

 
 
1)
Represents the elimination of non-cash equity earnings from our 19.99% equity investment in Dominican Republic, Consorcio de Tarjetas Dominicanas, S.A. (“CONTADO”), net of dividends received. 
2)
Primarily represents share-based compensation and severance payments.
3)
Represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, recorded as part of selling, general and administrative expenses and cost of revenues.
4)
Represents operating depreciation and amortization expense, which excludes amounts generated as a result of the Merger and from purchase accounting intangibles generated from acquisitions.
5)
Represents interest expense, less interest income, as they appear on our consolidated statements of income and comprehensive income, adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of discount.
6)
Represents income tax expense calculated on adjusted pre-tax income using the applicable GAAP tax rate, adjusted for certain discreet items.
7)
Represents the 35% non-controlling equity interest in Evertec Colombia, net of amortization for intangibles created as part of the purchase.

48


Contractual Obligations

The Company’s contractual obligations as of December 31, 2019 are as follows:
 
 
 
Payment due by periods
(In thousands)
 
Total
 
Less than
1 year
 
1-3 years
 
3-5 years
 
After 5 years
Long-term debt (1)
 
$
642,869

 
$
39,728

 
$
279,355

 
$
323,786

 
$
—

Operating leases (2)
 
34,669

 
6,574

 
16,803

 
8,927

 
2,365

Other long-term liabilities
 
2,622

 
1,061

 
1,561

 
—

 
—

Total
 
$
680,160

 
$
47,363

 
$
297,719

 
$
332,713

 
$
2,365

 
 
(1)
Long-term debt includes principal balance of $530.8 million and the payments of cash interest (based on interest rates as of December 31, 2019 for variable rate debt) of the senior secured term loan facilities, as well as commitments fees related to the unused portion of our senior secured revolving credit facility, as required under the terms of the long-term debt agreements.
(2)
Includes certain facilities and equipment under operating leases. See Note 22 of the Notes to Audited Consolidated Financial Statements for additional information regarding operating lease obligations.

Off Balance Sheet Arrangements

In the ordinary course of business, the Company may enter into commercial commitments. With the exception of the letters of credit issued against the Revolving Facility which reduce the additional borrowing capacity of the Revolving Facility, as of December 31, 2019, the Company did not have any off balance sheet items.

Seasonality

Our payment businesses generally experience moderate increased activity during the traditional holiday shopping periods and around other nationally recognized holidays, which follow consumer spending patterns.

Effect of Inflation

While inflationary increases in certain input costs, such as occupancy, labor and benefits, and general administrative costs, have an impact on our operating results, inflation has had minimal net impact on our operating results during the last three years as overall inflation has been partially offset by increased margins on incremental revenue and cost reduction actions. We cannot assure you, however, that we will not be affected by general inflation in the future.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks arising from our normal business activities. These market risks principally involve the possibility of change in interest rates that will adversely affect the value of our financial assets and liabilities or future cash flows and earnings, and foreign exchange risk that may result in unfavorable foreign currency translation adjustments. Market risk is the potential loss arising from adverse changes in market rates and prices.

Interest rate risks

We issued floating-rate debt which is subject to fluctuations in interest rates. Our senior secured credit facilities accrue interest at variable rates and only the Term B Loan is subject to floors or minimum rates. A 100 basis point increase in interest rates over our floor(s) on our debt balances outstanding as of December 31, 2019, under the senior secured credit facilities would increase our annual interest expense by approximately $3.3 million. The impact on future interest expense as a result of future changes in interest rates will depend largely on the gross amount of our borrowings at that time.

In December 2015 and December 2018, we entered into interest rate swap agreements which convert a portion of our outstanding variable rate debt to fixed.


49

The interest rate swap exposes us to credit risk in the event that the counterparty to the swap agreement does not or cannot meet its obligations. The notional amount is used to measure interest to be paid or received and does not represent the amount of exposure to credit loss. The loss would be limited to the amount that would have been received, if any, over the remaining life of the swap. The counterparty to the swap is a major US based financial institution and we expect the counterparty to be able to perform its obligations under the swap. We use derivative financial instruments for hedging purposes only and not for trading or speculative purposes

See Note 12 of the Notes to Audited Consolidated Financial Statements appearing elsewhere in this Annual Report on Form 10-K for additional information related to the senior secured credit facilities.

Foreign currency exchange risk

We conduct business in certain countries in Latin America. Some of this business is conducted in the countries’ local currencies. The resulting foreign currency translation adjustments, from operations for which the functional currency is other than the U.S. dollar, are reported in accumulated other comprehensive loss in the audited consolidated balance sheet, except for highly inflationary environments in which the effects would be included in other operating income in the consolidated statements of income and comprehensive income. At December 31, 2019, the Company had $16.9 million in an unfavorable foreign currency translation adjustment as part of accumulated other comprehensive loss compared to an unfavorable foreign currency translation adjustment of $21.6 million at December 31, 2018.


50

Item 8. Financial Statements and Supplementary Data

The Audited Consolidated Financial Statements, together with EVERTEC’s independent registered public accounting firms reports, are included herein beginning on page F-1 of this Annual Report on Form 10-K.

Selected Quarterly Financial Data
 
 
Quarters ended,
(Dollar amounts in thousands, except per share data)
March 31, 2019
 
June 30, 2019
 
September 30, 2019
 
December 31, 2019
Revenues
$
118,836

 
$
122,548

 
$
118,804

 
$
127,186

Operating costs and expenses
81,431

 
84,860

 
84,002

 
92,579

Income from operations
37,405

 
37,688

 
34,802

 
34,607

Non-operating expenses
(6,862
)
 
(8,062
)
 
(6,296
)
 
(6,607
)
Income before income taxes
30,543

 
29,626

 
28,506

 
28,000

Income tax expense
3,809

 
2,489

 
3,720

 
2,957

Net income
$
26,734

 
$
27,137

 
$
24,786

 
$
25,043

Net income attributable to EVERTEC, Inc.’s common stockholders
$
26,644

 
$
27,058

 
$
24,754

 
$
25,013

Net income per common share - basic
$
0.37

 
$
0.38

 
$
0.34

 
$
0.35

Net income per common share - diluted
$
0.36

 
$
0.37

 
$
0.34

 
$
0.34

 
 
 
 
 
 
 
 
 
Quarters ended,
(Dollar amounts in thousands, except per share data)
March 31, 2018
 
June 30, 2018
 
September 30, 2018
 
December 31, 2018
Revenues
$
110,274

 
$
113,347

 
$
112,017

 
$
118,231

Operating costs and expenses
76,719

 
82,707

 
79,656

 
89,659

Income from operations
33,555

 
30,640

 
32,361

 
28,572

Non-operating expenses
(6,506
)
 
(7,395
)
 
(5,984
)
 
(6,078
)
Income before income taxes
27,049

 
23,245

 
26,377

 
22,494

Income tax expense
3,935

 
3,112

 
3,302

 
2,247

Net income
$
23,114

 
$
20,133

 
$
23,075

 
$
20,247

Net income attributable to EVERTEC, Inc.’s common stockholders
$
23,022

 
$
20,052

 
$
22,997

 
$
20,199

Net income per common share - basic
$
0.32

 
$
0.28

 
$
0.32

 
$
0.27

Net income per common share - diluted
$
0.31

 
$
0.27

 
$
0.31

 
$
0.27


Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company, under the direction of the Chief Executive Officer and the Chief Financial Officer, has established disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2019, the Company’s disclosure controls and procedures are effective.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

51

Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of our Chief Executive Officer and Chief Financial Officer and effected by the Company’s board of directors, management, and other personnel 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. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the firm; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the firm’s assets that could have a material effect on our financial statements.
The Company’s management assessed the effectiveness of our internal control over financial reporting as of December 31, 2019. In making this assessment, management used the criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). Based on this assessment, management has determined that the Company’s internal control over financial reporting as of December 31, 2019 was effective.
Deloitte & Touche, LLP, an independent registered public accounting firm, has audited the consolidated financial statements as of and for the year ended December 31, 2019, included in this Form 10-K and, as part of the audit, has issued a report, included as part of Item 8 of this Form 10-K, on the effectiveness of our internal control over financial reporting as of December 31, 2019.

Item 9B. Other Information

None.

52

Part III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by Item 10 will be included in EVERTEC's proxy statement, to be filed pursuant to Regulation 14 A within 120 days after the end of the 2019 fiscal year, and is incorporated herein by reference.

Item 11. Executive Compensation

The information required by Item 11 will be included in EVERTEC's proxy statement, to be filed pursuant to Regulation 14 A within 120 days after the end of the 2019 fiscal year, and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 will be included in EVERTEC's proxy statement, to be filed pursuant to Regulation 14 A within 120 days after the end of the 2019 fiscal year, and is incorporated herein by reference.

Item 13. Certain Relationships and Related Party Transactions and Director Independence

The information required by Item 13 will be included in EVERTEC's proxy statement, to be filed pursuant to Regulation 14 A within 120 days after the end of the 2019 fiscal year, and is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services

The information required by Item 14 will be included in EVERTEC's proxy statement, to be filed pursuant to Regulation 14 A within 120 days after the end of the 2019 fiscal year, and is incorporated herein by reference.
Part IV
Item 15. Exhibits and Financial Statement Schedules
(a) (1) Financial Statements
The following consolidated financial statements of EVERTEC, Inc. together with the Report of Independent Registered Public Accounting Firm, are included in Part II, Item 8, Financial Statements and Supplementary Data:
 
•
Reports of Independent Registered Public Accounting Firm
•
Consolidated Balance Sheets as of December 31, 2019 and 2018
•
Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2019, 2018 and 2017
•
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2019, 2018 and 2017
•
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017
•
Notes to Audited Consolidated Financial Statements
(2) Financial Statement Schedules
Schedule I—Parent Company Only Financial Statements
(3) Exhibits

53
Table of Contents

Exhibit
 No.
 
Description
 
 
 
2.1*
 
 
 
 
2.2*
 
 
 
 
2.3*
 
 
 
 
2.4*
 
 
 
 
2.5*
 
 
 
 
2.6
 
 
 
 
3.1
 
 
 
 
3.2
 
 
 
 
4.1
 
 
 
 
4.2*
 
 
 
 
4.3
 
 
 
 
4.4
 
 
 
 
4.5
 
 
 
 
4.6*
 
 
 
 
10.1
 
 
 
 
10.2
 
 
 
 
10.3
 
 
 
 
10.4
 
 
 
 
10.5*
 

54
Table of Contents

 
 
 
10.6
 
 
 
 
10.7*
 
 
 
 
10.8*
 
 
 
 
10.9*
 
 
 
 
10.10*
 
 
 
 
10.11*
 
 
 
 
10.12+
 
 
 
 
10.13*
 
Credit Agreement, dated November 27, 2018, among EVERTEC, Inc., EVERTEC Group, LLC, the lenders party thereto from time to time, Bank of America, N.A., as administrative agent, collateral agent, swingline lender and L/C issuer, Bank of America, N.A. (solely with respect to the Term B Facility), Merrill Lynch Pierce, Fenner & Smith Incorporated (or any other registered broker-dealer wholly-owned by Bank of America Corporation to which all or substantially all of Bank of America Corporation’s or any of its subsidiaries’ investment banking, commercial lending services or related businesses may be transferred following the date of this Agreement) (solely with respect to the Term A Facility and the Revolving Credit Facility), SunTrust Robinson Humphrey, Inc., Citigroup Global Markets Inc., Goldman Sachs Bank USA and JPMorgan Chase Bank, N.A., as joint lead arrangers, Bank of America, N.A. (solely with respect to the Term B Facility), Merrill Lynch Pierce, Fenner & Smith Incorporated (or any other registered broker-dealer wholly-owned by Bank of America Corporation to which all or substantially all of Bank of America Corporation’s or any of its subsidiaries’ investment banking, commercial lending services or related businesses may be transferred following the date of this Agreement) (solely with respect to the Term A Facility and the Revolving Credit Facility), SunTrust Robinson Humphrey, Inc., Citigroup Global Markets Inc., Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A. and Deutsche Bank Securities Inc., as joint bookrunners, Goldman Sachs Bank USA, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank Securities Inc. and FirstBank Puerto Rico and Scotiabank de Puerto Rico as co-syndication agents
 
 
 
10.14*
 
 
 
 
10.15*
 
 
 
 
10.16+
 
 
 
 
10.17+
 
 
 
 
10.18+
 
 
 
 

55
Table of Contents

10.19+
 
 
 
 
10.20+
 
 
 
 
10.21*+
 
 
 
 
10.22+
 
 
 
 
10.23+
 
 
 
 
10.24+
 
 
 
 
10.25+
 
 
 
 
10.26+
 
 
 
 
10.27+
 
 
 
 
10.28
 
 
 
 
21.1*
 
 
 
 
23.1*
 
 
 
 
31.1*
 
 
 
 
31.2*
 
 
 
 
32.1**
 
 
 
 
32.2**
 
 
 
 
101.INS XBRL**
 
Instance document
 
 
 

56
Table of Contents

101.SCH XBRL**
 
Taxonomy Extension Schema
 
 
 
101.CAL XBRL**
 
Taxonomy Extension Calculation Linkbase
 
 
 
101.DEF XBRL**
 
Taxonomy Extension Definition Linkbase
 
 
 
101.LAB XBRL**
 
Taxonomy Extension Label Linkbase
 
 
 
101.PRE XBRL**
 
Taxonomy Extension Presentation Linkbase

*    Filed herewith.
**    Furnished herewith.
+    This exhibit is a management contract or a compensatory plan or arrangement.



57
Table of Contents

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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,
 
 
 
EVERTEC, Inc.
 
 
 
Date: February 27, 2020
 
By:
/s/ Morgan M. Schuessler, Jr.
 
 
 
Morgan M. Schuessler, Jr.
 
 
 
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
Signature
    
Title
 
Date
 
 
 
/s/ Morgan M. Schuessler, Jr.
    
Chief Executive Officer (Principal Executive
 
February 27, 2020
Morgan M. Schuessler, Jr.
    
Officer)
 
 
 
 
 
/s/ Joaquin A. Castrillo-Salgado
    
Chief Financial Officer (Principal Financial and
 
February 27, 2020
Joaquin A. Castrillo-Salgado
    
Accounting Officer)
 
 
 
 
 
/s/ Frank G. D’Angelo
    
Chairman of the Board
 
February 27, 2020
Frank G. D’Angelo
    
 
 
 
 
 
 
/s/ Iván Pagán
    
Director
 
February 27, 2020
Iván Pagán
    
 
 
 
 
 
 
/s/ Alan H. Schumacher
    
Director
 
February 27, 2020
Alan H. Schumacher
    
 
 
 
 
 
 
/s/ Thomas W. Swidarski
    
Director
 
February 27, 2020
Thomas W. Swidarski
    
 
 
 
 
 
 
/s/ Jorge A. Junquera
    
Director
 
February 27, 2020
Jorge A. Junquera
    
 
 
 
 
 
 
/s/ Aldo Polak
    
Director
 
February 27, 2020
Aldo Polak
    
 
 
 
 
 
 
/s/ Olga M. Botero
    
Director
 
February 27, 2020
Olga M. Botero
    
 
 
 
 
 
 
/s/ Brian J. Smith
    
Director
 
February 27, 2020
Brian J. Smith
    
 
 
 

58
Table of Contents

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Audited Consolidated Financial Statements
 
 
 
 
 
 
 
 
 
 
 
 
 

F - 1
Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of EVERTEC, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of EVERTEC, Inc. and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of income and comprehensive income, changes in stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2019, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2020, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Goodwill -Refer to Notes 1 and 9 to the financial statements
Critical Audit Matter Description
Goodwill is tested for impairment on an annual basis as of August 31, or more often if events or changes in circumstances indicate there may be impairment. The Company's annual goodwill impairment assessment at August 31, 2019 was performed using a qualitative approach by assessing changes in relevant events and circumstances, since the most recent fair value calculation, that affect the fair value or carrying amount of each reporting unit to determine whether it was more likely than not that the fair value of a reporting unit was less than its carrying amount. The Company’s goodwill was $399.5 million as of December 31, 2019, of which $54.6 million was allocated to the Payment Services - Latin America reporting unit. Based on the qualitative assessment performed, the Company concluded that it was not more likely than not that the fair value of each reporting unit was less than its carrying amount.
The Company’s most recent quantitative annual goodwill impairment assessment for the Payment Services - Latin America

F - 2
Table of Contents

reporting unit used the discounted cash flow model to estimate fair value, which required management to make significant estimates and assumptions, including selection of the discount rate.
Our evaluation of the Company’s conclusion that it was not more likely than not that the fair value of the Payment Services - Latin America reporting unit was less than its carrying amount included the evaluation of qualitative factors that could change the selected discount rate. Given the difference between the fair value and carrying value of the Payment Services - Latin America reporting unit, performing audit procedures to evaluate the reasonableness of the qualitative factors affecting the discount rate required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the events and circumstances evaluated by management on its qualitative assessment for the discount rate of Payment Services -Latin America included the following, among others:
•
We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the assessment of qualitative factors that affect the discount rate of Payment Services - Latin America.
•
With the assistance of our fair value specialists, we developed an expectation of a range of discount rates that a market participant would have used at August 31, 2019, considering any changes in events and circumstances in the Latin America market since the last quantitative assessment performed by the Company.
•
Compared the expectation developed above to the discount rate used by management in the last quantitative assessment performed by the Company.

/s/ Deloitte & Touche LLP


San Juan, Puerto Rico
February 27, 2020
Stamp No. E399793
affixed to original.

We have served as the Company’s auditor since 2015.





F - 3
Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of EVERTEC, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of EVERTEC, Inc. and subsidiaries (the “Company”) as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our report dated February 27, 2020, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

San Juan, Puerto Rico
February 27, 2020

Stamp No. E399794
affixed to original.


F - 4
Table of Contents

EVERTEC, Inc. Consolidated Balance Sheets    
(Dollar amounts in thousands, except share data)
 
 
 
December 31, 2019
 
December 31, 2018
Assets
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
 
$
111,030

 
$
69,973

Restricted cash
 
20,091

 
16,773

Accounts receivable, net
 
106,812

 
100,323

Prepaid expenses and other assets
 
38,085

 
29,124

Total current assets
 
276,018

 
216,193

Investment in equity investee
 
12,288

 
12,149

Property and equipment, net
 
43,791

 
36,763

Operating lease right-of-use asset
 
29,979

 
—

Goodwill
 
399,487

 
394,644

Other intangible assets, net
 
241,937

 
259,269

Deferred tax asset
 
2,131

 
1,917

Net investment in lease
 
722

 
1,060

Other long-term assets
 
5,323

 
5,297

Total assets
 
$
1,011,676

 
$
927,292

Liabilities and stockholders’ equity
 
 
 
 
Current Liabilities:
 
 
 
 
Accrued liabilities
 
$
58,160

 
$
57,006

Accounts payable
 
39,165

 
47,272

Unearned income
 
20,668

 
11,527

Income tax payable
 
6,298

 
6,650

Current portion of long-term debt
 
14,250

 
14,250

Current portion of operating lease liability
 
5,773

 
—

Total current liabilities
 
144,314

 
136,705

Long-term debt
 
510,947

 
524,056

Deferred tax liability
 
4,261

 
9,950

Unearned income - long term
 
28,437

 
26,075

Operating lease liability - long-term
 
24,679

 
—

Other long-term liabilities
 
27,415

 
14,900

Total liabilities
 
740,053

 
711,686

Commitments and contingencies (Note 22)
 
 
 
 
Stockholders’ equity
 
 
 
 
Preferred stock, par value $0.01; 2,000,000 shares authorized; none issued
 
—

 
—

Common stock, par value $0.01; 206,000,000 shares authorized; 72,000,261 shares issued and outstanding at December 31, 2019 (December 31, 2018 - 72,378,710)
 
720

 
723

Additional paid-in capital
 
—

 
5,783

Accumulated earnings
 
296,476

 
228,742

Accumulated other comprehensive loss, net of tax
 
(30,009
)
 
(23,789
)
Total EVERTEC, Inc. stockholders’ equity
 
267,187

 
211,459

Non-controlling interest
 
4,436

 
4,147

Total equity
 
271,623

 
215,606

Total liabilities and equity
 
$
1,011,676

 
$
927,292


The accompanying notes are an integral part of these audited consolidated financial statements.

F - 5
Table of Contents

EVERTEC, Inc. Consolidated Statements of Income and Comprehensive Income
(Dollar amounts in thousands, except per share data)
 

 
 
Years ended December 31,
 
 
2019
 
2018
 
2017
 
 
 
 
 
 
 
Revenues (affiliates Note 21)
 
$
487,374

 
$
453,869

 
$
407,144

 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
Cost of revenues, exclusive of depreciation and amortization shown below
 
213,379

 
196,957

 
200,650

Selling, general and administrative expenses
 
61,411

 
68,717

 
56,161

Depreciation and amortization
 
68,082

 
63,067

 
64,250

Total operating costs and expenses
 
342,872

 
328,741

 
321,061

Income from operations
 
144,502

 
125,128

 
86,083

Non-operating income (expenses)
 
 
 
 
 
 
Interest income
 
1,217

 
787

 
716

Interest expense
 
(28,811
)
 
(30,044
)
 
(29,861
)
Earnings of equity method investment
 
936

 
692

 
604

Other (expenses) income
 
(1,169
)
 
2,602

 
2,657

Total non-operating expenses
 
(27,827
)
 
(25,963
)
 
(25,884
)
Income before income taxes
 
116,675

 
99,165

 
60,199

Income tax expense
 
12,975

 
12,596

 
4,780

Net income
 
103,700

 
86,569

 
55,419

Less: Net income attributable to non-controlling interest
 
231

 
299

 
365

Net income attributable to EVERTEC, Inc.’s common stockholders
 
103,469

 
86,270

 
55,054

Other comprehensive (loss) income, net of tax of $1,070, $345 and $122
 
 
 
 
 
 
Foreign currency translation adjustments
 
4,754

 
(10,564
)
 
(635
)
(Loss) gain on cash flow hedges
 
(10,974
)
 
(2,377
)
 
2,178

Total comprehensive income attributable to EVERTEC, Inc.’s common stockholders
 
$
97,249

 
$
73,329

 
$
56,597

Net income per common share - basic attributable to EVERTEC, Inc.’s common stockholders
 
$
1.44

 
$
1.19

 
$
0.76

Net income per common share - diluted attributable to EVERTEC, Inc.’s common stockholders
 
$
1.41

 
$
1.16

 
$
0.76

The accompanying notes are an integral part of these audited consolidated financial statements.

F - 6
Table of Contents

EVERTEC, Inc. Consolidated Statements of Changes in Stockholders’ Equity
(Dollar amounts in thousands, except share data)
 
 
 
Number of
Shares of
Common Stock
 
Common
Stock
 
Additional
Paid-in
Capital
 
Accumulated
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Non-Controlling Interest
 
Total
Stockholders’
Equity
Balance at December 31, 2016
 
72,635,032

 
$
726

 
$
—

 
$
116,341

 
$
(12,391
)
 
$
3,499

 
$
108,175

Cumulative adjustment from the implementation of ASU 2016-09










4,203







 
4,203

Share-based compensation recognized
 
—

 
—

 
9,642

 
—

 
—

 
—

 
9,642

Repurchase of common stock
 
(465,240
)
 
(5
)
 
(2,702
)
 
(4,964
)
 
—

 
—

 
(7,671
)
Stock options exercised, net of cashless exercise
 
8,798

 
—

 
(91
)
 
—

 
—

 
—

 
(91
)
Restricted stock grants and units delivered, net of cashless exercise
 
215,343

 
2

 
(1,499
)
 
—

 
—

 
—

 
(1,497
)
Net income
 
—

 
—

 
—

 
55,054

 
—

 
365

 
55,419

Cash dividends declared on common stock, $0.30 per share
 
—

 
—

 
—

 
(21,747
)
 
—

 
—

 
(21,747
)
Other comprehensive income
 
—

 
—

 
—

 
—

 
1,543

 
 
 
1,543

Balance at December 31, 2017
 
72,393,933

 
723

 
5,350

 
148,887

 
(10,848
)
 
3,864

 
147,976

Cumulative adjustment from the implementation of ASC 606
 
—

 
—

 
—

 
858

 
—

 
(16
)
 
842

Share-based compensation recognized
 
—

 
—

 
12,592

 
—

 
—

 
—

 
12,592

Repurchase of common stock
 
(367,403
)
 
(4
)
 
(9,996
)
 
—

 
—

 
—

 
(10,000
)
Restricted stock grants and units delivered, net of cashless exercise
 
352,180

 
4

 
(2,163
)
 
—

 
—

 
—

 
(2,159
)
Net income
 
—

 
—

 
—

 
86,270

 
—

 
299

 
86,569

Cash dividends declared on common stock, $0.10 per share
 
—

 
—

 
—

 
(7,273
)
 
—

 
—

 
(7,273
)
Other comprehensive loss
 
—

 
—

 
—

 
—

 
(12,941
)
 
—

 
(12,941
)
Balance at December 31, 2018
 
72,378,710

 
723

 
5,783

 
228,742

 
(23,789
)
 
4,147

 
215,606

Share-based compensation recognized
 
—

 
—

 
13,570

 
—

 
—

 
—

 
13,570

Repurchase of common stock
 
(1,104,389
)
 
(11
)
 
(10,496
)
 
(21,315
)
 
—

 
—

 
(31,822
)
Restricted stock units delivered, net of cashless
 
725,940

 
8

 
(8,857
)
 
—

 
—

 
—

 
(8,849
)
Net income
 
—

 
—

 
—

 
103,469

 
—

 
231

 
103,700

Cash dividends declared on common stock, $0.20 per share
 
—

 
—

 
—

 
(14,420
)
 
—

 
—

 
(14,420
)
Other comprehensive loss
 
—

 
—

 
—

 
—

 
(6,220
)
 
58

 
(6,162
)
Balance at December 31, 2019
 
72,000,261

 
$
720

 
$
—

 
$
296,476

 
$
(30,009
)
 
$
4,436

 
$
271,623

  

The accompanying notes are an integral part of these audited consolidated financial statements.

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EVERTEC, Inc. Consolidated Statements of Cash Flows
(In thousands)
 
 
 
Years ended December 31,
 
 
2019
 
2018
 
2017
Cash flows from operating activities
 
 
 
 
 
 
Net income
 
$
103,700

 
$
86,569

 
$
55,419

Adjustments to reconcile net income to net cash provided by operating activities:
 

 

 
 
Depreciation and amortization
 
68,082

 
63,067

 
64,250

Amortization of debt issue costs and accretion of discount
 
2,988

 
4,316

 
5,128

Operating lease amortization
 
6,161

 
—

 
—

Loss on extinguishment of debt
 
—

 
2,645

 
—

Provision for doubtful accounts and sundry losses
 
3,939

 
2,112

 
843

Deferred tax benefit
 
(6,391
)
 
(4,611
)
 
(4,306
)
Share-based compensation
 
13,570

 
12,592

 
9,642

Loss on impairment of software
 
—

 
—

 
11,441

Loss on disposition of property and equipment and other intangibles
 
893

 
109

 
430

Earnings of equity method investment
 
(936
)
 
(692
)
 
(604
)
Dividend received from equity method investment
 
485

 
390

 
—

(Increase) decrease in assets:
 

 

 
 
Accounts receivable
 
(7,851
)
 
(18,181
)
 
(2,099
)
Prepaid expenses and other assets
 
(8,770
)
 
(3,911
)
 
(4,048
)
Other long-term assets
 
(1,750
)
 
(4,432
)
 
1,654

Increase (decrease) in liabilities:
 

 

 
 
Accounts payable and accrued liabilities
 
(215
)
 
16,057

 
(870
)
Income tax payable
 
(596
)
 
5,245

 
(349
)
Unearned income
 
11,504

 
7,021

 
8,444

Operating lease liabilities
 
(6,055
)
 
—

 
—

Other long-term liabilities
 
1,191

 
4,438

 
811

Total adjustments
 
76,249

 
86,165

 
90,367

Net cash provided by operating activities
 
179,949

 
172,734

 
145,786

Cash flows from investing activities
 


 


 
 
Additions to software
 
(36,871
)
 
(27,386
)
 
(22,174
)
Acquisitions, net of cash acquired
 
(5,585
)
 
—

 
(42,836
)
Property and equipment acquired
 
(23,002
)
 
(13,933
)
 
(11,290
)
Proceeds from sales of property and equipment
 
111

 
19

 
32

Net cash used in investing activities
 
(65,347
)
 
(41,300
)
 
(76,268
)
Cash flows from financing activities
 

 

 
 
Proceeds from issuance of long-term debt
 
—

 
545,000

 
—

Debt issuance costs
 
—

 
(4,418
)
 
—

Net decrease in short-term borrowings
 
—

 
(12,000
)
 
(16,000
)
Repayments of borrowings for purchase of equipment and software
 
(886
)
 
(720
)
 
(2,373
)
Dividends paid
 
(14,420
)
 
(7,273
)
 
(21,762
)
Withholding taxes paid on share-based compensation
 
(8,849
)
 
(2,159
)
 
(1,588
)
Repurchase of common stock
 
(31,822
)
 
(10,000
)
 
(7,671
)
Repayment of long-term debt
 
(14,250
)
 
(613,485
)
 
(19,789
)
Net cash used in financing activities
 
(70,227
)
 
(105,055
)
 
(69,183
)
Net increase in cash, cash equivalents and restricted cash
 
44,375

 
26,379

 
335

Cash, cash equivalents and restricted cash at beginning of the period
 
86,746

 
60,367

 
60,032

Cash, cash equivalents and restricted cash at end of the period
 
$
131,121

 
$
86,746

 
$
60,367

Reconciliation of cash, cash equivalents and restricted cash
 
 
 
 
 
 
Cash and cash equivalents
 
$
111,030

 
$
69,973

 
$
50,423

Restricted cash
 
20,091

 
16,773

 
9,944

Cash, cash equivalents and restricted cash
 
$
131,121

 
$
86,746

 
$
60,367

Supplemental disclosure of cash flow information:
 
 
 
 
 
 
Cash paid for interest
 
28,233

 
26,891

 
25,379

Cash paid for income taxes
 
18,703

 
9,750

 
9,930

Supplemental disclosure of non-cash activities:
 
 
 
 
 
 
Payable due to vendor related to property and equipment and software acquired
 
2,622

 
317

 
1,037

The accompanying notes are an integral part of these audited consolidated financial statements.

F - 8
Table of Contents

Notes to Audited Consolidated Financial Statements
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

F - 9
Table of Contents

EVERTEC, Inc. Notes to Consolidated Financial Statements

Note 1—The Company and Summary of Significant Accounting Policies

The Company

EVERTEC, Inc. (formerly known as Carib Latam Holdings, Inc.) and its subsidiaries (collectively the “Company,” or “EVERTEC”) is a leading full-service transaction processing business in Latin America and the Caribbean. The Company is based in Puerto Rico and provides a broad range of merchant acquiring, payment services and business process management services across 26 countries in the region. EVERTEC owns and operates the ATH network, one of the leading automated teller machine (“ATM”) and personal identification number (“PIN”) debit networks in Latin America. In addition, EVERTEC provides a comprehensive suite of services for core bank processing, cash processing and technology outsourcing in the regions the Company serves. EVERTEC serves a broad and diversified customer base of leading financial institutions, merchants, corporations and government agencies with solutions that are essential to their operations, enabling them to issue, process and accept transactions securely.

Initial Public Offering and Other Public Offerings

On April 17, 2013, the Company completed its initial public offering of 28,789,943 shares of common stock at a price to the public of $20.00 per share. On September 18, 2013 and December 13, 2013, the Company completed public offerings of 23,000,000 and 15,233,273 shares, respectively, of the Company’s common stock by Apollo Global Management, LLC ("Apollo") and Popular, Inc. ("Popular"), and current and former employees. As of December 31, 2019, Popular owned approximately 11.7 million shares of EVERTEC's common stock, or 16.2% and Apollo no longer owns any of the Company’s common stock.

Basis of Presentation

The consolidated financial statements of EVERTEC have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the accompanying consolidated financial statements, prepared in accordance with GAAP, contain all adjustments, all of which are normal and recurring in nature, necessary for a fair presentation.

A summary of the most significant accounting policies used in preparing the accompanying consolidated financial statements is as follows:

Principles of Consolidation

The accompanying consolidated financial statements include the accounts and operations of the Company, which are presented in accordance with GAAP. The Company consolidates all entities that are controlled by ownership of a majority voting interest. Intercompany accounts and transactions are eliminated in the consolidated financial statements.

Use of Estimates

The preparation of the accompanying consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company’s revenue recognition policy follows the guidance from Accounting Standards Codification ("ASC') 606, Revenue from Contracts with Customers, which provide guidance on the recognition, presentation, and disclosure of revenue in consolidated financial statements.

The Company recognizes revenue when (or as) control of goods or services are transferred to a customer. The transfer of control occurs when the customer can direct the use of and receive substantially all the benefits from the transferred good or service. Therefore, revenue is recognized over time (typically for services) or at a point in time (typically for goods).


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Table of Contents

EVERTEC, Inc. Notes to Consolidated Financial Statements

The assessment of revenue recognition is performed by the Company based on the five-step model established in Topic 606, as follows: Step 1: Identify the contract with customer; Step 2: Identify the performance obligations in the contract; Step 3: Determine the transaction price; Step 4: Allocate the transaction price to the performance obligations in the contract; and Step 5: Recognize revenue when or as the entity satisfies a performance obligation.

At contract inception, the Company evaluates whether the contract (i) is legally enforceable; (ii) approved by both parties; (iii) properly defines rights and obligations of the parties, including payment terms; (iv) has commercial substance; and (v) collection of substantially all consideration entitled is probable, before proceeding with the assessment of revenue recognition. If any of these requirements is not met, the contract does not exist for purposes of the model and any consideration received is recorded as a liability. A reassessment may be performed in a later date upon change in facts and circumstances. The Company also evaluates within this step if contracts issued within a period of 6 months with the same customer should be accounted for as a single contract. The Company’s contracts with customers may be modified through amendments, change requests and waivers. Upon receipt, modifications of contracts with customers are evaluated to determine if these must be accounted for: (i) as a separate contract, (ii) a cumulative catch-up, or (iii) as a termination and creation of a new contract. Contract modifications must also comply with the requirements to determine if a contract with a customer exists for accounting purposes.

To identify performance obligations within contracts with customers, the Company first identifies all the promises in the contract (i.e., explicit and implicit). This includes the customer’s options to acquire additional goods or services for free or at a discount in exchange for an upfront payment. The Company then assesses if each material good or service (or bundle of goods or services) is distinct in nature (i.e., the customer can benefit from the good or service on its own or together with other readily available resources), and is capable of being distinct in the context of the contract (i.e., the promise to transfer the good or service is separately identifiable from other promises in the contract). A distinct good or service (or bundle of goods or services) constitutes a performance obligation.

The Company also applies the series guidance to distinct goods or services (either with a specified quantity of goods or services or a stand-ready service), with an over time revenue recognition, to determine whether they should be accounted for as a single performance obligation. These distinct goods or services are recognized as a single performance obligation when their nature and timely increments are substantially the same and have the same pattern of transfer to the customer (i.e., the distinct goods or services within the series use the same method to measure progress towards complete satisfaction). To determine if a performance obligation should be recognized over time, one or more of the following criteria must be met: (1) the customer simultaneously receives and consumes the benefits as the Company performs (i.e., routine or recurring services); (2) the customer controls the asset as the entity creates or enhances it (i.e., asset on customer’s site); or (3) the Company’s performance does not create an asset for which the Company has an alternative use and there is a right to payment for performance to date (i.e., asset built to order). Performance obligations that do not meet the over time criteria are recognized at a point in time.

In addition, in Step 2 of the model, the Company evaluates whether the practical expedient of right-to-invoice applies. If this practical expedient is applicable, steps 3, 4 and 5 are waived. For this practical expedient to apply, the right to consideration must correspond directly with the value received by the customer for the Company’s performance to date, no significant up-front payments or retroactive adjustments must exist, and specified minimums must be deemed non-substantive at the contract level. If the contract with the customer has multiple performance obligations and the practical expedient of right-to-invoice does not apply, the Company proceeds to determine the transaction price and allocate it on a stand-alone selling price basis among the different performance obligations identified in the Step 2.

The Company generally applies the expected cost-plus margin approach to determine the stand-alone selling price at the performance obligation level. In addition, for performance obligations that are satisfied over time and the right to invoice practical expedient is not available, the Company determines a method to measure progress (i.e., input or output method) based on current facts and circumstances. When these performance obligations have variable consideration within its transaction price and are part of a series, the Company allocates the variable consideration to each time increment.

As part of the revenue recognition analysis, when another party is involved in providing goods or services to a customer, the Company evaluates, for each performance obligation, whether it is providing the goods or services itself (i.e., as principal), or if it is only arranging on behalf of the other party. The Company acts as principal if it controls the specified good or service before that good or service is transferred to a customer. To determine if the Company acts as an agent, the Company considers indicators, such as: (i) the responsibility to fulfill a promise; (ii) the inventory risk; and (iii) the price determination.

Investment in Equity Investee

F - 11
Table of Contents

EVERTEC, Inc. Notes to Consolidated Financial Statements


The Company accounts for investments using the equity method of accounting if the investment provides the Company the ability to exercise significant influence, but not control, over an investee. Significant influence is generally deemed to exist if the Company has an ownership interest in the voting stock of an investor of between 20 percent and 50 percent, although other factors are considered in determining whether the equity method of accounting is appropriate. Under this method, the investment, originally recorded at cost, is adjusted to recognize the Company’s share of net income or losses as they occur. The Company’s share of investee earnings or losses is recorded, net of taxes, within earnings (losses) of equity method investment caption in the consolidated statements of income and comprehensive income. The Company’s consolidated revenues include fees for services provided to an investee accounted for under the equity method. Additionally, the Company’s interest in the net assets of its equity method investee is reflected in the consolidated balance sheets. On the acquisition of the investment any difference between the cost of the investment and the amount of the underlying equity in net assets of an investee is required to be accounted as if the investee were a consolidated subsidiary. If the difference is assigned to depreciable or amortizable assets or liabilities, then the difference should be amortized or accreted in connection with the equity earnings based on the Company’s proportionate share of the investee’s net income or loss. If the investor is unable to relate the difference to specific accounts of the investee, the difference should be considered goodwill.

The Company considers whether the fair value of its equity method investment has declined below its carrying value whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable. If the Company considered any such decline to be other than temporary (based on various factors, including historical financial results, product development activities and the overall health of the investee’s industry), then the Company would record a write-down to estimated fair value.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method and expensed over their estimated useful lives. Amortization of leasehold improvements is computed over the terms of the respective leases, including renewal options considered by management to be reasonably assured of being exercised, or the estimated useful lives of the improvements, whichever is shorter. Costs of maintenance and repairs which do not improve or extend the life of the respective assets are expensed as incurred.

Impairment of Long-lived Assets

Long-lived assets to be held and used, and long-lived assets to be disposed of, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Capitalization of Software

The Company develops software that is used in providing processing services to customers. Capitalized software includes purchased software and internally-developed software and is recognized as software packages within the other intangible assets line item in the consolidated balance sheets. Capitalization of internally developed software occurs only after the preliminary project stage is complete and technological feasibility has been achieved, and management’s estimation that the likelihood of successful development and implementation reaches a provable level. Tasks that are generally capitalized are as follows: (a) system design of a chosen path including software configuration and software interfaces; (b) employee costs directly associated with the internal-use computer software project; (c) software development (coding) and software and system testing and verification; (d) system installation; and (e) enhancements that add function and are considered permanent. These tasks are capitalized and amortized using the straight line method over its estimated useful life, which range from three to ten years and is included in depreciation and amortization in the consolidated statements of income and comprehensive income.

The Company capitalizes interest costs incurred in the development of software. The amount of interest capitalized is an allocation of the interest cost incurred during the period required to substantially complete the asset. The interest rate for capitalization purposes is based on a weighted average rate on the Company’s outstanding borrowing. For the years ended December 31, 2019, 2018 and 2017, interest cost capitalized amounted to approximately $1.1 million, $1.1 million and $0.8 million, respectively.


F - 12
Table of Contents

EVERTEC, Inc. Notes to Consolidated Financial Statements

Software and Maintenance Contracts

Software and maintenance contracts are recorded at cost. Amortization of software and maintenance contracts is computed using the straight-line method and expensed over their estimated useful lives which range from one to five years and are recognized in cost of revenues in the consolidated statements of income and comprehensive income.

Software and maintenance contracts are recognized as prepaid expenses and other assets or within other long-term assets depending on their remaining useful lives.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price and related costs over the value assigned to net assets acquired. Goodwill is not amortized, but is tested for impairment at least annually, or more often if events or circumstances indicate there may be impairment.

The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative impairment test. If determined to be necessary, the quantitative impairment test shall be used to identify goodwill impairment and measure the amount of a goodwill impairment loss to be recognized (if any). The Company may assess qualitative factors to determine whether it is more likely than not, that is, a likelihood of more than 50 percent that the fair value of the reporting unit is less than its carrying amount, including goodwill. The Company has an unconditional option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. The Company may resume performing the qualitative assessment in any subsequent period. The quantitative goodwill impairment test, used to identify both the existence of impairment and the amount of impairment loss, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the Company determines to perform a quantitative impairment test, a third-party valuator may be engaged to prepare an independent valuation of each reporting unit. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Additionally, the Company shall consider the income tax effect from any tax-deductible goodwill on the carrying amount of the reporting unit, if applicable, when measuring the goodwill impairment loss. For the years ended December 31, 2019, 2018 and 2017, no impairment losses associated with goodwill were recognized.

Other identifiable intangible assets with definitive useful lives are amortized using the straight-line method or accelerated methods. These intangibles are evaluated periodically for impairment when events or changes in circumstances indicate that the carrying amounts may not be recoverable.

Other identifiable intangible assets with definitive useful lives include customer relationships, trademarks, software packages and a non-compete agreement. Customer relationships were valued using the excess earnings method under the income approach. Trademark assets were valued using the relief-from-royalty method under the income approach. Internally developed software packages, which include capitalized software development costs, are recorded at cost, while software packages acquired as part of a business combination were valued using the relief-from-royalty method under the income approach. The non-compete agreement was valued based on the estimated impact that theoretical competition would have on revenues and expenses.

Derivative Instruments and Hedging Activities

The Company uses derivative financial instruments to enhance its ability to manage its exposure to certain financial and market risks. On the date the derivative instrument contract is entered into, the Company may designate the derivative as (1) a hedge of the fair value of a recognized asset or liability or an unrecognized firm commitment (“fair value” hedge), (2) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge), or (3) as a “standalone” derivative instrument, including economic hedges that the Company has not formally documented as a fair value or cash flow hedge. Changes in the fair value of a derivative that qualifies for cash flow hedge accounting are recognized in Other Comprehensive Income (Loss). Amounts accumulated in other comprehensive income (loss) are reclassified to earnings when the related cash outflow affects earnings. Changes in the fair value of a derivative instrument that is highly effective and that is designated and qualifies as a fair value hedge, along with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk (including gains or losses on firm commitments), are recorded in current-period earnings. Similarly, the changes in the fair value of stand-alone derivative instruments or derivatives not qualifying or designated for hedge accounting are reported in current-period earnings. The Company recognizes all

F - 13
Table of Contents

EVERTEC, Inc. Notes to Consolidated Financial Statements

derivative financial instruments in the Consolidated Balance Sheets as assets or liabilities at fair value. The Company presents derivative assets and derivative liabilities separately in the Consolidated Balance Sheets. The Company does not enter into derivative financial instruments for speculative purposes.

Income Tax

Income taxes are accounted for under the asset and liability method. A temporary difference refers to a difference between the tax basis of an asset or liability, determined based on recognition and measurement requirements for tax positions, and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively. Deferred tax assets and liabilities represent the future effects on income taxes that result from temporary differences and carryforwards that exist at the end of a period. Deferred tax assets and liabilities are measured using enacted tax rates and provisions of the enacted tax law and are not discounted to reflect the time-value of money. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of income and comprehensive income in the period that includes the enactment date. A deferred tax valuation allowance is established if it is considered more likely than not that all or a portion of the deferred tax asset will not be realized.

The Company recognizes the benefit of uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement or disposition of the underlying issue with the taxing authority. Accordingly, the amount of benefit recognized in the consolidated financial statements may differ from the amount taken or expected to be taken in the tax return resulting in unrecognized tax benefits (“UTBs”). The Company recognizes the interest and penalties associated with UTBs as part of the provision for income taxes on its consolidated statements of income and comprehensive income. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheets.

All companies within EVERTEC are legal entities which file separate income tax returns.

Cash and cash equivalents

Cash includes cash on hand and in banks and certificates of deposits with original maturities of three months or less.

Restricted Cash

Restricted cash represents cash received on deposits from participating institutions of the ATH network that has been segregated for the development of the ATH brand and cash maintained as collateral for a credit facility with Popular. Also, restricted cash includes certain cash collected from the Ticketpop business and a reserve account for payment and transaction processing services to merchants. The restrictions of these accounts are based on contractual provisions entered into with third parties. This cash is maintained in separate accounts at a financial institution in Puerto Rico.

Allowance for Doubtful Accounts

An allowance for doubtful accounts is provided for based on the estimated uncollectible amounts of the related receivables. The estimate is primarily based on a review of the current status of specific accounts receivable. Receivables are considered past due if full payment is not received by the contractual date. Past due accounts are generally written off against the allowance for doubtful accounts only after all collection attempts have been exhausted.

Foreign Currency Translation

Assets and liabilities denominated in foreign currencies are translated to U.S. dollars using prevailing rates of exchange at the end of the period. Revenues, expenses, gains and losses are translated using weighted average rates for the period. The resulting foreign currency translation adjustment from operations for which the functional currency is other than the U.S. dollar is reported in accumulated other comprehensive loss. Gains and losses on transactions denominated in currencies other than the functional currencies are included in determining net income for the period in which exchange rates change.


F - 14
Table of Contents

EVERTEC, Inc. Notes to Consolidated Financial Statements

Share-based Compensation

The Company estimates the fair value of stock-based awards, on a contemporaneous basis, at the date they are granted using the Monte Carlo simulation analysis for market based restricted stock units (“RSUs”) using the following assumptions: (1) stock price; (2) risk-free rate; (3) expected volatility; (4) expected annual dividend yield and (5) expected term. The risk-free rate is based on the U.S. Constant Maturities Treasury Interest Rate as of the grant date or the yield of a 2-year or 3-year Treasury bond, as applicable. The expected volatility is based on a combination of historical volatility and implied volatility from publicly traded companies in the Company’s industry. The expected annual dividend yield is based on management’s expectations of future dividends as of the grant date and, in certain cases, assumes that those dividends will be reinvested over the performance period. Performance and time based RSUs and restricted stock are valued based on the market price of the Company’s stock at the grant date.

Upon restricted stock or RSUs release, participants may elect to “net share settle”. Rather than requiring the participant to deliver cash to satisfy the tax withholdings, the Company withholds a sufficient number of shares to cover these amounts and delivers the net shares to the participant.

Net Income Per Common Share

Basic net income per common share is determined by dividing net income by the weighted-average number of common shares outstanding during the period.

Diluted net income per common share assumes the issuance of all potentially dilutive share equivalents using the treasury stock method. For stock options and RSUs it is assumed that the proceeds will be used to buy back shares. For stock options, such proceeds equal the average unrecognized compensation plus exercise price. For unvested restricted share units, the proceeds equal the average unrecognized compensation.

Note 2—Recent Accounting Pronouncements

Recently adopted accounting pronouncements

In December 2018, SEC Release No. 33-10532, Disclosure Update and Simplification, became effective, amending certain disclosure requirements that were redundant or outdated. The amendments include replacing the requirement to disclose the high and low trading prices of the Company’s common stock with a requirement to disclose the ticker symbol of the common stock. In addition, the amendments expanded the disclosure requirements on the analysis of stockholder’s equity for interim financial statements. Under the amendments, the changes in each caption of stockholder’s equity presented in the balance sheet must be provided in a note or separate statement for the current and comparative year-to date interim periods. The Company adopted the new disclosure requirements in the first quarter of 2019.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued updated guidance for leases, codified as Topic 842, to increase transparency and comparability among organizations by recognizing Right of Use ("ROU") assets and lease liabilities on the balance sheet for all leases, notwithstanding the lease classification. Under the standard, organizations are required to provide disclosures with the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessors, this amended guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. In January 2018, July 2018 and March 2019, the FASB issued Accounting Standards Update (“ASU”) 2018-01, 2018-10, 2018-11 and 2019-01, to amend narrow aspects of the standard, to add new and optional transition method for the adoption of the standard and provide lessors with a practical expedient, among others. These standards are effective for public reporting companies for annual periods, and interim periods within annual periods beginning after December 15, 2018 and replaced the leasing guidance of Topic 840. The Company adopted the standard effective January 1, 2019 using the modified retrospective transition approach and the transition provisions provided by ASU 2018-11. In addition, the Company applied all the practical expedients available for transition, except for the practical expedient pertaining to land easements, since it was not applicable to the Company. Accordingly, the Company accounted for its existing leases without reassessing whether (a) the contract contains a lease under Topic 842, (b) the lease classification was different in accordance to Topic 842, and (c) initial direct costs before transition met the definition of the new leasing standard. For the lease terms determination, the Company considered all facts and circumstances from the lease contract inception up to the effective date of Topic 842. The Company, as a lessee, changed the characterization of the asset recognized for capital leases under ASC 840 to a ROU asset, and the obligation to a lease liability. The Company recognized lease liabilities of $36.2 million, with corresponding ROU assets for the same amount based on the present value of the remaining lease payments of

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existing operating leases entered into as a lessee with the implementation of the new leasing standard as of January 1, 2019. As a lessor, the Company changed the characterization of the asset recognized for financing leases to a net investment in lease. Results for reporting periods beginning after January 1, 2019 are presented under the new guidance provided by Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under Topic 840.

Refer to Note 22, Commitments and Contingencies, for discussions of the implementation of the Topic 842 on the Company’s consolidated financial statements.

In June 2018, the FASB issued updated guidance for accounting for non-employee share-based payments. The update was issued as part of the FASB simplification initiative and requires an entity to apply the requirements of Topic 718 to nonemployee awards, with certain exceptions, which were previously accounted under Topic 505. The Company adopted this update in the first quarter of 2019 with no material impact on the consolidated financial statements. Any future grants to non-employees will be accounted for under this update.

In July 2018, the FASB issued codification improvements for various standards. The amendments represent changes to clarify, correct errors in, or make minor improvements to the codification. Certain amendments included in the update were effective upon issuance of the guidance and the Company adopted them without a material impact on the consolidated financial statements. The remaining guidance improvements with effective dates for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year, were adopted by the Company in the first quarter of 2019, except for the amendments with a later effective date (i.e., Topic 820, Fair Value Measurement), with no material impact on the consolidated financial statements.

Recently issued accounting pronouncements

In December 2019, the FASB issued updated guidance for Topic 740 Income Taxes as part of its initiative to reduce complexity in accounting standards. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption of the amendments is permitted, including adoption in any interim period for public business entities for periods for which financial statements have not yet been issued. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The Company is currently evaluating the impact, if any, of the adoption of this guidance on the consolidated financial statements.

Accounting pronouncements issued prior to 2019 and not yet adopted

In June 2016, November 2018, April 2019 and May 2019, the FASB issued updated guidance for the measurement of credit losses on financial instruments, which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The main objective of these updates is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The updates affect trade receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash. Additional disclosures about significant estimates and credit quality are also required. In addition, the updated guidance also clarifies that receivables from operating leases are accounted for using the lease guidance and not as financial instruments. The updates provide an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost. As of January 1, 2020, the Company implemented the updated guidance using a modified retrospective approach through a cumulative-effect adjustment to retained earnings to align the credit loss methodology with the new standard. The Company implemented its new credit loss model and is updating its processes and controls. Based on the Company's assessment, the updates will have an impact on trade receivables, and other assets that represent rights to receive cash. Based on the quantitative impact analysis, the transition adjustment calculation upon adoption of the standard was not material to retained earnings. The Company has implemented appropriate changes to its business processes, systems and controls to support recognition and disclosures under the new standard.

In August 2018, the FASB issued an updated disclosure framework for fair value measurements. The amendments in the issued update remove, modify and add disclosure requirements on fair value measurements in Topic 820 Fair Value Measurements.

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The amendments in this update are effective to all entities for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Certain amendments in the update should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented. Early adoption is permitted upon issuance of this update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this update and delay adoption of the additional disclosures until their effective date. The Company adopted this guidance effective January 1, 2020, updated disclosures will be included in future filings.

In August 2018, the FASB issued updated guidance for customer’s accounting for implementation, set-up and other upfront costs incurred in a cloud computing arrangement that is a service contract. The amendments in this update align the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2019, with early adoption permitted, and interim periods within those fiscal years. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company adopted this guidance prospectively, effective January 1, 2020 and applies the guidance in this update to all implementation costs incurred in a cloud computing arrangement that is a service contract.

In October 2018, the FASB issued updated guidance to improve related party guidance for variable interest entities. The updated guidance requires entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety when determining whether a decision-making fee is a variable interest. The amendments in this update are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. These amendments should be applied retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The Company adopted this guidance effective January 1, 2020. The adoption of this guidance did not have an impact on the consolidated financial statements.

In November 2018, the FASB issued updated guidance to clarify the interaction between the guidance for collaborative arrangements and the updated revenue recognition guidance. The amendments in this update, among other things, provide guidance on how to assess whether certain collaborative arrangement transactions should be accounted for under Topic 606. The amendments in this update are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this guidance effective January 1, 2020. Contracts are evaluated under the updated guidance.

Note 3 – Revenues

Summary of Revenue Recognition Accounting Policy

The Company's revenue recognition policy follows Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, which provides guidance on the recognition, presentation and disclosure of revenue from contracts with customers in consolidated financial statements.

Revenue is measured based on the consideration specified in a contract with a customer. Once the Company determines a contract's performance obligations and the transaction price, including an estimate of any variable consideration, the Company allocates the transaction price to each performance obligation in the contract using a stand-alone selling price ("SSP"). The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product or service to a customer. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

Nature of performance obligations

At contract inception, the Company assesses the goods and services promised in the contract with a customer and identifies a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, the Company considers all the goods or services promised in the contract regardless of whether they are explicitly stated or implied. Payment for the Company’s contracts with customers are typically due in full within 30 days of invoice date.


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EVERTEC, Inc. Notes to Consolidated Financial Statements

The following is a description of the Company's principal revenue generating activities, including the separate performance obligations by operating segment.

The Payment Services - Puerto Rico & Caribbean segment provides financial institutions, government entities and other issuers services to process credit, debit and prepaid cards; automated teller machines and electronic benefit transfer (“EBT”) card programs (which principally consist of services to the government of Puerto Rico for the delivery of benefits to participants). Revenue is principally derived from fixed fees per transaction and time and material basis billing for professional services provided to enhance the existing hosted platforms. Professional services in these contracts are primarily considered non-distinct from the transactional services and accounted for as a single performance obligation. Revenue for these contracts is recognized over time in the amount in which the Company has right to consideration.

The Payment Services - Latin America segment provides financial institutions, government entities and other issuers services to process credit, debit and prepaid cards, for which revenue is recognized in the same manner as described above, as well as licensed software solutions for risk and fraud management and card payment processing. Licensed software solutions are provided mainly as Software as a Service ("SaaS") and on-premise perpetual licenses. Set-up fees related to SaaS are considered non-distinct from the license and accounted for as a single performance obligation. SaaS revenues are recognized over time while the customer benefits from the software. On-premises perpetual licenses require significant customization and development. Professional services provided for significant customizations and development are non-distinct from the license and accounted for as a single performance obligation, recognized over time during the development of the license. Revenue is recognized based on the Company's efforts or inputs, measured in labor hours expended, relative to the total expected inputs to satisfy the performance obligation. Maintenance or support services are considered distinct and recognized over time in the amount in which the Company has right to consideration.

The Merchant Acquiring segment provides customers with the ability to accept and process debit and credit cards. Revenue is derived from fixed or identifiable fees charged to individual merchants per transaction, set-up fees, monthly membership fees and rental of POS terminals. Set-up fees are considered non-distinct from the transaction processing services and accounted for as a single performance obligation. Revenue for these contracts is recognized over time in the amount in which the Company has right to consideration.

The Business Solutions segment consists of revenues from a full suite of business process management solutions. Revenue derived from core bank processing and other processing and transaction-based services are generally recognized over time in the amount in which the Company has right to consideration. Hosting services generally represent a series of distinct monthly increments that are substantially the same and has the same pattern of transfer. Professional services to enhance EVERTEC's platforms are generally considered non-distinct from the hosting service and accounted for as a single performance obligation. Hosting services are generally recognized over time once in production during the remaining term of the contract. Maintenance or support services are usually considered distinct and recognized over time in the amount in which the Company as right to consideration. Hardware and software sales are recognized at a point in time when the control of the asset is transferred to the customer. Indicators of transfer of control include the Company's right to payment, or as the customer has legal title or physical possession of the asset. The Company may also provide professional services to enhance customer's platforms or as IT consulting services by arranging for other parties to transfer the services (i.e., acting as an agent). For these contracts, revenue is recognized on a net basis.

The Company’s service contracts may include service level arrangements (“SLA”) generally allowing the customer to receive a credit for part of the service fee when the Company has not provided the agreed level of services. If triggered, the SLA is deemed a consideration payable that may impact the transaction price of the contract, thus SLA performance is monitored and assessed for compliance with arrangements on a monthly basis, including determination and accounting for its economic impact, if any.

Refer to Note 23 - Segment Information for further information, including revenue by products and services the Company provides and the geographic regions in which the Company operates.

Significant Judgments

Determining a measure of progress for performance obligations satisfied over time requires management to make judgments that affect the timing of revenue to be recognized. The Company exercises judgment in identifying a suitable method that depicts the entity’s performance in transferring control of these performance obligations, on a contract by contract basis. The principal criteria used for determining the measure of progress is the availability of reliable information that can be obtained

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without incurring undue cost, which generally results in the application of an input method since, in most cases, the outputs used to reasonably measure progress are not directly observable. Usually, the input method based on labor hours incurred, with respect to total expected labor hours to satisfy the performance obligation is applied. For performance obligations satisfied at a point in time, the Company determines that the customer is able to direct the use of, and obtain substantially all of the benefits from, the products at the time the products are delivered, the customer has legal title of the products or the Company’s has the right to payment.

The Company mainly uses the expected cost-plus margin approach to allocate the transaction price in contracts with multiple performance obligations. To determine the stand-alone selling price, the Company periodically performs an assessment to determine the margin of goods or services with the assistance of the different business areas. This assessment is performed considering past transactions and/or reasonably available information, including market conditions, trends or other company or customer specific factors, among others.

Disaggregation of revenue

The Company disaggregates revenue from contract with customers into the primary geographical markets, nature of products and services, and timing of transfer of goods and services. The revenue disaggregated by segment, which includes the nature of the products and services that the Company provides and the primary geographical markets in which the Company operates is discussed in Note 23 - Segment Information. In the following table, revenue is disaggregated by timing of revenue recognition.

 
December 31, 2019
(In thousands)
Payment Services - Puerto Rico & Caribbean
 
Payment Services - Latin America
 
Merchant Acquiring, net
 
Business Solutions
 
Total
Timing of revenue recognition
 
 
 
 
 
 
 
 
 
Products and services transferred at a point in time
$
3,041

 
$
3,811

 
$
—

 
$
10,421

 
$
17,273

Products and services transferred over time
82,487

 
74,985

 
106,388

 
206,241

 
470,101

 
$
85,528

 
$
78,796

 
$
106,388

 
$
216,662

 
$
487,374



 
December 31, 2018
(In thousands)
Payment Services - Puerto Rico & Caribbean
 
Payment Services - Latin America
 
Merchant Acquiring, net
 
Business Solutions
 
Total
Timing of revenue recognition
 
 
 
 
 
 
 
 
 
Products and services transferred at a point in time
$
293

 
$
2,864

 
$
—

 
$
7,329

 
$
10,486

Products and services transferred over time
77,744

 
75,706

 
99,655

 
190,278

 
443,383

 
$
78,037

 
$
78,570

 
$
99,655

 
$
197,607

 
$
453,869



Contract balances

The following table provides information about contract assets from contracts with customers.

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(In thousands)
Contract Assets
Balance at beginning of period
$
996

Services transferred to customers
781

Transfers to accounts receivable
(586
)
December 31, 2019
$
1,191



Contract assets of the Company arise when the Company has a contract with a customer for which revenue has been recognized (i.e., goods or services have been transferred), but the customer payment is subject to a future event (i.e., satisfaction of additional performance obligations). Contract assets are considered a receivable when the rights to consideration of the Company become unconditional (i.e., the Company has a present right to payment). The current portion of these contract assets is recorded as part of prepaid expenses and other assets and the long-term portion is included in other long-term assets.

Accounts receivable, net at December 31, 2019 amounted to $106.8 million. Unearned income and Unearned income - Long term, which refer to contract liabilities, at December 31, 2019 amounted to $20.7 million and $28.4 million, respectively, and generally arise when consideration is received or due in advance from customers prior to performance. Unearned income is mainly related to upfront fees for implementation or set up activities, including fees charged in pre-production periods in connection with hosting services. During the year ended December 31, 2019, the Company recognized revenue of $15.6 million that was included in unearned income at December 31, 2018.

Transaction price allocated to the remaining performance obligations

Revenues from recurring transaction-based and processing services represent the majority of the Company's total revenue as of December 31, 2019. The Company recognizes revenues from recurring transaction-based and processing services over time at the amounts in which the Company has right to invoice, which corresponds directly to the value to the customer of the Company’s performance completed to date. Therefore, the Company has elected to apply the practical expedient in paragraph 606-10-50-14. Under this practical expedient, the Company is not required to disclose information about remaining performance obligations if the performance obligation is part of a contract with an original expected duration of one year or less or if the Company recognizes revenue at the amount to which it has a right to invoice.

The Company also applies the practical expedient in paragraph 606-10-50-14A and does not disclose the information about remaining performance obligations for variable consideration when the variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation in accordance with paragraph 606-10-25-14(b).

For contracts excluded from the application of the practical expedients noted above, the estimated aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially satisfied at December 31, 2019 is $305.4 million. This amount primarily consists of professional service fees for implementation or set up activities related to hosting services and maintenance services, typically recognized over the life of the contract which vary from 2 to 5 years. It also includes professional service fees for customizations or development of on-premise licensing agreements, which are recognized over time based on inputs relative to the total expected inputs to satisfy a performance obligation.

Note 4—Cash and cash equivalents

At December 31, 2019 and 2018, the Company’s cash and cash equivalents amounted to $111.0 million and $70.0 million, respectively, which are deposited in deposit accounts within financial institutions. Of the total cash balance at December 31, 2019 and 2018, $57.8 million and $50.3 million, respectively, resides in subsidiaries located outside of Puerto Rico. Cash deposited in an affiliate financial institution amounted to $51.3 million and $19.6 million as of December 31, 2019 and 2018, respectively.

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Note 5—Accounts Receivable, Net

Accounts receivable, net consisted of the following:
 
December 31,
(In thousands)
2019
 
2018
Trade
$
58,493

 
$
61,082

Due from affiliates, net
39,095

 
25,703

Settlement assets
12,353

 
15,118

Other
232

 
304

Less: allowance for doubtful accounts
(3,361
)
 
(1,884
)
Accounts receivable, net
$
106,812

 
$
100,323



The Company records settlement assets that result from timing differences in the Company’s settlement processes with merchants, financial institutions, and credit card associations related to merchant and card transaction processing. The amounts are generally collected or paid the following business day.

Note 6—Prepaid Expenses and Other Assets

Prepaid expenses and other assets consisted of the following:

 
December 31,
(In thousands)
2019
 
2018
Software licenses and maintenance contracts
$
11,585

 
$
9,961

Deferred project costs
10,060

 
4,283

Guarantee deposits
4,899

 
4,611

Insurance
2,007

 
1,229

Prepaid income taxes
2,029

 
1,646

Taxes other than income
2,128

 
1,710

Postage
1,630

 
2,150

Other
3,747

 
3,534

Prepaid expenses and other assets
$
38,085

 
$
29,124



Note 7—Investment in Equity Investee

Consorcio de Tarjetas Dominicanas, S.A. (“CONTADO”) is the largest merchant acquirer and ATM network in the Dominican Republic. The Company uses the equity method of accounting to account for its equity interest in CONTADO. As a result of the acquisition in 2011 of CONTADO’s 19.99% equity interest, the Company calculated an excess cost of the investment in CONTADO over the amount of underlying equity in net assets of approximately $9.0 million, which was mainly attributed to customer relationships, trademark and goodwill intangibles. The Company’s excess basis allocated to amortizable assets is recognized on a straight-line basis over the lives of the appropriate intangibles. Amortization expense for each of the years ended December 31, 2019, 2018 and 2017 amounted to approximately $0.3 million, $0.3 million and $0.2 million, respectively, and was recorded within earnings of equity method investment in the consolidated statements of income and comprehensive income. The Company recognized $0.9 million, $0.7 million and $0.6 million as equity in CONTADO’s net income, net of amortization, in the consolidated statements of income and comprehensive income for the years ended December 31, 2019, 2018 and 2017, respectively. For the years ended December 31, 2019 and 2018, the Company received $0.5 million and $0.4 million, respectively, in dividends from CONTADO. No dividends were received during 2017.

CONTADO fiscal year ends December 31 and is reported in the consolidated statements of income and comprehensive income for the period subsequent to the acquisition date on a one month lag. No significant events occurred in CONTADO’s operations subsequent to November 30, 2019 that would have materially affected the Company’s reported results.

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Note 8—Property and Equipment, Net

Property and equipment, net consisted of the following:
 
Useful life
in years
 
December 31,
(Dollar amounts in thousands)
2019
 
2018
Buildings
30
 
$
1,542

 
$
1,440

Data processing equipment
3 - 5
 
116,950

 
110,673

Furniture and equipment
3 - 20
 
6,936

 
7,761

Leasehold improvements
5 -10
 
2,814

 
2,625

 
 
 
128,242

 
122,499

Less—accumulated depreciation and amortization
 
 
(85,780
)
 
(86,990
)
Depreciable assets, net
 
 
42,462

 
35,509

Land
 
 
1,329

 
1,254

Property and equipment, net
 
 
$
43,791

 
$
36,763



Depreciation and amortization expense related to property and equipment was $16.6 million, $14.5 million and $14.7 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Note 9—Goodwill

The changes in the carrying amount of goodwill, allocated by reporting unit, were as follows (See Note 23):
(In thousands)
Payment
Services -
Puerto Rico & Caribbean
 
Payment
Services -
Latin America
 
Merchant
Acquiring, net
 
Business
Solutions
 
Total
Balance at December 31, 2017
$
160,972

 
$
53,659

 
$
138,121

 
$
45,823

 
$
398,575

Foreign currency translation adjustments
—

 
(3,931
)
 
—

 
—

 
(3,931
)
Balance at December 31, 2018
160,972

 
49,728

 
138,121

 
45,823

 
394,644

Goodwill attributable to acquisition
—

 
3,719

 
—

 
—

 
3,719

Foreign currency translation adjustments
—

 
1,124

 
—

 
—

 
1,124

Balance at December 31, 2019
$
160,972

 
$
54,571

 
$
138,121

 
$
45,823

 
$
399,487

 

Goodwill is tested for impairment on an annual basis as of August 31, or more often if events or changes in circumstances indicate there may be impairment. The Company may test for goodwill impairment using a qualitative or a quantitative analysis. In a qualitative assessment, the Company assesses whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount. In the quantitative analysis, the Company compares the estimated fair value of the reporting units to their carrying values, including goodwill.

The estimated fair value of the reporting units is computed using either an income approach, a market approach, or a combination of both. The income approach involves projecting the cash flows that the reporting unit is expected to generate and converting these cash flows into a present value equivalent through discounting. Significant estimates and assumptions used in the cash flow projection include internal projections and discount rates. Internal projections are based on the Company’s historical experience and estimated future business performance. The discount rate used is based on the weighted-average cost of capital, which reflects the rate of return expected to be earned by market participants and the estimated cost to obtain long-term debt financing. Valuations using the market approach derive from applying metrics of publicly traded companies or historically completed transactions of comparable businesses. Comparable businesses are selected based on the market in which the reporting units operate, considering size, profitability and growth. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. If the fair value does not exceed the carrying value, an impairment loss equaling the excess amount is recorded, limited to the recorded balance of goodwill. The Company performed a qualitative analysis as of August 31, 2019 by which the Company concluded that it was not more likely than not that the fair

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value of a reporting unit was less than its carrying amount. The quantitative analysis as of August 31, 2018 indicated that the fair values of the reporting units ranged from 57% to 397% in excess of its carrying amount. No impairment losses were recorded in 2019, 2018 or 2017. For details regarding goodwill attributable to acquisition, refer to Note 10-Other Intangible Assets, net.

Note 10—Other Intangible Assets, Net
The carrying amount of other intangible assets consisted of the following:
 
Useful life in years
 
December 31, 2019
(In thousands)
Gross
amount
 
Accumulated
amortization
 
Net carrying
amount
Customer relationships
8 - 14
 
$
344,883

 
$
(220,434
)
 
$
124,449

Trademark
2 - 15
 
42,025

 
(32,456
)
 
9,569

Software packages
3 -10
 
256,220

 
(169,974
)
 
86,246

Non-compete agreement
15
 
56,539

 
(34,866
)
 
21,673

Other intangible assets, net
 
 
$
699,667

 
$
(457,730
)
 
$
241,937


 
Useful life in years
 
December 31, 2018
(In thousands)
Gross
amount
 
Accumulated
amortization
 
Net carrying
amount
 
 
 
 
 
 
 
 
Customer relationships
8 - 14
 
$
342,738

 
$
(194,570
)
 
$
148,168

Trademark
2 - 15
 
41,357

 
(28,888
)
 
12,469

Software packages
3 -10
 
224,855

 
(151,666
)
 
73,189

Non-compete agreement
15
 
56,539

 
(31,096
)
 
25,443

Other intangible assets, net
 
 
$
665,489

 
$
(406,220
)
 
$
259,269


Amortization expense related to intangibles, including software packages, was $51.5 million, $48.6 million and $49.5 million for the years ended December 31, 2019, 2018 and 2017, respectively. Amortization expense related to software packages was $18.3 million, $14.7 million and $15.9 million for the years ended December 31, 2019, 2018 and 2017, respectively. The estimated amortization expenses of balances outstanding at December 31, 2019 for the next five years are as follows:
(In thousands)
 
2020
$
50,894

2021
45,582

2022
40,459

2023
36,883

2024
28,052



On December 2, 2019, the Company completed the acquisition of 100% of the shares of capital stock of EGM Ingeniería Sin Fronteras, S.A.S., commercially known as PlacetoPay, an electronic payment company based in Medellin, Colombia. The acquisition was not significant to the consolidated financial statements. The Company completed the acquisition for a cash payment of $6.3 million and recognized a customer relationship of $1.8 million, software packages of $0.8 million, a tradename of $0.4 million and goodwill amounting to $3.7 million. Revenues and earnings from the acquisition were insignificant for the year ended December 31, 2019. Pro forma results of operations have not been presented because the effect of this business combination is not material to the consolidated financial condition and results of operations. The results of operations and financial position of PlacetoPay are included in the consolidated financial statements from and after the date of acquisition.
During the third quarter of 2017, the Company recognized an impairment charge of $6.5 million through cost of revenues for a third party software solution that is no longer commercially viable. In connection with this exit activity, the Company accrued $5.3 million for ongoing contractual fees, also through cost of revenues and recognized maintenance expense of $1.0 million. Both the liability and the impairment charge affected the Company's Merchant Acquiring segment and Payment Services segments. In the fourth quarter of 2017, the Company recognized an impairment loss related to a multi-year software

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development project that was impacted by delays caused by the hurricane and projected increased costs with a third party vendor, amounting to $5.0 million through cost of revenues and is in the Company's Payment Services - Puerto Rico & Caribbean segment. The fair value of the impaired assets was determined using discounted cash flow models.

Note 11—Other Long-Term Assets

As of December 31, 2019, other long-term assets included $1.4 million related to deferred debt-issuance costs related to the revolving credit facility and $3.9 million related to the long-term portion of certain software and maintenance contracts.

As of December 31, 2018, other long-term assets included $1.8 million related to deferred debt-issuance costs related to the revolving credit facility, $1.8 million related to the long-term portion of certain software and maintenance contracts and a derivative asset of $1.7 million.

Note 12—Debt and Short-Term Borrowings

Total debt was as follows: 
 
December 31,
(In thousands)
2019
 
2018
Senior Secured Credit Facility (2023 Term A) due on November 27, 2023 paying interest at a variable interest rate (LIBOR plus applicable margin(1)(2))
$
207,261

 
$
217,791

Senior Secured Credit Facility (2024 Term B) due on November 27, 2024 paying interest at a variable interest rate (LIBOR plus applicable margin(1)(3))
317,936

 
320,515

Senior Secured Revolving Credit Facility(2)
—

 
—

Note Payable due on April 30, 2021(1)
175

 
300

Notes Payable due on January 1, 2022(1)
2,231

 
—

Total debt
$
527,603

 
$
538,606

 
(1)
Net of unaccreted discount and unamortized debt issue costs, as applicable.
(2)
Applicable margin of 2.00% and 2.25% at December 31, 2019 and December 31, 2018, respectively.
(3)
Subject to a minimum rate (“LIBOR floor”) of 0.0% plus applicable margin of 3.50% at December 31, 2019 and December 31, 2018.

The following table presents contractual principal payments for the next five years:
(In thousands)
 
 
2020
 
$
15,311

2021
 
15,053

2022
 
20,508

2023
 
173,750

2024
 
308,750


  
2018 Senior Secured Credit Facilities

On November 27, 2018, EVERTEC and EVERTEC Group (“Borrower”) entered into a credit agreement governing the senior secured credit facilities, consisting of a $220.0 million term loan A facility that matures on November 27, 2023 ("2023 Term A"), a $325.0 million term loan B facility that matures on November 27, 2024 ("2024 Term B") and a $125.0 million revolving credit facility (the "Revolving Facility") that matures on November 27, 2023, with a syndicate of lenders and Bank of America, N.A. (“Bank of America”), as administrative agent, collateral agent, swingline lender and line of credit issuer (collectively the “2018 Credit Agreement”). The material terms and conditions of the senior secured credit facilities are summarized below.

Scheduled Amortization Payments

The 2023 Term A provides for amortization in the amount of 1.25% of the original principal amount of the 2023 Term A during

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each of the first twelve quarters starting from the quarter ending March 31, 2019, 1.875% during each of the four subsequent quarters and 2.50% during each of the final three quarters, with the balance payable on the final maturity date.

The 2024 Term B provides for quarterly amortization payments totaling 1.00% per annum of the original principal amount of the 2024 Term B, with the balance payable on the final maturity date.

Voluntary Prepayments and Reduction and Termination of Commitments

The terms of the 2018 senior secured credit facilities allow EVERTEC Group to prepay loans and permanently reduce the loan commitments under the senior secured credit facilities at any time, subject to the payment of customary LIBOR breakage costs, if any, provided that, in connection with certain refinancing or repricing of the 2024 Term B on or prior to the date which is six months after the closing date of the 2018 Credit Agreement, a prepayment premium of 1.00% will be required.

Additionally, the terms of the facilities require mandatory repayment of outstanding principal balances based on a percentage of excess cash flow provided that no such prepayment shall be due if the resulting amount of the excess cash flow times the applicable percentage is less than $10 million.

Interest

The interest rates under the 2023 Term A and revolving credit facility are based on, at EVERTEC Group’s option, (a) adjusted LIBOR plus an interest margin of 2.25% or (b) the greater of (i) Bank of America’s “prime rate,” (ii) the Federal Funds Effective Rate plus 0.5% and (iii) adjusted LIBOR plus 1.0% (“ABR”) plus an interest margin of 1.25%. The interest rates under the 2024 Term B are based on, at EVERTEC Group’s option, (a) adjusted LIBOR plus an interest margin of 3.50% or (b) ABR plus an interest margin of 2.50%. The interest margins under the 2023 Term A and Revolving Facility are subject to reduction based on achievement of specified total secured net leverage ratio.

Guarantees and Collateral

EVERTEC Group’s obligations under the senior secured credit facilities and under any cash management, interest rate protection or other hedging arrangements entered into with a lender or any affiliate thereof are guaranteed by EVERTEC and each of EVERTEC’s existing wholly-owned subsidiaries (other than EVERTEC Group) and subsequently acquired or organized subsidiaries, subject to certain exceptions.

Subject to certain exceptions, the senior secured credit facilities are secured to the extent legally permissible by substantially all of the assets of (1) EVERTEC, including a perfected pledge of all of the limited liability company interests of EVERTEC Intermediate Holdings, LLC (“Holdings”), (2) Holdings, including a perfected pledge of all of the limited liability company interests of EVERTEC Group and (3) EVERTEC Group and the subsidiary guarantors, including but not limited to: (a) a pledge of substantially all capital stock held by EVERTEC Group or any guarantor and (b) a perfected security interest in substantially all tangible and intangible assets of EVERTEC Group and each guarantor.

Covenants
 
The senior secured credit facilities contain affirmative and negative covenants that the Company believes are usual and customary for a senior secured credit agreement. The negative covenants in the senior secured credit facilities include, among other things, limitations (subject to exceptions) on the ability of EVERTEC and its restricted subsidiaries to:

•
declare dividends and make other distributions;
•
redeem or repurchase capital stock;
•
grant liens;
•
make loans or investments (including acquisitions);
•
merge or enter into acquisitions;
•
sell assets;
•
enter into any sale or lease-back transactions;
•
incur additional indebtedness;
•
prepay, redeem or repurchase certain indebtedness;
•
modify the terms of certain debt;
•
restrict dividends from subsidiaries;

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EVERTEC, Inc. Notes to Consolidated Financial Statements

•
change the business of EVERTEC or its subsidiaries; and
•
enter into transactions with their affiliates.
 
In addition, the 2023 Term A and the Revolving Facility require EVERTEC to maintain a maximum total secured net leverage ratio of 4.25 to 1.00 for any quarter ending on or prior to September 30, 2020 and for fiscal quarters ending thereafter, 4.00 to 1.00.

Concurrently with the execution of the 2018 Credit Agreement, the Company terminated the existing senior secured credit facilities. The net proceeds received by EVERTEC Group from the senior secured credit facilities under the 2018 Credit Agreement, together with other cash available to EVERTEC Group, were used, among other things, to refinance EVERTEC Group’s previous senior secured credit facilities, which consisted of a $191.4 million 2020 Term A and a $379.0 million Term B, under the credit agreement, dated as of April 17, 2013 and as subsequently amended, among EVERTEC Intermediate Holdings, LLC, EVERTEC Group, JPMorgan Chase Bank, N.A., as administrative agent, collateral agent, swingline lender and L/C issuer, and the lenders party thereto. In connection with this transaction, the Company recognized a loss on extinguishment of $2.6 million.

The unpaid principal balance at December 31, 2019 of the 2023 Term A Loan and the 2024 Term B Loan was $209.0 million, and $321.8 million, respectively. The additional borrowing capacity for the Revolving Facility loan at December 31, 2019 was $116.9 million. The Company issues letters of credit against the revolving credit facility which reduce the additional borrowing capacity of the revolving credit facility.

Events of Default

The events of default under the senior secured credit facilities include, without limitation, nonpayment, material misrepresentation, breach of covenants, insolvency, bankruptcy, certain judgments, change of control (as defined in the 2018 Credit Agreement) and cross-events of default on material indebtedness.

Notes payable

In May 2016, EVERTEC Group entered into a non-interest bearing financing agreement amounting to $0.7 million to purchase software. As of December 31, 2019 and 2018, the outstanding principal balance of the note payable was $0.2 million and $0.3 million, respectively. The current portion of this note is recorded as part of accounts payable and the long-term portion is included in other long-term liabilities.

In December 2019, EVERTEC Group entered into two non-interest bearing financing agreements amounting to $2.4 million to purchase software and maintenance. As of December 31, 2019, the outstanding principal balance of the notes payable was $2.4 million, recorded as part of accounts payable and the long-term portion is included in other long-term liabilities.

Interest Rate Swaps

At December 31, 2019, the Company had two interest rate swap agreements, entered into in December 2015 and December 2018, which convert a portion of the interest rate payments on the Company's 2023 Term B Loan from variable to fixed: 
Swap Agreement
 
Effective date
  
Maturity Date
  
Notional Amount
  
Variable Rate
  
Fixed Rate
2015 Swap
 
January 2017
  
April 2020
  
$200 million
  
1-month LIBOR
  
1.9225%
2018 Swap
 
April 2020
  
November 2024
  
$250 million
  
1-month LIBOR
  
2.89%


The Company has accounted for these transactions as cash flow hedges.

At December 31, 2019 and 2018, the carrying amount of the derivatives on the Company’s balance sheets is as follows:
(In thousands)
 
December 31, 2019
 
December 31, 2018
Other long-term assets
 
$
—

 
$
1,683

Other long-term liabilities
 
14,452

 
4,059



For the year ended December 31, 2019, the Company recognized gains related to hedging activities on the Statement of Income and Comprehensive Income that offset the Company's interest expense as follows:

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EVERTEC, Inc. Notes to Consolidated Financial Statements

(In thousands)
 
December 31, 2019
Interest expense
 
$
677



During the year ended December 31, 2019, the Company reclassified gains of $0.7 million from accumulated other comprehensive loss into income through interest expense. Based on current LIBOR rates, the Company expects to reclassify losses of $2.2 million from accumulated other comprehensive loss into income through interest expense over the next 12 months. Refer to Note 13 for tabular disclosure of the fair value of the derivative and to Note 15 for tabular disclosure of gains (losses) recorded on cash flow hedging activities.

The cash flow hedges are considered highly effective.

Note 13—Financial Instruments and Fair Value Measurements

Recurring Fair Value Measurements

Fair value measurement provisions establish a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. These provisions describe three levels of input that may be used to measure fair value:

Level 1: Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level 2: Inputs, other than quoted prices included in Level 1, which are observable for the asset or liability through corroboration with market data at the measurement date.
Level 3: Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The Company uses observable inputs when available. Fair value is based upon quoted market prices when available. If market prices are not available, the Company may employ models that mostly use market-based inputs including yield curves, interest rates, volatilities, and credit curves, among others. The Company limits valuation adjustments to those deemed necessary to ensure that the financial instrument’s fair value adequately represents the price that would be received or paid in the marketplace. Valuation adjustments may include consideration of counterparty credit quality and liquidity as well as other criteria. The estimated fair value amounts are subjective in nature and may involve uncertainties and matters of significant judgment for certain financial instruments. Changes in the underlying assumptions used in estimating fair value could affect the results. The fair value measurement levels are not indicative of risk of investment.

The fair value of financial instruments is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value estimates are made at a specific point in time based on the type of financial instrument and relevant market information. Many of these estimates involve various assumptions and may vary significantly from amounts that could be realized in actual transactions.
 
The following table summarizes fair value measurements by level at December 31, 2019 and 2018, for assets and liabilities measured at fair value on a recurring basis:
(In thousands)
Level 1
 
Level 2
 
Level 3
 
Total
December 31, 2019
 
 
 
 
 
 
 
Financial liability:
 
 
 
 
 
 
 
Interest rate swap
$
—

 
$
14,452

 
$
—

 
$
14,452

December 31, 2018
 
 
 
 
 
 
 
Financial asset:
 
 
 
 
 
 
 
Interest rate swap
—

 
1,683

 
—

 
1,683

Financial liability:
 
 
 
 
 
 
 
Interest rate swap
—

 
4,059

 
—

 
4,059



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EVERTEC, Inc. Notes to Consolidated Financial Statements


Derivative Instruments

The fair value of the Company’s derivative instrument is determined using a standard valuation model. The significant inputs used in these models are readily available in public markets, or can be derived from observable market transactions, and therefore have been classified as Level 2. Inputs used in these standard valuation models for derivative instruments include the applicable forward rates and discount rates. The discount rates are based on the historical LIBOR Swap rates.

The following table presents the carrying value, as applicable, and estimated fair values for financial instruments at December 31, 2019 and 2018:

 
December 31,
 
2019
 
2018
(In thousands)
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
Financial asset:
 
 
 
 
 
 
 
Interest rate swap
$
—

 
$
—

 
$
1,683

 
$
1,683

Financial liabilities:
 
 
 
 
 
 
 
Interest rate swap
14,452

 
14,452

 
4,059

 
4,059

2023 Term A
207,261

 
206,388

 
217,791

 
218,625

2024 Term B
317,936

 
324,163

 
320,515

 
319,517



The fair value of the senior secured term loans at December 31, 2019 and 2018 was obtained using the prices provided by third party service providers. Their pricing is based on various inputs such as: market quotes, recent trading activity in a non-active market or imputed prices. Also, the pricing may include the use of an algorithm that could take into account movement in the general high yield market, among other variants.
The senior secured term loans, which are not measured at fair value in the balance sheets, if measured, would be categorized as Level 3 in the fair value hierarchy.
There were no transfers in or out of Level 3 during the years ended December 31, 2019, 2018 and 2017.

Note 14—Other Long Term Liabilities

As of December 31, 2019, other long-term liabilities mainly consist of unrecognized tax benefit liabilities and the long-term portion of notes payables of $13.0 million and a derivative liability of $14.5 million.

As of December 31, 2018, other long-term liabilities mainly consist of unrecognized tax benefit liabilities and the long-term portion of notes payables of $10.5 million and a derivative liability of $4.1 million.

Note 15—Equity

The Company is authorized to issue up to 206,000,000 shares of common stock of $0.01 par value. At December 31, 2019 and 2018, the Company had 72,000,261 and 72,378,710 shares outstanding, respectively. The Company is also authorized to issue 2,000,000 shares of $0.01 par value preferred stock. As of December 31, 2019, no shares of preferred stock have been issued. 

Stock Repurchase

In 2019, 2018 and 2017, the Company repurchased a total of 1.1 million, 0.4 million, and 0.5 million shares, respectively, at a cost of $31.8 million, $10.0 million, and $7.7 million. The Company funded such repurchases with cash on hand and borrowings to the existing revolving credit facility. As of December 31, 2019, 2018 and 2017, the repurchased shares were permanently retired.

Dividends

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EVERTEC, Inc. Notes to Consolidated Financial Statements


The Company pays a regular quarterly dividend on common stock, subject to the declaration thereof by our Board each quarter. Any declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board and will depend on many factors, including our financial condition, earnings, available cash, business opportunities, legal requirements, restrictions in our debt agreements and other contracts, capital requirements, level of indebtedness and other factors that our Board deems relevant.

The Company’s dividend activity in 2019 and 2018 was as follows:
Declaration Date
 
Record Date
 
Payment Date
 
Dividend per share
July 26, 2018
 
August 6, 2018
 
September 7, 2018
 
$
0.05

October 25, 2018
 
November 5, 2018
 
December 7, 2018
 
0.05

February 15, 2019
 
February 26, 2019
 
March 22, 2019

0.05

April 25, 2019
 
May 6, 2019
 
June 7, 2019

0.05

July 25, 2019
 
August 5, 2019
 
September 6, 2019

0.05

October 23, 2019
 
November 4, 2019
 
December 6, 2019

0.05



Accumulated Other Comprehensive loss

The following table provides a summary of the changes in the balances comprising accumulated other comprehensive loss for the years ended December 31, 2019 and 2018:
 
Foreign Currency
Translation
Adjustments
 
Cash Flow Hedge
 
Total
Balance - December 31, 2017, net of tax
$
(11,062
)
 
$
214

 
$
(10,848
)
Other comprehensive loss before reclassifications
(10,564
)
 
(2,273
)
 
(12,837
)
Amount reclassified to Net Income
—

 
(104
)
 
(104
)
Balance - December 31, 2018, net of tax
(21,626
)
 
(2,163
)
 
(23,789
)
Other comprehensive income (loss) before reclassifications
4,754

 
(10,297
)
 
(5,543
)
Amount reclassified to Net Income
—

 
(677
)
 
(677
)
Balance - December 31, 2019, net of tax
$
(16,872
)
 
$
(13,137
)
 
$
(30,009
)


Note 16—Share-based Compensation

Long-term Incentive Plan ("LTIP")

In the first quarter of 2017, 2018 and 2019, the Compensation Committee of the Company's Board of Directors ("Board") approved grants of restricted stock units (“RSUs”) to executives and certain employees pursuant to the 2017 LTIP, 2018 LTIP and 2019 LTIP, respectively, all under the terms of our 2013 Equity Incentive Plan. Under the LTIPs, the Company granted restricted stock units to eligible participants as time-based awards and/or performance-based awards.

The vesting of the RSUs is dependent upon service, market, and/or performance conditions as defined in the grants. Employees that received time-based awards with service conditions are entitled to receive a specific number of shares of the Company’s common stock on the vesting date if the employee is providing services to the Company on the vesting date. Time-based awards vest over a period of three years in substantially equal installments commencing on the grant date and ending on February 24 of each year for the 2017 LTIP, February 28 of each year for the 2018 LTIP, and February 22 of each year for the 2019 LTIP.

For the performance-based awards under the 2017 LTIP, 2018 LTIP, and 2019 LTIP, the Compensation Committee established adjusted earnings before income taxes, depreciation and amortization ("Adjusted EBITDA") as the primary performance measure while maintaining focus on total shareholder return through the use of a market-based total shareholder return ("TSR") performance modifier. The TSR modifier adjusts the shares earned based on the core Adjusted EBITDA performance upwards or downwards (+/- 25%) based on the Company’s relative TSR at the end of the three-year performance period as compared to the companies in the Russell 2000 Index. The Adjusted EBITDA performance measure will be calculated for the one-year

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EVERTEC, Inc. Notes to Consolidated Financial Statements

period commencing on January 1 of the year of the grant and ending on December 31 of the same year, relative to the goals set by the Compensation Committee for this same period. The shares earned will be subject to an additional two-year service vesting period.

Performance and market-based awards vest at the end of the performance period that commenced on February 24, 2017 for the 2017 LTIP, February 28, 2018 for the 2018 LTIP, and February 22, 2019 for the 2019 LTIP. The periods end on February 24, 2020 for the 2017 LTIP, February 28, 2021 for the 2018 LTIP, and February 22, 2022 for the 2019 LTIP. Unless otherwise specified in the award agreement, or in an employment agreement, awards are forfeited if the employee voluntarily ceases to be employed by the Company prior to vesting.
  
The following table summarizes the nonvested restricted shares and RSUs activity for the years ended December 31, 2019, 2018 and 2017:
Nonvested restricted shares and RSUs
 
Shares
 
Weighted-average
grant date fair value
Nonvested at December 31, 2016
 
1,212,364

 
$
14.88

Granted
 
1,584,241

 
15.37

Vested
 
(315,953
)
 
15.30

Forfeited
 
(139,760
)
 
16.06

Nonvested at December 31, 2017
 
2,340,892

 
15.08

Granted
 
636,322

 
17.07

Vested
 
(468,064
)
 
18.41

Forfeited
 
(472,987
)
 
16.55

Nonvested at December 31, 2018
 
2,036,163

 
15.09

Granted
 
517,153

 
30.84

Vested
 
(931,389
)
 
29.32

Forfeited
 
(29,172
)
 
16.52

Nonvested at December 31, 2019
 
1,592,755

 
$
—


Share-based compensation recognized was as follows:
 
Years ended December 31,
(In thousands)
2019
 
2018
 
2017
Share-based compensation recognized, net
 
 
 
 
 
Stock options
$
—

 
$
—

 
$
6

Restricted shares and RSUs
13,570

 
12,592

 
9,636


The maximum unrecognized cost for restricted stock units was $17.7 million as of December 31, 2019. The cost is expected to be recognized over a weighted average period of 1.95 years.

Note 17—Employee Benefit Plan

EVERTEC, Inc. Puerto Rico Savings and Investment plan (“the EVERTEC Savings Plan”) was established in 2010, as a defined contribution savings plan qualified under section 1165(e) of the Puerto Rico Internal Revenue Code. Investments in the plan are participant directed, and employer matching contributions are determined based on specific provisions of the EVERTEC Savings Plan. Employees are fully vested in the employer’s contributions after five years of service. For the years ended December 31, 2019, 2018 and 2017, the costs incurred under the plan amounted to approximately $0.8 million, $0.8 million and $0.7 million, respectively.

Note 18—Total Other Income (Expenses)

For the year ended December 31, 2019, other income (expenses) is primarily comprised of $1.7 million in foreign currency transaction losses.

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EVERTEC, Inc. Notes to Consolidated Financial Statements

For the year ended December 31, 2018, other income (expenses) is primarily comprised of $2.7 million in foreign currency transaction gains, $1.8 million from federal relief funds received in connection with wages paid in the aftermath of hurricane Maria, and a $2.6 million loss on extinguishment of debt.
For the year ended December 31, 2017, other income (expenses) is primarily comprised of $2.6 million in foreign currency transaction gains.

Note 19—Income Tax

On April 17, 2012, EVERTEC Group and Holdings were converted from a Puerto Rico corporation into Puerto Rico limited liability companies to benefit from changes to the Puerto Rico Income Tax Code allowing limited liability companies to be treated as partnerships that are pass-through entities for Puerto Rico tax purposes. As a result of these conversions and subsequent elections to be treated as partnerships, EVERTEC Group’s and Holding’s taxable income flows through to EVERTEC, Inc.

EVERTEC Group, Holdings and EVERTEC, Inc. entered into a Tax Payment Agreement pursuant to which EVERTEC Group is obligated to make certain payments to Holdings or EVERTEC, Inc. for taxable periods or portions thereof occurring on or after April 17, 2012 (the “Effective Date”). Under the Tax Payment Agreement, EVERTEC Group will make payments with respect to any and all taxes (including estimated taxes) imposed under the laws of Puerto Rico, the United States of America and any other jurisdiction or any political (including municipal) subdivision or authority or agency in Puerto Rico, the United States of America or such other jurisdiction, that would have been imposed on EVERTEC Group if EVERTEC Group had been a corporation for tax purposes of that jurisdiction, together with all interest and penalties with respect thereto (“Taxes”), reduced by taking into account any applicable net operating losses or other tax attributes of Holdings or EVERTEC, Inc. that reduce Holdings’ or EVERTEC, Inc.’s taxes in such period. The Tax Payment Agreement provides that the payments thereunder shall not exceed the net amount of Taxes that Holdings and EVERTEC, Inc. actually owe to the appropriate taxing authority for a taxable period. Further, the Tax Payment Agreement provides that if Holdings or EVERTEC, Inc. receives a tax refund attributable to any taxable period or portion thereof occurring on or after the Effective Date, EVERTEC, Inc. shall be required to recalculate the payment for such period required to be made by EVERTEC Group to Holdings or EVERTEC, Inc. If the payment, as recalculated, is less than the amount of the payment EVERTEC Group already made to Holdings or EVERTEC, Inc. in respect of such period, Holdings or EVERTEC, Inc. shall promptly make a payment to EVERTEC Group in the amount of such difference.
The components of income tax expense consisted of the following:
 
Years ended December 31,
(In thousands)
2019
 
2018
 
2017
Current tax provision
$
19,366

 
$
17,207

 
$
9,086

Deferred tax benefit
(6,391
)
 
(4,611
)
 
(4,306
)
Income tax expense
$
12,975

 
$
12,596

 
$
4,780


  

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EVERTEC, Inc. Notes to Consolidated Financial Statements

The Company conducts operations in Puerto Rico and certain countries throughout the Caribbean and Latin America. As a result, the income tax expense includes the effect of taxes paid to the Puerto Rico government as well as foreign jurisdictions. The following table presents the segregation of income tax expense based on location of operations:
 
Years ended December 31,
(In thousands)
2019
 
2018
 
2017
Income before income tax provision
 
 
 
 
 
Puerto Rico
$
89,667

 
$
77,176

 
$
47,347

United States
4,047

 
3,199

 
3,089

Foreign countries
22,961

 
18,790

 
9,763

Total income before income tax provision
$
116,675

 
$
99,165

 
$
60,199

Current tax provision
 
 
 
 
 
Puerto Rico
$
7,550

 
$
6,841

 
$
1,892

United States
339

 
599

 
292

Foreign countries
11,477

 
9,767

 
6,902

Total current tax provision
$
19,366

 
$
17,207

 
$
9,086

Deferred tax benefit
 
 
 
 
 
Puerto Rico
$
(4,109
)
 
$
(2,904
)
 
$
(3,176
)
United States
(216
)
 
(584
)
 
(184
)
Foreign countries
(2,066
)
 
(1,123
)
 
(946
)
Total deferred tax benefit
$
(6,391
)
 
$
(4,611
)
 
$
(4,306
)


Taxes payable to foreign countries by EVERTEC’s subsidiaries will be paid by such subsidiary and the corresponding liability and expense will be presented in EVERTEC’s consolidated financial statements.

On December 10, 2018, the Governor of Puerto Rico signed in to law Act 257, which decreased the maximum corporate tax rate from 39% to 37.5%, effective January 1, 2019. This rate decrease is only applicable to the fully taxable operations of EVERTEC in Puerto Rico. As a result of this tax rate decrease, the deferred taxes were reevaluated as of December 31, 2018, the impact of this reevaluation was considered immaterial.

As of December 31, 2019, the Company has $62.2 million of unremitted earnings from foreign subsidiaries. The Company has not recognized a deferred tax liability on undistributed earnings for the Company’s foreign subsidiaries because these earnings are intended to be indefinitely reinvested. The amount of the unrecognized deferred tax liability depends on judgment required to analyze the withholding tax due, the applicable tax law and factual circumstances in effect at the time of any such distributions. EVERTEC believes it is not practicable at this time to reliably determine the amount of unrecognized deferred tax liability related to the Company’s undistributed earnings. If circumstances change and it becomes apparent that some or all of the undistributed earnings of a subsidiary will be remitted, and income taxes have not been recognized by the parent entity, the parent entity shall accrue as an expense of the current period income taxes attributable to that remittance.

On October 19, 2012, EVERTEC Group was granted a tax exemption under the Tax Incentive Act No. 73 of 2008. Under this grant, EVERTEC Group will benefit from a preferential income tax rate on industrial development income, as well as from tax exemptions with respect to its municipal and property tax obligations for certain activities derived from its data processing operations in Puerto Rico. The grant has a term of 15 years effective as of January 1, 2012 with respect to income tax obligations and January 1, 2013 with respect to municipal and property tax obligations. Industrial development income under this grant is subject to a preferential rate of 4%.

The grant contains customary commitments, conditions and representations that EVERTEC Group will be required to comply with in order to maintain the grant. The more significant commitments include: (i) maintaining at least 700 employees in EVERTEC Group's Puerto Rico data processing operations, (ii) investing at least $200.0 million in building, machinery, equipment or computer programs to be used in Puerto Rico during the effective term of the grant (to be made over four year capital investment cycles in $50.0 million increments); and (iii) 80% of EVERTEC Group employees must be residents of Puerto Rico. Failure to meet the requirements could result, among other things, in reductions of the benefits of the grant or revocation of the grant in its entirety, which could result in EVERTEC, Inc. paying additional taxes or other payments relative to what would be required to pay to other municipal agencies if the full benefits of the grant are not available.


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EVERTEC, Inc. Notes to Consolidated Financial Statements

On October 11, 2011, Evertec Group was granted a tax exemption under Tax Incentive Law No. 73 of 2008, retroactively to December 1, 2009. Under this grant, activities derived from consulting and data processing services provided outside Puerto Rico are subject to a preferred rate that declines gradually from 7% to 4% by December 1, 2013. After this date, the rate remains at 4% until its expiration in November 1, 2024.

In addition, in August 2018, the Puerto Rico Industrial Development Company approved the requested extension of a grant under Tax Incentive Law No. 135 of 1997 for EVERTEC Group. Under this grant, activities derived from certain development and installation service in excess of a determined income are subject to a fixed tax rate of 10% for a 10-year period from January 1, 2018.
The following table presents the components of the Company’s deferred tax assets and liabilities:
 
December 31,
(In thousands)
2019
 
2018
Deferred tax assets (“DTA”)
 
 
 
Allowance for doubtful accounts
$
271

 
$
170

Unearned income
6,807

 
4,394

Investment in equity subsidiary
51

 
220

Share-based compensation
1,222

 
1,684

Debt issuance costs
249

 
309

Accrued liabilities
1,034

 
1,257

Derivative liability
1,220

 
351

Accrual of contract maintenance cost
134

 
157

Impairment of asset
289

 
289

Other
1,546

 
1,976

Total gross deferred tax assets
12,823

 
10,807

Deferred tax liabilities (“DTL”)
 
 
 
Capitalized salaries
1,828

 
1,756

Derivative asset
—

 
185

Difference between the assigned values and the tax basis of assets and liabilities recognized in business combinations
12,568

 
16,240

Other
557

 
659

Total gross deferred tax liabilities
14,953

 
18,840

Deferred tax liability, net
$
(2,130
)
 
$
(8,033
)

Pursuant to the provision of the PR Code, net operating losses (“NOL”) can be carried forward for a period of seven, ten or twelve taxable years, depending on the taxable year generated. Act 72 of May 29, 2015, limited the amount of NOLs deduction to 80% for regular tax and 70% for alternative minimum tax (“AMT”) for taxable years commencing after December 31, 2014. However, Act 257 of 2018 limits the deduction of NOLs to 90% for regular tax for tax years commencing after December 31, 2019. At December 31, 2019, the Company has $0.2 million in NOL carryforwards related to Puerto Rico industrial development income, available to offset future eligible income.
The Company recognizes the benefit of uncertain tax positions ("UTPs") only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

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EVERTEC, Inc. Notes to Consolidated Financial Statements

The following is a tabular reconciliation of the total amounts of UTPs:
 
Years ended December 31,
(In thousands)
2019
 
2018
 
2017
Balance, beginning of year
$
9,238

 
$
9,148

 
$
12,219

Gross increases—tax positions in prior period
—

 
578

 
—

Gross decreases—tax positions in prior period
(92
)
 
(488
)
 
—

Lapse of statute of limitations
—

 
—

 
(3,071
)
Balance, end of year
$
9,146

 
$
9,238

 
$
9,148


 
As of December 31, 2019, 2018 and 2017, approximately $9.1 million, $9.2 million and $9.1 million, respectively, would affect the Company’s effective income tax rate, if recognized.

The Company recognizes interest and penalties related to UTB as part of income tax expense. During the years ended December 31, 2019, 2018 and 2017, the Company recognized an income tax expense of $0.4 million, an income tax expense of $0.4 million and an income tax benefit of $0.8 million, respectively, related to interest and penalties. The amount accrued for interest and penalties at December 31, 2019 and 2018 was $2.0 million, and $1.6 million, respectively. The Company anticipates changes to the UTBs within the next 12 months to be primarily related to interest. The Company believes it has sufficient accruals for contingent tax liabilities.

In connection with tax return examinations, contingencies can arise that generally result from different interpretations of tax laws and regulations as they pertain to the amount, timing or inclusion of revenues and expenses in taxable income, or the ability to utilize tax credits to reduce income taxes payable. While it is probable, based on the potential outcome of the Company’s Puerto Rico and foreign tax examinations or the expiration of the statute of limitations for specific jurisdictions, that the liability for UTBs may increase or decrease within the next twelve months, the Company does not expect any such change would have a material effect on our financial condition, results of operations or cash flow.

The Company and its subsidiaries are subject to Puerto Rico income tax as well as income tax of multiple foreign jurisdictions. A significant majority of the income tax is from Puerto Rico with a statute of limitations of four years after filing the income tax returns; therefore, the income tax returns for 2015, 2016, 2017, and 2018 are currently open for examination.

The income tax expense differs from the amount computed by applying the Puerto Rico statutory income tax rate to the income before income taxes as a result of the following:
 
Years ended December 31,
(In thousands)
2019
 
2018
 
2017
Computed income tax at statutory rates
$
43,753

 
$
38,674

 
$
23,477

Benefit of net tax-exempt interest income
(126
)
 
(50
)
 
(56
)
Differences in tax rates due to multiple jurisdictions
1,058

 
(678
)
 
2,353

Tax (benefit) expense due to a change in estimate
(84
)
 
467

 
(334
)
Effect of income subject to tax-exemption grant
(31,424
)
 
(26,260
)
 
(16,832
)
Unrecognized tax (benefit) expense
(32
)
 
443

 
(3,828
)
Other
(170
)
 
—

 
—

Income tax expense
$
12,975

 
$
12,596

 
$
4,780



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EVERTEC, Inc. Notes to Consolidated Financial Statements


Note 20—Net Income Per Common Share
The reconciliation of the numerator and the denominator of the earnings per common share is as follows:
 
Years ended December 31,
(Dollar amounts in thousands, except share and per share data)
2019
 
2018
 
2017
Net income attributable to EVERTEC, Inc.’s common stockholders
$
103,469

 
$
86,270

 
$
55,054

Less: non-forfeitable dividends on restricted stock
3

 
4

 
10

Net income available to common shareholders
$
103,466

 
$
86,266

 
$
55,044

Weighted average common shares outstanding
72,099,755

 
72,607,321

 
72,479,807

Weighted average potential dilutive common shares (1)
1,376,008

 
1,812,789

 
392,381

Weighted average common shares outstanding—assuming dilution
73,475,763

 
74,420,110

 
72,872,188

Net income per common share—basic
$
1.44

 
$
1.19

 
$
0.76

Net income per common share—diluted
$
1.41

 
$
1.16

 
$
0.76

 
(1)
Potential common shares consist of common stock issuable under the assumed exercise of stock options and RSUs awards using the treasury stock method.
Refer to Note 15 for a detail of dividends declared and paid during 2019 and 2018.

Note 21—Related Party Transactions
The following table presents the Company’s transactions with related parties for each of the periods presented below:
 
Years ended December 31,
(Dollar amounts in thousands)
2019
 
2018
 
2017
Total revenues (1)(2)
$
209,053

 
$
188,060

 
$
177,213

Cost of revenues
$
5,094

 
$
3,422

 
$
2,929

Rent and other fees
$
8,519

 
$
8,046

 
$
7,803

Interest earned from an affiliate
 
 
 
 
 
Interest income
$
161

 
$
147

 
$
154

 
(1)
Total revenues from Popular as a percentage of revenues were 43%, 41% and 43% for each of the periods presented above.
(2)
Includes revenues generated from investee accounted for under the equity method of $1.1 million, $1.3 million and $1.8 million for the years ended December 31, 2019, 2018 and 2017, respectively.

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EVERTEC, Inc. Notes to Consolidated Financial Statements

At December 31, 2019 and 2018, the Company had the following balances arising from transactions with related parties:
 
December 31,
(In thousands)
2019
 
2018
 
 
 
 
Cash and restricted cash deposits in affiliated bank
$
64,724

 
$
29,136

Other due/to from affiliate
 
 
 
Accounts receivable
$
39,095

 
$
25,714

Prepaid expenses and other assets
$
4,211

 
$
2,796

Operating lease right-of use assets
$
20,617

 
$
—

Other long-term assets
$
57

 
$
166

Accounts payable
$
7,250

 
$
6,344

Unearned income
$
35,489

 
$
25,401

Operating lease liabilities
$
20,905

 
$
—


The balance of cash and restricted cash deposits in an affiliated bank was included within the cash and cash equivalents and restricted cash line items in the accompanying consolidated balance sheets. Due from affiliates mainly included the amounts outstanding related to processing and information technology services billed to Popular subsidiaries according to the terms of the Master Services Agreement (“MSA”) under which EVERTEC Group has a contract to provide such services for at least 15 years on an exclusive basis for the duration of the agreement on commercial terms consistent with historical pricing practices among the parties. This amount was included in the accounts receivable, net in the consolidated balance sheets.

Note 22—Commitments and Contingencies
EVERTEC is a defendant in a number of legal proceedings arising in the ordinary course of business. Based on the opinion of legal counsel, management believes that the final disposition of these matters will not have a material adverse effect on the business, results of operations or financial condition of the Company. The Company has identified certain claims in which a loss may be incurred, but in the aggregate the loss would be minimal. For other claims, where the proceedings are in an initial phase, the Company is unable to estimate the range of possible loss for such legal proceedings. However, the Company at this time believes that any loss related to these latter claims will not be material.

Leases

The Company’s leases accounting policy follows the guidance from Accounting Standards Codification (“ASC”) 842, Leases, which provides guidance on the recognition, presentation and disclosure of leases in consolidated financial statements.

The Company determines if an arrangement is or contains a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease payable, and operating lease liabilities in the consolidated balance sheet. Finance leases are included in property and equipment, accrued liabilities, and other long-term liabilities in the consolidated balance sheet.
ROU assets and lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate, Management used the Company’s collateralized incremental borrowing rate (“IBR”) based on the information available at commencement date in determining the present value of future payments. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. We monitor events or changes in circumstances that change the timing or amount of future lease payments which results in the remeasurement of a lease liability, with a corresponding adjustment to the ROU asset. The lease payment terms may include fixed payment terms and variable payments. Fixed payment terms and variable payments that depend on an index (i.e., Consumer Price Index or “CPI”) or rate are considered in the determination of the operating lease liabilities. While lease liabilities are not remeasured because of changes to the CPI, changes are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. Variable payments that do not depend on an index or rate are not included in the lease liabilities determination. Rather, these payments are recognized as variable lease expense when incurred. Variable lease payments are included within operating costs and expenses in the consolidated statement of income and comprehensive income. For operating leases, lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. For finance leases, lease expense is composed of

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interest expense and amortization expense. The lease liability of these leases is measured using the interest rate method. The ROU asset from financing leases are amortized on a straight-line basis, and is presented as part of Property and Equipment, net.

The Company has lease agreements with lease and non-lease components, which are accounted for as a single lease component. The Company elected the practical expedient of not separating lease and related non-lease components for all classes of underlying assets (i.e., building and equipment). The Company also elected as an accounting policy to not recognize lease liabilities and ROU assets for any future short-term leases (i.e., leases with a lease term of 12 months or less).

The Company has operating leases for certain office facilities, buildings, telecommunications and other equipment; and finance leases for certain equipment. The Company’s lease contracts have remaining terms ranging from 1 year to 10 years, some of which may include options to extend the leases for up to 5 years, and some which may include the option to terminate the lease within 1 year.

At December 31, 2019, equipment leases classified as finance leases, which are included within Property and Equipment, net, were $0.6 million, net of accumulated depreciation.

Total lease cost for the twelve months ended December 31, 2019, was as follows:
 
 
Twelve months ended
 
 
December 31, 2019
(in thousands)
 
 
Operating lease cost
 
$
7,573

Finance lease cost
 
 
Amortization of right-of-use assets
 
255

Interest on lease liabilities
 
24

Variable lease cost
 
2,515

 
 
$
10,367

Other information related to leases, at December 31, 2019, was as follows:
(In thousands)
 
 
Right-of-use assets obtained in exchange for operating lease obligations:
 
$
940

Weighted average remaining lease term, in years
 
 
Operating leases
 
6

Finance leases
 
1

Weighted Average Discount Rate
 
 
Operating leases
 
4.7
%
Finance leases
 
4.2
%


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EVERTEC, Inc. Notes to Consolidated Financial Statements

Future minimum lease payments under leases at December 31, 2019 were as follows:
(In thousands)
 
Operating Leases
 
Finance Leases
2020
 
$
6,574

 
$
307

2021
 
5,824

 
34

2022
 
5,483

 
2

2023
 
5,496

 
—

2024
 
4,995

 
—

Thereafter
 
6,297

 
—

Total future minimum lease payments
 
34,669

 
343

Less: imputed interest
 
(4,217
)
 
(35
)
Total
 
$
30,452

 
$
308

 
 
 
 
 
Reported as of December 31, 2019
 
 
 
 
Accrued liabilities
 
$
—

 
$
276

Operating lease liability - current
 
5,773

 
—

Operating lease liability - long-term
 
24,679

 
—

Other long-term liabilities
 
—

 
32

 
 
$
30,452

 
$
308



Note 23—Segment Information

The Company operates in four business segments: Payment Services - Puerto Rico & Caribbean, Payment Services - Latin America (collectively "Payment Services segments"), Merchant Acquiring, and Business Solutions.

The Payment Services - Puerto Rico & Caribbean segment revenues are comprised of revenues related to providing access to the ATH debit network and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and POS transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial institutions) and EBT (which principally consist of services to the government of Puerto Rico for the delivery of benefits to participants). For ATH debit network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the leasing of POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed and other processing services. For EBT services, revenues are primarily derived from the number of beneficiaries on file.

The Payment Services - Latin America segment revenues consist of revenues related to providing access to the ATH network and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and POS transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial institutions), as well as, licensed software solutions for risk and fraud management and card payment processing. For ATH debit network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the leasing of POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed and other processing services.

The Merchant Acquiring segment consists of revenues from services that allow merchants to accept electronic methods of payment. In the Merchant Acquiring segment, revenues include a discount fee and membership fees charged to merchants, debit network fees and rental fees from POS devices and other equipment, net of credit card interchange and assessment fees charged by credit cards associations (such as VISA or MasterCard) or payment networks. The discount fee is generally a percentage of

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the transaction value. EVERTEC also charges merchants for other services that are unrelated to the number of transactions or the transaction value.

The Business Solutions segment consists of revenues from a full suite of business process management solutions in various product areas such as core bank processing, network hosting and management, IT professional services, business process outsourcing, item processing, cash processing, and fulfillment. Core bank processing and network services revenues are derived in part from a recurrent fixed fee and from fees based on the number of accounts on file (i.e. savings or checking accounts, loans, etc.) or computer resources utilized. Revenues from other processing services within the Business Solutions segment are generally volume-based and depend on factors such as the number of accounts processed. In addition, EVERTEC is a reseller of hardware and software products and these resale transactions are generally non-recurring.

In addition to the four operating segments described above, Management identified certain functional cost areas that operate independently and do not constitute businesses in themselves. These areas could neither be concluded as operating segments nor could they be combined with any other operating segments. Therefore, these areas are aggregated and presented as “Corporate and Other” category in the financial statements alongside the operating segments. The Corporate and other category consists of corporate overhead expenses, intersegment eliminations, certain leveraged activities and other non-operating and miscellaneous expenses that are not included in the operating segments. The overhead and leveraged costs relate to activities such as:

•
marketing,
•
corporate finance and accounting,
•
human resources,
•
legal,
•
risk management functions,
•
internal audit,
•
corporate debt related costs,
•
non-operating depreciation and amortization expenses generated as a result of the Merger,
•
intersegment revenues and expenses, and
•
other non-recurring fees and expenses that are not considered when management evaluates financial performance at a segment level

The Chief Operating Decision Maker ("CODM") reviews the operating segments separate financial information to assess performance and to allocate resources. Management evaluates the operating results of each of its operating segments based upon revenues and Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA"). Adjusted EBITDA is defined as EBITDA further adjusted to exclude unusual items and other adjustments. Adjusted EBITDA, as it relates to operating segments, is presented in conformity with Accounting Standards Codification Topic 280, "Segment Reporting" given that it is reported to the CODM for purposes of allocating resources. Segment asset disclosure is not used by the CODM as a measure of segment performance since the segment evaluation is driven by revenues and adjusted EBITDA performance. As such, segment assets are not disclosed in the notes to the accompanying consolidated financial statements.


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EVERTEC, Inc. Notes to Consolidated Financial Statements

The following tables set forth information about the Company’s operations by its four business segments for the periods indicated below. Historical information has been conformed to the updated presentation.
 
December 31, 2019
(In thousands)
Payment
Services -
Puerto Rico & Caribbean
 
Payment
Services -
Latin America
 
Merchant
Acquiring, net
 
Business
Solutions
 
Corporate and Other (1)
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
125,544

 
$
84,453

 
$
106,388

 
$
216,662

 
$
(45,673
)

$
487,374

Operating costs and expenses
61,396

 
65,701

 
62,098

 
138,224

 
15,453

 
342,872

Depreciation and amortization
11,646

 
9,930

 
1,814

 
16,529

 
28,163

 
68,082

Non-operating income (expenses)
1,781

 
286

 
48

 
340

 
(2,688
)
 
(233
)
EBITDA
77,575

 
28,968

 
46,152

 
95,307

 
(35,651
)
 
212,351

Compensation and benefits (2)
1,034

 
1,501

 
1,004

 
2,114

 
8,145

 
13,798

Transaction, refinancing, and other fees (3)
—

 
210

 
—

 
—

 
(163
)
 
47

Adjusted EBITDA
$
78,609

 
$
30,679

 
$
47,156

 
$
97,421

 
$
(27,669
)
 
$
226,196


 

(1)
Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment eliminations predominantly reflect the $39.0 million processing fee from Payments Services - Puerto Rico and Caribbean to Merchant Acquiring, intercompany software sale and developments of $6.7 million from Payment Services- Latin America to Payment Services- Puerto Rico & Caribbean and cost transfer fees from Corporate and Other to Payment Services Latin America for leveraged services and management fees.
(2)
Primarily represents share-based compensation and other compensation expense and severance payments.
(3)
Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of cash dividends received.


 
December 31, 2018
(In thousands)
Payment
Services -
Puerto Rico & Caribbean
 
Payment
Services -
Latin America
 
Merchant
Acquiring, net
 
Business
Solutions
 
Corporate and Other (1)
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
114,119

 
$
80,899

 
$
99,655

 
$
197,602

 
$
(38,406
)

$
453,869

Operating costs and expenses
52,006

 
75,240

 
55,778

 
126,232

 
19,485

 
328,741

Depreciation and amortization
9,734

 
9,284

 
1,698

 
13,878

 
28,473

 
63,067

Non-operating income (expenses)
2,420

 
11,750

 
3

 
477

 
(11,356
)
 
3,294

EBITDA
74,267

 
26,693

 
45,578

 
85,725

 
(40,774
)
 
191,489

Compensation and benefits (2)
1,087

 
1,034

 
938

 
2,088

 
8,512

 
13,659

Transaction, refinancing, exit activity and other fees (3)
(250
)
 
—

 
—

 
—

 
7,561

 
7,311

Adjusted EBITDA
$
75,104

 
$
27,727

 
$
46,516

 
$
87,813

 
$
(24,701
)
 
$
212,459

 
(1)
Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment eliminations predominantly reflect the $36.1 million processing fee from Payments Services - Puerto Rico and Caribbean to Merchant Acquiring, intercompany software sale and developments of $2.3 million from Payment Services- Latin America to Payment Services- Puerto Rico & Caribbean and cost transfer fees from Corporate and Other to Payment Services Latin America for leveraged services and management fees.
(2)
Primarily represents share-based compensation and other compensation expense and severance payments.

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(3)
Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement, relief contributions related to the 2017 hurricanes and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of cash dividends received.

 
December 31, 2017
(In thousands)
Payment
Services -
Puerto Rico & Caribbean
 
Payment
Services -
Latin America
 
Merchant
Acquiring, net
 
Business
Solutions
 
Corporate and Other (1)
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
101,687

 
$
62,702

 
$
85,778

 
$
189,077

 
$
(32,100
)

$
407,144

Operating costs and expenses
57,463

 
66,786

 
57,574

 
119,761

 
19,477


321,061

Depreciation and amortization
8,993

 
8,880

 
2,254

 
15,774

 
28,349

 
64,250

Non-operating income (expenses)
2,229

 
8,726

 
1

 
13

 
(7,708
)
 
3,261

EBITDA
55,446

 
13,522

 
30,459

 
85,103

 
(30,936
)
 
153,594

Compensation and benefits (2)
589

 
816

 
573

 
1,687

 
6,090

 
9,755

Transaction, refinancing, and other fees (3)
2,499

 
3,220

 
6,465

 
—

 
2,495

 
14,679

Adjusted EBITDA
$
58,534

 
$
17,558

 
$
37,497

 
$
86,790

 
$
(22,351
)
 
$
178,028

 
(1)
Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment eliminations predominantly reflect the $32.1 million processing fee from Payments Services - Puerto Rico and Caribbean to Merchant Acquiring and cost transfer fees from Corporate and Other to Payment Services Latin America for leveraged services and management fees.
(2)
Primarily represents share-based compensation and other compensation expense and severance payments.
(3)
Primarily represents fees and expenses associated with corporate transactions as defined in the 2013 Credit Agreement and consulting, audit and legal expenses incurred as part of the prior year restatement of financial results, certain fees paid to resolve a software maintenance contract matter, a software impairment charge and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A.
The reconciliation of EBITDA to consolidated net income is as follows:
 
Years ended December 31,
(In thousands)
2019
 
2018
 
2017
Total EBITDA
$
212,351

 
$
191,489

 
$
153,594

Less:
 
 
 
 
 
Income tax expense
12,975

 
12,596

 
4,780

Interest expense, net
27,594

 
29,257

 
29,145

Depreciation and amortization
68,082

 
63,067

 
64,250

Net Income
$
103,700

 
$
86,569

 
$
55,419


 
The geographic segment information below is classified based on the geographic location of the Company’s subsidiaries:
 
Years ended December 31,
(Dollar amounts in thousands)
2019
 
2018
 
2017
Revenues (1)
 
 
 
 
 
Puerto Rico
$
392,628

 
$
358,436

 
$
329,533

Caribbean
15,950

 
15,672

 
14,909

Latin America
78,796

 
79,761

 
62,702

Total revenues
$
487,374

 
$
453,869

 
$
407,144

 
(1)
Revenues are based on subsidiaries’ country of domicile.

F - 41
Table of Contents

EVERTEC, Inc. Notes to Consolidated Financial Statements

Major customers
For the years ended December 31, 2019, 2018 and 2017, the Company had one major customer which accounted for approximately $208.0 million or 43%, $186.8 million or 41%, and $175.4 million or 43%, respectively, of total revenues. See Note 21.
The Company’s next largest customer, the Government of Puerto Rico, consolidating all individual agencies and public corporations, represented 7% of the Company’s total revenues for each the years ended December 31, 2019, 2018 and 2017.

Note 24—Subsequent Events

On February 20, 2020, the Board declared a regular quarterly cash dividend of $0.05 per share on the Company’s outstanding shares of common stock. The dividend will be paid on April 3, 2020 to stockholders of record as of the close of business on March 4, 2020. The Board anticipates declaring this dividend in future quarters on a regular basis; however future declarations of dividends are subject to Board of Directors’ approval and may be adjusted as business needs or market conditions change.


F - 42
Table of Contents

Schedule I


EVERTEC, Inc. Condensed Financial Statements
Parent Company Only
Condensed Balance Sheets
 
December 31,
(In thousands)
2019
 
2018
Assets
 
 
 
Current assets:
 
 
 
Cash
$
1,678

 
$
1,678

Accounts receivable, net
1,290

 
2,068

Prepaid expenses and other assets
9

 
41

Total current assets
2,977

 
3,787

Investment in subsidiaries, at equity
273,759

 
221,515

Other Intangible Asset
9

 
$
—

Total assets
$
276,745

 
$
225,302

Liabilities and stockholders’ equity
 
 
 
Current liabilities:
 
 
 
Accrued liabilities
$
260

 
$
226

Income tax payable
1,757

 
1,660

Total current liabilities
2,017

 
1,886

Deferred tax liability, net
485

 
5,665

Other long-term liabilities
7,056

 
6,292

Total liabilities
9,558

 
13,843

Stockholders’ equity:
 
 
 
Common stock
720

 
723

Additional paid-in capital
—

 
5,783

Accumulated earnings
296,476

 
228,742

Accumulated other comprehensive loss, net of tax
(30,009
)
 
(23,789
)
Total stockholders’ equity
267,187

 
211,459

Total liabilities and stockholders’ equity
$
276,745

 
$
225,302


Condensed Statements of Income and Comprehensive Income
 
Years ended December 31,
(In thousands)
2019
 
2018
 
2017
Non-operating income (expenses)
 
 
 
 
 
Equity in earnings of subsidiaries
$
101,078

 
$
84,866

 
$
49,162

Interest income
367

 
380

 
301

Other expenses
(1,595
)
 
(1,396
)
 
(1,428
)
Income before income taxes
99,850

 
83,850

 
48,035

Income tax benefit
(3,619
)
 
(2,420
)
 
(7,019
)
Net income
103,469

 
86,270

 
55,054

Other comprehensive income (loss), net of tax
 
 
 
 
 
Foreign currency translation adjustments
4,754

 
(10,564
)
 
(635
)
(Loss) gain on cash flow hedges
(10,974
)
 
(2,377
)
 
2,178

Total comprehensive income
$
97,249

 
$
73,329

 
$
56,597


F - 43
Table of Contents

Schedule I


Condensed Statements of Cash Flows
 
Years ended December 31,
(In thousands)
2019
 
2018
 
2017
Cash flows from operating activities
$
55,092

 
$
19,431

 
$
29,422

Cash flows from financing activities
 
 
 
 
 
Dividends paid
(14,420
)
 
(7,273
)
 
(21,762
)
Repurchase of common stock
(31,822
)
 
(10,000
)
 
(7,671
)
Withholding taxes paid on share-based compensation
(8,849
)
 
(2,159
)
 
(1,588
)
Net cash used in financing activities
(55,091
)
 
(19,432
)
 
(31,021
)
Net (decrease) increase in cash
1

 
(1
)
 
(1,599
)
Cash at beginning of the period
1,678

 
1,679

 
3,278

Cash at end of the period
$
1,679

 
$
1,678

 
$
1,679








F - 44
EXHIBIT 2.1














AGREEMENT AND PLAN OF MERGER
by and among
POPULAR, INC.,
AP CARIB HOLDINGS, LTD.,
CARIB ACQUISITION, INC.
and
EVERTEC, INC.



Dated as of June 30, 2010












ARTICLE I
 
 
 
DEFINITIONS AND TERMS
 
 
 
Section 1.1
Certain Definitions
2

Section 1.2
Other Terms
16

Section 1.3
Other Definitional and Interpretational Provisions
16

 
 
 
ARTICLE II
 
 
 
MERGER
 
 
 
Section 2.1
The Merger
16

Section 2.2
Conversion of Shares
17

Section 2.3
Closing Payment Procedures
17

Section 2.4
Pre-Closing Adjustment
17

Section 2.5
Post-Closing True-Up
18

Section 2.6
Closing Deliveries by Parent
19

Section 2.7
Closing Deliveries by Stockholder
19

Section 2.8
Post-Closing Reorganization
20

 
 
 
ARTICLE III
 
 
 
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
 
 
 
Section 3.1
Organization and Qualification; Capitalization
20

Section 3.2
Authorization
21

Section 3.3
Consents and Approvals
21

Section 3.4
Non-Contravention
22

Section 3.5
Binding Effect
22

Section 3.6
Financial Statements
23

Section 3.7
Litigation and Claims
23

Section 3.8
Employees and Employee Benefits
23

Section 3.9
Compliance with Laws
24

Section 3.10
Intellectual Property
25

Section 3.11
Labor
27

Section 3.12
Material Contracts
27

Section 3.13
Absence of Changes
29

Section 3.14
Sufficiency of Assets
29

Section 3.15
Title to Assets
29

Section 3.16
Absence of Liabilities
29


i

Section 3.17
Finders’ Fees
29

Section 3.18
Taxes
29

Section 3.19
Environmental Matters
30

Section 3.20
Customers; Suppliers
30

Section 3.21
Ownership and Operations of the Companies
32

Section 3.22
Regulatory Matters; Security Breaches
32

Section 3.23
Insurance
33

Section 3.24
Solvency
33

Section 3.25
Transition Services Agreement; Master Services Agreement; ISO
 
 
Agreement and other Related Party Agreements
33

Section 3.26
Related Party Transactions
34

Section 3.27
Directors and Officers
34

Section 3.28
Bank Accounts; Powers of Attorney
34

Section 3.29
Standard
34

Section 3.30
No Other Representations or Warranties
35

 
 
 
ARTICLE IV
 
 
 
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
 
 
 
Section 4.1
Organization and Qualification
35

Section 4.2
Authorization
35

Section 4.3
Consents and Approvals
36

Section 4.4
Non-Contravention
36

Section 4.5
Binding Effect
36

Section 4.6
Finders’ Fees
36

Section 4.7
Litigation and Claims
36

Section 4.8
Financing
36

Section 4.9
Parent Impediments
37

Section 4.10
Guarantee
37

Section 4.11
Merger Sub
37

Section 4.12
No Other Representations or Warranties
37

 
 
 
ARTICLE V
 
 
 
COVENANTS
 
 
 
Section 5.1
Access and Information
37

Section 5.2
Conduct of Business
38

Section 5.3
Reasonable Best Efforts
39

Section 5.4
Tax Matters
40


ii

Section 5.5
Employee and Benefits Matters
41

Section 5.6
Certain Covenants
42

Section 5.7
Further Assurances
44

Section 5.8
Intellectual Property Matters
44

Section 5.9
Confidentiality
44

Section 5.10
Notification
44

Section 5.11
Financing
44

Section 5.12
Financing Cooperation
45

Section 5.13
Internal Reorganization
47

Section 5.14
Access to Stockholders Insurance
48

Section 5.15
Indebtedness
48

Section 5.16
Pre-Closing Dividend
48

Section 5.17
Certain Ancillary Agreement and Organizational Documents
48

Section 5.18
ATH Network Participation Agreement
48

Section 5.19
New Service Addenda
49

Section 5.20
Cash Depot Agreement
49

Section 5.21
GM Group Waiver
49

Section 5.22
Required Stockholder Approval
49

Section 5.23
Post-Closing Access and Cooperation
49

Section 5.24
Obligation to Make Payments
49

Section 5.25
Covenants Regarding Third Party License Agreements
50

Section 5.26
Sale of Assets
51

Section 5.27
Stockholder Contracts
52

 
 
 
ARTICLE VI
 
 
 
CONDITIONS TO CLOSING
 
 
 
Section 6.1
Conditions to the Obligations of the Parties
52

Section 6.2
Conditions to the Obligations of Parent and Merger Sub
53

Section 6.3
Conditions to the Obligations of Stockholder and the Company
54

 
 
 
ARTICLE VII
 
 
 
 
SURVIVAL; INDEMNIFICATION; CERTAIN REMEDIES
 
 
 
Section 7.1
Survival
54

Section 7.2
Indemnification by Stockholder
54

Section 7.3
Indemnification by Parent
55

Section 7.4
Indemnification by the Company
55

Section 7.5
Third-Party Claim Indemnification Procedures
56


iii

Section 7.6
Direct Claims
57

Section 7.7
Consequential Damages
57

Section 7.8
Adjustments to Losses
57

Section 7.9
Payments
58

Section 7.10
Characterization of Indemnification Payments
58

Section 7.11
Mitigation
58

Section 7.12
Remedies
58

 
 
 
ARTICLE VIII
 
 
 
TERMINATION
 
 
 
Section 8.1
Termination
58

Section 8.2
Effect of Termination
59

 
 
 
ARTICLE IX
 
 
 
MISCELLANEOUS
 
 
 
Section 9.1
Specific Performance
60

Section 9.2
Notices
60

Section 9.3
Amendment; Waiver
61

Section 9.4
No Assignment or Benefit to Third Parties
61

Section 9.5
Entire Agreement
62

Section 9.6
Fulfillment of Obligations
62

Section 9.7
Public Disclosure
62

Section 9.8
Expenses
62

Section 9.9
Personal Liability
62

Section 9.10
Schedules
62

Section 9.11
Governing Law; Submission to Jurisdiction; Selection of Forum; Waiver
 
 
of Trial by Jury
62

Section 9.12
Counterparts
63

Section 9.13
 Headings
63

Section 9.14
Severability
63

Section 9.15
Reliance
63









iv


AGREEMENT AND PLAN OF MERGER, dated as of 11:59 P.M., June 30, 2010, among (i) Popular, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (“Stockholder”), (ii) AP Carib Holdings, Ltd., an exempted company organized under the laws of the Cayman Islands with limited liability (“Parent”), (iii) Carib Acquisition, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (“Merger Sub”) and (iv) EVERTEC, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (the “Company”). Other capitalized terms used in this Agreement are defined in Section 1.1 below.

W I T N E S S E T H:
WHEREAS, each of (i) the Company, (ii) Banco Popular de Puerto Rico, a bank chartered under the laws of the Commonwealth of Puerto Rico (“BPPR”), and (iii) Popular International Bank, Inc., a Puerto Rico-chartered international banking entity (“PIBI”) are wholly owned Subsidiaries of Stockholder;
WHEREAS, Stockholder, the Company, BPPR and PIBI entered into that certain Agreement and Plan of Reorganization, dated May 17, 2010 attached hereto as Exhibit 5 (the “Master Reorganization Agreement”) as amended by the First Amendment to the Agreement and Plan of Reorganization dated June 30, 2010 attached hereto as Exhibit 12 (the “MRA Amendment”), pursuant to which, among other things, PIBI (A) transferred (directly or indirectly) to the Company all right title and interest in and to the shares (the “Foreign Shares”) of capital stock held by it in (ATH Costa Rica, S.A., a sociedad anónima organized under the laws of Costa Rica and T.I.I. Smart Solutions Inc., a BVI business company incorporated under the laws of the British Virgin Islands and (B) will transfer (directly or indirectly) to the Company all right title and interest in and to the shares of capital stock held by it in (except to the extent any shares are purchased by third parties pursuant to rights of first refusal): (I) EVERTEC Latinoamérica, S.A., a sociedad anónima organized under the laws of Costa Rica (“Evertec/Latam”), (II) Consorcio de Tarjetas Domincanas, S.A., a sociedad anónima organized under the laws of the Dominican Republic (“Contado”) and (III) Servicios Financieros, S.A. de C.V., a sociedad anónima organized under the laws of El Salvador (“Serfinsa”) (the entities in clauses (A) and (B)(I), collectively and together with their respective Subsidiaries, the “Foreign Subsidiaries” and shares or the shares of capital stock in the entities in clauses ((B)(II)) and ((B)(III)), collectively, the “Foreign Equity Investments”);
WHEREAS, the Company and BPPR entered into that certain Merchant and TicketPop Business Transfer and Reorganization Agreement, dated June 30, 2010 attached hereto as Exhibit 6 (the “Business Transfer Agreement”), pursuant to which, among other things, (i) BPPR transferred to the Company the Transferred Assets (as defined in the Business Transfer Agreement), and the Company assumed the Assumed Liabilities (as defined in the Business Transfer Agreement); (ii) the Company and BPPR entered into (A) that certain ISO, Sponsorship (BIN/ICA) and Services Agreement attached hereto as Exhibit 7 (the “ISO Agreement”), (B) that certain TicketPop Service Agreement attached hereto as Exhibit 8 (the “TicketPop Service Agreement”), and (C) that certain Centro Europa Building Lease attached hereto as Exhibit 9 (the “Centro Europa Building Lease”), and the Company and BPPR entered into that certain BPPR IP Transfer Agreement, dated June 30, 2010, attached hereto as Exhibit 11 (the “BPPR IP Transfer Agreement”) pursuant to which BPPR transferred to the Company the BPPR Transferred IP (as defined in the BPPR IP Transfer Agreement);
WHEREAS, prior to the execution hereof, the transactions contemplated by the Master Reorganization Agreement as amended by the MRA Amendment and the Business Transfer Agreement, to be consummated at the Closing Date (as defined in the Master Reorganization Agreement) in accordance with their terms and therefore, as of the date hereof, the Company owns all the Foreign Shares (other than Evertec/Latam and the Foreign Equity Investments) and owns and operates the Merchant Acquiring Business and TicketPop Business formerly owned and operated by BPPR (with the execution of the other Internal Reorganization Documents (as hereinafter defined) collectively, including the transfer of Evertec/Latam and Foreign Equity Investments, subject to the terms and conditions set forth in the MRA Amendment, the “Internal Reorganization”);
WHEREAS, contemporaneously with the execution and delivery of this Agreement, and as a condition to the willingness of Parent and Merger Sub to enter into this Agreement, Company and Stockholder and the other relevant Affiliates of Stockholder entered into that certain IP Purchase and Sale Agreement in the form attached as Exhibit 1.1(a)(C) hereto (the “IP Purchase and Sale Agreement”) pursuant to which the Stockholder and certain of its Affiliates agreed to sell, assign, transfer and convey certain Intellectual Property to the Company effective immediately following the Effective Time;


1


WHEREAS, contemporaneously with the execution and delivery of this Agreement, and as a condition to the willingness of Stockholder to enter into this Agreement, an Affiliate of Parent (the “Guarantor”) is entering into a limited guarantee in favor of Stockholder (the “Guarantee”) pursuant to which the Guarantor is guaranteeing certain obligations of Parent in connection with this Agreement;
WHEREAS, the boards of directors of Stockholder, the Company, Parent and Merger Sub have each approved and declared advisable this Agreement and determined that it is in the best interests of their respective stockholders that Merger Sub, a wholly owned subsidiary of Parent, merge with and into the Company (the “Merger”) pursuant to and subject to the terms and conditions of this Agreement and the General Corporations Law of 2009 of the Commonwealth of Puerto Rico (the “CGCL”);
WHEREAS, as a condition to the willingness of Parent and Merger Sub to enter into this Agreement, the Stockholder, as sole stockholder of the Company, has agreed pursuant to the terms of this Agreement to deliver immediately following the execution of this Agreement an irrevocable written consent (the “Stockholder Written Consent”) approving and adopting the Merger and this Agreement (the “Stockholder Approval”); and

WHEREAS, the Stockholder Approval constitutes the approval of holders of a type and number of shares of capital stock of the Company sufficient to approve this Agreement and approve the Merger as required under Commonwealth Law, the Company’s Articles of Incorporation and Bylaws, and any applicable agreements between the Company, on the one hand, and any holders of its capital stock, on the other hand (the “Required Stockholder Approval”).
NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and undertakings contained in this Agreement, and for other good and valuable consideration, the Parties agree as follows:
ARTICLE I
DEFINITIONS AND TERMS

Section 1.1 Certain Definitions. As used in this Agreement, the following terms have the meanings set forth below (including for purposes of the Recitals):
“2000 ATH Network Participation Agreement” means the Agreement, dated March 1, 2000, by and between GM Group, Inc. and Banco Popular de Puerto Rico, including all the schedules, exhibits, annexes, addenda and riders thereto.
“2004 Master Services Agreement” means the Master Services Agreement, dated March 31, 2004 between the Stockholder, the Company and certain Subsidiaries listed in Exhibit A thereto.
“Adjusted EBITDA” means an amount equal to the sum of (i) Consolidated EBITDA (as defined in Exhibit A to the Debt Commitment Letter as of the date hereof) calculated on a Pro Forma Basis (as defined in Exhibit A to the Debt Commitment Letter as of the date hereof) and (ii) without duplication, the adjustments set forth in Exhibit 13.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with, such Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made (it being understood and agreed that, for purposes of this Agreement, the Companies shall only be deemed to be Affiliates of Stockholder with respect to the period occurring on or prior to the Closing and with respect to the period occurring thereafter shall be deemed to be Affiliates of Parent).
“After-Tax Aggregate Proceeds” shall be the amount of the aggregate proceeds received by PIBI upon such sale of equity interests in Contado and Serfinsa minus the amount of any and all Taxes incurred by Stockholder, PIBI or any of their Affiliates on any gain realized on such sale and/or otherwise paid or payable incident to such sale (in each case net of any deductions or credits available to offset such Taxes).
“Agreement” means this Agreement and Plan of Merger, as amended or supplemented from time to time in accordance with its terms.
“Alternate Debt Financing” has the meaning set forth in Section 5.11(d).

2


“Amended ATH Network Participation Agreement” means an amended and restated ATH Network Participation Agreement between the Company and BPPR to be entered on or prior to Closing which agreement shall contain the same terms as set forth in the form ATH Network Participation Agreement attached hereto as Exhibit 1.1(a)(E) (the “Form Network Participation Agreement”), as modified by the following: (i) the riders to the 2000 ATH Network Participation Agreement attached as Exhibit 1.1(a)(G) shall be incorporated into the Amended ATH Network Participation Agreement, (ii) the pricing for the services provided under the Amended ATH Network Participation Agreement shall be consistent with the prices charged to other participants taking into account transaction volumes, (iii) Section 2.10 of the Form ATH Network Participation Agreement shall be revised to provide the Company with the option to match a bona fide third party offer to (x) provide any Development Project (as such term is defined in the Form Network Participation Agreement) and (y) contain such other terms customarily associated with the granting of a right of first refusal, (iv) provide that the services provided by the Company to BPPR as of the date of and pursuant to the Amended ATH Network Participation Agreement shall be provided exclusively by the Company to BPPR and that any change, modification or enhancement to such services that are requested or required by BPPR under Section 2.9 of the Form Network Participation Agreement shall be provided exclusively by the Company to BPPR, (v) the term of the New ATH Network Participation Agreement shall be co-terminus with the Amended and Restated Master Services Agreement, section 4.2(a) of the Form Network Participation Agreement shall be deleted and the termination provisions to be contained in the Amended ATH Network Participation Agreement shall generally be conformed to the Amended and Restated Master Services Agreement, except that the New ATH Network Participation Agreement shall not provide for any transition services.
“Amended EVERTEC Articles” has the meaning set forth in Section 5.17(b).
“Amended EVERTEC By-laws” has the meaning set forth in Section 5.17(b).
“Amended & Restated Centro Europa Building Lease” means an amended and restated lease with respect to the premises covered by the existing Centro Europa Building Lease containing such terms and conditions as the Parent and Stockholder mutually agree.
“Amended & Restated Cupey Center Lease” means an amended and restated lease with respect to the premises covered by the existing Cupey Center Lease containing such terms and conditions as the Parent and Stockholder mutually agree.
“Amended & Restated Holdco Articles” means Articles of Incorporation of Holdco as amended and restated prior to the Closing to reflect, as applicable, the terms set forth in the Stockholder Agreement & Corporate Governance Term Sheet and such other terms and conditions reasonably acceptable to the Parent and Stockholder.
“Amended & Restated Holdco By-Laws” means the By-laws of Holdco as amended and restated prior to the Closing to reflect, as applicable, the terms set forth in the Stockholder Agreement & Corporate Governance Term Sheet and such other terms and conditions reasonably acceptable to the Parent and Stockholder.
“Amended and Restated ISO Agreement” means an amended and restated ISO Agreement to be entered into by BPPR and the Company at or prior to Closing on such terms and conditions that the Parent and Stockholder mutually agree.
“Amended & Restated Master Services Agreement” means the Amended and Restated Master Services Agreement between Stockholder and the Company (including the New Service Addenda) substantially in the form attached hereto as Exhibit 1.1(a)(B) to be entered into at the Closing, and as may be amended, extended, supplemented or renewed following the Closing.
“Amended & Restated Services Agreement for Merchant and Electronic Payment Services to Government Entities” means an amended and restated Services Agreement for Merchant and Electronic Payment Services to Government Entities to be entered into between Stockholder and the Company and delivered at the Closing.
“Amended and Restated TicketPop Service Agreement” means an amended and restated TicketPop Service Agreement to be entered into by BPPR and the Company at or prior to Closing on such terms and conditions that the Parent and Stockholder mutually agree.
“Amended & Restated Tres Monjitas Sublease” means an amended and restated lease with respect to the premises covered by the existing Tres Monjitas Sublease containing such terms and conditions as the Parent and Stockholder

3


mutually agree (and, together with the Amended & Restated Centro Europa Building Lease and the Amended & Restated Cupey Center Lease, the “Amended & Restated Leases”).
“Ancillary Agreements” means, collectively, the Stockholders Agreement, the Amended & Restated Holdco Articles, the Amended & Restated Holdco By-laws, the Amended & Restated Master Services Agreement, the IP Purchase and Sale Agreement, the Transition Services Agreement, Amended ATH Network Participation Agreement, ATH Network Support Agreement, Amended & Restated Tres Monjitas Sublease, the Amended & Restated Cupey Center Lease, the Amended & Restated Centro Europa Building Lease, Amended & Restated TicketPop Service Agreement, Amended & Restated Services Agreement for Merchant and Electronic Payment Services to Government Entities, New Service Addenda, Amended and Restated ISO Agreement, and the Technology Escrow Agreement.
“Antitrust Law” means the U.S. Antitrust Laws and any other applicable supranational, national, federal, state, Commonwealth, provincial or local Law designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolizing or restraining trade or lessening competition of any other country or jurisdiction, to the extent applicable to the Transactions.
“Applicable Accounting Principles” has the meaning set forth in Section 2.4(a).
“Applicable Employees” means (i) the employees set forth on Schedule 1.1(c) to the Stockholder Disclosure Schedule who are (A) employees of Stockholder or its Affiliates (other than the Companies) who are being or have been transferred in connection with the transactions contemplated by the Business Transfer Agreement and the Master Reorganization Agreement; (B) employees on leave of absence or on disability (long term or short term), provided such employee returns to active employment within six months of the Closing Date or within a time period of the applicable reserve of employment established by any of the Commonwealth social protection statutes, including the Compensation System for Work Related Accidents Act (workmen’s compensation) and the Temporary Disability Benefit Act (non- occupational disability benefits) and/or the applicable Laws of the Foreign Jurisdictions; and (C) employees of Virgin Island Services and Merchant Business, located in the United States and British Virgin Islands who each receive and affirmatively accept an Employment Offer in the event such employee does not become a Transferred Employee pursuant to Section 5.5(a) as of the Closing Date and (ii) the employees of the Companies.
“Assumed Liabilities” has the meaning set forth in the Business Transfer Agreement.
“ATH Network” has the meaning set forth in the Business Transfer Agreement.
“ATH Network Support Agreement” has the meaning set forth in Section 5.17(i).
“Audited Carve-out Financials” has the meaning set forth in Section 3.6(a).
“Audited Financial Statements” has the meaning set forth in Section 3.6(a).
“Base Working Capital Value” means $45,600,000.
“Baseline Usage” has the meaning set forth in Section 5.25(d).
“Benefit Plans” means each “employee benefit plan” (including as defined in Section 3(3) of ERISA) and each other material profit-sharing, bonus, stock option, stock purchase, restricted stock units/shares, stock ownership, pension, retirement, severance, deferred compensation, excess benefit, supplemental unemployment, post-retirement medical or life insurance, welfare, incentive, sick leave or other leave of absence, short- or long-term disability, salary continuation, medical, hospitalization, life insurance, other insurance plan, or other employee benefit plan, program or arrangement, including individual employment, severance, change of control or similar Contracts, maintained, sponsored or contributed to (or for which a contribution obligation exists) by Stockholder or its Affiliates (including affiliates within the meaning of ERISA Sections 210(c) and (d)) and that provides compensation or benefits to or for the benefit of any Applicable Employee (including such Applicable Employee’s dependents, spouse or beneficiaries).
“BPPR” has the meaning set forth in the Recitals.
“BPPR IP Transfer Agreement” has the meaning set forth in the Recitals.
“BSA” has the meaning set forth in Section 3.9(b).

4


“Business” means the business and operations of the Companies (after giving effect to the transactions contemplated by the Internal Reorganization Documents). For the avoidance of doubt the Business shall include the following business segments of Stockholder and its Affiliates:
(i)the business of developing, marketing, selling, leasing and providing “transaction processing” products and services, including the business of providing financial institutions with access to the ATH Network, card processing, item processing, cash processing, payment processing and electronic benefit transfer processing and program management as currently conducted by the Companies;
(ii)the business of developing, marketing, selling, leasing and providing “business solutions” products and services, including core bank processing, network solutions, professional services, business process outsourcing and fulfillment, as currently conducted by the Companies;
(iii)the Merchant Acquiring Business and the TicketPop Business.
“Business Assets” means all of the assets, rights, properties, claims, Contracts (including the Company Contracts) and goodwill owned or transferred to the Companies (after giving effect to the Internal Reorganization Documents), and any such assets used primarily or held for use primarily, by Stockholder or any of its Affiliates in the Business; it being understood, for the avoidance of doubt, that Business Assets shall not include any rights of Stockholder or its Subsidiaries (other than the Companies) under any Ancillary Agreements or any Internal Reorganization Agreements.
“Business Day” means any day other than a Saturday, a Sunday or a day on which banks in New York, New York or San Juan, Puerto Rico are authorized or obligated by Law or executive order to close.
“Business Transfer Agreement” has the meaning set forth in the Recitals.
“Cap” has the meaning set forth in Section 7.2(b).
“Card” has the meaning set forth in the Business Transfer Agreement.
“Card Associations” means (i) the Bank Card Association (as defined in the Business Transfer Agreement) and (ii) any other card company, debit card network (including the ATH Network) or links, or similar entity with which the Business has a contract for processing and/or facilitating switching settlement of transaction media generated by holders of Cards or similar instruments issued by licensees of such groups.
“Card Transactions” means Transactions as defined in the Business Transfer Agreement.
“Cash Depot Agreement” means the Cash Depot Agreement, dated December 31, 2009, by and among BPPR, the PR Bankers Association and the FRBNY.
“Centro Europa Building Lease” has the meaning set forth in the Recitals.
“Certificate of Merger” has the meaning set forth in Section 2.1(c).
“CGCL” has the meaning set forth in the Recitals.
“Chargebacks” has the meaning set forth in the Business Transfer Agreement.
“Chosen Courts” has the meaning set forth in Section 9.11.
“Claim Notice” has the meaning set forth in Section 7.5(a).
“Closing” has the meaning set forth in Section 2.1(b).
“Closing Date” means the date on which the Closing occurs.
“Closing Documents” means the documents identified in Sections 2.6 or 2.7 hereof to be delivered at or prior to Closing.
“Closing Payment” shall mean an amount equal to (i) $639,750,000 minus (ii) the sum of (A) the product of the Equity Ratio multiplied by the Overfund Amount, and (B) if applicable, an amount equal to 25.5% of the After-Tax Aggregate Proceeds received from the sale by PIBI (or any Affiliate thereof) of any portion of its equity interests in Contado and Serfinsa in conjunction with a right of first refusal or otherwise minus (iii) the gross proceeds received by the Company or any of its Subsidiaries in connection with an EV Sale and/or an EV Transfer (whether from a third party, Stockholder or otherwise), including any payment made by Stockholder pursuant to Section 5.26, in each case, prior to the Closing.

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“Closing Statement” has the meaning set forth in Section 2.5(a).
“Closing Working Capital” means the difference between (i) the current assets of the Companies, minus (ii) the current liabilities of the Companies (for the avoidance of doubt, which do not include any of the items of current assets or current liabilities excluded therefrom in accordance with the Applicable Accounting Principles), in each case, as of the close of business on the Closing Date and calculated in accordance with the Applicable Accounting Principles.
“COBRA Coverage” means the health continuation coverage required by Part 6 of Title I of ERISA and the relevant provisions of the American Recovery and Reinvestment Act of 2009, as amended.
“Code” means the Internal Revenue Code of 1986, as amended.
“Collocation Services Addendum” means the Collocation Services Addendum referenced in Section 2.13(b) of the Master Services Agreement.
“Commonwealth” means the Commonwealth of Puerto Rico.
“Communications Act” means the Communications Act of 1934, as amended, and the regulations promulgated thereunder.
“Companies” means the Company and its Subsidiaries, including the Foreign Subsidiaries, and Contado.
“Company” has the meanings set forth in the Preamble.
“Company 1165(e) Plan” has the meaning set forth in Section 5.5(e).
“Company Articles” means the Amended and Restated Certificate of Incorporation of the Company, dated May 26, 2005.
“Company Books and Records” means all books, ledgers, files, reports, plans, records, manuals and other materials (in any form or medium) owned by the Companies.
“Company By-laws” means the By-laws of the Company, effective November 30, 2004.
“Company Contracts” means all Contracts to which any of the Companies is a party (after giving effect to the transactions contemplated by the Internal Reorganization Documents).
“Company IP Agreements” means all: (i) licenses of Intellectual Property from any third party to any of the Companies (other than commercially available “shrink wrap,” “click through,” “browse wrap,” or other off-the-shelf software license agreements), (ii) licenses of Intellectual Property from any of the Companies to any third party (other than non-exclusive licenses granted to customers in the Ordinary Course), (iii) Transferred Stockholder IP Agreements; and (iv) any other Contracts between any Company and any third party the primary purpose of which is the use of any Intellectual Property.
“Company Liabilities” means all of the Liabilities of the Companies.
“Company Owned Intellectual Property” means all Intellectual Property owned by any of the Companies, including Company Owned Software and Transferred Intellectual Property.
“Company Owned Software” means all Software owned by any of the Companies.
“Company Plans” has the meaning set forth in Section 5.5(c).
“Concession” has the meaning set forth in Section 5.25(c).
“Confidentiality Agreements” means the confidentiality agreements between Stockholder and Apollo Management VII, L.P., dated March 25, 2010 and June 24, 2010.
“Contracts” means all agreements, contracts, subcontracts, leases and subleases, purchase orders, membership agreements, participation agreements, indentures, notes, bonds, instruments, guarantees, mortgages, covenants, undertakings, commitments and licenses, whether written or oral (other than this Agreement and the Ancillary Agreements).
“Contado” has the meaning set forth in the Recitals.

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“Control,” and the correlative terms “Controlling” and “Controlled,” means the possession, direct or indirect, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“CPA Firm” means an internationally recognized “Big Four” firm of independent certified public accountants designated jointly by Stockholder and Parent.
“Credit Facility” has the meaning set forth in Section 4.8(a).
“Credit Loss” has the meaning set forth in the Business Transfer Agreement.
“Cupey Center Lease” means the Master Lease Agreement between the Company and BPPR dated April 1, 2004, as amended on January 1, 2006 and April 23, 2010.
“Customer” means a Person who is a customer of the Companies (after giving effect to the transactions contemplated by the Internal Reorganization Documents) or the Business.
“Dataroom” means the electronic data room established for “Project Sobek” at http://datasite.merrillcorp.com, as populated at 12:01 a.m. New York time on the full Business Day immediately preceding the date hereof and such other documents that Parent expressly consents in writing to be included therein following such time.
“Debt Commitment Letter” has the meaning set forth in Section 4.8(a).
“Debt Financing” has the meaning set forth in Section 4.8(a).
“Deductible” has the meaning set forth in Section 7.2(b).
“Direct Claim” has the meaning set forth in Section 7.6.
“Disaster Recovery Services Addendum” means the Disaster Recovery Services Addendum referenced in
Section 2.12 of the Master Services Agreement, which will include, at a minimum, the items set forth in Section 2.15(b) of the Master Services Agreement and, as appropriate, the items set forth in Section 2.15(c) and (f) of the Master Services Agreement.
“Disclosing Party” has the meaning set forth in Section 5.9.
“Economic Sanctions Laws” has the meaning set forth in Section 3.9(e)(ii).
“Effective Hire Date” has the meaning set forth in Section 5.5(a).
“Effective Time” has the meaning set forth in Section 2.1(c).
“Employment Offer” has the meaning set forth in Section 5.5(a).
“Encumbrance” means any lien, pledge, charge, claim, encumbrance, security interest, option, mortgage, easement, lease, license, right of first refusal, proxy, voting trust, transfer restriction or other similar restriction.
“Environmental Claim” has the meaning set forth in Section 3.19(b).
“Environmental Laws” has the meaning set forth in Section 3.19(a).
“Equity Commitment Letter” has the meaning set forth in Section 4.8(a).
“Equivalent IP Arrangement” has the meaning set forth in Section 5.25(d).
“Equity Financing” has the meaning set forth in Section 4.8(a).
“Equity Ratio” shall mean a quotient obtained by dividing 49 by 51.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Estimated Closing Statement” has the meaning set forth in Section 2.4(a).
“Estimated Closing Working Capital” means the difference, as set forth on the Estimated Closing Statement, between (i) the estimated current assets of the Companies, minus (ii) the estimated current liabilities of the Companies (for the avoidance of doubt, which do not include any of the items of current assets or current liabilities excluded

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therefrom in accordance with the Applicable Accounting Principles), in each case, as of the close of business on the Closing Date and calculated in accordance with the Applicable Accounting Principles.
“Estimated Closing Working Capital Adjustment Amount” has the meaning set forth in Section 2.4(b).
“EV” has the meaning as set forth in Section 5.26(a).
“Evertec/Latam” has the meaning set forth in the Recitals.
“EVERTEC Reserve Cash” means, as of the date of determination, an amount equal to the sum of the amount of (i) the “ATH marketing fund”, plus (ii) the “ATH settlement reserve”, plus (iii) the “Sundry losses reserve”, plus (iv) the “Cofre de Oro settlement reserve”, plus (v) any cash or cash equivalent (a) which is subject to capital maintenance, capital surplus rules or similar statutory restrictions which require the holding of specific assets on separate accounts and the like; (b) which is required to be held as collateral or in escrow as a result of regulatory, contractual or other requirements; (c)located in any country outside the United States which are subject to exchange control, taxation or other statutory provisions which do not permit a free transfer to the United States; or (d) which is classified as restricted cash in accordance with GAAP, as each such term in clauses (i) through (iv) is used in books and records underlying the Historical Financial Statements.
“EV Proportional Value” has the meaning as set forth in Section 5.26(b).
“EV Sale” has the meaning as set forth in Section 5.26(a).
“EV Transfer” has the meaning as set forth in Section 5.26(a).
“Excluded Liabilities” has the meaning set forth in the Business Transfer Agreement.
“Extended Survival Representations” has the meaning set forth in Section 7.1.
“Fee Letter” has the meaning set forth in Section 4.8(b).
“Financing” has the meaning set forth in Section 4.8(a).
“Financing Letters” has the meaning set forth in Section 4.8(a).
“First Amendment to the Subcontracting Agreement” means the First Amendment to the Subcontracting Agreement substantially in the form attached as Exhibit 10 hereto entered into by BPPR and the Company on June 2, 2010.
“Foreign Equity Investments” has the meaning set forth in the Recitals.
“Foreign Jurisdictions” means Puerto Rico, the Dominican Republic, Costa Rica, Mexico, Panama, El Salvador, Guatemala, Venezuela, Honduras, the British Virgin Islands and the U.S. Virgin Islands.
“Foreign Subsidiaries” has the meaning set forth in the Recitals.
“Foreign Shares” has the meaning set forth in the Recitals.
“FRBNY” means the Federal Reserve Bank of New York.
“Fundamental Representations” has the meaning set forth in Section 7.1.
“GAAP” means United States generally accepted accounting principles.
“GLBA” has the meaning set forth in Section 3.22(a).
“GM Group Obligations” has the meaning set forth in Section 5.21.
“GM Stockholders” has the meaning set forth in Section 5.21.
“Government Antitrust Entity” means any Government Entity with jurisdiction over the enforcement of any Antitrust Law.
“Government Entity” means any federal, national, supranational, state, provincial, Commonwealth, local or foreign or similar government, governmental subdivision, regulatory or administrative body or other governmental or quasi- governmental agency, tribunal, commission, court, judicial or arbitral body or other entity with competent jurisdiction, including any Government Antitrust Entity.

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“Governmental Authorizations” means all licenses, permits, certificates and other authorizations and approvals issued by or obtained from a Government Entity or Self-Regulatory Organization that are held by any of the Companies or otherwise required for the operation of the Business, including without limitation, those required to be obtained by Law.
“Guarantee” has the meaning set forth in the Recitals.
“Guarantor” has the meaning set forth in the Recitals.
“HIPAA” has the meaning set forth in Section 3.22(a).
“Historical Financial Statements” has the meaning set forth in Section 3.6(a).
“Holdco” means Carib Holdings, Inc., a corporation organized under the laws of the Commonwealth or, in the event that Carib Holdings, Inc. has conducted any operations or incurred any Liabilities other than those incurred in connection with any Ancillary Agreement, the Transactions or the Debt Financing, such other entity to be formed by Stockholder and Parent for the purposes of effecting the Closing.
“Holdco Non-Voting Common Stock” has the meaning set forth in Section 2.8.
“Holdco Voting Common Stock” has the meaning set forth in Section 2.8.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and any of the regulations promulgated thereunder.
“Increased License Cost” has the meaning set forth in Section 5.25(f).
“Indebtedness” means, with respect to any Person, (a) all indebtedness of such Person, whether or not contingent, for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services outside the Ordinary Course, (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar debt instruments, (d) all indebtedness created by or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person outside the Ordinary Course (even though the rights and remedies of Stockholder or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (f) all obligations, contingent or otherwise, of such Person under bankers’ acceptance, letter of credit or similar arrangements, (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any capital stock of such Person, valued, in the case of redeemable preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (h) obligations of such Person upon which interest charges are customarily paid, (i) all Indebtedness of others referred to in clauses (a) through (h) above guaranteed by such Person through an agreement (I) to pay or purchase such Indebtedness or to advance or supply funds for the payment or purchase of such Indebtedness, or (II) otherwise to guarantee a creditor against loss, and (j) all Indebtedness referred to in clauses (a) through (h) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Encumbrance on property (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness.
“Indemnified Parties” has the meaning set forth in Section 7.2(a).
“Indemnifying Party” has the meaning set forth in Section 7.5(a).
“Indemnitees” has the meaning set forth in Section 5.12(b).
“Indemnity Amount” has the meaning set forth in Section 7.9.
“Intellectual Property” means all of the following worldwide: (i) trademarks, service marks, Internet domain names, trade dress, trade, corporate or business names and other similar identifiers of source, all applications and registrations for the foregoing, including all renewals and extensions of same, and all goodwill associated therewith and symbolized thereby (collectively, “Trademarks”), (ii) patents and the issuances, registrations, invention disclosures and applications therefor, including divisions, continuations, continuations-in-part, provisionals, renewal applications, and renewals, extensions, reexaminations and reissues, (iii) trade secrets (including those contained in designs, specifications, know- how, customer/vendor lists, sales records/databases, technical information, marketing information, proprietary software and applications) (collectively, “Trade Secrets”), (iv) copyrights in works of

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authorship (including those contained in Software and other compilations of information), registrations and applications therefor, and renewals, extensions, restorations and reversions thereof, and (v) all other intellectual property rights of any nature, including the right to recover for damages and profits for past and future infringement of any part of the foregoing.
“Internal Reorganization” has the meaning set forth in the Recitals.
“Internal Reorganization Documents” means the Master Reorganization Agreement as amended by the MRA Amendment, the Business Transfer Agreement, the Operative Documents (as defined in the Business Transfer Agreement), the BPPR IP Transfer Agreement, the TicketPop Service Agreement, the Centro Europa Building Lease and the ISO Agreement and any other ancillary agreements, schedules or exhibits contemplated thereby.
“International Trade Laws” has the meaning set forth in Section 3.9(e)(iii).
“IP Agreements” means, collectively, Company IP Agreements and Stockholder IP Agreements.
“IP MAE” has the meaning set forth in Section 5.25(c).
“IP Purchase and Sale Agreement” has the meaning set forth in the Recitals.
“ISO Agreement” has the meaning set forth in the Recitals.
“Law” means any federal, national, supranational, state, provincial, Commonwealth, local or foreign or similar law, statute, ordinance, rule, regulation, code, Order, writ, judgment, injunction, directive, guideline or decree enacted, issued, promulgated, enforced or entered by a Government Entity or Self-Regulatory Organization (including, for the sake of clarity, any policy statement or interpretation that has the force of law with respect to any of the foregoing, and including common law).
“Legal Proceeding” means any judicial, administrative or arbitral actions (whether civil, criminal, commercial, labor, administrative or otherwise), suits, demands, mediations, arbitrations, hearings, investigations, inquiries, investigations, proceedings, actions, or claims (including counterclaims) by or before a Government Entity or Self- Regulatory Organization.
“Liabilities” means any and all debts, guarantees, claims, damages, costs, expenses, the obligation to make a payment based on future earnings in connection with an acquisition, fines, penalties, liabilities, commitments and obligations of any kind, whether direct or indirect, whether fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued, asserted or not asserted, known or unknown, determined, determinable or otherwise, whenever or however arising (including, whether arising out of any contract or tort based on negligence or strict liability) and whether or not the same would be required by GAAP to be reflected in, reserved against or otherwise disclosed on financial statements or disclosed in the notes thereto.
“Licensed Intellectual Property” means Intellectual Property licensed to the Stockholder (or any of its Affiliates) or any Company pursuant to the Company IP Agreements or the Stockholder IP Agreements, as the case may be.
“Losses” has the meaning set forth in Section 7.2(a).
“Management Long-Term Compensation Plan” means the Management Long-Term Compensation Plan to be adopted by the Company or Holdco at or after the Closing.
“Master Reorganization Agreement” has the meaning set forth in the Recitals.
“Master Services Agreement” means the Master Services Agreement between Stockholder and the Company dated as of April 1, 2010.
“Material Adverse Effect” means any fact, event, change, effect, development, condition or occurrence that has or would reasonably be expected to have a materially adverse effect on or with respect to the business, assets, liabilities, financial condition or results of operations of the Companies or the Business, taken as a whole; provided that none of the following (or the effects or results thereof) in and of itself, shall constitute, or shall be considered in determining whether there shall have occurred, a Material Adverse Effect: (i) any change in Law or accounting standards or interpretations thereof applicable to the Companies; (ii) general changes in economic, business or political conditions; (iii) general changes in the securities, credit or financial markets or in the banking industry; (iv) general changes in the transaction processing, technology based business solutions, merchant acquiring and payment network services

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industries; (v) the taking of any action required by this Agreement; (vi) any acts of god, natural disasters or acts of war, terrorism, insurrection or civil disobedience; and (vii) any adverse effect to the business, assets, financial condition or results of operations of the Companies, taken as a whole, as a result of the fact that Parent and its Affiliates will be acquiring control of Holdco and the Companies; provided, further, that with respect to clauses (i) through (iv) and (vi), such change (or effects or results thereof) shall not be excluded in the determination of whether there shall have occurred a Material Adverse Effect if such change (or effects or results thereof) materially and disproportionately adversely affects the business, assets, Liabilities, condition (financial condition) or results of operations of the Companies or the Business, taken as a whole, compared to the businesses or entities operating in the same industry in which the Companies or the Business operate.
“Material Contract” has the meaning set forth in Section 3.12(a).
“Merchant” has the meaning set forth in the Business Transfer Agreement.
“Merchant Acquiring Business” means the business of enabling Merchants to accept and process payment of goods and services from their customers by means of Cards or other transaction media, including the signing up and underwriting of Merchants for accepting such means of payment, providing POS card-based transaction processing services and electronic payment and settlement services (including PIN and signature debit transaction authorization, settlement and exception processing, gift, private label, stored value and prepaid card processing and certain payments- related reselling services), the sale of products and services related thereto, including terminal deployment services and other value added services (including Card-acquiring debit portfolio management services related to the foregoing, and certain data processing services).
“Merchant Agreement” has the meaning set forth in the Business Transfer Agreement.
“Merger” has the meaning set forth in the Recitals.
“Merger Consideration” means the Closing Payment plus the Estimated Closing Working Capital Adjustment Amount plus the Working Capital True-Up Amount.
“Merger Sub” has the meaning set forth in the Preamble.
“Merger Sub Common Stock” means the shares of common stock, par value $0.01 per share, of Merger Sub.
“MRA Amendment” has the meaning set forth in the Recitals.
“Network Rules” has the meaning set forth in Section 3.22(a).
“New Debt Commitment Letter” has the meaning set forth in Section 5.11(d).
“New Service Addenda” has the meaning set forth in Section 5.19.
“Non-Governmental Authorizations” means all licenses, permits, certificates and other authorizations and approvals other than Governmental Authorizations that are held by any of the Companies or otherwise required for the operation of the Business.
“Notice Period” has the meaning set forth in Section 7.5(a).
“OFAC” has the meaning set forth in Section 3.9(e)(i).
“Open Source Software” has the meaning set forth in Section 3.10(h).
“Order” means any order, injunction, judgment, decree, writ or other enforcement action of a Government Entity.
“Ordinary Course” means the ordinary and usual conduct of normal day-to-day operations of the Business and/or use of the Business Assets consistent with, and in accordance with, Stockholder’s or the Companies’, as applicable, historical customs, practices and procedures and not requiring authorization by the board of directors or shareholders of such Person (or by any Person or group of Persons exercising similar authority).
“Original Financing Failure” has the meaning set forth in Section 5.11(d).
“Overfund Amount” shall mean, as of immediately prior to the Closing and giving effect to the contribution of the proceeds from the Equity Commitment to Merger Sub and receipt by Merger Sub of the proceeds of the Debt Financing (without regard to whether such Debt Financing is consummated immediately prior to or immediately

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following the Closing), the excess of Merger Sub’s cash over the sum of (i) the principal amount of all Indebtedness of Merger Sub (which for the avoidance of doubt will exclude any Parent Transaction Expenses) and (ii) $165,750,000; provided that, in no event shall the Overfund Amount be more than $40 million, without the written consent of Stockholder.
“Parent” has the meaning set forth in the Preamble.
“Parent Disclosure Schedule” means the Parent Disclosure Schedule attached as Exhibit 4 hereto.
“Parent Indemnified Parties” has the meaning set forth in Section 7.2(a).
“Parent Required Approvals” means all consents, approvals, waivers, authorizations, notices and filings from or with a Government Entity that are required to be listed on Schedule 4.3 of the Parent Disclosure Schedule.
“Parent Restricted Business” means the Companies’ business of developing, marketing, selling, leasing and providing “transaction processing” products and services in the Commonwealth and the Dominican Republic as currently conducted, including the business of providing financial institutions with access to the ATH Network, card processing, item processing, cash processing, payment processing and electronic benefit transfer processing and program management and the businesses in which the Merchant Acquiring Business is engaged in, in each case, as currently conducted by the Companies, in the Commonwealth of Puerto Rico and the Dominican Republic and, in each case, if the Companies continue to conduct any such business.
“Parent Termination Fee” has the meaning set forth in Section 8.2(b).
“Parent Transaction Expenses” means the out-of-pocket expenses (including, without limitation, all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a party) incurred by Parent or any of its Affiliates or on their behalf in connection with or related to the authorization, preparation, due diligence, exploration, negotiation, execution and performance of this Agreement, the Ancillary Agreements, the Closing Documents, the documents related to Debt Financing, the Internal Reorganization, and all other matters related to the Internal Reorganization, the Transactions and the Debt Financing.
“Party” means any of Parent, Merger Sub, Stockholder and the Company, and “Parties” means, collectively, Parent, Merger Sub, Stockholder and the Company.
“Patriot Act” has the meaning set forth in Section 3.9(b).
“PCI-DSS” has the meaning set forth in Section 3.22(a).
“Permitted Encumbrances” means (i) Encumbrances reflected in, reserved against or otherwise disclosed on the Historical Financial Statements, (ii) mechanics’, materialmen’s, warehousemen’s, carriers’, workers’, or repairmen’s liens or other similar common law or statutory Encumbrances arising or incurred in the Ordinary Course and that are not material in amount or effect on the Business, (iii) liens for current Taxes, assessments and other governmental charges that are (a) not yet due and payable, (b) due but not delinquent or (c) being contested in good faith by appropriate Legal Proceedings, and that in each case have been reflected in, reserved against or otherwise disclosed on the balance sheets or statements of condition contained in the Historical Financial Statements or relate to a period after such Historical Financial Statements; in each case, in an amount that would not be material, (iv) Encumbrances incurred in the Ordinary Course since the date of the Historical Financial Statements and that are not material in amount or effect on the Business, (v) gaps in the chain of title evident from the records of the relevant Government Entity maintaining such registration, (vi) the matters set forth on Schedule 1.1(b) of the Stockholder Disclosure Schedule and (vii) Encumbrances that would not materially impair the conduct of the Business or the use or value of the relevant Business Assets.
“Person” means an individual, a corporation, a partnership, an association, a limited liability company, a joint venture, a Government Entity, a trust or other entity or organization.
“PIBI” has the meaning set forth in the Recitals.
“Policy” has the meaning set forth in Section 3.10(h).
“PR Bankers Association” means the Puerto Rico Bankers Association.
“PR Code” means the Puerto Rico Internal Revenue Code of 1994, as amended.

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“Pre-Closing Claim” has the meaning set forth in Section 5.14.
“Pre-Closing Dividend” has the meaning set forth in Section 5.16.
“Prohibited Alternate Debt Terms” has the meaning set forth in Section 5.11(d).
“Receiving Party” has the meaning set forth in Section 5.9.
“Related Party” has the meaning set forth in Section 3.26(b).
“Related Party Agreements” has the meaning set forth in Section 3.12(a)(ix).
“Related Persons” has the meaning set forth in Section 3.12(a)(ix).
“Released Related Party” has the meaning set forth in Section 8.2(b).
“Relevant Concession” has the meaning set forth in Section 5.25(d).
“Relevant IP Agreements” has the meaning set forth in Section 5.25(f).
“Relevant Period” has the meaning set forth in Section 5.25(f).
“Relevant Unassigned License” has the meaning set forth in Section 5.25(d).
“Representatives” has the meaning set forth in Section 5.12(a).
“Required Information” has the meaning set forth in Section 5.12(a)(iii).
“Required Stockholder Approval” has the meaning set forth in the Recitals.
“Restricted Party” has the meaning set forth in Section 3.9(e)(i).
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act of 1933” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Self-Regulatory Organization” means the Financial Industry Regulatory Authority, the American Stock Exchange, the National Futures Association, the Chicago Board of Trade, the New York Stock Exchange, any national securities exchange (as defined in the Securities Exchange Act of 1934, as amended), any other securities exchange, futures exchange, contract market, any other exchange or corporation or similar self-regulatory body or organization.
“Serfinsa” has the meaning set forth in the Recitals.
“Services Agreement for Merchant and Electronic Payment Services to Government Entities” means the service addendum, dated June 30, 2010, among Stockholder and Company relating to the provision of certain merchant and electronic payment services by BPPR to those Government Entities listed in Exhibit A to such service addendum.
“Shares” means the issued and outstanding shares of common stock, par value $1.00 per share of the Company.
“Software” means computer software, programs, and applications of any kind and in any medium, including, source code, object code, firmware, and middleware, and all versions, updates, enhancements and modifications thereof.
“Source Code Disclosure” has the meaning set forth in Section 3.10(h).
“Stockholder” has the meaning set forth in the Preamble.
“Stockholder 1165(e) Plan” has the meaning set forth in Section 5.5(e).
“Stockholder Agreement” means the Stockholder Agreement among the Stockholder and the Parent to be entered into at Closing reflecting and consistent with the Stockholder Agreement and Corporate Governance Term Sheet attached hereto as Exhibit 1.1(a)(A) and such other terms and conditions as the Parent and Stockholder mutually agree.
“Stockholder Approval” has the meaning set forth in the Recitals.
“Stockholder Contract” means any third-party Contract to which Stockholder or any of its Affiliates (other than the Companies) is party that primarily relates to, is primarily used in, or is primarily held for use in the Business (other than the Merchant Acquiring Business or the TicketPop Business).

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“Stockholder Disclosure Schedule” means the Stockholder Disclosure Schedule attached as Exhibit 3 hereto.
“Stockholder Indemnified Parties” has the meaning set forth in Section 7.3(a).
“Stockholder IP Agreements” means all (i) licenses of Intellectual Property from any third party to Stockholder or any of its Affiliates (other than the Companies) (other than commercially available “shrink wrap,” “click through,” “browse wrap,” or other off-the-shelf software license agreements), (ii) licenses of Company Owned Intellectual Property and Transferred Intellectual Property from Stockholder or any if its Affiliates to any third party (other than non-exclusive licenses granted to customers in the Ordinary Course), and (iii) any other Contracts between the Stockholder or any of its Affiliates (other than the Companies) and any third party the primary purpose of which is the use of Intellectual Property, in each case to the extent primarily used or held for use in connection with the Business.
“Stockholder Licensed Intellectual Property” means any Intellectual Property licensed by Stockholder or one of its Affiliates to any of the Companies pursuant to any of the Ancillary Agreements.
“Stockholder Parties” means BPPR, PIBI and any other Affiliate of Stockholder (other than the Companies) that is a party to any Ancillary Agreement, Closing Document or Internal Reorganization Document.
“Stockholder Required Approvals” means all consents, approvals, waivers, authorizations, notices and filings from or with a Government Entity that are required to be listed on Schedule 3.3(a) of the Stockholder Disclosure Schedule.
“Stockholder Services” means those rights, assets and services to be provided by Stockholder or any of its Affiliates to the Companies from and after the Closing pursuant to this Agreement, the First Amendment to the Subcontracting Agreement, any Internal Reorganization Document or any Ancillary Agreement.
“Stockholder Written Consent” has the meaning set forth in the Recitals.
“Stockholder’s Knowledge” or any similar phrase means the actual knowledge of any of the persons set forth on Schedule 1.1(a) of the Stockholder Disclosure Schedule, after reasonable inquiry under the circumstances.
“Stockholder’s Objection” has the meaning set forth in Section 2.5(b).
“Stockholder Transaction Expenses” means the out-of-pocket expenses (including, without limitation, all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a party) incurred by Stockholder and its Affiliates solely in connection with or related to the authorization, preparation, due diligence, exploration, negotiation, execution and performance of the Debt Financing.
“Subsidiary” means, as to any Person, any other Person Controlled by such Person, whether directly or indirectly through one or more intermediaries.
“Surviving Corporation” has the meaning set forth in Section 2.1(a).
“Tax Returns” means any report, return, declaration, estimate, claim for refund or information return or statement relating to, or required to be filed with respect to Taxes, including any schedule, election, form, attachment or amendment.
“Taxes” means any federal, state, Commonwealth, local, municipal, territorial, provincial or foreign or similar taxes of any kind whatsoever, including income, net income, gross receipts, windfall profits, value added, severance, real property, personal property, production, single business, unincorporated business, sales, use, stamp, duty, license, excise, franchise, payroll, employment, unemployment, occupation, premium, environmental (including taxes under Section 59A of the Code), customs duties, capital stock, franchise, profits, gains, withholding, social security (or similar), disability, workers compensation, ad valorem, replacement, transfer, registration, alternative or add-on minimum, estimated taxes, fees, charges or any obligations similar to the foregoing including any liability therefor as a successor or transferee (including under Section 6901 of the Code or similar provision of applicable Law), as a result of any Tax sharing indemnification or similar agreement, or otherwise together with any interest, additions, fines or penalties with respect thereto and any interest in respect of such additions or penalties, whether or not disputed and whether imposed by Law, contract or otherwise. With respect to Mexico, “Taxes” also means any and all social security contributions (aportaciones de seguridad social), duties (derechos), contributions (contribuciones), and tariffs (aranceles) and other charges deemed as such under Law imposed by any Government Entity, including with respect to income (impuesto sobre la renta), assets (impuesto al activo), flat taxes (impuesto empresarial a tasa única), real property (including impuesto predial and contribuciones de mejoras), withholding taxes (retenciones), social security quotas (contribuciones

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al Instituto Mexicano del Seguro Social), contributions and quotas to the National Pension Fund System (contribuciones al Sistema de Ahorro para el Retiro), contributions and quotas to the National Workers’ Housing Fund Institute Quotas (contribuciones al Infonavit) and value added tax (Impuesto al Valor Agregado), including in each case any charges, interest, surcharges, additions or penalties imposed by any Government Entity in connection therewith.
“Technology Escrow Agent” means a recognized third-party technology escrow agent such as Iron Mountain selected by Stockholder with the consent of Parent (not to be unreasonably withheld or delayed).
“Technology Escrow Agreement” means the Technology Escrow Agreement among the Stockholder, Parent and the Technology Escrow Agent to be entered into at Closing reflecting and consistent with the Technology Escrow Agreement Term Sheet attached hereto as Exhibit 1.1(a)(F) and such other terms and conditions as the Parent and Stockholder mutually agree.
“Termination Date” has the meaning set forth in Section 8.1(b).
“Third-Party Claim” has the meaning set forth in Section 7.5(a).
“Third Party Referral Contract” means any referral Contract between the Companies and/or BPPR or their respective Affiliates and a Third-Party Referral Provider related to the Merchant Acquiring Business conducted by the Company or by Stockholder or its Affiliates prior to the consummation of the Internal Reorganization.
“Third Party Referral Provider” means any indirect sales channel (including banks, Affiliate banks, professional associations, value added resellers, and other referral sources), that sells, refers, or promotes the services of the Merchant Acquiring Business conducted by the Company or by Stockholder or its Affiliates prior to the consummation of the Internal Reorganization to merchants pursuant to a Third Party Referral Contract.
“TicketPop Business” has the meaning set forth in the Business Transfer Agreement.
“TicketPop Service Agreement” has the meaning set forth in the Recitals.
“Top Local Merchant” has the meaning set forth in Section 3.20(a)(iii)(A).
“Top Referral Providers” has the meaning set forth in Section 3.20(a)(v).
“Top U.S. Retail Merchants” has the meaning set forth in Section 3.20(a)(iii)(A).
“Transactions” means all of the transactions contemplated by this Agreement, the Ancillary Agreements and any of the Closing Documents.
“Transfer Consents” has the meaning set forth in Section 5.25(c).
“Transfer Taxes” has the meaning set forth in Section 5.4(c).
“Transferred Agreements” has the meaning set forth in the Business Transfer Agreement.
“Transferred Assets” has the meaning set forth in the Business Transfer Agreement.
“Transferred Employee” has the meaning set forth in Section 5.5(a).
“Transferred Intellectual Property” means the Intellectual Property owned by Stockholder or any of its Affiliates, including the Transferred Software, that is assigned, transferred, sold, and/or conveyed to any of the Companies by the Stockholder or any of its Affiliates pursuant to the IP Purchase and Sale Agreement.
“Transferred Software” means the Software owned by Stockholder or any of its Affiliates that is assigned to any of the Companies pursuant to the IP Purchase and Sale Agreement.
“Transferred Stockholder Contracts” has the meaning set forth in Section 5.27(a).
“Transition Services Agreement” means the Transition Services Agreement substantially in the form attached hereto as Exhibit 1.1(a)(D).
“Transferred Stockholder IP Agreements” has the meaning set forth in Section 5.25(a).
“Tres Monjitas Sublease” means the sublease for the Tres Monjitas facility as in effect as of the date hereof.
“Unaudited Carve-out Financial Information” has the meaning set forth in Section 3.6(a).

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“U.S. Antitrust Laws” means the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and all other federal, state and Commonwealth statutes, rules, regulations, Orders, decrees, administrative and judicial doctrines and other Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade.
“U.S. Export Control Laws” has the meaning set forth in Section 3.9(e)(v).
“U.S. Foreign Corrupt Practices Act” has the meaning set forth in Section 3.9(e)(iv).
“Valuation Dispute Notice” has the meaning set forth in Section 5.4(f).
“Valuation Report” has the meaning set forth in Section 5.4(f).
“WARN” has the meaning set forth in Section 3.11(d).
“Work-around” has the meaning set forth in Section 5.27(c).
“Working Capital True-Up Amount” has the meaning set forth in Section 2.5(e).
Section 1.2 Other Terms. Other terms may be defined elsewhere in the text of this Agreement and, unless otherwise indicated, shall have such meaning throughout this Agreement.
Section 1.3 Other Definitional and Interpretational Provisions.
(a) Unless the express context otherwise requires:
(i) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement;
(ii) the terms defined in the singular have a comparable meaning when used in the plural, and vice versa (other than, for the avoidance of doubt, with respect to the terms “Company” and “Companies”);
(iii) the terms “Dollars” and “$” mean United States Dollars;
(iv) references herein to a specific Article, Section, Subsection or Schedule shall refer, respectively, to Articles, Sections, Subsections or Schedules of this Agreement;
(v) wherever the word “include,” “includes” or “including” is used in this Agreement, it shall be deemed to be followed by the words “without limitation;” and
(vi) references herein to any gender includes each other gender.
(b) The Parties have participated jointly in the negotiation and drafting of this Agreement and, in the event of an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.

ARTICLE II

MERGER
Section 2.1 The Merger
(a) Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time Merger Sub shall be merged with and into the Company in accordance with Commonwealth Law, including the CGCL, whereupon the separate existence of Merger Sub shall cease, and the Company shall be the surviving corporation (the “Surviving Corporation”).
(b) Upon the terms and subject to the conditions set forth in Article VI, the closing of the Merger (the “Closing”) shall take place (i) at the offices of Stockholder at 10:00 a.m. (San Juan, Puerto Rico time) on the third Business Day following the satisfaction or waiver of the conditions set forth in Section 6.1, Section 6.2 and Section 6.3 (in each case, other than those conditions that by their nature are to be satisfied at the Closing but subject to the fulfillment or waiver of those conditions); or (ii) at such other date, time and/or place as agreed to in writing by the parties hereto.

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(c) As promptly as practicable following the Closing, Parties hereto shall cause the Merger to be consummated by causing the Company and Merger Sub to file a certificate of merger with the Secretary of State in such form as is required by, and executed in accordance with the relevant provisions of the CGCL (the “Certificate of Merger”) and make all other filings or recordings required by Commonwealth Law in connection with the Merger. The Merger shall become effective at such time (the “Effective Time”) as the Certificate of Merger is duly filed with the Secretary of State of the Commonwealth of Puerto Rico (or at such later time as may be specified in the Certificate of Merger).
(d) At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the CGCL. Without limiting the generality of the foregoing, from and after the Effective Time, the Surviving Corporation shall possess all the rights, privileges, powers, franchises and property, and be subject to all of the debts, obligations, liabilities, duties and restrictions of, the Company and Merger Sub, all as provided under Commonwealth Law.
(e) At the Effective Time, (a) the Amended EVERTEC Articles shall be the articles of incorporation of the Surviving Corporation and (b) the Amended EVERTEC By-laws shall be the by-laws of the Surviving Corporation, in each case until thereafter changed or amended in accordance with the provisions of the Surviving Corporation’s articles of incorporation and the Commonwealth Law.
(f) At the Effective Time, unless otherwise agreed in writing by Parent and Stockholder prior to such time, the Surviving Corporation’s board of directors at the Effective Time shall be comprised of 9 directors, to consist initially of the Chief Executive Officer of the Surviving Corporation, (ii) 5 directors designated by Parent before the Effective Time and (iii) 3 directors designated by Stockholder before the Effective Time, each to hold office in accordance with the Amended EVERTEC Articles and Amended EVERTEC By-laws.
Section 2.2 Conversion of Shares.
(a) At the Effective Time, each share of Merger Sub Common Stock issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, the Merger Sub, or the Company, be converted into a number of shares of common stock, par value $1.00 per share, of the Surviving Corporation such that immediately following the Effective Time, Parent will be the holder of 51% of the outstanding shares of common stock, par value $1.00 per share, of the Surviving Corporation.
(b) At the Effective Time, each Share issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, the Merger Sub, or the Company, shall be canceled and converted automatically into the right to receive (i) a number of shares of common stock, par value $1.00 per share, of the Surviving Corporation so that immediately following the Effective Time, Stockholder will be the holder of 49% of the outstanding shares of common stock, par value $1.00 per share, of the Surviving Corporation and (ii) the right to receive an amount per Share equal to pro rata share applicable to such Share of (A) the Closing Payment in cash, without interest, payable to the Stockholder in the manner provided in Section 2.3 and (B) subject to Section 2.5 of this Agreement, the Working Capital True-Up Amount, without interest (except as otherwise provided herein), payable in cash to the Stockholder, but only to the extent any such amount is payable to such Stockholder in accordance with Section 2.5(e).
Section 2.3 Closing Payment Procedures. Immediately after the Effective Time, the Surviving Corporation shall pay to Stockholder the Closing Payment by wire transfer of immediately available funds to an account or accounts that have been designated by Stockholder at least two Business Days prior to the Closing Date. If Stockholder or any of its Affiliates receives after the Closing any amount in respect of the sale by PIBI or any of its Affiliates of any portion of its equity interest in Contado or Serfinsa in conjunction with the exercise of a right of first refusal or otherwise, it shall promptly pay to Parent an amount equal to 25.5% of the After-Tax Aggregate Proceeds. Such payment shall be treated as an adjustment to the Merger Consideration for Tax purposes.
Section 2.4 Pre-Closing Adjustment.
(a) Stockholder shall prepare, or cause to be prepared, and deliver to Parent on or before the date that is three days before the anticipated Closing Date a statement (the “Estimated Closing Statement”) consisting of (A) an estimated consolidated balance sheet of the Companies as of the close of business on such anticipated Closing Date, (B) a good faith estimation in reasonable detail of the Estimated Closing Working Capital derived from such balance sheet and (C) a good faith calculation of the amounts of any contribution or payments required under Section 2.4(b). The Estimated Closing Statement shall be prepared in accordance with GAAP applied on a basis consistent with the accounting

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principles, methods, practices, policies and procedures (with consistent classifications, judgments and valuation and estimation methodologies) that were used to prepare the Historical Financial Statements, except as set forth in Exhibit 2.4(a) (with such exceptions, the “Applicable Accounting Principles”). For illustrative purposes, Exhibit 2.4(a) contains a pro forma calculation of the Estimated Closing Working Capital as of December 31, 2009 applying the Applicable Accounting Principles.
(b) The difference between (i) the Base Working Capital Value, minus (ii) the Estimated Closing Working Capital, expressed as a positive, if positive, or as a negative, if negative, is referred to in this Agreement as the “Estimated Closing Working Capital Adjustment Amount.” In the event that the Estimated Closing Working Capital Adjustment Amount is a negative number, then Stockholder shall cause the Company to declare and pay a special dividend to Stockholder on or before the Closing Date (by wire transfer of immediately available funds) in an amount in cash equal to the absolute value of the Estimated Closing Working Capital Adjustment Amount; provided that the payment of such amount shall be subject to the restrictions in Section 5.2(b)(xi). Such special dividend shall be subject to an obligation by Stockholder to make a possible subsequent contribution pursuant to Section 2.5(e) below. In the equal to pro rata share applicable to such Share of (A) the Closing Payment in cash, without interest, payable to the Stockholder in the manner provided in Section 2.3 and (B) subject to Section 2.5 of this Agreement, the Working Capital True-Up Amount, without interest (except as otherwise provided herein), payable in cash to the Stockholder, but only to the extent any such amount is payable to such Stockholder in accordance with Section 2.5(e). In the event that the Estimated Closing Working Capital Adjustment Amount is a positive number, then Stockholder shall contribute to the Company on or before the Closing Date (by wire transfer of immediately available funds) an amount in cash equal to the value of the Estimated Closing Working Capital Adjustment Amount.
Section 2.5 Post-Closing True-Up.
(a) As soon as practicable, but in no event more than 90 days following the Closing Date, Parent shall prepare, or cause to be prepared, and deliver to Stockholder a statement (the “Closing Statement”) consisting of (i) an unaudited consolidated balance sheet of the Companies as of the close of business on the Closing Date, (ii) a good faith calculation in reasonable detail of the Closing Working Capital derived from such balance sheet and (iii) a good faith calculation of the amount of any payment required under Section 2.5(e). The Closing Statement shall be prepared in accordance with the Applicable Accounting Principles and shall be consistent with the Estimated Closing Statement with respect to form and format.
(b) Subject to Parent’s and the Company’s compliance with Section 2.5(d), Stockholder shall complete its review of the Closing Statement within 60 days after delivery thereof by Parent. In the event that Stockholder determines that the Closing Statement has not been prepared on the basis set forth in Section 2.5(a), Stockholder shall, on or before the last day of such 60-day period, so inform Parent in writing (such writing, “Stockholder’s Objection”), setting forth a specific description of the basis of Stockholder’s determination and the adjustments to the Closing Statement and the corresponding adjustments to the Closing Working Capital that Stockholder believes should be made. If no Stockholder’s Objection is received by Parent on or before the last day of such 60-day period, then the Closing Working Capital set forth on the Closing Statement delivered by Parent shall be final and binding on the Parties. Parent shall have 30 days from its receipt of Stockholder’s Objection to review and respond to Stockholder’s Objection. To the extent Stockholder submits a Stockholder’s Objection within such 60-day period, Stockholder may amend such Stockholder’s Objection within 90-days following the delivery by Parent of the Closing Statement.
(c) If Parent and Stockholder are unable to resolve all of their disagreements with respect to the proposed adjustments set forth in Stockholder’s Objection within 30 days following the completion of Parent’s review of Stockholder’s Objection, they shall refer any remaining disagreements with respect to matters set forth in Stockholder’s Objection to the CPA Firm, which, acting as an expert and not as an arbitrator, shall determine, on the basis set forth in and in accordance with Section 2.5(a), and only with respect to the remaining differences so submitted, whether and to what extent, if any, the Closing Statement and the Closing Working Capital require adjustment. Parent and Stockholder shall instruct the CPA Firm to deliver its written determination to Parent and Stockholder no later than 30 days after the remaining differences underlying Stockholder’s Objection are referred to the CPA Firm. In making such determination, the CPA Firm shall not assign a value to any item greater than the greatest value for such item claimed by Parent or Stockholder, or less than the smallest value for such item claimed by Parent or Stockholder. The CPA Firm’s determination shall be conclusive and binding upon Parent and Stockholder and their respective Affiliates. The fees and disbursements of the CPA Firm shall be borne by Stockholder if the CPA Firm rules against a majority (by

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dollar value) of the items set forth in Stockholder’s Objection that are submitted to the CPA Firm and by Parent if the CPA Firm rules in favor of a majority (by dollar value) of the items set forth in Stockholder’s Objection that are submitted to the CPA Firm. Parent and Stockholder shall make readily available to the CPA Firm all relevant books and records and any work papers (including those of their respective accountants, to the extent permitted by such accountants) relating to the Closing Statement and Stockholder’s Objection and all other items reasonably requested by the CPA Firm in connection therewith, and may submit such additional data and information to the CPA Firm as each deems appropriate.
(d) Parent and the Company shall provide to Stockholder and its accountants reasonable access to all information used by Parent and the Company in preparing the Closing Statement, including work papers of its accountants, and to any employees during regular business hours and on reasonable advance notice, to the extent reasonably necessary for Stockholder to review the Closing Statement, to prepare Stockholder’s Objection and to prepare materials for presentation to the CPA Firm in connection with Section 2.5(c).
(e) An amount equal to (i) the Estimated Closing Working Capital, minus (ii) the Closing Working Capital (as adjusted pursuant to this Section 2.5, if applicable), expressed as a positive, if positive, or as a negative, if negative, is referred to in this Agreement as the “Working Capital True-Up Amount.” If the Working Capital True-Up Amount is a negative number, then the Company shall pay to Stockholder (by wire transfer of immediately available funds) an amount in cash equal to the absolute value of the Working Capital True-Up Amount, and if the Working Capital True-Up Amount is a positive number, then Stockholder shall pay to the Company (by wire transfer of immediately available funds) an amount in cash equal to the value of the Working Capital True-Up Amount, in each case, within five Business Days following the final determination of the Working Capital True-Up Amount.
Section 2.6 Closing Deliveries by Parent. At the Closing, Parent shall deliver to Stockholder the following:
(a)
a duly executed counterpart of each of the Ancillary Agreements to which Parent is a party;
(b) resignations of each member of the Board of Directors of Merger Sub immediately prior to the Effective Time other than those members who shall be designated by Parent to remain on the Board of Directors of the Surviving Corporation pursuant to Section 2.1(f),
(c) evidence of the obtaining of, or the filing with respect to, the Parent Required Approvals;
(d) the certificate to be delivered pursuant to Section 6.3(d);
(e) a duly executed counterpart of the Certificate of Merger; and
(f) secretary’s certificates, evidence of corporate existence and good standing, evidence of corporate approvals and other similar documents, and such other customary instruments of transfer, assumptions, filings or documents, in form and substance reasonably satisfactory to Stockholder, as may be required to give effect to this Agreement, the Ancillary Agreements and to obtain the Debt Financing, as applicable.
Section 2.7 Closing Deliveries by Stockholder. At the Closing, Stockholder shall deliver, or cause to be delivered, to Parent the following:
(a) a duly executed counterpart of each of the Ancillary Agreements to which Stockholder or any of its Affiliates is a party;
(b) resignations of each member of the Board of Directors of the Company immediately prior to the Effective Time other than those members who shall be designated by Stockholder to remain on the Board of Directors of the Surviving Corporation pursuant to Section 2.1(f);
(c) evidence of the obtaining of, or the filing with respect to, the Stockholder Required Approvals;
(d) the certificate to be delivered pursuant to Section 6.2(d);
(e) copies of all (i) consents, approvals, waivers, authorizations, assignments notices or filings set forth in this Agreement (or otherwise required by an Ancillary Agreement, or Internal Reorganization Document) and (ii) executed copies of all agreements between any of the Companies and the other party thereto set forth in Schedule 2.7(e) of the Stockholder Disclosure Schedule (or otherwise required by an Ancillary Agreement, or Internal Reorganization Document);

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(f) a duly executed amendment of each service addendum and statement of work entered under the 2004 Master Services Agreement and not provided to Parent or its advisors prior to the date hereof to make such changes in order for such service addendum or statement of work to be acceptable to Stockholder and Parent;
(g) a duly executed New Service Addenda;
(h) secretary’s certificates, evidence of corporate existence and good standing, evidence of corporate approvals and other similar documents, and such other customary instruments of transfer, assumptions, filings or documents, in form and substance reasonably satisfactory to Parent, as may be required to give effect to this Agreement, the Ancillary Agreements, and to obtain the Debt Financing; and
(i) a duly executed counterpart of the Certificate of Merger.
Section 2.8 Post-Closing Reorganization. Immediately following the Effective Time, each of Parent and Stockholder shall contribute their respective share of the Company’s outstanding equity interests into Holdco in exchange for, in the case of Parent, a number of shares of Class A Voting Common Stock of Holdco, par value $0.01 per share (“Holdco Voting Common Stock”), representing upon issuance 51% of Holdco’s outstanding equity interests and in the case of Stockholder, a number of shares of Holdco Voting Common Stock, representing upon issuance 49% of Holdco’s outstanding equity interests; it being acknowledged by both Parent and Stockholder that such equity interests are subject to dilution with respect to shares of Class B Non-Voting Stock of Holdco, par value $0.01 per share (“Holdco Non-Voting Common Stock”) issued pursuant to the terms of the Management Long-Term Incentive Plan or investments made by management of the Companies at or within a reasonable time following the Closing. Immediately following the foregoing contributions, Parent and Stockholder shall cause Holdco to pledge all the outstanding capital stock of the Company held by Holdco in accordance with the terms of the Debt Financing.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER

Except as set forth in the Stockholder Disclosure Schedule and subject to Section 9.10, Stockholder represents and warrants, (except to the extent that any representation or warranty expressly speaks as of the date hereof or another specified date, in which case such representation and warranty shall be given only as of such date) as of the date hereof and as of the Closing, to Parent as follows:
Section 3.1 Organization and Qualification; Capitalization.
(a) Stockholder is a corporation duly organized, validly existing and in good standing under the laws of Commonwealth and has all requisite corporate power and authority to own, lease and operate its assets and to carry on its business as currently conducted. The Company is a corporation duly organized, validly existing and in good standing under the laws of Commonwealth and has all requisite corporate power and authority to own, lease and operate its assets, and to carry on its business as currently conducted. Each Stockholder Party is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, as applicable, and has all requisite power and authority to own, lease and operate its assets and to carry on its business as currently conducted. The Company, Stockholder and each Stockholder Party is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership or operation of its assets or the conduct of its business as currently conducted requires such qualification, except for failures to be so qualified or in good standing, as the case may be, that would not and have not, individually or in the aggregate, (a) materially impair or delay Stockholder’s, the Company’s or the other Stockholder Parties’, as applicable, ability to perform their respective obligations under this Agreement, the Ancillary Agreements, and the Internal Reorganization Documents and to consummate the Merger, the other Transactions and the transactions contemplated by the Internal Reorganization Documents or (b) materially and adversely affect the ability of the Companies to conduct the Business.
(b) As of immediately prior to the Closing and the Effective Time, (i) the authorized capital stock of the Company shall consist of 2,500,000 shares of common stock, par value $1.00 per share, 875,118 of which will be issued and outstanding and will have been duly authorized, validly issued, fully paid and nonassessable, (ii) none of the issued and outstanding Shares will have been issued in violation of any preemptive rights, (iii) all issued and outstanding Shares will be owned beneficially and of record by Stockholder, free and clear of all Encumbrances, (iv) there will be

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no preemptive or other outstanding rights, options, warrants, conversion rights, redemption rights, repurchase rights, agreements, arrangements or commitments of any character relating to the Shares or under which Stockholder or the Company is or may become obligated to issue or sell, or giving any Person a right to subscribe for or acquire, or in any way dispose of, any equity interests, or any securities or obligations exercisable or exchangeable for or convertible into any equity interests of the Company, and no securities or obligations evidencing such rights will be authorized, issued or outstanding, other than as set forth in this Agreement, the Stockholder Agreement and the Management Long-Term Compensation Plan, (v) no Shares will be subject to any voting trust or proxy agreement or other contract, agreement or arrangement restricting or otherwise relating to the voting, dividend or similar rights or disposition of Shares other than as set forth in this Agreement and the Stockholder Agreement or as created by Parent or its Affiliates and (vi) there will be no phantom stock or similar rights providing economic benefits based, directly or indirectly, on the value or price of Shares or other equity interests of the Company, except as created by Parent or its Affiliates, other than as set forth in the Stockholder Agreement and the Management Long-Term Compensation Plan. There are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any Shares or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person. The Shares constitute all of the issued and outstanding capital stock of the Company and are owned of record and beneficially by Stockholder free and clear of all Encumbrances. Upon consummation of the Merger, the Shares to be issued to Parent will be fully paid and nonassessable.
Section 3.2 Authorization. Each of Stockholder and the Company has full corporate power and authority to execute and deliver this Agreement and, in the case of the Company to consummate the Merger, and each of Stockholder, the Company and the Stockholder Parties had full power to execute and deliver the Internal Reorganization Documents and will have the power and authority at the Closing (or at such earlier time as such document is executed and/or delivered by such Party) to execute and deliver each of the Ancillary Agreements, and other Closing Documents to which it is a party and to perform its obligations hereunder and thereunder. Upon delivery of the Stockholder Written Consent immediately following the execution of this Agreement, the Stockholder shall have duly approved and adopted this Agreement, and the Merger shall be approved by the Required Stockholder Approval and as of the Closing and Effective Time, the Required Stockholder Approval shall have been received. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the Transactions and this Agreement and the Merger have been approved, accepted and declared advisable by the unanimous vote of the Board of Directors of the Company, the execution, delivery and performance by Stockholder of this Agreement has been duly and validly authorized and the execution, delivery and performance by each of Stockholder, the Company and the Stockholder Parties of the Internal Reorganization Documents has been duly and validly authorized and the execution, delivery and performance by Stockholder, the Stockholder Parties and the Company of each of the Ancillary Agreements and other Closing Documents to which it is or will be a party will be, when executed and delivered duly and validly authorized, and no additional corporate or stockholder or similar authorization or consent is required in connection therewith. No other corporate proceedings on the part of the Company are necessary to authorize this Agreement or the Merger (other than, with respect to the Merger, the Required Stockholder Approval and the filing and recordation of the Certificate of Merger and other appropriate merger documents as required by the CGCL). Each Affiliate of Stockholder has (and, if executed or delivered prior to the date hereof, at the time of execution and delivery had), or prior to the Closing will have, full corporate power and authority to execute and deliver each Ancillary Agreement or other Closing Document to which it is or will be a party and to perform its obligations thereunder. The execution, delivery and performance by each Affiliate of Stockholder of each of the Ancillary Agreements or other Closing Document to which it is or will be a party has been, or prior to the Closing (or time of performance thereunder) will have been, duly and validly authorized, and no additional corporate or stockholder or similar authorization or consent is or will be required in connection therewith.
Section 3.3 Consents and Approvals.
(a) Schedule 3.3(a) of the Stockholder Disclosure Schedule sets forth all consents, approvals, waivers, authorizations, notices or filings that are (or were) required to be obtained by any of Stockholder, the Stockholder Parties or the Companies from, or to be given by any of Stockholder, the Stockholder Parties or the Companies to, or made by any of Stockholder, the Stockholder Parties or the Companies with, any Government Entity or Self-Regulatory Organization, in connection with the execution, delivery and performance by any of Stockholder, the Stockholder Parties or the Company of this Agreement, the Internal Reorganization Documents, the Ancillary Agreements or the other Closing Documents to which it is a party, other than those the failure of which to obtain, give or make would not,

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individually or in the aggregate, (i) materially impair or delay the ability of Stockholder, the Stockholder Parties and the Company to effect the Closing or to perform their respective obligations under this Agreement, the Ancillary Agreements and the other Closing Documents to which it is a party and (ii) reasonably be expected to result in a Material Adverse Effect.
(b) Schedule 3.3(b) of the Stockholder Disclosure Schedule sets forth all consents, approvals, waivers, authorizations, notices or filings that are required to be obtained by any of Stockholder, the Stockholder Parties or the Companies from, or to be given by any of Stockholder, the Stockholder Parties or the Companies to, or made by any of Stockholder, the Stockholder Parties or the Companies with, any Person that is not a Government Entity or Self- Regulatory Organization with respect to the Material Contracts in connection with the execution, delivery and performance by Stockholder, the Stockholder Parties or the Company of this Agreement, the Ancillary Agreements or the other Closing Documents to which it is a party, other than those the failure of which to obtain, give or make would not, individually or in the aggregate, (i) materially impair or delay the ability of any of Stockholder, the Stockholder Parties or the Company to effect the Closing or to perform their respective obligations under this Agreement, the Ancillary Agreements and the other Closing Documents to which it is a party and (ii) reasonably be expected to result in a Material Adverse Effect.
(c) Schedule 3.3(c) of the Stockholder Disclosure Schedule sets forth all consents, approvals, waivers, authorizations, notices, applications or filings that were obtained, made or given by any of Stockholder, the Companies, or their respective Affiliates in connection with the execution, delivery and performance by any of such parties of the Internal Reorganization Documents and the transaction contemplated thereby and a true, correct and complete list of all assets of BPPR that would be Transferred Assets but were not Transferred Assets as of the “Closing” contemplated by the Business Transfer Agreement pursuant to Section 2.5 of the Business Transfer Agreement.
Section 3.4 Non-Contravention. The execution, delivery and performance by Stockholder, the Stockholder Parties and the Company of this Agreement, the Internal Reorganization Documents, the Ancillary Agreements and other Closing Documents to which it is a party, and the consummation of the Transactions, do not, in the case of this Agreement, have not, in the case of the Internal Reorganization Documents, and will not as of the Closing, in the case of this Agreement, the Internal Reorganization Documents, the Ancillary Agreements and the other Closing Documents to which it is a party, (i) violate any provision of the Articles of Incorporation, Bylaws or other organizational documents of any of Stockholder, the Stockholder Parties or the Companies or any shareholders’ agreement to which Stockholder, the Stockholder Parties, the Company or any of the Companies is a party, (ii) assuming the receipt of all consents, approvals, waivers and authorizations and the making of the notices and filings set forth on Schedule 3.3(b) of the Stockholder Disclosure Schedule, and except as set forth on Schedule 3.4 of the Stockholder Disclosure Schedule, conflict with, or result in the breach of, or constitute a default under (or event which with the giving of notice or lapse of time, or both, would constitute a default), give rise to the right of, or result in, termination, cancellation, modification, suspension, revocation or acceleration (whether after the filing of notice or the lapse of time or both) of any right or obligation of any of Stockholder or the Companies under, or result in a loss of any benefit to which any of Stockholder or the Companies is entitled under, any Contract, or result in the creation of any Encumbrance upon any of the Business Assets or the Shares or (iii) assuming the receipt of all consents, approvals, waivers and authorizations and the making of notices and filings set forth on Schedule 3.3(a) of the Stockholder Disclosure Schedule, or required to be made or obtained by Parent, violate or result in a breach of or constitute a default under any Law to which any of Stockholder, the Stockholder Parties or the Companies is subject, or under any Governmental Authorization, other than in the cases of clauses (ii) and (iii), conflicts, breaches, modifications, suspensions, revocations, terminations, defaults, cancellations, accelerations, losses, violations or Encumbrances that would not, individually or in the aggregate, (x) reasonably be expected to have a Material Adverse Effect and (y) materially impair or delay the ability of any of Stockholder, the Stockholder Parties or the Company to perform its respective obligations under this Agreement, the Ancillary Agreements or the other Closing Documents to which it is a party.
Section 3.5 Binding Effect. This Agreement, when executed and delivered by Parent and Merger Sub, constitutes, and each of the Ancillary Agreements, Internal Reorganization Documents and other Closing Documents to which Stockholder, the Stockholder Parties or the Company is a party, when executed and delivered by all other parties thereto, will or does constitute, a valid and legally binding obligation of Stockholder, the Stockholder Parties and the Company, as applicable, enforceable against Stockholder, the Stockholder Parties and the Company, as applicable, in accordance with its respective terms.

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Section 3.6 Financial Statements. (a) Set forth on Schedule 3.6(a) of the Stockholder Disclosure Schedule is (i) a copy of the audited balance sheets as of December 31, 2008 and 2009 and audited statements of income and cash flows for the years ended December 31, 2008 and 2009 of the Company, together with all related notes and schedules thereto (the items set forth in this clause (i), the “Audited Financial Statements”), (ii) carve-out combined audited balance sheet as of December 31, 2008 and 2009 and carve-out audited combined statements of income and cash flows for the years ended December 31, 2007, 2008 and 2009 of the Companies, the Merchant Acquiring Business as conducted by Stockholder or its Affiliates prior to the consummation of the Reorganization Transactions, the TicketPop Business and the Foreign Equity Investments, together with all related notes and schedules thereto (the items set forth in this clause (ii) the “Audited Carve-out Financials”), and (iii) a copy of the unaudited carve-out interim combined balance sheet and statements of income of the Companies, the Merchant Acquiring Business as conducted by Stockholder or its Affiliates prior to the consummation of the Reorganization Transactions, the TicketPop Business and the Foreign Equity Investments as of and for the period ended March 31, 2010 (the items set forth in this clause (iii), the “Unaudited Carve-out Financial Information”, together with the Audited Financial Statements and the Audited Carve-out Financials, the “Historical Financial Statements”). Except as described in the notes thereto and for the absence of statements of stockholders’ equity, the Historical Financial Statements have been specially prepared in accordance with the Company Books and Records for purposes of this Agreement in accordance with GAAP consistently applied consistent with Stockholder’s past practices, fairly present, in all material respects, the financial condition and results of operations and cash flows of the entities or business to which they relate as of the dates thereof or the periods then ended and include all adjustments (consisting only of normal recurring accruals) that are necessary for a fair presentation of the combined financial condition of the entities or business to which they relate as of the date thereof and the Audited Carve-out Financials, except as set forth on Schedule 3.6(a), meet the requirements of Regulation S-X and Regulation S-K under the Securities Act of 1933 and all other accounting rules and regulations of the SEC promulgated thereunder applicable to a registration statement under the Securities Act of 1933 on Form S-4. There are no material off-balance sheet transactions, arrangements, obligations or relationships attributable to the Companies, other than those summarized on Schedule 3.6(b) of the Stockholder Disclosure Schedule. Stockholder maintains in all material respects adequate internal controls (as defined in Section 404 the Sarbanes-Oxley Act of 2002).
(b) The unreimbursed Chargebacks and Credit Losses relating to Merchant Customers of the Business (including any unreimbursed Chargebacks and Credit Losses that are being subsidized or paid for by any division or Affiliate of the Stockholder outside of the Business) have been appropriately accounted for and reflected in the Audited Carve-out Financials and the Unaudited Carve-out Financials.
Section 3.7 Litigation and Claims.
(a) Other than as set forth on Schedule 3.7 to the Stockholder Disclosure Schedule, there is no Legal Proceeding pending, or to Stockholder’s Knowledge, threatened, against any of the Companies, or, in respect of the Business, Stockholder or any of its Affiliates, other than those that, if adversely determined, do not and would not reasonably be expected to (i) involve a claim for damages to the Companies in excess of $250,000, in the aggregate, (ii) lead to the seeking of injunctive relief or (iii) materially impair or delay the ability of any of Stockholder, the Stockholder Parties or the Company to perform its respective obligations under this Agreement, the Internal Reorganization Documents, the Ancillary Agreements or the other Closing Documents to which it is a party.
(b) None of Stockholder, the Companies or the Business Assets, or, in respect of the Business, Stockholder or any of its Affiliates, is subject to any Order that, if adversely determined, individually or in the aggregate, would (i) materially impair or delay the ability of Stockholder or the Company to effect the Closing or (ii) materially and adversely affect the Companies or the Business, taken as a whole, whether before or after the Closing.
Section 3.8 Employees and Employee Benefits.
(a) Schedule 3.8(a) of the Stockholder Disclosure Schedule sets forth a true, correct and complete list of all material Benefit Plans. Stockholder has made available to Parent true, correct and complete copies of the most recent plan document (including all amendments thereto) and the most recent summary plan description, if any, of the Benefit Plans.
(b) None of Stockholder, its Subsidiaries or any ERISA Affiliate has or is reasonably expected to incur any material liability under Title IV of ERISA with respect to any Benefit Plan that is an ongoing, frozen or terminated “single- employer plan,” within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by

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any of them. An ERISA Affiliate for purposes of this Section 3.8(b) shall mean any person or entity that would be considered, when combined with Stockholder or any of its Subsidiaries, a single employer pursuant to Section 210(c) and (d) of ERISA.
(c) The Benefit Plans have been maintained and operated in substantial compliance with applicable Laws (including, as applicable, ERISA and the PR Code). There are no material Legal Proceedings (other than routine claims for benefits (or as disclosed in Schedule 3.7 of the Stockholder Disclosure Schedule)) arising from or relating to the Benefit Plans. There are no Legal Proceedings arising from or relating to the Benefit Plans pursuant to which the Companies would reasonably be expected to have any Liability.
(d) None of the Benefit Plans provides for post-employment medical or life insurance benefits for any person beyond his or her retirement or other termination of service, except (i) as may be required under COBRA Coverage or similar state or Commonwealth law or (ii) disability benefits under a welfare plan that is fully provided for by insurance.
(e) None of the Benefit Plans obligates Stockholder or its Affiliates to pay any separation, severance, termination, change in control related or other benefits solely as a result of the execution and delivery of this Agreement or the consummation of the Transactions and such execution, delivery or consummation will not result in Parent, the Company or its or their Affiliates becoming liable for any separation, severance, termination or other benefits.
(f) Each Benefit Plan that is intended to be qualified under Section 1165 of the PR Code has received a favorable determination letter from the Puerto Rico Treasury Department and, to Stockholder’s Knowledge, nothing has occurred with respect to the operation of such Benefit Plan that would reasonably be expected to cause the loss of such qualification or exemption or the imposition of any material liability, penalty or tax under ERISA or the PR Code.
(g) Other than payroll-related compensatory arrangements, including, without limitation, arrangements providing for salary, bonus, or vacation, no Benefit Plans, including without limitation welfare plans, are sponsored or maintained by the Company.
Section 3.9 Compliance with Laws. (a) Except for the matters covered by Section 3.9(b), (c), (d) and (e) or excluded from the provisions thereof by virtue of the limitations expressed or implied therein, the Companies (i) have been for the period beginning January 1, 2005, and currently are in compliance in all material respects with all applicable Law, (ii) have not for the period beginning January 1, 2005 (A) received any notice alleging any violation under any applicable Law or (B) received or entered into any Order and (iii) have in full force and effect all Governmental Authorizations and Non-Governmental Authorizations necessary for the conduct of the Business as currently conducted by the Companies other than those the absence of which is not material.
(b) The Companies do not maintain or conduct and, since January 1, 2005, have not maintained or conducted the Business in violation in any material respect of the federal Bank Secrecy Act, as amended, and its implementing regulations (31 C.F.R. Part 103) (the “BSA”), the USA PATRIOT Act of 2001, Public Law 107-56 (the “Patriot Act”), and the regulations promulgated thereunder, any order issued with respect to anti-money laundering by any applicable anti-money laundering statute, rule or regulation. The Companies have adopted and implemented, maintain and monitor the compliance with, and effectiveness of, an anti-money laundering program with respect to the Business that meets applicable BSA requirements. The Companies do not maintain or conduct, and since January 1, 2005, have not maintained or conducted, any business, investment, operation or other activity in or with any country or person designated by the United States Secretary of the Treasury pursuant to the Patriot Act as being of “primary money laundering concern.”
(c) The Companies (i) for the period beginning May 1, 2005 have been and currently are (A) to Stockholder’s Knowledge, and in light of due application of the compliance policies of the Companies in respect of the Business with respect to International Trade Laws, in compliance in all material respects with all applicable International Trade Laws, except as may be disclosed on Schedule 3.9 of the Stockholder Disclosure Schedule, and have in full force and effect all Governmental Authorizations required by International Trade Law for the conduct of the Business conducted by the Companies other than those the absence of which is not material, (B), in compliance in all material respects with all applicable U.S. Export Control Laws, and have not identified any Governmental Authorizations required by International Trade Law for the conduct of the Business conducted by the Companies other than those the absence of which is not material, and (C) conducting an ongoing internal review to assess the application of Export Control Laws and determine appropriate compliance mechanisms, and (ii) with respect to the Business have not, for the period beginning May 1, 2005, (A) received any notice alleging any violation under any applicable International Trade Laws

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or U.S. Export Control Laws or (B) received or entered into any Order related to violations of or compliance with International Trade Laws or U.S. Export Control Laws.
(d) None of the Companies, and, to Stockholder’s Knowledge, no director, officer, majority shareholder, or employee of the Companies, is a Restricted Party. To Stockholder’s Knowledge, the Companies do not engage in, and since May 1, 2005 none of the Companies has engaged in, any transaction that is contrary to Economic Sanctions Laws (including without limitation laws regulating transactions involving Iran, Cuba, and Sudan), and the Companies do not maintain or conduct, and since May 1, 2005 none of the Companies has maintained or conducted, any business, investment or other dealing with any Restricted Party.
(e) For purposes of this Section 3.9 the following terms have the meanings ascribed to such terms in this Section 3.9(e):
(i) “Restricted Party” means: (i) any target of Economic Sanctions Laws or any person, entity or vessel, directly or indirectly, controlled by or acting for or on behalf of any such target, or (ii) any person, entity or vessel listed on the “Specially Designated Nationals and Blocked Persons” List maintained by the United States Department of Treasury Office of Foreign Assets Control (“OFAC”), or listed on the Debarred Persons, Denied Persons, or Entity Lists maintained by agencies of the United States government.
(ii) “Economic Sanctions Laws” mean: (i) the Trading with the Enemy Act, 50 U.S.C. App. § 5 et seq.; (ii) the International Emergency Economic Powers Act, 50 U.S.C. § 1701 et seq.; (iii) any Executive Order administered by OFAC; and (iv) the regulations contained in 31 C.F.R. Parts 500-598.
(iii) “International Trade Laws” mean the Economic Sanctions Laws and the U.S. Foreign Corrupt Practices Act.
(iv) “U.S. Foreign Corrupt Practices Act” means 15 U.S.C. §§ 78m, 78dd-1 to-3 and 78ff, and all requirements administered by the SEC in furtherance of these provisions or any other applicable Law or similar effect.
(v) “U.S. Export Control Laws” mean: (i) the Export Administration Act, 50 U.S.C. app. §§ 2401-2420; (ii) the Trading with the Enemy Act, 50 U.S.C. App. § 5 et seq.; (iii) the International Emergency Economic Powers Act, 50 U.S.C. § 1701 et seq.; (iv) the Export Administration Regulations, 15 C.F.R. Parts 730-774; and (v) the U.S. Foreign Trade Regulations, 15 C.F.R. Part 30.
Section 3.10 Intellectual Property. (a) Schedule 3.10(a) of the Stockholder Disclosure Schedule sets forth a true, correct, and complete list, as of the date hereof, of all:
(i) (A) registrations and applications for registration for the Company Owned Intellectual Property, including, as applicable, the jurisdictions in which each such item of Company Owned Intellectual Property has been issued or registered, or in which any such application for such issuance and registration has been filed or is pending, and the registration or application date and number and owner, and (B) all material unregistered Trademarks included in the Company Owned Intellectual Property;
(ii) all IP Agreements, absence of which, individually or in the aggregate, would reasonably be expected to materially and adversely affect any of the Companies and/or the conduct of the Business as currently conducted; and
(iii) material Company Owned Software.
(b) All of the Company Owned Intellectual Property listed on Schedule 3.10(a) of the Stockholder Disclosure Schedule, and all of the Transferred Intellectual Property, is subsisting, and to Stockholder’s Knowledge, valid and enforceable, and no such Intellectual Property has been adjudged invalid or unenforceable in whole or part a by court of competent jurisdiction. The Companies, jointly or individually, are the exclusive owners or beneficiaries of the entire right, title and interest in and to the Company Owned Intellectual Property, free from any Encumbrances, except for Permitted Encumbrances, and licenses, agreements, and other arrangements entered into in the Ordinary Course. Stockholder and its Affiliates (other than the Companies), jointly or individually, are the exclusive owners or beneficiaries of the entire right, title and interest in and to the Transferred Intellectual Property, free from any Encumbrances, except for Permitted Encumbrances, and licenses, agreements, and other arrangements entered into in the Ordinary Course. To Stockholder’s Knowledge, (i) each of the Companies has a valid and enforceable right to the Company Owned Intellectual Property that it owns in connection with the Business as currently conducted, and (ii) Stockholder and each of its Affiliates (as applicable) has a valid and enforceable right to assign the Transferred Intellectual Property and license the Stockholder Licensed Intellectual Property, in each case, under the terms and

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conditions set forth in the BPPR Transfer Agreement and the IP Purchase and Sale Agreement. No third-party interests restrict Stockholder’s or Stockholder’s Affiliates’ ability to assign the Transferred Intellectual Property to the Companies or to license the Stockholder Licensed Intellectual Property to the Companies under the terms and conditions set forth in the BPPR Transfer Agreement and the IP Purchase and Sale Agreement. None of this Agreement, the Ancillary Agreements, the Internal Reorganization Documents or the other Closing Documents or the consummation of the Transactions shall have any material adverse impact on the Companies’ rights in, to or under any Company Owned Intellectual Property or Stockholder Licensed Intellectual Property.
(c) No current or former employee (including officers and directors), consultant, or independent contractor of Stockholder or any of its Affiliates, or the Companies has any ownership right, title or interest, directly or indirectly, in whole or in part, in any material Company Owned Intellectual Property or Transferred Intellectual Property. Stockholder and its Affiliates maintain a policy whereby all (i) current employees (including officers and directors), consultants and independent contractors are required to maintain the confidentiality of any confidential information owned or used by Stockholder and its Affiliates; and (ii) any current employees (including officers and directors) that have contributed to the development of any invention, improvement, discovery or work of authorship created, made or conceived of in connection with their employment are required to disclose and assign their interest in such Intellectual Property to Stockholder, Stockholder’s Affiliates, or the Companies, as applicable.
(d) To Stockholder’s Knowledge, the use of the Company Owned Intellectual Property and the Transferred Intellectual Property, as used in the Business as currently conducted by the Companies, and the conduct of the Business as currently conducted by the Companies, do not infringe, misappropriate or otherwise violate the Intellectual Property rights or any other rights of any other Person. To Stockholder’s Knowledge, (i) neither the Company Owned Intellectual Property nor the Transferred Intellectual Property is being infringed upon, misappropriated or violated by any other Person; and (ii) there has been no such case of such infringement during the twelve (12) month period immediately preceding the date of this Agreement. Stockholder, its Affiliates, and the Companies have not asserted or brought any action alleging the infringement, misappropriation or violation of any Company Owned Intellectual Property or Transferred Intellectual Property against any third parties during the twelve (12) month period immediately preceding the date of this Agreement.
(e) There is no Legal Proceeding pending or, to Stockholder’s Knowledge, threatened by any third party against Stockholder or any of its Affiliates, concerning the ownership, validity, registerability, enforceability, infringement or use of any Company Owned Intellectual Property, Transferred Intellectual Property, Stockholder Licensed Intellectual Property, or the Licensed Intellectual Property used in the Business as currently conducted by the Companies or their Affiliates, nor has any claim or written demand been made against Stockholder or any of its Affiliates by any third party that (i) challenges the validity, enforceability, use or ownership of any such Intellectual Property, (ii) alleges any infringement, misappropriation or violation by any of Stockholder, its Affiliates, or the Companies of any Intellectual Property of any third party arising from the conduct of the Business, or (iii) alleges that the Licensed Intellectual Property is being licensed or sublicensed in conflict with the terms of any other license or Contract.
(f) Stockholder and its Affiliates have taken commercially reasonable measures to protect, maintain and preserve: (i) the operation and security of their Software, servers, systems, networks, workstations, data communication lines and other information technology equipment used in the Business as currently conducted by the Companies, and (ii) the confidentiality of all Trade Secrets used in the Business as currently conducted by the Companies and their Affiliates.
(g) To Stockholder’s Knowledge, as of the date hereof, to the extent used in the Business as of the date hereof, the Transferred Software and the Company Owned Software, unless modified other than by or for Stockholder or any of its Affiliates (i) conform in all material respects to written specifications for their use in the conduct of the Business as currently conducted by the Companies, and (ii) are free in all material respects of bugs, errors, viruses and other contaminants.
(h) To Stockholder’s Knowledge, no open source software, freeware or other software distributed under similar licensing or distribution models (including software licensed or distributed under GNU’s General Public License (GPL) or Lesser/Library GPL (LGPL), the Artistic License (e.g., PERL), the Mozilla Public License, the Netscape Public License, the Sun Community Source License (SCSL), the Sun Industry Standards License (SISL), the BSD License or the Apache License) (“Open Source Software”) has been incorporated into any Transferred Software or Software owned by any of the Companies that would in any way obligate Stockholder or any of its Affiliates, or the Companies to disclose free of charge to any third party the source code for any software owned by any of the Companies (“Source

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Code Disclosure”). Stockholder and its Affiliates: (i) maintain a policy whereby the use of freeware and shareware is not permitted and any deviation from such policy requires approval (“Policy”); and (ii) to Stockholder’s Knowledge, there has been no material deviation from or violation of the Policy.
Section 3.11 Labor.
(a) None of the Companies are, or have ever been, a party to or bound by any labor agreement, union contract or collective bargaining agreement, nor are any of the Companies’ employees represented by a works’ council or a labor organization. For the past three years there have been no, and there currently are no, proceedings filed or, to the Stockholder’s Knowledge, threatened by any labor union or labor organization or any other activities or efforts to organize any employees of the Companies or to compel any of the Companies to bargain with any labor union or labor organization or other employee concerted activity.
(b) For the past three years there has been no and there is no pending or, to Stockholder’s Knowledge, threatened strike; walkout; lock-out; slowdown; labor demonstration, leafleting, boycott or picketing; sit-in; or similar form of organized labor disruption or work stoppage at any of the Companies.
(c) For the past three years, there have been no and there are no unfair labor practice charges or complaints, grievances, or labor arbitration demands or proceedings filed against any of the Companies, whether or not filed pursuant to a collective bargaining agreement, pending or threatened, nor, to Stockholder’s Knowledge, is there any valid legal basis for such charge or complaint.
(d) The Companies are and for the past three years have been in material compliance with all applicable Laws relating to labor and employment, including but not limited to all applicable Laws relating to payment of wages, hours of work, meal and rest periods, and the Fair Labor Standards Act; the Worker Adjustment and Retraining Notification Act and any applicable similar local, state, Commonwealth, US-national, or non-US national “mass layoff” or “plant closing” Law (“WARN”); collective bargaining, discrimination, civil rights, equal employment opportunity, disability, labor relations, immigration, benefits, working conditions, occupational safety and health, personal leave, family and medical leave, hiring, promotion, assignment, terminations, workers’ compensation and the collection and payment of withholding and/or social security Taxes and any similar Tax, and there has been no “mass layoff” or “plant closing” as defined by WARN with respect to any of the Companies within the two (2) years prior to Closing, and no notifications with respect to mass layoffs have been made.
Section 3.12 Material Contracts
(a) Schedule 3.12 of the Stockholder Disclosure Schedule contains a true, correct and complete list, as of the date hereof, of the following Contracts (each, a “Material Contract”) to which any of the Companies, or in respect of the Business, Stockholder and its Affiliates is a party or bound by, and, in each case, to which any of them will continue to be a party to or bound by, or under which the Business Assets may be bound or have any obligations, following the Closing:
(i) leases of real or personal property or equipment leases, except leases of personal property that require payment during their remaining term of less than $250,000;
(ii) loan or credit agreements, indentures, mortgages, security agreements or other agreements or instruments relating to Indebtedness (other than in connection with the Debt Financing);
(iii) fidelity or surety bonds or completion bonds and the agreements pursuant to which such bonds are issued;
(iv) agreements of indemnification or guaranty of another Person (other than customary indemnification provisions contained in Company Contracts with Customers);
(v) Contracts containing any covenant limiting the ability of any of the Companies in any material respect to engage in the Business;
(vi) any agreements, contracts or commitments relating to capital expenditures involving future payments of $250,000 or more (it being understood and agreed that such expenditures shall not be deemed to include any potential penalties regarding a violation of a term related to the level of service under such agreement, contract or commitment);
(vii) Contracts relating to the disposition of Business Assets outside the Ordinary Course or the disposition of any operating business of any Company or the capital stock or other equity interests of any other Person;

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(viii) Contracts relating to the acquisition of (A) any asset for consideration in excess of $250,000 or (B) any operating business or the capital stock or other equity interests of any other Person outside the Ordinary Course;
(ix) Contracts between any of the Companies, on the one hand, and any of their respective Affiliates (other than the Companies), directors or officers (“Related Persons”), on the other hand (the “Related Party Agreements”);
(x) Contracts with any Government Entity (including any electronic benefit transfer Contracts);
(xi) Contracts with any customer, supplier, consultant, vendor, or similar Person reasonably expected to provide for payments in excess of $250,000 during the twelve (12) month period ended on the last day of the calendar month immediately preceding the date hereof (or pursuant to which any such Person is reasonably expected to pay in excess of such amount during any twelve month period commencing on or after January 1, 2010);
(xii) Contracts under which any third-party is authorized to sell, sublicense, lease, distribute, re-sell, market or take orders for, any product or service to be provided by one of the Companies or the Business;
(xiii) Contracts are set forth in Schedule 3.10(a)(ii);
(xiv) Shareholder or equivalent agreements, powers of attorney (except as entered into in the Ordinary Course) and settlement agreements (except as entered into in the Ordinary Course);
(xv) Each material indirect processor agreement with a processor that has a merchant agreement with a Top 25 US Retail Merchant.
(xvi) any membership, license, sponsorship agreement, gateway agreement, terminal sharing, or similar Contract with a Card Association; and
(xvii) all current material insurance policies of any Company.
(b) Each Material Contract is in full force and effect and is enforceable against the Companies party thereto and, to the Stockholder’s Knowledge, the counterparty thereto in accordance with the express terms thereof, and upon consummation of the Transactions, shall continue in full force and effect without penalty or other adverse consequence, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting the enforcement of creditors’ rights generally and by general equitable principles (except those Material Contracts that are cancelled, rescinded or terminated after the date hereof in accordance with their terms and this Agreement).
(c) There does not exist under any Material Contract any material violation, breach or event of default, or alleged violation, breach or event of default, or event or condition that, after notice or lapse of time or both, would constitute a violation, breach or event of default thereunder on the part of any of the Companies, Stockholder or any of their respective Affiliates or, to Stockholder’s Knowledge, any other party thereto.
(d) There are no disputes pending or threatened under any Material Contract that would have a Material Adverse Effect.
(e) Except as set forth in Schedule 12(e) of the Stockholder Disclosure Schedule, all Merchant Agreements provide for a Customer service charge for credit card transactions and/or debit card transactions that meets or exceeds interchange fees charged by the applicable Card Association.
(f) True, correct and complete copies of each Material Contract (or true, correct and complete summaries of any Material Contract that is not in writing) have been made available to Parent in the Dataroom. A true, correct and complete copy of the current version of the standard form of (i) the Merchant Agreement (including the Standard Merchant Agreement ), (ii) the Westernbank Merchant Agreement as defined in the Business Transfer Agreement (iii) TicketPop Agreement, (iv) master customer agreement and (iv) ATH Network participation agreement each as presently used by Stockholder or any of its Affiliates have been made available to Parent in the Dataroom. Schedule 3.12(e) of the Stockholder Disclosure Schedule set forth a true, correct and complete list of each other materially different version of the standard form of such agreements used by such parties during the last five (5) years. All such standard form contracts were created by Stockholder or its Affiliates in accordance with its then current customary credit review and acceptance criteria for the Business, which in all cases were in material compliance with any applicable Network Rules.

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Section 3.13 Absence of Changes. Other than as permitted by this Agreement or pursuant to the Internal Reorganization Documents, since December 31, 2009, (i) (x) Stockholder and the Companies, as applicable, have conducted the Business only in the Ordinary Course and (y) the Companies and, in respect of the Business, Stockholder have not experienced any event or condition, and to Stockholder’s Knowledge, no event or condition is threatened, that would, individually or in the aggregate, have a Material Adverse Effect, (ii) none of Stockholder, the Companies or their Affiliates has transferred, leased or otherwise disposed of any of the material Business Assets or acquired any material assets or properties for the Business, other than in each case in the Ordinary Course, (iii) there has not been any change by any of the Companies or, in respect of the Business, Stockholder or its Affiliates in accounting or Tax reporting principles, methods or policies that would have the effect of increasing the Tax liability for the Companies for any period ending after the Closing Date or decreasing any Tax attribute existing on the Closing Date, (iv) none of the Companies or, in respect of the Business, Stockholder or its Affiliates has made or rescinded any election relating to Taxes or settled or to Stockholder’s Knowledge compromised any claim, action, suit, litigation, Legal Proceeding, arbitration, investigation, audit or controversy relating to Taxes that would have the effect of increasing the Tax liability for the Companies for any period ending after the Closing Date or decreasing any Tax attribute existing on the Closing Date, and (v) none of the actions or events prohibited or circumscribed by clauses (iv), (v) or (vii) of Section 5.2 has been taken or occurred.
Section 3.14 Sufficiency of Assets. Immediately following the Closing, the Business Assets, when taken together with the Stockholder Services, constitute all the assets, properties, Contracts, Governmental Authorizations, Non- Governmental Authorizations and rights, tangible and intangible, reasonably necessary for the Companies to operate and conduct the Business in all material respects as conducted by the Companies, Stockholder and their respective Affiliates immediately prior to the Internal Reorganization.
Section 3.15 Title to Assets. (a) Each of the Companies has good and valid title to all buildings, structures, equipment and other personal tangible property it owns and that is necessary for the conduct of the Business as currently conducted, in each case free and clear of all Encumbrances, except Permitted Encumbrances.
(b) At all times since January 1, 2009, Stockholder, the other Stockholder Parties and their Affiliates have caused the Business Assets to be maintained in accordance with good business practice.
Section 3.16 Absence of Liabilities. Except as reflected in, reserved against or otherwise disclosed on the Historical Financial Statements, there are no Liabilities of the Companies that would have been required to be reflected in, reserved against or otherwise disclosed on a balance sheet or statement of condition prepared in accordance with GAAP consistently applied consistent with Stockholder’s past practices and were not so reflected in, reserved against or disclosed, other than the Assumed Liabilities, Liabilities of the Companies in respect of the Debt Financing and Liabilities that were incurred in the Ordinary Course since the date of the Historical Financial Statements and are not, individually or in the aggregate, material to the Companies or are Excluded Liabilities.
Section 3.17 Finders’ Fees. Except for Goldman, Sachs & Co., whose fees will be paid by Stockholder, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of any of Stockholder or its Affiliates who might be entitled to any fee or commission from any of Stockholder or its Affiliates in connection with the Transactions.
Section 3.18 Taxes. (a) There is no Encumbrance for Taxes upon any of the Business Assets, the assets of the Foreign Equity Investments, any Foreign Shares or the Shares, nor, to the Stockholder’s Knowledge, is any Government Entity in the process of imposing any such liens, other than Encumbrances (i) for Taxes that are not yet due and payable or (ii) for Taxes the validity or amount of which is being contested by any of Stockholder or its Affiliates in good faith by appropriate action and have been reflected in, reserved against or otherwise disclosed on the balance sheets or statements of condition contained in the Historical Financial Statements.
(b) Since the date of the most recent balance sheet and statement of condition contained in the Historical Financial Statements, none of the Companies or Serfinsa have incurred any Taxes other than Taxes incurred in the Ordinary Course.
(c) All material Tax Returns required to be filed by or on behalf of the Companies, BPPR and Serfinsa have been prepared in accordance with all applicable Laws and timely filed and all such Tax Returns are true, correct and complete in all material respects, and have been prepared in accordance with the accounting principles of applicable Tax Laws. All Taxes owed and/or due and payable by the Companies, BPPR and Serfinsa have been or will be timely paid, other

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than Taxes that (i) the validity or amount of which is being contested by any of the Companies, BPPR or Serfinsa in good faith by appropriate action and (ii) have been sufficiently reflected in, reserved against or otherwise disclosed on the balance sheets or statements of condition contained in the Historical Financial Statements. Each of the Companies, BPPR and Serfinsa has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party, and all information returns related to such amounts have been properly completed and timely filed. Currently and within the past five years each Person classified by any of the Companies, BPPR or Serfinsa as an “independent contractor” is and was properly classified under all applicable Laws, and the Companies, BPPR and Serfinsa have fully and accurately reported such independent contractors’ compensation on an IRS Form 1099 or similar form when required to do so.
(d) All deficiencies asserted or assessments made as a result of any examinations by any Government Entity of the Tax Returns relating to the Companies, BPPR, the Business Assets or Serfinsa have been fully paid (other than those the validity or amount of which is being contested by any of the Companies, BPPR or Serfinsa in good faith by appropriate action and which have been reflected in, reserved against or otherwise disclosed on the balance sheets or statements of condition contained in the Historical Financial Statements), and there are no other audits or investigations by any Government Entity in progress, nor has any of the Companies, BPPR or Serfinsa received any notice from any Government Entity that it intends to conduct any audit or investigation. None of the Companies, BPPR or Serfinsa expects any Government Entity to assess any additional Taxes for any period for which Tax Returns have been filed.
(e) No agreement, waiver or other document or arrangement extending or having the effect of extending the period for assessment or collection of Taxes (including, but not limited to, any applicable statute of limitation) or the period for filing any Tax Return, in each case with respect to the Companies, BPPR or Serfinsa, has been executed or filed with any Government Entity by or on behalf of any of the Companies, BPPR or Serfinsa. None of the Companies, BPPR or Serfinsa has requested any extension of time within which to file any Tax Return, which Tax Return has since not been filed.
(f) None of the Companies, BPPR or Serfinsa (i) is party to or bound by any Tax sharing, indemnification or allocation agreement or arrangement and (ii) is presently liable, nor do the Companies or Serfinsa have any potential liability, for the Taxes of another Person under applicable Tax law, as transferee or successor, or by contract, indemnity or otherwise. None of the Companies, BPPR or Serfinsa have been members of a consolidated group under the provisions of Treasury Regulations issued under Section 1502 of the Code or any similar provision of Law.
(g) Stockholder has made available to Parent true, correct and complete copies of (i) all Tax Returns filed by or on behalf of the Companies within the past five years requested by Parent, and (ii) all ruling requests, private letter rulings, notices of proposed deficiencies, closing agreements, settlement agreements, and any similar documents or communications sent or received by the Companies within the past five years relating to Taxes.
(h) The Company is in full compliance in all material respects with the terms and conditions of, and with any and all reporting obligations pursuant to a tax exemption decree granted under Act No. 73 of May 28, 2008, as amended, or under any prior industrial tax incentives act.
Section 3.19 Environmental Matters. (a) To Stockholder’s Knowledge, the Companies are in material compliance with all Laws relating to environmental contamination, pollution or the protection of the environment, natural resources or human health and safety as it relates to exposure to any harmful substance (“Environmental Laws”).
(b) To Stockholder’s Knowledge, none of the Companies have received any notice of any claim, demand, action, suit, Legal Proceeding, or other communication by any Person alleging any violation of, or any actual or potential Liability under any Environmental Law (“Environmental Claim”).
(c) Notwithstanding any other representation or warranty in Article III, the representations and warranties in this Section 3.19 constitute the sole representations and warranties of Stockholder with respect to any Environmental Law or Environmental Claim.
Section 3.20 Customers; Suppliers. (a) Schedule 3.20(a) of the Stockholder Disclosure Schedule contains the following:
(i) a true, correct and complete list of the Customers that are party to a Company Contract pursuant to which the Companies received or were entitled to receive $250,000 or more in gross revenue during 2009 as such amount is

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included in the Historical Financial Statements, in each case, reflecting the total dollar amount of gross revenue to each such Customer for calendar years 2007, 2008 and 2009 and the first quarter 2010;
(ii) for each business segment of the “Processing” segment and the “Business Solutions” segments of the Business: (1) a true, correct and complete list of the top 25 external Customers of such segment or line of business (by 2009 gross revenue) specifying for each such Customer, the amount of gross revenue for 2009 and the first quarter 2010, and (2) for the remaining customers of each such business segment of the Processing and Business Solutions Segments of the Business, the aggregate gross revenue for 2009 and the first quarter 2010; and
(iii) a true, correct and complete list of (A) the top twenty-five (25) local Merchants (the “Top Local Merchants”) and top twenty-five (25) United States retail Merchants (the “Top U.S. Retail Merchants”) (by 2009 sales volume) of the Merchant Acquiring Business as conducted by the Company or by Stockholder or its Affiliates prior to the consummation of the Reorganization Transactions, specifying for each such Merchant, the amount of gross revenue for 2009 and the first quarter 2010 and (B) for the remaining Merchants, the aggregate gross revenue for 2009 and the first quarter 2010;
(iv) each Merchant Agreement with a Top Local Merchant is in the form of merchant agreement as provided in the Dataroom; and
(v) a true, correct and complete list of each Third Party Referral Provider that individually or with its Affiliates was one of the top twenty (25) largest Third Party Referral Providers of the Business based on 2009 gross revenue of the Business (the “Top Referral Providers”) specifying for each such Third Party Referral Provider, the amount of gross revenue for 2009 and the first quarter 2010.
(b) The pricing and/or other material terms and conditions offered by the Business to the Customers described in Section 3.20(a) are independent of any such customer relationship(s) with Stockholder and its Affiliates outside of the Business and, to the extent any such Customers have customer relationship(s) with Stockholder and its Affiliates outside of the Business, the pricing and/or other material terms and conditions offered by the Business to such Customers do not differ materially from the pricing and/or terms and conditions offered by the Business to Customers of similar processing volumes with the Companies (by annual gross revenue (net of interchange)) that receive similar services but that do not have similar customer relationship(s) with Stockholder and its Affiliates outside of the Business.
(c) Schedule 3.20(c) of the Stockholder Disclosure Schedule contains a true, correct and complete list of the suppliers that are parties to a Contract pursuant to which the Companies or, in respect of the Business, Stockholder or its Affiliates paid or were obligated to pay $250,000 or more for goods and services during the 2009 calendar year, and showing the total dollar amount paid for such goods and services received for the most recent fiscal year, in each case, as reported in the Historical Financial Statements.
(d) Neither Stockholder nor any of its Affiliates has received any oral or written notice from any Customer or Third Party Referral Provider listed on Schedule 3.20(a) of the Stockholder Disclosure Schedule, or any Supplier listed on Schedule 3.20(c) of the Stockholder Disclosure Schedule that such party intends to terminate, to cancel, not to renew, or otherwise to modify or amend, or to request a modification or amendment of, in any material respect (including any material reduction or change to pricing terms), any such Contract to which it is a party.
(e) Except as set forth on Schedule 3.20(e) of the Stockholder Disclosure Schedule, each of Stockholder, the Companies and their respective Affiliates, as applicable, has conducted a satisfactory review as the date hereof of all Customers, Suppliers and Third Party Referral Providers that complies with the current credit review, underwriting standard and acceptance criteria of the Business and the relevant Network Rules.
(f) Stockholder has provided true, correct and complete credit memorandums as of the date hereof to the Parent with respect to each Top Local Merchant, Top U.S. Retail Merchant and each Merchant with delayed delivery exposure of $200,000 or more as of the date hereof and each Person set forth on Schedule 3.20(f) at subparts (i), (ii) and (iii). Schedule 3.20(f) of the Stockholders Disclosure Schedule sets forth by name the following: (i) each Merchant identified by the chargeback monitoring programs of the Card Associations during calendar year 2009 or the first quarter of 2010; (ii) Merchant with delayed delivery exposure of $200,000 or more as of the date hereof; (iii) Merchants with escrow/reserve amounts in excess of $50,000 as of the date hereof; (iv) Merchants in a bankruptcy-related Legal Proceeding with a Loss greater than $5,000 as of the date hereof; (v) non-PCI-compliant level 1, 2 and 3 Merchants; (vi) Merchants

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that experienced account data compromise in 2009 and/or 2010; and (vii) Merchants in a Legal Proceeding with Stockholder or any of its Affiliates as of the date hereof.
Section 3.21 Ownership and Operations of the Companies. (a) As of the date of this Agreement, Stockholder owns, and at all times after the date hereof and prior to the Closing will own, directly or indirectly, in the aggregate, 100% of the issued and outstanding equity interests of the Company, free and clear of Encumbrances. (i) The Company holds, and at all times after the date hereof and prior to the Closing, will own, directly or indirectly, 100% of the issued and outstanding equity interests free and clear of all Encumbrances of EVERTEC Dominicana, S.A., a sociedad anónima organized under the laws of the Dominican Republic, EVERTEC de Venezuela, C.A., a sociedad anónima organized under the laws of Venezuela, and Sense Software International Corp., a corporation organized under the laws of Commonwealth, and the Foreign Subsidiaries, and (ii) the Company owns as of the date hereof, and, except to the extent the Foreign Equity Investments are sold pursuant to the applicable rights of first refusal, at all times after the date hereof and prior to the Closing, will own free and clear of all Encumbrances, the Foreign Equity Investments. Except as set forth in the prior sentence, the Company has no Subsidiaries, does not own, directly or indirectly, any capital stock, membership interest or other equity interests of any Person or have any direct or indirect equity or ownership interest in any business and is not a member of or participant in any partnership, joint venture or similar Person.
(b) Schedule 3.21 of the Stockholder Disclosure Schedule sets forth a true, correct and complete list of each Subsidiary of the Company, listing for each Subsidiary its name, type of entity, the jurisdiction of its incorporation or organization, its authorized capital stock, partnership capital or equivalent, the number and type of its issued and outstanding shares of capital stock, partnership interests or similar ownership interests, and the current ownership of such shares, partnership interests or similar ownership interests.
(c) Each Subsidiary of any Company: (i) is duly incorporated or organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, (ii) has all necessary power and authority to own, operate or lease the properties and assets owned, operated or leased by such Subsidiary and to carry on its business as it has been and is currently conducted by such Subsidiary and (iii) is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such licensing or qualification necessary, except for failures to be so qualified or in good standing, as the case may be, that would not and have not, individually or in the aggregate, materially and adversely affect the ability of the Companies to conduct the Business.
(d) All the outstanding shares of capital stock of each Subsidiary of any Company that is a corporation are validly issued, fully paid, nonassessable and, except with respect to wholly owned Subsidiaries, free of preemptive rights and, except as set forth on Schedule 3.21 of the Stockholder Disclosure Schedule, are owned by the Company, whether directly or indirectly, free and clear of Encumbrances. There are no options, warrants, conversion rights, redemption rights, repurchase rights, or other agreements, arrangements or commitments obligating Stockholder, or any Company to issue or sell or otherwise transfer any shares of capital stock of, or any other interest in, any Subsidiary of any Company. There are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any shares of capital stock of or any other interests in any Subsidiary of any Company. True, correct and complete copies of the Certificate of Incorporation and Bylaws (or similar organizational documents), in each case as in effect on the date hereof, of each Company have been made available to Parent in the Dataroom.
Section 3.22 Regulatory Matters; Security Breaches. (a) The Companies are and for the past five years have been in material compliance with all applicable Law relating to information security and data privacy, including but not limited to the Gramm Leach Bliley Act (“GLBA”) and the Health Insurance Portability and Accountability Act (“HIPAA”). Since January 1, 2005, there has been no material failure by any of the Companies or the Business to comply with the applicable bylaws, operating rules and identification standards manual of, and any other rules, regulations, manuals, service levels, standard and requirements, policies and procedures promulgated or issued by a Card Association, and any interpretations thereof by such Card Association, as the same may be amended from time to time, including those issued by (A) Visa, Inc. and its Subsidiaries and Affiliates, including the Visa Regional Operating Regulations, Latin America and Caribbean, (B) MasterCard Incorporated and its Affiliates, including those that are applicable to the Latin America and the Caribbean Region, (C) or any other applicable bankcard associations or networks, gateway services or other networks (including Visa’s Cardholder Information Security program, MasterCard’s Site

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Data Protection program and Discover Network’s Debit and Prepaid Operating Regulations) as may be in effect from time to time (collectively, “Network Rules”) that would adversely affect its membership or participation in the applicable network. Since January 1, 2005, there has been no material failure by any of the Companies or the Business to comply with the Payment Card Industry Data Security Standard (“PCI-DSS”). None of the Companies is subject to any Liabilities arising out of any actual or alleged violation of any applicable Law relating to information security and data privacy, the Network Rules or PCI-DSS.
(b) The Companies and, in respect of the Business, Stockholder and its Affiliates have implemented, and are in material compliance with, commercially reasonable technical measures and organizational controls to assure the confidentiality, integrity and security of transactions executed through the computer systems of the Business and of all material confidential or proprietary data in any of the Companies’ possession or control and to assure that all material confidential or proprietary data is not processed in ways contradictory to applicable Law relating to information security and privacy. The Companies and, in respect of the Business, Stockholder and its Affiliates have implemented and maintain sufficient procedures to detect and respond to security breaches involving material confidential or proprietary data in any of the Companies’ possession or control. Since January 1, 2007, to Stockholder’s Knowledge, there has been no actual or perceived breach of security, or unauthorized access to or acquisition, use, loss, destruction, compromise or disclosure of any personally identifiable information, confidential or proprietary data or any other such information maintained or stored by the Companies or the Business involving confidential information of customers, suppliers, consumers or other similarly situated individuals impacting more than 50 individuals in connection with any such particular breach and affecting the Business in any material respect.
(c) Schedule 3.22(c) of the Stockholder Disclosure Schedule sets forth a true, correct and complete list of all compliance assessments or audits of the Companies or the Business under the Network Rules, PCI-DSS or otherwise relating to information security and data privacy which were conducted by third parties in 2008 or 2009. Stockholder has made available to Parent true, correct and complete copies of each report prepared by third parties conducting such compliance assessments or audits. Since January 1, 2007, Stockholder and its Affiliates have properly responded in all material respects to all written notices, recommendations or findings alleging any failure to comply with or violation of applicable Law relating to information security and data privacy, the Network Rules or PCI-DSS.
Section 3.23 Insurance. Stockholder has, in respect of the Business, insurance policies in full force and effect (a) for such amounts as are sufficient for all requirements of Law applicable to the Business, and (b) which are in such amounts, with such deductibles and against such risks and losses, as are reasonable for the Business and the Business Assets except, in each of clauses (a) and (b), as would not and has not, individually or in the aggregate, result in a Material Adverse Effect. Schedule 3.23 of the Stockholder Disclosure Schedule sets forth a loss run for claims in excess of $250,000 made with respect to the Companies under such policies within the last three years. Excluding insurance policies that have expired and been replaced in the Ordinary Course and insurance policies that will be cancelled in connection with the Transactions, as set forth in Section 3.23 of the Stockholder Disclosure Schedule, no material insurance policy of Stockholder covering the Companies has been cancelled within the last two years and, to Stockholder’s Knowledge, no threat has been made to cancel any insurance policy of Stockholder covering the Companies during such period. No event has occurred in respect of the Business, including the failure by Stockholder or any of the Companies to give any notice or information, or Stockholder giving any inaccurate or erroneous notice or information, which materially limits or impairs the rights of Stockholder or any of the Companies in respect of the Business under any such insurance policies.
Section 3.24 Solvency. Immediately after giving effect to the Closing and the Transactions, and assuming the terms of the Debt Financing have not materially and adversely changed from the terms set forth in the Debt Commitment Letter provided to the Stockholder as of the date hereof (it being understood that the exercise of any “market flex” provisions in the Fee Letters as of the date hereof shall not be a material and adverse change), the Companies (a) will be able to pay its debts as they become due and shall own property that has a fair saleable value greater than the amounts required to pay its respective debts (including a reasonable estimate of the amount of all contingent Liabilities) and (b) shall have adequate capital to carry on the Business. No transfer of property is being made, and no obligation is being incurred, in connection with the Transactions with the intent to hinder, delay or defraud either present or future creditors of Stockholder or any of its Affiliates.
Section 3.25 Transition Services Agreement; Master Services Agreement; ISO Agreement and other Related Party Agreements. The pricing, pass-through costs, other out-of-pocket costs, service-level requirements and other

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material terms and conditions under each of the Transition Services Agreement, the Amended & Restated Master Services Agreement, the Amended & Restated ISO Agreement, the Amended & Restated TicketPop Service Agreement, the Amended ATH Network Participation Agreement and the Amended & Restated Leases are or will be upon execution, in each case, no less favorable in the aggregate to the Companies than the transfer pricing, pass-through costs, other out-of- pocket expenses, service-level requirements, as applicable, and other material terms and conditions applicable to the Companies or the Business, as applicable, and their receipt or provision, as applicable, of similar services from Stockholder and its Affiliates during the twelve month period ending in the last day of the calendar month preceding the date hereof. The revenue received by any of the Companies from Stockholder, BPPR or any of their affiliates that is recorded in the Historical Financial Statements and/or billed since December 31, 2009 has been billed in accordance with the 2004 Master Services Agreement, the Master Services Agreement, or similar applicable agreements. Stockholder has made available a true, correct and complete copy of the Master Services Agreement and the ATH Network Participation Agreement, and all schedules, riders, exhibits and other documents referred therein. None of the Companies is currently in breach of any of its obligations under the Master Services Agreement or the ATH Network Participation Agreement and none of them shall be in breach upon consummation of the transactions contemplated hereby. Exhibit 1.1(a)(G) hereto contains a true, complete and correct set of all the riders to the 2000 ATH Network Participation Agreement and all the optional services provided under the 2000 ATH Network Participation Agreement are set forth in such riders.
Section 3.26 Related Party Transactions.
(a) Except as set forth on Schedule 3.26 of the Stockholder Disclosure Schedule, no executive officer or director of any of Stockholder or its Affiliates and no child or spouse who resides with any such executive officer or director:
(i) has any direct or indirect financial interest in any competitor, supplier or customer (other than, in each case, Stockholder or its Subsidiaries) of the Companies or the Business; provided, however, that the ownership of securities representing no more than one percent of the outstanding voting power of any competitor, supplier or customer and that is also listed on any national securities exchange, shall not be deemed to be a “financial interest” so long as the Person owning such securities has no other connection or relationship with such competitor, supplier or customer;
(ii) owns directly or indirectly (other than through any equity interest in Stockholder) in whole or in part, or has any other direct or indirect interest (other than through any equity interest in Stockholder) in, any tangible or intangible property that the Companies use or have used in the conduct of the Business or otherwise; or
(iii) has outstanding any Indebtedness to any of the Companies.
(b) Except as set forth in Schedule 3.26 of the Stockholder Disclosure Schedule, none of Stockholder, its Affiliates or the Companies has any Liability of any nature whatsoever (other than compensation paid or payable to its bona fide employees in the Ordinary Course) to any executive officer or director of the Companies or to any parent, child, sibling or spouse (or parent, child, sibling of such spouse) who resides with, or is a dependent of, any such executive officer or director (a “Related Party”).
(c) Except as set forth in Schedule 3.26 of the Stockholder Disclosure Schedule all Related Party Agreements and other relationships between any of the Companies, on the one hand, and any of the Stockholder Parties or their respective Affiliates (other than the Companies), on the other hand, are conducted on terms and conditions that approximate those terms and conditions had such arrangements been negotiated on an arm’s-length basis.
Section 3.27 Directors and Officers. Schedule 3.27 of the Stockholder Disclosure Schedule contains a true, correct and complete list of all of the directors and officers at the Senior Vice President level (or above) of each of the Companies.
Section 3.28 Bank Accounts; Powers of Attorney. Schedule 3.28 of the Stockholder Disclosure Schedule contains a true, correct and complete list of (i) all bank accounts and safe deposit boxes of the Companies and the Business and (ii) Persons authorized to sign or otherwise act with respect thereto and (iii) a complete and correct list of all Persons holding a general or special power of attorney granted by any of the Companies.
Section 3.29 Standard. Except for the representations and warranties of the Stockholder with respect to Contado and Serfinsa pursuant to Section 3.21, which shall be true and correct in all respects, each of the representations and warranties of the Stockholder with respect to Contado and Serfinsa in this Article III shall be true and correct to the Stockholder’s Knowledge.

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Section 3.30 No Other Representations or Warranties. Except for the representations and warranties contained in this Agreement, the Ancillary Agreements and the certificate delivered pursuant to Section 6.2(d), neither Stockholder nor any other Person makes any other express or implied representation or warranty on behalf of Stockholder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the Parent Disclosure Schedule, Parent and Merger Sub each represents and warrants, (except to the extent that any representation or warranty expressly speaks as of the date hereof or another specified date, in which case such representation and warranty shall be given only as of such date) as of the date hereof and as of the Closing to Stockholder as follows:
Section 4.1 Organization and Qualification.
(a) Parent is an exempted limited liability company duly organized, validly existing and in good standing under the laws of Cayman Islands. Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth. Each of Parent and Merger Sub has all requisite power and authority to own and operate its properties and assets and to carry on its business as currently conducted. Each of Parent and Merger Sub is duly qualified to do business and is in good standing in each jurisdiction where the ownership or operation of its properties and assets or the conduct of its business requires such qualification, except for failures to be so qualified or in good standing that would not, individually or in the aggregate, impair or delay Parent’s or Merger Sub’s ability to perform its obligations hereunder. Merger Sub has heretofore made available to Stockholder a complete and correct copy of the certificate of incorporation and the bylaws of Merger Sub, each as amended to date. Such certificate of incorporation and bylaws are in full force and effect. Merger Sub is not in violation of any of the provisions of its certificate of incorporation or bylaws.
(b) As of immediately prior to the Closing, (i) the authorized capital stock of Merger Sub shall consist of 1,000 shares of Merger Sub Common Stock, 100 of which will be issued and outstanding and will have been duly authorized, validly issued, fully paid and nonassessable, (ii) none of the issued and outstanding shares of Merger Sub Common Stock will have been issued in violation of any preemptive rights, (iii) all issued and outstanding shares of Merger Sub Common Stock will be owned beneficially and of record by Parent, free and clear of all Encumbrances, (iv) there will be no preemptive or other outstanding rights, options, warrants, conversion rights, redemption rights, repurchase rights, agreements, arrangements or commitments of any character relating to the shares of Merger Sub Common Stock or under which Parent or Merger Sub is or may become obligated to issue or sell, or giving any Person a right to subscribe for or acquire, or in any way dispose of, any equity interests, or any securities or obligations exercisable or exchangeable for or convertible into any equity interests of Merger Sub, and no securities or obligations evidencing such rights will be authorized, issued or outstanding, other than as set forth in this Agreement, (v) no shares of Merger Sub Common Stock will be subject to any voting trust or proxy agreement or other contract, agreement or arrangement restricting or otherwise relating to the voting, dividend or similar rights or disposition of shares of Merger Sub Common Stock other than as set forth in this Agreement or as created by Stockholder or its Affiliates and (vi) there will be no phantom stock or similar rights providing economic benefits based, directly or indirectly, on the value or price of shares of Merger Sub Common Stock or other equity interests of Merger Sub, except as created by Stockholder or its Affiliates. There are no outstanding contractual obligations of Merger Sub to repurchase, redeem or otherwise acquire any shares of Merger Sub Common Stock or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person. The shares of Merger Sub Common Stock constitute all of the issued and outstanding capital stock of Merger Sub and are owned of record and beneficially by Parent free and clear of all Encumbrances.
Section 4.2 Authorization. Each of Parent and Merger Sub has full power and authority to execute and deliver this Agreement and will have full power and authority at the Closing to execute and deliver each of the Ancillary Agreements and other Closing Documents to which it is a party and to perform its obligations hereunder and thereunder. The execution, delivery and performance by each of Parent and Merger Sub of this Agreement has been duly and validly authorized and of each of the Ancillary Agreements and other Closing Documents to which it is a party will be, when executed and delivered, duly and validly authorized, and no additional corporate or stockholder or similar authorization or consent is required in connection with the execution, delivery and performance by Parent and Merger Sub of this

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Agreement or will be required in connection with the execution, delivery and performance by Parent and Merger Sub of any of the Ancillary Agreements and other Closing Documents to which it is a party.
Section 4.3 Consents and Approvals. Other than any filings required under the HSR Act and other Antitrust Laws and the Communications Act, no consent, approval, waiver, authorization, notice, application or filing is required to be obtained by Parent or Merger Sub from, or to be given by Parent or Merger Sub to, or made by Parent or Merger Sub with, any Government Entity or Self-Regulatory Organization or other Person in connection with the execution, delivery and performance by Parent and Merger Sub of this Agreement and the Ancillary Agreements or the other Closing documents referenced herein to which it is a party, other than those the failure of which to obtain, give or make would not, individually or in the aggregate, materially impair or delay the ability of Parent or Merger Sub to effect the Closing or to perform its obligations under this Agreement and the Ancillary Agreements and the other Closing documents referenced herein to which either of them is a party.
Section 4.4 Non-Contravention. The execution, delivery and performance by each of Parent and Merger Sub of this Agreement and each of the Ancillary Agreements and the other Closing documents referenced herein to which it is a party, and the consummation of the Transactions, do not, in the case of this Agreement, and will not as of the Closing, in the case of this Agreement, the Ancillary Agreements and other Closing documents referenced herein, (i) violate any provision of the Articles of Incorporation, Bylaws or other organizational documents of Parent or Merger Sub and (ii) assuming the receipt of all consents, approvals, waivers and authorizations from the Federal Communications Commission, violate or result in a breach of or constitute a default under any Law to which Parent or Merger Sub is subject, other than, in the case of clause (ii), result in breaches, defaults or violations that would not, individually or in the aggregate, materially impair or delay Parent’s or Merger Sub’s ability to perform its obligations hereunder or under the Ancillary Agreements or under the Closing Documents to which either of them is a party.
Section 4.5 Binding Effect. This Agreement, when executed and delivered by Stockholder and the Company, constitutes, and each of the Ancillary Agreements and other Closing documents referenced herein to which Parent or Merger Sub is a party, when executed and delivered by all other parties thereto, will constitute, a valid and legally binding obligation of Parent and Merger Sub, as applicable, enforceable against them in accordance with its terms.
Section 4.6 Finders’ Fees. Except for fees set forth in Schedule 4.6 of the Parents Disclosure Schedule, which will be paid by the Company on behalf of the Parent in accordance with Section 9.8, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of Parent or any Affiliate of Parent who might be entitled to any fee or commission from Parent in connection with the Transactions.
Section 4.7 Litigation and Claims. There is no Legal Proceeding pending or, to the actual knowledge of Parent (after due inquiry), threatened against Parent or any of its Affiliates that, individually or in the aggregate, would materially impair or delay the ability of Parent or Merger Sub to effect the Closing, obtain the Parent Required Approvals or materially affect the Companies, taken as a whole, whether before or after the Closing. Parent and Merger Sub are not subject to any Order that, individually or in the aggregate, would materially impair or delay the ability of Parent or Merger Sub to effect the Closing, obtain the Parent Required Approvals or materially affect the Companies, taken as a whole, whether before or after the Closing.
Section 4.8 Financing. (a) Parent has delivered to Stockholder true, correct and complete copies of (i) the executed commitment letter, dated as of the date hereof, among Parent and AIF VII Euro Holdings, L.P. (the “Equity Commitment Letter”), pursuant to which AIF VII Euro Holdings, L.P. has committed, subject to the terms and conditions thereof, to invest the cash amounts set forth therein in the manner set forth therein, and of which Stockholder is a third-party beneficiary and entitled to specific performance of the terms thereof (the “Equity Financing”) and (ii) the executed commitment letter(s), dated as of the date hereof, among Merger Sub and each of Bank of America, N.A. and Morgan Stanley Senior Funding, Inc. (the “Debt Commitment Letter” and, together with the Equity Commitment Letter, the “Financing Letters”), pursuant to which the counterparties thereto have committed, subject to the terms and conditions thereof, to lend to Merger Sub the amounts set forth therein, of which no less than $50,000,000 of commitments will be made available to Merger Sub under a revolving credit facility (the “Credit Facility”), (the “Debt Financing” and, together with the Equity Financing, the “Financing”). The amounts to be provided pursuant to the Equity Financing, if funded in accordance with the terms of the Equity Commitment Letter, will be sufficient for Parent, when required, to contribute sufficient cash to Merger Sub such that Merger Sub will have, immediately prior to the Closing, without giving effect to the Debt Financing, cash in the amounts set forth in the Equity Commitment Letter. At the Closing,

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assuming the consummation of Debt Financing, Merger Sub shall have cash in amount sufficient to pay the Closing Payment (without regard to any Estimated Working Capital Adjustment) and the Pre-Closing Dividend.
(b) Except for fee letters with respect to fees, market flex and related arrangements with respect to the Debt Financing (the “Fee Letters”), of which Parent has delivered a true, correct and complete copy to the Company on or prior to the date of this Agreement, such Fee Letters do not contain any conditions precedent to, the funding of the Debt Financing. There are no side letters or other Contracts related to the Financing other than as expressly set forth in the Financing Letters, the Fee Letters and the Engagement Letter delivered to Stockholder prior to the date hereof. None of the Financing Letters, the Fee Letters or the Engagement Letter have been amended or modified and the respective commitments contained in the Financing Letters have not been withdrawn or rescinded in any respect.
(c) As of the date hereof, the Debt Financing Letters and the Equity Commitment Letter are in full force and effect and are the valid, binding and enforceable obligations of Merger Sub with respect to Debt Financing Letters and Parent and the other party thereto with respect to the Equity Commitment Letter, and to the knowledge of Parent, the other parties to the Debt Financing Letters. There are no conditions precedent or other contingencies related to the funding of the full amount of the Financing, other than as set forth in the Financing Letters and the Fee Letters. As of the date hereof, no event has occurred or circumstance exists which, with or without notice, lapse of time or both, would or would reasonably be expected to constitute a default or breach on the part of Parent or Merger Sub under the Equity Commitment Letter or the Debt Commitment Letter. As of the date hereof, Parent has no reason to believe that any of the conditions to the Financing contemplated in the Financing Letters and the Fee Letters will not be satisfied, that the Equity Financing will not be made available to Parent or Merger Sub, as applicable, at or prior to the time contemplated hereunder for the Closing or the Debt Financing will not be made available to the Company at or prior to the time contemplated hereunder for the Closing, except that no representation or warranty is being made as to whether any of Stockholder’s representations or warranties are true or correct or whether Stockholder has complied with its covenants contained in this Agreement.
Section 4.9 Parent Impediments. As of the date hereof, there is no Legal Proceeding pending or, to the actual knowledge of Parent, threatened, nor, to the actual knowledge of Parent, is there any investigation pending, or outstanding Order against Parent or any of its Affiliates that would reasonably be likely, individually or in the aggregate, to materially impair or delay the ability of Parent to obtain the Parent Required Approvals or materially impair or delay the ability of the Parties to effect the Closing.
Section 4.10 Guarantee. Concurrently with the execution of this Agreement, the Guarantor has delivered to Stockholder the duly executed Guarantee. The Guarantee is in full force and effect and is the valid, binding and enforceable obligation of the Guarantor, and no event has occurred, which, with or without notice, lapse of time or both, would constitute a default on the part of the Guarantor under the Guarantee.
Section 4.11 Merger Sub. Merger Sub was formed solely for the purpose of engaging in the transactions contemplated hereby and ancillary hereto, including the Debt Financing and/or Alternate Debt Financing, if applicable, and as of the date hereof has engaged in no other business activities. Merger Sub does not have any Liabilities other than (a) under this Agreement, any Ancillary Agreements to which it is or may be a party, Financing Letters, and any document referred to herein or any of the foregoing, (b) in connection with the Transactions or the Debt Financing, and (c) of the Company.
Section 4.12 No Other Representations or Warranties. Except for the representations and warranties contained in this Agreement, the Ancillary Agreements and the certificate delivered pursuant to Section 6.3(d), neither Parent, Merger Sub nor any other Person makes any other express or implied representation or warranty on behalf of Parent or Merger Sub.
ARTICLE V
COVENANTS
Section 5.1 Access and Information. (a) From the date hereof until the Closing, subject to any applicable Laws, Stockholder shall (i) afford Parent and its representatives access, during regular business hours and upon reasonable advance notice, to the Applicable Employees, the Business Assets and the Company Books and Records (including payroll information and employee data), (ii) furnish, or cause to be furnished, to Parent any financial and operating data and other information that is available with respect to the Companies as Parent from time to time reasonably

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requests in writing and (iii) instruct the Applicable Employees, and its counsel and financial advisors to cooperate with Parent in its investigation of the Companies, including instructing its accountants to give Parent access to their work papers; provided that in no event shall Parent have access to any information that (x) based on advice of Stockholder’s counsel, could create any potential Liability under applicable Laws, including U.S. Antitrust Laws, or could jeopardize any legal privilege or (y) in the reasonable judgment of Stockholder, could (A) result in the disclosure of any trade secrets of third parties or (B) violate any obligation of Stockholder with respect to confidentiality so long as, with respect to confidentiality, Stockholder has made reasonable efforts to obtain a waiver regarding the possible disclosure from the third party to whom it owes an obligation of confidentiality; provided, further, that a Party may designate certain portions of such documents as being provided on an outside-counsel basis only. All requests for information made pursuant to this Section 5.1(a) shall be directed to an executive officer of Stockholder or such Person or Persons as may be designated by Stockholder. All information received pursuant to this Section 5.1(a) shall be governed by the terms of Section 5.9.
(b) Following the Closing, upon the request of another Party, each of Stockholder, Parent, Merger Sub and the Companies (other than Contado) shall, to the extent permitted by Law and confidentiality obligations existing as of the Closing, grant to a requesting Party and its representatives during regular business hours, the right, at the expense of such requesting Party, to inspect and copy the books, records and other documents in the granting Party’s possession pertaining to the operation of the Companies or the Foreign Equity Investments prior to the Closing (including books of account, records, files, invoices, correspondence and memoranda, customer and supplier lists, data, specifications, insurance policies, operating history information and inventory records) with respect to Stockholder, for purposes of preparing the requesting Party’s Tax Returns and with respect to the Companies, for any purpose reasonably related to the Transaction; provided that the requesting Party agrees such access will give due regard to minimizing interference with the operations, activities and employees of the granting Party.
Section 5.2 Conduct of Business. (a) During the period from the date hereof to the Closing, except as otherwise contemplated by this Agreement or the Ancillary Agreements or with the prior consent of Parent (such consent not to be unreasonably withheld or delayed), Stockholder shall cause the Companies to conduct the Business in the Ordinary Course, maintain in all material respects its program of capital expenditures and marketing expenditures consistent with past practice and use its commercially reasonable efforts, as applicable, to preserve intact the Business, the Business Assets and its relationships with the counterparties to the Material Contracts and the Applicable Employees.
(b) Without limiting the generality of the foregoing, during the period from the date hereof to the Closing and except as otherwise expressly provided by this Agreement or as required by Law or with the prior consent of Parent (in the case of subsections (b)(iii), (iv), (vii)(C), (viii) or, for the avoidance of doubt with respect to such subsections (b)(xiii), such consent not to be unreasonably delayed or withheld), Stockholder shall not (with respect to the Companies, the Business, the Business Assets or the Company Liabilities), and shall not permit the Companies (other than Contado), and shall use commercially reasonable efforts to not permit Contado to and shall not knowingly cause Contado to:
(i) incur, create or assume any Encumbrance on any Business Asset other than a Permitted Encumbrance;
(ii) transfer, issue, sell, pledge, encumber or dispose of any shares of capital stock or other securities of, or other ownership interests in, or assets of any of the Companies;
(iii) (A) enter into, terminate or materially extend or materially amend any Material Contract (other than the First Amendment to the Subcontracting Agreement), except in the Ordinary Course and except for such amendments as may be reasonably necessary or advisable in order to obtain any required consent therefor or extension under the same material terms or (B) amend the Master Services Agreement, except as provided for pursuant to Section 5.19 hereof;
(iv) settle any claims, actions, arbitrations, disputes or other Legal Proceedings (i) that would result in Stockholder or any of its Affiliates being enjoined in any respect material to the consummation of the Transactions or the Companies, taken as a whole, or (ii) for an amount, in the aggregate, exceeding $500,000.
(v) change any accounting method or practice of the Companies that has a material impact on the Companies, taken as a whole, except in the Ordinary Course or except as required by Law or any Government Entity or Self- Regulatory Organization;
(vi) amend the organizational documents of any of the Companies or cause any of the Companies to enter into or agree to enter into any merger or consolidation with any corporation or other entity or acquire an interest of 5% or

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more of the outstanding equity interests of any Person, or acquire a substantial portion of the assets or business of any Person or any division or line of business thereof, or otherwise acquire any material assets other than in the Ordinary Course;
(vii) increase the salary or other compensation of any director or Applicable Employee except for increases in the Ordinary Course or as required pursuant to the terms of the Benefit Plans as of the date hereof, (B) increase the coverage or benefits available under any (or create any new) Benefit Plans other than in the Ordinary Course or (C) enter into any employment, deferred compensation, severance, special pay, consulting, non-competition, change in control or similar agreement or arrangement with any directors or officers of any of the Companies (or amend any such agreement) other than amendments that result in de minimis additional expense;
(viii) knowingly and intentionally do any other act that would cause any representation or warranty of Stockholder in this Agreement to be or become untrue or knowingly and intentionally omit to take any action necessary to prevent any such representation or warranty from being untrue at such time; or
(ix) other than in the Ordinary Course, license any material Company Owned Intellectual Property or permit any material Company Owned Intellectual Property that is subject to a registration or application for registration, to lapse or be abandoned, including failure to renew or maintain registrations therefor;
(x) make any material changes to any insurance coverage or fail to use its commercially reasonable efforts to maintain insurance coverage substantially similar in all material respects to the insurance coverage currently maintained by the Company;
(xi) make any distributions or dividends of EVERTEC Reserve Cash or declare any dividend other than the Pre-Closing Dividend and other than to the extent paid prior to Closing (it being understood that Company may distribute EVERTEC Reserve Cash to the extent that it is EVERTEC Reserve Cash by virtue of it being subject to taxation which does not permit a free transfer to the United States, including the Commonwealth);
(xii) make any Tax election, settle or compromise any Tax liability or file any Tax Return other than on a basis consistent with past practice; or
(xiii) authorize or enter into any agreement or commitment prohibited by this Section 5.2.
Section 5.3 Reasonable Best Efforts. (a) Each of Stockholder, Company, Merger Sub and Parent shall cooperate and use their respective reasonable best efforts (and shall cause their Affiliates (other than Contado and Serfinsa) to use their respective reasonable best efforts) to fulfill or cause to be fulfilled as promptly as practicable the conditions precedent to the other’s obligations hereunder, including securing all consents, approvals, waivers and authorizations required in connection with the Transactions. Without limiting the generality of the foregoing, Merger Sub, Parent and Stockholder shall make all appropriate filings and submissions required by the U.S. Antitrust Laws, the Communications Act and any other Laws and promptly file any additional information requested as soon as practicable after receipt of such request therefor.
(b) Stockholder and the Company, on the one hand, and Parent and Merger Sub, on the other hand, shall cooperate with each of the other Parties and shall furnish to the other Parties all information necessary or desirable in connection with making any filing under the HSR Act and for any application or other filing to be made pursuant to any competition Law, and in connection with resolving any investigation or other inquiry by any Government Entity under any competition Laws with respect to the Transactions. Stockholder and the Company, on the one hand, and Parent and Merger Sub, on the other hand, shall promptly inform the other Parties of any communication with, and any proposed understanding, undertaking or agreement with, any Government Entity regarding any such filings or any such Transactions. None of the Parties shall participate in any meeting with any Government Entity in respect of any such filings, investigation or other inquiry without giving the other Parties prior notice of the meeting. The Parties shall consult and cooperate with one another in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any Party in connection with all meetings, actions and Legal Proceedings under or relating to the HSR Act or other competition Laws. The cooperation among the Parties shall include, with respect to making a particular filing, providing copies of all such documents to the non-filing Parties and their advisors prior to filing (subject to applicable Law and provided, that the Parties shall not be required to provide to each other any documents or other materials related to a Party’s valuation of the Transactions), and provided further that a Party may designate certain portions of such documents as being provided on an outside-

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counsel basis only and, if requested, giving due consideration to all reasonable additions, deletions or changes suggested in connection therewith.
Section 5.4 Tax Matters. (a) Stockholder’s Liability for Taxes. Stockholder shall be liable for (i) any Taxes imposed with respect to the Companies, the Business and the Business Assets, and any income or gain attributable to or derived with respect thereto for the taxable periods, or portions thereof, ended on or before the Closing Date, including any Taxes arising as a result of the transactions contemplated by the Internal Reorganization Documents, (ii) Losses directly or indirectly relating to or arising out of any liability for Taxes, including Transfer Taxes, imposed with respect to the Companies, the Business and the Business Assets, or any income or gain attributable to or derived with respect thereto for the taxable periods, or portions thereof, ended on or before the Closing Date, and (iii) Taxes of any Person imposed on any of the Companies or Serfinsa as a transferee or successor, by contract or otherwise, which Taxes relate to an event or transaction before the Closing;
(b) For purposes of determining Stockholder’s indemnification obligations pursuant to this Section 5.4, the determination of the Taxes attributable to a period prior to the Closing Date shall be determined by assuming two taxable periods, one that ended at the close of the Closing Date and the other that began at the beginning of the day following the Closing Date, and items of income, gain, deduction, loss or credit attributable to or derived with respect to the Companies, the Business and the Business Assets shall be allocated between the two taxable periods on a closing of the books basis by assuming that the books of the Companies and Serfinsa were closed at the close of the Closing Date; provided, however, that (i) exemptions, allowances or deductions that are calculated on an annual basis, such as the deduction for depreciation, and (ii) periodic taxes, such as real and personal property taxes, shall be apportioned ratably between such periods on the basis of the number of elapsed days in each such period.
(c) Transfer Taxes. All federal, state, Commonwealth, local or foreign or other excise, sales, use, value added, transfer (including real property transfer or gains), stamp, documentary, filing, recordation and other similar taxes and fees that may be imposed or assessed as a result of the Transactions or the transaction contemplated by the Internal Reorganization Documents, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties (collectively, the “Transfer Taxes”), shall be borne 100% by Stockholder. Parent, Merger Sub, Stockholder and the Company shall cooperate to minimize any such Transfer Taxes.
(d) Refunds. Any Tax refund (including any interest in respect thereof) received by Parent, the Companies or any Affiliate thereof, and any amounts of overpayments of Tax credited against Taxes that Parent, the Companies or any Affiliate thereof otherwise would be or would have been required to pay, that relate to Taxes for which Stockholder is obligated to indemnify Parent under Section 7.2, will be for the account of Stockholder, and Parent will pay over to Stockholder any such refund or the amount of any such credit within 30 days after the receipt or the application of any such refund or credit to reduce a Tax liability of Parent, the Companies or any Affiliate thereof. Parent and the Company agree to notify Stockholder, as promptly as reasonably practicable, of both the discovery of a right to claim any such refund or overpayment and the receipt of any such refund or utilization of any such overpayment. Parent and the Company agree to furnish, as promptly as reasonably practicable, to Stockholder all information, records and assistance reasonably necessary to verify the amount of the refund or overpayment in a commercially reasonable manner.
(e) Maintenance of the Company Books and Records. Until the applicable statute of limitations (including periods of waiver) has run for any Tax Returns filed or required to be filed covering the periods up to and including the Closing Date, the Companies shall retain all Company Books and Records in existence on the Closing Date and after the Closing Date will provide Stockholder access to such Company Books and Records for inspection and copying by Stockholder, or its agents upon reasonable request and upon reasonable notice.
(f) Allocation. (i) Stockholder, Parent, and the Company agree that, for Tax purposes, a portion of the Closing Payment equal to the fair market value of the covenant in Section 5.6(c) shall be allocated to such covenant. Parent shall hire an independent third party to establish the value for such covenant, and Parent shall deliver a valuation report prepared by such third party (the “Valuation Report”) to Stockholder within 30 days following the Closing Date. The Valuation Report shall be final and binding unless Parent receives from Stockholder a written notice of objection (the “Valuation Dispute Notice”) on or prior to 60 days after delivery of the Valuation Report to Stockholder. The Valuation Dispute Notice shall state in reasonable detail the basis for Stockholder’s objection to the Valuation Report.
(ii) In the event of a dispute, Parent and Stockholder will use reasonable efforts to resolve in writing any such objections, and any such resolution agreed to in writing by Parent and Stockholder shall be final and binding. If Parent

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and Stockholder do not resolve any such dispute in writing within 30 days after Parent’s receipt of the Valuation Dispute Notice, then Parent and Stockholder shall refer the dispute to the CPA Firm, and the CPA Firm will determine the value of the covenant. Parent and Stockholder shall instruct the CPA Firm to deliver its written determination within 30 days after the dispute is referred to the CPA Firm. The CPA Firm’s valuation shall be conclusive and binding upon Parent, Stockholder and the Company. The cost of any valuation prepared by the CPA Firm shall be borne 50% by Parent and 50% by Stockholder.
(iii) Parent, the Company and Stockholder shall provide to the other parties and their respective accountants reasonable access to all information reasonably necessary to prepare and review the Valuation Report, the Valuation Dispute Notice and/or submissions to the CPA Firm provided for by this Section 5.4(f) including work papers of its accountants, and to any employees during regular business hours and on reasonable advance notice, to the extent reasonably necessary for Stockholder or Parent to prepare and review such Valuation Report, the Valuation Dispute Notice and/or submissions to the CPA Firm.
Section 5.5 Employee and Benefits Matters. (a) For purposes of this Agreement, each of the Applicable Employees shall become a “Transferred Employee” as of such Applicable Employee’s Effective Hire Date. For purposes of this Agreement, the “Effective Hire Date” shall mean (i) with respect to an Applicable Employee listed on Schedule 1.1(c) Part A of the Stockholder Disclosure Schedule, the Closing Date, (ii) with respect to an Applicable Employee listed on Schedule 1.1(c) Part B of the Stockholder Disclosure Schedule, the later of the Closing Date and the first Business Day after such Applicable Employee returns to active employment and (iii) with respect to an Applicable Employee listed on Schedule 1.1(c) Part C of the Stockholder Disclosure Schedule, the later of the Closing Date and the first Business Day after the Company is able to establish payroll services for such Applicable Employee, provided that in the event an Applicable Employee referenced in this clause (iii) does not become a Transferred Employee as of the Closing Date, such Applicable Employee accepts an Employment Offer. The Company shall make a written offer of employment (an “Employment Offer”) to each of the Applicable Employees referenced in clause (iii) of the immediately preceding sentence prior to the Closing Date, which Employment Offer shall become effective as of the Effective Hire Date applicable to such Applicable Employees and shall comply with the provisions of Section 5.5(b) below. The Company shall take all commercially reasonable steps to establish payroll services with respect to the Applicable Employees listed on Schedule 1.1(c) Part C of the Stockholder Disclosure Schedule as soon as practicable following the date hereof.
(b) Terms of Employment. Merger Sub agrees that, during the period commencing on the Closing Date and ending on the first anniversary of the Closing Date, each Applicable Employee will be provided with base salary or wage rate (as the case may be) and annual bonus opportunities that are no less than the base salary or wage rate and annual bonus opportunities that are no less than the base salary or wage rate and annual bonus opportunities provided to each Applicable Employee immediately prior to the closing date.
(c) Employee Benefits; Crediting of Service. Immediately following the Closing Date, the Companies shall make available to Applicable Employees (and their eligible spouses, dependents and beneficiaries) employee benefits and compensation plans, programs and arrangements that are substantially comparable in the aggregate to those provided to Applicable Employees (and, as applicable, their eligible spouses, dependents and beneficiaries) under the Benefit Plans, excluding for purposes of determining such comparability defined pension benefits, retiree medical benefits and equity based compensation, immediately prior to the Closing Date without limitations based upon pre-existing conditions (and the amount of year-to-date deductibles incurred by Applicable Employees prior to the Closing Date under the Benefit Plans shall be credited toward satisfaction of deductibles under the employee benefits and compensation plans, programs and arrangements sponsored or maintained by the Companies (the “Company Plans”) for the year in which the Closing Date occurs). From the Closing Date, the Companies shall ensure that the Company Plans grant full credit for all service or employment with, or recognized by, Stockholder and its Affiliates for purposes of eligibility, participation and vesting with respect to any Company Plan that is an “employee pension benefit plan,” as defined in Section 3(2) of ERISA, and, for purposes of eligibility, participation and determining the amount of any benefit with respect to any Company Plan that is a vacation, severance or other program that is affected by seniority and any Company Plan that is an “employee welfare benefit plan,” as defined in Section 3(1) of ERISA, including any severance plan or sick plan; provided that the Companies’ vacation plan shall be able to offset, for the year in which the Closing Date occurs, the vacation credited to each of the Applicable Employees pursuant to Section 5.5(c), or alternatively the vacation already taken by Applicable Employees during the year in which the Closing Date occurs, according to applicable Law.

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(d) Vacation. The Companies shall ensure that their vacation policy grants full credit for purposes of eligibility, participation and determining the amount of any accrued vacation benefits to which any Applicable Employee is entitled pursuant to the vacation policy applicable to such Applicable Employee immediately prior to the Closing Date.
(e) 1165(e) Plan. To the extent allowable by Law, as soon as administratively possible after the Closing Date, the account balances of all Applicable Employees who have an account balance under any Benefit Plan that is a Puerto Rico tax-qualified defined contribution retirement plan (the “Stockholder 1165(e) Plan”) shall be transferred in a trust-to-trust transfer in the form of cash, a promissory note (in the case of loans) or any combination thereof from the Stockholder 1165(e) Plan to a Puerto Rico tax-qualified defined contribution retirement plan maintained by Companies for the benefit of the Applicable Employees (the “Company 1165(e) Plan”). In the case of any Applicable Employee with an outstanding loan balance under the Stockholder 1165(e) Plan, Stockholder and the Companies shall take (or cause to be taken) any and all necessary action, to the extent allowable by Law, to permit the Applicable Employee to transfer such outstanding loan balance to the Company 1165(e) Plan through a direct rollover on or as soon as administratively possible after the Closing Date. Stockholder shall take all reasonable action to cause all Applicable Employees to be fully vested in their account balances under the Stockholder 1165(e) Plan prior to the Closing.
(f) Defined Benefit Pension Plans. Stockholder shall take all reasonable action to cause all Applicable Employees to be fully vested in their defined pension benefits under Stockholder’s defined benefit pension plans prior to the Closing.
(g) Retiree Medical Plan. From and after the Closing, Stockholder shall take all reasonable action to maintain retiree medical benefits under Stockholder’s retiree medical plan for those Applicable Employees who are eligible to receive such retiree medical benefits under such retiree medical plan of Stockholder as of the Closing Date. This Agreement does not limit Stockholder’s ability to terminate or otherwise amend Stockholder’s retiree medical coverage following the Closing; provided, that, as a result of such amendment or termination, such Applicable Employees are treated no less favorably than the employees of Stockholder generally.
(h) IBNR. Stockholder shall retain all liability with respect to any claims by Applicable Employees for benefits under the Benefit Plans, including, without limitation, under Stockholder’s medical plan, arising out of or relating to periods prior to the Closing.
(i) Equity-Based Compensation Plan. Except as set forth in Schedule 5.5(i), Stockholder shall take all reasonable action to cause all Applicable Employees to be fully vested in, and receive payment of, their equity-based compensation awards under Stockholder’s equity-based compensation plan prior to the Closing.
(j) No Third-Party Beneficiaries; Information. Nothing in this Section 5.5, express or implied, (i) is intended to confer on any person other than the Parties or their respective successors and assigns any rights, remedies, obligations or Liabilities under or by reason of this Agreement or (ii) shall limit the right of the Companies (A) to terminate any Applicable Employee after the Closing Date (B) to modify the terms or conditions of any Applicable Employee’s employment or (C) to amend or terminate any Company Plan. Stockholder shall provide the Company with such information and records ordinarily maintained by Stockholder that are necessary for the Company to comply with its obligations under this Section 5.5.
(k) Deferred Compensation. Prior to Closing, Stockholder shall or shall cause an Affiliate (other than the Companies) to assume and be liable for any non-qualified deferred compensation obligations of the Companies.
(l) Employee Transition. The Parties shall use their commercially reasonable efforts to (i) establish and have the Companies adopt the Company Plans and (ii) establish all human resource functions necessary to support the day-to-day operations of the Companies and its employees no later than the Closing Date.
(m) Contado and Its Employees. This Section 5.5 shall not apply to Contado or any of its employees.
Section 5.6 Certain Covenants. (a) Stockholder agrees that, during the period commencing on the date hereof and ending on the later of (i) the fifth anniversary of the Closing Date, (ii) the first anniversary of termination of the Amended and Restated Master Services Agreement and (iii) the first date on which Stockholder (together with its Affiliates) holds less than 10% of the outstanding shares of the capital stock of both Holdco and the Company, that neither Stockholder nor any of its Affiliates will directly or indirectly, without obtaining the prior written permission of Parent (i) induce or encourage any employee of the Companies to terminate his or her employment with the Companies, (ii) solicit for employment or any similar arrangement any employee of the Companies or (iii) hire or assist any other

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Person in hiring any employee of the Companies; provided that Stockholder and its Affiliates shall not be restricted from (i) accepting referrals for employment made by a placement agency or employment service so long as such placement agency or employment service has not targeted employees of the Companies, (ii) making any general advertisement not targeted at employees of the Companies appearing in a newspaper, magazine, Internet sites or trade publication, or (iii) soliciting or hiring any person who has not been an employee of the Company for at least 180 days prior to being solicited or hired by Stockholder or any of its Affiliates and whom neither Stockholder nor any of its Affiliates, subject to clauses (i) and (ii) of the proviso, have solicited over such 180 day period.
(b) Parent and the Company agree that for the period commencing on the Closing and ending on the second anniversary of the Closing Date, neither Parent (including any of its Affiliates acting at the direction of Parent), Holdco nor the Company (including any of its controlled Subsidiaries or any of its other Affiliates acting at the direction of the Company or to whom information concerning the Companies or an Applicable Employee has been provided) will directly or indirectly, without obtaining the prior written permission of Stockholder, (x) solicit for employment or any similar arrangement any employee of Stockholder or any of its Affiliates with whom Parent or any of its Affiliates came into contact during the discussions relating to, negotiation of and execution of this Agreement or any Ancillary Agreement or who is then currently involved in providing services to the Companies under any Ancillary Agreement or (y) hire or assist any other Person in hiring any employee of Stockholders or any of its Affiliates with whom Parent or any of its Affiliates came into contact during the discussions relating to, negotiation of and execution of this Agreement or any Ancillary Agreement or who is then currently involved in providing services to the Companies under any Ancillary Agreement; provided that Parent, Holdco and the Company shall not be restricted from (x) accepting referrals for employment made by a placement agency or employment service so long as such placement agency or employment service has not targeted employees of Stockholder or any of its Affiliates, (y) making any general advertisement not targeted at employees of Stockholder or any of its Affiliates appearing in a newspaper, magazine, Internet sites or trade publication, or hiring any employees of Stockholder or any of its Affiliates as a result thereof or (z) soliciting or hiring any person who has not been an employee of Stockholders or any of its Affiliates for at least 180 days prior to being solicited or hired by Parent, Holdco or the Company and whom none of Parent, Holdco or the Company, subject to clauses (x) and (y) of the proviso, have solicited over such 180 day period.
(c) Stockholder and its Affiliates shall not until the later of (i) the fifth anniversary of the Closing Date (ii) the termination of the Amended and Restated Master Services Agreement and (iii) the first date on which Stockholder (together with its Affiliates) holds less than 10% of the outstanding shares of capital stock of both Holdco and the Company, directly or indirectly, engage in, manage, control, license, participate in, or own or control a financial interest in a Person (other than the Companies) that engages in, the Business (other than as contemplated in Section 5.6(e)); provided that neither Stockholder nor any of its Affiliates shall be required to terminate Transferred Agreements that cannot be validly transferred to the Company under their terms. Nothing in this Section 5.6(c) shall be deemed to apply (i) to services of the type provided pursuant to the ISO Agreement between BPPR and the Company or (ii) if following the fifth anniversary of the Closing Date, Stockholder (together with its Affiliates) holds less than 10% of the outstanding shares of capital stock of both Holdco and the Company, to services of the type typically provided by Independent Sales Organizations (as such term is defined in the ISO Agreement) to Merchants.
(d) Parent and its Affiliates (other than the Companies) shall not until the first date on which Parent (together with its Affiliates) hold less than 10% of the outstanding shares of capital stock of both Holdco and the Company engage in, manage, control, or own or control an equity interest in (A) a Person (other than the Companies) that engages in, the Parent Restricted Business (other than as contemplated in Section 5.6(f)) or (B) such Persons listed in Schedule 5.6(d) of the Parent Disclosure Schedule.
(e) Notwithstanding Section 5.6(c), neither Stockholder nor any of its respective Affiliates shall be precluded from:(A) owning up to 5% of the voting equity of any publicly traded Person engaged in the Business, provided that such investment is a non-controlling investment or (B) purchasing or acquiring (through merger, stock purchase or purchase of all or substantially all of the assets or otherwise) any Person engaged in the Business and continuing to operate such existing Business, provided that (x) such existing Business shall not represent more than 20% of the consolidated annual revenues of the business or entity acquired or (y) if such existing Business represents more than 20% of the consolidated annual revenues of the business or entity acquired, Stockholder or its Affiliates, as applicable, divest, sell, dispose of or otherwise transfer, within 12 months of the purchase or acquisition thereof, sufficient assets or businesses of such Business to reduce the consolidated annual revenues that the Business represents of the business or entity acquired to 20% or less.

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Section 5.7 Further Assurances. From time to time after the Closing Date, each Party shall, and shall cause its respective Affiliates to, promptly execute, acknowledge and deliver any other assurances or documents or instruments of transfer reasonably requested by another Party and necessary for the requesting Party to satisfy its obligations hereunder or to complete the Transactions.
Section 5.8 Intellectual Property Matters. Following the Closing, none of the Companies or their Affiliates shall use, and Parent shall cause the Companies and their Affiliates not to use, any Trademarks owned by Stockholder or its Affiliates, or any Trademarks confusingly similar thereto, or other Intellectual Property owned or licensed by Stockholder or its Affiliates, other than pursuant to an agreement. Following the Closing, none of Stockholder or its Affiliates shall use, and Stockholder shall cause its Affiliates not to use, any Trademarks owned by the Companies, or any Trademarks confusingly similar thereto, or use any other Intellectual Property owned by the Companies, other than pursuant to an agreement, where such use would, but for such agreement, constitute an infringement, misappropriation or violation of such Intellectual Property. Following the Closing: (i) none of Stockholder or its Affiliates shall, and Stockholder shall cause its Affiliates not to, hold itself out as affiliated with Parent, the Companies, or any of their respective Affiliates; and (ii) none of the Companies shall, and Parent shall cause each of the Companies not to, hold itself out as affiliated with Stockholder or its Affiliates, in each case except as contemplated by any of the Ancillary Agreements, Internal Reorganization Documents, or this Agreement.
Section 5.9 Confidentiality. Each Party (the “Receiving Party”) agrees that it will, and will cause its Affiliates and its and its Affiliates’ officers, directors, employees, accountants, consultants, advisors and agents to, hold all information concerning another Party (the “Disclosing Party”) or its Affiliates received by the Receiving Party from the Disclosing Party or its Affiliates (other than information which (i) becomes generally available to the public, (ii) was available to the Receiving Party on a non- confidential basis prior to its disclosure by the Disclosing Party or its Affiliates, as the case may be, (iii) becomes available to the Receiving Party on a non-confidential basis from a source other than the Disclosing Party or its Affiliates not known by the Receiving Party to be prohibited from disclosing such information to such persons by a contractual, legal or fiduciary obligation, (iv) is required or requested to be disclosed by Law or any Government Entity or Self- Regulatory Organization, (v) may be necessary or advisable to be disclosed in order to enforce any of the Receiving Party’s rights pursuant to this Agreement or any Ancillary Agreement, (vi) may be necessary or advisable to be disclosed in connection with any litigation, arbitration, mediation or other similar Legal Proceeding involving the Receiving Party or any of its Affiliates or (vii) may be necessary or advisable to disclose in order for the Receiving Party or its Affiliates, as applicable, to perform their respective obligations pursuant to this Agreement or the Ancillary Agreements) on a confidential basis and not voluntarily disclose (other than pursuant to legal process after an opportunity to restrict or otherwise limit disclosure) to any other Person such information without the prior written consent of the Disclosing Party for a period of three years after the Receiving Party receives the information from the Disclosing Party; provided that Parent and Merger Sub shall be permitted to disclose such information to potential sources of capital, rating agencies, prospective lenders and investors in connection with the Financing so long as such Persons enter into a confidentiality agreement or other customary undertakings with respect to such information with Stockholder, its Affiliates and the Company being beneficiaries of each such confidentiality agreement or undertaking. At the Closing, the Parent and Stockholder shall cause the Confidentiality Agreement to be terminated.
Section 5.10 Notification. Prior to the Closing, Stockholder shall, as soon as reasonably practicable, notify Parent (after Stockholder has notice thereof), and Parent shall promptly notify Stockholder (after Parent has notice thereof), and keep such other Party advised, as to any litigation pending or, to Stockholder’s Knowledge or the actual knowledge of Parent, as applicable, threatened against such Party that challenges such Party’s ability to effect the Transactions.
Section 5.11 Financing. (a) Subject to the terms and conditions of this Agreement, Merger Sub shall use its reasonable best efforts to obtain the Financing on the terms and conditions described in the Financing Letters, after giving effect to the market flex terms in the Fee Letter, and shall not permit any amendment or modification to be made to, or any waiver of any provision or remedy under, the Financing Letters or the Fee Letter, if such amendment, modification or waiver (i) reduces the aggregate amount of the Financing (including by changing the amount of fees to be paid or original issue discount) or (ii) imposes new or additional conditions or other terms or otherwise expands, amends or modifies any of the conditions to the receipt of the Financing or other terms in a manner that could reasonably be expected to (x) delay or prevent the Closing (y) make the timely funding of the Financing or satisfaction of the conditions to obtaining the Financing less likely to occur or (z) adversely impact the ability of Parent and Merger Sub to enforce their rights against the other parties to the Financing Letters or the definitive agreements with respect thereto;

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provided that Parent and Merger Sub shall have the right to substitute other debt (but not equity financing) for all or any portion of the Debt Financing contemplated by the Debt Commitment Letter from the same and/or alternative financing sources; provided, further, that such substitution shall only be permitted if (i) the terms would not be reasonably expected to delay or prevent the Closing or make the timely funding of the Debt Financing or satisfaction of the conditions to obtaining the Debt Financing less likely to occur, (ii) the conditions to the Debt Financing set forth in the Debt Commitment Letter as of the date hereof would not be expanded or modified in a manner that would reasonably be expected to delay or prevent the Closing and (iii) the terms and conditions are not, in the aggregate, less favorable to the Company than those in the Debt Commitment Letter, after giving effect to the market flex terms in the Fee Letters and provided, further, that any such substitute financing shall not obligate any of Stockholder or its Affiliates (other than the Companies) as a surety, guarantor or indemnitor or to extend credit to any Person. Any reference in this Agreement to (A) “Financing,” “Equity Financing” and “Debt Financing” shall include the financing contemplated by the Financing Letters as amended or modified in compliance with this Section 5.11 and (B) “Financing Letters,” “Equity Commitment Letter,” “Debt Commitment Letter” and “Fee Letter” shall include such documents as amended or modified in compliance with this Section 5.11.
(b) Merger Sub shall use its reasonable best efforts (i) to maintain in effect the Financing Letters in accordance with the terms and subject to the conditions thereof, (ii) to negotiate and enter into all definitive agreements with respect to the Debt Financing contemplated by the Debt Commitment Letter on the terms and conditions contained in the Debt Commitment Letter, including the market flex provisions in the Fee Letter and (iii) to satisfy all conditions to such definitive agreements that are applicable to Parent or Merger Sub that are within their reasonable control and consummate the Financing at or prior to the Closing. Parent shall keep Stockholder and the Company reasonably apprised of the status of the Financing and developments with respect thereto (including giving Stockholder and the Company prompt notice of any material change with respect to such Financing) and shall provide to the Company copies of all material definitive documents related to the Debt Financing. Without limiting the foregoing, Parent agrees to notify the Company promptly, and in any event within two (2) Business Days, if at any time (i) any of the Financing Letters shall expire or be terminated for any reason, (ii) any financing source that is a party to any of the Financing Letters notifies Parent or Merger Sub that such source no longer intends to provide financing on the terms set forth therein or (iii) to Parent’s knowledge (without a requirement of due inquiry), any party to any of the Financing Letters is or is alleged to be in breach or default thereunder.
(c) Merger Sub shall use its reasonable best efforts to cause the lenders and any other Persons providing Financing to fund on the Closing Date the Financing required to consummate the Transactions and the other transactions contemplated by the Financing Letters, including by taking enforcement action, if all conditions in the Debt Commitment Letter (other than the availability of the Equity Financing) and all conditions to Closing contained in Article VI are satisfied or waived, or upon funding will be satisfied (other than the condition in Section 6.3(e)).
(d) If the Debt Commitment Letter shall be terminated or modified in a manner materially adverse to Parent or Merger Sub for any reason or to include any Prohibited Alternate Debt Terms, or if any portion of the Debt Financing becomes unavailable on the terms and conditions contemplated in the Debt Commitment Letter (other than as a result of obtaining substitute debt financing in accordance with Section 5.11(a)) (such event, an “Original Financing Failure”), Merger Sub shall use its reasonable best efforts to arrange promptly to obtain alternative financing from alternative sources on terms and conditions not less favorable to Parent or Merger Sub than those contained in the Debt Commitment Letter and the Fee Letter and in an amount at least equal to the Debt Financing or such unavailable portion thereof, as the case may be (the “Alternate Debt Financing”), and to obtain a new financing commitment letter with respect to such Alternate Debt Financing (the “New Debt Commitment Letter”), which shall replace the existing Debt Commitment Letter, provided that any such Alternate Debt Financing shall not obligate any of Stockholder or its Affiliates other than the Companies as a surety, guarantor or indemnitor or to extend credit to any Person or require the amendment of the terms of any Ancillary Agreements (other than the Stockholders Agreement, the Amended and Restated Holdco Articles of Incorporation and the Amended and Restated Holdco By-laws) in a manner materially adverse to Stockholder (the terms described in this proviso “Prohibited Alternate Debt Terms”). Merger Sub shall not execute a New Debt Commitment Letter or consummate any Alternate Debt Financing, without the written consent of Stockholder, if the terms of the New Debt Commitment Letter or Alternate Debt Financing are, in the aggregate, less favorable to the Stockholder than the Debt Commitment Letters or the Debt Financing, in either case, as of the date hereof. Parent shall promptly provide a true, correct and complete copy of such New Debt Commitment Letter and any related fee letter to Stockholder. In the event any New Debt Commitment Letter is obtained, (i) any reference in this Agreement to the

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“Debt Financing” shall mean the debt financing contemplated by the Debt Commitment Letter as modified pursuant to clause (ii) below, (ii) any reference in this Agreement to the “Debt Commitment Letter” shall be deemed to include the Debt Commitment Letter that is not superseded by a New Debt Commitment Letter at the time in question and the New Debt Commitment Letters to the extent then in effect and (iii) any reference in this Agreement to “Fee Letter” shall be deemed to include any fee or other letter relating to the Debt Commitment Letters that are not superseded by a New Debt Commitment Letter at the time in question and the New Debt Commitment Letters to the extent then in effect.
(e) In the event of an Original Financing Failure, the Parties agree that Stockholder shall have the right to participate in any alternate financing proposed to be provided by Affiliates of Parent (including any Alternate Debt Financing) on a pro rata basis based on the respective number of Shares to be outstanding pursuant to Section 2.2 following the Closing without giving effect to any such alternate financing.
(f) Parent and Merger Sub shall (i) structure the Financing such that the consideration payable pursuant to this Agreement in respect of any Share is governed by Section 1111 of the PR Code and not by Section 1119(g) of the PR Code, (ii) treat the payment of such consideration accordingly and (iii) not take any action that would cause such treatment to be incorrect.
(g) Notwithstanding anything to the contrary set forth in this Agreement, Parent and Merger Sub shall be entitled to pursue substitute financing, the terms of which may differ from the terms set forth in the Debt Commitment Letters and such substitute financing may not constitute Alternate Debt Financing. No actions taken by Parent, Merger Sub or their Affiliates or representatives in connection therewith shall in and of itself constitute a breach of the obligations of Parent or Merger Sub under this Agreement.
Section 5.12 Financing Cooperation. (a) Prior to the Closing, Stockholder shall, and shall cause each of its Affiliates to, use reasonable best efforts to cause their respective directors, officers, employees, investment bankers, attorneys, accountants and other advisors or representatives (collectively, “Representatives”) to, provide to Parent and Merger Sub such cooperation reasonably requested by Parent in connection with the Debt Financing, including:
(i) participating in a customary and reasonable number of meetings, presentations, due diligence sessions, drafting sessions, road shows and sessions with rating agencies and assisting Parent and Merger Sub in obtaining ratings as contemplated by the Debt Financing;
(ii) assisting with the preparation of materials for rating agency presentations, offering documents, private placement memoranda, bank information memoranda, prospectuses and similar documents for the Debt Financing, including execution and delivery of customary representation letters in connection with bank information memoranda;
(iii) as promptly as reasonably practical, furnishing Parent and Merger Sub and their Debt Financing sources with financial and other information regarding the Company and its subsidiaries as may be reasonably requested by Parent (including in connection with Parent’s or Merger Sub’s preparation of pro forma financial statements), including financial statements, financial data, projections, audit reports and other information of the type required by
Regulation S-X and Regulation S-K of the Securities Act of 1933 for a registered public offering, and of type and form customarily included in private placements under Rule 144A, to consummate the offering(s) of debt securities contemplated by the Debt Financing, or as otherwise reasonably required in connection with the Debt Financing, or as otherwise necessary in order to assist in receiving customary “comfort” (including “negative assurance” comfort) from independent accountants in connection with the offering(s) of debt securities contemplated by the Debt Financing (all such information in this clause (iii), the “Required Information”);
(iv) executing and delivering any credit agreement, customary and reasonable pledge and security documents, indentures, purchase agreements, currency or interest hedging arrangements, other definitive financing documents, officer’s certificates, customary closing documents, or other certificates or documents with respect to the Debt Financing contemplated by the Debt Financing as may be reasonably requested by Parent (including customary consents of accountants for use of their reports in any materials relating to the Debt Financing) or otherwise reasonably facilitating the pledging of collateral;
(v) furnishing Parent and Merger Sub and their Financing sources as promptly as practicable all financial information required to be delivered pursuant to the Debt Commitment Letter and monthly financial statements for the Company within fifteen (15) days of the end of each month prior to the Closing Date;

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(vi) executing and delivering, as of the Closing Date, a certificate of the chief financial officer of the Company with respect to solvency matters;
(vii) assisting Parent and Merger Sub to obtain waivers, consents, estoppels and approvals from other parties to material leases, Encumbrances and Contracts to which the Company or any subsidiary is a party and arranging discussions among Parent and Merger Sub and their financing sources with other parties to material leases, encumbrances and contracts as of the Closing Date;
(viii) taking all corporate actions, subject to the occurrence of the Closing Date, reasonably requested by Parent that are necessary or customary to permit the consummation of the Debt Financing (including any high yield financing), and to permit the proceeds thereof, together with the cash at the Company and its Subsidiaries (not needed for other purposes), to be made available to the Company on the Closing Date to consummate the Transactions);
(ix) cooperating with Parent and Merger Sub in their efforts to obtain accountants’ comfort letters, consents, legal opinions, surveys, appraisals, engineering reports, environmental and other inspections, title insurance and other documentation and items relating to the Debt Financing, as reasonably requested by Parent; and
(x) taking all actions reasonably necessary to (x) permit the prospective lenders involved in the Debt Financing to evaluate the Companies’ current assets, cash management and accounting systems, policies and procedures relating thereto for the purpose of establishing collateral arrangements to the extent customary and reasonable and (y) establish bank and other accounts and blocked account agreements and lock box arrangements in connection with the foregoing; provided that (A) nothing herein shall require such cooperation to the extent it would require Stockholder or its Affiliates to waive or amend any terms of this Agreement, incur any Liabilities, pay any fees, reimburse any expenses or give any indemnities, in each case, with respect to the Debt Financing (other than with respect to a purchase agreement in connection with a high yield financing), prior to the Closing for which it has not received prior reimbursement by or on behalf of Parent or Merger Sub, (B) nothing herein shall require such cooperation from Stockholder or its Affiliates to the extent it would unreasonably interfere with the ongoing operations of Stockholder or its Affiliates, (C) no action, Liability or obligation of Stockholder or its Affiliates under any certificate, agreement, arrangement, document or instrument relating to the Debt Financing shall be effective until the Closing (other than with respect to a purchase agreement in connection with a high yield financing) and (D) any offering documents, private placement memoranda, bank information memoranda, prospectuses and similar documents required in relation to the Debt Financing shall contain disclosure and financial statements reflecting the Company as the obligor.
(b) Merger Sub shall indemnify Stockholder, its Affiliates and their respective directors, officers, stockholders, partners, members and employees and their heirs, successors and permitted assigns, each in their capacity as such (collectively, the “Indemnitees”), from, against and in respect of any Losses imposed on, sustained, incurred or suffered by, or asserted against, any of them, whether in respect of Third-Party Claims, Direct Claims or otherwise, directly or indirectly relating to, arising out of or resulting from the arrangement of the Debt Financing (including any purchase agreement in connection with a high yield financing), any other financing and/or the provision of information utilized in connection therewith to the fullest extent permitted by applicable Law, except to the extent such Losses result from such Indemnitee’s gross negligence or willful misconduct.
(c) Stockholder and the Company hereby consent to the use of their logos in connection with the Financing; provided that such logos are used solely in a manner that is not intended to or reasonably likely to harm or disparage Stockholder or any of its Affiliates (including the Companies) or the reputation or goodwill of Stockholder or any of its Affiliates (including the Companies).
(d) The Company will take reasonable best efforts to periodically update Required Information provided to Parent and Merger Sub pursuant to clause (iii) of Section 5.12(a) as may be necessary such that the Required Information does not contain any untrue statement of material fact or omit to state any material fact necessary in order to make the statements contained therein not misleading.
Section 5.13 Internal Reorganization. From and after the date hereof Stockholder shall not and shall cause the Stockholder Parties and the Companies not to, amend, modify, terminate, supplement or waive any term or provision of the Internal Reorganization Documents or the IP Purchase & Sale Agreement without the prior written consent of Parent. Following the date hereof, Stockholder shall and shall cause its Affiliates to use reasonable best efforts to complete any transactions contemplated by the Master Reorganization Agreement (as Amended by the MRA Amendment) and the Business Transfer Agreement not completed prior to the date hereof as promptly as practical,

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including without limitation the transfer of any Foreign Shares or Foreign Equity Interests following compliance with the applicable transfer restrictions including rights of first refusal. In furtherance of the foregoing and subject to such transfer restrictions, to the extent any of the Foreign Equity Interests are not transferred to the Company prior to the Closing, Stockholder shall and shall cause its Affiliates to transfer such Foreign Equity Interest to the Company in accordance with the terms of the Master Reorganization Agreement as amended by the MRA Amendment.
Section 5.14 Access to Stockholders Insurance. To the extent any insurance claims are included in the Transferred Assets, or to the extent there are insurance claims primarily related to the Companies or the Business (other than Contado) under any occurrence-based insurance policies covering events related to the Companies or the Business occurring prior to the Closing (each a “Pre-Closing Claim”) then Stockholder shall cooperate with the Company and take all commercially reasonable actions as may be required to assist the Company in obtaining amounts payable under such Pre-Closing Claims; provided that nothing herein shall require Stockholder and/or its Affiliates (other than the Companies) to maintain or preserve in effect any policies of insurance post-Closing. Stockholder (or its designee) will reasonably promptly remit to the Company any and all amounts recovered pursuant to Stockholder’s insurance for any Pre-Closing Claim. Parent and the Company shall provide all assistance and information reasonably requested by Stockholder in connection with processing of Pre-Closing Claims and providing information to its insurance underwriters. The Company shall promptly reimburse Stockholder for all of its out-of-pocket costs and expenses incurred in providing the assistance described in this Section 5.14.
Section 5.15 Indebtedness. Stockholder shall cause the Companies (other than Contado) to have no outstanding Indebtedness as of the Closing (other than the Debt Financing).
Section 5.16 Pre-Closing Dividend. Prior to Closing, the Company shall declare a dividend on its Shares outstanding as of immediately prior to the Closing Date in an aggregate amount in cash of $56,000,000.00 (“Pre-Closing Dividend”). Such Pre-Closing Dividend shall be paid immediately following the Closing.
Section 5.17 Certain Ancillary Agreement and Organizational Documents.
Parent, Merger Sub and Stockholder shall use reasonable best efforts to:
(a) promptly negotiate in good faith and finalize the terms and conditions of the Stockholders Agreement, the Amended & Restated Holdco Articles and the Amended & Restated Holdco By-Laws;
(b) promptly negotiate in good faith and finalize the terms and conditions of the Amended & Restated Articles of Incorporation of the Company (the “Amended EVERTEC Articles”) and the Amended & Restated By-Laws of the Company (the “Amended EVERTEC By-laws”);
(c) promptly negotiate in good faith and finalize the terms and conditions of the Amended ATH Network Participation Agreement;
(d) promptly negotiate in good faith and finalize the terms and conditions of the Amended & Restated Leases;
(e) promptly negotiate in good faith and finalize the terms and conditions of the Technology Escrow Agreement and appoint the Technology Escrow Agent;
(f) promptly negotiate in good faith and finalize the terms and conditions of the Amended & Restated TicketPop Service Agreement;
(g) promptly negotiate in good faith and finalize the terms and conditions of the Amended & Restated ISO Agreement;
(h) promptly negotiate in good faith and finalize the terms and conditions of the Transition Service Agreement; and
(i) promptly negotiate in good faith and finalize the terms and conditions of an agreement (the “ATH Network Support Agreement”) containing provisions inter alia for Stockholder to promote and support the ATH brand consistent with past practice during the term of the Amended and Restated Master Services Agreement.
Section 5.18 ATH Network Participation Agreement. From the date hereof until the Closing Date, if BPPR desires to (i) implement any “Development Project” (as such term is defined in the Form Network Participation Agreement), Parent shall cause BPPR to grant the Company a right of first refusal with respect to the Development Project (the

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notice periods and other terms relating to the trigger and exercise of the right of first refusal shall be the same as those set forth in the right of first refusal contained in Amended and Restated Master Services Agreement) and (ii) modify, change, enhance or upgrade any service provided under the 2000 ATH Network Participation Agreement (or any rider thereto) or obtain a new Service (as such term is defined in the Form Network Participation Agreement), Parent shall cause BPPR to obtain any of the foregoing from the Company.
Section 5.19 New Service Addenda. Stockholder or any of its Affiliates, as applicable, on the one hand, and the Company, on the other hand, shall promptly negotiate in good faith and enter into (i) the Amended & Restated Services Agreement for Merchant and Electronic Payment Services to Government Entities, (ii) the Collocation Services Addendum, (iii) the Disaster Recovery Service Addendum, and (iv) any other service addendum that the Company and Stockholder (or any of its Affiliates) determine to be reasonably necessary or advisable (collectively, the “New Service Addenda”). Each New Service Addendum shall have a duration that is coterminous with the Amended & Restated Master Services Agreement (or, in the case of an addendum that relates to a definitive project, the time necessary to complete such project (as agreed by Parent and Stockholder)) and other terms that are satisfactory to Parent and Stockholder.
Section 5.20 Cash Depot Agreement. (a) Promptly following the execution of this Agreement, Stockholder shall cause BPPR to use its reasonable best efforts to obtain the consent of the FRBNY and the PR Bankers Association to the assignment by BPPR to the Company of BPPR’s rights and obligations under the Cash Depot Agreement.
(b) From the Closing until the earliest of the termination of the Master Services Agreement, the termination of the ISO Agreement and the assignment of the Cash Depot Agreement by Stockholder to the Company, Stockholder shall cause BPPR to use its reasonable best efforts not to take any action that would (i) cause the termination of the Cash Depot Agreement or (ii) deprive the Company of the economic benefit that it derives from the Cash Depot Agreement.
Section 5.21 GM Group Waiver. Prior to the Closing the Stockholder shall, and shall cause the Company to obtain and deliver to Parent a full and irrevocable waiver and release of any obligations (the “GM Group Obligations”) contained in Section 9.15 of that certain Stock Purchase Agreement by and among Stockholder and GM Group, Inc. and its former stockholders party thereto (the “GM Stockholders”) from such GM Group Stockholders.
Section 5.22 Required Stockholder Approval. Immediately following the execution hereof, the Stockholder shall deliver to the Company and Parent the duly executed Stockholder Written Consent.
Section 5.23 Post-Closing Access and Cooperation. From and after the Closing, the Stockholder shall and shall cause its Affiliates to continue to provide the cooperation required by Section 5.12 during periods following the Closing to the extent such cooperation is reasonably necessary in connection with the Debt Financing, subsequent registration statements, post-closing accounting, any audit of the closing balance sheet, income statement and cash flows from January 1, 2010 through Closing, preparation of comparable quarterly financial information in respect of periods ended prior to the Closing, SEC reporting obligations and analysis after the Closing relating to any period prior to the Closing; provided that the Company shall pay any direct, out of pocket expenses incurred by Stockholder in connection with such cooperation.
Section 5.24 Obligation to Make Payments. (a) So long as any payment is required to be made by Stockholder pursuant to this Section 5.24, Company shall deliver to Stockholder, within 15 days of the end of each fiscal quarter for which Stockholder must make a payment pursuant to this Section 5.24, a written statement setting forth the calculation of each such payment in reasonable detail permitting Stockholder to verify Company’s calculation of each such payment, which payment shall be in amounts calculated in the same manner as was used in the preparation of the financial projections included in the Confidential Information Memorandum. Company shall provide Stockholder access to such information as is necessary to validate the statement delivered by Company to Stockholder pursuant to this Section 5.24 (a). Company and Stockholder shall negotiate in good faith to resolve any disputes regarding the calculation of any payment.
(b) During the period from the Closing Date to the earlier of (i) the termination of the agreement set forth on Schedule 5.24 of the Stockholder Disclosure Schedule and (ii) February 29, 2012, Stockholder shall make a quarterly payment to Company in an amount equal to the payment with respect to the merchant identified in such agreement for the immediately preceding fiscal quarter within 30 days of the end of such fiscal quarter.

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Section 5.25 Covenants Regarding Third Party License Agreements.
(a) Assignment. On the terms and subject to the conditions set forth in this Section 5.25, at the Closing, Stockholder shall and, shall cause each of its Affiliates (as applicable) to, assign, transfer, convey and deliver to the Company and the Company shall accept from Stockholder all of Stockholder’s and each of its Affiliate’s right, title, and interest in and under the IP Agreements set forth on Schedule 5.25, free and clear of all Encumbrances except for Permitted Encumbrances, (the “Transferred Stockholder IP Agreements”).
(b) Closing Deliverable. At the Closing, Stockholder shall deliver, or cause to be delivered, to Parent an assignment and assumption agreement, in the form and substance reasonably acceptable to Stockholder and Parent, as may be necessary to affect the assignment, transfer, conveyance and delivery to the Company of the Transferred Stockholder IP Agreements.
(c) Transfer Consents. Notwithstanding anything to the contrary contained in this Agreement, to the extent that the assignment, transfer, conveyance or delivery or attempted assignment, transfer, conveyance or delivery to the Company of any Transferred Stockholder IP Agreement or any right or any benefit arising thereunder or resulting therefrom is prohibited by any applicable Law or would require any governmental or third-party authorizations, approvals, consents or waivers (“Transfer Consents”), Stockholder shall and, shall cause each of its Affiliates (as applicable) to, use commercially reasonable efforts to obtain such Transfer Consents prior to Closing, provided that, if any such Transfer Consents shall not have been obtained prior to the Closing, the Closing shall proceed without the assignment, transfer, conveyance or delivery of such Transferred Stockholder IP Agreement, unless the failure to assign, transfer, convey or deliver any such Transferred Stockholder IP Agreement prior to Closing would result in a Material Adverse Effect (taking into consideration the obligations of Stockholder under this Section 5.25) (an “IP MAE”). In the event that the Closing occurs without the assignment, transfer, conveyance or delivery of any Transferred Stockholder IP Agreement or any right or benefit arising thereunder, then following the Closing, the Stockholder shall use its commercially reasonable efforts to obtain promptly any necessary Transfer Consents, and the Company shall cooperate as reasonably requested by the Stockholder in connection with the foregoing; provided that none of the Companies shall have any obligation to give any guarantee or pay any consideration of any nature for obtaining such Transfer Consent or to consent to any change in or otherwise compromise the terms of any agreement or arrangement which the Company reasonably deems to be adverse to the Business (each such action being a “Concession”). Until such Transfer Consent has been obtained, Stockholder shall use commercially reasonable efforts to provide to the Companies and any of their Affiliates, through any reasonable and lawful arrangement, rights and benefits substantially equivalent to those the Companies and their Affiliates would have received under such Transferred Stockholder IP Agreement had the Transferred Stockholder IP Agreement been assigned to the Companies at the Closing, and the Companies shall cooperate as reasonably requested by the Stockholder in connection with the foregoing, without any obligation to make a Concession. Once the Transfer Consent for the assignment, transfer, conveyance or delivery of any Transferred Stockholder IP Agreement not assigned, transferred, conveyed or delivered at the Closing is obtained, Stockholder shall or shall cause its relevant Affiliates to, promptly, assign, transfer, convey and deliver such Transferred Stockholder IP Agreement to the relevant Companies and/or their Affiliates free and clear of all Encumbrances except for Permitted Encumbrances.
(d) Equivalent IP Arrangements. To the extent that, (i) within 90 days of the Closing Date, it is determined by Stockholder, with the consent of Parent (such consent not to be unreasonably withheld or delayed) that any Transferred Stockholder IP Agreement cannot be assigned, transferred, conveyed or delivered upon the Closing pursuant to this Section 5.25(d), or (ii) there is any other Stockholder IP Agreement, other than a Transferred Stockholder IP Agreement, under which a third party grants a license of Intellectual Property to Stockholder or any of its Affiliates (including the Companies) (collectively, (i) and (ii), a “Relevant Unassigned License”), then Stockholder shall use its commercially reasonable efforts to obtain promptly an alternative arrangement designed to provide the Companies and their Affiliates with substantially equivalent rights, benefits, costs and obligations, for a substantially equivalent term, in each case, as the Relevant Unassigned License as of the Closing (each, subject to the following proviso, an “Equivalent IP Arrangement”); provided that, such obligation shall apply (A) only with respect to those versions of the software or other technology, including any future enhancements or updates, used or authorized for use by the Companies or any of their Affiliates prior to Closing under the Relevant Unassigned License (or, if such versions are no longer available, the most comparable version that is reasonably available), and (B) only in respect of the scope, extent and manner of the Companies or any of their Affiliates’ authorized use of such software or other technology prior to Closing (collectively, (A) and (B), the “Baseline Usage”). Company shall cooperate as reasonably requested by the Stockholder

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in connection with the foregoing, without any obligation to make a Concession, other than, subject to Stockholder’s payment obligations in subsection (e) below, assuming all rights and obligations accruing after the Closing Date under the Transferred Stockholder IP Agreement and entering into the relevant Equivalent IP Arrangement, as applicable (the “Relevant Concession”). Upon obtaining such Equivalent IP Arrangement, the relevant Transferred Stockholder IP Agreement shall no longer be deemed to be a Transferred Stockholder IP Agreement for purposes of this Section 5.25.
(e) Payment for Transfer Consents and Equivalent IP Arrangements. Stockholder agrees to pay (i) direct, out-of- pocket costs payable to the applicable licensor or distributor solely in consideration of (A) obtaining the Transfer Consent for each relevant Transferred Stockholder IP Agreement, and (B) the establishment of each Equivalent IP Arrangement with respect to the applicable Baseline Usage thereunder; and (ii) with respect to any Equivalent IP Arrangement, which requires any Companies’ implementation of any new or updated software or technology (“Implementation”), any reasonable direct, out of pocket expenses, including any consultant or programmer fees, incurred in connection with such Implementation, to the extent that the Companies do not have the resources and/or know-how internally to complete such Implementation; provided, however, that, except as expressly set forth in subsection (f) below, Stockholder shall have no obligation or liability with respect to any subscription, maintenance or other recurring fees applicable to or arising from any period of use after the Closing.
(f) Incremental License Cost. If and to the extent that any (i) Transferred Stockholder IP Agreement that is transferred, assigned or conveyed to Company, or (ii) Equivalent IP Arrangement (collectively, (i) and (ii), the “Relevant IP Agreements”), require the payment by any of the Companies or their Affiliates of license, subscription or maintenance fees with respect to the Baseline Usage during the period from the Closing until the fifth anniversary thereafter (the “Relevant Period”) that are higher than those fees paid or payable by or on behalf of the Companies with respect to the Baseline Usage immediately prior to Closing (the “Increased License Cost”), the Stockholder shall pay to the Company an amount equal to such incremental increase in documented, direct and out-of-pocket costs actually paid by the Companies to the applicable licensor under the Transferred Stockholder IP Agreements and Alternative IP Agreements for the Baseline Usage during the Relevant Period. The foregoing obligation of the Stockholder is conditioned upon (i) the Companies using commercially reasonable efforts to obtain a price that does not result in an Increased License Cost for the Baseline Usage, without any obligation to make a Relevant Concession, (ii) the Companies providing at least thirty (30) days written notice to the Stockholder prior to entering into any agreement that would impose an Increased License Cost, and (iii) upon Stockholder’s reasonable request, Companies’ providing reasonable cooperation with Stockholder in seeking on behalf of the Companies a license agreement on substantially equivalent terms and use right that would not impose an Increased License Cost without any obligation to make a Relevant Concession. In addition, the Companies shall provide all information reasonably requested by Stockholder to verify any claim of Increased License Cost.
(g) As used in this Section 5.25, each use of “Affiliate(s)” of an entity shall mean Affiliates of such entity as of immediately prior to the Closing.
Section 5.26 Sale of Assets. (a) At any time prior to the Closing, Parent may deliver to Stockholder a written notice (i) requesting that the Company and Stockholder use commercially reasonable efforts to sell all of the capital stock and/or assets of EVERTEC de Venezuela, C.A. (“EV”) for cash on terms and conditions reasonably acceptable to Stockholder (an “EV Sale”) or (ii) requiring Stockholder purchase EV from the Company (“EV Transfer”) at or prior to the Closing for a purchase price equal to the EV Proportional Value (as defined below), unless an EV Sale is consummated prior to Closing. For a period of six months commencing immediately following the Closing, Parent may cause the Company to pursue an EV Sale without the consent of Stockholder. In such event, Parent will deliver a notice to such effect to Stockholder, and Stockholder shall have the right to control the sale process of the EV Sale. If the EV Sale or EV Transfer occurs following Closing, Stockholder shall indemnify the Company for any Taxes resulting from such sale or transfer, as if such sale or transfer was consummated prior to Closing, taking into account the Company’s basis in EV at the actual time of sale. Stockholder and Parent will use commercially reasonable efforts to cooperate with any EV Sale or EV Transfer.
(b) If the aggregate proceeds to the Company in an EV Sale is less than an amount equal to the product of eight multiplied by EBITDA for EV for the last twelve months immediately prior to the EV Sale (which in no event shall be less than the amount set forth in Schedule 5.26(b) of the Stockholder Disclosure Schedule) (the “EV Proportional Value”), Stockholder will pay to the Company the amount of any such deficiency promptly after consummation thereof. If the Company has not consummated an EV Sale within 180 days after Parent delivers a notice requesting an EV Sale,

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the Company will have the right to sell EV to Stockholder for an aggregate cash purchase price equal to the EV Proportional Value. In connection with an EV Sale or EV Transfer, neither the Company nor any of its Subsidiaries will be obligated to incur any Liabilities.
Section 5.27 Stockholder Contracts. (a) Assignment. On or prior to Closing, the Stockholder shall and shall cause its Affiliates (other than the Companies) to assign, transfer, convey and deliver to the Company or one of its Subsidiaries, and Company or one of its Subsidiaries, as applicable, shall accept from the Stockholder and its Affiliates, as applicable, all right, title and interest in and under all Stockholder Contracts other than any IP Agreements (which are separately covered under Section 5.25) (collectively the “Transferred Stockholder Contracts”).
(b) Closing Deliveries. At the Closing, Stockholder shall deliver, or cause to be delivered, to Parent an assignment and assumption agreement, in the form and substance reasonably acceptable to Stockholder and Parent, as may be necessary to effect the assignment, transfer, conveyance and delivery to the Company of the Transferred Stockholder Contracts.
(c) Consent and Work Around. In the case of any Stockholder Contracts that are not by their terms or by applicable Law assignable or transferable, Stockholder shall, and shall cause it Affiliates, to use reasonable best efforts to obtain, or cause to be obtained, on or prior to the Closing, any consents, approvals, waivers, authorizations, notices and filings from or with a Government Entity or third party necessary to assign or transfer to the Company or any of its Affiliates the benefit thereof. The Company or an Affiliate of the Company shall reasonably cooperate with Stockholder in such manner as may be reasonably requested in connection therewith. In the event any consents, approvals, waivers, authorizations, notices and filings from or with a Government Entity or third party to an assignment or transfer contemplated hereby is not obtained on or prior to the Closing Date, Stockholder shall continue to use Reasonable Best Efforts to obtain any such any consents, approvals, waivers, authorizations, notices and filings from or with a Government Entity or third party after the Closing Date for a period of six (6) months from the Closing Date or until such time as such any consents, approvals, waivers, authorizations, notices and filings from or with a Government Entity or third party has been obtained or made or it shall become reasonably apparent that such consent or approval is not forthcoming, whichever is shorter, and Stockholder agrees, and agrees to cause its applicable Affiliates, to enter into any appropriate and economically feasible arrangement (a “Work-around”) to provide that the Company or its Affiliate, as applicable, shall receive Stockholder’s (or its Affiliates) interest in the benefits under any such Stockholder Contract, provided that the Company or its Subsidiaries shall undertake to pay or satisfy the corresponding Liabilities for the enjoyment of such benefit to the extent the Company or its Subsidiary would have been responsible therefor if such any consents, approvals, waivers, authorizations, notices and filings from or with a Government Entity or third party had been obtained, in which case such Stockholder Contract will be treated as a Stockholder Contract for all purposes hereunder to the extent of such Work-around. No Stockholder Contract shall be deemed a Transferred Stockholder Contract hereunder unless and until any required any consents, approvals, waivers, authorizations, notices and filings from or with a Government Entity or third party has been obtained or made, except to the extent that a Work-around has been implemented.
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to the Obligations of the Parties. The obligations of Stockholder and the Company, on the one hand, and Parent and Merger Sub, on the other hand, to effect the Closing are subject to the satisfaction (or waiver) prior to the Closing of the following conditions:
(a) HSR Act and other Competition Laws. The waiting periods applicable to the consummation of the Transactions under the HSR Act shall have expired or been terminated and the consents, notices, reports and other filings required to be made or obtained in connection with the Transaction at or prior to the Closing under other competition Laws shall have been made or obtained.
(b) No Prohibition; Other Matters. No Government Entity shall have commenced any legal action or proceeding against Stockholder or Parent or their respective Affiliates to enjoin or otherwise prohibit the consummation of the Transactions, which legal action or proceeding has a reasonable probability of succeeding on the merits. No Law shall be in effect enjoining or otherwise prohibiting the consummation of the Transactions.

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(c) Consents and Approvals. All Stockholder Required Approvals and all Parent Required Approvals shall have been obtained.
(d) Company Stockholder Approval. This Agreement and the Merger shall have been approved and adopted by the requisite vote of the Company’s stockholders in accordance with the CGCL and the Company Articles and Company By- laws.
(e) Financing. Merger Sub shall receive sufficient cash in order to fund the Closing Payment (without regard to Estimated Closing Working Capital Adjustment), the Pre-Closing Dividend, the Stockholder Transaction Expenses and the Parent Transaction Expenses.
Section 6.2 Conditions to the Obligations of Parent and Merger Sub. The obligation of Parent and Merger Sub to effect the Closing is subject to the satisfaction (or waiver) prior to the Closing of the following conditions:
(a) Representations and Warranties. Each of the representations and warranties of Stockholder (i) set forth in this Agreement (other than those in Sections 3.1, 3.2, and 3.5) shall be true and correct, without giving effect to any limitation as to any materiality, Material Adverse Effect (or similar) qualifiers set forth therein, as of the date hereof and as of the Closing as if made on and as of the Closing (except for such representations and warranties that are made as of a specific date, which shall speak only as of such date); it being understood that any materiality limitations that describe the contents of a Schedule (A) shall not be disregarded for the purposes of the matters required to be disclosed thereon and (B) shall not be disregarded for the purposes of the Historical Financial Statements and fairly representing the financial condition and results of operations and cash flows of any entity or business; provided that notwithstanding anything herein to the contrary, the condition set forth in this Section 6.2(a)(i) shall be deemed to have been satisfied even if such representations and warranties of Stockholder are not so true and correct, unless the failure of such representations and warranties of Stockholder to be so true and correct would, individually or in the aggregate, have a Material Adverse Effect; and (ii) set forth in Sections 3.1, 3.2, and 3.5 shall be true and correct in all material respects as of the date hereof and as of the Closing as if made on and as of the Closing (except for such representations and warranties that are made as of a specific date, which shall speak only as of such date) without giving effect to any limitation as to materiality or Material Adverse Effect (or similar) qualifiers set forth therein.
(b) Covenants. Each of the covenants and agreements of Stockholder or the Company to be performed on or prior to the Closing shall have been duly performed in all material respects.
(c) Ancillary Agreements. Stockholder and the Company shall have executed and delivered the Ancillary Agreements and the other documents required by Section 2.7 to which it is a party or signatory.
(d) Certificate. Parent shall have received a certificate, signed by a duly authorized officer of Stockholder and dated the Closing Date, to the effect that the conditions set forth in Section 6.2 have been satisfied.
(e) Adjusted EBITDA. Adjusted EBITDA for the four (4) most recent full fiscal quarters ending at least 45 days prior to the Closing Date shall not be less than $109,523,810.00; provided, however, that if the EV Sale or EV Transfer has not occurred prior to Closing, the Adjusted EBITDA shall be adjusted accordingly.
(f) Internal Reorganization. The Stockholder and its Affiliates shall have consummated all the transactions contemplated as part of the Internal Reorganization to the extent any such transactions were not consummated prior to the date hereof.
(g) Master Services Agreement. (i) Stockholder shall have delivered to Parent (x) the Anti-Spam and Anti-Virus Management Services Addendum between the Company and Banco Popular North America entered into under the 2004 Master Services Agreement and (y) each of the statements of work currently in effect that were executed by the Company and Stockholder or its Affiliates under the 2004 Master Services Agreement; and (ii) Stockholder shall have delivered an amendment to each service addendum and statement of work entered into under the 2004 Master Services Agreement to (x) extend the duration of such addendum so that it is coterminous with the Master Services Agreement (or, in the case of an addendum relates to a definitive project, the time necessary to complete such project (as agreed by Parent and Stockholder)) and (y) delete any termination without cause or termination for convenience provision.
(h) Absence of Material Adverse Effect. Since the date hereof, there shall have been no Material Adverse Effect and no event, circumstance or condition shall exist which has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, including an IP MAE.

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Section 6.3 Conditions to the Obligations of Stockholder and the Company.
The obligation of Stockholder and the Company to effect the Closing is subject to the satisfaction (or waiver) prior to the Closing (or in the case of clause (d), simultaneously with the Closing) of the following conditions:
(a) Representations and Warranties. Each of the representations and warranties of Parent or Merger Sub (i) set forth in this Agreement that is qualified by a materiality (or similar) qualifier shall be true and correct as of the date hereof and as of the Closing as if made on and as of the Closing and (ii) contained in this Agreement that is not qualified by materiality (or similar) qualifier shall be true and correct in all material respects as of the date hereof and as of the Closing as if made on and as of the Closing.
(b) Covenants. Each of the covenants and agreements of Parent or Merger Sub to be performed on or prior to the Closing shall have been duly performed in all material respects.
(c) Ancillary Agreements. Parent and Merger Sub shall have executed and delivered the Ancillary Agreements and the other documents required by Section 2.6 to which it is a party or signatory.
(d) Certificate. Stockholder and the Company shall have each received a certificate, signed by a duly authorized officer of Parent and dated the Closing Date, to the effect that the conditions set forth in Sections 6.3(a) and 6.3(b) have been satisfied.
ARTICLE VII
SURVIVAL; INDEMNIFICATION; CERTAIN REMEDIES
Section 7.1 Survival. The representations and warranties of Stockholder and Parent or Merger Sub contained in this Agreement shall survive the Closing for the period set forth in this Section 7.1. All representations and warranties set forth in this Agreement and all claims with respect thereto shall terminate on April 1, 2012, except that (i) the representations and warranties contained in Sections 3.1, 3.2, 3.3, 3.4(i), 3.5, 3.15(a), 3.21(a) (other than the final sentence thereof),(c) and (d), 3.26(a) and (b), 4.1, 4.2, 4.3, 4.4(i), 4.5 and 4.11 (the “Fundamental Representations”) shall survive forever, (ii) the representations and warranties contained in Section 3.18 shall expire 90 days following the expiration of the applicable statute of limitations (iii) the representations and warranties contained in Section 3.14 and 3.25 (the “Extended Survival Representations”) shall expire on April 1, 2013 and (iv) any representation or warranty, and any Liability with respect thereto, that would otherwise terminate in accordance with this Section 7.1 shall continue to survive if a notice of a claim for a breach or inaccuracy of such representation or warranty shall have been timely given under this Article VII on or prior to such termination until such claim has been satisfied or otherwise resolved as provided in this Article VII, but only with respect to such claim.
Section 7.2 Indemnification by Stockholder. (a) Stockholder hereby agrees that from and after the Closing it shall indemnify, defend and hold harmless Parent and its Affiliates and their respective directors, officers, stockholders (other than Stockholder or any of its Affiliates in the case of the stockholders of the Companies after the Closing), partners, members and employees (other than the Applicable Employees) and their heirs, successors and permitted assigns, each in their capacity as such (the “Parent Indemnified Parties,” and collectively with the Stockholder Indemnified Parties, the “Indemnified Parties”) from, against and in respect of any damages, losses, charges, Liabilities, claims, demands, actions, suits, proceedings, payments, judgments, settlements, assessments, deficiencies, Taxes, interest, penalties, and costs and expenses, including fines and penalties (including reasonable attorney’s fees and expenses) (collectively, “Losses”) imposed on, sustained, incurred or suffered by, or asserted against, any of the Parent Indemnified Parties, whether in respect of third-party claims, claims between the Parties, or otherwise, directly or indirectly relating to or arising out of (i) subject to Section 7.2(b), any breach or inaccuracy of any representation or warranty made by Stockholder contained in this Agreement for the period such representation or warranty survives, (ii) any material breach of any covenant or agreement of Stockholder contained in this Agreement, (iii) any material breach of any covenant or agreement of the Company occurring on or prior to the Closing, (iv) any Taxes for which Stockholder is responsible in accordance with Section 5.4, (v) any Liability to the extent resulting from any Company being an Affiliate of Stockholder, any Selling Party or their respective Affiliates, (vi) any Losses arising out of or resulting from the transactions contemplated by the Internal Reorganization Documents, (vii) any Liability to the extent arising out of or resulting from pre-Closing acts or failures of fiduciary responsibilities of any director or officer of any Company to the extent insured under Stockholder’s insurance existing as of the date hereof, (viii) any Losses arising out of or related to the GM Group Obligations, any payments arising out of or related to any of the obligations set forth on Schedule

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7.2 or the existing ownership of any equity interest in Evertec/Latam by any party other than PIBI, Popular or the Company or any rights of first refusal by any equity owner thereof, (ix) any violations of International Trade Law, the BSA or U.S. Export Control Laws committed by the Companies from and after May 1, 2005 through the Closing, and (x) any Loss arising out of or relating to (A) the failure of (i) a Transferred Stockholder IP Agreement to be assigned, transferred, conveyed and delivered at the Closing, or (ii) the Stockholder to establish for the Companies an Equivalent IP Arrangement that enables the Companies to engage in the Baseline Usage after Closing as set forth in Section 5.25(d), and (B) the third party licensor under any Transferred Stockholder IP Agreement or any Unassigned License Agreement asserts a claim of infringement against the Companies with respect to the Baseline Usage occurring during the Relevant Period; provided that, the foregoing indemnification obligation will not apply with respect to any Baseline Usage for which the Companies decline to accept a Transferred Stockholder IP Agreement or Equivalent IP Arrangement, that would, if accepted, render such usage non-infringing. Notwithstanding anything else to the contrary in this Article VII, any indemnification by Stockholder of the Parent Indemnified Parties shall be without duplication as between Parent and the Companies (and their respective directors, stockholders (other than Stockholder or any of its Affiliates in the case of the Companies after the Closing), partners, members and employees), including, for illustrative purposes, that Stockholder shall not be required to also indemnify Parent with respect to Losses incurred with respect to a diminution in value of its Shares on or after the Closing in the event that the Company has been indemnified by Stockholder pursuant to this Agreement with respect to the facts giving rise to a claim of indemnification hereunder and vice versa.
(b) Except with respect to fraud, willful misconduct and any breach or inaccuracy of any Fundamental Representation and the Extended Survival Representations, from and after the Closing Stockholder shall not be liable to the Parent Indemnified Parties for any Losses with respect to the matters referred to in Section 7.2(a)(i) with respect to any individual claim or related claims unless such claim or claims, as applicable, involve Losses in excess of $10,000 (and such item or related items involving Losses equal to or less than $10,000 shall not be applied or consolidated for calculating the Deductible or the Cap), and unless the Losses therefrom exceed an aggregate amount equal to $5,000,000 (the “Deductible”) and then only for Losses in excess of that amount and up to an aggregate amount equal to $100,000,000 (the “Cap”). Notwithstanding the foregoing, this Section 7.2(b) does not apply to indemnification obligations directly or indirectly relating to or arising out of any breach or inaccuracy of any representation and warranty under any of the Fundamental Representations, the Extended Survival Representations, or to Stockholder’s indemnification obligation set forth in Section 5.4.
Section 7.3 Indemnification by Parent. (a) Parent and the Company hereby agree that from and after the Closing they shall, jointly and severally, indemnify, defend and hold harmless Stockholder, its Affiliates and their respective directors, officers, stockholders, partners, members and employees and their heirs, successors and permitted assigns, each in their capacity as such (the “Stockholder Indemnified Parties”) from, against and in respect of any Losses imposed on, sustained, incurred or suffered by, or asserted against, any of the Stockholder Indemnified Parties, whether in respect of third-party claims, claims between the Parties, or otherwise, directly or indirectly relating to, arising out of or resulting from, (i) subject to Section 7.3(b), any breach or inaccuracy of any representation or warranty made by Parent contained in this Agreement for the period such representation or warranty survives, (ii) any material breach of a covenant or agreement of Parent contained in this Agreement, and (iii) any material breach of any covenant or agreement of the Company occurring after the Closing.

(b) Except with respect to fraud, willful misconduct and any breach or inaccuracy of any Fundamental Representation, from and after the Closing Parent and the Company shall not be liable to the Stockholder Indemnified Parties for any Losses with respect to the matters referred to in Section 7.3(a)(i), with respect to any individual claim or related claims unless such claim or claims, as applicable, involve Losses in excess of $10,000 (and such item or related items involving Losses equal to or less than $10,000 shall not be applied or consolidated for calculating the Deductible or the Cap), and unless the Losses therefrom exceed the Deductible and then only for Losses in excess of that amount and up to the Cap. Notwithstanding the foregoing, this Section 7.3(b) does not apply to indemnification obligations directly or indirectly relating to or arising out of any breach or inaccuracy of any of the Fundamental Representations.
Section 7.4 Indemnification by the Company. The Company hereby agrees that from and after the Closing it shall indemnify, defend and hold harmless the Stockholder Indemnified Parties from, against and in respect of any Losses imposed on, sustained, incurred or suffered by, or asserted against, any of the Stockholder Indemnified Parties, whether in respect of Third-Party Claims, claims between the Parties, or otherwise, directly or indirectly relating to, arising out

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of or resulting from (i) any material breach of any covenant or agreement of the Company set forth in Sections 5.1, 5.5, 5.6, 5.7 and 5.9 occurring after the Closing, (ii) the Company Liabilities and (iii) the Business Assets, the Business or the Applicable Employees to the extent attributable to the operation or ownership of the Business Assets or the Business or the employment of the Applicable Employees, in each case, following the Closing.
Section 7.5 Third-Party Claim Indemnification Procedures. (a) In the event that any written claim or demand for which an indemnifying Party (an “Indemnifying Party”) may have liability to any Indemnified Party hereunder is asserted against or sought to be collected from any Indemnified Party by a third party (a “Third-Party Claim”), such Indemnified Party shall promptly, but in no event more than 15 days following such Indemnified Party’s receipt of a Third-Party Claim, notify the Indemnifying Party in writing of such Third-Party Claim, the amount or the estimated amount of damages sought thereunder to the extent then ascertainable (which estimate shall not be conclusive of the final amount of such Third-Party Claim), any other remedy sought thereunder, any relevant time constraints relating thereto and, to the extent practicable, any other material details pertaining thereto (a “Claim Notice”); provided that the failure to give a timely Claim Notice shall affect the rights of an Indemnified Party hereunder only to the extent that such failure has a prejudicial effect on the defenses or other rights available to the Indemnifying Party with respect to such Third-Party Claim. The Indemnifying Party shall have 30 days (or such lesser number of days set forth in the Claim Notice as may be required by Legal Proceeding in the event of a litigated matter) after receipt of the Claim Notice (the “Notice Period”) to notify the Indemnified Party that it desires to defend the Indemnified Party against such Third-Party Claim; provided that in order to assume the defense of such Third-Party Claim, the Indemnifying Party in a writing signed by such Indemnifying Party agrees to be responsible for a substantial portion of such Losses relating to such Third-Party Claim and that the Indemnifying Party will provide indemnification to the Indemnified Party with respect to such substantial portion of the Losses relating to the Third Party Claim.
(b) In the event that the Indemnifying Party notifies the Indemnified Party within the Notice Period that it desires to defend the Indemnified Party against a Third-Party Claim, the Indemnifying Party shall have the right to defend the Indemnified Party by appropriate Legal Proceedings and shall have the sole power to direct and control such defense at its expense. Once the Indemnifying Party has duly assumed the defense of a Third-Party Claim, the Indemnifying Party shall defend such Third-Party Claim. The Indemnified Party may participate in any such defense at its expense; provided that such Indemnified Party shall be entitled to participate in any such defense with separate counsel at the reasonable expense of the Indemnifying Party if (i) representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them or (ii) the Indemnified Party assumes the defense of a Third-Party Claim after the Indemnifying Party has failed to diligently pursue a Third-Party Claim it has assumed, as provided in the first sentence of Section 7.5(c). The Indemnifying Party shall not, without the prior written consent of the Indemnified Party (such consent not to be unreasonably withheld or delayed), settle, compromise or offer to settle or compromise any Third-Party Claim on a basis that would result in (i) the imposition of a consent Order, injunction or decree that would materially restrict the future activity or conduct of the Indemnified Party or any of its Affiliates, (ii) a finding or admission of a violation of Law by the Indemnified Party or any of its Affiliates, (iii) a finding or admission that would have a Material Adverse Effect on other claims made or threatened against the Indemnified Party or any of its Affiliates or (iv) any monetary liability of the Indemnified Party that will not be promptly paid or reimbursed by the Indemnifying Party.
(c) If the Indemnifying Party (i) elects not to defend the Indemnified Party against a Third-Party Claim, whether by not giving the Indemnified Party timely notice of its desire to so defend or otherwise, (ii) is not entitled to defend the Third-Party Claim as a result of the Indemnified Party’s election to defend the Third-Party Claim as provided in Section 7.5(b) or (iii) after assuming the defense of a Third-Party Claim, fails to take reasonable steps necessary to defend diligently such Third-Party Claim within ten days after receiving written notice from the Indemnified Party to the effect that the Indemnifying Party has so failed, the Indemnified Party shall have the right but not the obligation to assume its own defense; it being understood that the Indemnified Party’s right to indemnification for a Third-Party Claim shall not be adversely affected by assuming the defense of such Third-Party Claim in such circumstance. The Indemnified Party shall not settle a Third-Party Claim without the consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
(d) The Indemnified Party and the Indemnifying Party shall cooperate in order to ensure the proper and adequate defense of a Third-Party Claim, including by providing access to each other’s relevant business records and other documents, and employees.

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(e) The Indemnified Party and the Indemnifying Party shall use reasonable best efforts to avoid production of confidential information (consistent with applicable Law), and to cause all communications among employees, counsel and others representing any party to a Third-Party Claim to be made so as to preserve any applicable attorney-client or work-product privileges.
Section 7.6 Direct Claims. If an Indemnified Party wishes to make a claim for indemnification hereunder for a Loss that does not result from a Third-Party Claim (a “Direct Claim”), the Indemnified Party shall notify the Indemnifying Party in writing of such Direct Claim, the amount or the estimated amount of damages sought thereunder to the extent then ascertainable (which estimate shall not be conclusive of the final amount of such Direct Claim), any other remedy sought thereunder, any relevant time constraints relating thereto and, to the extent practicable, any other material details pertaining thereto. The Indemnifying Party shall have a period of 30 days within which to respond to such Direct Claim. In the event that the Indemnifying Party does not deliver a response within such 30 day period, the Indemnifying Party shall be deemed to have accepted the Direct Claim and agreed that the amount or estimated amount of Losses shall be promptly paid by the Indemnifying Party. If the Indemnifying Party rejects all or any part of the Direct Claim, the Indemnified Party shall be free to seek enforcement of its rights to indemnification under this Agreement with respect to such Direct Claim.
Section 7.7 Consequential Damages. Notwithstanding anything to the contrary contained in this Agreement, no Person shall be liable under this Article VII for (i) any Losses that are not direct, actual damages or (ii) any punitive, special or speculative damages, in each case, unless such Losses are paid pursuant to a Third-Party Claim.
Section 7.8 Adjustments to Losses. (a) Insurance. In calculating the amount of any Loss, the proceeds actually received by the Indemnified Party or any of its Affiliates under any insurance policy or pursuant to any claim, recovery, settlement or payment by or against any other Person in each case relating to the Third-Party Claim or the Direct Claim, net of any actual costs, expenses or premiums (including any increase in premiums exclusively and demonstrably attributable to insurance claims relating to such Loss) incurred in connection with securing or obtaining such proceeds, shall be deducted, except to the extent that the adjustment itself would excuse, exclude or limit the coverage of all or part of such Loss. Each Indemnified Party shall use reasonable best efforts to collect any amounts available under insurance coverage, or from any other Person alleged to be responsible, for any Losses to the same extent that such Indemnified Party would if such Loss were not subject to indemnification hereunder.
(b) Taxes. In calculating the amount of any Loss, there shall be deducted an amount equal to any net Tax benefit actually realized through a reduction in Taxes otherwise due (including the utilization of a Tax loss or Tax credit carried forward) as a result of such Loss by the Party claiming such Loss, and there shall be added an amount equal to any Tax imposed on the receipt of any indemnity payment with respect thereto.
(c) Reimbursement. If an Indemnified Party recovers an amount from a third party in respect of a Loss that is the subject of indemnification hereunder after all or a portion of such Loss has been paid by an Indemnifying Party pursuant to this Article VII, the Indemnified Party shall promptly remit to the Indemnifying Party the excess (if any) of (i) the amount paid by the Indemnifying Party in respect of such Loss, plus the amount received from the third party in respect thereof, less (ii) the full amount of such Loss.
(d) Materiality. For purposes of determining whether a representation, warranty, covenant or agreement has been breached, limitations or qualifications as to dollar amount or materiality or Material Adverse Effect (or similar concept) set forth in such representation, warranty, covenant or agreement shall not be disregarded, but if it is determined that an item, event or other matter creates such a breach, then the amount of any Loss arising from such breach of such representation, warranty, covenant or agreement and related to such item, event or other matter shall be determined without regard to any limitation or qualification as to dollar amount or materiality or Material Adverse Effect (or similar concept) set forth in such representation, warranty, covenant or agreement, it being understood that any materiality limitations (A) that describe the contents of a Schedule shall not be disregarded for purposes of the matters required to be disclosed thereon and (B) shall not be disregarded for purposes of the Historical Financial Statements and fairly representing the financial condition and results of operations and cash flows of any entity or business.
(e) Losses Related to Tax Representations. In connection with any indemnification obligation arising from any breach or inaccuracy or misrepresentation of Section 3.18, any Loss arising from actions taken by the Companies following the Closing to the extent relating to Taxes for the period after the Closing shall be excluded.

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Section 7.9 Payments. The Indemnifying Party shall pay all amounts payable pursuant to this Article VII (the “Indemnity Amount”), by wire transfer of immediately available funds, within a reasonable period of time following receipt from an Indemnified Party of a bill, together with reasonably detailed back-up documentation, for a Loss that is the subject of indemnification hereunder, unless the Indemnifying Party in good faith disputes the Loss, in which event it shall so notify the Indemnified Party. In any event, the Indemnifying Party shall pay to the Indemnified Party an amount in cash equal to the Indemnity Amount by wire transfer of immediately available funds no later than five Business Days following any final determination of the Indemnity Amount and the Indemnifying Party’s liability therefor. A “final determination” shall exist when (i) the parties to the dispute have reached an agreement in writing, (ii) a court of competent jurisdiction shall have entered a final and non-appealable Order or judgment or (iii) an arbitration or like panel shall have rendered a final non-appealable determination with respect to disputes the parties have agreed to submit thereto. Notwithstanding anything to the contrary contained herein, if an indemnity payment is to be made to Parent hereunder for a Loss incurred by the Company, then the amount to be paid to Parent for such Loss will be reduced to take into account Stockholder’s ownership of the Company.
Section 7.10 Characterization of Indemnification Payments. All payments made by an Indemnifying Party to an Indemnified Party in respect of any claim pursuant to Section 7.2, 7.3 or 7.4 shall be treated as adjustments to the Merger Consideration for Tax purposes.
Section 7.11 Mitigation. Each Indemnified Party shall use its reasonable best efforts to mitigate any indemnifiable Loss. In the event an Indemnified Party fails to so mitigate an indemnifiable Loss, the Indemnifying Party shall have no liability for any portion of such Loss that reasonably could have been avoided had the Indemnified Party made such efforts.
Section 7.12 Remedies. (a) Following the Closing, except (a) with respect to a claim to enforce this Article VII, (b) with respect to fraud or willful misconduct or (c) as may be otherwise contemplated by Section 2.3 or 9.1, the rights and remedies of Stockholder, the Company and Parent under this Article VII are exclusive and in lieu of any and all other rights and remedies that Stockholder, the Company and Parent may have under this Agreement or otherwise against each other with respect to the Transactions; provided that for the avoidance of doubt, nothing in this Section 7.12 is intended to limit any rights the parties have under the Ancillary Agreements. The express written waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or agreement, shall foreclose the right to indemnification or other remedy based on such representations, warranties, covenants or agreements.
(b) Notwithstanding anything to the contrary in this Agreement, any Internal Reorganization Agreement or any Ancillary Agreement, to the extent the Company or Parent is entitled to a claim for indemnification hereunder with respect to a set of facts and circumstances and the same or substantially similar facts and circumstances give rise to a claim for indemnification or other remedy (including service credits) by Stockholder or its Affiliates against any of the Companies under the Amended & Restated Master Services Agreement (including Sections 7.1, 7.5(a) and 10 of the Amended & Restated Master Services Agreement, or any other Ancillary Agreement, Internal Reorganization Document, Stockholder and its Representatives shall not be entitled to such indemnification or other remedy under such document.
(c) Stockholder, Parent and the Company agree and acknowledge that none of the debt financing sources (or their affiliates, successors or assigns) shall be liable for any indirect, special, punitive or consequential damages in connection with this Agreement or the transactions contemplated hereby.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at any time prior to the Closing:
(a) by written agreement of Parent, Merger Sub, Stockholder and the Company;
(b) by either Parent or Stockholder, by giving written notice of such termination to the other Parties, if the Closing shall not have occurred on or before December 17, 2010 (the “Termination Date”) so long as the terminating Party is not in material breach of its obligations under this Agreement;

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(c) by Parent or Stockholder if any federal, state or Commonwealth court of competent jurisdiction or other federal, state or Commonwealth Government Entity of competent jurisdiction shall have issued an Order or taken any other action permanently enjoining or otherwise prohibiting the consummation of the transactions contemplated by Section 2.1 and such Order or other action shall have become final and non-appealable;
(d) by Stockholder, by giving written notice of such termination to Parent, if (i) there has been a material breach of the representations, warranties, covenants or agreements of Parent or Merger Sub contained in this Agreement that
(x) would result in the failure of the conditions set forth in Section 6.3(a) or Section 6.3(b) and (y) cannot be cured prior to the Termination Date; provided that Stockholder shall not have the right to terminate this Agreement pursuant to this Section 8.1(d) if Stockholder is then in material breach of any of its representations, warranties, covenants or agreements contained in this Agreement; or
(e) by Parent, by giving written notice of such termination to Stockholder, if there has been a material breach of the representations, warranties, covenants or agreements of Stockholder contained in this Agreement that (i) would result in the failure of the condition set forth in Section 6.2(a) or Section 6.2(b) and (ii) cannot be cured prior to the Termination Date.
(f) Between 7:00 pm on July 29 and 7:00 pm on August 5, 2010, by either Parent or Stockholder if either party shall not be reasonably satisfied with the terms and conditions of the New Service Addenda and the documents referred to in Section 5.17 prior to such time.
Section 8.2 Effect of Termination.
(a) In the event of the termination of this Agreement in accordance with Section 8.1, this Agreement shall thereafter become void and have no effect, and no Party shall have any liability to any other Party or their respective Affiliates, or their respective directors, officers or employees, except for the obligations of the Parties contained in this Section 8.2 and in Sections 9.2, 9.5, 9.7, 9.8, 9.9, 9.10, 9.11, 9.13 and 9.14 (and any related definitional provisions set forth in Article I), as applicable, and except that nothing in this Section 8.2(a) shall relieve any Party from liability for any breach of this Agreement that arose prior to such termination, for which liability the provisions of Article VII shall remain in effect in accordance with the provisions and limitations of such Article.
(b) In the event that this Agreement is terminated (i) pursuant to Section 8.1(b), at such time all the conditions set forth in Section 6.1 (other than Section 6.1(e)) and Section 6.2 (other than Section 6.2(c) to the extent that forms of Ancillary Agreements to be finalized pursuant to Sections 5.17 and 5.18 have been agreed between Parent and Stockholder, and it being understood that for purposes of Section 6.2(d), such certificate may be delivered within three Business Days following such termination as if the date of such termination was the Closing Date) shall have been satisfied and the Debt Financing shall not have been consummated or (ii) after September 1, 2010, pursuant to Section 8.1 (d) in connection with a material breach of a material representation, warranty or covenant or other agreement set forth in this Agreement that is a consequence of an act by Parent or Merger Sub with the actual knowledge that the taking of such act would cause a breach of this Agreement (a “Willful Breach”), then Parent shall pay or cause to be paid, by wire transfer of immediately available funds, $30 million (the “Parent Termination Fee”) to Stockholder no later than two Business Days after termination of this Agreement pursuant to Section 8.1(b). The right to so terminate and receive such Parent Termination Fee (and reimbursement of such costs and expenses and payment of interest as provided for in this Section 8.2(b)) and the guarantee thereof pursuant to the Guarantee shall be the sole and exclusive remedy of Stockholder and its Affiliates following any termination of this Agreement in accordance with its terms as against Parent, Merger Sub, the Guarantor and any of their respective former, current and future direct or indirect equity holders, controlling persons, stockholders, directors, officers, employees, agents, Affiliates, members, financing sources (including the parties to the Debt Financing Letters and their affiliates, successors and assigns), managers, general or limited partners or assignees (each a “Released Related Party” and collectively, the “Released Related Parties”); provided that, nothing herein shall limit, prior to the termination of this Agreement in accordance with its terms, the ability of any party hereto to seek specific performance under this Agreement. Upon payment of such amount, no Person shall have any rights or claims against any of the Released Related Parties or any Released Related Party of any Released Related Party under this Agreement, the Guarantee, the Equity Commitment Letter or otherwise, whether at law or equity, in contract, in tort or otherwise, and none of the Released Related Parties or any Released Related Party of any Released Related Party shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated by this Agreement. In no event shall the Company or Parent be entitled to seek the remedy of specific performance of this Agreement other than solely under the specific circumstances and as specifically set

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forth in Section 9.1. Notwithstanding anything herein to the contrary, if Parent or Merger Sub makes a bona fide written proposal to Stockholder for alternate financing of the cash amounts required to consummate the Transactions consistent with Section 5.11(e), which proposal may include debt or equity financing to be provided by Affiliates of Parent or by a third party, and Stockholder does not accept such proposal within 3 Business Days after the proposal is made, then no Parent Termination Fee will be payable hereunder.
(c) Parent acknowledges that the agreements contained in this Section 8.2 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Stockholder would not enter into this Agreement. Accordingly, if Parent fails to promptly pay the amounts due pursuant to this Section 8.2 and, in order to obtain such payment, Stockholder commences a suit that results in a judgment against Parent for the Parent Termination Fee or any portion thereof, Parent shall pay to Stockholder interest on the amount of the Parent Termination Fee or portion thereof ordered to be paid by a court at a rate per annum equal to 5% from the date such payment was required to be made through the date of payment of the Parent Termination Fee.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Specific Performance. The Parties agree that irreparable damage would occur and no adequate remedy at law would exist in the event that any of the covenants or agreements (including Parent’s and Merger Sub’s obligation to effect the Closing) contained in this Agreement are not performed in accordance with their specific terms or are otherwise breached. It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of any covenants or agreements contained in this Agreement and to enforce specifically any terms and provisions of this Agreement in the Chosen Courts, this being in addition to any other remedy to which such Party is entitled at law or in equity. Notwithstanding anything to the contrary contained herein, Stockholder hereby acknowledges and agrees that it shall not have any right to enforce specifically the obligation of Parent and Merger Sub to effect the Closing in the event that the Parent Termination Fee is payable by Parent pursuant to Section 8.2(b) hereof. Notwithstanding anything to the contrary contained herein, Stockholder hereby acknowledges and agrees that it shall not have the right to specifically enforce the obligation of Parent and Merger Sub to effect the Closing unless the Debt Financing has been funded or will be funded at Closing if the Equity Financing is funded at Closing.
Section 9.2 Notices. All notices and communications hereunder shall be deemed to have been duly given and made if in writing and if served by personal delivery upon the Party for whom it is intended or delivered by registered or certified mail, return receipt requested, or if sent by telecopier or email; provided that the telecopy or email is promptly confirmed by telephone confirmation thereof, to the Person at the address set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such Person:
To Parent or Merger Sub:
AP Carib Holding, Ltd.
c/o Apollo Management
VII, L.P. 9 West 57th Street, 43rd Floor
New York, New York 10019
Telephone:         (212) 515-3202
Email:         becker@apollolp.com
Attention:         Marc Becker
with a copy (which shall not constitute notice) to:
Akin Gump Strauss Hauer & Feld LLP
One Bryant Park
New York, New York 10036
Telephone:         (212) 872-8112
Telecopy:         (212) 872-1002
Email:         aweinstein@akingump.com
Attention:         Adam Weinstein, Esq.


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To Stockholder:
Popular, Inc.
209 Ave. Muñoz Rivera
Hato Reyes, Puerto Rico 00918
Telephone: (787) 758-7208
Telecopy: (787) 754-4984
Email: rcarrion@bppr.com
Attention: Richard L. Carrión
CEO & President
copy to: Ignacio Alvarez, Esq.
Executive Vice President &
General Counsel igalvarez@bppr.com
with copies to:
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Telecopy: (212) 291-9156
Email: toumeyd@sullcrom.com
Attention: Donald J. Toumey

To the Company:
Evertec, Inc.
Carr #176, Km 1.3
Cupey Bajo, Rio Piedras Puerto Rico 00926
P.O. Box 364527
San Juan, Puerto Rico 00936-4527
Telephone: (787) 759-9999
Telecopy: (787) 250-7356
Email: fvillamil@evertecinc.com
Attention: Felix Villamil President
Copy to: Luisa Wert, Esq.
lwert@evertecinc.com
with copies to each of Parent and Stockholder as set forth above.
Section 9.3 Amendment; Waiver. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Parent, Merger Sub, the Company and Stockholder, or in the case of a waiver, by the Party against whom the waiver is to be effective. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law except as otherwise specifically provided in Article VII.
Section 9.4 No Assignment or Benefit to Third Parties. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, legal representatives and permitted assigns. No Party may assign any of its rights or delegate any of its obligations under this Agreement without the prior written consent of each other Party, except as provided in Section 9.6, and any purported assignment or delegation in violation hereof shall be null and void; provided, however, that (i) Parent shall be permitted, without the consent of Stockholder or the Company, to assign any of its rights and obligations under this Agreement to any of its Subsidiaries or Affiliates or to any financing source for security purposes, and the enforcement of all rights and remedies that Parent has against Stockholder or the Company; provided that, notwithstanding any such assignment, Parent shall remain responsible for all of its obligations pursuant to this Agreement. Nothing in this Agreement, express or implied, is intended to confer upon any Person other than Parent, Merger Sub, Stockholder, the Company, the Indemnified Parties, the Released Related Parties or any

61


Released Related Party of a Released Related Party and their respective successors, legal representatives and permitted assigns any rights or remedies under or by reason of this Agreement.
Section 9.5 Entire Agreement. This Agreement (including all Schedules and Exhibits hereto), and the Ancillary Agreements contain the entire understanding between the Parties with respect to the subject matter hereof and thereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters, except for the Confidentiality Agreement.
Section 9.6 Fulfillment of Obligations. Any obligation of any Party to any other Party under this Agreement, or any of the Ancillary Agreements, which obligation is performed, satisfied or fulfilled completely by an Affiliate of such Party, shall be deemed to have been performed, satisfied or fulfilled by such Party.
Section 9.7 Public Disclosure. Notwithstanding anything to the contrary contained herein, from and after the date hereof, no press release or similar public announcement or communication shall be made or caused to be made relating to this Agreement or the Transactions unless specifically approved in advance by Stockholder and Parent, except as may be required to comply with the requirements of any applicable Law and the rules and regulations of any applicable Self- Regulatory Organization (in which case a copy of such press release, announcement or communication shall be provided to the other Parties in advance, to the extent reasonably practicable) , in which case the party required to make the release or announcement shall use its reasonable best efforts to allow the other party reasonable time to comment on such release or announcement in advance of such issuance.
Section 9.8 Expenses. Except as otherwise expressly provided in this Agreement or any Ancillary Agreement, whether or not the Transactions are consummated, all costs and expenses incurred in connection with this Agreement and the Transactions shall be borne by the Party incurring such costs and expenses. The Company shall pay or reimburse all the Parent Transaction Expenses and the Stockholder Transaction Expenses.
Section 9.9 Personal Liability. This Agreement shall not create or be deemed to create or permit any personal liability or obligation on the part of any stockholder, director, officer, employee, authorized representative or agent of Parent or Stockholder.
Section 9.10 Schedules. The disclosure of any matter in the Stockholder Disclosure Schedule with respect to Article III or in the Parent Disclosure Schedule with respect to Article IV shall be deemed to be a disclosure on all other Schedules to Article III or Article IV, respectively, to which such matter may reasonably apply so long as such disclosure is in sufficient detail to enable a reasonable person to identify the other Sections thereof to which such information is responsive.
Section 9.11 Governing Law; Submission to Jurisdiction; Selection of Forum; Waiver of Trial by Jury. Except for the mechanics of the Merger that shall be governed and construed in accordance with the Commonwealth Law, this Agreement shall be governed and construed in accordance with the Laws of Delaware, in each case without regard to any conflict of law rules of the Commonwealth or Delaware, as the case may be, that would apply the laws of a different jurisdiction. Each Party agrees that it shall bring any action or Legal Proceeding in respect of any claim arising out of or related to this Agreement or the Transactions or involving any Released Related Party or any Released Related Party of a Released Related Party, exclusively in any federal court located in the State of Delaware or any Delaware state court (the “Chosen Courts”), and solely in connection with claims arising under this Agreement or the Transactions or involving any Released Related Party or any Released Related Party of a Released Related Party (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action or Legal Proceeding in the Chosen Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any Party or Released Related Party or any Released Related Party of a Released Related Party and (iv) agrees that service of process upon such Party in any such action or Legal Proceeding shall be effective if notice is given in accordance with Section 9.2. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION PERMITTED UNDER THIS SECTION 9.11. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND

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HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
Section 9.12 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.
Section 9.13 Headings. The heading references herein and the table of contents hereof are for convenience purposes only, and shall not be deemed to limit or affect any of the provisions hereof.
Section 9.14 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (i) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (ii) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction; provided, however, if any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be reformed by limiting and reducing it to the minimum extent necessary, so as to be enforceable to the extent compatible with the applicable Law.
Section 9.15 Reliance. Each party hereto shall be entitled to rely upon, and shall be deemed to have relied upon, all representations, warranties and covenants of each other party set forth in this Agreement that have been or are made in favor of such party, notwithstanding any investigation or examination conducted with respect to, or any knowledge acquired (or capable of being acquired) about the accuracy or inaccuracy of or compliance with, any representation, warranty, covenant, agreement, undertaking or obligation made by or on behalf of the parties hereto.
IN WITNESS WHEREOF, the Parties have executed or caused this Agreement to be executed as of the date first written above.
POPULAR, INC.
By: /s/ Jorge A. Junquera
Name: Jorge A. Junquera
Title: Senior Executive Vice President

EVERTEC, INC
By: /s/ Felix M. Villamil
Name: Felix M. Villamil
Title: President

AP CARIB HOLDINGS, LTD.
By: Apollo Management VII, L.P., its sole director
By: AIF VII Management, LLC, its general partner
By: /s/ Mark Becker
Name: Mark Becker
Title: Vice President

CARIB ACQUISITION, INC.
By: /s/ Scott Ross
Name: Scott Ross
Title: Secretary and Treasurer

63

EXHIBIT 2.2

AMENDMENT TO AGREEMENT AND PLAN OF MERGER BY AND AMONG
POPULAR, INC., AP CARIB HOLDINGS, LTD., CARIB ACQUISITION, INC.
AND EVERTEC, INC.

This Amendment, dated August 5, 2010 (this “Amendment”), amends the Agreement and Plan of Merger, dated as of 11:59 P.M., June 30, 2010, among (i) Popular, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (“Stockholder”), (ii) AP Carib Holdings, Ltd., an exempted company organized under the laws of the Cayman Islands with limited liability (“Parent”), (iii) Carib Acquisition, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (“Merger Sub”) and (iv) EVERTEC, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (the “Company”) (as so amended, the “Agreement”). Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to them in the Agreement.

WHEREAS, the parties hereto desire to amend the Agreement pursuant to Section 9.3 thereof.

NOW, THEREFORE, in consideration of the premises, the mutual agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1.Section 8.1(f) of the Agreement shall be amended and restated in its entirety to read as follows:

“(f) Between 7:00 pm on Thursday, August 5, 2010 and 7:00 pm on Sunday, August 8, 2010, by either Parent or Stockholder if either party shall not be reasonably satisfied with the terms and conditions of the New Service Addenda and the documents referred to in Section 5.17 prior to such time.”

2.Except as specifically amended by this Amendment, the Agreement shall remain in full force and effect and is hereby ratified and confirmed. This Amendment shall be construed as one with the Agreement, and the Agreement shall, where the context requires, be read and construed so as to incorporate this Amendment.

3.This Amendment shall be governed by and construed in accordance with the Agreement.

4.This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same agreement.


















[Signature page follows]

1




IN WITNESS WHEREOF, the parties have executed or caused this Amendment to be executed as of the date first written above.


POPULAR, INC.
By: /s/ Richard Carrión Rexach
Name:
Title:
EVERTEC, INC.
By: /s/ Richard Carrión Rexach
Name:
Title:
AP CARIB HOLDINGS, LTD.
By: Apollo Management VII, L.P., its sole director
By: AIF Management LLC, its general partner
By: /s/ Marc Becker
Name:
Title:
CARIB ACQUISITION, INC.
By: /s/ Marc Becker
Name:
Title:














[Signature Page of Amendment to Merger Agreement]

2


EXHIBIT 2.3

SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER

This Second Amendment (this “Amendment”), dated as of August 8, 2010, is made and entered into by and among (i) Popular, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (“Stockholder”), (ii) AP Carib Holdings, Ltd., an exempted company organized under the laws of the Cayman Islands with limited liability (“Parent”), (iii) Carib Acquisition, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (“Merger Sub”) and (iv) EVERTEC, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (the “Company”). Capitalized terms used and not otherwise defined herein have the meanings set forth in the Merger Agreement (as defined below).

WHEREAS, the Stockholder, Parent, Merger Sub and the Company are parties to that certain Agreement and Plan of Merger, dated as of 11:59 P.M., June 30, 2010 (the “Merger Agreement”), as amended by the Amendment to Agreement and Plan of Merger by and among Popular, Inc., AP Carib Holdings, Ltd., Carib Acquisition, Inc. and EVERTEC, Inc., dated August 5, 2010 (the “First Amendment”);
WHEREAS, the Parties have finalized negotiation of certain Ancillary Agreements and therefore desire to amend the Merger Agreement to attach such forms of agreements and to refine the terms and conditions of the Merger Agreement relating to the completion of the other Ancillary Agreements;
WHEREAS, Section 9.3 of the Merger Agreement provides, among other things, that the Merger Agreement may be amended only in a writing signed by Parent, Merger Sub, the Company and Stockholder (collectively, the “Parties”); and
WHEREAS, the Parties desire to amend the Merger Agreement as set forth in this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and in the Merger Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
A. Amendments to the Merger Agreement. The Merger Agreement is hereby amended as follows:
1. Table of Contents. The list of Exhibits set forth in the Table of Contents of the Merger Agreement is hereby amended and restated by deleting the list of Exhibits and replacing the list with the list set forth in Exhibit A to this Amendment.
Section 1.1 — Definitions. (a) Section 1.1 of the Merger Agreement is hereby amended by amending and restating the following definitions as set forth below:
“Amended ATH Network Participation Agreement” means (i) the amended and restated ATH Network Participation Agreement to be entered into by BPPR and the Company at or prior to Closing, substantially in the form attached hereto as Exhibit 1.1(a)(E)(1), except that such agreement shall be modified to incorporate the provisions of the Assignment/Change in Control Rider mutatis mutandis (ii) the ATH Fee Schedule, substantially in the form attached hereto as Exhibit 1.1(a)(E) (2), and (iii) the New ATH Network Riders, substantially in the form attached hereto as Exhibit 1.1(a)(E)(3).
“Amended EVERTEC Articles” means the amended and restated Certificate of Incorporation of the Company.
“Amended EVERTEC By-laws” means the amended and restated By-laws of the Company.

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“Amended & Restated Centro Europa Building Lease” means the amended and restated lease with respect to the premises covered by the Centro Europa Building Lease, substantially in the form attached hereto as Exhibit 1.1(a)(I).
“Amended & Restated Holdco Articles” means the amended and restated Certificate of Incorporation of Holdco, substantially in the form attached hereto as Exhibit 1.1(a)(N).
“Amended & Restated Holdco By-Laws” means the amended and restated By-laws of Holdco substantially in the form attached hereto as Exhibit 1.1(a)(O).
“Amended and Restated ISO Agreement” means (i) the amended and restated Independent Sales Organization Sponsorship and Services Agreement between BPPR and the Company to be entered into at or prior to Closing, substantially in the form attached hereto as Exhibit 1.1(a)(L)(1), except that such agreement shall be modified to incorporate the provisions of the Assignment/Change in Control Rider mutatis mutandis, and (ii) the Merchant Application Approval Policy.
“Amended & Restated Master Services Agreement” means (i) the Amended and Restated Master Services Agreement to be entered into among Stockholder, BPPR and the Company, substantially in the form attached hereto as Exhibit 1.1(a)(B), as such agreement may further be amended, extended, supplemented or renewed following the Closing, (i) the New Service Addenda, (iii) the Amended & Restated MSA Service Addenda, (iv) the MSA Outsourcing Policies and Procedures, and (v) the MSA Exhibit B.
“Amended and Restated TicketPop Service Agreement” means the amended and restated TicketPop Service Agreement between BPPR and the Company to be entered into at or prior to Closing, substantially in the form attached hereto as Exhibit 1.1(a)(U), except that such agreement shall be modified to incorporate the provisions of the Assignment/Change in Control Rider mutatis mutandis.
“Ancillary Agreements” means, collectively, the Stockholder Agreement, the Amended & Restated Holdco Articles, the Amended & Restated Holdco By-laws, the Amended & Restated Master Services Agreement, the New Service Addenda, the Amended & Restated MSA Service Addenda, the MSA Outsourcing Policies and Procedures, the IP Purchase and Sale Agreement, the Transition Services Agreement, the Amended ATH Network Participation Agreement, the New ATH Network Riders, the ATH Fee Schedule, ATH Support Agreement, the Third Tres Monjitas Sublease Amendment, the Third Cupey Center Lease Amendment, the Amended & Restated Centro Europa Building Lease, the Amended and Restated TicketPop Service Agreement, the Amended and Restated ISO Agreement, the Merchant Application Approval Policy, the Third Party Master Beneficiary Escrow Service Agreement, and the Technology Agreement.
“Assignment/Change in Control Rider” means the rider attached hereto as Exhibit 1.1(a)(X).
“Collocation Services Addendum” means the Collocation Services Addendum to the Amended & Restated Master Services Agreement among Popular, BPPR, and the Company to be entered into at or prior to Closing, substantially in the form attached hereto as Exhibit 1.1(a)(P)(1).
“Disaster Recovery Services Addendum” means the Disaster Recovery Services Addendum to the Amended & Restated Master Services Agreement among Popular, BPPR, and the Company to be entered into at or prior to Closing, substantially in the form attached hereto as Exhibit 1.1(a)(P)(2).
“Stockholder Agreement” means (i) the Stockholder Agreement among Holdco, the Stockholder, Parent, and the other stockholders of Holdco to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(H) and (ii) the Business Plan.
“Technology Escrow Agent” means Iron Mountain Intellectual Property Management, Inc. or such other escrow agent as Parent and Stockholder mutually agree.

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“Transition Services Agreement” means the Transition Services Agreement between Stockholder and the Company to be entered into at or prior to the Closing, substantially in the form attached hereto as Exhibit 1.1(a)(D).
(b) Section 1.1 of the Merger Agreement is hereby amended by inserting the following definitions in appropriate alphabetical order:
“Amended & Restated Leases” means the Amended & Restated Centro Europa Building Lease, the Third Cupey Center Lease Amendment, and the Third Tres Monjitas Sublease Amendment.
“Amended & Restated MSA Service Addenda” means (i) the Amended and Restated Service Addendum — Information Security Help Desk Service Addendum, (ii) the Amended and Restated Service Addendum — Hosting and Maintenance Services, (iii) the Amended and Restated Service Addendum — Anti-SPAM and Anti-Virus Management Services, (iv) the Amended and Restated Service Addendum — EZ Statement Service, (v) the Amended and Restated Service Addendum — ATM Driving and Card Management Services, and (vi) the Dedicated Resources Services Addendum.
“Amended and Restated Service Addendum — Information Security Help Desk Service Addendum” means the Amended and Restated Information Security Help Desk Service Addendum among Stockholder, BPPR, Popular Mortgage, Popular Auto, Popular Securities, Popular Insurance and Popular Risk and the Company to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(M)(1).
“Amended and Restated Service Addendum — Hosting and Maintenance Services” means the Amended and Restated Service Addendum — Hosting and Maintenance Services between Banco Popular North America and the Company to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(M)(2).
“Amended and Restated Service Addendum — Anti-SPAM and Anti-Virus Management Services” means the Amended and Restated Service Addendum — Anti-SPAM and Anti-Virus Management Services between Banco Popular North America and the Company to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a) (M)(3).
“Amended and Restated Service Addendum — EZ Statement Service” means the Amended and Restated Service Addendum — EZ Statement Service between BPPR and the Company to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(M)(4).
“Amended and Restated Service Addendum — ATM Driving and Card Management Services” means the Amended and Restated Service Addendum — ATM Driving and Card Management Services between Banco Popular North America and the Company to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(M)(5).
“ATH Fee Schedule” means Schedule F to the Amended ATH Network Participation Agreement, substantially in the form attached hereto as Exhibit 1.1(a)(E)(2).
“ATH Support Agreement” means an agreement between the Company and Stockholder to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(W) , except that such agreement shall be modified to incorporate the provisions of the Assignment/Change in Control Rider mutatis mutandis.
“Business Plan” means the business plan to be attached as Exhibit B to the Stockholder Agreement, substantially in the form attached hereto as Exhibit 1.1(a)(V).
“Dedicated Resources Services Addendum” means the Dedicated Resources Services Addendum by and among Stockholder, BPPR, Popular Insurance, Popular Insurance, Inc., Popular Mortgage, Inc., Popular Auto, Inc. and the Company to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(M)(6).

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“Merchant Application Approval Policy” means the merchant application approval policy to be attached as Exhibit B to the Amended and Restated ISO Agreement, substantially in the form attached hereto as Exhibit 1.1(a)(L)(2).
“Mobile Banking Service Rider” means a new service rider to the Amended ATH Network Participation Agreement providing for the development of a service that will allow users subscribing to the service to access their designated banking account information and perform certain banking transactions.
“MSA Exhibit B” means Exhibit B to the Amended and Restated Master Services Agreement to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(S).
“MSA Outsourcing Policies and Procedures” means the “Outsourcing Policy” to be attached as Schedule F to the Amended and Restated Master Services Agreement to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(T).
“New ATH Network Riders” means (i) the new service riders to the Amended ATH Network Participation Agreement with respect to the following services: (A) ATM Terminal Driving Services; (B) NYCE POS Terminals; and (C) Mobile Phone ATM Airtime, in each case, substantially in the form attached hereto as Exhibit 1.1(a)(E)(3).
“New Service Addenda” means (i) the Collocation Services Addendum, (ii) the Disaster Recovery Service Addendum and (iii) the Transition Assistance Addendum.
“Technology Agreement” means the Technology Agreement between Stockholder and the Company to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(F)(2), except that such agreement shall be modified to incorporate the provisions of the Assignment/Change in Control Rider mutatis mutandis.
“Third Cupey Center Lease Amendment” means the Third Amendment to the Master Lease Agreement, dated April 1, 2004, as amended by the First Amendment, dated January 1, 2006, and the Second Amendment, dated April 23, 2010, between BPPR and the Company to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(J).
“Third Tres Monjitas Sublease Amendment” means the Third Amendment to the Sublease Agreement, dated April 1, 2004, as amended by the First Amendment, dated January 1, 2008, and the Second Amendment, dated February 9, 2010, between BPPR and the Company to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(K).
“Third Party Master Beneficiary Escrow Services Agreement” means the Third Party Master Beneficiary Services Agreement(s) among Stockholder, the Company and the Technology Escrow Agent to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(F)(1), except that such agreement shall be modified to incorporate the provisions of the Assignment/Change in Control Rider mutatis mutandis, subject to the approval of the Technology Escrow Agent.
“Transition Assistance Addendum” means the Transition Assistance Service Addendum to the Amended & Restated Master Services Agreement to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(P)(3).
(c) Section 1.1 of the Merger Agreement is hereby amended by deleting the following definitions contained therein:
(i) “ATH Network Support Agreement”,
(ii) “Technology Escrow Agreement”,
(iii) “Amended & Restated Cupey Center Lease”, and

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(iv) “Amended & Restated Tres Monjitas Lease”;
2. Section 2.6. Closing Deliveries by Parent. Section 2.6(a) of the Merger Agreement is hereby amended and restated as set forth below:
“(a) a duly executed counterpart of (or in the event that the terms of any Ancillary Agreement do not require an executed counterpart, a copy of) each of the Ancillary Agreements to which Parent is a party;”
3. Section 2.7. Closing Deliveries by Stockholder. Sections 2.7(a), (f) and (g) of the Merger Agreement are hereby amended and restated as set forth below:
“(a) a duly executed counterpart of (or in the event that the terms of any Ancillary Agreement do not require an executed counterpart, a copy of), or a duly adopted copy of, as the case may be, each of the Ancillary Agreements to which Stockholder or any of its Affiliates is a party;
(f)[INTENTIONALLY OMITTED]; and
(g)[INTENTIONALLY OMITTED];”
4. Section 5.17 Certain Ancillary Agreement and Organizational Documents. Section 5.17 of the Merger Agreement is hereby amended and restated as follows:
“Section 5.17 Certain Ancillary Agreement and Organizational Documents. Prior to the Closing, each of Parent, Merger Sub, the Company and Stockholder shall promptly (a) negotiate in good faith and finalize the terms and conditions of the Amended EVERTEC Articles and Amended EVERTEC By-laws, in each case, on terms and conditions reasonably satisfactory to Parent and Stockholder, (b) negotiate in good faith and finalize the terms and conditions of the Mobile Banking Service Rider, which will have a duration that will commence upon completion of the development and testing of mobile banking service and be coterminous with the term of the Amended ATH Network Participation Agreement and contain such other terms and conditions reasonably satisfactory to Parent and Stockholder, (c) select and appoint the Technology Escrow Agent and (d) complete Schedule 1 to the Stockholder Agreement in a manner consistent with the issuance of capital stock contemplated by Section 2.8. In addition, the Parties agree and acknowledge that the services covered by the Services Agreement for Merchant and Electronic Payment Services to Government Entities entered into on June 30, 2010 is to be incorporated into the Amended and Restated ISO Agreement and therefore such Services Agreement for Merchant and Electronic Payment Services to Government Entities shall be terminated prior to the Closing.”
5. Section 5.18 ATH Network Participation Agreement. Section 5.18 of the Merger Agreement is hereby amended and restated as follows:
“Section 5.18 Amended ATH Network Participation Agreement. From the date hereof until the Closing Date, if BPPR desires to (i) implement any “Development Project” (as such term is defined in the Amended ATH Network Participation Agreement), Stockholder shall cause BPPR to grant the Company a right of first refusal with respect to the Development Project (the notice periods and other terms relating to the trigger and exercise of the right of first refusal shall be the same as those set forth in Section 2.10 of the Amended ATH Network Participation Agreement) and (ii) modify, change, enhance or upgrade any service provided under the 2000 ATH Network Participation Agreement (or any rider thereto) or obtain a new Service (as such term is defined in the Amended ATH Network Participation Agreement), Stockholder shall cause BPPR to obtain any of the foregoing from the Company.”
6. Section 5.19 Completion of Master Service Agreement and Service Addenda, Statements of Work and Related Documents. Section 5.19 of the Merger Agreement is hereby amended and restated as set forth below:
“Section 5.19 [Intentionally Omitted]”.
7. Section 8.1 Termination. Section 8.1 of the Merger Agreement is hereby amended by deleting Section 8.1(f).

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8. Exhibits. The Exhibits attached to the Merger Agreement are hereby amended as follows:
(a) Each of the Exhibits to the Merger Agreement set forth in the following table are hereby deleted from the Merger Agreement and replaced with the Exhibit to this Agreement set forth opposite such Exhibit to the Merger Agreement in the corresponding row to such table:
Exhibit to Merger Agreement being Deleted
Replacement Exhibit from this Amendment
Exhibit 1.1(a)(B) — Form of Amended and Restated Master Services Agreement
Exhibit 1.1(a)(B) — Form of Amended and Restated Master Services Agreement
Exhibit 1.1(a)(D) — Form of Transition Services Agreement
Exhibit 1.1(a)(D) — Form of Transition Services Agreement
Exhibit 1.1(a)(E) — Form of Amendment to the ATH Network Participation Agreement
Exhibit 1.1(a)(E)(1) — Form of Amended ATH Network Participation Agreement
Exhibit 1.1(a)(E)(2) — Form of ATH Fee Schedule
Exhibit 1.1(a)(E)(3) —Form of New ATH Network Riders
Exhibit 1.1(a)(F) — Technology Escrow Term Sheet
Exhibit 1.1(a)(F)(1) — Form of Third-Party Master Beneficiary Escrow Services Agreement.
Exhibit 1.1(a)(F)(2) — Form of Technology Agreement
(b) The following Exhibits to this Agreement are hereby attached to the Merger Agreement and incorporated therein as additional exhibits:
New Exhibit to Merger Agreement
Exhibit from this Amendment
Exhibit 1.1(a)(H) — Form of Stockholder Agreement
Exhibit 1.1(a)(H) — Form of Stockholder Agreement
Exhibit 1.1(a)(I) — Form of Amended & Restated Centro Europa Building Lease
Exhibit 1.1(a)(I) — Form of Amended & Restated Centro Europa Building Lease
Exhibit 1.1(a)(J) — Form of Third Cupey Center Lease Amendment
Exhibit 1.1(a)(J) — Form of Third Cupey Center Lease Amendment
Exhibit 1.1(a)(K) — Form of Third Tres Monjitas Sublease Amendment
Exhibit 1.1(a)(K) — Form of Third Tres Monjitas Sublease Amendment
Exhibit 1.1(a)(L)(1) — Form of Amended and Restated ISO Agreement
Exhibit 1.1(a)(L)(1) — Form of Amended and Restated ISO Agreement
Exhibit 1.1(a)(L)(2) — Form of Merchant Application Approval Policy
Exhibit 1.1(a)(L)(2) — Form of Merchant Application Approval Policy
Exhibit 1.1(a)(M)(1)-(6) — Form of Amended & Restated MSA Service Addenda
Exhibit 1.1(a)(M)(1)-(6) — Form of Amended & Restated MSA Service Addenda
Exhibit 1.1(a)(N) — Form of Holdco Certificate of Incorporation
Exhibit 1.1(a)(N) — Form of Holdco Certificate of Incorporation
Exhibit 1.1(a)(O) — Form of Holdco By-laws
Exhibit 1.1(a)(O) — Form of Holdco By-laws
Exhibit 1.1(a)(P)(1)-(3) — Form of New Service Addenda
Exhibit 1.1(a)(P)(1)-(3) — Form of New Service Addenda
Exhibit 1.1(S) — Form of MSA Exhibit B
Exhibit 1.1. (S) — Form of MSA Exhibit B
Exhibit 1.1(T) — Form of MSA Outsourcing Policies and Procedures
Exhibit 1.1(T) — Form of MSA Outsourcing Policies and Procedures

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Exhibit 1.1(a)(U) — Form of Amended and Restated TicketPop Service Agreement
Exhibit 1.1(a)(U) — Form of Amended and Restated TicketPop Service Agreement
Exhibit 1.1(a)(V) — Form of Business Plan
Exhibit 1.1(a)(V) — Form of Business Plan
Exhibit 1.1(a)(W) — Form of ATH Support Agreement
Exhibit 1.1(a)(W) — Form of ATH Support Agreement
Exhibit 1.1(a)(X) — Form of Assignment/Change in Control Rider
Exhibit 1.1(a)(X) — Form of Assignment/Change in Control Rider
B. Miscellaneous. This Amendment, the First Amendment and the Merger Agreement (including all Schedules and Exhibits to each of the foregoing) and the Ancillary Agreements (including all schedules and exhibits thereto), together, contain the entire understanding between the Parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, except for the Confidentiality Agreement. Except as specifically amended hereby and by the First Amendment, the Merger Agreement, as amended hereby and by the First Amendment, shall remain in full force and effect. The terms and provisions of Article IX of the Merger Agreement are incorporated herein by reference as if set forth herein in their entirety and shall apply mutatis mutandis to this Amendment.

* * * * *


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EXHIBITS TO THIS AMENDMENT
Exhibit A
Table of Contents

Exhibit 1.1(a)(B)
Form of Amended and Restated Master Services Agreement

Exhibit 1.1(a)(D)
Form of Transition Services Agreement

Exhibit 1.1(a)(E)(1)
Form of Amendment to the ATH Network Participation Agreement

Exhibit 1.1(a)(E)(2)
Form of ATH Fee Schedule

Exhibit 1.1(a)(E)(3)
Form of ATH Network Riders

Exhibit 1.1(a)(F)(1)
Form of Third-Party Master Beneficiary Escrow Services Agreement

Exhibit 1.1(a)(F)(2)
Form of Technology Agreement

Exhibit 1.1(a)(H)
Form of Stockholder Agreement

Exhibit 1.1(a)(I)
Form of Amended and Restated Centro Europa Building Lease

Exhibit 1.1(a)(J)
Form of Third Cupey Center Lease Amendment

Exhibit 1.1(a)(K)
Form of Tres Monjitas Sublease Amendment

Exhibit 1.1(a)(L)(1)
Form of Amended and Restated ISO Agreement

Exhibit 1.1(a)(L)(2)
Form of Merchant Application Approval Policy

Exhibit 1.1(a)(M)(1)-(6)
Form of Amended and Restated MSA Service Addenda

Exhibit 1.1(a)(N)
Form of Holdco Certificate of Incorporation

Exhibit 1.1(a)(O)
Form of Holdco By-laws

Exhibit 1.1(a)(P)(1)-(3)
Form of New Service Addenda

Exhibit 1.1(a)(S)
Form of MSA Exhibit B

Exhibit 1.1(a)(T)
Form of MSA Outsourcing Policies and Procedures

Exhibit 1.1(a)(U)
Form of Amended and Restated TicketPop Service Agreement

Exhibit 1.1(a)(V)
Form of Business Plan

Exhibit 1.1(a)(W)
Form of ATH Support Agreement

Exhibit 1.1(a)(X)
Form of Assignment/Change in Control Rider






8



IN WITNESS WHEREOF, the Parties have executed or caused this Amendment to be executed as of the date first written above.

POPULAR, INC.
By: /s/ Richard L. Carrión
Name: Richard L. Carrión
Title: Chairman of the Board and Chief Executive Officer
EVERTEC, INC.
By: /s/ Richard L. Carrión
Name: Richard L. Carrión
Title: Chairman of the Board
AP CARIB HOLDINGS, LTD.
By: Apollo Management VII, L.P., its sole director
By: AIF Management LLC, its general partner
By: /s/ Marc Becker
Name: Marc Becker
Title: Vice President
CARIB ACQUISITION, INC.
By: /s/ Marc Becker
Name: Marc Becker
Title: President








[Signature Page of Amendment to Merger Agreement]

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EXHIBIT 2.4

THIRD AMENDMENT TO AGREEMENT AND PLAN OF MERGER

This Third Amendment (this “Amendment”), dated as of September 15, 2010, is made and entered into by and among (i) Popular, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (“Stockholder”), (iii) AP Carib Holdings, Ltd., an exempted company organized under the laws of the Cayman Islands with limited liability (“Parent”), (iii) Carib Acquisition, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (“Merger Sub”) and (iv) EVERTEC, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (the “Company”). Capitalized terms used and not otherwise defined herein have the meanings set forth in the Merger Agreement (as defined below).

WHEREAS, the Stockholder, Parent, Merger Sub and the Company are parties to that certain Agreement and Plan of Merger, dated as of 11:59 P.M., June 30, 2010 as amended on August 5, 2010 and August 8, 2010 (the “Merger Agreement”);

WHEREAS, prior to entering into the Merger Agreement, Stockholder, the Company, BPPR and PIBI entered into that certain Master Reorganization Agreement, as amended by the MRA Amendment, and now such parties further amend such Master Reorganization Agreement as set forth in the Second Amendment to the Agreement and Plan of Reorganization (the “Second MRA Amendment”) attached hereto as Exhibit 14;

WHEREAS, prior to entering into the Merger Agreement, the Company and, BPPR entered into that certain Business Transfer Agreement and now amend such Business Transfer Agreement as set forth in the First Amendment to the Business Transfer Agreement (the “BTA Amendment”) attached hereto as Exhibit 15;

WHEREAS, prior to entering into the Merger Agreement, the Company and, BPPR entered into that certain BPPR IP Transfer Agreement and now amend such BPPR IP Transfer Agreement as set forth in the First Amendment to the BPPR IP Transfer Agreement (the “BPPR IPTA Amendment”) attached hereto as Exhibit 16;

WHEREAS, contemporaneously with the execution and delivery of this Amendment, Stockholder, PIBI and the Company are entering into that certain Agreement and Plan of Reorganization, attached hereto as Exhibit 18 (the “Venezuelan Reorganization Agreement”), pursuant to which, among other things, the Company will transfer to PIBI all right, title and interest in and to the shares of capital stock of EVERTEC de Venezuela, C.A. (“EV”) held by the Company and transfer certain services agreements pursuant to which the Company provides certain financial data and transaction processing services, in coordination with EV, as set forth in Schedule 1 to the Venezuela Reorganization Agreement (the “Venezuela Customer Contracts”) to EV and/or PIBI and therefore the Parties desire to amend the Merger Agreement to refine the terms and conditions of the Merger Agreement relating to the EV Transfer;

WHEREAS, the Parties have determined that PIBI’s Foreign Equity Investment in Serfinsa will not be transferred to the Company prior to the Closing and PIBI’s Foreign Equity Investment in Contado may not be transferred to the Company prior to the Closing and therefore desire to amend the Merger Agreement to refine the terms and conditions of the Merger Agreement and the Master Reorganization Agreement relating to Serfinsa and Contado;

WHEREAS, the Parties have determined that it is necessary to enter into certain additional Ancillary Agreements and therefore desire to amend the Merger Agreement to refine the terms and conditions of the Merger Agreement relating to the completion of the other Ancillary Agreements;

WHEREAS, as a condition to the willingness of Parent and Merger Sub to enter into this Amendment, the Stockholder, as sole stockholder of the Company, has agreed to deliver immediately following the execution of this Amendment an irrevocable written consent (an “Additional Stockholder Written Consent”) approving and adopting the Merger and the Merger Agreement as amended by this Amendment (an “Additional Stockholder Approval”);

WHEREAS, the Stockholder Approval, together with the Additional Stockholder Approval, constitutes the approval of holders of a type and number of shares of capital stock of the Company sufficient to approve the Merger

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Agreement (as amended by this Amendment) and approve the Merger as required under Commonwealth Law, the Company’s Articles of Incorporation and Bylaws, and any applicable agreements between the Company, on the one hand, and any holders of its capital stock, on the other hand (the “Required Stockholder Approval”);

WHEREAS, Section 9.3 of the Merger Agreement provides, among other things, that the Merger Agreement may be amended only in a writing signed by Parent, Merger Sub, the Company and Stockholder (collectively, the “Parties”); and

WHEREAS, the Parties desire to amend the Merger Agreement as set forth in this Amendment;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and in the Merger Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

A.
Amendments to the Merger Agreement. The Merger Agreement is hereby amended as follows:

1.Table of Contents. The list of Exhibits set forth in the Table of Contents of the Merger Agreement is hereby amended and restated by deleting the list of Exhibits and replacing the list with the list set forth in Exhibit A to this Amendment.

2.Recitals. The second, third, fourth and ninth recitals in the Merger Agreement shall be amended and restated as follows:

Second Recital: “WHEREAS, Stockholder, the Company, BPPR and PIBI entered into that certain Agreement and Plan of Reorganization, dated May 17, 2010 attached hereto as Exhibit 5 (the “Master Reorganization Agreement”) as amended by the First Amendment to the Agreement and Plan of Reorganization dated June 30, 2010 attached hereto as Exhibit 12 (the “MRA Amendment”) and the Second Amendment to the Agreement and Plan of Reorganization attached hereto as Exhibit 14 (the “Second MRA Amendment”), pursuant to which, among other things, PIBI transferred (directly or indirectly) to the Company all right title and interest in and to the shares (the “Foreign Shares”) of capital stock held by it in ATH Costa Rica, S.A., a sociedad anónima organized under the laws of Costa Rica and T.I.I. Smart Solutions Inc., a BVI business company incorporated under the laws of the British Virgin Islands and EVERTEC Latinoamérica, S.A., a sociedad anónima organized under the laws of Costa Rica (“Evertec/Latam”), and (B) will transfer (directly or indirectly) to the Company all right title and interest in and to the shares of capital stock held by it in (except to the extent any shares are purchased by third parties pursuant to rights of first refusal): (I) Consorcio de Tarjetas Domincanas, S.A., a sociedad anónima organized under the laws of the Dominican Republic (“Contado”) and (II) Servicios Financieros, S.A. de C.V., a sociedad anónima organized under the laws of El Salvador (“Serfinsa”) (the entities in clause (A) collectively and together with their respective Subsidiaries, the “Foreign Subsidiaries” and shares or the shares of capital stock in the entities in clauses (B)(I) and (B)(II), collectively, the “Foreign Equity Investments”);”

Third Recital: “WHEREAS, the Company and BPPR entered into that certain Merchant and TicketPop Business Transfer and Reorganization Agreement, dated June 30, 2010 attached hereto as Exhibit 6 (the “Business Transfer Agreement”) as amended by the First Amendment to the Business Transfer Agreement attached hereto as Exhibit 15 (the “BTA Amendment”), pursuant to which, among other things, (i) BPPR transferred to the Company the Transferred Assets (as defined in the Business Transfer Agreement, as amended), and the Company assumed the Assumed Liabilities (as defined in the Business Transfer Agreement, as amended); (ii) the Company and BPPR entered into (A) that certain ISO, Sponsorship (BIN/ICA) and Services Agreement attached hereto as Exhibit 7 (the “ISO Agreement”), (B) that certain TicketPop Service Agreement attached hereto as Exhibit 8 (the “TicketPop Service Agreement”), and (C) that certain Centro Europa Building Lease attached hereto as Exhibit 9 (the “Centro Europa Building Lease”), and the Company and BPPR entered into that certain BPPR IP Transfer Agreement, dated June 30, 2010, attached hereto as Exhibit 11 (the “BPPR IP Transfer Agreement”) pursuant to which BPPR transferred to the Company the BPPR Transferred IP (as defined in the BPPR IP Transfer Agreement), as amended by the First Amendment to the BPPR IP Transfer Agreement attached hereto as Exhibit 16 (the “BPPR IPTA Amendment”);”


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Fourth Recital: “WHEREAS, prior to Closing, Stockholder, PIBI and the Company will enter into that certain Agreement and Plan of Reorganization attached hereto as Exhibit 18 (the “Venezuelan Reorganization Agreement”), pursuant to which, among other things, the Company will, prior to the Closing and the filing of the Certificate of Merger, transfer to PIBI all right, title and interest in and to the shares of capital stock of EVERTEC de Venezuela, C.A. (“EV”) held by the Company, and transfer certain service agreements pursuant to which the Company provides certain financial data and transaction processing services, in coordination with EV, as set forth in Schedule 1 to the Venezuela Reorganization Agreement (the “Venezuela Customer Contracts”) to EV and/or PIBI (such transaction and the other transactions contemplated by the EV Transfer Documents, collectively the “EV Transfer”);

WHEREAS, (i) prior to the execution hereof, the transactions contemplated by (i) the Master Reorganization Agreement, as amended by the MRA Amendment, and (ii) the Business Transfer Agreement, to be consummated on the Closing Date (as defined in the Master Reorganization Agreement) were consummated in accordance with their terms and therefore, as of the date hereof, the Company owns all the Foreign Shares (other than EVERTEC/Latam and the Foreign Equity Investments) and owns and operates the Merchant Acquiring Business and TicketPop Business formerly owned and operated by BPPR and (ii) on September 8, 2010, the transfer of the EVERTEC/Latam contemplated by the Master Reorganization Agreement, as amended by the MRA Amendment, was consummated and therefore from and after such date the Company owns all the Foreign Shares (other than the Foreign Equity Investments) (with the execution of the other Internal Reorganization Documents (as hereinafter defined) collectively, including the transfer of Foreign Equity Investments, subject to the terms and conditions set forth in the MRA Amendment and the Second MRA Amendment, the “Internal Reorganization”);”

Ninth Recital: “WHEREAS, the Stockholder Approval, together with any Additional Stockholder Approvals (as defined herein), constitutes the approval of holders of a type and number of shares of capital stock of the Company sufficient to approve this Agreement and approve the Merger as required under Commonwealth Law, the Company’s Articles of Incorporation and Bylaws, and any applicable agreements between the Company, on the one hand, and any holders of its capital stock, on the other hand (the “Required Stockholder Approval”).”

3. Section 1.1 — Definitions. (a) Section 1.1 of the Merger Agreement is hereby amended by amending and restating the following definitions as set forth below:

“Amended & Restated Leases” means the Amended & Restated Centro Europa Building Lease, the Third Cupey Center Lease Amendment, the Third Tres Monjitas Sublease Amendment and the Señorial Building Lease.

“Amended & Restated MSA Service Addenda” means (i) the Amended and Restated Service Addendum — Information Security Help Desk Service Addendum, (ii) the Amended and Restated Service Addendum – Hosting and Maintenance Services, (iii) the Amended and Restated Service Addendum – Anti-SPAM and Anti-Virus Management Services, (iv) the Amended and Restated Service Addendum – EZ Statement Service, (v) the Amended and Restated Service Addendum – ATM Driving and Card Management Services, (vi) the Dedicated Resources Services Addendum and (vii) the Amended and Restated Service Addendum – Remote Capture Services.

“Amended ATH Network Participation Agreement” means (i) the amended and restated ATH Network Participation Agreement to be entered into by BPPR and the Company at or prior to Closing, substantially in the form attached hereto as Exhibit 1.1(a)(E)(1), (ii) the ATH Fee Schedule and (iii) the New ATH Network Riders.

“Amended EVERTEC Articles” means the amended and restated Certificate of Incorporation of the Company, substantially in the form attached hereto as Exhibit 1.1(a)(Z).

“Amended EVERTEC By-Laws” means the amended and restated By-laws of the Company substantially in the form attached hereto as Exhibit 1.1(a)(ZZ).

“Amended and Restated ISO Agreement” means (i) the amended and restated Independent Sales Organization Sponsorship and Services Agreement between BPPR and the Company to be entered into at or prior to Closing, substantially in the form attached hereto as Exhibit 1.1(a)(L)(1) and (ii) the Merchant Application Approval Policy.


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“Amended and Restated TicketPop Service Agreement” means the amended and restated TicketPop Service Agreement between BPPR and the Company to be entered into at or prior to Closing, substantially in the form attached hereto as Exhibit 1.1(a)(U).

“Ancillary Agreements” means, collectively, the Stockholder Agreement, the Amended & Restated Holdco Articles, the Amended & Restated Holdco By-laws, the Amended & Restated Master Services Agreement, the New Service Addenda, the Amended & Restated MSA Service Addenda, the MSA Outsourcing Policies and Procedures, the FCC Side Letter, the IP Purchase and Sale Agreement, the Transition Services Agreement, the Amended ATH Network Participation Agreement, the New ATH Network Riders, the ATH Fee Schedule, ATH Support Agreement, the Third Tres Monjitas Sublease Amendment, the Third Cupey Center Lease Amendment, the Amended & Restated Centro Europa Building Lease, the Señorial Building Lease, the Amended & Restated TicketPop Service Agreement, the Amended and Restated ISO Agreement, the Merchant Application Approval Policy, the Third Party Master Beneficiary Escrow Service Agreement, the Technology Agreement, the Apollo Consulting Agreement, the Popular Consulting Agreement, the EV Transfer Documents, and the Virgin Islands Services Agreement.

“Applicable Employees” means (i) the employees set forth on Schedule 1.1(c) to the Stockholder Disclosure Schedule who are (A) employees of Stockholder or its Affiliates (other than the Companies) who are being or have been transferred in connection with the transactions contemplated by the Business Transfer Agreement (as amended by the BTA Amendment) and the Master Reorganization Agreement (as amended by the MRA Amendment and Second MRA Amendment); (B) employees on leave of absence or on disability (long term or short term), provided such employee returns to active employment within six months of the Closing Date or within a time period of the applicable reserve of employment established by any of the Commonwealth social protection statutes, including the Compensation System for Work Related Accidents Act (workmen’s compensation) and the Temporary Disability Benefit Act (non-occupational disability benefits) and/or the applicable Laws of the Foreign Jurisdictions; and (ii) the employees of the Companies.

“ATH Support Agreement” means an agreement between the Company and Stockholder to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(W).

“Base Working Capital Value” means $43,400,000.

“Closing Payment” shall mean an amount equal to (i) $637,850,000 minus (ii) the sum of (A) the product of the Equity Ratio multiplied by the Overfund Amount, and (B) if applicable, an amount equal to 50.0% of the After-Tax Aggregate Proceeds received from the sale by PIBI (or any Affiliate thereof) of any portion of its equity interests in Contado and Serfinsa in conjunction with a right of first refusal or otherwise minus (iii) $32,000,000 minus (iv) the Serfinsa Holdback Amount, minus (v) the Contado Holdback Amount.

“Closing Working Capital” means the difference between (i) the current assets of the Companies (other than current assets of EV and other than the P/SSA Receivables, the PSA Receivables and the Other Receivables (each as defined in the Venezuela Reorganization Agreement)), minus (ii) the current liabilities of the Companies (other than EV) (for the avoidance of doubt, which do not include any of the items of current assets or current liabilities excluded therefrom in accordance with the Applicable Accounting Principles and which includes all Liabilities incurred by the Companies in connection with the Scheduled Transaction Bonuses whether before, at or after Closing, including all related employer payroll Taxes), in each case, as of the close of business on the Closing Date and calculated in accordance with the Applicable Accounting Principles.

“Companies” means the Company and its Subsidiaries, including the Foreign Subsidiaries, and Contado; provided that, for purposes of Articles V and VII only, Companies shall not include EV with respect to periods following the Closing.

“Estimated Closing Working Capital” means the difference, as set forth on the Estimated Closing Statement, between (i) the estimated current assets of the Companies (other than current assets of EV and other than the P/SSA Receivables, the PSA Receivables and the Other Receivables (each as defined in the Venezuela Reorganization Agreement), minus (ii) the estimated current liabilities of the Companies (other than EV) (for the avoidance of doubt,

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which do not include any of the items of current assets or current liabilities excluded therefrom in accordance with the Applicable Accounting Principles and which includes all Liabilities incurred by the Companies in connection with the Scheduled Transaction Bonuses whether before, at or after Closing, including all related employer payroll Taxes), in each case, as of the close of business on the Closing Date and calculated in accordance with the Applicable Accounting Principles.

“EV” has the meaning set forth in the Recitals.

“Internal Reorganization Documents” means (i) the Master Reorganization Agreement as amended by the MRA Amendment and the Second MRA Amendment, (ii) the Business Transfer Agreement as amended by the BTA Amendment, (iii) the Operative Documents (as defined in the Business Transfer Agreement, as amended), (iv) the BPPR IP Transfer Agreement as amended by the BPPR IPTA Amendment, (v) the TicketPop Service Agreement, (vi) the Centro Europa Building Lease, (vii) the Señorial Building Lease, and (viii) the ISO Agreement (as amended by the First ISO Amendment) and any other ancillary agreements, schedules or exhibits contemplated thereby.

“New ATH Network Riders” means (i) the new service riders to the Amended ATH Network Participation Agreement with respect to the following services: (ii) ATM Terminal Driving Services; (iii) NYCE POS Terminals; and (iv) Mobile Phone ATM Airtime, in each case, substantially in the form attached hereto as Exhibit 1.1(a)(E)(3).

“New Service Addenda” means (i) the Collocation Services Addendum, (ii) the Disaster Recovery Service Addendum, (iii) the Transition Assistance Addendum, (iv) EVERPay Kiosk Systems Service Addendum, (v) Fraud Monitoring Service Addendum and (vi) Fleet Card Services Addendum.
“Stockholder Parties” means BPPR, PIBI and any other Affiliate of Stockholder (other than the Companies (other than EV)) that is a party to any Ancillary Agreement, Closing Document or Internal Reorganization Document.

“Technology Agreement” means the Technology Agreement between Stockholder and the Company to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(F)(2).

“Third Party Master Beneficiary Escrow Services Agreement” means the Third-Party Master Beneficiary Services Agreement(s) among Stockholder, the Company and the Technology Escrow Agent to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(F)(1).

“Third Tres Monjitas Sublease Amendment” means the Third Amendment to the Sublease Agreement, dated January 1, 2004, as amended by an Office Building Lease Memorandum of Lease dated August 23, 2007, the First Amendment, dated January 1, 2008, and the Second Amendment, dated February 9, 2010, between BPPR and the Company to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(K).

4. Section 1.1 of the Merger Agreement is hereby amended by inserting the following definitions in appropriate alphabetical order:

“Additional Stockholder Approval” means an Additional Stockholder Written Consent approving and adopting the Merger and this Agreement, as amended.

“Additional Stockholder Written Consent” means the written consent of the Stockholder to an amendment to this Agreement for which stockholder approval is required under the CGCL.

“After-Tax Dividend Proceeds” means the amount of the aggregate proceeds received by PIBI in respect of any dividend or distribution declared or paid with respect to a Foreign Equity Investment minus the amount of any and all Taxes incurred by Stockholder, PIBI or any of their respective Affiliates on any such dividend or distribution and/or otherwise paid or payable incident to such dividend or distribution (in each case net of any deductions or credits available to offset such Taxes).


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“Amended and Restated Service Addendum – Remote Capture Services” means the Amended and Restated Service Addendum – Remote Capture Services by and between BPPR and the Company to be entered into at Closing, substantially in the form attached hereto as Exhibit 1.1(a)(M)(7).

“Apollo Consulting Agreement” means the Consulting Agreement to be entered into at Closing, among the Company, Holdco and Apollo Management VII, L.P., substantially in the form attached hereto as Exhibit 1.1(a)(ZZZ)(1).

“BPPR IPTA Amendment” has the meaning set forth in the Recitals.

“BTA Amendment” has the meaning set forth in the Recitals.

“Contado Purchase Price” means an amount equal to $20,000,000.

“Contado Holdback Amount” means (i) to the extent that prior to Closing, the Foreign Equity Investment in Contado (other than any shares that are purchased by third parties pursuant to rights of first refusal) has not been transferred to the Company, an amount equal to $20,000,000, and (ii) in all other circumstances, an amount equal to $0.00.

“EVERPay Kiosk Systems Service Addendum” means the Kiosk Systems Service Addendum between BPPR and the Company to be entered into at or prior to Closing, substantially in the form attached hereto as Exhibit 1.1(a)(P)(4).

“EV Transfer” has the meaning set forth in the Recitals.

“EV Transfer Documents” means the Venezuelan Reorganization Agreement, the Venezuela TSA, and the Venezuelan Assignment and Assumption Agreements, the Venezuela Promissory Notes and any other ancillary agreements, schedules or exhibits contemplated thereby.

“FCC Side Letter” means the Letter Agreement for Private Carrier Services between the Company and Stockholder to be entered into at or prior to Closing, substantially in the form attached hereto as Exhibit 1.1(a)(Y).

“Fleet Card Services Addendum” means the Fleet Card Services Addendum between BPPR and the Company to be entered into at or prior to Closing, substantially in the form attached hereto as Exhibit 1.1(a)(P)(5).

“Foreign Equity Dividend” has the meaning set forth in Section 2.9.

“Fraud Monitoring Service Addendum” means the Fraud Monitoring and Hosting Service Addendum between BPPR and the Company to be entered into at or prior to Closing, substantially in the form attached hereto as Exhibit 1.1(a) (P)(4).

“IVU Lotto Proposal” means the joint Harmonization Proposal of the Company and Softek, Inc., dated June 11, 2010, in response to the Commonwealth of Puerto Rico Department of Treasury’s Request for Proposal — Technology Improvements for Collections and Fiscalization of Sales Use Tax or any similar proposal by the Company in response to such request for proposal.

“Mobile Banking Service” means a service provided by the Company under the Amended ATH Network Participation Agreement that allows users subscribing to the service to access their designated banking account information and perform certain banking transactions.

“OFAC” means Office of Foreign Assets Control, U.S. Department of the Treasury.

“Penalty Notice” has the meaning ascribed to such term set forth in 31 Code of Federal Regulations Section 501.703(j).

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“Post-Closing Foreign Equity Adjustment” has the meaning set forth in Section 2.9.

“Popular Consulting Agreement” means the Consulting Agreement to be entered into at Closing, among the Company, Holdco and Stockholder, substantially in the form attached hereto as Exhibit 1.1(a)(ZZZ)(2).

“Reorganization Transactions” means the transactions contemplated by the Internal Reorganization.

“ROFR Transfer Period” has the meaning set forth in Section 5.13(b).

“Scheduled Transaction Bonuses” means the transaction bonus payable to certain employees of the Company as set forth in Schedule 2.4(b) of the Stockholder Disclosure Schedule.

“Schedule 7.13 Matters” has the meaning set forth in Section 7.13.

“Serfinsa Holdback Amount” means (i) to the extent that prior to Closing, the Foreign Equity Investment in Serfinsa (other than any shares that are purchased by third parties pursuant to rights of first refusal) has not been transferred to the Company an amount equal to $250,000, and (ii) in all other circumstances, an amount equal to $0.00.

“Second MRA Amendment” has the meaning set forth in the Recitals.

“Señorial Building Lease” means the lease agreement with respect to the premises located at the El Señorial Center between BPPR and the Company to be entered into at or prior to Closing, substantially in the form attached hereto as Exhibit 17.

“Serfinsa Purchase Price” means an amount equal to $250,000.

“Serfinsa Remaining Amount” means an amount to equal to $120,000.

“Venezuela Contract Assignment” has the meaning set forth in Section 5.26.

“Venezuela Customer Contracts” has the meaning set forth in the Recitals.

“Venezuelan Assignment and Assumption Agreements” has the meaning set forth in Section 5.26.

“Venezuelan Reorganization Agreement” has the meaning set forth in the Recitals.

“Venezuela Promissory Notes” means the (i) P/SSA Note and the (ii) PIBI Note (as each such term is defined in the Venezuelan Reorganization Agreement).

“Venezuelan TSA” has the meaning set forth in Section 5.26.

“Virgin Islands Services Agreement” means the Virgin Islands Services Agreement between BPPR and the Company to be entered into at or prior to Closing, substantially in the form attached hereto as Exhibit 1.1(a)(X).

“VZ Business” has the meaning set forth in Section 7.2(a).

(c) Section 1.1 of the Merger Agreement is hereby amended by deleting the following definitions contained therein:

(i) “EV Sale”;

(ii) “Mobile Banking Service Rider”; and


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(iii) “Assignment/Change in Control Rider”.

5. Definition of Material Adverse Effect. The definition of Material Adverse Effect in Section 1.1 of the Merger Agreement is hereby amended by inserting the following as a new clause (viii) immediately prior to the second proviso of such definition:

“(viii) any fact, event, change, effect, development, condition or occurrence to the extent such fact, event, change, effect, development, condition or occurrence affects EV or, to the extent transferred or to be transferred to EV prior to the Closing, the VZ Business, in each case other than any fact, event, change, effect, development, condition or occurrence that has had or would reasonably be expected to have a material adverse effect on the Companies (other than EV), taken as whole, taking into account such transfers and giving effect to the EV Transfer;”

6. Section 1.3 Interpretational Provisions. The Merger Agreement is hereby amended by inserting the following as the new Section 1.3(c):

“(c) The phrase “date hereof”, “date of this Agreement”, “as of the ‘Closing’ contemplated by the Business Transfer Agreement pursuant to section 2.5 of the Business Transfer Agreement” and other phrases of similar import, and (to the extent used to describe a point in time) “execution of this Agreement”, “consummation of the Reorganization Transactions”, “consummation of the Internal Reorganization” and other phrases of similar import, shall be deemed to refer for all purposes of this Agreement (including Article III) to (i) September 15, 2010 with respect to the Second MRA Amendment, the BPPR IPTA Amendment, the BTA Amendment, the ISO Agreement (as amended by the First ISO Amendment) and the Seňorial Building Lease and (ii) June 30, 2010 with respect to all other matters.”

7. Section 2.3 Closing Payment Procedures, 2.4 Pre-Closing Adjustment, 2.5 Post-Closing True-up and 2.9 Post- Closing Foreign Equity Payments.

(a)
Section 2.3 of the Merger Agreement is hereby amended by deleting the last two sentences thereof.

(b)
Section 2.4(a) of the Merger Agreement is hereby amended and restated as set forth below:

“Stockholder shall prepare, or cause to be prepared, and deliver to Parent on or before the date that is three days before the anticipated Closing Date a statement (the “Estimated Closing Statement”) consisting of (A) an estimated consolidated balance sheet of the Companies (other than EV) as of the close of business on such anticipated Closing Date, a good faith estimation in reasonable detail of the Estimated Closing Working Capital derived from such balance sheet and (C) a good faith calculation of the amounts of any contribution or payments required under Section 2.4(b). The Estimated Closing Statement shall be prepared in accordance with GAAP applied on a basis consistent with the accounting principles, methods, practices, policies and procedures (with consistent classifications, judgments and valuation and estimation methodologies) that were used to prepare the Historical Financial Statements, except as set forth in Exhibit 2.4(a) (with such exceptions, the “Applicable Accounting Principles”). For illustrative purposes, Exhibit 2.4(a) contains a pro forma calculation of the Estimated Closing Working Capital (provided, however, that such illustrative calculation includes EV) as of December 31, 2009 applying the Applicable Accounting Principles.”

(c)
Section 2.5(a) of the Merger Agreement is hereby amended and restated as set forth below:

“As soon as practicable, but in no event more than 90 days following the Closing Date, Parent shall prepare, or cause to be prepared, and deliver to Stockholder a statement (the “Closing Statement”) consisting of (i) an unaudited consolidated balance sheet of the Companies (other than EV) as of the close of business on the Closing Date, (ii) a good faith calculation in reasonable detail of the Closing Working Capital derived from such balance sheet and (iii) a good faith calculation of the amount of any payment required under Section 2.5(e). The Closing Statement shall be prepared in accordance with the Applicable Accounting Principles and shall be consistent with the Estimated Closing Statement with respect to form and format.”

(d)
The Merger Agreement is hereby amended by inserting the following as a new Section 2.9:

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“Section 2.9 Post-Closing Foreign Equity Payments. If Stockholder or any of its Affiliates receives during the ROFR Transfer Period any amount from the sale by PIBI or any of its Affiliates of any portion of its Foreign Equity Investment in Contado or Serfinsa in conjunction with the exercise of a right of first refusal or otherwise during the ROFR Transfer Period, it shall pay to Holdco an amount equal to 50% of the After-Tax Aggregate Proceeds as further provided herein, at the time of the transfer of a portion of the applicable Foreign Equity Investment to the Company (each such amount being a “Post-Closing Foreign Equity Adjustment”). Such payment shall be treated as an adjustment to the Merger Consideration for Tax purposes. If Stockholder or its Affiliates does not complete the transfer of a portion of the Foreign Equity Investment in Serfinsa or Contado to the Company as required by Section 5.13(b), Stockholder shall pay to Holdco the Contado Remaining Amount with respect to Contado and the Serfinsa Remaining Amount with respect to Serfinsa, as applicable, as promptly as practicable after the expiration of the ROFR Transfer Period. Such payments shall be treated as an adjustment to the Merger Consideration for Tax purposes. For the avoidance of doubt, Stockholder shall not be obligated to pay such Contado Remaining Amount or Serfinsa Remaining Amount, as applicable, if no shares of capital stock in such Foreign Equity Investment can be transferred due to the fact that the entire applicable Foreign Equity Investment was acquired pursuant to the applicable rights of first refusal and, for the avoidance of doubt, the applicable Post-Closing Foreign Equity Adjustment shall be made. Furthermore, to the extent any dividends or distributions are declared or paid to PIBI or any of its Affiliates (other than Holdco or any of its Subsidiaries) with respect to a Foreign Equity Investment following the Closing and prior to the expiration of the ROFR Transfer Period, an amount equal to the After-Tax Dividend Proceeds of such dividends or distributions shall be paid by the Stockholder to the Holdco as promptly as practical after receipt thereof (each such amount being a “Foreign Equity Dividend”). Such payment of any Foreign Equity Dividends shall be treated as an adjustment to the Merger Consideration for Tax purposes. Parent and Stockholder shall cause Holdco to contribute to the Company, as an additional contribution to capital, any amounts received as a Post-Closing Foreign Equity Adjustment, the Serfinsa Remaining Amount or Contado Remaining Amount or as a Foreign Equity Dividend.

8. Section 3.1 Capitalization. Section 3.1(b)(i) of the Merger Agreement is hereby amended and restated as set forth below:

“the authorized capital stock of the Company shall consist of 2,500,000 shares of common stock, par value $1.00 per share, 822,279 of which will be issued and outstanding and will have been duly authorized, validly issued, fully paid and nonassessable (subject to adjustment for (i) any transfer of PIBI’s Foreign Equity Investment in CONTADO pursuant to the Master Reorganization Agreement (as amended by the MRA Amendment and the Second MRA Amendment) prior to Closing and/or (ii) any change in the book value of certain accounts receivable to be transferred by the Company pursuant to the EV Transfer Documents),”

9. Section 3.9(e) Compliance with Laws. The lead in to Section 3.9(e) of the Merger Agreement (but not sub- clauses (i) through (v)) is hereby amended and restated as set forth below:

“For purposes of this Agreement, the following terms have the meanings ascribed to such terms in this Section. 3.9(e):”

10. Section 3.31 EV Customer Contracts; Receivables. (a) the Merger Agreement is hereby amended by inserting the following as a new Section 3.31:

“Section 3.31 EV Customer Contracts; Receivables. The revenues of the Companies attributable to the Venezuela Customer Contracts were included in the calculation of EBITDA of the VZ Business used to determine the value of the VZ Business in connection with the reduction of the Closing Payment pursuant to clause (iii) of the definition thereof. The P/SSA Receivables and PSA Receivables are payment obligations under the Venezuela Customer Contracts and the Other Receivables arose from the VZ Business.”

(b) The final sentence of Section 7.2(b) of the Merger Agreement is hereby amended and restated as follows:

“Notwithstanding the foregoing, this Section 7.2(b) does not apply to indemnification obligations directly or indirectly relating to or arising out of any breach or inaccuracy of any representation and warranty under any of the

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Fundamental Representations, the Extended Survival Representations and the representation set forth in Section 3.31 or to Stockholder’s indemnification obligation set forth in Section 5.4.”

11. Section 5.4 Tax Matters. Section 5.4 of the Merger Agreement is hereby amended by inserting the following after sub-clauses (iii):

“and (iv) any Taxes imposed with respect to the transactions contemplated by the EV Transfer Documents or the transactions contemplated by Section 5.13(b); provided, however, that with respect to Contado and Serfinsa, references in clauses (i), (ii) and (iii) hereof to “Closing Date” and “Closing” shall be determined based on the time of closing of the transaction contemplated by Section 5.13(b).”

12. Section 5.5 Employee and Benefit Matters. (a) The Merger Agreement is hereby amended by deleting the last sentence of Section 5.5(a).

(b) Section 5.5 of the Merger Agreement is hereby amended by inserting the following as a new Subsection 5.5(n):

“(n) Employees of EV and the EV Business. Notwithstanding anything to the contrary set forth herein, none of the Companies shall have any obligations under this Section 5.5 in respect of any employees of EV or any employees of the Company primarily serving the VZ Business.”

13. Section 5.6 Non-Competition. Section 5.6(c) of the Merger Agreement is hereby amended by inserting the following immediately following the proviso contained in the first sentence thereof:

“; provided further that, notwithstanding anything to the contrary contained herein, Stockholder and its Affiliates shall be permitted to own EV, Contado and Serfinsa and to directly or indirectly engage in, manage, control, license or participate in the business currently conducted by EV in Venezuela and the business consisting of servicing the Venezuelan Customer Contracts and, to the extent related to ownership of equity interests of Contado or Serfinsa, the business of Contado or Serfinsa, respectively.”

14. Section 5.13 Internal Reorganization. Section 5.13 of the Merger Agreement is hereby amended and restated as set forth below:

“Section 5.13 Internal Reorganization; Contado; Serfinsa. (a) From and after the date hereof Stockholder shall not, and shall cause the Stockholder Parties and the Companies not to, amend, modify, terminate, supplement or waive any term or provision of the Internal Reorganization Documents or the IP Purchase & Sale Agreement without the prior written consent of Parent. Following the date hereof, Stockholder shall and shall cause its Affiliates to complete any transactions contemplated by the Master Reorganization Agreement (as Amended by the MRA Amendment and the Second MRA Amendment) and the Business Transfer Agreement (as amended by the BTA Amendment) not completed prior to the date hereof as promptly as practical, including without limitation the transfer of any Foreign Shares or Foreign Equity Investments following compliance with the applicable transfer, restrictions including rights of first refusal.

(b) To the extent any of the Foreign Equity Investments are not transferred to the Company prior to the Closing, no later than twelve months following the Closing (the period from the Closing to such date, the “ROFR Transfer Period”), subject to and after compliance with applicable rights of first refusal and other transfer restrictions, Stockholder shall and shall cause its Affiliates to sell, assign, transfer and convey, as promptly as reasonably practical all of any such Person’s right, title and interest in and to any such Foreign Equity Investment, remaining after such compliance with such applicable rights of first refusal, to the Company, free and clear of all Encumbrances (other than pursuant to the charter or bylaws of Contado or Serfinsa or any stockholders’ agreement among stockholders of Contado or Serfinsa) in consideration for the Contado Purchase Price, with respect to Contado, and in consideration for the Serfinsa Purchase Price, with respect to Serfinsa. For the avoidance of doubt, the Company shall also pay such Contado Purchase Price, with respect to Contado, and Serfinsa Purchase Price, with respect to Serfinsa, and Stockholder shall not be obligated to transfer any shares of capital stock in such Foreign Equity Investment to the Company if the other shareholders of

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the applicable Foreign Equity Investment purchase all the shares of capital stock in such Foreign Equity Investment owned by Stockholder and its Affiliates pursuant to the applicable rights of first refusal. In furtherance of the foregoing, in exchange for the payment by the Company of the Contado Purchase Price or the Serfinsa Purchase Price, as applicable, Stockholder shall and shall cause its Affiliates, as applicable, to execute and deliver any instruments or other documents required for the transfer and delivery to the Company of the stock certificates evidencing all such Foreign Equity Investments, duly endorsed in blank or in favor of the Company.

15. Section 5.14 Insurance. Section 5.14 of the Merger Agreement is hereby amended by inserting the following immediately following the proviso contained in the first sentence thereof:

“; and provided further that the term Pre-Closing Claim shall not include any claim to the extent the claim would reimburse losses suffered by EV.”

16. Section 5.17 Certain Ancillary Agreements and Organizational Documents: Section 5.17 of the Merger Agreement is hereby amended and restated as follows:

“Section 5.17 Certain Ancillary Agreement and Organizational Documents. Prior to the Closing, each of Parent, Merger Sub, the Company and Stockholder shall promptly (a) select and appoint the Technology Escrow Agent and (b) complete Schedule 1 to the Stockholder Agreement in a manner consistent with the issuance of capital stock contemplated by Section 2.8. In addition, the Parties agree and acknowledge that the services covered by the Services Agreement for Merchant and Electronic Payment Services to Government Entities entered into on June 30, 2010 is to be incorporated into the Amended and Restated ISO Agreement and therefore such Services Agreement for Merchant and Electronic Payment Services to Government Entities shall be terminated prior to the Closing.”

17. Section 5.20 Cash Depot Agreement. Section 5.20(b) of the Merger Agreement is hereby amended by deleting the term “ISO Agreement” and replacing such deleted term with the term “Amended and Restated ISO Agreement”.

18. Section 5.22 Required Stockholder Approval. Section 5.22 of the Merger Agreement is hereby amended and restated as set forth below:

“Section 5.22 Required Stockholder Approval. Immediately following the execution hereof, the Stockholder shall deliver to the Company and Parent the duly executed Stockholder Written Consent. Immediately following the execution of the Second MRA Amendment, Stockholder shall deliver to the Company and Parent the duly executed Additional Stockholder Written Consent.”

19. Section 5.24 Obligations to Make Payments. Section 5.24 of the Merger Agreement is hereby amended and restated as set forth below:

“Section 5.24. Intentionally Omitted.”

20. Section 5.26 Sale of Assets. Section 5.26 of the Merger Agreement is hereby amended and restated as set forth below:

“Section 5.26 Sale of Assets. (a) Stockholder shall, and shall cause the Company, PIBI and EV to, use reasonable best efforts to complete the EV Transfer prior to Closing, including entering into (i) one or more assignment and assumption agreements, substantially in the form attached hereto as Exhibit 19 (the “Venezuelan Assignment and Assumption Agreement(s)”), pursuant to which the Company will (x) assign to EV and or/PIBI, as applicable and EV or PIBI as applicable shall assume all of the Venezuela Customer Contracts (such assignment and assumption, the “Venezuela Contract Assignment”) and (y) certain accounts receivable and (ii) a transition services agreement, substantially in the form attached hereto as Exhibit 20 (the “Venezuelan TSA”), pursuant to which the Company will provide certain transition services to EV for the period set forth therein. Except as provided in EV Transfer Documents, neither the Company nor any of its Subsidiaries will be obligated to incur or retain any Liabilities in connection with the EV Transfer (or any subsequent sale by Stockholder) or the Venezuela Contract Assignment. The Companies shall

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use commercially reasonable efforts to cooperate in any subsequent sale of EV by Stockholder; provided that the Companies shall not be obligated to violate any Law or incur any Liabilities in connection therewith other than non-out-of-pocket expenses, immaterial expenses or expenses that Stockholder consents to reimburse.

(b) From and after the date hereof, Stockholder shall not, and shall cause the Stockholder Parties and the Companies not to, amend, modify, terminate, supplement or waive any term or provision of the EV Transfer Documents without the prior written consent of Parent.”

21. Section 5.28 Mobile Banking Service Rider. The Merger Agreement is hereby amended by inserting the following as a new Section 5.28:

“Section 5.28 Mobile Banking Service Rider. Stockholder agrees that, promptly upon the Company’s completion of the development and testing of the Mobile Banking Service, the Company will, and Stockholder will cause BPPR to (a) negotiate in good faith and finalize the terms and conditions of a service rider under the Amended ATH Network Participation Agreement, pursuant to which the Company will provide to BPPR the Mobile Banking Service for a term that will commence immediately upon the execution of the applicable service rider and be coterminous with the term of the Amended ATH Network Participation Agreement and contain such other terms and conditions reasonably satisfactory to the Company (or, if prior to the Closing, Parent) and Stockholder and (b) enter into such service rider promptly following finalization of the terms and conditions thereof.”

22. Section 5.29 Performance Bonds; Section 5.30 Letters of Credit.
(a) The Merger Agreement is hereby amended by inserting the following as a new Section 5.29:

“Section 5.29 Performance Bonds.

(a) From and after the Closing and until the fifth anniversary of the Closing (the “Coverage Period”), subject to the terms of this Section 5.29, Stockholder shall keep outstanding the currently outstanding Applicable Performance Bonds and to cause to be issued by qualified insurance companies or surety companies reasonably acceptable to the counterparties to the Underlying Performance Bond Obligations (“Qualified Issuers”) new Applicable Performance Bonds, and to have such Applicable Performance Bonds and new Applicable Performance Bonds maintained during the Coverage Period in full force and effect (subject with respect to the obligations of the issuer of the Performance Bonds, to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting the enforcement of creditors’ rights generally and by general equitable principles; provided, that Stockholder shall replace any Applicable Performance Bond as promptly as practicable upon becoming aware that such obligations are not in full force and effect) (including renewing each Applicable Performance Bond at or prior to its expiration (which for the avoidance of doubt will not require the Stockholder to renew any such Applicable Performance Bond for a period extending beyond the end of the Coverage Period)) in amounts and with terms and conditions required by the Underlying Performance Bond Obligations, for so long as any such bond is required under the applicable Underlying Performance Bond Obligations but, for the avoidance of doubt, no longer than the Coverage Period. Without Stockholder’s prior written consent, the Company shall not enter into any definitive agreement in connection with the IVU Lotto Proposal providing for obligations of the Company to procure Applicable Performance Bonds in respect of such bid proposal which are in excess of 10% of the annual revenue produced by the services provided under such definitive agreement; provided that the Company will use its commercially reasonable efforts to minimize (in both amount and length of time) any such obligation to procure Applicable Performance Bonds. Notwithstanding anything to the contrary herein, Stockholder shall be deemed not to be in breach of any of its obligations set forth in this Section 5.29 as a result of procuring Performance Bonds or replacing any Applicable Performance Bonds or new Performance Bonds with other Performance Bonds, in each case, with a term expiring at the end of the Coverage Period.

(b) During the Coverage Period Stockholder shall execute, deliver, maintain in full force and effect and comply with all of the terms set forth in the applicable indemnity or similar agreements with the applicable Qualified Issuers in connection with which the Applicable Performance Bonds are issued and, without the prior written consent of the Company (which consent shall not be unreasonably withheld or delayed), shall not terminate, amend or supplement such agreements in a manner contrary to its obligations hereunder.


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(c) The Company shall cooperate with the Stockholder in a manner reasonably necessary to assist Stockholder with its performance hereunder, including, promptly notifying Stockholder of its Performance Bond requirements.

(d) The Company shall execute and deliver a reimbursement and/or indemnity agreement with Stockholder that mirrors the reimbursement and/or indemnity agreement executed and delivered by Stockholder with the Qualified Issuers, provided that the Company shall have no obligation to post any collateral thereunder (subject to Section 5.29(e)), which mirror reimbursement and/or indemnity agreement shall provide for, amongst other things, the reimbursement, or at the request of Stockholder, advance to Stockholder upon reasonable notice, of (i) all premiums and other charges related to the issuance of the Applicable Performance Bonds owed by Stockholder to the issuer thereof pursuant to the applicable indemnity agreements, and (ii) all losses for which Stockholder indemnifies any such Qualified Issuers under the applicable indemnity agreements to the extent arising out of or relating to the failure of the Company to perform or otherwise satisfy its obligations under the Underlying Performance Bond Obligations. Stockholder shall use its commercially reasonable efforts to negotiate the most favorable terms, including premiums and other charges, for itself and the Company in respect of each Applicable Performance Bond and to minimize any such losses.

(e) If the issuer of any Applicable Performance Bond requires the posting of cash or other collateral in respect of such Performance Bond during the Coverage Period, the Company and Stockholder will cooperate and use their commercially reasonable efforts to arrange for the issuance of a replacement Performance Bond, which (i) shall be issued in accordance with an indemnity agreement between Stockholder and a replacement Qualified Issuer, (ii) shall satisfy the requirements of the Underlying Performance Bond Obligations, (iii) does not require the posting of cash or other collateral at such time and (iv) is otherwise substantially similar to the then existing indemnity agreement. If the Company is unable to obtain a replacement Performance Bond that satisfies the foregoing criteria, then Stockholder shall post the required collateral, letter of credit or other credit enhancement acceptable to the existing Qualified Issuer within the timeframe required by the applicable indemnity agreement and the Company shall reimburse Stockholder for its reasonable out-of-pockets costs incurred in obtaining such collateral or credit enhancement.

(f) For the avoidance of doubt, none of the Companies shall have any Liability under any Applicable Performance Bond except as otherwise provided in this Section 5.29. The Company shall cooperate with the Stockholder in a manner reasonably necessary to assist Stockholder with its performance of its obligations hereunder, including, promptly notifying Stockholder after receiving any request that collateral may be demanded.

(g) The Company shall use its reasonable best efforts to, as of the end of the Coverage Period (or to the extent notwithstanding such efforts the Company is unable to as of such time, as promptly as practicable thereafter), cause any collateral posted by Stockholder pursuant to Section 5.29 to be returned to Stockholder and obtain a release of Stockholder and its Affiliates from any Qualified Issuer from all obligations under any applicable indemnity agreement and, for so long as Company is unable to obtain such release, the Company shall provide a back to back indemnity agreement that mirrors the obligations of Stockholder in full.

(h) The Company may have additional Performance Bonds (other than the Applicable Performance Bonds (“Additional Performance Bonds”). The Company will not permit any collateral posted in connection with the Additional Performance Bonds or any obligations thereunder to be cross-collateralized with any Applicable Performance Bonds or any obligations thereunder.

(i) For purposes of this Section 5.29, (x) “Performance Bonds” means performance bonds, surety bonds, bid bonds, completion guarantees and similar instruments, (y) “Applicable Performance Bonds” means (i) those Performance Bonds that are outstanding as of the date of the Third Amendment to this Agreement, including those set forth on Schedule 5.29 of the Stockholder Disclosure Schedule and (ii) those Performance Bonds required by any Contract entered into in connection with the IVU Lotto Proposal and (z) “Underlying Performance Bond Obligations” means those Contracts which (i) any Company is a party to or is bound and (ii) require the issuance of the Applicable Performance Bonds or Laws, as such Contract may be amended, supplemented, extended, renewed or replaced without giving effect to any changes in respect of the obligations to provide Performance Bonds thereunder which are adverse to Stockholder.”

(b) The Merger Agreement is hereby amended by inserting the following as a new Section 5.30:

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“Section 5.30 Letters of Credit.

(a) At or prior to Closing, subject to this Section 5.30, Stockholder shall (i) replace each of the current Applicable Credit Enhancements with new Credit Enhancements and post any required collateral under such new Credit Enhancements, if any, (a “Replacement Credit Enhancement”) or, if it would result in such Applicable Credit Enhancements not constituting debt of the Company under the credit documents of the Company to be entered into in connection with the Closing and not reducing the borrowing capacity of the Company under such credit documents, replace the required collateral, if any, posted under the current Applicable Credit Enhancement and (ii) if required, enter into customary reimbursement and/or indemnity agreements with the Qualified Issuing Bank in respect of any Applicable Credit Enhancement. Any new Credit Enhancements shall be issued by a qualified issuing bank (a “Qualified Issuing Bank”) on behalf of Stockholder in support of the Underlying Credit Enhancement Obligations. Notwithstanding anything to the contrary herein, Stockholder shall be deemed not to be in breach of any of its obligations set forth in this Section 5.30 as a result of procuring Applicable Credit Enhancement or replacing any Applicable Credit Enhancement or Replacement Credit Enhancements with other Credit Enhancement, in each case, with a term expiring at the end of the Coverage Period.

(b) During the Coverage Period, subject to the terms of this Section 5.30, Stockholder shall cause all the Replacement Credit Enhancements to be maintained during the Coverage Period in full force and effect (including renewing each Replacement Credit Enhancement at or prior to its expiration (which for the avoidance of doubt will not require the Stockholder to renew any such Replacement Credit Enhancements for a period extending beyond the end of the Coverage Period)) in amounts and with terms and conditions required by the Underlying Credit Enhancement Obligations, for so long as any such Credit Enhancement is required under any Underlying Credit Enhancement Obligations, but for the avoidance of doubt, no longer than the Coverage Period.

(c) During the Coverage Period, Stockholder (i) shall execute, deliver, maintain in full force and effect and comply with all of the terms set forth in the applicable reimbursement, indemnity or similar agreements with the applicable Qualified Issuing Bank in connection with which the Replacement Credit Enhancements are issued and (ii) shall not, without the prior written consent of the Company (which consent shall not be unreasonably withheld or delayed), terminate, amend or supplement such agreements in a manner inconsistent with its obligations hereunder.

(d) The Company shall cooperate with the Stockholder in a manner reasonably necessary to assist Stockholder with its performance hereunder, including, promptly notifying Stockholder of its Credit Enhancement requirements.

(e) The Company shall execute and deliver a reimbursement and/or indemnity agreement that mirrors the reimbursement and/or indemnity agreement executed and delivered by Stockholder with the Qualified Issuing Bank, provided that the Company shall have no obligation to post any collateral thereunder, which mirror reimbursement and/or indemnity agreement shall provide for, amongst other things, the reimbursement, or at the request of Stockholder, advance to Stockholder upon reasonable notice, of (i) all premiums and other charges related to the issuance of the Credit Enhancements owed by Stockholder to the issuer thereof pursuant to the applicable indemnity agreements, and (ii) all losses for which Stockholder indemnifies any such Qualified Issuers under the applicable indemnity agreements to the extent arising out of or relating to the failure of the Company to perform or otherwise satisfy its obligations under the Underlying Credit Enhancement Obligations. Stockholder shall use its commercially reasonable efforts to negotiate the most favorable terms, including premiums and other charges, for itself and the Company in respect of each Replacement Credit Enhancements and to minimize any such losses.

(f) For the avoidance of doubt, none of the Companies shall have any Liability under Replacement Credit Enhancement except as otherwise provided in this Section 5.30.

(g) The Company shall use its reasonable best efforts to, as of the end of the Coverage Period (or to the extent notwithstanding such efforts the Company is unable to as of such time, as promptly as practicable thereafter), procure Credit Enhancements replacing all Credit Enhancements then procured or collateralized by Stockholder and shall obtain a release of Stockholder and its Affiliates from all collateral requirements or other claims under any Credit Enhancement

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and, for so long as Company is unable to obtain such release, the Company shall provide a back to back indemnity agreement that mirrors the obligations of Stockholder in full.

(h) For purposes of this Section 5.30, (x) “Credit Enhancements” means letters of credit, bank guarantees, bankers acceptances and similar instruments other than Performance Bonds, (y) “Applicable Credit Enhancements” means those Credit Enhancements issued on behalf of any Company prior to the Closing and outstanding as of immediately prior to the Closing and (z) “Underlying Credit Enhancement Obligations” means (A) those Contracts to which any Company is a party or is bound (as in effect as of the Closing, as such Contract may be amended, supplemented, extended, renewed or replaced without giving effect to any changes in respect of the obligations to provide Credit Enhancements thereunder which are adverse to Stockholder), (B) Network Rules or (C) applicable Laws, in each case, which require the counterparty to provide Credit Enhancements.”

23. Section 5.31 Certain Additional Matters. The Merger Agreement is hereby amended by inserting the following as a new Section 5.31:

“Section 5.31 Certain Additional Matters. Stockholder shall cause the Companies to perform the obligations set forth in Schedule 5.31 of the Stockholder Disclosure Schedule.

24. Section 6.1(e). Conditions to the Obligations of the Parties. Section 6.1(e) of the Merger Agreement is hereby amended and restated as follows:

“(e) Financing. Merger Sub shall receive sufficient cash in order to fund the Closing Payment (without regard to Estimated Closing Working Capital Adjustment), the Contado Holdback Amount, the Serfinsa Holdback Amount, the Pre- Closing Dividend, the Stockholder Transaction Expenses and the Parent Transaction Expenses.”

25. Section 6.2 Conditions to the Obligations of Parent and Merger Sub. (a) Section 6.2 of the Merger Agreement is hereby amended by adding the following condition at the end of such section:

“(i) EV Transfer. The Stockholder and the Company shall have consummated the EV Transfer, provided that in no event shall this condition be deemed not to have been satisfied by the failure to assign any Venezuela Customer Contract other than the Venezuela Customer Contract set forth on Schedule 6.2(i) of the Stockholder Disclosure Schedule.”

(b) Section 6.2(e) of the Merger Agreement is hereby amended and restated as set forth below:

“(e) Adjusted EBITDA. Adjusted EBITDA for the four (4) most recent full fiscal quarters ending at least 45 days prior to the Closing Date shall not be less than $109,523,810.00.”

26. Section 7.2 Indemnification by Stockholder. (a) Section 7.2(a) of the Merger Agreement is hereby amended by adding the following new clauses (xi), (xii), (xiii) and (xiv) at the end of the first sentence thereof:

“(xi) (a) the Company’s, Stockholder’s and/or its Affiliates ownership of EV and the ownership, operation, performance, and conduct of EV’s business, the Venezuelan Customer Contracts and any other Venezuela Operations Assets (as such term is defined in the Venezuelan Reorganization Agreement) or Liabilities to the extent related to services provided to the operations of financial institutions in Venezuela or such Venezuela Operations Assets (collectively, the “VZ Business”), and (b) the transactions contemplated by the EV Transfer Documents, in the cases of each of clauses (a) and (b), (x) including any violation of Law, or performance, non-performance or breach of Contract to the extent related thereto, and (z)(i) with respect to breaches of any Contracts (taking into account only such modifications or amendments to such Contracts which do not expand or otherwise modify the Company’s or its Subsidiaries’ obligations thereunder) in existence prior to or as of the Closing whether arising before, at or after the Closing, (ii) with respect to any act, failure to act, event, circumstance, condition, or occurrence occurring prior to or at Closing regardless of whether the related Liability arises before, at or after Closing and (iii) with respect to all other matters, whether arising before, at or, to the extent of any obligations that exist as of the Closing, after the Closing.”


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“(xii) any Losses arising out of or related to the matters set forth on Schedule 7.2(a)(xii) of the Stockholder Disclosure Schedule.”

“(xiii) any Losses arising out of the conduct prior to the Closing of the Services specified on Schedule 5.31 of the Stockholder Disclosure Schedule.”

“(xiv) any Liability for any breach that occurs on or before the Closing Date and any continuing breach thereafter of any Contract to which any of the Companies is a party at or prior to the Closing arising from the Companies ceasing to provide the Services specified on Schedule 5.31 of the Stockholder Disclosure Schedule.”

27. Section 7.4 Indemnification by the Company. Section 7.4 of the Merger Agreement is hereby amended and restated as set forth below:

“Section 7.4 Indemnification by the Company. The Company hereby agrees that from and after the Closing it shall indemnify, defend and hold harmless the Stockholder Indemnified Parties from, against and in respect of any Losses imposed on, sustained, incurred or suffered by, or asserted against, any of the Stockholder Indemnified Parties, whether in respect of Third-Party Claims, claims between the Parties, or otherwise (other than, in the case of clauses (ii) and (iii), to the extent of Stockholder’s indemnification obligations pursuant to Section 7.2(a)), directly or indirectly relating to or arising out of (i) any material breach of any covenant or agreement of the Company set forth in Sections 5.1, 5.5, 5.6, 5.7 and 5.9 occurring after the Closing, (ii) the Company Liabilities and (iii) the Business Assets (other than those retained by Stockholder or any of its Affiliates following the Closing, to the extent and for the time periods so retained), the Business (other than the VZ Business) or the Applicable Employees to the extent attributable to the operation or ownership of the Business Assets (other than those retained by Stockholder or any of its Affiliates following the Closing, to the extent and for the time periods so retained) or the Business (other than the VZ Business) or the employment of the Applicable Employees, in each case, following the Closing.”

28. Section 7.5(b) Third-Party Claim Indemnification Procedures. The Merger Agreement is hereby amended by inserting the following immediately before the last sentence in Section 7.5(b):

“If the Indemnifying Party assumes control of the defense of any matter, it shall keep the Indemnified Parties reasonably informed of the details of any applicable matter, including by using reasonable efforts to include the Indemnified Parties in any in-person or telephonic meeting with any Government Entity or other Person asserting a Claim against the Indemnified Party for which indemnification is sought (or with any advisor to such a Government Entity or other Person.”

29. Section 7.13 Certain Matters. The Merger Agreement is hereby amended by inserting the following as a new Section 7.13:

“Section 7.13 Certain Matters. Stockholder hereby agrees that it shall not assert that it is not obligated to provide indemnification for Losses that a Parent Indemnified Party asserts are covered by the indemnification obligations in Sections 7.2(a)(ix), 7.2(a)(xi), 7.2(a)(xiii) or 7.2(a)(xiv), including any such Losses described in such Sections arising out of or relating to the matters set forth on Schedule 7.13 of the Stockholder Disclosure Schedule (the “Schedule 7.13 Matters”), regardless of whether any of such matters constitute a violation of Law; provided, that Stockholder shall not be prevented from disputing that such Losses do not relate to or arise out of the matters set forth in such Sections. Stockholder shall negotiate in good faith with any applicable Governmental Authorities to resolve all matters covered by the indemnification obligations in Section 7.2(a)(ix) as promptly as reasonably practical. Notwithstanding anything in this Agreement to the contrary, Losses covered by the indemnification obligations in Sections 7.2(a)(ix), 7.2(a)(xi), 7.2(a)(xiii) and 7.2(a)(iv) including any Losses covered by the indemnification obligations in such Sections arising out of or relating to the Schedule 7.13 Matters, shall include: (i) all fines and penalties payable to Governmental Authorities in respect of the matters covered thereby and (ii) all reasonable out-of-pocket costs and expenses to the extent directly resulting from any required changes to the business practices of the Companies, which changes are necessary to comply with the Orders of Governmental Authorities, with respect to the matters covered thereby. If a Governmental Authority delivers a Penalty Notice or similar final notice imposing a penalty with respect to any of the matters referred to in Sections 7.2(a)(ix), 7.2(a) (xi), 7.2(a)(xiii) and 7.2(a)(xiv), including any such matters that are Schedule 7.13 Matters,

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and Stockholder does not resolve all the matters contemplated thereby within thirty calendar days, then Stockholder shall be required to post a bond, letter of credit, cash collateral or other credit enhancement, in each case, reasonably satisfactory to Parent and Stockholder, in favor of the applicable Parent Indemnified Parties in the amounts set forth in the Penalty Notice. Notwithstanding anything to the contrary in this Agreement, Stockholder, Parent, Merger Sub and the Company hereby agree that a Claim Notice shall be deemed to have been delivered to Stockholder, as of the Closing, with respect to all matters (other than Direct Claims) referred to in Section 7.2(a)(ix) , 7.2(a)(xi), 7.2(a)(xiii) and 7.2(a)(xiv) that are Schedule 7.13 Matters. Stockholder shall be deemed to have asserted control of such matters for purposes of Section 7.5 (b). In the event that a Third Party Claim is asserted against Holdco, the Company or any other Patent Indemnified Party in respect of such matters, the applicable Indemnified Party shall promptly, but in no event more than 15 days following such Indemnified Party’s receipt of a Third-Party Claim, notify the Indemnifying Party in writing of such Third-Party Claim and provide the information with respect to such Third-Party Claim that would be set forth in a Claim Notice for such Third Party Claim if a Claim Notice had not been deemed delivered pursuant to this Section 7.13.”

30. Stockholder Disclosure Schedules. The Stockholder Disclosure Schedules attached to the Merger Agreement are hereby amended as follows:

(a)
Schedule 1.1(c) of the Stockholder Disclosure Schedules is hereby amended by:

(i) deleting the individuals set forth on Exhibit B hereto; and (ii) adding the individuals set forth on Exhibit C hereto.

(b)
Schedule 2.6(e) of the Stockholder Disclosure Schedule is hereby amended by deleting the following closing deliverable:

“5. Consent of the other shareholders of Servicios Financieros S.A. under the Acuerdo de Desarrollo de Negocios de Servicios Financieros S.A., dated June 4, 2003.”

(c)
Schedule 3.3(a) is hereby amended by adding the following at the end thereof:

“– Application by Popular International Bank, Inc. for the issuance and delivery of the New PIBI Shares pursuant to Section 10 of Act 52 and Article 8(2) of Regulation 5653 to Implement the Provisions of the International Banking Center Act (“Regulation 5653”) of the Office of the Commissioner of Financial Institutions of Puerto Rico.
– Application by Popular International Bank, Inc. for the acquisition of the EVCA Shares pursuant to Article 9(c) of Regulation 5653 of the Office of the Commissioner of Financial Institutions of Puerto Rico.”

(d) Schedule 3.3(b) of the Stockholder Disclosure Schedules is hereby amended by adding the Contracts set forth on Exhibit D hereto.

(e) The Stockholder Disclosure Schedule is hereby amended by inserting the following Schedules to this Amendment in the appropriate chronological order:

New Schedule to the Stockholder Disclosure Schedule
Schedule from this Amendment
Schedule 2.4(b) — Scheduled Transaction Bonuses
Schedule 2.4(b) — Scheduled Transaction Bonuses
Schedule 5.29 — Performance Bonds
Schedule 5.29 — Performance Bonds
Schedule 5.31 — Certain Additional Matters
Schedule 5.31 — Certain Additional Matters
Schedule 6.2(i) — EV Transfer
Schedule 6.2(i) — EV Transfer
Schedule 7.2(a)(xii) — Certain Matters
Schedule 7.2(a)(xii) — Certain Matters
Schedule 7.13 — Schedule 7.13 Matters
Schedule 7.13 — Schedule 7.13 Matters

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31. Section 7.11 Mitigation. Section 7.11 of the Merger Agreement is hereby amended by interesting the following at the end of such Section:

“Notwithstanding anything herein to the contrary the obligations set forth in Section 7.11 and/or any other similar obligations arising under Law or equity shall not apply to claims for indemnification brought pursuant to Sections 7.2(a) (ix), 7.2(a)(xi), 7.2(a)(xiii) or 7.2(a)(xiv).”

32. Exhibits. The Exhibits attached to the Merger Agreement are hereby amended as follows:

(a) Each of the Exhibits to the Merger Agreement set forth in the following table are hereby deleted from the Merger Agreement and replaced with the Exhibit to this Agreement set forth opposite such Exhibit to the Merger Agreement in the corresponding row to such table:

Exhibit to Merger Agreement being Deleted
Replacement Exhibit from this Amendment
Exhibit 1.1(a)(B) — Form of Amended and Restated Master Services Agreement
Exhibit 1.1(a)(B) — Form of Amended and Restated Master Services Agreement
Exhibit 1.1(a)(E)(1) — Form of Amended ATH Network Participation Agreement
Exhibit 1.1(a)(E)(1) — Form of Amended ATH Network Participation Agreement
Exhibit 1.1(a)(F)(1) — Form of Third-Party Master Beneficiary Escrow Services Agreement
Exhibit 1.1(a)(F)(1) — Form of Third-Party Master Beneficiary Escrow Services Agreement
Exhibit 1.1(a)(F)(2) — Form of Technology Agreement
Exhibit 1.1(a)(F)(2) — Form of Technology Agreement
Exhibit 1.1(a)(H) — Form of Stockholder Agreement
Exhibit 1.1(a)(H) — Form of Stockholder Agreement
Exhibit 1.1(a)(I) — Form of Amended & Restated Centro Europa Building Lease
Exhibit 1.1(a)(I) — Form of Amended & Restated Centro Europa Building Lease
Exhibit 1.1(K) — Form of Third Tres Monjitas Sublease Amendment
Exhibit 1.1(K) — Form of Third Tres Monjitas Sublease Amendment
Exhibit 1.1(a)(L)(1) — Form of Amended and Restated ISO Agreement
Exhibit 1.1(a)(L)(1) — Form of Amended and Restated ISO Agreement
Exhibit 1.1(a)(N) — Form of Holdco Certificate of Incorporation
Exhibit 1.1(a)(N) — Form of Holdco Certificate of Incorporation
Exhibit 1.1(a)(O) — Form of Holdco By-laws
Exhibit 1.1(a)(O) — Form of Holdco By-laws
Exhibit 1.1(a)(S) — Form of MSA Exhibit B
Exhibit 1.1(a)(S) — Form of MSA Exhibit B
Exhibit 1.1(a)(U) — Form of Amended and Restated Ticketpop Service Agreement
Exhibit 1.1(a)(U) — Form of Amended and Restated Ticketpop Service Agreement
Exhibit 1.1(a)(W) — Form of ATH Support Agreement
Exhibit 1.1(a)(W) — Form of ATH Support Agreement

(b) The following Exhibits to this Amendment are hereby attached to the Merger Agreement and incorporated therein as additional exhibits:
New Exhibit to Merger Agreement
Exhibit from this Amendment
Exhibit 1.1(a)(M)(7) — Form of Amended and Restated Service Addendum – Remote Capture Services
Exhibit 1.1(a)(M)(7) — Form of Amended and Restated Service Addendum – Remote Capture Services

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Exhibit 1.1(a)(P)(4) — Form of EVERPay Kiosk Service Addendum
Exhibit 1.1(a)(P)(4) — Form of EVERPay Kiosk Service Addendum
Exhibit 1.1(a)(P)(5) — Form of Fleet Card Services Addendum
Exhibit 1.1(a)(P)(5) — Form of Fleet Card Services Addendum
Exhibit 1.1(a)(P)(6) — Form of Fraud Monitoring Service Addendum
Exhibit 1.1(a)(P)(6) — Form of Fraud Monitoring Service Addendum
Exhibit 1.1(a)(X) — Form of Virgin Islands Services Agreement
Exhibit 1.1(a)(X) — Form of Virgin Islands Services Agreement
Exhibit 1.1(a)(Y) — Form of FCC Side Letter
Exhibit 1.1(a)(Y) — Form of FCC Side Letter
Exhibit 1.1(a)(Z) — Form of EVERTEC Certificate of Incorporation
Exhibit 1.1(a)(Z) — Form of EVERTEC Certificate of Incorporation
Exhibit 1.1(a)(ZZ) — Form of EVERTEC By-laws
Exhibit 1.1(a)(ZZ) — Form of EVERTEC By-laws
Exhibit 1.1(a)(ZZZ)(1) — Form of Apollo Consulting Agreement
Exhibit 1.1(a)(ZZZ)(1) — Form of Apollo Consulting Agreement
Exhibit 1.1(a)(ZZZ)(2) — Form of Popular Consulting Agreement
Exhibit 1.1(a)(ZZZ)(2) — Form of Popular Consulting Agreement
Exhibit 14 — Second MRA Amendment
Exhibit 14 — Second MRA Amendment
Exhibit 15 — BTA Amendment
Exhibit 15 — BTA Amendment
Exhibit 16 — BPPR IPTA Amendment
Exhibit 16 — BPPR IPTA Amendment
Exhibit 17 — Señorial Building Lease
Exhibit 17 — Señorial Building Lease
Exhibit 18 — Venezuelan Reorganization Agreement
Exhibit 18 — Venezuelan Reorganization Agreement
Exhibit 19 — Venezuelan Assignment and Assumption Agreements
Exhibit 19 — Venezuelan Assignment and Assumption Agreements
Exhibit 20 — Venezuela TSA
Exhibit 20 — Venezuela TSA

B.
Consent to Amendments.

1. Internal Reorganization. Parent and Merger Sub hereby consent to the amendments of the Master Reorganization Agreement, the Business Transfer Agreement and the BPPR IP Transfer Agreement set forth in the Second MRA Amendment, the BTA Amendment and the BPPR IPTA Amendment attached hereto, respectively.

2. ISO Agreement. Parent and Merger Sub hereby consent to the amendment to the ISO Agreement to provide that the Company will be responsible for “front line” customer claim receipt services (such amendment being, the “First ISO Amendment”).

C. Consent to EV Transfer. Notwithstanding anything in this Amendment or the Merger Agreement to the contrary, (i) Parent and Merger Sub hereby consent to the consummation of the EV Transfer in accordance with and subject to the terms and conditions set forth in this Amendment and the EV Transfer Documents, (ii) the Parties hereby agree that none of the representations and warranties contained in Section 3.6 (Financial Statements); Section 3.8 (Employees and Employee Benefits) (other than Section 3.8(e)); Section 3.10 (Intellectual Property) (other than the last sentence of Section 3.10(b), Section 3.10(d) to the extent related to the Company Owned Intellectual Property and Transferred Intellectual Property to the extent not owned by EV), 3.11 (Labor); Section 3.12 (Material Contracts) solely related to the Venezuela Customer Contracts and the Contracts of EV; Section 3.13 (Absence of Changes); Section 3.14 (Sufficiency of Assets) other than with respect Assets necessary to perform obligations of the Companies (other than obligations of EV and the Venezuela Customer Contracts); Section 3.15 (Title to Assets); Section 3.17 (Finders Fee), Section 3.18 (Taxes); Section 3.19 (Environmental Matters); Section 3.20 (Customers; Suppliers); Section 3.21

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(Ownership and Operation of the Companies); Section 3.22 Regulatory Matters; Security Breaches) other than with respect to matters related compliance with Network Rules; Section 3.23 (Insurance); Section 3.25 (Transition Services Agreement; Master Services Agreement; ISO Agreement and other Related Party Agreements); Section 3.26 (Related Party Transactions), Section 3.27 (Directors and Officers); and Section 3.28 (Bank Accounts; Powers of Attorney) of the Merger Agreement, as amended by this Amendment, or the covenants of Stockholder or its Affiliates contained in Section 5.2 to be performed on or before the Closing pursuant to the Merger Agreement, as amended by this Amendment, shall be deemed to be breached to the extent resulting from the consummation of the EV Transfer in accordance with and subject to the terms and conditions set forth in this Amendment and the Venezuelan Reorganization Documents and (iii) Parent and Merger Sub hereby waive any rights or remedies they may have as a result of the breach of any such representation, warranty or covenant to the extent resulting from the consummation of the EV Transfer in accordance with and subject to the terms and conditions set forth in this Amendment and the EV Transfer Documents.

D. Consent to Certain Other Matters. The Parties hereby agree that, notwithstanding anything in this Amendment or the Merger Agreement to the contrary, (i) none of the representations and warranties contained in the Merger Agreement, as amended by this Amendment, or any covenants of Stockholder or its Affiliates contained in Section 5.2 or 5.15 to be performed on or before the Closing pursuant to the Merger Agreement, as amended by this Amendment, shall be deemed to be breached as a result of (x)(A) the consummation of the transactions contemplated by Sections 5.29 or 5.30 of the Merger Agreement, as amended by this Amendment, or (B) otherwise with respect to any matter relating to the Applicable Performance Bonds or the Applicable Credit Enhancements or (y) the matters set forth on Exhibit 7.2(a)(xii) hereto and (i) Parent and Merger Sub hereby waive any rights or remedies they may have as a result of the breach of any such representation or warranty or any such obligation to the extent resulting from such matters.

E. Miscellaneous. This Amendment and the Merger Agreement, together, contain the complete agreement among the Parties and supersede any prior understandings, agreements, letters of intent, or representations by or among such parties, written or oral, that may have related to the subject matter hereof in any way. Except as specifically amended hereby, the Merger Agreement, as amended hereby, shall remain in full force and effect. The terms and provisions of Article IX of the Merger Agreement are incorporated herein by reference as if set forth herein in their entirety and shall apply mutatis mutandis to this Amendment.

* * * * *
























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EXHIBITS TO THIS AMENDMENT
Exhibit A
Table of Contents
Exhibit B
Removed Employees
Exhibit C
Additional Employees
Exhibit 1.1(a)(B)
Form of Amended and Restated Master Services Agreement
Exhibit 1.1(a)(E)(1)
Form of Amended ATH Network Participation Agreement
Exhibit 1.1(a)(F)(1)
Form of Third-Party Master Beneficiary Escrow Services Agreement
Exhibit 1.1(a)(F)(2)
Form of Technology Agreement
Exhibit 1.1(a)(H)
Form of Stockholder Agreement
Exhibit 1.1(a)(I)
Form of Amended & Restated Centro Europa Building Lease
Exhibit 1.1(K)
Form of Third Tres Monjitas Sublease Amendment
Exhibit 1.1(a)(L)(1)
Form of Amended and Restated ISO Agreement
Exhibit 1.1(a)(M(7))
Form of Amended and Restated Service Addendum – Remote Capture Services
Exhibit 1.1(a)(N)
Form of Holdco Certificate of Incorporation
Exhibit 1.1(a)(O)
Form of Holdco By-laws
Exhibit 1.1(a)(P)(4)
Form of EVERPay Kiosk Service Addendum
Exhibit 1.1(a)(P)(5)
Form of Fleet Card Services Addendum
Exhibit 1.1(a)(P)(6)
Form of Fraud Monitoring Service Addendum
Exhibit 1.1(a)(S)
Form of MSA Exhibit B
Exhibit 1.1(a)(U)
Form of Amended and Restated TicketPop Service Agreement
Exhibit 1.1(a)(W)
Form of ATH Support Agreement
Exhibit 1.1(a)(X)
Form of Virgin Islands Services Agreement
Exhibit 1.1(a)(Y)
Form of FCC Side Letter
Exhibit 1.1(a)(Z)
Amended EVERTEC Articles
Exhibit 1.1(a)(ZZ)
Amended EVERTEC Bylaws
Exhibit 1.1(a)(ZZZ)(1)
Apollo Consulting Agreement
Exhibit 1.1(a)(ZZZ)(2)
Popular Consulting Agreement
Exhibit 14
Second MRA Amendment
Exhibit 15
BTA Amendment
Exhibit 16
BPPR IPTA Amendment
Exhibit 17
Señorial Building Lease
Exhibit 18
Venezuelan Reorganization Agreement
Exhibit 19
Venezuelan Assignment and Assumption Agreements
Exhibit 20
Venezuela TSA
 
 
SCHEDULES TO THIS AMENDMENT
 
 
Schedule 2.4(b)
Scheduled Transaction Bonuses
Schedule 5.29
Performance Bonds
Schedule 5.31
Certain Additional Matters
Schedule 6.2(i)
EV Transfer
Schedule 7.2(a)(xii)
Certain Matters
Schedule 7.13
Schedule 7.13 Matters


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IN WITNESS WHEREOF, the Parties have executed or caused this Amendment to be executed as of the date first written above.

POPULAR, INC.
By: /s/ Richard Carrión Rexach
Name: Richard L. Carrión
Title: Chairman, President & CEO
EVERTEC, INC.
By: /s/ Felix M. Villamil
Name: Felix M. Villamil
Title:
AP CARIB HOLDINGS, LTD.
By: Apollo Management VII, L.P., its sole director
By: AIF Management LLC, its general partner
By: /s/ Marc Becker
Name: Marc Becker
Title: Vice President
CARIB ACQUISITION, INC.
By: /s/ Marc Becker
Name: Marc Becker
Title: President




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EXHIBIT 2.5

FOURTH AMENDMENT TO AGREEMENT AND PLAN OF MERGER

This Fourth Amendment (this “Amendment”), dated as of September 30, 2010, is made and entered into by and among (i) Popular, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (“Stockholder”), (ii) AP Carib Holdings, Ltd., an exempted company organized under the laws of the Cayman Islands with limited liability (“Parent”), (iii) Carib Acquisition, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (“Merger Sub”) and (iv) EVERTEC, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (the “Company”). Capitalized terms used and not otherwise defined herein have the meanings set forth in the Merger Agreement (as defined below).

WHEREAS, Stockholder, Parent, Merger Sub and the Company are parties to that certain Agreement and Plan of Merger, dated as of 11:59 P.M., June 30, 2010 as amended on August 5, 2010, August 8, 2010 and September 15, 2010 (the “Merger Agreement”); and

WHEREAS, the Parties amended the IP Purchase and Sale Agreement to join certain affiliates of Stockholder as Sellers and to clarify the software being transferred thereunder;
WHEREAS, as a condition to the willingness of Parent and Merger Sub to enter into this Amendment, the Stockholder, as sole stockholder of the Company, has agreed to deliver immediately following the execution of this Amendment an irrevocable written consent (an “Additional Stockholder Written Consent”) approving and adopting the Merger and the Merger Agreement as amended by this Amendment (an “Additional Stockholder Approval”);
WHEREAS, the Parties desire to amend the Merger Agreement as set forth in this Amendment to specify certain procedures to be followed in connection with the Closing;
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and in the Merger Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
A.
Amendments to the Merger Agreement. The Merger Agreement is hereby amended as follows:
1. Table of Contents. The list of Exhibits set forth in the Table of Contents of the Merger Agreement is hereby amended and restated by deleting the list of Exhibits and replacing the list with the list set forth in Exhibit A to this Amendment.
2. Recitals. (a) The sixth recital in the Merger Agreement (as entered into on June 30, 2010), is hereby amended and restated as follows:
“WHEREAS, contemporaneously with the execution and delivery of this Agreement, and as a condition to the willingness of Parent and Merger Sub to enter into this Agreement, Company and Stockholder and the other relevant Affiliates of Stockholder entered into that certain IP Purchase and Sale Agreement in the form attached as Exhibit 1.1(a)(C) hereto as later amended by the IP Joinder Agreement (together, the “IP Purchase and Sale Agreement”), pursuant to which the Stockholder and certain of its Affiliates agreed to sell, assign, transfer and convey certain Intellectual Property to the Company effective immediately following the Effective Time;”
(b) The first paragraph of the fourth recital in the Agreement, is hereby amended and restated as follows:
“WHEREAS, prior to Closing, Stockholder, PIBI and the Company will enter into that certain Agreement and Plan of Reorganization attached hereto as Exhibit 18 (the “Venezuelan Reorganization Agreement”), as amended by the First Amendment to the Agreement and Plan of Reorganization entered into on September 29, 2010, pursuant to which, among other things (the “First EV Amendment”), the Company will, prior to the Closing and the filing of the

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Certificate of Merger, transfer to PIBI all right, title and interest in and to the shares of capital stock of EVERTEC de Venezuela, C.A. (“EV”) held by the Company, and transfer certain service agreements pursuant to which the Company provides certain financial data and transaction processing services, in coordination with EV, as set forth in Schedule 1 to the Venezuela Reorganization Agreement (the “Venezuela Customer Contracts”) to EV and/or PIBI (such transaction and the other transactions contemplated by the EV Transfer Documents, collectively the “EV Transfer”);
(c) The eighth recital in the Merger Agreement, is hereby amended and restated as follows:
“WHEREAS, as a condition to the willingness of Parent and Merger Sub to enter into the Agreement and the subsequent amendments on September 15, 2010 (the “Third Amendment”) and September 30, 2010 (the “Fourth Amendment”), the Stockholder, as sole stockholder of the Company, has agreed to deliver immediately following the execution of each such document, an irrevocable written consent (in the case of the Merger Agreement, the Stockholder Written Consent” and in the case of each amendment thereto. an “Additional Stockholder Written Consent”) approving and adopting the Merger and the Merger Agreement as amended by such amendment (an “Additional Stockholder Approval”);
3. Section 1.1 — Definitions.
(a) Section 1.1 of the Merger Agreement is hereby amended by amending and restating the following definitions as set forth below:
“Ancillary Agreements” means, collectively, the Stockholder Agreement, the Amended & Restated Holdco Articles, the Amended & Restated Holdco By-laws, the Amended & Restated Master Services Agreement, the New Service Addenda, the Amended & Restated MSA Service Addenda, the MSA Outsourcing Policies and Procedures, the FCC Side Letter, the MSA Side Letter, the IP Purchase and Sale Agreement and the IP Joinder Agreement, the Transition Services Agreement, the Amended ATH Network Participation Agreement, the New ATH Network Riders, the ATH Fee Schedule, ATH Support Agreement, the Third Tres Monjitas Sublease Amendment, the Third Cupey Center Lease Amendment, the Amended & Restated Centro Europa Building Lease, the Señorial Building Lease, the Amended & Restated TicketPop Service Agreement, the Amended and Restated ISO Agreement, the Merchant Application Approval Policy, the Third Party Master Beneficiary Escrow Service Agreement, the Technology Agreement, the Apollo Consulting Agreement, the Popular Consulting Agreement, the EV Transfer Documents, and the Virgin Island Services Agreement.
“Closing Payment” shall mean an amount equal to (i) $637,710,000 minus (ii) the sum of (A) the product of the Equity Ratio multiplied by the Overfund Amount, and (B) if applicable, an amount equal to 50.0% of the After-Tax Aggregate Proceeds received from the sale by PIBI (or any Affiliate thereof) of any portion of its equity interests in Contado and Serfinsa in conjunction with a right of first refusal or otherwise minus (iii) $32,000,000 minus (iv) the Serfinsa Holdback Amount, minus (v) the Contado Holdback Amount.
“Closing Working Capital” means the difference between (i) the current assets of the Companies (other than current assets of EV and other than the P/SSA Receivables, the PSA Receivables and the Other Receivables (each as defined in the Venezuela Reorganization Agreement), but including cash that is immediately available and (x) does not include Evertec Reserve Cash (other than (1) the “ATH marketing fund,” (2) the “ATH settlement reserve,” (3) the “Sundry losses reserve” and (4) cash that is EVERTEC Reserve Cash solely by virtue of it being subject to taxation which does not permit a free transfer to the United States, including the Commonwealth, (y) is not ATM Cash and (z) has been reduced by all fees, costs, expenses or withholding or other Taxes incurred or that would be reasonably expected to be incurred in connection with the Company repatriating any such cash to its accounts in the Commonwealth or the distribution of any such cash to the Company immediately following the Closing up to the amount necessary to cause the Estimated Closing Working Capital Adjustment Amount to be a negative number with an absolute value of $2 million, minus (ii) the current liabilities of the Companies (other than EV) (for the avoidance of doubt, which do not include any of the items of current assets or current liabilities excluded therefrom in accordance with the Applicable Accounting Principles and which include all Liabilities incurred by the Companies in connection with the Scheduled

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Transaction Bonuses whether before, at or after Closing, including all related employer payroll Taxes), in each case, as of the close of business on the Closing Date and calculated in accordance with the Applicable Accounting Principles. For the avoidance of doubt, all proceeds of, and Liabilities incurred in connection with, the Financing shall be excluded from the calculation of Closing Working Capital.
“Estimated Closing Working Capital” means the difference, as set forth on the Estimated Closing Statement, between (i) the estimated current assets of the Companies (other than current assets of EV and other than the P/SSA Receivables, the PSA Receivables and the Other Receivables (each as defined in the Venezuela Reorganization Agreement), but including cash that is immediately available and (x) does not include Evertec Reserve Cash (other than (1) the “ATH marketing fund,” (2) the “ATH settlement reserve”, (3) the “Sundry losses reserve” and (4) cash that is EVERTEC Reserve Cash solely by virtue of it being subject to taxation which does not permit a free transfer to the United States, including the Commonwealth, (y) is not ATM Cash and (z) has been reduced by all fees, costs, expenses or withholding or other Taxes incurred or that would be reasonably expected to be incurred in connection with the Company repatriating any such cash to its accounts in the Commonwealth or the distribution of any such cash to the Company immediately following the Closing up to the amount necessary to cause the Estimated Closing Working Capital Adjustment Amount to be a negative number with an absolute value of $2 million, minus (ii) the estimated current liabilities of the Companies (other than EV) (for the avoidance of doubt, which do not include any of the items of current assets or current liabilities excluded therefrom in accordance with the Applicable Accounting Principles and which include all Liabilities incurred by the Companies in connection with the Scheduled Transaction Bonuses whether before, at or after Closing, including all related employer payroll Taxes), in each case, as of the close of business on the Closing Date and calculated in accordance with the Applicable Accounting Principles. For the avoidance of doubt, all proceeds of, and Liabilities incurred in connection with, the Financing shall be excluded from the calculation of Estimated Closing Working Capital.
“EV Transfer Documents” means the Venezuelan Reorganization Agreement as amended by the First VZ Amendment, the Venezuela TSA, and the Venezuelan Assignment and Assumption Agreements, the Venezuela Promissory Notes and any other ancillary agreements, schedules or exhibits contemplated thereby.”
“Overfund Amount” means, as of immediately prior to the Closing and giving effect to the contribution of the proceeds from the Equity Commitment to Merger Sub (or payment of such amount on behalf of the Company to Stockholder) and receipt by Merger Sub of the proceeds of the Debt Financing (without regard to whether such Debt Financing is consummated immediately prior to or immediately following the Closing and assuming the Debt Financing is funded into Merger Sub if it is funded directly into the Company), the excess of Merger Sub’s cash (assuming, if the Equity Commitment is paid to Stockholder on behalf of the Company, that the amount of such payment is contributed to Merger Sub) over the sum of (i) the principal amount of all Indebtedness of Merger Sub (assuming the incurrence of all Indebtedness pursuant to the Debt Financing by Merger Sub if such Indebtedness is incurred by the Company and, for the avoidance of doubt, excluding any Parent Transaction Expenses) and (ii) $165,750,000; provided that, in no event shall the Overfund Amount be more than $40 million, without the written consent of Stockholder.
(b) Section 1.1 of the Merger Agreement is hereby amended by inserting the following definitions in alphabetical order therein:
“Applicable Amortization Period” has the meaning set forth in Section 5.4(a).
“ATM Cash” means any cash held in, held for use in, in transit to, or otherwise designated for use in, automated teller machines or similar devices.
“Change of Control Consent” means any applicable governmental or third-party authorizations, approvals, consents or waivers required for the continuation by EVERTEC of its exercise of any Company IP Agreement or to otherwise make use of such Third-Party Intellectual Property following the Effective Date.
“Disallowance” has the meaning set forth in Section 5.4(a).

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“Forgone Tax Benefit” has the meaning set forth in Section 5.4(a).

“IP Joinder Agreement” means the IP Joinder and Amendment by and among Stockholder, the Company, BPPR, Popular Auto, Inc., Popular Insurance, Inc., and Popular Mortgage, Inc. attached hereto at Exhibit 1.1(ZZZZ).
“MSA Side Letter” means that certain Letter Agreement dated September 30, 2010 among Stockholder, BPPR and the Company with respect to the provision of certain services pursuant to the Amended & Restated Master Services Agreement.
“Permitted Extension Time” means (i) prior to 11:30 a.m. (San Juan, Puerto Rico time) on September 30, 2010, 2:30 p.m. (San Juan, Puerto Rico time) on September 30, 2010, (ii) after 11:30 a.m. (San Juan, Puerto Rico time) on September 30, 2010 and prior to 2:30 p.m. (San Juan, Puerto Rico time) on September 30, 2010, 11:30 a.m. (San Juan, Puerto Rico time) on October 14, 2010, (iii) after 2:30 p.m. (San Juan, Puerto Rico time) on September 30, 2010 and prior to 11:30 a.m. (San Juan, Puerto Rico time) on October 14, 2010, 11:30 a.m. (San Juan, Puerto Rico time) on any Business Day that is prior to the Termination Date determined by Stockholder in its reasonable discretion after giving Parent a reasonable opportunity to consult with Stockholder with respect to such decision, (iv) after 11:30 a.m. (San Juan, Puerto Rico time) on October 14, 2010 and prior to the then applicable Effective Time if such Effective Time is prior to December 16, 2010, 11:30 a.m. (San Juan, Puerto Rico time) on any Business Day that is prior to the Termination Date determined by Stockholder in its reasonable discretion after giving Parent a reasonable opportunity to consult with Stockholder with respect to such decision and (v) after 11:30 a.m. (San Juan, Puerto Rico time) on December 16, 2010, at any time on any Business Day following the Termination Date determined by Stockholder in its reasonable discretion after giving Parent a reasonable opportunity to consult with Stockholder with respect to such decision.
4. Section 2.1 — Merger. Section 2.1(c) of the Merger Agreement is hereby amended and restated as follows:
“(c) Immediately following satisfaction or waiver of all the conditions to closing set forth in Article VI other than Section 6.1(e) on the Closing Date, the Parties hereto shall cause the Merger to be consummated by causing the Company and Merger Sub to file a certificate of merger with the Secretary of State in such form as is required by, and executed in accordance with the relevant provisions of the CGCL (the “Certificate of Merger”) and make all other filings or recordings required by Commonwealth Law in connection with the Merger. The Merger shall become effective at such time (the “Effective Time”) as may be specified in the Certificate of Merger. The Certificate of Merger shall initially specify an Effective Time of 11:30 a.m. (San Juan, Puerto Rico time) on September 30, 2010. From time to time prior to the effectiveness of the Certificate of Merger, Stockholder (unless otherwise agreed by Stockholder and Parent in writing) shall file, and cause to be filed on behalf of the Company and Merger Sub, one or more amendments to the Certificate of Merger amending the Effective Time set forth therein to the Permitted Extension Time in the event the Company has not received proceeds from the Financing (when taken together with payments to Stockholder made on the Company’s behalf in respect of the Closing Payment) in an aggregate amount sufficient to satisfy the Funding Amount, by wire transfer of immediately available funds by 30 minutes prior to the then contemplated Effective Time or such later time as may be agreed in writing by Parent and Stockholder. Parent shall cause Merger Sub to deliver to Stockholder prior to the Closing executed counterparts of any documents necessary to effect any such amendments which the prior sentence contemplates may be filed on September 30, 2010. Stockholder shall not file any such amendments if the Company has received proceeds from the Financing (when taken together with payments to Stockholder made on the Company’s behalf in respect of the Closing Payment) in an aggregate amount sufficient to satisfy the Funding Amount and shall return such counterparts promptly following the Effective Time. The Parties hereby agree that, for the purposes of this Section 2.1, the receipt of funds equal to the Funding Amount in BPPR’s account with the Federal Reserve Bank of New York for credit to an account at BPPR held by the Company or the Stockholder shall constitute conclusive evidence of the receipt of sufficient proceeds. Unless the Effective Time occurs on September 30, 2010, the Company and Merger Sub agree to execute and cause to be notarized and filed with the Secretary of State for the Commonwealth of Puerto Rico prior to October 14, 2010 powers of attorney in the form

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attached hereto as Exhibit 2.1 appointing one or more individuals designated by Stockholder as agent for the Company and Merger Sub, respectively, to execute or cause to be executed and to file or cause to be filed one or more amendments to the Certificate of Merger on behalf of the Company and Merger Sub, respectively, pursuant to this Section 2.1. In the event that any portion of the Financing is contributed or paid to the Company and/or Stockholder, the Company or Stockholder, as applicable agree to immediately return such amount by wire transfer in immediately available funds in the event that Stockholder files or causes to be filed any amendment to the Certificate of Merger to provide for an Effective Time subsequent to the date of the filing of such amendment in accordance with the foregoing. For the avoidance of doubt, if Stockholder or Parent validly terminates this Agreement in accordance with its terms, Stockholder shall be obligated to terminate the Certificate of Merger.”
5. Section 2.3 — Closing Payment Procedures. Section 2.3 of the Merger Agreement is hereby amended by inserting the following at the end thereof:
“Parent, Merger Sub, Stockholder and the Company hereby agree and acknowledge that to the extent Guarantor directly wires an amount equal to the Equity Commitment Amount plus the Overfund Amount to Stockholder, the payment of such amount shall constitute a payment on behalf of Company in partial satisfaction of the Company’s obligation to pay the Closing Payment to Stockholder hereunder. Notwithstanding anything to the contrary in the Agreement the Parties agree that the Estimated Closing Statement is the statement attached hereto as Exhibit 2.3, that Stockholder shall not be deemed to be in breach of any of its obligations hereunder with respect to the previous delivery of an estimated closing statement and that the attached Exhibit 2.3 shall satisfy in full Stockholder’s obligations pursuant to Section 2.4(a) to deliver the Estimated Closing Statement.”
6. Section 5.4(a) — Tax Matters. Section 5.4(a) of the Merger Agreement is hereby amended by inserting the following at the end thereof:
“In addition, Stockholder shall be liable for (a) any Taxes paid or payable by the Companies arising out of the Disallowance, and (b) the Foregone Tax Benefit. For purposes of determining whether Taxes have been paid or are payable by the Company arising out of a Disallowance, amortization deductions claimed by the Company for the Transferred IP located in Puerto Rico shall be deemed to have been utilized before any other deductions of the Company have been utilized to offset taxable income of the Company that is subject to tax in Puerto Rico. Any such claimed amortization deductions that are part of a net operating loss carryforward of the Company for Puerto Rico tax purposes that would have been carried forward to a taxable year of the Company subsequent to the taxable year of a Disallowance shall be treated in the same manner as if such claimed amortization deductions were foregone amortization deductions for purposes of determining the Foregone Tax Benefit pursuant to this section 5.4(a). The Company shall keep Stockholder fully informed of the details of any application (other than any Tax Return) seeking the allowance by a Government Entity of income Tax deductions claimed by the Company for amortization of the Transferred IP (as defined under the IP Purchase and Sale Agreement) and shall not have any in-person or telephonic meeting with any Government Entity or other Person related to such application without giving Stockholder a reasonable opportunity to fully participate in any such meeting. Additionally, the Company shall (i) allow Stockholder a reasonable opportunity to review and comment on any such application or any amendment or supplement thereof in advance of its filing, (ii) incorporate comments of Stockholder on such application or any amendment or supplement thereof to the extent such comments reasonably would be expected to affect Stockholder’s liability for Taxes under this Agreement, provided that such comments would not otherwise materially prejudice the Company, and (iii) not file any such application or any amendment or supplement thereof without the prior consent of Stockholder (such consent not to be unreasonably withheld, conditioned or delayed). “Disallowance” shall mean each disallowance by a Government Entity during the Applicable Amortization Period for each of the assets included in the Transferred IP and located in Puerto Rico of income Tax deductions claimed by the Company for amortization of the Transferred IP located in Puerto Rico except to the extent that Stockholder can show by a preponderance of the evidence that any such disallowance was not the result of any transfer of a portion of such Transferred IP located in Puerto Rico prior to the Effective Time and any related rescission. The “Applicable Amortization Period” shall mean the amortization period for each of the assets included in the Transferred IP as set forth on Exhibit 5.4(a). The “Foregone Tax Benefit” shall mean the amount of the

5


Tax benefit of any forgone amortization deductions under the Puerto Rican Internal Revenue Code for the Transferred IP located in Puerto Rico for taxable years subsequent to the last taxable year of a Disallowance, such Tax benefit amount to be determined based upon the schedule set forth in Exhibit 5.4(a) hereto, except to the extent that Stockholder can show by a preponderance of the evidence that any such disallowance was not the result of any transfer of a portion of such Transferred IP located in Puerto Rico prior to the Effective Time and any related rescission. The Foregone Tax Benefit for a taxable year shall be paid by Stockholder to the Company within 20 Business Days following the Company notifying Stockholder that is has filed its applicable Tax Return with respect to the taxable year to which the Foregone Tax Benefit relates. No Foregone Tax Benefit shall apply with respect to any of the assets included in the Transferred IP located in Puerto Rico from and after the date any such assets are transferred (or deemed transferred under the Puerto Rican Internal Revenue Code) or cancelled by the Company during the Applicable Amortization Period.”
7. Section 5.22 — Required Stockholder Approval. Section 5.22 of the Merger Agreement is hereby amended and restated as set forth below:
“Immediately following the execution hereof, the Stockholder shall deliver to the Company and Parent the duly executed Stockholder Written Consent. Immediately following the execution of the Third Amendment, Stockholder shall deliver to the Company and Parent the duly executed Additional Stockholder Written Consent. Immediately following the execution of the Fourth Amendment, Stockholder shall deliver to the Company and Parent the subsequent duly executed Additional Stockholder Written Consent.”
8. Section 5.25(c) — Covenants Regarding Transfer Consents. Section 5.25(c) of the Merger Agreement is hereby amended and restated as follows:
“Notwithstanding anything to the contrary contained in this Agreement, to the extent that the assignment, transfer, conveyance or delivery or attempted assignment, transfer, conveyance or delivery to the Company of any Transferred Stockholder IP Agreement or any right or any benefit arising thereunder or resulting therefrom is prohibited by any applicable Law or would require any governmental or third-party authorizations, approvals, consents or waivers (“Transfer Consents”), Stockholder shall and, shall cause each of its Affiliates (as applicable) to, use commercially reasonable efforts to obtain such Transfer Consents prior to Closing , provided that, if any such Transfer Consents shall not have been obtained prior to the Closing, the Closing shall proceed without the assignment, transfer, conveyance or delivery of such Transferred Stockholder IP Agreement, unless the failure to assign, transfer, convey or deliver any such Transferred Stockholder IP Agreement prior to Closing would result in a Material Adverse Effect (taking into consideration the obligations of Stockholder under this Section 5.25) (an “IP MAE”). In the event that the Closing occurs without the assignment, transfer, conveyance or delivery of any Transferred Stockholder IP Agreement or any right or benefit arising thereunder or without any Change of Control Consent, then following the Closing, the Stockholder shall use its best efforts to obtain promptly any necessary Transfer Consents or Change of Control Consents, and the Company shall cooperate as reasonably requested by the Stockholder in connection with the foregoing; provided that none of the Companies shall have any obligation to give any guarantee or pay any consideration of any nature for obtaining such Transfer Consent or Change of Control Consent or to consent to any change in or otherwise compromise the terms of any agreement or arrangement which the Company reasonably deems to be adverse to the Business (each such action being a “Concession”). Until such Transfer Consent has been obtained, Stockholder shall use best efforts to provide to the Companies and any of their Affiliates, through any reasonable and lawful arrangement, rights and benefits substantially equivalent to those the Companies and their Affiliates would have received under such Transferred Stockholder IP Agreement had the Transferred Stockholder IP Agreement been assigned to the Companies at the Closing, and the Companies shall cooperate as reasonably requested by the Stockholder in connection with the foregoing, without any obligation to make a Concession. Once the Transfer Consent for the assignment, transfer, conveyance or delivery of any Transferred Stockholder IP Agreement not assigned, transferred, conveyed or delivered at the Closing is obtained, Stockholder shall or shall cause its relevant Affiliates to, promptly, assign, transfer, convey and deliver such Transferred Stockholder IP Agreement to the relevant Companies and/or their Affiliates free and clear of all Encumbrances except for Permitted Encumbrances.”

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9. Section 5.25(f) — Covenants Regarding Third Party License Agreements. Section 5.25(f) of the Merger Agreement is hereby amended and restated as follows:
“If and to the extent that any (i) Transferred Stockholder IP Agreement that is transferred, assigned or conveyed to Company, (ii) Equivalent IP Arrangement, or (iii) any Company IP Agreements (collectively, (i), (ii) and (iii), the “Relevant IP Agreements”), require the payment by any of the Companies or their Affiliates of license, subscription or maintenance fees with respect to the Baseline Usage during the period from the Closing until the fifth anniversary thereafter (the “Relevant Period”) that are higher than those fees paid or payable by or on behalf of the Companies with respect to the Baseline Usage immediately prior to Closing (the “Increased License Cost”), the Stockholder shall pay to the Company an amount equal to such incremental increase in documented, direct and out-of-pocket costs actually paid by the Companies to the applicable licensor under the Transferred Stockholder IP Agreements, Company IP Agreements and Alternative IP Agreements for the Baseline Usage during the Relevant Period. Except with respect to any such arrangements entered into prior to the Closing Date, the foregoing obligation of the Stockholder is conditioned upon (i) the Companies using commercially reasonable efforts to obtain a price that does not result in an Increased License Cost for the Baseline Usage, without any obligation to make a Relevant Concession, (ii) the Companies providing at least thirty (30) days written notice to the Stockholder prior to entering into any agreement that would impose an Increased License Cost, and (iii) upon Stockholder’s reasonable request, Companies’ providing reasonable cooperation with Stockholder in seeking on behalf of the Companies a license agreement on substantially equivalent terms and use right that would not impose an Increased License Cost without any obligation to make a Relevant Concession. In addition, the Companies shall provide all information reasonably requested by Stockholder to verify any claim of Increased License Cost.”
10. Section 5.29(d) — Performance Bonds. Section 5.29(d) of the Merger Agreement is hereby amended and restated as follows:
“No later than October 29, 2010, the Company shall execute and deliver to Stockholder a reimbursement and/or indemnity agreement, effective as of the Closing Date, with Stockholder that mirrors the reimbursement and/or indemnity agreement executed and delivered by Stockholder with the Qualified Issuers, provided that the Company shall have no obligation to post any collateral thereunder (subject to Section 5.29(e)), which mirror reimbursement and/or indemnity agreement shall provide for, amongst other things, the reimbursement, or at the request of Stockholder, advance to Stockholder upon reasonable notice, of (i) all premiums and other charges related to the issuance of the Applicable Performance Bonds owed by Stockholder to the issuer thereof pursuant to the applicable indemnity agreements, and (ii) all losses for which Stockholder indemnifies any such Qualified Issuers under the applicable indemnity agreements to the extent arising out of or relating to the failure of the Company to perform or otherwise satisfy its obligations under the Underlying Performance Bond Obligations. Stockholder shall use its commercially reasonable efforts to negotiate the most favorable terms, including premiums and other charges, for itself and the Company in respect of each Applicable Performance Bond and to minimize any such losses.”
11. Section 5.30(e) — Letters of Credit. Section 5.30(e) of the Merger Agreement is hereby amended and restated as follows:
“No later than October 29, 2010, the Company shall execute and deliver to Stockholder a reimbursement and/or indemnity agreement, effective as of the Closing Date, that mirrors the reimbursement and/or indemnity agreement executed and delivered by Stockholder with the Qualified Issuing Bank, provided that the Company shall have no obligation to post any collateral thereunder, which mirror reimbursement and/or indemnity agreement shall provide for, amongst other things, the reimbursement, or at the request of Stockholder, advance to Stockholder upon reasonable notice, of (i) all premiums and other charges related to the issuance of the Credit Enhancements owed by Stockholder to the issuer thereof pursuant to the applicable indemnity agreements, and (ii) all losses for which Stockholder indemnifies any such Qualified Issuers under the applicable indemnity agreements to the extent arising out of or relating to the failure of the Company to perform or otherwise satisfy its obligations under the Underlying Credit Enhancement Obligations. Stockholder shall use its commercially reasonable efforts to negotiate the most favorable terms, including

7


premiums and other charges, for itself and the Company in respect of each Replacement Credit Enhancements and to minimize any such losses.”
12. Section 6.1(e) — Conditions to the Obligations of the Parties. Section 6.1(e) of the Merger Agreement is hereby amended and restated as follows:
“(e) Financing. Merger Sub and the Company taken together shall receive sufficient cash pursuant to the Financing in order to fund the Closing Payment (without regard to Estimated Closing Working Capital Adjustment and less any amounts paid directly to Stockholder on their behalf), the Contado Holdback Amount, the Serfinsa Holdback Amount, the Pre-Closing Dividend, the Stockholder Transaction Expenses and the Parent Transaction Expenses (collectively, the “Funding Amount”) and proceeds in respect of the Equity Financing shall have been paid or deemed paid to Merger Sub in an amount not less than $165,750,000 plus the Overfund Amount, if any.”
13. Section 6.2(g) — Conditions to the Obligations of Parent and Merger Sub. Section 6.2(g) of the Merger Agreement is hereby amended and restated as follows:
“(g) Master Services Agreement. (i) Stockholder shall have delivered to Parent (x) the Anti-Spam and Anti-Virus Management Services Addendum between the Company and Banco Popular North America entered into under the 2004 Master Services Agreement and (y) each of the statements of work for recurring services currently in effect that were executed by the Company and Stockholder or its Affiliates under the 2004 Master Services Agreement; and (ii) Stockholder shall have delivered an amendment to each service addendum and statement of work for recurring services entered into under the 2004 Master Services Agreement to (x) extend the duration of such addendum so that it is coterminous with the Master Services Agreement (or, in the case of an addendum relates to a definitive project, the time necessary to complete such project (as agreed by Parent and Stockholder)) and (y) delete any termination without cause or termination for convenience provision.”
14. Section 7.2(a)(x) — Indemnification by Stockholder. Section 7.2(a)(x) of the Merger Agreement is hereby amended and restated as follows:
“(x) any Loss arising out of or relating to (A) (i) the failure of a Transferred Stockholder IP Agreement to be assigned, transferred, conveyed and delivered at the Closing, or (ii) the failure of the Stockholder to establish for the Companies an Equivalent IP Arrangement that enables the Companies to engage in the Baseline Usage after Closing as set forth in Section 5.25(d), or (iii) the failure to obtain any authorization, consent, approval or waiver (other than a temporary waiver) required pursuant to any Company IP Agreement as a result of the entry into this Agreement or the consummation of the Merger or the other transactions contemplated hereby, and (B) a claim of infringement made by a third party licensor against the Company with respect to the Baseline Usage occurring during the Relevant Period with respect to any Transferred Stockholder IP Agreement, any Company IP Agreement or any Unassigned License Agreement; provided that, the foregoing indemnification obligation will not apply with respect to any Baseline Usage for which the Companies decline to accept a Transferred Stockholder IP Agreement or Equivalent IP Arrangement, that would, if accepted, render such usage non-infringing.”
15. Section 7.7 — Consequential Damages. Section 7.7 of the Merger Agreement is hereby amended and restated:
“Section 7.7 Consequential Damages. Notwithstanding anything to the contrary contained in this Agreement, no Person shall be liable under this Article VII for (i) any Losses that are not direct, actual damages or (ii) any punitive, special or speculative damages, in each case, except for (x) such Losses that are paid pursuant to a Third-Party Claim or (y) with respect to indemnification pursuant to Section 7.2(a)(x) hereof, such Losses that constitute lost profits prior to the fifth anniversary of the Closing Date arising from Contracts existing as of the Closing (or to the extent not expanding the services or materially increasing the fees provided thereunder, any renewals of or replacement Contracts for, such Contract) with a Customer (other than the Stockholder or any of its Affiliates) for the provision of services by the Company or its Subsidiaries.”

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16. Section 7.10 — Characterization of Indemnification Payments. Section 7.10 of the Merger Agreement is hereby amended and restated as follows:
“All payments made by an Indemnifying Party to an Indemnified Party in respect of any claim pursuant to Section 7.2, 7.3 or 7.4 shall be treated as adjustments to the Merger Consideration for Tax purposes to the extent allowed by Law or, to the extent not so allowed, as capital contributions, to the extent allowed by Law.”
17. Section 8.2(a) — Effect of Termination. Section 8.2(a) of the Merger Agreement is hereby amended and restated as follows:
“(a) In the event of the termination of this Agreement in accordance with Section 8.1, this Agreement shall thereafter become void and have no effect, and no Party shall have any liability to any other Party or their respective Affiliates, or their respective directors, officers or employees, except for the obligations of the Parties contained in this Section 8.2 and in Sections 2.1(c)(last sentence), 9.2, 9.5, 9.7, 9.8, 9.9, 9.10, 9.11, 9.13 and 9.14 (and any related definitional provisions set forth in Article I), as applicable, and except that nothing in this Section 8.2(a) shall relieve any Party from liability for any breach of this Agreement that arose prior to such termination, for which liability the provisions of Article VII shall remain in effect in accordance with the provisions and limitations of such Article.”
18. Exhibits. Exhibit 2.4(a) to the Merger Agreement is hereby deleted from the Merger Agreement and replaced with Exhibit 2.4(a) to this Amendment and Exhibit 1.1(ZZZZ), Exhibit 2.1, Exhibit 2.3 and Exhibit 5.4(a) to this Amendment are hereby inserted as Exhibit 1.1(ZZZZ), Exhibit 2.1, Exhibit 2.3 and Exhibit 5.4(a) to the Merger Agreement, respectively.
19. Stockholder Disclosure Schedules. Schedule 2.4(B) to the Stockholder Disclosure Schedules attached to the Merger Agreement is hereby deleted and replaced by Schedule 2.4(B) to this Amendment.
B. Miscellaneous. This Amendment and the Merger Agreement, together, contain the complete agreement among the Parties and supersede any prior understandings, agreements, letters of intent, or representations by or among such parties, written or oral, that may have related to the subject matter hereof in any way. Except as specifically amended hereby, the Merger Agreement, as amended hereby, shall remain in full force and effect. The terms and provisions of Article IX of the Merger Agreement are incorporated herein by reference as if set forth herein in their entirety and shall apply mutatis mutandis to this Amendment.
* * * * *

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SCHEDULES AND EXHIBITS TO THIS AMENDMENT
Exhibit A
Table of Contents

Exhibit 2.1
Form of Power of Attorney
Schedule 2.4(B)
Scheduled Transaction Bonuses

Exhibit 2.3
Estimated Closing Statement

Exhibit 2.4(a)
Applicable Accounting Principles; Pro Forma Reference Working Capital Calculation

Exhibit 5.4(a)
Foregone Tax Benefit

Exhibit 1.1 (ZZZ)
IP Joinder Agreement








































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IN WITNESS WHEREOF, the Parties have executed or caused this Amendment to be executed as of the date first written above.

POPULAR, INC.
By: /s/ Richard L. Carrión
Name: Richard L. Carrión
Title: Chairman, President & CEO
EVERTEC, INC.
By: /s/ Felix M. Villamil
Name: Felix M. Villamil
Title: President
AP CARIB HOLDINGS, LTD.
By: Apollo Management VII, L.P., its sole director
By: AIF Management LLC, its general partner
By: /s/ Marc Becker
Name: Marc Becker
Title: Vice President
CARIB ACQUISITION, INC.
By: /s/ Marc Becker
Name: Marc Becker
Title: President







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EXHIBIT 4.2




















STOCKHOLDER AGREEMENT
Among
CARIB LATAM HOLDINGS, INC. AND
THE HOLDERS PARTY HERETO

DATED APRIL 17, 2012















 
TABLE OF CONTENTS
Page
Section 1.
Definitions
1

Section 2.
Board of Directors
13

Section 3.
Stockholder Meetings; Actions Requiring Special Approval
17

Section 4.
Transfer Restrictions; Permitted Transfers
18

Section 5.
Registration Rights
25

Section 6.
Preemptive Rights
40

Section 7.
Representations and Warranties
42

Section 8.
Additional Agreements
44

Section 9.
Agreements Related to Management Holders
49

Section 10.
Assignment
52

Section 11.
Company Governing Documents Post-IPO
52

Section 12.
Miscellaneous Provisions
52



i

STOCKHOLDER AGREEMENT, dated as of April 17, 2012 (this “Agreement”), among CARIB LATAM HOLDINGS, INC., a corporation organized under the laws of the Commonwealth of Puerto Rico (the “Company”) and each of the Holders of the Company listed on Schedule I attached hereto.
WHEREAS, each party deems it to be in the best interest of the Company and the parties that provision be made for the continuity and stability of the business and policies of the Company, and, to that end, the Company and the parties hereby set forth herein their agreement with respect to the Common Shares now owned or hereafter owned by them.
WHEREAS, each of AP Carib Holdings, Ltd., an exempted company organized under the laws of the Cayman Islands (“Apollo”), and Popular, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (“Popular”), is subject to certain non-competition and non-solicitation provisions contained in that certain Agreement and Plan of Merger dated as of June 30, 2010, among Apollo, Popular and the other parties thereto (as amended by the amendments dated August 5, August 8, September 15 and September 30, 2010, the letter agreement dated February 23, 2011, and as it hereafter may be amended, modified or supplemented from time to time, the “Merger Agreement”).
NOW, THEREFORE, in consideration of the promises and of the mutual consents and obligations hereinafter set forth, the parties hereto hereby agree as follows:
Section 1. Definitions.
As used in this Agreement:
“5% Board Right” has the meaning ascribed to such term in Section 2(d)(ii).
“10% Board Right” has the meaning ascribed to such term in Section 2(d)(iii).
“25% Apollo Board Right” has the meaning ascribed to such term in Section 2(d)(iv).
“25% Popular Board Right” has the meaning ascribed to such term in Section 2(d)(v).
“Acquired Indebtedness” has the meaning ascribed to such term in Section 8(f)(ii).
“Acquired Indebtedness Participation Right” has the meaning ascribed to such term in Section 8(f)(ii).
“Acquiring Stockholder” has the meaning ascribed to such term in Section 8(f)(ii).
“Additional Redeemable Shares” has the meaning ascribed to such term in Section 9(a)(ii).
“Adoption Agreement” means an Adoption Agreement in the form attached hereto as Exhibit A.
“Affiliate” means, with respect to any Person, any other Person, directly or indirectly, through one or more intermediaries, Controlling, Controlled by, or under common Control with, such Person. Notwithstanding the foregoing, (i) with respect to Apollo, the term “Affiliate” shall (x) include any investment fund with respect to which Apollo Global Management LLC or its Controlled Affiliates (including its and their respective successors) are the sole or, if not sole, primary investment managers and, subject to clause (y) below, each of their Subsidiaries and (y) not include portfolio companies of Apollo Global Management LLC or its Controlled Affiliates and, (ii) with respect to Popular (to the extent that at the time of determination it is engaged in a private equity or similar business), the term “Affiliate” shall not include portfolio companies of Popular or its Controlled Affiliates.
“Agreement” has the meaning ascribed to such term in the Recitals.
“Apollo” has the meaning ascribed to such term in the Recitals.
“Apollo Consulting Agreement” means the consulting agreement dated as of the Merger Closing Date, between Holdings, EVERTEC and Apollo Management VII, L.P., as amended, modified or supplemented from time to time.
“Apollo Excess Period” has the meaning ascribed to such term in Section 2(e)(iii).
“Applicable Indebtedness” has the meaning ascribed to such term in Section 8(f)(iv).
“Asset Acquirer” has the meaning ascribed to such term in Section 4(d)(vii).
“Assignment in Part” has the meaning ascribed to such term in Section 10(c).

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“Assignment in Whole” has the meaning ascribed to such term in Section 10(b).
“Automatic Shelf Registration Statement” means an “automatic shelf registration statement” as defined in Rule 405 under the Securities Act.
“Bankruptcy Event” means with respect to any Holder (i) such Holder shall voluntarily be adjudicated as bankrupt or insolvent; (ii) such Holder shall consent to or not contest the appointment of a receiver or trustee for himself, herself or itself or for all or any part of his, her or its property; (iii) such Holder shall file a petition seeking relief under the bankruptcy, rearrangement, reorganization or other debtor relief laws of the United States or any state or any other competent jurisdiction; (iv) such Holder shall make a general assignment for the benefit of his, her or its creditors; (v) a petition shall have been filed against such Holder seeking relief under the bankruptcy, rearrangement, reorganization or other debtor relief laws of the United States or any state or other competent jurisdiction and such petition remains unstayed and undismissed for a period of 60 consecutive days after the commencement of any case pursuant to such petition; or (vi) a court of competent jurisdiction shall have entered an order, judgment or decree appointing a receiver or trustee for such Holder, or for any part of his, her or its property, and such order, judgment or decree remains unstayed and undismissed for a period of 60 consecutive days after its entry.
“beneficially owned”, “beneficial ownership” and similar phrases have the same meanings as such terms have under Rule 13d-3 (or any successor rule then in effect) under the Exchange Act, except that in calculating the beneficial ownership of any Holder, such Holder shall be deemed to have beneficial ownership of all securities that such Holder has the right to acquire, whether such right is currently exercisable or is exercisable upon the occurrence of a subsequent event. Notwithstanding the foregoing, no Principal Stockholder shall be deemed to beneficially own any Common Shares beneficially owned by another Person who is not a Controlled Affiliate of such Principal Stockholder’s Ultimate Parent Entity (disregarding solely for the purposes of determining Common Shares beneficially owned by such Person, (i) application of this sentence to any Common Shares that have been Transferred (other than in the form of a pledge, hypothecation or similar grant of a security interest only and which shall not involve the grant of a proxy or other right with respect to the voting of such Common Shares) to such Person in compliance with this Agreement and (ii) any Group Common Shares with respect to such Person), including without limitation, another Principal Stockholder or any Partial Rights Transferee, in either case, that is not a Controlled Affiliate of such Principal Stockholder’s Ultimate Parent Entity.
“BHCA Subsidiary” means any “subsidiary” of the Company as such term is defined under the Bank Holding Company Act of 1956.
“Board” means the Board of Directors of the Company.
“Board Percentage Trigger” has the meaning ascribed to such term in Section 2(e).
“Board Quorum Rights” means the rights set forth in Section 2(b) of this Agreement.
“Board Rights” means the right to nominate Directors to the Board as set forth in Section 2(d) of this Agreement, as it may be modified by Section 2(e) and Section 2(f).
“BPPR” means Banco Popular de Puerto Rico, a bank organized under the laws of the Commonwealth.
“Business Day” means any day other than a Saturday, a Sunday or a day on which banks in New York, New York or San Juan, Puerto Rico are authorized or obligated by Law or executive order to close.
“Business Plan” has the meaning ascribed to such term in Section 8(c).
“Cause” has the meaning ascribed to such term in the Management Long-Term Compensation Plan.
“Certificate of Incorporation” means the certificate of incorporation of the Company.
“Change of Control” means, with respect to any Person, any:
(i)     merger, consolidation or other business combination of such Person (or any Subsidiary or Subsidiaries that alone or together represent all or substantially all of such Person’s consolidated business at that time) or any successor or other entity holding all or substantially all the assets of such Person and its Subsidiaries that results in the stockholders of such Person (or such Subsidiary or Subsidiaries) or any successor or other entity

2

holding all or substantially all the assets of such Person and its Subsidiaries or the surviving entity thereof, as applicable, immediately before the consummation of such transaction or a series of related transactions (or, in the case of the Company, the Principal Stockholders and the Controlled Affiliates of their respective Ultimate Parent Entities), holding, directly or indirectly, less than 50% of the voting power of such Person (or such Subsidiary or Subsidiaries) or any successor, other entity or surviving entity thereof, as applicable, immediately following the consummation of such transaction or series of related transactions, provided that for the purpose of the second sentence of Section 3(c), this clause (i) shall not be deemed applicable to any merger, consolidation or other business combination, if, as a result of any such merger, consolidation or other business combination, no Person or Group of Persons shall have obtained “control” of Popular, as such term is defined under the Bank Holding Company Act of 1956;
(ii)     Transfer (other than in the form of a pledge, hypothecation or similar grant of a security interest only and which shall not involve the grant of a proxy or other right with respect to the voting of such equity), in one or a series of related transactions, of equity representing 50% or more of the voting power of such Person (or any Subsidiary or Subsidiaries of such Person that alone or together represent all or substantially all of such Person’s consolidated business at that time) or any successor or other entity holding all or substantially all the assets of such Person and its Subsidiaries to a Person or Group of Persons (other than, in the case of the Company, a Transfer of such equity to Apollo’s Ultimate Parent Entity or any of its Controlled Affiliates or Popular or any of its Controlled Affiliates);
(iii)     transaction in which a majority of the board of directors or equivalent governing body of such Person (or any successor or other entity holding all or substantially all the assets of such Person and its Subsidiaries) immediately following or as a proximate cause of such transaction is comprised of persons who were not members of the board of directors or equivalent governing body of such Person (or such successor or other entity) immediately prior to such transaction (or, in the case of the Company, are not designees of Apollo or Popular (or their respective Affiliates)) except, with respect to the Company, (X) resulting from the compliance, at the time of the Initial Public Offering, with the listing requirements, listed company manual or similar rules or regulations of the securities exchange on which the Company’s equity securities will be listed pursuant to its Initial Public Offering, (Y) if a majority of the Board is not “independent” under the rules of the applicable securities exchange on the date following such Initial Public Offering upon which the Company first ceases to be a “controlled company” (or similar status) under the rules and regulations of such exchange, resulting from compliance with the rules and regulations of such exchange that first apply upon the Company ceasing to be a “controlled company” (or similar status) or (Z) the loss of Directors pursuant to Section 2 that does not result in another Person or Group of Persons having the right or ability to appoint a majority of the Board as a result of such transaction; provided that, for the avoidance of doubt, this clause (Z) shall only apply to the resignation and initial replacement of such Directors and not to any subsequent replacement of such Directors (whether in connection with another transaction or otherwise); or
(iv)     sale or other disposition in one or a series of related transactions of all or substantially all of the assets of such Person and its Subsidiaries (or any successor or other entity holding all or substantially all the assets of such Person and its Subsidiaries).
“Class A Shares” means the class A voting shares of common stock of the Company, par value $0.01 per share.
“Class B Shares” means the class B non-voting shares of common stock of the Company, par value $0.01 per share.
“Code” has the meaning ascribed to such term in Section 9(a)(iii)(C).
“Commission” means the Securities and Exchange Commission or any other Federal agency at the time administering the Securities Act.
“Committee Rights” has the meaning ascribed to such term in Section 2(h).
“Common Shares” means the common stock of the Company, par value $0.01 per share. For the avoidance of doubt, Common Shares shall include the Class A Shares and the Class B Shares.
“Commonwealth” means the Commonwealth of Puerto Rico.
“Company” has the meaning ascribed to such term in the introductory paragraph hereof.

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“Company By-Laws” means the by-laws of the Company, as they may be amended, modified or supplemented from time to time.
“Complete Rights Transferee” means (i) any Person to whom Apollo or Popular, as the case may be, (A) Transfers 80% or more of the Common Shares held by it and its Affiliates as of the date of this Agreement and (B) has made or is making an Assignment in Whole and (ii) any Person to whom a Complete Rights Transferee (A) Transfers 100% of the Common Shares acquired by such Complete Rights Transferee in connection with an Assignment in Whole pursuant to which such Complete Rights Transferee became a Complete Rights Transferee and (B) has made or is making an Assignment in Whole; provided that, in each case, such Transferee (x) has acquired such Common Shares in one or more Transfers of Common Shares which are in compliance with the terms and conditions of this Agreement, including the requirements set forth in Section 4 hereof and (y) has executed and delivered an Adoption Agreement to each party to this Agreement.
“Confidential Information” has the meaning ascribed to such term in Section 8(d).
“Consent Actions” has the meaning ascribed to such term in Section 3(c).
“Consent Action Rights” means the rights set forth in Section 3(c).
“Consulting Agreements” means the Apollo Consulting Agreement and the Popular Consulting Agreement.
“Control,” and its correlative meanings, “Controlling,” and “Controlled,” means the possession, direct or indirect, or the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Counsel to the Holders” means, with respect to any underwritten offering pursuant to a Demand Registration (including a Shelf Takedown), (i) one law firm retained by the Holders of a majority of the Registrable Shares requested to be included in such Demand Registration (including a Shelf Takedown, if applicable), together with any separate local counsel reasonably retained by such law firm; provided that such counsel shall not also be counsel to the Company without the consent of each Principal Stockholder who requests to include Registrable Shares representing at least 10% of the Registrable Shares requested to be included in such Demand Registration, which consent shall not be unreasonably withheld, conditioned or delayed, and (ii), if a Principal Stockholder or any of its Affiliates (other than the Company and any of its Subsidiaries) hold any Registrable Shares requested to be included in such Demand Registration (including a Shelf Takedown, if applicable) and such Registrable Shares represent at least 20%, but do not represent a majority, of the total number of Registrable Shares requested to be included in such Demand Registration (including a Shelf Takedown, if applicable), one law firm retained by such Principal Stockholder, together with any separate local counsel reasonably retained by such law firm.
“Covered Activity” has the meaning ascribed to such term in Section 8(e).
“Covered Activity Notice” has the meaning ascribed to such term in Section 8(e).
“Covered Business” has the meaning ascribed to such term in Section 8(e).
“DR Selected Underwriter” has the meaning ascribed to such term in Section 5(a)(ix).
“Debt Acquisition Terms” has the meaning ascribed to such term in Section 8(f)(ii).
“Debt Participation Deadline” has the meaning ascribed to such term in Section 8(f)(ii).
“Demand Registration” has the meaning ascribed to such term in Section 5(a)(iii).
“Demand Registration Notice” has the meaning ascribed to such term in Section 5(a)(iv).
“Demand Shelf Takedown Notice” has the meaning ascribed to such term in Section 5(b)(iii).
“Determination Date” has the meaning ascribed to such term in Section 5(b)(vii).
“Director” means a member of the Board.
“Director Percentage” means, with respect to a Nominating Holder at a given time, a fraction (expressed as a percentage) the numerator of which is the number of Directors a Nominating Holder is entitled to nominate at such

4

time pursuant to Section 2, and the denominator of which is the total number of Directors comprising the entire Board at such time (assuming all vacancies have been filled).
“Disclosure Package” means, with respect to any offering of securities, (i) the preliminary prospectus, (ii) each Free Writing Prospectus and (iii) all other information, in each case, that is deemed, under Rule 159 under the Securities Act, to have been conveyed to purchasers of securities at the time of sale of such securities (including a contract of sale).
“Dividend Policy” has the meaning ascribed to such term in Section 8(g).
“Drag-Along Notice” has the meaning ascribed to such term in Section 4(d)(i).
“Drag-Along Percentage” means, a fraction (expressed as a percentage) the numerator of which is the total number of Class A Shares Apollo’s Ultimate Parent Entity (together with its Controlled Affiliates) desires to Transfer in the Drag- Along Transaction and the denominator of which is the total number of Class A Shares held by Apollo’s Ultimate Parent Entity (together with its Controlled Affiliates) at the time immediately prior to such Drag-Along Transaction.
“Drag-Along Right” has the meaning ascribed to such term in Section 4(d)(i).
“Drag-Along Shares” has the meaning ascribed to such term in Section 4(d)(i).
“Drag-Along Transaction” has the meaning ascribed to such term in Section 4(d)(i).
“Dragged Asset Sale” has the meaning ascribed to such term in Section 4(d)(vii).
“Dragged Asset Sale Holder” has the meaning ascribed to such term in Section 4(d)(vii).
“Dragged Asset Sale Notice” has the meaning ascribed to such term in Section 4(d)(vii).
“Dragged Asset Sale Right” has the meaning ascribed to such term in Section 4(d)(vii).
“Dragged Holder” has the meaning ascribed to such term in Section 4(d)(i).
“Encumbrances” means any direct or indirect encumbrances, lien, pledge, security interest, claim, charges, option, right of first refusal or offer, mortgage, deed of trust, easement, or any other restriction or third-party right, including restrictions on the right to vote equity interests.
“Estimated Pricing Range” has the meaning ascribed to such term in Section 5(c)(i).
“EVERTEC” means EVERTEC, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico and any successor entity thereto (it being understood that EVERTEC, Inc. is expected to be converted to a limited liability company organized under the laws of the Commonwealth of Puerto Rico named EVERTEC, LLC, and immediately following such conversion, “EVERTEC” shall mean EVERTEC, LLC).
“EVERTEC Board” means the board of directors, board of managers or equivalent governing body of EVERTEC.
“Exchange Act” means the Securities Exchange Act of 1934.
“Excluded Securities” has the meaning ascribed to such term in Section 6(b).
“Fair Market Value” has the meaning ascribed to such term in the Management Long-Term Compensation Plan.
“Financing Agreements” means (i) the Credit Agreement, dated as of September 30, 2010, among Holdings, EVERTEC, the lenders party thereto, Bank of America, N.A., as administrative agent and collateral agent (as amended, modified or supplemented from time to time), (ii) the Indenture, dated as of September 30, 2010, among EVERTEC, EVERTEC Finance Corp., the guarantors party thereto and Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB), as trustee, pursuant to which the 11% Senior Notes due 2018 were co-issued by EVERTEC and EVERTEC Finance Corp. (as amended, modified or supplemented from time to time) and (iii) any indenture, note, bond, debenture, guarantee or other agreement of any kind evidencing Indebtedness of the Company or any of its Subsidiaries, whether existing at the time of this Agreement or entered into after the date hereof.

5

“FINRA” means the Financial Industry Regulatory Authority or any successor regulatory authority.
“First Board Trigger Date” has the meaning ascribed to such term in Section 2(e)(i).
“Form S-3 Shelf” has the meaning ascribed to such term in Section 5(b)(i).
“Free Writing Prospectus” means any “free writing prospectus” as defined in Rule 405 under the Securities Act.
“GAAP” has the meaning ascribed to such term in Section 8(a)(i).
“Government Entity” means any federal, national, supranational, state, provincial, Commonwealth, local or foreign or similar government, governmental subdivision, regulatory or administrative body or other governmental or quasi- governmental agency, tribunal, commission, court, judicial or arbitral body or other entity with competent jurisdiction.
“Group Common Shares” means any Common Shares beneficially owned by a Person solely as a result of this Agreement and, for the avoidance of doubt, which have not been Transferred to such Person’s Ultimate Parent Entity or any of its Controlled Affiliates.
“Group of Persons” means a group of Persons that would constitute a “group” as determined pursuant to Section 13 (d) of the Exchange Act and the rules and regulations promulgated thereunder.
“Holders” means the holders of Common Shares who are parties hereto as set forth in Schedule I hereto, as the same may be amended, modified or supplemented from time to time.
“Holdings” means Carib Holdings, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico and any successor entity thereto (it being understood that Carib Holdings, Inc. is expected to be converted to a limited liability company organized under the laws of the Commonwealth of Puerto Rico named Carib Holdings, LLC, and immediately following such conversion, “Holdings” shall mean Carib Holdings, LLC).
“Holdings Board” means the board of directors, board of managers or equivalent governing body of Holdings.
“Indebtedness” and its correlative meaning “Indebted,” means, with respect to any Person, (a) all indebtedness of such Person, whether or not contingent, for borrowed money, and (b) all obligations of such Person evidenced by notes, bonds, debentures or other similar debt instruments.
“Independent Director” means (i) if the Common Shares are listed on a securities exchange, a Director who qualifies as “independent” within the meaning of the rules of the applicable Self-Regulatory Organization or (ii) if the Common Shares are not listed, a Director who is not, and for the prior three years has not been, employed by, or serving as a consultant to the Company or any of its Subsidiaries.
“Independent Director Obligation” means, with respect to a Nominating Holder at a given time, such Nominating Holder’s Independent Director Quota at such time minus the number of Directors previously nominated by such Nominating Holder who qualify as Independent Directors and are serving as Directors at such time.
“Independent Director Quota” means, with respect to a Nominating Holder at a given time, such Nominating Holder’s Director Percentage at such time multiplied by the number of Independent Directors required to be on the Board by such applicable Law at a given time, rounded up to the nearest whole number.
“Independent Replacement Director” means a Director who (i) qualifies as “independent” within the meaning of the rules of the NASDAQ Stock Market and the NYSE with respect to the Company and each Principal Stockholder, in each case, as if the Company or such Principal Stockholder were listed on the NASDAQ Stock Market or the NYSE, as applicable, and (ii) is nominated as a Director pursuant to the provisions of Section 2(d)(vi)-(vii).
“Independent Replacement Director Selection Committee” has the meaning ascribed to such term in Section 2(d)(vi).
“Information Rights” means the rights set forth in Section 8(a) of this Agreement.
“Initial Demand Registration” has the meaning ascribed to such term in Section 5(a)(i).
“Initial Public Offering” means the consummation of an initial underwritten public offering of Common Shares

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pursuant to an effective registration statement filed by the Company with the Commission (other than on Forms S-4 or S-8 or successors to such forms) under the Securities Act.
“Initial Requesting Holder” has the meaning ascribed to such term in Section 5(a)(i).
“Inspection Rights” means the rights set forth in Section 8(b) of this Agreement.
“Law” means any federal, national, supranational, state, provincial, Commonwealth, local or foreign or similar law, statute, ordinance, rule, regulation, code, order, writ, judgment, injunction, directive, guideline or decree enacted, issued, promulgated, enforced or entered by a Government Entity or Self-Regulatory Organization (including, for the sake of clarity, any policy statement or interpretation that has the force of law with respect to any of the foregoing, and including common law).
“Lock-Up Period” has the meaning ascribed to such term in Section 5(d)(i).
“Long-Form Demand Right” has the meaning ascribed to such term in Section 10(c).
“Long-Form Registration” has the meaning ascribed to such term in Section 5(a)(ii).
“Losses” has the meaning ascribed to such term in Section 5(i)(i).
“Management Director” means (i) for so long as Félix M. Villamil Pagani holds the position of Vice Chairman of the EVERTEC Board (pursuant to and in accordance with the Confidential Modification Agreement and General Release between EVERTEC and Mr. Villamil, effective February 22, 2012), Mr. Villamil and (ii) if Mr. Villamil no longer holds the position of Vice Chairman of the EVERTEC Board (pursuant to and in accordance with the Confidential Modification Agreement and General Release between EVERTEC and Mr. Villamil, effective February 22, 2012), the individual holding the office of Chief Executive Officer of EVERTEC.
“Management Holder” means Holders who are employed by, or serve as consultants or directors, to the Company or any of its Subsidiaries; provided that in no event shall Apollo, Popular or any of their respective Affiliates be deemed a Management Holder for purposes of this Agreement.
“Management Long-Term Compensation Plan” means the Carib Latam Holdings, Inc. Amended and Restated 2010 Equity Incentive Plan, as adopted by the Board, as it may be amended, modified or supplemented from time to time, and any successor plan thereto.
“Master Services Agreement” means the Amended and Restated Master Services Agreement among Popular, BPPR and EVERTEC dated as of the Merger Closing Date, and as may be amended, extended, supplemented or renewed following the Merger Closing Date.
“Merger Agreement” has the meaning ascribed to such term in the Recitals.
“Merger Closing Date” means September 30, 2010.
“New Investor” has the meaning ascribed to such term in Section 6(a)(iii).
“Nominating Holder” has the meaning ascribed to such term in Section 2(f).
“Non-Controlled Public Entity” means a Person which has equity securities listed on national stock exchange and which the Affiliates of such Person do not beneficially own securities representing the majority of the voting power to elect the members of the board of directors or other governing body of such Person.
“NYSE” means the New York Stock Exchange.
“Offered Securities” has the meaning ascribed to such term in Section 6(a)(i).
“Offered Shares” has the meaning ascribed to such term in Section 4(c)(i).
“Other Holders” has the meaning ascribed to such term in Section 5(c)(iii).
“PT Selected Underwriter” has the meaning ascribed to such term in Section 5(c)(iv).
“Partial Rights Transferee” means (i) any Person to whom a Principal Stockholder (A) Transfers 20% or more of the Common Shares held by Apollo or Popular as of the date of this Agreement and (B) has made or is making an Assignment in Part and, except as set forth in Section 10(d), solely to the extent of such Assignment in Part, and

7

(ii) any Person to whom a Partial Rights Transferee (A) Transfers 100% of the Common Shares acquired by such Partial Rights Transferee in connection with the Assignment in Part pursuant to which such Partial Rights Transferee became a Partial Rights Transferee and (B) has made or is making an Assignment in Part of all rights assigned to such Partial Rights Transferee and, except as set forth in Section 10(d), solely to the extent of such Assignment in Part; provided that, in each case, (x) such Transferee (1) has acquired such Common Shares in one or more Transfers of Common Shares which are in compliance with the terms and conditions of this Agreement, including the requirements set forth in Section 4 hereof and (2) has agreed in writing to comply with the terms and conditions of this Agreement applicable to Partial Rights Transferees, (y) in the case of an Assignment in Part by a Principal Stockholder involving the assignment of a 5% Board Right or 10% Board Right, such Principal Stockholder shall not make such Assignment in Part unless it and such Transferee have agreed (and set forth such agreement in the Adoption Agreement entered into in connection with such Transfer) whether the Director(s) nominated by such Principal Stockholder or such Transferee shall resign from the Board in the event such Principal Stockholder loses its right under Section 2 to nominate one or more Directors, and (z) in the case of an Assignment in Part by a Partial Rights Transferee, such Partial Rights Transferee shall not make such Assignment in Part until such Transferee has agreed (and set forth such agreement in the Adoption Agreement entered into in connection with such Transfer) to be bound by the agreement in respect of the resignation of Directors set forth in clause (y) above between such Partial Rights Transferee and the Principal Stockholder who made the initial Assignment in Part giving rise to such rights.
“Partial Rights Transferee Rights” has the meaning ascribed to such term in Section 10(d).
“Permitted ROFO Transfer” has the meaning ascribed to such term in Section 4(c)(v).
“Permitted Transfer” means:
(a)     subject to Section 3(c), a Transfer to the Company and/or one or more of the Principal Stockholders in accordance with Section 9(a) of this Agreement;
(b)     in the case of any Holder who is an individual, a Transfer of Common Shares to a trust or estate planning- related entity for the sole benefit of such Holder;
(c)     in the case of any Holder (other than a Management Holder) that is a partnership, (i) a Transfer of Common Shares to its limited, special and general partners or their equivalents as a pro rata distribution by such partnership to its partners or equivalents, provided that either (A) as a result of such distribution no such Transferee’s Proportionate Percentage equals or exceeds 10% or (B) the Common Shares included in such distribution constitute 30% or less (by value) of the aggregate value of the (x) common equity securities, (y) non-investment grade preferred equity securities and (z) non-investment grade Indebtedness included in such distribution and (ii) a Transfer of Common Shares made to such Holder’s Ultimate Parent Entity or any of its Controlled Affiliates; and
(d)     in the case of any Holder (other than a Management Holder) that is a corporation, company or limited liability company, (i) a Transfer of Common Shares to its shareholders or members, as the case may be, as a pro rata distribution by such Person to its shareholders or members, provided that either (A) as a result of such distribution no such Transferee’s Proportionate Percentage equals or exceeds 10% or (B) the Common Shares included in such distribution constitute 30% or less (by value) of the aggregate value of the (x) common equity securities, (y) non-investment grade preferred equity securities and (z) non-investment grade Indebtedness included in such distribution included in such distribution and (ii) a Transfer of Common Shares made to such Holder’s Ultimate Parent Entity or any of its Controlled Affiliates.
“Permitted Transferee” means any Person acquiring Common Shares from a Holder pursuant to a Permitted Transfer.
“Person” shall be construed broadly and shall include, without limitation, an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Governmental Entity or any department, agency or political subdivision thereof.
“Piggyback Registration” has the meaning ascribed to such term in Section 5(c)(i).
“Piggyback Takedown” has the meaning ascribed to such term in Section 5(c)(i).

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“Policies” means (i) the Corporate Policy approved by the Holdings Board on February 1, 2011, (ii) the Related Party Transaction Policy approved by the EVERTEC Board on February 1, 2011, (iii) the Insider Trading Policy approved by the EVERTEC Board on February 1, 2011, (iv) the Disclosure Policy approved by the EVERTEC Board on February 1, 2011, (v) the Anti-Money Laundering Policy approved by the EVERTEC Board on February 1, 2011, (vi) the Export Management and Compliance Policy approved by the EVERTEC Board on February 1, 2011, (vii) the OFAC Policy approved by the EVERTEC Board on February 1, 2011, (viii) the Anticorruption Policy approved by the EVERTEC Board on February 1, 2011, (ix) the Privacy Policy approved by the EVERTEC Board on February 1, 2011, and (x) such other policies of the Company and its Subsidiaries that may be adopted from time to time by the Board, the Holdings Board or the EVERTEC Board or, in each case, any committee thereof, in the case of each of (i) through (x) above, as amended, modified or supplemented from time to time.
“Popular” has the meaning ascribed to such term in the Recitals.
“Popular Consulting Agreement” means the consulting agreement dated as of the Merger Closing Date, between Holdings, EVERTEC and Popular, Inc., as amended, modified or supplemented from time to time.
“Popular Excess Period” has the meaning ascribed to such term in Section 2(e)(iii).
“Potential Participant” has the meaning ascribed to such term in Section 8(d).
“Preemptive Offer Acceptance Notice” has the meaning ascribed to such term in Section 6(a)(ii).
“Preemptive Offer Notice” has the meaning ascribed to such term in Section 6(a)(i).
“Preemptive Offer Period” has the meaning ascribed to such term in Section 6(a)(i).
“Preemptive Rights” means the rights set forth in Section 6 of this Agreement.
“Preferred Stock” has the meaning ascribed to such term in the Certificate of Incorporation.
“Principal Stockholder” means Apollo, Popular and each of their respective Complete Rights Transferees.
“Proportionate Percentage” means, with respect to any Person at the time of an event, a fraction (expressed as a percentage) the numerator of which is the total number of outstanding Class A Shares beneficially owned by such Person’s Ultimate Parent Entity or any of its Controlled Affiliates, in each case at such time, and the denominator of which is the total number of outstanding Class A Shares at such time.
“Proposed Offer” has the meaning ascribed to such term in Section 4(c)(ii).
“Prospectus” means any prospectus used in connection with a Registration Statement.
“Public Sale” means any sale, occurring simultaneously with or after the Initial Public Offering, of Common Shares to the public pursuant to an offering registered under the Securities Act, or pursuant to Rule 144 thereunder (or successor rule), except to the extent the Holder Transferring its Common Shares has actual knowledge that the Transferee of such Common Shares is an Affiliate or portfolio company of such Holder or its Affiliates or such Holder has knowingly targeted a Person or group of Persons as the intended Transferees.
“Purchasing Stockholder” has the meaning ascribed to such term in Section 8(f)(iv).
“Qualified Public Offering” means an underwritten public offering of Common Shares by the Company pursuant to an effective registration statement filed by the Company with the Commission (other than on Forms S-4 or S-8 or successors to such forms) under the Securities Act, pursuant to which the aggregate offering price of the Common Shares actually sold in such offering is at least $75 million.
“Reconvened Meeting” means a meeting of the Board or the stockholders, as the case may be, that (i) has been properly called in accordance with the Company By-laws (including by given proper notice of such meeting) as if such meeting was not an adjourned meeting and (ii) has the same agenda as a previously convened meeting that was adjourned due to the lack of a quorum.
“Redeemed Holder” shall have the meaning ascribed to such term in Section 9(a).
“Refused Securities” has the meaning ascribed to such term in Section 6(a)(iii).

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“Registrable Shares” means, at any time, any Common Shares held or beneficially owned by any Holder and any Common Shares issuable upon the conversion, exchange or exercise of any security issued by the Company and held or beneficially owned by any Holder following the conversion, exchange or exercise of such security; provided, however, that as to any Registrable Shares, such securities shall cease to be Registrable Shares (i) upon the sale thereof pursuant to an effective registration statement, (ii) upon the sale thereof pursuant to Rule 144 (or successor rule) under the Securities Act, or (iii) when such securities cease to be outstanding.
“Registration Expenses” means all expenses (other than Selling Expenses) arising from or incident to the registration of Registrable Shares in compliance with this Agreement, including:
(i)
    Commission, FINRA and other registration and filing fees,
(ii)     all fees and expenses incurred in connection with complying with any securities or blue-sky laws (including fees, charges and disbursements of counsel in connection with blue sky qualifications of the Registrable Shares),
(iii)all printing, messenger and delivery expenses,
(iv)the fees, charges and disbursements of counsel to the Company and of its independent public accountants and any other accounting and legal fees, charges and expenses incurred by the Company (including any expenses arising from or incident to any special audits or “comfort letters” required in connection with or incident to any registration),
(v)the fees and expenses incurred in connection with the listing of the Registrable Shares on NYSE (or any other national securities exchange),
(vi)the fees and expenses incurred in connection with marketing (including any “road show”) with respect to any underwritten offerings,
(vii)all fees and expenses incurred in connection with contracting for the services of any transfer agent or registrar, and
(viii)reasonable and documented fees, charges and disbursements of Counsel to the Holders, including, for the avoidance of doubt, any expenses of Counsel to the Holders in connection with the filing or amendment of any Registration Statement, Prospectus or Free Writing Prospectus hereunder.
“Registration Notice” has the meaning ascribed to such term in Section 5(b)(i).
“Registration Rights” means the rights set forth in Section 5.
“Registration Statement” means any registration statement filed hereunder in accordance with the exercise of Registration Rights.
“Regulatory Authorities” has the meaning ascribed to such term in Section 8(e).
“Related Parties” has the meaning ascribed to such term in Section 12(g).
“Representatives” have the meaning ascribed to such term in Section 8(d).
“Repurchase Event” means, with respect to a Management Holder, such Management Holder shall cease to be employed by the Company or any of its Subsidiaries for any reason (including upon death or disability) or a Bankruptcy Event shall have occurred with respect to such Management Holder.
“Repurchase Designee Notice” has the meaning ascribed to such term in Section 9(a)(ii).
“Repurchase Notice” has the meaning ascribed to such term in Section 9(a)(i).
“Repurchase Period” has the meaning ascribed to such term in Section 9(a)(iv).
“Repurchase Right” has the meaning ascribed to such term in Section 9(a)(i).
“Repurchaser” has the meaning ascribed to such term in Section 9(a)(i).
“Requesting Holder” has the meaning ascribed to such term in Section 5(a)(ii).
“Restricted Asset Sale” has the meaning ascribed to such term in Annex I.
“Restricted Period” shall have the meaning set forth in Section 4(a)(i).
“Right of First Offer” has the meaning ascribed to such term in Section 4(c)(ii).

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“ROFO Acceptance Notice” has the meaning ascribed to such term in Section 4(c)(iii).
“ROFO Acceptance Period” has the meaning ascribed to such term in Section 4(c)(iii).
“ROFO Notice” has the meaning ascribed to such term in Section 4(c)(i).
“ROFO Offerees” has the meaning ascribed to such term in Section 4(c)(i).
“ROFO Proportionate Percentage” means, with respect to any Person at the time of an event, a fraction (expressed as a percentage) the numerator of which is the total number of outstanding Class A Shares beneficially owned by such Person’s Ultimate Parent Entity or any of its Controlled Affiliates, in each case at such time, and the denominator of which is the total number of outstanding Class A Shares (excluding any Class A Shares beneficially owned by the Transferring Holder or any Person from whom the Transferring Holder has not elected to accept a Proposed Offer) at such time.
“Rule 144” means Rule 144 under the Securities Act.
“Second Board Trigger Date” has the meaning ascribed to such term in Section 2(e)(ii).
“Securities Act” means the Securities Act of 1933.
“Selected Underwriter” has the meaning ascribed to such term in Section 5(c)(iv).
“Self-Regulatory Organization” means the FINRA, the American Stock Exchange, the National Futures Association, the Chicago Board of Trade, the NYSE, any national securities exchange (as defined in the Exchange Act), any other securities exchange, futures exchange, contract market, any other exchange or corporation or similar self-regulatory body or organization.
“Selling Expenses” means the underwriting fees, discounts, selling commissions and stock transfer taxes applicable to the offering and sale of Registrable Shares registered by Holders pursuant to a Registration Statement.
“Service Termination Date” means the date such Redeemed Holder ceases to provide services to the Company or any of its Subsidiaries.
“Shelf Takedown” has the meaning ascribed to such term in Section 5(b)(ii).
“Short-Form Registration” has the meaning ascribed to such term in Section 5(a)(iii).
“Significant Related Entity” has the meaning ascribed to such term in Section 3(d).
“Solvent” with regard to any Person, means that (i) the sum of the assets of such Person, both at a fair valuation and at a present fair salable value, exceeds its liabilities, including contingent, subordinated, unmatured, unliquidated, and disputed liabilities; (ii) such Person has sufficient capital with which to conduct its business; and (iii) such Person has not incurred debts beyond its ability to pay such debts as they mature. For purposes of this definition, “debt” means any liability on a claim, and “claim” means (x) a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) a right to an equitable remedy for breach of performance to the extent such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. With respect to any such contingent liabilities, such liabilities shall be computed at the amount which, in light of all the facts and circumstances existing at the time, represents the amount which can reasonably be expected to become an actual or matured liability.
“SPV Affiliate” means with respect to any Principal Stockholder, any Controlled Affiliate of such Principal Stockholder’s Ultimate Parent Entity whose direct or indirect interest in the Common Shares constitutes more than 30% (by value) of the equity securities portfolio of such Controlled Affiliate.
“Stockholder Quorum Rights” means the rights set forth in Section 3(b) of this Agreement.
“Stockholder Rights Plan” has the meaning ascribed to such term in Section 8(j).
“ST Selected Underwriter” has the meaning ascribed to such term in Section 5(b)(vi).
“Subscribing Preemptive Rights Holder” has the meaning ascribed to such term in Section 6(a)(ii).

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“Subsidiary” means, with respect to any Person, any corporation, association, partnership, limited liability company or other business entity of which 50% or more of the total voting power or equity interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by (a) such Person, (b) such Person and one or more Subsidiaries of such Person, or (c) one or more Subsidiaries of such Person.
“Subsidiary Board” has the meaning ascribed to such term in Section 2(i).
“Subsidiary Board Rights” has the meaning ascribed to such term in Section 2(i).
“Tag-Along Acceptance Notice” has the meaning ascribed to such term in Section 4(e)(ii).
“Tag-Along Notice” has the meaning ascribed to such term in Section 4(e)(i).
“Tag-Along Offerors” has the meaning ascribed to such term in Section 4(e)(i).
“Tag-Along Proportionate Percentage” means, with respect to any Person at the time of an event, a fraction (expressed as a percentage) the numerator of which is the total number of outstanding Common Shares beneficially owned by (x) if such Person is an individual, such Person and (y) if such Person is not an individual, such Person’s Ultimate Parent Entity or any of its Controlled Affiliates, in each case at such time, and the denominator of which is the aggregate number of outstanding Common Shares beneficially owned by the Transferring Holder (or by any of its Transferring Affiliates) and all Holders who have timely delivered a Tag-Along Acceptance Notice at such time, in each case with respect to the Transfer of Common Shares giving rise to the Tag-Along Right.
“Tag-Along Right” has the meaning ascribed to such term in Section 4(e)(ii).
“Tag-Along Shares” has the meaning ascribed to such term in Section 4(e)(i).
“Tag-Along Transaction” has the meaning ascribed to such term in Section 4(e)(i).
“Transfer” means any direct or indirect sale, assignment, transfer, conveyance, gift, bequest by will or under intestacy laws, pledge, hypothecation or other Encumbrance, or any other disposition, of the stated security (or any interest therein or right thereto, including the issuance of any total return swap or other derivative whose economic value is primarily based upon the value of the stated security) or of all or part of the voting power (other than the granting of a revocable proxy) associated with the stated security (or any interest therein) whatsoever, or any other transfer of beneficial ownership of the stated security, with or without consideration and whether voluntarily or involuntarily (including by operation of law). Notwithstanding anything to the contrary set forth in this Agreement, (i) each of (x) a Transfer of equity interests of Popular and (y) a Change of Control of Popular shall be deemed not to constitute a Transfer of any Common Shares beneficially owned by Popular; (ii) each of (x) a Transfer of equity interests of Apollo’s Ultimate Parent Entity or any of its Controlled Affiliates that is not an SPV Affiliate and (y) a Change of Control of Apollo’s Ultimate Parent Entity or any of its Controlled Affiliates that is not an SPV Affiliate shall be deemed not to constitute a Transfer of any Common Shares beneficially owned by Apollo’s Ultimate Parent Entity or such Controlled Affiliate, as applicable; and (iii) each of (x) a Transfer of equity interests of any Complete Rights Transferee’s Ultimate Parent Company or any of its Controlled Affiliates that is not an SPV Affiliate and (y) a Change of Control of any Complete Rights Transferee’s Ultimate Parent Company or any of its Controlled Affiliates that is not an SPV Affiliate shall be deemed not to constitute a Transfer of any Common Shares beneficially owned by such Complete Rights Transferee’s Ultimate Parent Company or such Controlled Affiliate, as applicable; provided that, for the avoidance of doubt, subject to clause (i) above, any Change of Control of an SPV Affiliate shall be deemed to constitute a Transfer of the Common Shares beneficially owned by such SPV Affiliate.
“Transferee” means any Person to whom a Holder has transferred Common Shares pursuant to a Transfer.
“Transferred Entity” has the meaning ascribed to such term in Section 4(b).
“Transferring Affiliate” has the meaning ascribed to such term in Section 4(e)(i).
“Transferring Holder” has the meaning ascribed to such term in Section 4(c)(i).
“Ultimate Parent Entity” means (i) with respect to Apollo, Apollo Global Management LLC and its successors, (ii) with respect to Popular, Popular and its successors and (iii) with respect to a Complete Rights Transferee, (x) the Person which (A)(i) Controls such Complete Rights Transferee or (ii) if no Person Controls such Complete

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Rights Transferee, the beneficial owner of a majority of the voting power of such Complete Rights Transferee and (B) is not itself Controlled by any other Person that is an Ultimate Parent Entity of such Complete Rights Transferee or, (y) if no such Person exists, the Complete Rights Transferee; provided that, with respect to determining an Ultimate Parent Entity (i) the Control of any entity by a natural person shall be disregarded and (ii) the Control of any Non-Controlled Public Entity by any Person shall be disregarded.
“Upstream Transfer” has the meaning ascribed to such term in Section 4(b).
“Well-Known Seasoned Issuer” means a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act and which (i) is a “well-known seasoned issuer” under paragraph (1)(i)(A) of such definition or (ii) is a “well-known seasoned issuer” under paragraph (1)(i)(B) of such definition and is also eligible to register a primary offering of its securities relying on General Instruction I.B.1 of Form S-3 or Form F-3 under the Securities Act.
Section 2. Board of Directors.
(a)     General. Subject to applicable Law and the terms of this Agreement, the Board shall have the sole right to manage the business and affairs of the Company and shall have all powers and rights necessary, appropriate or advisable to effectuate and carry out the purposes and business of the Company. Regular meetings of the Board shall be held within 60 days of the end of each fiscal year and at least once every fiscal quarter, in each case, at such times and places as shall be designated from time to time by the Board. Written notice of each regular meeting of the Board shall be given to each Director at least five Business Days before the date of such meeting.
(b)     Quorum. A quorum for the transaction of business at any meeting of the Board shall consist of (i) a majority of the total number of Directors then in office and (ii) for so long as any Principal Stockholder’s Proportionate Percentage is at least 5%, at least one Director nominated by such Principal Stockholder; provided that in the event a meeting of the Board is adjourned for a lack of quorum because a Director nominated by such a Principal Stockholder has not appeared at a duly called meeting for which such Director received proper notice, the absence of such Director shall not prevent a quorum at a Reconvened Meeting provided that a majority of the total number of Directors then in office are in
attendance.
(c)     Actions of Board. Subject to applicable Law and the terms of this Agreement, all matters before the Board shall require a majority of the votes of the Directors present at a meeting in which there is a quorum. In the absence of a quorum for any such meeting, a majority of the Directors present thereat may adjourn such meeting from time to time until a quorum shall be present. Any action required or permitted to be taken at any meeting of the Board may be taken without a meeting if all of the Directors consent thereto in writing.
(d)     Composition. The Board shall consist of nine members. Each Holder agrees to vote all its Common Shares
on matters subject to the vote of such Holder and to take all other necessary or desirable actions within its control (whether in such Holder’s capacity as a Holder or otherwise, and including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings), and the Company will, as promptly as practicable, take all necessary and desirable actions within its control (including, without limitation, calling special meetings of the Board and the Holders), so that each Director shall be elected from nominees determined as follows (subject to Section 2(e) and Section 10):

(ix)
the Management Director shall serve as a Director;

(x)
for so long as any Principal Stockholder’s Proportionate Percentage is 5% or more, but less than 10%, such Principal Stockholder or its Partial Rights Transferees, as applicable, shall have the right to nominate, in the aggregate, one Director (the “5% Board Right”);

(xi)for so long as any Principal Stockholder’s Proportionate Percentage is 10% or more, but less than 25%, such Principal Stockholder or its Partial Rights Transferees, as applicable, shall have the right to nominate, in the aggregate (together with its Partial Rights Transferees of a 5% Board Right), two Directors (the “10% Board Right”);

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(xii)for so long as Apollo’s or its Complete Rights Transferee’s Proportionate Percentage is 25% or more, Apollo or such Complete Rights Transferee, as applicable, shall have the right (the “25% Apollo Board Right”) to nominate, in the aggregate (together with its Partial Rights Transferees), five Directors;

(xiii)for so long as Popular’s or its Complete Rights Transferee’s Proportionate Percentage is 25% or more, Popular or such Complete Rights Transferee, as applicable, shall have the right (the “25% Popular Board Right”) to nominate, in the aggregate (together with its Partial Rights Transferees), three Directors;

(xiv)if the number of Directors nominated pursuant to the foregoing clauses (ii) through (v) is less than eight, then a committee of the Board comprised of all Directors other than (A) Independent Replacement Directors and (B) the Director or Directors who are to be replaced by Independent Replacement Directors because the Holder or Holders who nominated such Directors have lost the right to nominate such Directors pursuant to this Section 2 (the “Independent Replacement Director Selection Committee”), shall have the right to (1) nominate Independent Replacement Directors to fill such vacancies, which nominations must be reasonably acceptable to each Principal Stockholder so long as such Principal Stockholder’s Proportional Percentage is 5% or more, and (2) remove any Independent Replacement Directors at any time and for any reason; provided that (x) the Independent Replacement Director Selection Committee shall act by the vote of a majority of all of its members (including any vacancies) in nominating and removing the Independent Replacement Directors; (y) except in connection with nominations for the annual meeting of the Holders or any special meeting of the Holders for which the notice of such meeting sets forth that the business to be conducted shall include the election of directors (and in the case of such a special meeting, solely to the extent of the number of directors so indicated to be elected), the Independent Replacement Director Selection Committee shall only nominate a person to be an Independent Replacement Director to the extent there exists, at such time, a vacancy on the Board; and (z) the Independent Replacement Director Selection Committee shall, in connection with nominating any person to be an Independent Replacement Director, indicate the order in which each Independent Replacement Director shall be automatically removed if the number of Independent Directors pursuant to this Section 2(d)(vi) decreases; and

(xv) the avoidance of doubt, if a Holder loses the right to nominate a Director pursuant to this Section 2, the Director who is to be replaced by an Independent Replacement Director shall be, subject to the terms of any applicable Adoption Agreement, designated by the Holder who has lost the right to nominate such Director (such designation to be made as promptly as practicable and, in any event, no later than two Business Days following the date on which such Holder loses such nomination right; provided that if such Holder fails to make such designation within such two Business Day period, then the Independent Replacement Committee may make such determination on majority vote of the Directors not nominated by such Holder) from among the Directors such Holder and its applicable Partial Rights Transferees have nominated to the Board.

(e)     Adjustments to Composition. Notwithstanding anything to the contrary in Section 2(d), in the event that Popular’s or its applicable Complete Rights Transferee’s Proportionate Percentage exceeds Apollo’s or its applicable Complete Rights Transferee’s Proportionate Percentage by 10% or more (the “Board Percentage Trigger”), then:

(i)     from and after the date on which the Board Percentage Trigger is first met (the “First Board Trigger Date”), (A) the 25% Apollo Board Right shall cease to represent the right to nominate five Directors and shall thereafter represent the right to nominate four Directors and Apollo, or its Complete Rights Transferee, shall cause one Director nominated by Apollo, or its Complete Rights Transferee, or any of its respective Affiliates pursuant to such 25% Apollo Board Right to resign effective immediately; provided that, for the avoidance of doubt, if Apollo, or its Complete Rights Transferee, or any of its respective Affiliates has made an Assignment in Part of its 5% Board Right or 10% Board Right prior to the First Board Trigger Date, the Director removed from the Board pursuant to this Section 2(e)(i) shall be determined as set forth in the Adoption Agreement executed and delivered to each of the parties to this Agreement by the Partial Rights Transferee and acknowledged and agreed to by Apollo, or its Complete Rights Transferee, and (B) the 25% Popular Board Right shall cease to represent the right to nominate three Directors and shall thereafter represent the right to nominate four Directors and Popular, or its Complete Rights

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Transferee, shall have the right to immediately designate such additional Director and have such Director elected to the Board as soon after the First Board Trigger Date as possible;

(ii)     on the earlier of the second anniversary of (x) the First Board Trigger Date and (y) the date of an Initial Public Offering, if prior to such Initial Public Offering the Board Percentage Trigger is met (the earlier of (x) and (y), the “Second Board Trigger Date”), (A) the 25% Apollo Board Right shall cease to represent the right to nominate four Directors and shall thereafter represent the right to nominate three Directors, and Apollo, or its Complete Rights Transferee, shall cause one Director nominated by Apollo, or its Complete Rights Transferee, or any of its respective Affiliates pursuant to such 25% Apollo Board Right to resign effective immediately; provided that, for the avoidance of doubt, if Apollo, or its Complete Rights Transferee, or any of its respective Affiliates has made an Assignment in Part of its 5% Board Right or 10% Board Right prior to the Second Board Trigger Date but there remains at least one director designated by Apollo, or its Complete Rights Transferee, on the Board, the Director removed from the Board pursuant to this Section 2(e)(ii) shall be determined as set forth in the Adoption Agreement executed and delivered to each of the parties to this Agreement by the Partial Rights Transferee and acknowledged and agreed to by Apollo, or its Complete Rights Transferee, and (B) the 25% Popular Board Right shall cease to represent the right to nominate four Directors and shall thereafter represent the right to nominate five Directors and popular, or its Complete Rights Transferee, shall have the right to immediately designate such additional Director and have such Director elected to the Board as soon after the Second Board Trigger Date as possible;

(iii)notwithstanding anything to the contrary set forth in Section 2(e)(iii)-(v), following the First Board Trigger Date (A) the 25% Popular Board Right shall represent the right to nominate one or two additional Directors as set forth in Section 2(e)(i) and (ii) during such time periods when Popular’s or its applicable Complete Rights Transferee’s Proportionate Percentage equals or exceeds Apollo’s or its applicable Complete Rights Transferee’s Proportionate Percentage (any such period, a “Popular Excess Period”) and (B) the 25% Apollo Board Right shall represent the right to nominate such additional Directors during such time periods when Apollo’s or its applicable Complete Rights Transferee’s Proportionate Percentage exceeds Popular’s or its applicable Complete Rights Transferee’s Proportionate Percentage (any such period, an “Apollo Excess Period”);

(iv)(A) on the commencement of each Apollo Excess Period, Popular or its Complete Rights Transferee shall cause a Director (if the Apollo Excess Period occurs after the First Board Trigger Date but prior to the Second Board Trigger Date) or two Directors (if the Apollo Excess Period occurs after the Second Board Trigger Date) nominated by Popular, or its Complete Rights Transferee, or any of its respective Affiliates pursuant to such 25% Popular Board Right to resign effective immediately; provided that, for the avoidance of doubt, if Popular, or its Complete Rights Transferee, or any of its respective Affiliates has made an Assignment in Part of its 5% Board Right or 10% Board Right prior to such date, the Director or Directors removed from the Board pursuant to Section 2(e)(iii) and (iv) shall be determined as set forth in the Adoption Agreement executed and delivered to each of the parties to this Agreement by the Partial Rights Transferee and acknowledged and agreed to by Popular, or its Complete Rights Transferee; and (B) on the commencement of each Popular Excess Period, Apollo or its Complete Rights Transferee, shall cause a Director (if the Popular Excess Period occurs after the First Board Trigger Date but prior to the Second Board Trigger Date) or two Directors (if the Popular Excess Period occurs after the Second Board Trigger Date) nominated by Apollo, or its Complete Rights Transferee, or any of its respective Affiliates pursuant to such 25% Apollo Board Right to resign effective immediately; provided that, for the avoidance of doubt, if Apollo, or its Complete Rights Transferee, or any of its respective Affiliates has made an Assignment in Part of its 5% Board Right or 10% Board Right prior to such date, the Director or Directors removed from the Board pursuant to Section 2(e)(iii) and (iv) shall be determined as set forth in the Adoption Agreement executed and delivered to each of the parties to this Agreement by the Partial Rights Transferee and acknowledged and agreed to by Apollo, or its Complete Rights Transferee; and

(v)     for the avoidance of doubt, the occurrence of any Apollo Excess Period shall not affect the time periods set forth in Section 2(e)(ii)(x) and (y).
(f)         Independent Directors. Solely to the extent necessary to comply with applicable Law (including, for the avoidance of doubt, the rules of any Self-Regulatory Organization), without limiting any rights or obligations under this Agreement, each Person entitled to nominate a Director pursuant to this Section 2 (each a “Nominating

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Holder”) agrees that if a Director nominated by such Nominating Holder is not an Independent Director, it shall replace such Director with a nominee who is an Independent Director; provided that (i) the Directors shall be replaced sequentially based on the Nominating Holder with the highest Independent Director Obligation at such time (taking into account each preceding replacement) until the Board contains the number of Independent Directors required to be on the Board by such applicable Law, (ii) in no event shall such Nominating Holder be required to replace a Director if the number of Directors nominated by such Nominating Holder who qualify as Independent Directors exceed such Nominating Holder’s Independent Director Quota, and (iii) if at a given time two or more Nominating Holders have identical Independent Director Obligations and the number of Independent Directors nominated pursuant to this Section 2(f) would exceed the requirements of applicable Law, the remaining Director to be replaced pursuant to this Section 2(f) shall be a Director nominated by the Nominating Holder with the lower Proportionate Percentage; provided, that, in the case of this clause (iii) if two or more Nominating Holders have identical Proportionate Percentages, then each such Nominating Holder shall remove from the Board one of its Directors that is not an Independent Director and each such Nominating Holder shall replace such Director with a nominee that is an Independent Director.
(g)     Term; Removal and Replacement. The nominees designated in Section 2(d) or Section 2(e) will be elected as Directors at any annual or special meeting of the Holders (or by written consent in lieu of a meeting of the Holders) and will serve until their successors are duly elected and qualified pursuant to the terms of this Agreement or until their earlier death, disability, resignation, termination (with cause or without cause) or other removal. No Director may be removed without the consent of the Holder who is entitled to nominate such individual as a Director pursuant this Agreement. A Director may only be removed at the direction of the party that is entitled to nominate such Director and, except as set forth in Section 2(d)(vi), the vacancy created by any former Director may only be filled by a nominee of the party that was entitled to nominate such former Director. Each Holder agrees to vote all of its Common Shares and to take all other necessary or desirable actions within its control (whether in such Holder’s capacity as a Holder or otherwise, and including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings), and the Company will, as promptly as practicable, take all necessary and desirable actions within its control (including, without limitation, calling special meetings of the Board and the Holders), so that each Director shall be removed as directed by the Holder entitled to nominate such Director. Furthermore, the Holders shall vote their Common Shares to cause the individual then entitled to be the Management Director to be a member of the Board, including removing any person previously elected as the Management Director and no longer entitled to hold such position in accordance with this Agreement. Subject to the foregoing, in the event a vacancy is created on the Board by reason of the death, disability, resignation or termination (with cause or without cause) of any Director, each of the Holders hereby agrees that such vacancy shall be filled in accordance with the procedures set forth in this Section 2. The Company and the Holders shall fill any vacancies on the Board in accordance with this Section 2, as soon as practicable following the date such vacancy is created.
(h)     Representation on Committees. Unless otherwise prohibited by applicable Law or regulation, for so long as any Principal Stockholder’s Proportionate Percentage is at least 5%, such Principal Stockholder or its Partial Rights Transferee, as applicable, shall have the right to representation on each committee of the Board or otherwise appointed by the Board (for the avoidance of doubt, including the “Committee” appointed pursuant to the Management Long-Term Compensation Plan) in the same proportion as the number of Directors, if any, nominated by such Principal Stockholder or such Partial Rights Transferee, as applicable, bears to the total number of Directors (the “Committee Rights”).
(i)     Representation on Subsidiary Boards. Unless otherwise prohibited by applicable Law or regulation, for so long as any Principal Stockholder’s Proportionate Percentage is at least 5%, such Principal Stockholder or its Partial Rights Transferee, as applicable, shall have the right to representation on (i) the board of directors of each Subsidiary of the Company (each a “Subsidiary Board”) and (ii) each committee of each Subsidiary Board, in each case, in the same proportion as the number of Directors nominated by such Principal Stockholder or such Partial Rights Transferee, as applicable, bears to the total number of Directors (collectively, (i) and (ii), the “Subsidiary Board Rights”). The Company shall take all actions to ensure that at all times the EVERTEC Board and the Holdings Board shall have the same composition as the Board including by (i) removing any director or manager from the EVERTEC Board and the Holdings Board upon the removal of such person as a Director pursuant to the

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terms of this Agreement and (ii) filling vacancies on the EVERTEC Board and the Holdings Board with the persons elected as Directors pursuant to the terms of this Agreement.
(j)     Fees and Expenses. The Company shall reimburse each Director for all necessary and proper costs and expenses (including reasonable travel, lodging and meal expenses) incurred in connection with such Director’s attendance and participation at meetings of (i) the Board, (ii) the Holdings Board, (iii) the EVERTEC Board and (iv) the committees of the Board, the Holdings Board or the EVERTEC Board, as the case may be, in each case to the extent not otherwise reimbursed by the Company or any of its Subsidiaries by virtue of the status of such Director as an employee of the Company or any of its Subsidiaries. The Company shall cause each of its Subsidiaries to reimburse the directors or members, as applicable, of such Subsidiary’s Subsidiary Board for all necessary and proper costs and expenses (including reasonable travel, lodging and meal expenses) incurred in connection with such director’s or members attendance and participation at meetings of (i) such Subsidiary Board and (ii) the committees of such Subsidiary Board, as the case may be, in each case to the extent not otherwise reimbursed by the Company or any of its Subsidiaries by virtue of the status of such Director as an employee of the Company or any of its Subsidiaries.
(k)     Officers. The officers of the Company, Holdings and EVERTEC shall be appointed and removed by the Board, the Holdings Board or the EVERTEC Board, as applicable, and perform such functions as delegated to them by such board. The Board may delegate to any officer of the Company or to any such other Person such authority to act on behalf of the Company as the Board may from time to time deem appropriate in its sole discretion.
Section 3. Stockholder Meetings; Actions Requiring Special Approval.
(a)     General. The Company shall hold annual and special meetings of the stockholders in accordance with the Company By-laws. Written notice of each stockholders’ meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote thereat by or at the direction of the officer calling such meeting not less than ten nor more than 60 days before the date of the meeting.
(b)     Quorum. A quorum for the transaction of business at any meeting of the stockholders shall consist of (i) holders of a majority of the total number of Common Shares outstanding and entitled to vote at such meeting and (ii) for so long as any Principal Stockholder’s or Partial Rights Transferee’s, as applicable, Proportionate Percentage is at least 20%, each such Principal Stockholder or Partial Rights Transferee; provided that in the event a meeting of the stockholders is adjourned for a lack of quorum because a Principal Stockholder or its applicable Partial Rights Transferee has not appeared at a duly called meeting for which such Principal Stockholder or its applicable Partial Rights Transferee received proper notice, the absence of such Principal Stockholder or its applicable Partial Rights Transferee shall not prevent a quorum at a Reconvened Meeting provided that a majority of the total number of Common Shares outstanding and entitled to vote at such meeting are in attendance.
(c)     Actions Requiring Special Approval. For so long as any Principal Stockholder’s Proportionate Percentage is at least 20%, without the prior approval of such Principal Stockholder, the Company shall not, and shall cause each of its Subsidiaries not to, take or omit to take, as applicable, or agree to take or omit to take, as applicable, directly or indirectly, any of the actions set forth on Annex I (the “Consent Actions”), which Consent Actions may be amended, modified, supplemented or restated in writing by the Principal Stockholders, unanimously, from time to time. Notwithstanding the foregoing, Popular’s consent shall not be required for any of the above mentioned actions following (i) a Change of Control of Popular or (ii) a failure by Popular to pay material amounts due and payable under the Master Services Agreement which are not disputed by Popular and which payment default gives rise to the right of the Company to terminate the Master Services Agreement pursuant to the terms thereof; provided, that (x) for the avoidance of doubt, this sentence shall not apply following an assignment by Popular of such rights to a Complete Rights Transferee and (y) a payment shall not be considered disputed only after such dispute has been settled or determined pursuant to a final non- appealable judgment or final, non-appealable binding arbitration award. For so long as any Principal Stockholder’s Proportionate Percentage is 10% or more and such Principal Stockholder has the right to nominate a Director pursuant to Section 2, the approval of at least one Director nominated by such Principal Stockholder shall be required in order for (i) the Company to issue any Preferred Stock, (ii) any Subsidiary of the Company to issue any preferred stock (other than preferred stock issued by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary of the Company), (iii) the Company or any Subsidiary of the Company to Transfer any preferred stock issued by a Subsidiary of the Company or (iv) the Company to Transfer any equity securities of Holdings (or any entity holding all or substantially all the assets

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of Holdings and its Subsidiaries of which other entity either the Company or the Principal Stockholders beneficially own equity securities) or EVERTEC (or any other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries of which other entity either the Company or the Principal Stockholders beneficially own equity securities) or any securities convertible into or exercisable or exchangeable for equity securities of Holdings (or other entity) or EVERTEC (or other entity), other than (x) any Transfer pursuant to a Drag-Along Transaction or Dragged Asset Sale or (y) any pledge, hypothecation or similar grant of a security interest (or the right to exercise all rights and remedies in connection with such security interest) in the securities of Holdings (or other entity) or EVERTEC (or other entity) to its financing sources in connection with the Company’s, Holdings’ (or other entity’s) or EVERTEC’s (or other entity’s) incurrence of Indebtedness.
(d)     Transactions with Significant Related Entities. For so long as the other Principal Stockholder’s Proportionate Percentage is at least 10%, each Principal Stockholder agrees that it shall not knowingly cause any Person in which it or any of its Affiliates holds more than 20% of such Person’s voting equity securities (each such Person or any of such Person’s Subsidiaries, a “Significant Related Entity”) to engage in any transactions with the Company or any Subsidiary of the Company unless such transaction is entered into on arm’s length terms and in the ordinary course of business. If a Principal Stockholder becomes aware of any transaction or series of related transactions between the Company or any Subsidiary of the Company, on the one hand, and an Affiliate or Significant Related Entity of such Principal Stockholder, on the other hand, in each case, which transaction(s) is not on arm’s length terms or not in the ordinary course of business, such Principal Stockholder shall use its reasonable efforts to cause the applicable Affiliate or Significant Related Entity to terminate such transaction(s) and in the event that the applicable Principal Stockholder knowingly caused (i) such Affiliate or Significant Related Entity to enter into a transaction with the Company or a Subsidiary of the Company or (ii) the Company or a Subsidiary of the Company to enter into a transaction with such Affiliate or Significant Related Entity, which transaction(s) is not on arm’s length terms, then such Principal Stockholder shall reimburse the Company for any losses resulting from such non-arm’s length terms but only to the extent of the corresponding gains by such Affiliate or Significant Related Entity.

Section 4. Transfer Restrictions; Permitted Transfers.

(a)     General Transfer Restrictions.

(i)     No Holder may Transfer its Common Shares prior to the earlier of (A) the date that is 30 months after the Merger Closing Date (such 30-month period, the “Restricted Period”) and (B) the consummation of a Qualified Public Offering, except for (x) Permitted Transfers and (y) Transfers of Common Shares made in connection with a Qualified Public Offering. Notwithstanding the foregoing, no Management Holder may Transfer its Common Shares except in connection with a Public Sale or a Transfer of such Common Shares pursuant to Section 4(d) or Section 4(e) of this Agreement.

(ii)     For so long as any Principal Stockholder’s Proportionate Percentage is at least 5%, without prior written approval of such Principal Stockholder, no Holder may Transfer any of its Common Shares to any Person if such Person or any Affiliate of such Person is engaged, directly or indirectly, in the banking, securities, insurance or lending business from which they derive aggregate annual revenues in Puerto Rico in excess of $50 million unless none of them have a physical presence in Puerto Rico which is used to conduct any such business (other than Transfers of Common Shares to Popular, Apollo’s Ultimate Parent Entity or any of their respective Controlled Affiliates).

(iii)Notwithstanding anything to the contrary set forth in this Agreement, no Transfer of Common Shares shall become effective and the Company shall not recognize any such Transfer (A) unless such Transfer complies with the provisions of this Section 4, and (B) except in the case of a Transfer of Common Shares made pursuant to a Public Sale, until the Transferee (unless already party to this Agreement) executes and delivers to each party to this Agreement an Adoption Agreement. Subject to Section 10, upon such Transfer and such execution and delivery of such Adoption Agreement, the Transferee shall be bound by, and entitled to the benefits of, this Agreement with respect to the Transferred Common Shares. Any Transfer of Common Shares in violation of this Section 4 shall be void ab initio.

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(b)     Permitted Transfers and Upstream Transfers. Notwithstanding anything to the contrary set forth in this Agreement but subject to the following sentence, a Holder may Transfer any of its Common Shares pursuant to a Permitted Transfer; provided that such Permitted Transferee (unless already party to this Agreement) executes and delivers to each party to this Agreement an Adoption Agreement. Notwithstanding anything to the contrary set forth in this Agreement, if prior to the completion of a Qualified Public Offering, a Transfer of Common Shares (other than pursuant to Section 4(c), Section 4(d) or Section 4(e)) by any Person will result in a Principal Stockholder (to the extent that such Principal Stockholder has an Ultimate Parent Entity) or any of its Affiliates (including SPV Affiliates) ceasing to be a Controlled Affiliate, after such Transfer, of such Principal Stockholder’s Ultimate Parent Entity immediately prior to such Transfer (such Principal Stockholder or such Affiliate, as applicable, the “Transferred Entity” and such Transfer, an “Upstream Transfer”), then immediately prior to such Upstream Transfer, the Transferred Entity shall Transfer, or cause the Transfer of, all of its Common Shares to such Ultimate Parent Entity or a Person that will remain a Controlled Affiliate after the Upstream Transfer of such Ultimate Parent Entity.
(c)     Right of First Offer.

(i)     During any period between the expiration of the Restricted Period and the consummation of a Qualified Public Offering, if a Holder (the “Transferring Holder”) wishes to effect a Transfer of its Common Shares, then such Transferring Holder shall first deliver a written notice (the “ROFO Notice”) to all Holders whose Proportionate Percentage is at least 5% (the “ROFO Offerees”). Such ROFO Notice shall disclose the number of Common Shares proposed to be Transferred (the “Offered Shares”) and the material terms of any offer the Transferring Holder has received or is contemplating, if applicable.

(ii)     Each ROFO Offeree shall have the right (the “Right of First Offer”) to provide the Transferring Holder, within 45 days of the date of the ROFO Notice, an irrevocable written offer to acquire all of the Offered Shares, upon the price, terms and conditions on which such ROFO Offeree is willing to purchase the Offered Shares (the “Proposed Offer”).

(iii)The Transferring Holder, in its sole discretion, may elect to accept any Proposed Offer by delivering an irrevocable written notice of acceptance (the “ROFO Acceptance Notice”) to the ROFO Offerees and the Company within 60 days after the date of the ROFO Notice (the “ROFO Acceptance Period”); provided that (A) if such Transferring Holder receives a Proposed Offer from more than one ROFO Offeree, such Transferring Holder may only accept the Proposed Offer with the most favorable terms and conditions (including price) in its reasonable discretion, and (B) if such Transferring Holder (x) receives Proposed Offers with equivalent terms (including price, conditions and other terms and conditions) from more than one ROFO Offeree and (y) elects to accept one of such Proposed Offers, such Transferring Holder shall accept all such Proposed Offers with equivalent terms and the Offered Shares shall be allocated pro rata among such ROFO Offerees based on their respective ROFO Proportionate Percentages.

(iv)The ROFO Offerees purchasing the Common Shares pursuant to this Section 4(c) shall be entitled to require the Transferring Holder to provide representations and warranties regarding (A) its power, authority and legal capacity to enter into such Transfer of Common Shares; (B) valid right, title and interest in such Common Shares and the Transferring Holder’s ownership of such Common Shares; (C) the absence of any Encumbrances on such Common Shares; and (D) the absence of any violation, default, or acceleration of any agreement or instrument pursuant to which such Transferring Holder or the assets of such Transferring Holder are bound as the result of such sale.

(v)     Subject to any Tag-Along Rights, after the termination of the ROFO Acceptance Period, the Transferring Holder may, during the 120 day period following the ROFO Acceptance Period, Transfer (or enter into an agreement to Transfer and at any time Transfer in accordance with such agreement) the Offered Shares at and upon the price and other material terms and conditions that are more favorable to the Transferring Holder than the most favorable Proposed Offer that the Transferring Holder received (such Transfer, the “Permitted ROFO Transfer”). If the Transferring Holder has not consummated a Permitted ROFO Transfer (or has not entered into an agreement with respect thereto) within such 120 day period, the Transferring Holder shall not thereafter Transfer any Common Shares (including such Offered Shares), whether pursuant to a Proposed Offer or otherwise, without first providing

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a new ROFO Notice to the ROFO Offerees in the manner provided above, and such proposed Transfer shall again be subject to the requirements of this Section 4(c).

(vi)the closing of the sale of any Common Shares pursuant to this Section 4(c), the Transferring Holder shall deliver at such closing, against payment of the purchase price therefor, certificates representing those Common Shares to be sold, duly endorsed for transfer or accompanied by duly endorsed stock powers, and evidence of the absence of Encumbrances and adverse claims with respect thereto and of such other matters as are deemed necessary by the Company for the proper Transfer of such Common Shares on the books of the Company.

(vii)Notwithstanding anything to the contrary in this Agreement, this Section 4(c) shall not apply to (A) Permitted Transfers, (B) Transfers of Common Shares made in a Qualified Public Offering, (C) Transfers of Common Shares made by Dragged Holders in a Drag-Along Transaction, or (D) Transfers of Common Shares made in connection with the exercise of Tag-Along Rights.

(d)     Drag-Along Rights.

(i)     During any period between the expiration of the Restricted Period and completion of a Qualified Public Offering, if Apollo (by itself or together with its Ultimate Parent Entity and its Ultimate Parent Entity’s Controlled Affiliates) is the Transferring Holder and the Offered Shares to be Transferred in a transaction or series of related transactions, which consolidation or otherwise, comprise 80% or more of Common Shares beneficially owned by Apollo’s Ultimate Parent Entity and its Controlled Affiliates, and at least a majority of the Class A Shares outstanding (a “Drag-Along Transaction”), then, in the event that a Holder (the “Dragged Holder”) was not entitled to a Right of First Offer or has not timely submitted its Proposed Offer, or any such Proposed Offer has been rejected in compliance with this Agreement, Apollo shall have the right (the “Drag-Along Right”) to require such Dragged Holder to Transfer, in the Drag-Along Transaction, the number of Common Shares beneficially owned by such Dragged Holder multiplied by the Drag-Along Percentage (rounded down to the nearest whole share). In order to exercise its Drag-Along Right, Apollo shall deliver written notice of such Drag-Along Transaction (the “Drag-Along Notice”) to the Company and each Dragged Holder within 150 days after the date of the ROFO Notice. Such Drag-Along Notice shall disclose in reasonable detail the number of Common Shares to be subject to the Drag-Along Transaction (the “Drag-Along Shares”), the proposed price, the other proposed terms and conditions of the proposed Drag-Along Transaction (including copies of the definitive agreements relating thereto) and the identity of the prospective purchaser. For the avoidance of doubt, the terms and conditions of the proposed Drag-Along Transaction (including the terms and conditions of any stockholder, voting or other ongoing arrangement between the Transferring Holder and the prospective purchaser) must be the same for the Transferring Holder and the Dragged Holder including, without limitation, the same per Common Share purchase price, but excluding any payments under the Consulting Agreements made as a result of any Drag-Along Transaction which will be governed by Section 8(h) hereof.

(ii)     The Persons purchasing the Common Shares pursuant to a Drag-Along Transaction shall be entitled to require the Dragged Holders to provide representations and warranties regarding (A) its power, authority and legal capacity to enter into such Transfer of Common Shares; (B) valid right, title and interest in such Common Shares and the Transferring Holder’s ownership of such Common Shares; (C) the absence of any Encumbrances on such Common Shares; and (D) the absence of any violation, default, or acceleration of any agreement or instrument pursuant to which such Dragged Holder or the assets of such Dragged Holder are bound as the result of such sale; provided that the representations to be provided by each Dragged Holder and the Transferring Holder shall be substantially identical other than with respect to the applicable governing law with respect to its power, authority and legal capacity to enter into such Transfer of Common Shares.

(iii)With respect to any Drag-Along Transaction, Apollo and each Dragged Holder agrees that it shall use its reasonable best efforts to effect the Drag-Along Transaction as expeditiously as practicable, including delivering all documents necessary or reasonably requested in connection with such Drag-Along Transaction, voting in support of such transaction and entering into any instrument, undertaking or obligation necessary or reasonably requested in connection with such Drag-Along Transaction (as specified in the Drag-Along Notice). Subject to the terms and conditions of this Section 4(d) and without limiting the generality of the foregoing, the Company and each Dragged Holder shall take or cause to be taken all actions, and do, or cause to be done, on behalf and in respect

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of the Company any and all actions that may be reasonably requested consistent with this Section 4(d) in connection with any Drag-Along Transaction. In addition, (A) each of the Transferring Holder and each Dragged Holder shall pay its pro rata share (based on the percentage of the proceeds actually received by the Transferring Holder or such Dragged Holder, as applicable, as compared to the aggregate proceeds actually received by all Dragged Holders and the Transferring Holder) of the reasonable expenses (if any) incurred by the Transferring Holder and each of the Dragged Holders (or any of their respective Affiliates) in connection with the Drag-Along Transaction; and (B) each Dragged Holder shall join on a pro rata basis (based on the percentage of the proceeds actually received by such Dragged Holder as compared to the aggregate proceeds actually received by all Dragged Holders and the Transferring Holder), severally and not jointly, in any indemnification or other obligations that are specified in the Drag- Along Notice and to which the Transferring Holder will also be subject on a proportionate basis (but in no circumstances including any indemnification of Apollo or any of its Affiliates), other than indemnification with respect to the representations and warranties given by a Dragged Holder pursuant to Section 4(d)(ii); provided that no Dragged Holder shall be obligated under this clause in connection with such Drag-Along Transaction to agree to indemnify or hold harmless the Transferee or Transferees or any other party related to such Drag-Along Transaction (including, but not limited to, Affiliates, escrow agents, investment bankers or other agents or advisors) with respect to an aggregate amount in excess of the proceeds actually paid to such Dragged Holder (after deducting any expenses paid by such Dragged Holder pursuant to clause (A) of this sentence) in respect of such Dragged Holder’s Common Shares in connection with such Drag-Along Transaction (provided that, with respect to any options, warrants or other rights to purchase or subscribe for Common Shares exercised or converted into Common Shares by a Dragged Holder following the delivery of the applicable Drag-Along Notice, such proceeds shall only include the amount by which the aggregate proceeds actually received exceeds the aggregate exercise or conversion price actually paid by such Dragged Holder in respect of such options, warrants or rights).

(iv)In the event of a Drag-Along Transaction, each Dragged Holder shall be required to Transfer such Common Shares beneficially owned by such Dragged Holder as provided in the Drag-Along Notice to the extent such Transfer is required under Section 4(d)(i) hereof. The form of the consideration offered in respect of any Common Shares in a Drag-Along Transaction shall be the same for all Common Shares in such Drag-Along Transaction, including the Common Shares of the Transferring Holder.
(v)     If requested by Apollo, each Dragged Holder will, immediately prior to the consummation of the Drag- Along Transaction, exercise and or convert, as applicable, such number of options, warrants or other rights to purchase or subscribe for Common Shares into Common Shares as is required so that a sufficient number of Common Shares are available to Transfer the applicable number of Drag-Along Shares beneficially owned by such Dragged Holder; provided that any Dragged Holder that holds such options, warrants or other rights to purchase the exercise or conversion price per share of which is greater than the per share price at which the Drag-Along Shares are to be Transferred, may, in place of such exercise or conversion, submit to irrevocable cancellation thereof without any liability for payment of any exercise or conversion price with respect thereto.

(vi)Upon the closing of the sale of any Common Shares pursuant to this Section 4, the Dragged Holders shall deliver at such closing, against payment of the purchase price therefor, certificates representing their Common Shares to be sold, duly endorsed for transfer or accompanied by duly endorsed stock powers, and evidence of the absence of Encumbrances and adverse claims with respect thereto and of such other matters as are deemed necessary by the Company for the proper transfer of such shares on the books of the Company.

(vii)If Apollo has satisfied the conditions necessary to exercise the Drag Along Right with respect to a Drag Along Transaction for 100% of the Common Shares, then during any period between the expiration of the Restricted Period and the completion of a Qualified Public Offering, in connection with a sale of at least 90% of the consolidated gross assets (excluding cash) of the Company and its Subsidiaries and assumption of at least 90% of the consolidated gross liabilities (excluding Indebtedness) of the Company and its Subsidiaries (which sale and assumption shall include the assignment and assumption of all commercial agreements between the Company or any of its Subsidiaries, on the one hand, and Popular or any of its Subsidiaries, on the other hand) (a “Dragged Asset Sale”), Apollo shall have the right (the “Dragged Asset Sale Right”) to require each Holder (a “Dragged Asset Sale Holder”) that was not entitled to a Right of First Offer or has not timely submitted its Proposed Offer, or whose Proposed Offer has been rejected in compliance with this Agreement, solely as a stockholder of the Company with respect to any requirements of Article 9.01 of the Puerto Rico General Corporations Law and not with respect to

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any of its rights under this Agreement (except (x) as expressly set forth in Section 4(d)(viii), Section 4(d)(ix) and this Section 4(d)(vii) and (y) that no Principal Stockholder shall have a right to veto the Dragged Asset Sale pursuant to Section 3(c) solely because such Dragged Asset Sale constitutes a Restricted Asset Sale) or under the Certificate of Incorporation or By-Laws of the Company, to vote to approve such Dragged Asset Sale; provided that (A) for so long as Popular’s Proportionate Percentage is 5% or more, Apollo shall not be permitted to exercise its Dragged Asset Sale Right unless Apollo reasonably determines that the net proceeds to be received by Popular in a Drag-Along Transaction for 100% of the Common Shares would be less, after taking account of tax, indemnification obligation and other effects, and assuming that any fees and expenses would be paid in the same manner, than the net proceeds (including the fair market value of expected distributions related to any assets retained by the Company in the Dragged Asset Sale, on a present value basis) that would be received by Popular if such transaction were structured as a Dragged Asset Sale; (B) such Dragged Asset Sale must be pursuant to a legally binding contract with a Person, after giving effect to the Dragged Asset Sale, that is Solvent (the “Asset Acquirer”) providing that (1) the Asset Acquirer shall acquire at least 90% of the consolidated gross assets (excluding cash) of the Company and its Subsidiaries and assume at least 90% of the consolidated gross liabilities (excluding Indebtedness) of the Company and of its Subsidiaries (including the assignment and assumption of all commercial agreements between the Company or any of its Subsidiaries, on the one hand, and Popular or any of its Subsidiaries, on the other hand) through one legal entity and (2) following the completion of the Dragged Asset Sale, the Company shall be liquidated and all net proceeds shall be distributed promptly to the Holders; (C) the gross liquidation proceeds from the Dragged Asset Sale must exceed the highest Proposed Offer on a price per share basis that Apollo received within 45 days of the date of the applicable ROFO Notice; (D) unless paid in accordance with Section 4(d)(ix), the Company must either reimburse or assume, at the Company’s option, and pay prior to distributing the proceeds from such Dragged Asset Sale, all reasonable expenses incurred by each Principal Stockholder or its Partial Rights Transferees with respect to such Dragged Asset Sale; (E) the terms and conditions of the proposed Dragged Asset Sale must be the same for Apollo and any of its Affiliates and all Dragged Asset Sale Holders, including, without limitation, the same per Common Share liquidation proceeds; (F) the Dragged Asset Sale must not result in Apollo or its Affiliates receiving any benefit or being relieved of any obligation in any manner disproportionate to any such Dragged Asset Sale Holder, other than, in either case of clauses (E) and (F), as a result of the distribution on a pro rata basis (by Common Shares beneficially owned) of the liquidation proceeds of the Dragged Asset Sale and any payments made or to be made pursuant to the Consulting Agreements, which will be governed by Section 8(h) hereof; and (G) for so long as Popular’s Proportionate Percentage is 5% or more, the Dragged Asset Sale (as compared to the adverse effect that would result if the transaction were structured as a Drag-Along Transaction that complies with the provisions of this Section 4(d)) shall not have an adverse effect on Popular or its Subsidiaries that is not applicable to all Holders, and no such adverse effect may disproportionately (which for the avoidance of doubt, will not include any pro rata effects that derive from each Holder’s Proportional Percentage) affect Popular or its Subsidiaries (provided that any adverse or disproportionate effect arising from the assignment of any commercial arrangements between Popular and its Subsidiaries, on the one hand, and the Company and its Subsidiaries, on the other hand, in such Dragged Asset Sale shall be excluded in any determination under the clause (G); it being understood that the ability of the Company to make such assignment is subject to the contractual terms of such commercial arrangement). In order to exercise its Dragged Asset Sale Right, Apollo’s ROFO Notice must have specified that Apollo was considering a Dragged Asset Sale and provided that a Proposed Offer may include a proposed sale of assets and assumption of liabilities, and Apollo must deliver written notice of such proposed Dragged Asset Sale (the “Dragged Asset Sale Notice”) to the Company and each Dragged Asset Sale Holder within 150 days after the date of such ROFO Notice. Such Dragged Asset Sale Notice shall disclose in reasonable detail the proposed price, the other proposed terms and conditions of the proposed Dragged Asset Sale (including copies of the definitive agreements relating thereto) and the identity of the prospective Asset Acquirer.

(viii)The Asset Acquirer shall be entitled to require the Dragged Asset Sale Holders to provide representations and warranties regarding (A) its power, authority and legal capacity to vote its Common Shares in favor of such Dragged Asset Sale; (B) valid right, title and interest in such Common Shares and the Dragged Asset Sale Holder’s ownership of such Common Shares; (C) the absence of any Encumbrances on such Common Shares; and (D) the absence of any violation, default, or acceleration of any agreement or instrument pursuant to which such Dragged Asset Sale Holder or the assets of such Dragged Asset Sale Holder are bound as the result of such sale; provided that the representations to be provided by each Dragged Asset Sale Holder and Apollo shall be substantially

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identical other than with respect to the applicable governing law with respect to its power, authority and legal capacity to vote its Common Shares in favor of such Dragged Asset Sale.

(ix)Subject to the terms and conditions of this Section 4(d), the Company (in the case of any Dragged Asset Sale) agrees that it shall use its reasonable best efforts to effect the Dragged Asset Sale, as expeditiously as practicable, including delivering all documents necessary or reasonably requested in connection with such Dragged Asset Sale, entering into any instrument, undertaking or obligation necessary or reasonably requested in connection with such Dragged Asset Sale (as specified in the Dragged Asset Sale Notice). Subject to the terms and conditions of this Section 4 (d) and without limiting the generality of the foregoing, the Company shall take or cause to be taken all actions, and do, or cause to be done, on behalf and in respect of the Company, any and all actions that may be reasonably requested consistent with this Section 4(d) in connection with any Dragged Asset Sale, as applicable. In addition, (A) each of Apollo and each Dragged Asset Sale Holder shall pay its pro rata share (based on the percentage of the proceeds actually received by Apollo or such Dragged Asset Sale Holder, as applicable, as compared to the aggregate proceeds actually received by all Dragged Asset Sale Holders and Apollo) of the reasonable expenses (if any) incurred by Apollo and each of the Dragged Asset Sale Holders (or any of their respective Affiliates) in connection with the Dragged Asset Sale; and (B) each Dragged Asset Sale Holder shall join on a pro rata basis (based on the percentage of the proceeds actually received by such Dragged Asset Sale Holder as compared to the aggregate proceeds actually received by all Dragged Asset Sale Holders and Apollo), severally and not jointly, in any indemnification or other obligations that are specified in the Dragged Asset Sale Notice and to which Apollo will also be subject on a proportionate basis (but in no circumstances including any indemnification of Apollo or any of its Affiliates), other than indemnification obligations with respect to the representations and warranties given by a Dragged Asset Sale Holder pursuant to Section 4(d)(viii); provided that (y) no Dragged Asset Sale Holder shall be obligated under this Section 4(d)(ix) in connection with such Dragged Asset Sale to agree to indemnify or hold harmless the Asset Acquirer or any other party related to such Dragged Asset Sale (including, but not limited to, Affiliates, escrow agents, investment bankers or other agents or advisors) with respect to an aggregate amount in excess of the liquidation proceeds actually paid to such Dragged Asset Sale Holder (after deducting any expenses paid by such Dragged Asset Sale Holder pursuant to clause (A) of this sentence) in respect of the assets sold in such Dragged Asset Sale. Each Dragged Asset Sale Holder shall, to the extent reasonably requested by Apollo, (1) afford the Asset Acquirer and the Asset Acquirer’s representatives access to appropriate employees of such Dragged Asset Sale Holder, (2) furnish reasonably requested non-confidential information regarding such Dragged Asset Sale Holder’s relationship with the Company, (3) instruct such Dragged Asset Sale Holder’s employees to reasonably cooperate with the Asset Acquirer in the Asset Acquirer’s investigation of the Company; provided that, in no event shall the Asset Acquirer have any access, based on the advice of the Dragged Asset Sale Holder’s counsel, that would create any potential liability under applicable Laws, including antitrust Laws, violate any confidentiality obligation or that would reasonably be expected to result in the waiver of any legal privilege. All requests for information by Apollo pursuant to this Section 4(d)(ix) shall be directed to an executive officer of the applicable Dragged Asset Sale Holder or such Person or Persons as may be designated by the applicable Dragged Asset Sale Holder.

(x)     Notwithstanding anything to the contrary in this Agreement, for the avoidance of doubt, this Section 4 (d) shall not apply to (A) Permitted Transfers or Transfers of Common Shares to any portfolio company of Apollo’s Ultimate Parent Entity or its Affiliates, (B) Transfers of Common Shares made in a Qualified Public Offering or (C) any sale, assignment, transfer or conveyance of assets by the Company or any of its Subsidiaries to Apollo’s Ultimate Parent Entity or any of its Affiliates or their respective portfolio companies.

(e)      Tag-Along Rights.

(i)     During any period between the expiration of the Restricted Period and completion of a Qualified Public Offering, if any Transferring Holder (together with its Affiliates) proposes to Transfer to another Person or Persons (including, for the avoidance of doubt, any ROFO Offeree) (collectively, the “Tag-Along Offerors”), in a transaction or series of related transactions (the “Tag-Along Transaction”), Common Shares representing at least 15% of the Class A Shares then outstanding, then, at least 15 Business Days prior to the closing of such proposed Transfer, such Transferring Holder shall deliver a written notice (the “Tag-Along Notice”) to each Holder. Such Tag-Along Notice shall (A) set forth (1) the total number of Common Shares proposed to be Transferred (the “Tag-Along Shares”), (2) the total number of Common Shares beneficially owned by the Transferring Holder and each Affiliate

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of such Transferring Holder proposing to Transfer Common Shares in such Tag-Along Transaction (each a “Transferring Affiliate”), (3) the name and address of the Tag-Along Offerors, (4) the proposed amount and type of consideration (including, if the consideration consists in whole or in part of non-cash consideration, such information available to the Transferring Holder as may be reasonably necessary for the Company to properly analyze the economic value and investment risk of such non-cash consideration) and (5) the terms and conditions of payment that the Transferring Holder and its Transferring Affiliates intend to accept; and (B) indicate that the Tag-Along Offerors have been informed of the Tag-Along Rights provided for in this Section 4(e) and have agreed to purchase Common Shares from the Principal Stockholders (and their Affiliates) and their applicable Partial Rights Transferees (and their respective Affiliates) in accordance with the terms hereof.

(ii)     Each Holder shall have the right (the “Tag-Along Right”), exercisable by delivering a written notice (the “Tag-Along Acceptance Notice”) to the Transferring Holder within ten Business Days after delivery of the Tag- Along Notice, to Transfer to the Tag-Along Offerors and substitute for Tag-Along Shares held by the Transferring Holder, as a condition to such proposed Transfer of Tag-Along Shares by the Transferring Holder or its Transferring Affiliates, up to the number of Common Shares equal to the number of Tag-Along Shares multiplied by such Holder’s Tag-Along Proportionate Percentage (rounded down to the nearest whole share), at a price per share equal to the same price per Common Shares proposed to be paid by the Tag-Along Offerors and otherwise on the same terms and conditions set forth in the Tag-Along Notice.

(iii)The Transferring Holder (and its Transferring Affiliates) shall not Transfer any Common Shares to the Tag-Along Offerors unless each Holder that delivered a timely Tag-Along Acceptance Notice is permitted to Transfer simultaneously therewith, and substitute for Tag-Along Shares held by the Transferring Holder (or its Transferring Affiliates), the number of Common Shares equal to the number of Tag-Along Shares multiplied by such Holder’s Tag- Along Proportionate Percentage (rounded down to the nearest whole share), at a price per share equal to the same price per Common Shares proposed to be paid to the Transferring Holder (and its Transferring Affiliates) and otherwise on the same terms and conditions set forth in the Tag-Along Notice.

(iv)If all such Transfers of Common Shares to the Tag-Along Offeror are not consummated within 120 days from delivery of the Tag-Along Notice, the provisions of this Section 4(e) shall again become effective with respect to the proposed Transfer of Common Shares.

(v)     Notwithstanding anything to the contrary in this Agreement, this Section 4(e) shall not apply to (A) Permitted Transfers or (B) Transfers of Common Shares made in a Qualified Public Offering.

(f)     Securities Restrictions; Legends.

(i)     No Common Shares shall be Transferred except upon the conditions specified in Section 4 and in this Section 4(f), which conditions are intended to insure compliance with the provisions of the Securities Act.

(ii)     Securities Act Legend. Each certificate representing Common Shares shall be stamped or otherwise imprinted with a legend in substantially the following form:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM PURSUANT TO THE ACT AND APPLICABLE STATE SECURITIES LAWS. ANY OFFER, SALE, ASSIGNMENT, TRANSFER OR OTHER DISPOSITION OF THESE SECURITIES IN A TRANSACTION THAT IS NOT REGISTERED UNDER THE ACT IS SUBJECT TO THE COMPANY’S RIGHT TO REQUIRE DELIVERY OF AN OPINION OF COUNSEL TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.”


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The Holder of any Common Shares by acceptance thereof agrees, prior to any Transfer of any such Common Shares, to give written notice to the Company of such Holder’s intention to effect such Transfer and to comply in all other respects with Section 4 and the provisions of this Section 4(f). Each such notice shall describe the manner and circumstances of the proposed Transfer of Common Shares. Upon request by the Company, the Holder delivering such notice shall deliver a written opinion, addressed to the Company, of counsel for the Holder of such Common Shares, stating that in the opinion of such counsel (which opinion and counsel shall be reasonably satisfactory to the Company) such proposed Transfer does not involve a transaction requiring registration or qualification of such shares under the Securities Act or other applicable securities laws. Such Holder of such Common Shares shall be entitled to effect a Transfer of such Common Shares in accordance with the terms of the notice delivered to the Company, if such Transfer is otherwise in compliance with this Agreement and the Company does not reasonably object to such Transfer and request such opinion within 15 days after delivery of such notice, or, if it requests such opinion, does not reasonably object to such Transfer within 15 days after delivery of such opinion. Each certificate or other instrument evidencing any such Transferred Common Shares shall bear the legend set forth in this Section 4(f)(ii) unless (i) such opinion of counsel to the Holder of such shares (which opinion and counsel shall be reasonably acceptable to the Company) states that registration or qualification of any future Transfer of Common Shares is not required by the applicable provisions of the Securities Act or other applicable securities laws or (ii) the Company shall have waived the requirement of such legends.

(iii)Stockholders Agreement Legend. Each certificate representing shares of Common Shares shall be endorsed with the following legend:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A STOCKHOLDER AGREEMENT DATED AS OF APRIL 17, 2012 (AS AMENDED, MODIFIED, SUPPLEMENTED OR RESTATED FROM TIME TO TIME, THE “STOCKHOLDERS’ AGREEMENT”), AMONG THE HOLDER OF SUCH SECURITIES (OR THE PREDECESSOR IN INTEREST TO THE HOLDER OF SUCH SECURITIES), THE COMPANY AND CERTAIN OTHER STOCKHOLDERS OF THE COMPANY. THE TERMS OF THE AGREEMENT INCLUDE, AMONG OTHER THINGS, RESTRICTIONS ON TRANSFERS. THE COMPANY WILL, UPON WRITTEN REQUEST, FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”
The legend required under this Section 4(f)(iii) shall be removed upon the earlier of (i) termination of this Agreement in accordance with the provisions of Section 12(a) and (ii) with respect to any Common Shares to be sold in a Transfer pursuant to Public Sale, in connection with any such Transfer of Common Shares made pursuant to a Public Sale.

Section 5. Registration Rights.

(a)     Demand Registration Rights.

(i)     Initial Demand Registration. At any time after the second anniversary of the Merger Closing Date, any Principal Stockholder (by itself or together with its Ultimate Parent Entity and its Ultimate Parent Entity’s Controlled Affiliates and any of its Partial Rights Transferees) beneficially owning, in the aggregate, 40% or more of the outstanding Common Shares (the “Initial Requesting Holder”) may request registration under the Securities Act of all or any portion of the Registrable Shares beneficially owned by such Initial Requesting Holder on Form S-1 or similar long-form registration statement as part of an underwritten offering (the “Initial Demand Registration”); provided that such Initial Requesting Holder shall only be entitled to make such Initial Demand Registration if the aggregate offering price of the Registrable Shares to be sold in such offering is reasonably expected to be at least $75 million. The Initial Requesting Holder may request that the Initial Demand Registration be a firm commitment underwritten offering. At the request of the Initial Requesting Holder, if (A) it is necessary in order to comply with the rules and regulations of any applicable Self- Regulatory Organization or (B) if the managing and lead underwriters, in their reasonable judgment, determine that it is advisable and inform the Initial Requesting Holder and the Company of such determination, the Company will cause the automatic conversion of the Class B Shares into Class A Shares as set forth in the Certificate of Incorporation.


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(ii)     Long-Form Registration. At any time after the Initial Public Offering, any Principal Stockholder or, to the extent any such rights have been assigned to any Partial Rights Transferee pursuant to Section 10(c), its applicable Partial Rights Transferee (in such capacity, a “Requesting Holder”) may request registration under the Securities Act of all or any portion of the Registrable Shares beneficially owned by such Requesting Holder on Form S-1 (or any successor form) or similar long-form registration statement (a “Long-Form Registration”); provided that (A) subject to Section 10, no Requesting Holder may request more than a total of four Long-Form Registrations and (B) such Requesting Holder shall only be entitled to demand such Long-Form Registration if the aggregate offering price of the Registrable Shares to be sold in such offering (including piggyback shares and before deduction of underwriting discounts) is reasonably expected to exceed, in the aggregate, the lower of (1) $75 million and (2) if the aggregate market value of all Registrable Shares held by the Requesting Holder (or its Ultimate Parent Entity or its Controlled Affiliates) is less than $75 million but not less than $50 million, the aggregate market value of all such Registrable Shares held by such Requesting Holder (or its Ultimate Parent Entity or its Controlled Affiliates). Any Requesting Holder may request that an offering conducted under a Long-Form Registration be an underwritten offering.

(iii)Short-Form Registration. At any time at which the Company is eligible to file a Registration Statement on Form S-3 with respect to Common Shares, a Requesting Holder may request registration under the Securities Act of all or any portion of the Registrable Shares beneficially owned by such Requesting Holder on Form S-3 (or any successor form) or any similar short form registration statement, if available (a “Short-Form Registration”). Each Requesting Holder may request an unlimited number of Short-Form Registrations; provided that such Requesting Holder shall only be entitled to demand such Short-Form Registration if the aggregate offering price of the Registrable Shares to be sold in such offering (including piggyback shares and before deduction of underwriting discounts) is reasonably expected to exceed, in the aggregate, the lower of (1) $50 million and (2) if the aggregate market value of all Registrable Shares held by the Requesting Holder (or its Ultimate Parent Entity or its Controlled Affiliates) is less than $50 million but not less than $25 million, the aggregate market value of all such Registrable Shares held by such Requesting Holder (or its Ultimate Parent Entity or its Controlled Affiliates). Any Requesting Holder may request that an offering conducted under a Short-Form Registration be an underwritten offering. A request for registration under this Section 5(a)(iii) or under Section 5(a)(i) or Section 5(a)(ii) shall be a “Demand Registration”.

(iv)Demand Registration Notices. All requests for Demand Registrations shall be made by giving written notice to the Company (the “Demand Registration Notice”). Each Demand Registration Notice shall specify the number of Registrable Shares proposed to be sold in the Demand Registration by the Holder giving such Demand Registration Notice.

(v)     Effective Demand Registrations. A registration shall not count as one of the permitted Demand Registrations until both (i) it has become effective and (ii) such effective registration includes at least 75% of the Registrable Shares requested to be included by the Requesting Holder; provided that a Demand Registration that is withdrawn at the sole request of the Requesting Holder who demanded such Demand Registration shall not count as a Demand Registration of such Requesting Holder if the Company is reimbursed by such Holder for all reasonable out-of-pocket expenses incurred by the Company in connection with such registration, including all Registration Expenses.

(vi)Short-Form Registrations. Regardless of a request for a Long-Form Registration, Registration Statements shall be Short-Form Registrations whenever the Company is permitted to use an applicable short form. Promptly after the Company has become subject to the reporting requirements of the Exchange Act, the Company shall use its commercially reasonable efforts to satisfy all registrant eligibility requirements specified by Form S-3 (or any successor form).

(vii) Priority on Demand Registrations. The Company shall not include in any Demand Registration any securities which are not Registrable Shares without the prior written consent of the Holders of a majority of the Registrable Shares requested to be registered on such Registration Statement and each Principal Stockholder who has requested Registrable Shares that would constitute at least 10% of the Registrable Shares to be included in the Demand Registration, except as set forth in the next sentence. If the Demand Registration is an underwritten offering

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and the managing underwriters for such Demand Registration advise the Company in writing that in their opinion the number of Registrable Shares and, if permitted hereunder, other securities requested to be included in such Demand Registration exceeds the number of Registrable Shares and other securities, if any, which can be sold in such offering without significantly delaying or jeopardizing the success of such offering, including by selling at a price per share within a price range reasonably acceptable to the Holders of a majority of the Registrable Shares requested to be included in the Demand Registration, including, if any securities other than Registrable Shares are to be included in such Demand Registration, each Principal Stockholder who has requested Registrable Shares that would constitute at least 10% of the Registrable Shares to be included in the Demand Registration, the Company shall include in such Demand Registration the number of Registrable Shares which can be so sold in the following order of priority: (A) first, the Registrable Shares requested to be included in such Demand Registration, pro rata among the respective Holders of such Registrable Shares on the basis of the total number of Registrable Shares beneficially owned by each such Holder, and (B) second, all other securities requested to be included in such Demand Registration to the extent permitted hereunder; provided however that with respect to the Initial Demand Registration only, the order priority shall be as follows: (1) first, the securities the Company proposed to sell; (2) second, the Registrable Shares requested to be included in such Demand Registration, pro rata among the respective Holders of such Registrable Shares on the basis of the total number of Registrable Shares beneficially owned by each such Holder, and (3) third, all other securities requested to be included in such Demand Registration to the extent permitted hereunder.

(viii)Restrictions on Demand Registrations. The Company shall not be obligated to effect (i) any Long- Form Registration within 120 days or (ii) any Short-Form Registration within 90 days, in each case, after the effective date of a previous Demand Registration or a previous registration statement in which the Holders of Registrable Shares were given piggyback rights pursuant to Section 5(c) of this Agreement. In addition, the Company shall not be obligated to effect any Demand Registration during the period starting with the date that is 60 days prior to the Board’s good faith estimate of the date of filing of, and ending on the date that is 90 days after the effective date of, a Company-initiated registration statement, provided that the Company is actively employing in good faith all reasonable best efforts to cause such registration statement to become effective, and provided further that, notwithstanding anything in the foregoing to the contrary, the aggregate number of days that any one or more Demand Registrations are suspended or delayed by operation of this Section 5(a)(viii) shall not exceed 120 days in any 12-month period. In the event of any such suspension or delay, the Holder of Registrable Shares initially requesting a Demand Registration that is suspended by operation of this Section 5(a)(viii) shall be entitled to withdraw such request and, if such request is withdrawn, such Demand Registration shall not count as one of the permitted Demand Registrations hereunder, and, notwithstanding the proviso in Section 5(a)(v), the Company shall pay all Registration Expenses in connection with such registration.

(ix)Selection of Underwriters. Except as set forth in this Section 5(a)(ix), the Holders of a majority of the Registrable Shares requested to be included in a Demand Registration which is an underwritten offering shall have the right to select the underwriters and managing underwriter (which shall consist of one or more reputable nationally recognized investment banks), subject to the Company’s approval (and in the event such Holders control a majority of the Board and the managing underwriter or any other underwriter selected by such Holders is not one of the investment banks listed on Annex II attached hereto (or a successor entity of the applicable investment bank), the other Principal Stockholder’s approval), in each case, which shall not be unreasonably withheld, conditioned or delayed; provided that Popular Securities, Inc. will be notified of the initial organizational meeting for any such registration and, if Popular Securities, Inc. is not selected as the managing underwriter, the Company and the Holders of a majority of the Registrable Shares requested to be included in a Demand Registration will consider in good faith including it as a co-lead underwriter or co-lead book-running manager of such registration. If a Principal Stockholder who requested Registrable Shares that would constitute at least 10% of the Registrable Shares to be included in a Demand Registration so requests, each Principal Stockholder who has requested Registrable Shares that would constitute at least 10% of the Registrable Shares to be included in such Demand Registration shall, acting together, select one co-lead underwriter mutually agreeable to such Principal Stockholders, which (A) shall be one of the investment banks listed on Annex II attached hereto and (B) shall not be an Affiliate of any of such Principal Stockholders (the “DR Selected Underwriter”).



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(b)     Shelf Registrations.

(i)     Filing. At any time after the one year anniversary of the Initial Public Offering, the Company shall use its commercially reasonable efforts to file, no later than 45 days following any written request from any Requesting Holder, a Registration Statement on Form S-3 (or any successor form) or any similar short-form registration statement filed with the Commission for an offering to be made on a delayed or continuous basis in accordance with and pursuant to Rule 415 under the Securities Act (the “Form S-3 Shelf”) covering the resale of the Registrable Shares. The Company shall use commercially reasonable efforts to cause the Form S-3 Shelf to become effective as soon as practicable after such filing. The Company shall give written notice of the filing of the Registration Statement at least 15 days prior to filing the Registration Statement to all Holders of Registrable Shares (the “Registration Notice”) and shall include in such Registration Statement all Registrable Shares with respect to which the Company has received written requests for inclusion therein within ten days after sending the Registration Notice. The Company shall maintain the Form S-3 Shelf in accordance with the terms hereof.

(ii)     Requests for Shelf Takedowns. At any time and from time to time after the Form S-3 Shelf has been declared effective by the Commission, any Requesting Holder may request to sell all or any portion of their Registrable Shares in an underwritten offering that is registered pursuant to the Form S-3 Shelf (each, a “Shelf Takedown”); provided that in the case of each such Shelf Takedown such Requesting Holder will be entitled to make such demand only if the total offering price of the shares to be sold in such offering (including piggyback shares and before deduction of underwriting discounts) is reasonably expected to exceed, in the aggregate, $25 million.

(iii)Demand Notices. All requests for Shelf Takedowns shall be made by giving written notice to the Company (the “Demand Shelf Takedown Notice”) at least 15 days prior to the proposed date of such Shelf Takedown. Each Demand Shelf Takedown Notice shall specify the number of Registrable Shares proposed to be sold in the Shelf Takedown.

(iv)Priority on Shelf Takedowns. If the Shelf Takedown is an underwritten offering and the managing underwriters for such Shelf Takedown advise the Company in writing that in their opinion the number of Registrable Shares and, if permitted hereunder, other securities requested to be included in such Shelf Takedown exceeds the number of Registrable Shares and other securities, if any, which can be sold in such offering without significantly delaying or jeopardizing the success of such offering, including by selling at a price per share within a price range reasonably acceptable to the Holders of a majority of the Registrable Shares requested to be included in the Shelf Takedown, including, if any securities other than Registrable Shares are to be included in such Shelf Takedown, each Principal Stockholder who has requested Registrable Shares that would constitute at least 10% of the Registrable Shares to be included in the Shelf Takedown, the Company shall include in such Shelf Takedown the number of Registrable Shares which can be so sold in the following order of priority: (A) first, the Registrable Shares requested to be included in such Shelf Takedown pursuant to Section 5(c)(ii), pro rata among the respective Holders of such Registrable Shares on the basis of the number of Registrable Shares beneficially owned by each such Holder; and (B) second, all other securities requested to be included in such Shelf Takedown to the extent permitted hereunder.

(v)     Restrictions on Shelf Takedowns. The Company shall not be obligated to effect more than three Shelf Takedowns for any Requesting Holder during any period of 12 consecutive months and shall not be obligated to effect a Shelf Takedown within 90 days after the pricing of any previous underwritten offering by the Company (whether or not on its own behalf).

(vi)Selection of Underwriters. Except as set forth in this Section 5(b)(vi), the Holders of a majority of the Registrable Shares requested to be included in a Shelf Takedown shall have the right to select the underwriters and managing underwriter (which shall consist of one or more reputable nationally recognized investment banks), subject to the Company’s prior approval (and in the event such Holders control a majority of the Board and the managing underwriter or any other underwriter selected by such Holders is not one of the investment banks listed on Annex II attached hereto (or a successor entity of the applicable investment bank), the other Principal Stockholder’s approval), in each case, which shall not be unreasonably withheld, conditioned or delayed; provided that Popular Securities, Inc. will be notified of the initial organizational meeting for any such registration and, if Popular Securities,

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Inc. is not selected as the managing underwriter, the Company and the Holders of a majority of the Registrable Shares requested to be included in a Shelf Takedown will consider in good faith including it as a co-lead underwriter or co-lead book-running manager of such registration. If a Principal Stockholder who requested Registrable Shares that would constitute at least 10% of the Registrable Shares to be included in a Shelf Takedown so requests, each Principal Stockholder who has requested Registrable Shares that would constitute at least 10% of the Registrable Shares to be included in such Shelf Takedown shall, acting together, select one co-lead underwriter mutually agreeable to such Principal Stockholders, which (A) shall be one of the investment banks listed on Annex II attached hereto and (B) shall not be an Affiliate of any of such Principal Stockholders (the “ST Selected Underwriter”).

(vii)Automatic Shelf Registration. Further, upon the Company becoming a Well-Known Seasoned Issuer, the Company shall, as promptly as practicable, register, under an Automatic Shelf Registration Statement, the sale of all of the Registrable Shares in accordance with the terms of this Agreement. The Company shall use its commercially reasonable efforts to file such Automatic Shelf Registration Statement as promptly as practicable, but in no event later than 30 days after it becomes a Well-Known Seasoned Issuer, and to cause such Automatic Shelf Registration Statement to remain effective thereafter (including by filing a new Automatic Shelf Registration Statement prior to the expiration thereof) until there are no longer any Registrable Shares. The Company shall give written notice of filing such Registration Statement to all of the Holders as promptly as practicable thereafter. At any time after the filing of an Automatic Shelf Registration Statement by the Company, if the Company is no longer permitted to use such Automatic Shelf Registration Statement in connection with the issuance of Registrable Shares (the “Determination Date”), (A) within ten days after such Determination Date (or if earlier, the date upon which the Company becomes aware that it is no longer a Well-Known Seasoned Issuer), the Company shall give written notice thereof to all of the Holders and (B) within 30 days after such Determination Date, the Company shall file a Registration Statement on an appropriate form (or a post-effective amendment converting the Automatic Shelf Registration Statement to an appropriate form) covering all of the Registrable Shares, and use commercially reasonable efforts to have such Registration Statement declared effective as promptly as practicable (but in no event more than 30 days) after the date the Automatic Shelf Registration Statement is no longer useable by the Holders to sell their Registrable Shares.

(c)     Piggyback Registration.

(i)     Right to Piggyback. Whenever the Company proposes to register any of its Common Shares (other than a registration on Form S-4 or Form S-8, or any successor of either such form, or a registration relating solely to the offer and sale to the Company’s employees pursuant to any employee stock plan or other employee benefit plan arrangement), whether or not following a request by an Initial Requesting Holder or Requesting Holder pursuant to a Demand Registration Notice (a “Piggyback Registration”), or proposes to conduct a Shelf Takedown from an effective Form S-3 Shelf, whether or not following a request by a Requesting Holder pursuant to a Demand Shelf Takedown Notice (together with a Piggyback Registration, a “Piggyback Takedown”), the Company shall give prompt written notice to all Holders of Registrable Shares of its intention to effect such Piggyback Takedown. In the case of a Piggyback Takedown that is a Shelf Takedown, such notice shall be given not less than ten Business Days prior to the expected date of commencement of marketing efforts for such Shelf Takedown. In the case of a Piggyback Takedown that is an underwritten offering under a registration statement that is not a shelf registration statement, such notice shall be given not less than six Business Days prior to the expected date of filing of such registration statement. The Company shall, subject to the provisions of Section 5(c)(ii) and Section 5(c)(iii) below, include in such Piggyback Takedown, as applicable, all Registrable Shares with respect to which the Company has received written requests for inclusion therein within five Business Days after sending the Company’s notice. At least four Business Days prior to the pricing of any Piggyback Takedown, the Company shall cause to be delivered to each Holder of Registrable Shares who requested to include securities in such Piggyback Takedown, an expected range of prices, as determined by the managing underwriters, for such Piggyback Takedown (the “Estimated Pricing Range”). Notwithstanding anything to the contrary contained herein, (A) the Company may determine not to proceed with any Piggyback Takedown upon written notice to the Holders of Registrable Shares requesting to include their Registrable Shares in such Piggyback Takedown, and (B) any Holder of Registrable Shares may withdraw its request for inclusion by giving written notice to the Company of its intention to withdraw such request; provided that, (1) other than in the case of an Initial Demand Registration or a Piggyback Takedown in which the actual pricing is below the lowest price in the Estimated Pricing Range, such withdrawal request must be delivered before the later

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to occur of (x) the filing of a preliminary prospectus including such Registrable Shares in the proposed offering and (y) two (2) Business Days prior to pricing of the proposed offering; and (2) the withdrawal shall be irrevocable and after making the withdrawal, a Holder shall no longer have any right to include its Registrable Shares in that Piggyback Takedown. For the avoidance of doubt, in the case of an Initial Demand Registration or a Piggyback Takedown in which the actual pricing is below the lowest price in the Estimated Pricing Range a Holder of Registrable Shares may withdraw its request at any time.

(ii)     Priority on Primary Piggyback Takedowns. If a Piggyback Takedown is an underwritten primary registration on behalf of the Company, such registration includes Registrable Shares requested to be included by one or more Holders and the managing underwriters for a Piggyback Takedown advise the Company in writing that in their opinion the number of securities requested to be included in such Piggyback Takedown exceeds the number which can be sold in such offering without significantly delaying or jeopardizing the success of such offering, including by selling at a price per share within a price range reasonably acceptable to the Company, the Company shall include in such Piggyback Takedown the number which can be so sold in the following order of priority: (A) first, the securities the Company proposes to sell; (B) second, the Registrable Shares requested to be included in such Piggyback Takedown (pro rata among the respective Holders of such Registrable Shares on the basis of the number of Registrable Shares beneficially owned by each such Holder); and (C) third, all other securities requested to be included in such Piggyback Takedown.

(iii)Priority on Secondary Piggyback Takedowns. If (1) a Piggyback Takedown is an underwritten secondary registration on behalf of an Initial Requesting Holder, a Requesting Holder, or other holders of the Company’s securities (“Other Holders”), (2) such registration includes Registrable Shares requested to be included by one or more Holders pursuant to Section 5(c)(i), and (3) the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such Piggyback Takedown exceeds the number of securities that can be sold in such offering without significantly delaying or jeopardizing the success of such offering, including by selling at a price per share within a price range reasonably acceptable to the Holders (including the Other Holders) of a majority of the Registrable Shares and other securities requested to be included in the Piggyback Takedown (and each Principal Stockholder who has requested Registrable Shares that would constitute at least 10% of the Registrable Shares to be included in the Piggyback Takedown), the Company shall include in such registration the number of securities that can be so sold in the following order of priority: (A) first, the Registrable Shares requested to be included in such registration (pro rata among the respective Holders of any such securities and Registrable Shares on the basis of the number of securities and Registrable Shares beneficially owned by each such Holder); (B) second, the securities requested to be included therein by the Other Holders requesting such registration (pro rata among the holders of any such securities on the basis of the number of securities beneficially owned by each such holder); and (C) third, all other securities requested to be included in such registration.

(iv)Selection of Underwriters. Except as set forth in this Section 5(c)(iv), if any Piggyback Takedown is an underwritten primary offering, the Company will have the sole right to select the underwriters and managing underwriter (which shall consist of one or more reputable nationally recognized investment banks) for such underwritten primary offering. If any Piggyback Takedown is an underwritten secondary offering, the Holders of a majority of the Registrable Shares requested to be included in such Piggyback Takedown shall have the right to select the underwriters and managing underwriter (which shall consist of one or more reputable nationally recognized investment banks), subject to the Company’s prior approval (and in the event such Holders control a majority of the Board and the managing underwriter or any other underwriter selected by such Holders is not one of the investment banks listed on Annex II attached hereto (or a successor entity of the applicable investment bank), the other Principal Stockholder’s approval), in each case, which shall not be unreasonably withheld, conditioned or delayed; provided that Popular Securities, Inc. will be notified of the initial organizational meeting for any such registration and, Popular Securities, Inc. is not selected as the managing underwriter, the Company and the Holders of a majority of the Registrable Shares requested to be included in a Piggyback Takedown will consider in good faith including it as a co-lead underwriter or co-lead book-running manager of such registration. If a Principal Stockholder who requested Registrable Shares that would constitute at least 10% of the Registrable Shares to be included in a Piggyback Takedown so requests, each Principal Stockholder who has requested Registrable Shares that would constitute at least 10% of the Registrable Shares to be included in such Piggyback Takedown shall,

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acting together, select one co-lead underwriter mutually agreeable to such Principal Stockholders, which (A) shall be one of the investment banks listed on Annex II attached hereto and (B) shall not be an Affiliate of any of such Principal Stockholders (the “PT Selected Underwriter”, and any of the DR Selected Underwriter, the ST Selected Underwriter or the PT Selected Underwriter, the “Selected Underwriter”).

(d)     Holdback Agreement.

(i)     Holders of Registrable Securities. In connection with an underwritten public offering of equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, by the Company for its own account or on behalf of any Holder or Other Holders (including pursuant to any Shelf Takedown), if requested by the managing underwriters in connection with such underwritten offering, no Holder who is a Management Holder or who beneficially owns 5% or more of the outstanding Common Shares shall effect any sale or distribution (including sales pursuant to Rule 144) of equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, without prior written consent from the underwriters managing the underwritten public equity offering by the Company during a period beginning up to seven days prior to and ending up to 90 days from and including the date of pricing as reasonably requested by the underwriters managing the underwritten public equity offering (including pursuant to any Shelf Takedown) (or 180 days in the case of the Initial Public Offering) (the “Lock-Up Period”); provided that (A) the foregoing shall not apply to any Common Shares that are offered for sale as part of the underwritten public equity offering, (B) such Lock-Up Period shall be no longer than the lock-up period applicable on substantially similar terms to the Company and the executive officers and directors of the Company and (C) such Lock-Up Period shall be subject to customary exceptions and not commence unless the Company notifies the Holders in writing prior to the commencement of the Lock-Up Period; provided further, that nothing herein shall prevent any Holder that is a partnership or corporation from making a distribution of Registrable Shares to the partners or stockholders thereof or a Transfer of Registrable Shares to an Affiliate that is otherwise in compliance with the applicable securities laws. Each Holder agrees to execute a lock-up agreement in favor of the Company’s underwriters to such effect and, in any event, that the Company’s underwriters in any underwritten public offering of equity securities shall be third- party beneficiaries of this Section 5(d). Any discretionary waiver or termination of the requirements of this Section 5(d) made by the managing underwriters in connection with an underwritten offering shall apply to each Holder subject to this Section 5(d) on a pro rata basis in accordance with the Proportionate Percentages (assuming for purposes of this calculation the full conversion of all Class B Shares into Class A Shares) of such Holders immediately prior to such offering, except, if (i) a Principal Stockholder has the right to request the selection of a Selected Underwriter with respect to such underwritten offering and has made a request for such selection, (ii) the Selected Underwriter has been selected pursuant to such request and (iii) agrees that (A) a pro rata waiver or termination of requirements would not be commercially reasonable and (B) that the proposed waiver or termination of requirements is as close to pro rata as would be commercially feasible. The provisions of this Section 5(d) will no longer apply to a Holder if (x) such Holder ceases to hold any Registrable Shares or (y) such Holder beneficially owns less than 5% of the outstanding Common Shares or ceases to be a Management Holder, as applicable.

(ii)     The Company. In connection with any underwritten public equity offering (including pursuant to any Demand Registration, Piggyback Takedown or Shelf Takedown), if requested by the managing underwriters in connection with such underwritten offering, the Company shall not affect any sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities (except pursuant to registrations on Form S-8 or Form S-4 (or any successor to such forms) under the Securities Act), during a period beginning up to seven days prior to and ending up to 90 days from and including the date of pricing of such underwritten public equity offering as reasonably requested by the underwriters managing the underwritten public equity offering (or 180 days in the case of the Initial Public Offering); provided that the foregoing shall not apply to any securities that are offered for sale as part of the underwritten public equity offering; provided, further, that nothing herein will prevent the Company from (A) issuing securities upon the exercise of an option or warrant or the conversion or exchange of a security outstanding on such date, or (B) granting securities pursuant to employee benefit plans in effect on such date.

(e)     Company Undertakings. Whenever Registrable Shares are registered pursuant to this Agreement, the Company shall use its commercially reasonable efforts to effect the registration and the sale of such Registrable

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Shares as soon as reasonably practicable in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as soon as reasonably practicable:

(i)     before filing a Registration Statement or Prospectus or any amendments or supplements thereto, at the Company’s expense, furnish to the Holders whose securities are covered by the Registration Statement no less than three Business Days prior to filing copies of all such documents, other than documents that are incorporated by reference, proposed to be filed and such other documents reasonably requested by such Holders, which documents shall be subject to the review and comment of the Counsel to such Holders;

(ii)     notify each Holder of Registrable Shares of the effectiveness of each Registration Statement and prepare and file with the Commission such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for a period ending on the date on which all Registrable Shares have been sold under such Registration Statement or have otherwise ceased to be Registrable Shares, and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement;

(iii)furnish to each seller of Registrable Shares, and the managing underwriters, without charge, such number of copies of the applicable Registration Statement, each amendment and supplement thereto, the Prospectus included in such Registration Statement (including each preliminary Prospectus, final Prospectus, and any other Prospectus (including any Prospectus filed under Rule 424, Rule 430A or Rule 430B under the Securities Act and any “issuer free writing prospectus” as such term is defined under Rule 433(h) under the Securities Act)), all exhibits and other documents filed therewith and such other documents as such seller or such managing underwriters may reasonably request including in order to facilitate the disposition of the Registrable Shares owned by such seller, and upon request, a copy of any and all transmittal letters or other correspondence to or received from, the Commission or any other governmental authority relating to such offer;

(iv)use its commercially reasonable efforts (A) to register or qualify such Registrable Shares under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests, (B) to keep such registration or qualification in effect for so long as such Registration Statement remains in effect, and (C) to do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Shares owned by such seller (provided that the Company shall not be required to (1) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (2) subject itself to taxation in any such jurisdiction or (3) consent to general service of process in any such jurisdiction);

(v)     notify each seller of such Registrable Shares, Counsel to the Holders and the managing underwriters: (A) at any time when a Prospectus relating to the applicable Registration Statement is required to be delivered under the Securities Act, (1) upon discovery that, or upon the happening of any event as a result of which, such Registration Statement, or the Prospectus or Free Writing Prospectus relating to such Registration Statement, or any document incorporated or deemed to be incorporated therein by reference contains an untrue statement of a material fact or omits any fact necessary to make the statements in the Registration Statement or the Prospectus or Free Writing Prospectus relating thereto not misleading or otherwise requires the making of any changes in such Registration Statement, Prospectus, Free Writing Prospectus or document, and, at the request of any such seller and subject to Section 5(d)(i) hereof, the Company shall promptly prepare a supplement or amendment to such Prospectus or Free Writing Prospectus, furnish a reasonable number of copies of such supplement or amendment to each seller of such Registrable Shares, Counsel to the Holders and the managing underwriters and file such supplement or amendment with the Commission so that, as thereafter delivered to the purchasers of such Registrable Shares, such Prospectus or Free Writing Prospectus as so amended or supplemented shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading, (2) as soon as the Company becomes aware of any comments or inquiries by the Commission or any requests by the Commission or any federal or state governmental authority for amendments or supplements to a Registration Statement or related Prospectus or Free Writing Prospectus covering Registrable Shares or for additional information relating thereto, (3) as soon as the Company becomes aware of the issuance or threatened issuance by the Commission of any stop

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order suspending or threatening to suspend the effectiveness of a Registration Statement covering the Registrable Shares or (4) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any Registrable Share for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose; and (B) when each Registration Statement or any amendment thereto has been filed with the Commission and when each Registration Statement or the related Prospectus or Free Writing Prospectus or any Prospectus supplement or any post-effective amendment thereto has become effective;

(vi)use its commercially reasonable efforts to cause all such Registrable Shares (A) if the Common Shares are then listed on a securities exchange or included for quotation in a recognized trading market, to be so listed or included, (B) if the Common Shares are not then listed on a securities exchange or included for quotation in a recognized trading market, to, as promptly as practicable, and in no event later than the effective date of the Form S-3 Shelf filed pursuant to Section 5(b), be listed on NYSE or another national securities exchange, and (C) to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of the Registrable Shares;

(vii)provide and cause to be maintained a transfer agent and registrar for all such Registrable Shares from and after the effective date of the applicable Registration Statement;

(viii)enter into and perform under such customary agreements (including underwriting agreements in customary form, including customary representations and warranties and provisions with respect to indemnification and contribution) and take all such other actions as the underwriters reasonably request in order to expedite or facilitate the disposition of such Registrable Shares (including effecting a stock split, a combination of shares, or other recapitalization) and provide reasonable cooperation, including causing appropriate officers to attend and participate in “road shows” and analyst or investor presentations and such other selling or other informational meetings organized by the underwriters, if any; provided that the Company shall have no obligation to participate in in-person “road shows” in connection with any Shelf Takedown in which the total offering price of the Registrable Shares to be sold therein is less than $50 million;

(ix)for a reasonable period prior to the filing of any Registration Statement or the commencement of marketing efforts for a Shelf Takedown, as applicable, pursuant to this Agreement, make available for inspection and copying by any Holder of Registrable Shares, Counsel to the Holders, any underwriter participating in any disposition pursuant to such Registration Statement or Shelf Takedown, as applicable, and any other attorney retained by any such Holder or underwriter, all financial and other records and pertinent corporate documents of the Company, and cause the Company’s officers, directors and employees and use commercially reasonable efforts to cause the Company’s independent accountants to supply all information and participate in any due diligence sessions reasonably requested by any such Holder, underwriter or attorney in connection with such Registration Statement or Shelf Takedown, as applicable, provided that recipients of such financial and other records and pertinent corporate documents agree in writing to keep the confidentiality thereof pursuant to a written agreement reasonably acceptable to the Company and the applicable underwriter (which shall contain customary exceptions thereto), provided, further, that unless the disclosure of such records and documents is necessary to avoid or correct a misstatement or omission in any such Registration Statement or associated Prospectus (in each case including any amendment or supplement thereto) or otherwise to comply with federal securities laws or the release of such records and documents is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, the Company shall not be required to provide any information under this Section 5 (e)(ix) if the Company believes, based on the advice of outside counsel for the Company, that to do so would cause the Company to forfeit an attorney-client privilege that was applicable to such information;

(x)     permit any Holder of Registrable Shares that beneficially owns at least 5% of the Common Shares then outstanding, Counsel to the Holders, any underwriter participating in any disposition pursuant to a Registration Statement, and any other attorney retained by such Holder of Registrable Shares or underwriter, to participate (including, but not limited to, reviewing, commenting on and attending all meetings) in the preparation of such Registration Statement and any Prospectus supplement thereto, if applicable;


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(xi)in the event of the issuance or threatened issuance of any stop order suspending the effectiveness of a Registration Statement, or of any order suspending or preventing the use of any related Prospectus or suspending the qualification of any Common Shares included in such Registration Statement for sale in any jurisdiction, the Company shall use its commercially reasonable efforts promptly to (A) prevent the issuance of any such stop order, and in the event of such issuance, to obtain the withdrawal of such order and (B) obtain the withdrawal of any order suspending or preventing the use of any related Prospectus or Free Writing Prospectus or suspending qualification of any Registrable Shares included in such Registration Statement for sale in any jurisdiction at the earliest practicable date;

(xii)if requested in connection with any underwritten offering, obtain and furnish to the underwriters and each such Holder of Registrable Shares including Registrable Shares in such offering a signed counterpart of (A) a cold comfort letter from the Company’s independent public accountants and any other accountants responsible for the audit and review of any financial statements included in the Registration Statement, and a bring-down thereof, and (B) a legal opinion of counsel to the Company addressed to the relevant underwriters and/or such Holders of Registrable Shares, in each case delivered at the customary times and in customary form and covering such matters of the type customarily covered by such letters as the managing underwriters and/or Holders of a majority of the Registrable Shares included in such offering reasonably request;

(xiii)With respect to each Free Writing Prospectus or other materials to be included in the Disclosure Package, ensure that no Registrable Shares be sold “by means of” (as defined in Rule 159A(b) under the Securities Act) such Free Writing Prospectus or other materials without the prior written consent of a majority of the Holders of the Registrable Shares that are being sold pursuant to such Free Writing Prospectus, which Free Writing Prospectuses or other materials shall be subject to the review of Counsel to the Holders; provided, however, the Company shall not be responsible or liable for any breach by a Holder that has not obtained the prior written consent of the Company to use such Free Writing Prospectus;

(xiv)provide a CUSIP number for the Registrable Shares prior to the effective date of the first Registration Statement including Registrable Shares;

(xv)promptly notify in writing the Holders and the managing underwriters of the securities being sold, (A) when such Registration Statement or related Prospectus or Free Writing Prospectus or any Prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to any such Registration Statement or any post-effective amendment, when the same has become effective and (B) of any written comments by the Commission and by the blue sky or securities commissioner or regulator of any state with respect thereto;

(xvi)(A) prepare and file with the Commission such amendments and supplements to each Registration Statement as may be necessary to comply with the provisions of the Securities Act, including post effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective for the applicable time period required hereunder, and if applicable, file any Registration Statements pursuant to Rule 462(b) under the Securities Act; (B) cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; (C) comply with the provisions of the Securities Act and the Exchange Act and any applicable securities exchange or other recognized trading market with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented; and (D) provide additional information related to each Registration Statement as requested by, and obtain any required approval necessary from, the Commission or any federal or state governmental authority;

(xvii)cooperate with each Holder of Registrable Shares and each underwriter participating in the disposition of such Registrable Shares and underwriters’ counsel in connection with any filings required to be made with FINRA;

(xviii)within the deadlines specified by the Securities Act, make all required filing fee payments in respect of any Registration Statement or Prospectus used under this Agreement (and any offering covered thereby);

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(xix)if requested by any participating Holder of Registrable Shares or the managing underwriters, promptly include in a Prospectus supplement or amendment such information as the Holder or managing underwriters may reasonably request, including in order to permit the intended method of distribution of such securities, and make all required filings of such Prospectus supplement or such amendment as soon as reasonably practicable after the Company has received such request;

(xx)in the case of certificated Registrable Shares, cooperate with the participating Holders of Registrable Shares and the managing underwriters to facilitate the timely preparation and delivery of certificates (not bearing any legends) representing Registrable Shares to be sold after receiving written representations from each participating Holder that the Registrable Shares represented by the certificates so delivered by such Holder will be transferred in accordance with the Registration Statement, and enable such Registrable Shares to be in such denominations and registered in such names as the Holders or managing underwriters may reasonably request at least two Business Days prior to any sale of Registrable Shares;

(xxi)make generally available to its security holders a consolidated earnings statement (which need not be audited) for a period of 12 months beginning after the effective date of the Registration Statement that satisfies the requirements of an earnings statement under Section 11(a) of the Securities Act and Rule 158 thereunder, which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-Q, 10-K and 8-K under the Exchange Act; and

(xxii)use its commercially reasonable efforts to take all other actions necessary to effect the registration and sale of the Registrable Shares contemplated hereby.

(f)     Additional Undertakings.

(i)     The Company shall ensure that (A) no Registration Statement (including any amendment or supplement thereto) shall contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein not misleading, and (ii) no Prospectus (including any amendment or supplement thereto) shall contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case, except for any untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact made in reliance on and in conformity with written information furnished to the Company by or on behalf of any Holder or any underwriter or other distributor specifically for use therein.

(ii)     The Company may prepare and deliver an “issuer free-writing prospectus” as such term is defined in Rule 405 under the Securities Act, in lieu of any supplement to a Prospectus. Neither any Holder nor any underwriter or distributor of Registrable Shares may use a free-writing prospectus to offer or sell any such shares without the Company’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed.

(iii)It is understood and agreed that any failure of the Company to file a Registration Statement or any amendment or supplement thereto or to cause any such document to become or remain effective or usable within or for any particular period of time as provided in this Agreement, due to reasons that are not reasonably within its control, or due to any refusal of the Commission to permit a Registration Statement or Prospectus to become or remain effective or to be used because of unresolved Commission comments thereon (or on any documents incorporated therein by reference) despite the Company’s good faith and diligent efforts to resolve those comments, shall not be a breach of this Agreement. However, neither shall any such failure relieve the Company of its obligations hereunder to remedy such failure.
(g)     Expenses. All Registration Expenses shall be borne by the Company. For the avoidance of doubt, subject to the proviso in Section 5(a)(v) of this Agreement, all Registration Expenses in connection with any registration initiated as a Demand Registration shall be borne by the Company regardless of whether or not such registration has become effective and whether or not such registration has counted as one of the permitted Long-Form Registrations pursuant to Section 5(a)(v) of this Agreement. All Selling Expenses relating to Registrable Shares

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registered shall be borne by the selling Holders of such Registrable Shares pro rata on the basis of the number of Registrable Shares sold. Notwithstanding anything to the contrary herein, if the Company shall not register any securities with respect to which it had given written notice to Holders of its intention to register, all out-of-pocket expenses incurred by such requesting Holders in connection with such registration (other than the fees, disbursements and other charges of counsel other than the Counsel to the Holders) shall be deemed to be Registration Expenses.

(h) Indemnification.

(i)     Indemnification by the Company. The Company agrees to indemnify and hold harmless each Holder of Registrable Shares, the Affiliates, directors, officers, employees, members, managers and agents of each such Holder and each Person who Controls any such Holder within the meaning of either the Securities Act or the Exchange Act, to the fullest extent permitted by applicable Law, from and against any and all losses, claims, damages, liabilities and expenses to which they or any of them may become subject insofar as such losses, claims, damages, liabilities and expenses (or actions in respect thereof) arise out of or are based upon (A) any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement as originally filed or in any amendment thereof, or the Disclosure Package, or any preliminary, final or summary Prospectus or Free Writing Prospectus included in any such Registration Statement, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (B) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any applicable state or foreign securities law, or any rule or regulation promulgated under of the foregoing laws, relating to the offer or sale of the Registrable Shares, and in any such case, the Company agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating, preparing or defending any such loss, claim, damage, liability, action or investigation (whether or not the indemnified party is a party to any proceeding); provided, however, that the Company will not be liable to a Holder to the extent that any such loss, claim, damage, liability or expense (1) arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information relating to such Holder furnished to the Company by or on behalf of any such Holder specifically for inclusion therein or (2) is caused by such Holder’s failure to deliver to such Holder’s immediate purchaser a copy of the Registration Statement or Prospectus (in each case including any amendments or supplements to thereto) if such documents are required to be delivered under applicable Law. This indemnity agreement will be in addition to any liability which the Company may otherwise have.

(ii)     Indemnification by the Holders. Each Holder severally (and not jointly) agrees to indemnify and hold harmless the Company and each of its Affiliates, directors, employees, members, managers and agents and each Person who controls the Company within the meaning of either the Securities Act or the Exchange Act, to the fullest extent permitted by applicable Law, from and against any and all losses, claims, damages or liabilities to which they or any of them may become subject insofar as such losses, claims, damages or liabilities (1) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement as originally filed or in any amendment thereof, or in the Disclosure Package or any Holder Free Writing Prospectus, preliminary, final or summary Prospectus included in any such Registration Statement, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that any such untrue statement or alleged untrue statement or omission or alleged omission is contained in or arises from any written information relating to such Holder furnished to the Company by or on behalf of such Holder specifically for inclusion therein or (2) are caused by such Holder’s failure to deliver to such Holder’s immediate purchaser a copy of the Registration Statement or Prospectus (in each case including any amendments or supplements to thereto) if such documents are required to be delivered under applicable Law; provided, however, that the total amount to be indemnified by such Holder pursuant to this Section 5(h)(ii) shall be limited to the net proceeds (after deducting underwriters’ discounts and commissions) received by such Holder in the offering to which such Registration Statement or Prospectus relates; provided, further, that a Holder shall not be liable in any case to the extent that prior to the filing of any such Registration Statement or Disclosure Package, or any amendment thereof or supplement thereto, such Holder has furnished in writing to the Company, information

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expressly for use in, and within a reasonable period of time prior to the effectiveness of such Registration Statement or Disclosure Package, or any amendment thereof or supplement thereto, which corrected or made not misleading information previously provided to the Company. This indemnity agreement will be in addition to any liability which any such Holder may otherwise have.

(iii)Conduct of Indemnification Proceedings. Promptly after receipt by an indemnified party under this Section 5(h) of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5(h), notify the indemnifying party in writing of the commencement thereof; but the failure to so notify the indemnifying party (A) will not relieve it from liability under Section 5(h)(i) or Section 5(h)(ii) above unless and to the extent such action and such failure results in material prejudice to the indemnifying party and forfeiture by the indemnifying party of substantial rights and defenses; and (B) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in Section 5(h)(i) or Section 5(h)(ii) above. The indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and, except as provided in the next sentence, after notice from the indemnifying party to such indemnified party of its election to so assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal expenses of other counsel or any other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. Notwithstanding the indemnifying party’s rights set forth in the prior sentence, the indemnified party shall have the right to employ its own counsel (and one local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if: (1) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with an actual or potential conflict of interest; (2) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party; (3) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (4) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. No indemnifying party shall, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general circumstances or allegations, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties. Notwithstanding the limitations set forth in the prior sentence, an indemnified party shall have the right to employ its own counsel (and one local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if: (1) the use of one counsel for all indemnified parties to represent such indemnified party would present such counsel with an actual or potential conflict of interest; (2) the actual or potential defendants in, or targets of, any such action include multiple indemnified parties and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the other indemnified parties; or (3) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party shall not be liable under this Section 5(h) to any indemnified party regarding any settlement or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent is consented to by such indemnifying party. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement or compromise unless such settlement or compromise (x) includes as an unconditional term thereof the giving by the claimant or plaintiff therein, to such indemnified party, of a full and final release from all liability in respect to such claim or litigation and (y) does not include a statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of such indemnified party.

(iv)The provisions of this Section 5(h) will remain in full force and effect, regardless of any investigation made by or on behalf of any Holder of Registrable Shares or the Company or any of the officers,

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directors or Controlling Persons referred to in this Section 5(h) hereof, and will survive the Transfer of Registrable Shares.
(i) Contribution.

(i)     In the event that the indemnity provided in Section 5(h) above is unavailable to or insufficient to hold harmless (other than as a result of the limitations set forth in Section 5(h)) an indemnified party for any reason against any losses, claims, damages or liabilities arise out of or are based upon any matters for which such indemnified party is entitled to indemnification in accordance with the terms of Section 5(h), then each applicable indemnifying party agrees to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating, preparing or defending same) (collectively, “Losses”) to which such indemnifying party may be subject in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and by the indemnified party on the other, in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof). If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable Law, then each indemnifying party shall contribute to such Losses paid or payable by such indemnified party for which such indemnified party is entitled to indemnification by such indemnifying party in accordance with the terms of Section 5(h) in such proportion as is appropriate to reflect the relative benefits received by the parties as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party on the one hand or the indemnified party on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(ii)     The parties agree that it would not be just and equitable if contribution pursuant to this Section 5(i) were determined by pro rata allocation (even if the Holders of Registrable Shares or any agents or underwriters or all of them were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 5(i). The amount paid or payable by an indemnified party as a result of the Losses (or actions in respect thereof) referred to above in this Section 5(i) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating, preparing or defending any such action or claim.

(iii)Notwithstanding the provisions of this Section 5(i), no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

(iv)For purposes of this Section 5(i), each Person who Controls any Holder of Registrable Shares, agent or underwriter within the meaning of either the Securities Act or the Exchange Act and each director, officer, employee and agent of any such Holder, agent or underwriter shall have the same rights to contribution as such Holder, agent or underwriter, and each Person who controls the Company within the meaning of either the Securities Act or the Exchange Act and each officer and director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this Section 5(i).

(v)     The provisions of this Section 5(i) will remain in full force and effect, regardless of any investigation made by or on behalf of any Holder of Registrable Shares or the Company or any of the officers, directors or Controlling Persons referred to in this Section 5(i) hereof, and will survive the Transfer of Registrable Shares.
(j)     Rule 144 and Rule 144A; Other Exemptions. With a view to making available to the Holders the benefits of Rule 144 and Rule 144A under the Securities Act and other rules and regulations of the Commission that may at any time permit a Holder to sell securities of the Company to the public without registration (but only in compliance with this Agreement), the Company covenants that it will (i) file in a timely manner all reports and other documents required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder and (ii) take such further action as each Holder may reasonably request

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(including, but not limited to, providing any information necessary to comply with Rule 144 and Rule 144A under the Securities Act, if available with respect to resales of the Registrable Shares under the Securities Act), at all times from and after the date which is 90 days following the Initial Public Offering, all to the extent required from time to time to enable such Holder to sell Registrable Shares in compliance with this Agreement without registration under the Securities Act within the limitation of the exemptions provided by (x) Rule 144 and Rule 144A under the Securities Act (if available with respect to resales of the Registrable Shares) under the Securities Act, as such rules may be amended from time to time or (y) any other rules or regulations now existing or hereafter adopted by the Commission. Upon the written request of a Holder, the Company shall deliver to the Holder a written statement as to whether it has complied with such requirements, and, if not, the specific reasons for non-compliance.

(k)     Private Placement. Except for Section 4 and Section 5(d), the Company agrees that nothing in this Agreement shall prohibit the Holders, at any time and from time to time, from selling or otherwise transferring Registrable Shares pursuant to a private placement or other transaction which is not registered pursuant to the Securities Act. To the extent requested by a Holder, the Company shall take all reasonable steps necessary to assist and cooperate with such Holder to facilitate such sale or transfer, including providing due diligence access to potential purchasers, and entering into a private placement agreement containing customary representations and warranties, indemnifications, opinions and other typical closing conditions.

(l)          Other Registration Rights.

(i)     The Company represents and warrants that, except as set forth in this Agreement, the Company is not a party to, or otherwise subject to, any other agreement granting registration rights to any other Person with respect to any equity securities of the Company.

(ii)     From and after the Merger Closing Date until the Holders shall no longer hold any Registrable Shares, the Company shall not, without the prior written consent of the holders of a majority of the Registrable Shares beneficially owned by the Principal Stockholders and their Affiliates, enter into any agreement with any holder or prospective holder of any equity securities of the Company giving such holder or prospective holder demand or incidental registration rights containing cut-back provisions that are by their terms not subordinate to the registration rights granted in this Agreement.

(m)     Underwriter Cutback. Notwithstanding anything to the contrary set forth in this Section 5, if the managing underwriters for an underwritten offering advise the Company in writing that their opinion that the inclusion of all Registrable Shares proposed to be included in any registration by any Holder would significantly jeopardize the success of such offering (including selling at a price per share that is an unreasonable discount to the price that could be achieved taking into account any prices quoted on any national securities exchange, if applicable, for the Registrable Shares), then the number of such Registrable Shares proposed to be included in such registration by each Holder shall be reduced to such lower number of Registrable Shares that the managing underwriters advise such Holder may sell; provided, however, that any such reduction shall be done on a pro rata basis in accordance with the Proportionate Percentages (assuming for the purposes of this calculation the full conversion of all Class B Shares into Class A Shares) of such Holders immediately prior to such offering, except, if (i) a Principal Stockholder has the right to request the selection of a Selected Underwriter with respect to such underwritten offering and has made a request for such selection, (ii) a Selected Underwriter has been selected pursuant to such request and (iii) such Selected Underwriter agrees that (A) such pro rata reduction would significantly jeopardize the success of such offering (including selling at a price per share that is an unreasonable discount to the price that could be achieved taking into account any prices quoted on any national securities exchange, if applicable, for the Registrable Shares) and (B) that the proposed reduction is as close to pro rata as is feasible without significantly jeopardizing the success of such offering (including selling at a price per share that is an unreasonable discount to the price that could be achieved taking into account any prices quoted on any national securities exchange, if applicable, for the Registrable Shares).


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(n) Termination. The obligations of any Holder and of the Company with respect to such Holder, other than those obligations contained in Section 5(h) and Section 5(i), shall terminate as soon as both such Holder no longer holds any Registrable Shares.

Section 6. Preemptive Rights.

(a) General.

(i)     If the Company or any of its Subsidiaries proposes to issue or incur, as applicable, any (A) equity securities, (B) debt securities or other Indebtedness, (C) securities convertible into or exercisable or exchangeable for equity or debt securities or Indebtedness or (D) other securities, other than Excluded Securities (the “Offered Securities”), the Company shall deliver to each Principal Stockholder and its applicable Partial Rights Transferees a written notice (which notice shall state the number or amount of the Offered Securities proposed to be issued, the purchase price therefor and any other material terms or conditions of the proposed Offered Securities and of their issuance or incurrence, as applicable, including any linked or grouped securities which comprise Offered Securities) of such issuance or incurrence, as applicable (the “Preemptive Offer Notice”) at least ten Business Days prior to the date of the proposed issuance (the period beginning on the date that the Preemptive Offer Notice is delivered to the Principal Stockholders and applicable Partial Rights Transferees and the date that is ten Business Days following such date being the “Preemptive Offer Period”).

(ii)     Each Principal Stockholder and applicable Partial Rights Transferees shall have the option, exercisable at any time during the Preemptive Offer Period by delivering a written notice to the Company (a “Preemptive Offer Acceptance Notice”), (A) to subscribe for the number or amount of such Offered Securities up to its Proportionate Percentage (excluding for the purposes of this calculation Common Shares beneficially owned by Holders who are not Principal Stockholders or their applicable Partial Rights Transferees) of the total number or amount of Offered Securities proposed to be issued and (B) in the case of Offered Securities that are not debt securities or other Indebtedness, to offer to subscribe for up to its Proportionate Percentage (excluding for the purposes of this calculation Common Shares beneficially owned by Holders who are not Subscribing Preemptive Rights Holders) of the Offered Securities not subscribed for by the other Principal Stockholders or their applicable Partial Rights Transferees (as further described below). In the case of Offered Securities that are not debt securities or other Indebtedness, any Offered Securities not subscribed for by a Principal Stockholder or applicable Partial Rights Transferees shall be deemed to be re-offered to and accepted by each of the other Principal Stockholders and applicable Partial Rights Transferees that has exercised its option specified in clause (B) of the immediately preceding sentence (each a “Subscribing Preemptive Rights Holder”), with respect to the lesser of (x) the amount specified in such Subscribing Preemptive Rights Holder’s Preemptive Offer Acceptance Notice and (y) an amount equal to the Offered Securities not subscribed for by the Principal Stockholders and applicable Partial Rights Transferees who are not Subscribing Preemptive Rights Holders. Such deemed re-offer and acceptance procedures described in the immediately preceding sentence shall be deemed to be repeated until either (1) all of the Offered Securities are accepted by the Principal Stockholders and applicable Partial Rights Transferees or (2) no Principal Stockholders or applicable Partial Rights Transferees desire to subscribe for more Offered Securities. The Company shall notify each Subscribing Preemptive Rights Holder within five Business Days following the expiration of the Preemptive Offer Period of the number or amount of Offered Securities which such Subscribing Preemptive Rights Holder has subscribed to purchase.

(iii)If Preemptive Offer Acceptance Notices are not given by the Principal Stockholders and applicable Partial Rights Transferees for all the Offered Securities, the Company or its Subsidiary, as applicable, may issue the part of such Offered Securities as to which Preemptive Offer Acceptances Notices have not been given by the Principal Stockholders and their applicable Partial Rights Transferees (the “Refused Securities”) to any other Person (a “New Investor”) in accordance with the terms and conditions set forth in the Preemptive Offer Notice. Any Refused Securities not purchased by one or more New Investors in accordance with this Section 6(a) within 60 days after the expiration of the Preemptive Offer Period may not be sold or otherwise disposed of until they are again offered to the Principal Stockholders under the procedures specified in this Section 6(a).


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(iv)For the avoidance of doubt, neither the Principal Stockholders nor their applicable Partial Rights Transferees shall be required to make any additional capital contributions to the Company or any of its Subsidiaries.
(b)     Excluded Securities. The rights under this Section 6 shall not apply to the following securities issued by the Company or any of its Subsidiaries at any time in compliance with this Agreement (the “Excluded Securities”):

(i)     Class A Shares issued upon the conversion of any Class B Shares in accordance with the terms thereof;

(ii)     non-voting securities of the Company, including any options, warrants or other securities convertible into or exercisable or exchangeable for any such non-voting securities, issued pursuant to the Management Long-Term Compensation Plan, in an aggregate amount (inclusive of any such securities that have been converted into, exercised or exchanged for voting securities) at any time outstanding not to exceed (on an as-converted, exercised or exchanged basis) 2,921,604 Common Shares, subject to adjustments for any stock dividends or distributions, stock splits, reclassifications, recapitalizations or other subdivisions or combinations of such Common Shares;

(iii)Common Shares issued as a dividend on Common Shares or upon any stock split;

(iv)securities issued in connection with a consolidation, merger, purchase of all or substantially all of the assets or similar transaction involving the Company, or any of its Subsidiaries, and a business entity that is not an Affiliate (disregarding clauses (i)(y) and (ii) of the definition of such term) of the Company or one of the Principal Stockholders, in each case to the extent that such transaction is conducted in compliance with this Agreement;

(v)with the approval of a majority of the Board and, for so long as any Principal Stockholder’s Proportionate Percentage is at least 5%, the approval of at least one Director nominated by such Principal Stockholder (to the extent such Principal Stockholder has the right to nominate a Director pursuant to Section 2 hereof), securities issued as an equity kicker to one or more Persons to whom the Company or one or more of its Subsidiaries is becoming Indebted in connection with the incurrence of such Indebtedness by the Company or any of its Subsidiaries, provided that such incurrence otherwise occurs in compliance with this Agreement, provided that (A) to the extent any Principal Stockholder or Partial Rights Transferee exercises its Preemptive Rights to such Indebtedness, it shall be entitled to Preemptive Rights pursuant to this Section 6 (without respect to this Section 6(b)(v)) with respect to such securities issued as an equity kicker, and (B) the effect of such issuance does not discriminate against any Principal Stockholder (including by having a different adverse impact on any Principal Stockholder based on such Principal Stockholder’s identity or any of its attributes);

(vi)with the approval of a majority of the Board and, for so long as any Principal Stockholder’s Proportionate Percentage is at least 5%, the approval of at least one Director nominated by such Principal Stockholder (to the extent such Principal Stockholder has the right to nominate a Director pursuant to Section 2 hereof), and to the extent that the Company concludes that an issuance is appropriate and desirable and in order to further the business relationship with a customer of the Company or one of its Subsidiaries, Common Shares issued on customary terms to such customer, provided that such customer is not an Affiliate (disregarding clauses (i)(y) and (ii) of the definition of such term) of the Company or one of the Principal Stockholders, provided further that the effect of such issuance does not discriminate against any Principal Stockholder (including by having a different adverse impact on any Principal Stockholder based on such Principal Stockholder’s identity or any of its attributes);

(vii) securities issued by a Subsidiary of the Company or another Subsidiary of the Company; and

(viii)securities issues upon the exercise, conversion or exchange of any options, warrants or any other derivative securities of the Company of its Subsidiaries issued in compliance with (or not otherwise in violation of) this Section 6.

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(c)     Termination. The rights set forth in this Section 6 shall terminate immediately prior to the consummation of a Qualified Public Offering.
(d)     Treasury Stock. For the avoidance of doubt, the Transfer (other than to a wholly owned Subsidiary of the Company) by the Company or any of its Subsidiaries of any security issued by the Company or such Subsidiaries, as applicable, shall be deemed to be an issuance of such security by the Company or such Subsidiary for the purposes of this Agreement.
(e)     Certain Debt Issuances. Notwithstanding anything to the contrary set forth in this Section 6, if the managing underwriters for an offering of debt securities or the lead arrangers for issuances of bank or other Indebtedness by the Company or any of its Subsidiaries advise the Company in writing that in their opinion the availability of Preemptive Rights to the Principal Stockholders and their Partial Rights Transferees would significantly jeopardize the success of such offering or debt raising (including by adversely affecting the terms on which such debt securities or Indebtedness could be issued or incurred, as applicable), then the Company shall provide notice of such opinion in the Preemptive Rights Notice and no Principal Stockholder or Partial Rights Transferee shall have any such Preemptive Rights pursuant to Section 6(a) with respect to such offering or incurrence of debt securities or Indebtedness; provided, however that the Principal Stockholders may participate in such offering or debt raising to the extent permitted under Section 8(f) hereunder.
Section 7. Representations and Warranties.
(a)     Representations and Warranties of the Holders. Each Holder, as to itself and not jointly, hereby represents and warrants to the Company as of the date hereof that:
(i)     Organization. If such Holder is an entity, such Holder is duly formed, validly existing, and in good standing under the Laws of the jurisdiction of its creation, formation or organization and there is no pending or, to the knowledge of such Holder, threatened action for the dissolution, liquidation, insolvency, or rehabilitation of such Holder.

(ii)     Authority. Such Holder has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution, delivery, and performance by such Holder of this Agreement has been duly authorized by all necessary action of such Holder; and this Agreement has been duly executed and delivered by such Holder and is the legal, valid and binding obligation of such Holder enforceable against such Holder in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, receivership, conservatorship, reorganization, liquidation, moratorium, or similar events affecting such Stockholder or its assets, or by general principles of equity.

(iii)No Consents; No Violations. (A) No authorization, approval or other action by, and no notice to or filing with, any governmental, regulatory or legal authority or any other Person is required for the due execution, delivery, and performance by such Holder of this Agreement (other than (x) such as has been obtained, given, effected or taken prior to the date hereof, (y) consents, authorizations, approvals or filings required to be obtained or made by, or notices given to, any regulatory authority having jurisdiction over the Company, as to which such Holder makes no representations or warranties and (z) routine filings that are informational in nature and made in the ordinary course of business); and (B) the execution, delivery, and performance of this Agreement and the performance by such Holder of its obligations hereunder do not and will not result in any breach, violation or contravention of (1) if such Holder is an entity, such Holder’s organizational documents, (2) any Law of any Governmental Entity applicable to such Holder, (3) any order, writ, injunction, judgment, decree or award of any court, arbitrator, or governmental or regulatory authority to which such Holder or any of its properties is subject or (4) any mortgage, contract, agreement, deed of trust, license, lease or other instrument, arrangement, commitment, obligation, understanding or restriction of any kind to which such Holder is a party or by which any of its properties is bound, except for breaches, violations and contraventions, if any, as would not, individually or in the aggregate, have a material adverse effect on the financial condition, results of operations, business, properties or assets of such Holder.





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(iv)Investment Related Representations and Warranties.

(A)Such Holder is acquiring the Common Shares for his own account, for investment and not with a view to the distribution thereof or any interest therein in violation of the Securities Act or applicable securities Laws.

(B)Such Holder understands that (1) the Common Shares have not been registered under the Securities Act or under any state securities Laws, and are being offered and sold in reliance under federal and state exemptions for transactions not involving a public offering and (2) the Common Shares must be held by such Holder indefinitely unless a subsequent Transfer thereof is registered under the Securities Act and applicable Law or is exempt from such registration.

(C)Such Holder further understands that the exemption from registration afforded by Rule 144 (the provisions of which are known to such Holder) depends on the satisfaction of various conditions, and that, if applicable, Rule 144 may afford the basis for sales of the Common Shares acquired hereunder in limited amounts. Such Holder further understands that the Holder has no right to compel the Company to disclose any information for purposes of complying with Rule 144.

(D)Such Holder (1) is an “accredited investor” (as defined in Rule 501(a) of Regulation D under the Securities Act or National Instrument 45-106 Prospectus and Registration Exemptions, as applicable) or (2) has a preexisting personal or business relationship with the Company, its Subsidiaries or certain members of the Board or officers of the Company which is of a nature and duration sufficient to make such Holder aware of the character, business acumen and general business and financial circumstances of the Company, its Subsidiaries, and/or such members of the Board or officers of the Company, if any.
(E)     The Company has made available to such Holder or its representatives all agreements, documents, records and books that such Holder has requested relating to an investment in the Common Shares being acquired by the Holder. Such Holder has had an opportunity to ask questions of, and receive answers from, Persons acting on behalf of the Company, concerning the terms and conditions of this investment, and answers have been provided to all of such questions to the full satisfaction of such Holder. Such Holder has such knowledge and experience in financial and business matters that it is capable of evaluating the risks and merits of the investment in the Common Shares and to suffer a complete loss of such investment.

(F)     Such Holder has no need for liquidity in its investment in the Common Shares. Such Holder can bear the economic risk of investment in the Common Shares and has such knowledge and experience in financial or business matters to be capable of evaluating the merits and risks of the investment in the Common Shares. Such Holder has consulted with its professional, tax and legal advisors with respect to the federal, state, local and foreign income tax consequences of such Holder’s participation as a Holder of the Company.
(G)Such Holder understands that there is no public market for the Common Shares and that the transferability of the Common Shares is restricted.

(b)     Representations and Warranties of the Company. The Company hereby represents and warrants to the Holders as of the date hereof that:

(i)Organization. The Company is a corporation validly existing and in good standing under the laws of the Commonwealth.

(ii)Authority. The Company has the power and authority to carry on its business as now conducted, to own or hold under lease its properties, and to execute and deliver this Agreement and to perform its obligations hereunder. The execution, delivery, and performance by the Company of this Agreement has been duly authorized by all necessary action; and this Agreement has been duly executed and delivered by the Company and is the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, receivership, conservatorship, reorganization, liquidation, moratorium, or similar events affecting the Company or its assets, or by general principles of equity.


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(iii)No Consents; No Violations. (A) No authorization, approval or other action by, and no notice to or filing with, any governmental, regulatory or legal authority or any other Person is required for the due execution, delivery, and performance by the Company of this Agreement or the consummation of the transactions contemplated hereby other than such as has been obtained, given, effected or taken prior to the date hereof; and (B) the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not result in any breach, violation or contravention of (1) the Certificate of Incorporation or the Company By-Laws, (2) any law, rule or regulation of any Governmental Entity applicable to the Company, (3) any order, writ, injunction, judgment, decree or award of any court, arbitrator, or governmental or regulatory authority to which the Company or any of its properties is subject or (4) any mortgage, contract, agreement, deed of trust, license, lease or other instrument, arrangement, commitment, obligation, understanding or restriction of any kind to which the Company is a party or by which any of its properties is bound.

Section 8. Additional Agreements.

(a)     Information Rights. For so long as any Principal Stockholder’s or Partial Rights Transferee’s Proportionate Percentage is 1% or more, the Company, upon request, shall furnish to such Principal Stockholder or Partial Rights Transferee, as applicable:

(i)     Annual Financial Reports. (A) As soon as available, but in no event later than 30 days after the end of each fiscal year, unaudited consolidated financial statements of the Company and its Subsidiaries, for the immediately preceding fiscal year, and (B) as soon as available, but in no event later than 90 days after the end of each fiscal year, audited consolidated financial statements of the Company and its Subsidiaries, in each of clauses (A) and (B) including a consolidated balance sheet as of the end of such fiscal year, a consolidated statement of income and a consolidated statement of cash flows for such year, in each case setting forth in comparative form the figures from the Company’s previous fiscal year, all prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) consistently applied (with the exception of footnotes in the case of clause (A)) and, in the case of clause (A), to be accompanied by a certification of the principal financial or accounting officer of the Company as to the conformity of the financial statements with this Section 8(a)(i), and, in the case of clause (B), audited by a nationally recognized independent certified public accounting firm selected by the Board. Audited financial statements shall also be accompanied by a narrative discussion in writing comparing the results of operations of the current fiscal year and the previous fiscal year, which discussion shall be prepared by the Company’s management.

(ii)     Quarterly Financial Reports. As soon as available, but in no event later than 30 days after the end of each fiscal quarter, unaudited consolidated financial statements of the Company and its Subsidiaries, including a consolidated balance sheet as of the end of such fiscal quarter, a consolidated statement of income and a consolidated statement of cash flows for such quarter and the current fiscal year to date, in each case setting forth in comparative form the figures from the corresponding periods of the previous fiscal year and the Company’s projected financial statements for the current fiscal year and showing deviations from the Company’s budget, such financial statements to be prepared in accordance with GAAP consistently applied (with the exception of footnotes), and to be accompanied by a certification of the principal financial or accounting officer of the Company as to the conformity of the financial statements with this Section 8(a)(ii) and a narrative discussion in writing prepared by the Company’s management comparing the results of operations of the current fiscal quarter and the fiscal quarter from the previous fiscal year;

(iii)Monthly Financial Reports. As soon as available, but in no event later than ten days after the end of each month, unaudited consolidated monthly financial statements of the Company and its Subsidiaries, including a consolidated balance sheet as of the end of such month, a consolidated statement of income and a consolidated statement of cash flows for such month and the current fiscal year to date, which statements shall be prepared in accordance with GAAP consistently applied (with the exception of footnotes). Such statements shall also, in each case, set forth in comparative form the figures for the corresponding periods of the previous fiscal year and the Company’s projected financial statements for the current fiscal year and show deviations from the Company’s budget for the current year. Monthly financial statements shall be accompanied by a certification of the principal financial or accounting officer of the Company as to the conformity of the financial statements with this Section 8(a)(iii).

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(b)     Inspection Rights. For so long as any Principal Stockholder’s or its applicable Partial Rights Transferee’s Proportionate Percentage is 5% or more, the Company shall permit such Principal Stockholder or Partial Rights Transferee (as applicable) and such Persons as it may designate, at such Principal Stockholder’s or Partial Rights Transferee’s (as applicable) expense, to visit and inspect any of the properties of the Company and its Subsidiaries, examine its books and records and take copies and extracts therefrom, discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company’s officers, employees and public accountants (and the Company hereby authorizes said accountants to discuss with such holder and such designees such affairs, finances and accounts) during normal business hours and upon reasonable notice.
(c)     Business Plan. The business and affairs of the Company, Holdings and EVERTEC shall be conducted at all times in accordance with the then-in-effect annual business plan and operating budget (the “Business Plan”). The Business Plan in effect on the date hereof is the Business Plan adopted by the Holdings Board on February 22, 2012. Subsequent Business Plans shall be adopted by the Board at least 30 days prior to each fiscal year. For so long as any Principal Stockholder’s or its applicable Partial Rights Transferee’s Proportionate Percentage is 5% or more, the Company shall furnish to such Principal Stockholder or Partial Rights Transferee (as applicable), as promptly as practicable, but in any event within five days after adoption by the Board, the Business Plan. The Company will also furnish to such Principal Stockholder or Partial Rights Transferee (as applicable), within a reasonable time after its preparation, any amendment to such previously delivered Business Plan.
(d)     Confidentiality. Each Holder agrees to, and shall cause its Affiliates, and its and their respective directors, officers, employees, agents, advisors and representatives (“Representatives”) to, (i) hold confidential all information they may have or obtain concerning the Company or any of its Subsidiaries and their respective assets, business, operations, financial performance or prospects or the arrangements among the Holders and the Company (“Confidential Information”) and (ii) not to use such Confidential Information except, with respect to clause (ii), in connection with evaluating and monitoring its investment in the Company or exercising its rights and fulfilling its obligations with respect thereto (including, for the avoidance of doubt, the right, following the Restricted Period, to conduct a sale process with respect to the sale of its Common Shares so long as such Holder (x) complies with clause (i) of this sentence and (y) requires each potential participant in such sale process (a “Potential Participant”) to whom Confidential Information is provided to enter into a customary confidentiality agreement (to which the Company is a third-party beneficiary) with respect to such sale process which requires such Potential Participant and its Representatives to hold confidential, use only for the purposes of evaluating a purchase of Common Shares from the Holder, and to return or destroy at the conclusion of the sale process (unless such Potential Participant enters into a definitive agreement with such Holder whereby such Potential Participant will become a Holder upon consummation of the transactions contemplated by such agreement) any Confidential Information received by such Potential Participant or its Representatives); provided, however, that the term “Confidential Information” does not include information that (i) is already in such party’s possession, provided that such information is not known by such Holder to be subject to another confidentiality agreement with or other obligation of secrecy to any Person, (ii) is or becomes generally available to the public other than as a result of a disclosure, directly or indirectly, by such party or such party’s Representatives, (iii) is or becomes available to such party on a non-confidential basis from a source other than any of the parties hereto or any of their respective Representatives, provided that such source is not known by such party to have made such information available to such party in violation of a confidentiality agreement with or other obligation of secrecy to any Person or (iv) is received in the course of a commercial arrangement between such Holder or any of its Affiliates, on the one hand, and the Company or any of its Affiliates, on the other hand (which confidential information shall be governed by the provisions governing such commercial arrangement). Notwithstanding the foregoing, nothing herein shall prevent any party hereto from disclosing Confidential Information (1) upon the order of any court or administrative agency, (2) upon the request or demand of any regulatory agency or authority having jurisdiction over such party, (3) to the extent required by Law, (4) to the extent necessary in connection with any suit, action or proceeding relating to this Agreement or the exercise of any remedy hereunder, and (5) to such party’s Representatives that need to know such information and who agree to keep such information confidential on the terms set forth in this Section 8(d) (it being understood and agreed that, in the case of clause (1), (2) or (3), unless prohibited by Law or any regulatory authority, to the extent not prohibited by applicable Law, such party shall notify the other parties hereto of the proposed disclosure as far in advance of such disclosure as practicable and use reasonable efforts to ensure that any information so disclosed is accorded confidential treatment, when and if available). The provisions set forth in this Section 8(d) shall terminate with respect to a given Holder on the second anniversary of the date such Holder ceases to own Common Shares.

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(e)     Restrictions on New Business Activities. The Company and the Holders acknowledge that Popular and its Affiliates are subject to regulatory oversight by bank regulatory authorities in various jurisdiction (the “Regulatory Authorities”). For so long as the Company’s or any of its BHCA Subsidiaries’ activities and investments are subject to restrictions under the Bank Holding Company Act of 1956, because of Popular’s and/or its Affiliates ownership of Common Shares, neither the Company nor any of its BHCA Subsidiaries shall engage in any business (a “Covered Business”) or make any investment (collectively with a Covered Business, a “Covered Activity”) other than, to the extent that the Company or any of its BHCA Subsidiaries actually engaged in such Covered Business as of the Merger Closing Date in the jurisdictions in which the Company and its Subsidiaries then operated, the Business (as defined in the Merger Agreement), including the commencement of operations in a country in which the Company or any of its BHCA Subsidiaries was not operating as of the Merger Closing Date or in which such Covered Business has not been previously conducted, whether by acquisition, investment or organic growth, if such Covered Activity may reasonably require Popular or an Affiliate of Popular to seek regulatory approvals from, or provide notice to, any Regulatory Authority, in each case, without first sending written notice to Popular (the “Covered Activity Notice”). Within 90 days after receipt of the Covered Activity Notice, Popular shall notify the Board in writing (i) whether, based on the advice of outside legal counsel, such Covered Activity would be permissible for Popular and/or its Affiliates to make or engage in directly under applicable banking Laws and (ii) either (A) that no regulatory approval with respect to Popular and/or its Affiliates is required for such Covered Activity, or (B) whether any required regulatory approval with respect to such Covered Activity has been obtained by Popular and/or its Affiliates. Neither the Company nor any of its BHCA Subsidiaries shall engage in any Covered Activity if such activity is impermissible, or until all required regulatory approvals are obtained. Popular and its Affiliates shall use its reasonable best efforts to obtain, as promptly as reasonably possible, all regulatory approvals necessary for the Company to conduct such Covered Activity; provided that Popular and each its Affiliates shall exercise their reasonable best efforts to minimize disclosure of any confidential or proprietary information relating to the Company and to seek confidential treatment for any such information, in each case, to the extent allowed under applicable Law.

(f)         Restrictions on Holders with Respect to Company Debt.

(i)     [Intentionally Omitted].

(ii)     If a Principal Stockholder (an “Acquiring Stockholder”) or any of its Affiliates intends to acquire any Indebtedness of the Company or any of its Subsidiaries (whether through one or more transactions in the secondary market or otherwise) or the Company or any of its Subsidiaries intends to issue Indebtedness to a Principal Stockholder (in each case other than pursuant to the exercise of Preemptive Rights by such Principal Stockholder) (the “Acquired Indebtedness”), such Acquiring Stockholder or the Company, as the case may be, shall deliver written notice to the other Principal Stockholder setting forth the terms of such Acquired Indebtedness, the face amount to be acquired and the price and other material terms and conditions (the “Debt Acquisition Terms”) on which such Acquired Indebtedness will be acquired by the Acquiring Stockholder or its Affiliate. The other Principal Stockholder shall have the right, exercisable at any time prior to 11:59 p.m. on the third Business Day following receipt of such notice from Acquiring Stockholder or the Company (the “Debt Participation Deadline”), to purchase up to its pro rata portion (based on its and the Acquiring Stockholder’s respective ownership of Common Shares) of the face amount of the Acquired Indebtedness on the Debt Acquisition Terms from the proposed transferor or from the Company or such Subsidiary (including any securities issued as an equity kicker with respect to such Acquired Indebtedness) (the “Acquired Indebtedness Participation Right”), provided that in the case of secondary market transactions of outstanding Indebtedness, the Acquiring Stockholder shall have the right to purchase any such Acquired Indebtedness before the Debt Participation Deadline, in which case the other Principal Stockholder’s Acquired Indebtedness Participation Right will (A) be exercisable until 11:59 p.m. on the third Business Day following such other Principal Stockholder’s receipt of notice of such purchase from the Acquiring Stockholder and (B) entitle such other Principal Stockholder to buy its pro rata share of the Acquired Indebtedness from the Acquiring Stockholder or the Affiliate of the Acquiring Stockholder purchasing such Acquired Indebtedness.

(iii)If a Principal Stockholder becomes aware that any of its Significant Related Entities has acquired Indebtedness of the Company or any of its Subsidiaries (whether through one or more transactions in the secondary market, as part of the initial incurrence or issuance of such Indebtedness by the Company or any of its Subsidiaries

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or otherwise) that, if acquired by such Principal Stockholder, would have entitled the other Principal Stockholder to purchase up to its pro rata portion of such Indebtedness, the other Principal Stockholder may purchase up to its pro rata portion of such Indebtedness without complying with the foregoing. No Principal Stockholder shall knowingly cause a Significant Related Entity to take any actions which would be in violation of the provisions set forth in this Section 8(f), if such Significant Related Entity were an Affiliate of such Principal Stockholder.

(iv)If the terms of any Indebtedness of the Company or any of its Subsidiaries (“Applicable Indebtedness”) contain restrictions on voting of such Applicable Indebtedness (other than restrictions on the Company and/or its Subsidiaries), then no Principal Stockholder or Affiliate thereof (the “Purchasing Stockholder”) shall vote any Applicable Indebtedness held by it unless either (A) the other Principal Stockholder or its Affiliates would be entitled to vote its holdings of such Applicable Indebtedness pursuant to the terms of such restrictions or (B) the terms or conditions of the Applicable Indebtedness are amended or supplemented to add such restrictions after the acquisition thereof by the Purchasing Stockholder and such amendment or supplement was not executed at any time during which (x) such Purchasing Stockholder or its Affiliates, in the aggregate, have the right to nominate, or otherwise the ability to elect, a majority of the Directors or (y) the Purchasing Stockholder is part of a Group of Persons (other than as a result of this Agreement) that, in the aggregate, has the right to nominate, or otherwise the ability to elect, a majority of the Directors.

(v)     If the terms of any Applicable Indebtedness contain restrictions on the principal amount of Applicable Indebtedness that may be acquired or otherwise owned by any Person (other than the Company and/or its Subsidiaries), then the Purchasing Stockholder shall not acquire or otherwise own a principal amount of such Applicable Indebtedness in excess of such principal amount unless (A) the other Principal Stockholder or its Affiliates would be entitled to acquire or otherwise own an equal principal amount of such Applicable Indebtedness under the terms of such restrictions (it being understood that the Purchasing Stockholder shall be entitled to acquire a principal amount of Applicable Indebtedness under this clause (v) that, together with the principal amount of such Applicable Indebtedness held by the Purchasing Stockholder at such time, is equal to the principal amount held by the other Principal Stockholder without giving effect to this limitation) or (B) the terms of the Applicable Indebtedness are amended or supplemented to add such restrictions after the acquisition thereof by the Purchasing Stockholder and such amendment or supplement was not executed at any time during which (x) such Purchasing Stockholder or its Affiliates, in the aggregate, have the right to nominate, or otherwise the ability to elect, a majority of the Directors or (y) the Purchasing Stockholder is part of a Group of Persons (other than as a result of this Agreement) that, in the aggregate, has the right to nominate, or otherwise the ability to elect, a majority of the Directors.

(vi)the terms of any Applicable Indebtedness contain requirements for representations and warranties to the effect that the purchaser of such Applicable Indebtedness (other than the Company and/or its Subsidiaries) does not have any material non-public information with respect to the Company and its Subsidiaries that (A) has not been disclosed to the lenders under the Applicable Indebtedness (other than lenders that do not wish to receive material non-public information with respect to the Company and/or its Subsidiaries) prior to such time and (B) could reasonably be expected to have a material effect upon, or otherwise be material, to either a lender’s decision to participate in any assignment of such Applicable Indebtedness or to the market price of the Applicable Indebtedness, then the Purchasing Stockholder must be able to make such representations and warranties truthfully to the Company with respect to both itself and its Affiliates in connection with the purchase of such Applicable Indebtedness.

(vii)the terms of any Applicable Indebtedness contain any other express provision that would adversely affect the ability of a Principal Stockholder or any of its Affiliates (other than the Company and/or its Subsidiaries) to acquire or otherwise own such Applicable Indebtedness other than in a manner affecting the other Principal Stockholder in respect of its ability to acquire or own such Applicable Indebtedness proportionally on the basis of its ownership of such Applicable Indebtedness, then the Purchasing Stockholder shall not acquire or otherwise own such Applicable Indebtedness unless the terms of the Applicable Indebtedness are amended or supplemented to add such provisions after the acquisition thereof by the Purchasing Stockholder and such amendment or supplement was not executed at any time during which (x) such Purchasing Stockholder or its Affiliates, in the aggregate, have the right to nominate, or otherwise the ability to elect, a majority of the Directors or (y) the Purchasing Stockholder

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is part of a Group of Persons (other than as a result of this Agreement) that, in the aggregate, has the right to nominate, or otherwise the ability to elect, a majority of the Directors.

(viii)the terms of any Applicable Indebtedness contain any other provision that would adversely affect the ability of a Principal Stockholder or any of its Affiliates (other than the Company and/or its Subsidiaries) to exercise rights or remedies in respect of such Applicable Indebtedness other than in a manner affecting the other Principal Stockholder in respect of its ability to exercise such rights or remedies proportionally on the basis of its ownership of such Applicable Indebtedness, then the Purchasing Stockholder shall not exercise such rights or remedies unless either (A) the other Principal Stockholder or its Affiliates would be entitled to exercise such rights or remedies or (B) the terms of the Applicable Indebtedness are amended or supplemented to add such provisions after the acquisition thereof by the Purchasing Stockholder and such amendment or supplement was not executed at any time during which (x) such Purchasing Stockholder or its Affiliates, in the aggregate, have the right to nominate, or otherwise the ability to elect, a majority of the Directors or (y) the Purchasing Stockholder is part of a Group of Persons (other than as a result of this Agreement) that, in the aggregate, has the right to nominate, or otherwise the ability to elect, a majority of the Directors.

(ix)The restrictions set forth in Section 8(f)(iv) through (viii) shall not apply (A) if the Purchasing Stockholder is Apollo or its Complete Rights Transferee or any of their respective Affiliates, if either (x) Apollo or its Complete Rights Transferee shall have received the prior written consent of Popular or its Complete Rights Transferee or (y) Popular’s or such Complete Rights Transferee’s Proportionate Percentage is less than 10% and (B) if the Purchasing Stockholder is Popular or its Complete Rights Transferee or any of their respective Affiliates, if either (x) Popular or its Complete Rights Transferee shall have received the prior written consent of Apollo or its Complete Rights Transferee or Apollo’s or such Complete Rights Transferee’s Proportionate Percentage is less than 10%.
(g)     Dividends. Dividends shall be declared and paid in accordance with the Company’s, Holdings’ and EVERTEC’s dividend policy in effect from time to time (the “Dividend Policy”). The Dividend Policy shall be adopted and/or amended by the Board from time to time; provided that such Dividend Policy (i) shall limit the amount of any dividends to the Company’s earnings, Holdings’ earnings or EVERTEC’s earnings, as the case may be, and (ii) shall not, in the reasonable judgment of the Board, adversely affect the working capital levels necessary for the Company, Holdings and EVERTEC to conduct their respective operations in accordance with the then-in-effect Business Plan. Notwithstanding anything to the contrary contained in this Agreement, for so long as any Principal Stockholder’s Proportionate Percentage is at least 20%, without the prior approval of such Principal Stockholder, the Company shall not use any proceeds obtained from the incurrence of Indebtedness by the Company to pay any dividend to the Company’s stockholders.

(h)     Fees Shared Pro rata; Issuances to Certain Persons.

(i)     Any management, advisory, consulting or similar fees paid by the Company or any of its Controlled Affiliates to (A) Apollo, any of its Affiliates or any of their affiliated investment funds and/or their related investment management companies or (B) Popular or any of its Affiliates (for the avoidance of doubt, including any fees payable pursuant to Section 6 or Section 7 of the Apollo Consulting Agreement or Section 6 or Section 7 of the Popular Consulting Agreement, but excluding any fees paid to Popular or its Affiliates pursuant to any Ancillary Agreement (as such term is defined in the Merger Agreement) or other commercial arrangement in the ordinary course, on terms at least as favorable to the Company or any of its Controlled Affiliates as arm’s length terms; provided that the terms as of the date hereof of any commercial arrangement and the terms agreed to during any period during which a Principal Stockholder (other than Popular or any of its Affiliates) has the right to appoint a majority of the Board shall be deemed to be on arm’s length terms and any such commercial arrangement shall be deemed to be in the ordinary course for purposes of this Section 8(h) (but, for the avoidance of doubt, not for purposes of Section 3(c))), shall be shared by Apollo and Popular (or their respective designees) pro rata, based on their respective Proportionate Percentages (excluding for the purposes of this calculation Common Shares beneficially owned by Holders other than Apollo’s Ultimate Parent Entity, Popular and their respective Controlled Affiliates). Notwithstanding the foregoing, the fees payable pursuant to Section 4 of the Consulting Agreements shall be paid in accordance with the terms set forth in the Consulting Agreements.


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(ii)     In the event that the Company issues any equity securities to any person who is employed by, or who acts as a consultant to, a Principal Stockholder (the “Employing Principal Stockholder”) or any of its Affiliates which qualify as Excluded Securities pursuant to Section 6(b)(ii), it shall issue a pro rata portion of such equity securities to the other Principal Stockholder in consideration for the Board services performed by the Principal Stockholder’s representatives; provided that prior to such issuance the Company shall inform the Employing Principal Stockholder who shall have the right to (i) have some or all of such equity securities issued to the Employing Principal Stockholder instead of a person who is an employee or consultant to such Employing Principal Stockholder or (ii) to reallocate all or some of such equity securities to its employees or consultants that are eligible to receive such equity securities pursuant to the Management Long-Term Compensation Plan.
(i)     Stock Exchange Listing. In the event of a listing of Common Shares on a national securities exchange in connection with an Initial Public Offering, if a listing on the NASDAQ Stock Market or the NYSE, as applicable, would be more likely (as compared to the other) to materially increase the likelihood of any Director nominated by any Principal Stockholder to be deemed an Independent Director, then the Company shall list such Common Shares on such national securities exchange where the likelihood of such determination as an Independent Director is more likely unless, in the reasonable judgment of the managing and lead underwriters, listing such Common Shares on such national securities exchange would otherwise be materially less favorable for the success of an Initial Public Offering.
(j)         Stockholder Rights Plan. Notwithstanding anything in this Agreement to the contrary, the adoption of any stockholder rights plan, rights agreement or any other form of “poison pill” which is designed to or has the effect of making an acquisition of large holdings of the Company’s Common Shares more difficult or expensive (“Stockholder Rights Plan”) or the amendment of any such Stockholder Rights Plan which has the effect of extending the term of a Stockholder Rights Plan or any rights or options provided thereunder, shall require the affirmative vote of (i) a majority of the entire Board and (ii) for so long as any Principal Stockholder’s Proportionate Percentage is at least 5%, at least one Director nominated by such Principal Stockholder.
(k)     Group Status. To the extent that it is necessary for the Company to qualify as a “controlled company” (or similar status) pursuant to the rules of any securities exchange on which the Company is listed, no Holder shall deny “group” status for purposes of Section 13(d) of the Exchange Act (or the rules promulgated pursuant thereto) with the other parties to this Agreement (other than the Company) and Holders shall timely file and amend a Schedule 13D for the group with the U.S. Securities and Exchange Commission.

Section 9. Agreements Related to Management Holders.

(a)     Redemption Rights. The provisions set forth in this Section 9(a) shall apply to the Management Holders (each, a “Redeemed Holder”).

(i)     From and after a Repurchase Event with respect to any Redeemed Holder, the Company or one or more of its designees (each, a “Repurchaser”) shall have the right (but not the obligation) (the “Repurchase Right”), upon delivery of a notice to such Redeemed Holder (the “Repurchase Notice”), to purchase all Common Shares and all options and warrants exercisable for Common Shares beneficially owned by each such Redeemed Holder within the Repurchase Period.

(ii)     The Company may only designate a Principal Stockholder to be a Repurchaser. In order to designate a Principal Stockholder to be a Repurchaser with respect to a particular Redeemed Holder, the Company shall provide written notice (the “Repurchase Designee Notice”) to each Principal Stockholder setting forth (A) the identity of such Redeemed Holder, (B) the number of Common Shares and options and warrants exercisable for Common Shares beneficially owned by such Redeemed Holder as of the date of the applicable Repurchase Event, (C) the number of securities set forth in (B) above which the Company elects to Repurchase (the difference between (B) and (C) the “Additional Redeemable Shares”), and (D) whether the termination of such Redeemed Holder was for Cause, due to death or disability or at the election of such Redeemed Holder. Each Principal Stockholder shall have the right, exercisable by providing the Company with written notice within ten Business Days of the date of the Repurchase Designee Notice, to purchase (x) its pro rata portion of the Additional Redeemable Securities, based on its Proportionate Percentage (excluding for the purposes of this calculation Common Shares beneficially owned

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by Holders who are not Principal Stockholders) and (y) up to all of such other Additional Redeemable Securities not elected to be repurchased by the other Principal Stockholder.

(iii)In the event one or more Repurchaser elects to exercise its Repurchase Right, the repurchase price shall be determined as set forth below:

(A)If such termination is (a) by the Company or any of its subsidiaries for Cause or (b) by the Redeemed Holder, the price to be paid by such Repurchaser to repurchase each Common Share shall be an amount equal to the lesser of (x) the Fair Market Value of such Common Share as of such Redeemed Holder’s Service Termination Date (in the case of options and warrants, less the exercise price thereof) and (y) the amount originally paid to acquire such Common Share upon issuance thereof.

(B)If such termination is (a) by the Company without Cause or (b) due to death or disability of such Redeemed Holder, then the price to be paid by such Repurchaser to repurchase each Common Share shall be an amount equal to the Fair Market Value of such Common Share as of such Redeemed Holder’s Service Termination Date (in the case of options and warrants, less the exercise price thereof).

(C)The purchase price to be paid by a Repurchaser shall be paid, at the election of such Repurchaser, either (a) in cash in a single lump sum payment or (b) in consideration of a five-year subordinated promissory note issued by such Repurchaser (such note bearing interest equal to 5.0% per annum) or (c) a combination of the foregoing clauses (a) and (b). To the extent a Redeemed Holder is subject to the United States Internal Revenue Code (the “Code”) and the repurchase price is determined to be “deferred compensation” within the meaning of the Code, such repurchase price shall be made in a lump sum as soon as practicable after the Redeemed Holder’s Service Termination Date, but in any event within 30 days thereafter.

(D)Each Repurchaser, when purchasing the Common Shares pursuant to this Section 9, will be entitled to require each such Redeemed Holder to provide representations and warranties regarding (a) its power, authority and legal capacity to enter into such Transfer of Common Shares; (b) valid right, title and interest in such Common Shares and the Redeemed Holder’s ownership of such Common Shares; (c) the absence of any Encumbrances on such share of Common Shares; and (d) the absence of any violation, default, or acceleration of any agreement or instrument pursuant to which such Redeemed Holder or the assets of such Redeemed Holder are bound as the result of such sale. Each Repurchaser shall have the right to revoke its Repurchase Notice at any time. Should the Company elect to exercise the Repurchase Rights pursuant to this Section 9 and such Redeemed Holder fails to deliver all of such Common Shares in accordance with the terms hereof, the Company may, at its option, in addition to all other remedies it may have, cancel on its books the Common Shares (and options and warrants, to the extent applicable) registered in the name of the Redeemed Holder. All such Redeemed Holder’s right, title, and interest in and to such Common Shares (and options and warrants, to the extent applicable) shall terminate in all respects.

(iv)For purposes of this Section 9, “Repurchase Period” shall mean the 12 months following the applicable Service Termination Date; provided that such 12-month period shall be tolled if the Company determines that the purchase of such Common Shares (together with any other purchases of Common Shares pursuant to this Section 9, or pursuant to similar provisions in any other agreements with other investors of which the Company has at such time been given or has given notice), would result (1) in a violation of any applicable Law or (2) after giving effect thereto (including any dividends or other distributions or loans from a Subsidiary of the Company to the Company in connection therewith), in a violation of any Financing Agreements, (3) there exists a violation of a Financing Agreement which prohibits such issuance or purchase (including any dividends or other distributions or loans from a subsidiary of the Company to the Company in connection therewith), (4) the Company does not have funds available to effect such purchase of share of Common Shares, or (5) the consent of any legal, judicial, regulatory, or other Governmental Entity is required to consummate such redemption or repurchase. The Company shall upon learning of any such fact and prior to the end of the Repurchase Period so notify the Redeemed Holder that it will not purchase such Common Shares and/or options or warrants during the Repurchase Period and has deferred its right to make such purchase until such violation of law or Financing Agreement or unavailability of funds would not result therefrom or has ceased. The closing of the sale and purchase of Common Shares which the Company has elected to defer in accordance with this Section 9 shall take place no later than 20 Business Days

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after such date that the Company is no longer permitted to defer purchasing such Common Shares under this Section 9.
(b)     Consent of Spouses of Management Holders. The spouses of the individual Management Holders are fully aware of, understand and fully consent and agree to the provisions of this Agreement and its binding effect upon any community property interests or similar marital property interests in the Common Shares they may now or hereafter own, and agree that the termination of their marital relationship with any Management Holder for any reason shall not have the effect of removing any Common Shares of the Company otherwise subject to this Agreement from the coverage of this Agreement and that their awareness, understanding, consent and agreement are evidenced by their signing this Agreement. Furthermore, each individual Management Holder agrees to cause his or her spouse (and any subsequent spouse) to execute and deliver, upon the request of the Company, a counterpart of this Agreement, or an Adoption Agreement substantially in the form of Exhibit A or in a form satisfactory to the Company and each Principal Stockholder whose Proportionate Percentage is 5% or more.
(c)     No Right to Employment. Neither the ownership of Common Shares nor any provision contained in this Agreement shall entitle the Management Holder to obtain employment with or remain in the employment of the Company or any of its subsidiaries or Affiliates or affect any right the Company or any subsidiary or Affiliate of the Company may have to terminate the Management Holder’s employment, pursuant to an applicable employment agreement or otherwise for any reason.
(d)     Non-Solicitation. Each Management Holder agrees that during the period commencing on the Merger Closing Date and ending on the first anniversary of the date on which such Management Holder is no longer employed by the Company or any of its Subsidiaries for any reason (including upon death or disability), such Management Holder shall not directly, or indirectly through another Person, (i) induce or attempt to induce any employee, representative, agent or consultant of the Company or any of its Affiliates or Subsidiaries to leave the employ or services of the Company or any of its Affiliates or Subsidiaries, or in any way interfere with the relationship between the Company or any of its Affiliates or Subsidiaries and any employee, representative, agent or consultant thereof, (ii) hire any person who was an employee, representative, agent or consultant of the Company or any of its Affiliates or Subsidiaries at any time during the 12-month period immediately prior to the date on which such hiring would take place or (iii) directly or indirectly call on, solicit or service any customer, supplier, licensee, licensor, representative, agent or other business relation of the Company or any of its Affiliates or Subsidiaries in order to induce or attempt to induce such Person to cease doing business with, or reduce the amount of business conducted with, the Company or any of its Affiliates or Subsidiaries, or in any way interfere with the relationship between any such customer, supplier, licensee, licensor, representative, agent or business relation of the Company or any of its Affiliates or Subsidiaries.
(e)     Non-Competition. Each Management Holder hereby acknowledges that it is familiar with the Confidential Information of the Company and its Subsidiaries. Each Management Holder acknowledges and agrees that the Company would be irreparably damaged if such Management Holder were to provide services to any Person competing with the Company or any of its Affiliates or Subsidiaries or engaged in a similar business and that such competition by such Management Holder would result in a significant loss of goodwill by the Company. Therefore, each Management Holder agrees that during the period commencing on the Merger Closing Date and ending on the first anniversary of the date on which such Management Holder is no longer employed by the Company or any of its Subsidiaries for any reason (including upon death or disability), such Management Holder shall not (and shall cause each of his or its affiliates not to) directly or indirectly own any interest in, manage, control, participate in (whether as an officer, director, manager, employee, partner, equity holder, member, agent, representative or otherwise), consult with, render services for, or in any other manner engage in any business engaged directly or indirectly, in the Commonwealth of Puerto Rico, in the business of the Company and its Subsidiaries as currently conducted or proposed to be conducted as of the date on which such Management Holder is no longer employed by the Company or any of its Subsidiaries for any reason (including upon death or disability); provided, that nothing herein shall prohibit a Management Holder from being a passive owner of not more than 5% of the outstanding stock of any class of a corporation which is publicly traded so long as none of such persons has any active participation in the business of such corporation.
(f) Policies. Each Management Holder hereby agrees to be bound by and to act in accordance with the Policies.


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Section 10. Assignment.
(a)     No Assignment. Unless otherwise provided herein, no Holder may assign any of its rights or obligations under this Agreement without the prior written consent of the Principal Stockholders. Any assignment in violation of this Agreement shall be null and void and of no force and effect.
(b)     Assignment in Whole. Notwithstanding the foregoing, each Principal Stockholder may assign, in whole, but not in part, its rights under this Agreement as a Principal Stockholder (including, without limitation, its Board Quorum Rights, Board Rights, Committee Rights, Subsidiary Board Rights, Stockholder Quorum Rights, Consent Action Rights, Tag-Along Rights, Registration Rights, Preemptive Rights, Inspection Rights and Information Rights) to any Complete Rights Transferee (an “Assignment in Whole”). Following an Assignment in Whole, such Complete Rights Transferee may assign, in whole, but not in part, its rights under this Agreement to any Person to whom such Complete Rights Transferee Transfers 100% of the Common Shares acquired by such Complete Rights Transferee pursuant to the transaction, or series of related transactions, giving rise to the Assignment in Whole.
(c)     Assignment in Part. Notwithstanding the foregoing, each Principal Stockholder may assign (i) its 5% Board Right or its 10% Board Right to any Partial Rights Transferee; provided that at no time during the term of this Agreement shall the total number of Board Rights held by a Principal Stockholder and its Partial Rights Transferees exceed, in the aggregate, the total number of Board Rights such Principal Stockholder would have been entitled to had no such assignment of Board Rights been made; or (ii) its right to demand a Long-Form Registration (a “Long-Form Demand Right”) to any Partial Rights Transferee (any assignment, set forth in this Section 10(c), an “Assignment in Part”); provided that (x) no Principal Stockholder may assign, in the aggregate, more than two Long-Form Demand Rights and (y) at no time during the term of this Agreement shall the total number of Long-Form Demand Rights held by a Principal Stockholder and its Partial Rights Transferees exceed, in the aggregate, the total number of Long-Form Demand Rights such Principal Stockholder would have been entitled to had no such assignment of Long-Form Demand Rights been made.
(d)     Additional Rights Received by Partial Rights Transferees. Upon becoming a party to this Agreement, a Partial Rights Transferee shall be granted the rights set forth in this Agreement applicable to Partial Rights Transferees, including Committee Rights, Subsidiary Board Rights, Stockholder Quorum Rights, Tag-Along Rights, Preemptive Rights, Inspection Rights and Information Rights (collectively, the “Partial Rights Transferee Rights”), (i) in each case, only if such Partial Rights Transferee meets any applicable ownership thresholds and (ii) in the case of Committee Rights and Subsidiary Board Rights, only if such Partial Rights Transferee has been assigned a 5% Board Right or 10% Board Right. For the avoidance of doubt and subject to Section 10(c), the grant of the Partial Rights Transferee Rights to any Partial Rights Transferee pursuant to this Section 10(d) in and by itself shall not cause the loss of any such rights by the assigning Principal Stockholder.

(e)     Binding Effect. Except as otherwise expressly provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Holders (including any Management Holders and any spouses of such Management Holders) and the Company.

Section 11. Company Governing Documents Post-IPO.

The Company and the Holders shall cause the Certificate of Incorporation and bylaws of the Company, Holdings, EVERTEC and any entity that beneficially owns 100% of the equity securities of EVERTEC and that will issue equity securities in connection with an Initial Public Offering to be amended in order to preserve the rights of the Principal Stockholders and any Partial Rights Transferees set forth in this Agreement to the maximum extent permitted under Law.

Section 12. Miscellaneous Provisions.

(a)     Termination. This Agreement shall terminate in respect of any Holder on the date such Holder ceases to own any Common Shares and such Holder shall have no further rights under this Agreement, but shall

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remain subject to Section 8(d) (Confidentiality), Section 9(d) (Non-Solicitation) and Section 9(e) (Non-Competition) and shall not be released from any liability incurred hereunder prior to the date it ceases to own any Common Shares.
(b)     Entire Agreement; Effectiveness. This Agreement, together with the Merger Agreement and the Exhibits, Schedules and Annexes attached hereto and thereto and any certificates, documents, instruments and writings that are delivered pursuant hereto and thereto, constitutes the entire agreement and understanding of the parties in respect of the subject matter hereof and supersedes all prior understandings, agreements or representations by or among the parties, written or oral, to the extent they relate in any way to the subject matter hereof (other than any waivers and consents under the Holdings Stockholder Agreement, which shall apply mutatis mutandis to this Agreement). This Agreement amends, restates and supersedes the Stockholder Agreement, dated September 30, 2010, as amended on February 11, 2011, by and among Holdings and it stockholders (the “Holdings Stockholders’ Agreement”). This Agreement shall be effective as to all parties to the Holdings Stockholders’ Agreement upon the execution hereof by the Company and each of the Principal Stockholders. With respect to any Holder who was not a party to the Holdings Stockholders’ Agreement, this Agreement shall be effective as to such Holder as of the date on which such Holder executes this Agreement.
(c)     Notices. All notices, requests and other communications provided for or permitted to be given under this Agreement must be in writing and given by personal delivery, by certified or registered United States mail (postage prepaid, return receipt requested), by United States Express Mail or a nationally recognized overnight delivery service for next day delivery, or by facsimile transmission or electronic mail, as follows (or to such other address as any party may give in a notice given in accordance with the provisions hereof):

If to the Company, to:
Carib Latam Holdings, Inc.
c/o EVERTEC, LLC
Carr #176, Km 1.3
Cupey Bajo, Rio Piedras Puerto Rico 00926
P.O. Box 364527
San Juan, Puerto Rico 00936-4527
Telephone: (787) 773-5445
Email: pharrington@evertecinc.com
Attention:Peter Harrington
         President
with a copy, so long as Apollo’s Proportionate Percentage is at least 5% (which copy shall not constitute notice), to:
Apollo Management VII, L.P.
9 West 57th Street, 43rd Floor
New York, New York 10019
Telephone: (212) 515-3202
Email: becker@apollolp.com
Attention: Marc Becker
and to:
Akin Gump Strauss Hauer & Feld LLP
One Bryant Park
New York, New York 10036
Telephone: (212) 872-8112
Telecopy: (212) 872-1002
Email: aweinstein@akingump.com
Attention: Adam Weinstein, Esq.




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with a copy, so long as Popular’s Proportionate Percentage is at least 5% (which copy shall not constitute notice), to:
Popular, Inc.
209 Muñoz Rivera Avenue
Hato Reyes, Puerto Rico 00918
Telephone: (787) 758-7208
Email: rcarrion@bppr.com
Attention: Richard L. Carrión
CEO & President
copy to:    Ignacio Alvarez, Esq.
Executive Vice President & General Counsel
igalvarez@bppr.com
and to:
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Email: toumeyd@sullcrom.com
Attention: Donald J. Toumey
If to a Holder, to the address set forth under such Holder’s name in Schedule I attached hereto.
All notices, requests or other communications will be effective and deemed given only as follows: (i) if given by personal delivery, upon such personal delivery, (ii) if sent by certified or registered mail, on the third Business Day after being deposited in the United States mail, (iii) if sent for next day delivery by United States Express Mail or overnight delivery service, on the date of delivery as confirmed by written confirmation of delivery, (iv) if sent by telecopy or facsimile, upon confirmation of receipt, except that if such confirmation occurs after 5:00 p.m. (in the recipient’s time zone) on a Business Day, or occurs on a day that is not a Business Day, then such notice, request or communication will not be deemed effective or given until the next succeeding Business Day or (v) if sent by electronic mail, when sent. Notices, requests and other communications sent in any other manner will not be effective.
(d)     Specific Performance; Remedies. Each party acknowledges and agrees that the other parties would be damaged irreparably and would not have an adequate remedy at Law if any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached. Accordingly, in addition to any other remedy to which it may be entitled at Law or in equity, each party will be entitled to an injunction or injunctions to prevent breaches or threatened breaches of the provisions of this Agreement and to enforce specifically this Agreement and its provisions, without bond or other security being required. Except as expressly provided herein, the rights and remedies created by this Agreement are cumulative and in addition to any other rights and remedies otherwise available at Law or in equity. Except as expressly provided herein, nothing herein will be considered an election of remedies or a waiver of the right to pursue any other right or remedy to which such party may be entitled.
(e)     Governing Law; Jurisdiction. This Agreement and all claims and cause of action arising hereunder or relating hereto will be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to any conflict of law principles that would result in the application of the laws of any other jurisdiction. In furtherance of the foregoing, the parties hereby acknowledge and agree that it is their intent that the Chosen Courts (as defined below) not apply the internal affairs doctrine for the purposes of any litigation, action, suit or other proceeding with respect to the subject matter hereof to the extent that such doctrine would result in the application of any law other than the law of the State of New York to this Agreement or claim or cause of action arising hereunder. Each party irrevocably and unconditionally consents, agrees and submits to the jurisdiction of the United States District Court for the Southern District of New York or any New York State court, in each case, located in the Borough of Manhattan and not in any other State or Federal court in the United States of America or any court in any other country (and appropriate appellate courts therefrom) (the “Chosen Courts”), for the purposes of any litigation, action, suit or other proceeding with respect to the subject matter hereof. Each party agrees to commence any litigation, action, suit or proceeding relating hereto only in the Chosen Courts. Each party irrevocably and unconditionally

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waives any objection to the laying of venue of any litigation, action, suit or proceeding with respect to the subject matter hereof in the Chosen Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such litigation, action, suit or proceeding brought in any such court has been brought in an inconvenient forum. The parties agree that a final judgment in any such litigation, action, suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law.
(f)          WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION PERMITTED UNDER THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12(F).
(g)     No Recourse. Notwithstanding anything that may be expressed or implied in this Agreement, and notwithstanding the fact that certain of the Holders may be partnerships or limited liability companies, each Holder covenants, agrees and acknowledges that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement shall be had against any of the Company’s or any Holder’s former, current or future directors, officers, agents, affiliates, general or limited partners, members, managers or stockholders or any former, current or future directors, officers, agents, affiliates, employees, general or limited partners, members, managers or stockholders of any of the foregoing, as such (collectively, the “Related Parties”), whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any of the Related Parties, as such, for any obligation or liability of the Company or any Holder under this Agreement or any documents or instruments delivered in connection herewith for any claim based on, in respect of or by reason of such obligations or liabilities or their creation; provided that nothing in this Section 12(g) shall relieve or otherwise limit the liability of any Holder, as such, for any breach or violation of its obligations under such agreements, documents or instruments.
(h)     Amendments. Other than with respect to amendments to Schedule I attached hereto, which may be amended by the Company to reflect additional Holders, this Agreement may not be amended, supplemented or modified without the written consent of (x) the Holders holding at least a majority of the Class A Shares of the Company then outstanding and (y) for so long as any Principal Stockholder’s Proportionate Percentage is at least 10%, such Principal Stockholder; provided, however, that (i) any such amendment, modification or supplement that by its terms affects the rights or obligations of all Holders of Class B Shares in a manner that is materially adverse and substantially different relative to the Holders of Class A Shares, shall not be enforceable against such Holders of Class B Shares without the written consent of Holders holding at least a majority of the Class B Shares of the Company then outstanding, (ii) any such amendment, modification or supplement that by its terms affects the rights or obligations of any Holder in a manner that is materially adverse and substantially different relative to other Holders shall not be enforceable against such Holder without the written consent of such Holder, and (iii) the written consent of the Company shall be required, in the event that any such amendment, modification or supplement imposes a burden or obligation on the Company or adversely affects a benefit or right of the Company under this Agreement.
(i)         Extensions; Waivers. Any party may, for itself only, (i) extend the time for the performance of any of the obligations of any other party under this Agreement, (ii) waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions for the benefit of such party contained herein. Any such extension or waiver will be valid only if set forth in a writing signed by the party to be bound thereby. No waiver by any party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant

55

hereunder or affect in any way any rights arising because of any prior or subsequent such occurrence. Neither the failure nor any delay on the part of any party to exercise any right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise of the same or of any other right or remedy.
(j)         Severability. The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions hereof; provided that if any provision of this Agreement, as applied to any party or to any circumstance, is judicially determined not to be enforceable in accordance with its terms, the parties agree that the court judicially making such determination may modify the provision in a manner consistent with its objectives such that it is enforceable, and/or to delete specific words or phrases, and in its modified form, such provision will then be enforceable and will be enforced.
(k)     No Third-Party Beneficiaries. The terms and provisions of this Agreement are intended solely for the benefit of the parties hereto and their respective successors and permitted assigns. Except for the Company’s underwriters as set forth in Section 5(d), there are no third-party beneficiaries having rights under or with respect to this Agreement, and it is not the intention of the parties to confer third-party beneficiary rights upon any other person.
(l)     Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.
(m)     Headings. The heading references herein and the table of contents hereof are for convenience purposes only, and shall not be deemed to limit or affect any of the provisions hereof.
(n)     Construction. This Agreement has been freely and fairly negotiated among the parties. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party because of the authorship of any provision of this Agreement. Any reference to any law will be deemed to refer to such law as amended and all rules and regulations promulgated thereunder, unless the context requires otherwise. The words “include,” “includes,” and “including” will be deemed to be followed by “without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context otherwise requires. The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The parties intend that each representation, warranty, and covenant contained herein will have independent significance. If any party has breached any covenant contained herein in any respect, the fact that there exists another covenant relating to the same subject matter (regardless of the relative levels of specificity) which the party has not breached will not detract from or mitigate the fact that the party is in breach of the first covenant.
* * * * *












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This Agreement is executed by the Company and by each Holder and spouse of each Management Holder to be effective as of the date first above written.

THE COMPANY:

CARIB LATAM HOLDINGS, INC.

By: /s/ Carlos Ramirez
Name: Carlos Ramirez
Title: Executive Vice President




























Signature Page to Stockholder Agreement

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PRINCIPAL STOCKHOLDER:

AP CARIB HOLDINGS, LTD.,
By: Apollo Management VII, L.P., its sole director

By: AIF VII Management, LLC, its general partner

By: /s/ Mark Becker
Name: Mark Becker
Title:


























Signature Page to Stockholder Agreement

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PRINCIPAL STOCKHOLDER:

POPULAR, INC.

By: /s/ Ivan Pagán
Name: Ivan Pagán
Title: Senior Vice President

























Signature Page to Stockholder Agreement

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SOLELY WITH RESPECT TO SECTION 12(b):

CARIB HOLDINGS, INC.

By: /s/ Carlos Ramirez
Name: Carlos Ramirez
Title: Executive Vice President

























Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

By: /s/ Felix M. Villamil Pagani
Name: Felix M. Villamil Pagani
The spouse of the above signed Management Holder, if applicable, hereby executes this Agreement to acknowledge (a) the fairness of this Agreement and (b) that binding such spouse’s community interest, if any, in the Common Shares and any other securities referred to in this Agreement to the terms of this Agreement is in such spouse’s best interest.

SPOUSE OF MANAGEMENT HOLDER

By: /s/ Lourdes Durand Villamil
Name: Lourdes Durand Villamil





















Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

By: /s/ Carlos J. Ramirez
Name: Carlos J. Ramirez






























Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

By: /s/ Jorge Rafael Hernandez Gonzalez
Name: Jorge Rafael Hernandez Gonzalez
The spouse of the above signed Management Holder, if applicable, hereby executes this Agreement to acknowledge (a) the fairness of this Agreement and (b) that binding such spouse’s community interest, if any, in the Common Shares and any other securities referred to in this Agreement to the terms of this Agreement is in such spouse’s best interest.

SPOUSE OF MANAGEMENT HOLDER

By: /s/ Soraya Cheleuitte
Name: Soraya Cheleuitte























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MANAGEMENT HOLDER

By: /s/ Luis Gerardo Alvarado
Name: Luis Gerardo Alvarado
The spouse of the above signed Management Holder, if applicable, hereby executes this Agreement to acknowledge(a) the fairness of this Agreement and (b) that binding such spouse’s community interest, if any, in the Common Shares and any other securities referred to in this Agreement to the terms of this Agreement is in such spouse’s best interest.

SPOUSE OF MANAGEMENT HOLDER

By: /s/ Alexandra Pilbalohor
Name: Alexandra Pilbalohor























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MANAGEMENT HOLDER

By: /s/ Miguel Vizcarrondo
Name: Miguel Vizcarrondo
The spouse of the above signed Management Holder, if applicable, hereby executes this Agreement to acknowledge (a) the fairness of this Agreement and (b) that binding such spouse’s community interest, if any, in the Common Shares and any other securities referred to in this Agreement to the terms of this Agreement is in such spouse’s best interest.

SPOUSE OF MANAGEMENT HOLDER

By: /s/ J. Cardena
Name: J. Cardena























Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

By: /s/ Raul A. Aponte
Name: Raul A. Aponte
The spouse of the above signed Management Holder, if applicable, hereby executes this Agreement to acknowledge (a) the fairness of this Agreement and (b) that binding such spouse’s community interest, if any, in the Common Shares and any other securities referred to in this Agreement to the terms of this Agreement is in such spouse’s best interest.

SPOUSE OF MANAGEMENT HOLDER

By: /s/ Madeline Fontanes
Name: Madeline Fontanes























Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

By: /s/ Ramon Luis Melendez
Name: Ramon Luis Melendez
The spouse of the above signed Management Holder, if applicable, hereby executes this Agreement to acknowledge (a) the fairness of this Agreement and (b) that binding such spouse’s community interest, if any, in the Common Shares and any other securities referred to in this Agreement to the terms of this Agreement is in such spouse’s best interest.

SPOUSE OF MANAGEMENT HOLDER

By: /s/ Ana M. Hernóval
Name: Ana M. Hernóval























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MANAGEMENT HOLDER

By: /s/ Jose Luis Casas
Name: Jose Luis Casas
The spouse of the above signed Management Holder, if applicable, hereby executes this Agreement to acknowledge (a) the fairness of this Agreement and (b) that binding such spouse’s community interest, if any, in the Common Shares and any other securities referred to in this Agreement to the terms of this Agreement is in such spouse’s best interest.

SPOUSE OF MANAGEMENT HOLDER

By: /s/ Enii Escriba
Name: Enii Escriba























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MANAGEMENT HOLDER

By: /s/ Miguel Angel Mercado Morales
Name: Miguel Angel Mercado Morales
The spouse of the above signed Management Holder, if applicable, hereby executes this Agreement to acknowledge (a) the fairness of this Agreement and (b) that binding such spouse’s community interest, if any, in the Common Shares and any other securities referred to in this Agreement to the terms of this Agreement is in such spouse’s best interest.

SPOUSE OF MANAGEMENT HOLDER

By: /s/ Marena Rodriguez
Name: Marena Rodriguez
























Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

By: /s/ Luisa Wert Serrano
Name: Luisa Wert Serrano






























Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

By: /s/ Wanda Betancourt Diaz
Name: Wanda Betancourt Diaz
The spouse of the above signed Management Holder, if applicable, hereby executes this Agreement to acknowledge (a) the fairness of this Agreement and (b) that binding such spouse’s community interest, if any, in the Common Shares and any other securities referred to in this Agreement to the terms of this Agreement is in such spouse’s best interest.

SPOUSE OF MANAGEMENT HOLDER

By: /s/ Joseph Andino
Name: Joseph Andino























Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

By: /s/ Lilia Sylvette Ramos Figueroa
Name: Lilia Sylvette Ramos Figueroa





























Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

By: /s/ Luis Cabrera
Name: Luis Cabrera
The spouse of the above signed Management Holder, if applicable, hereby executes this Agreement to acknowledge (a) the fairness of this Agreement and (b) that binding such spouse’s community interest, if any, in the Common Shares and any other securities referred to in this Agreement to the terms of this Agreement is in such spouse’s best interest.

SPOUSE OF MANAGEMENT HOLDER

By: /s/ Elisa Sánchez
Name: Elisa Sánchez























Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

By: /s/ James Gonzalez, Jr.
Name: James Gonzalez, Jr.
The spouse of the above signed Management Holder, if applicable, hereby executes this Agreement to acknowledge (a) the fairness of this Agreement and (b) that binding such spouse’s community interest, if any, in the Common Shares and any other securities referred to in this Agreement to the terms of this Agreement is in such spouse’s best interest.

SPOUSE OF MANAGEMENT HOLDER

By: /s/ Marin S. Lizardi
Name: Marin S. Lizardi
























Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

By: /s/ Juan Jose Román Jimenez
Name: Juan Jose Román Jimenez
The spouse of the above signed Management Holder, if applicable, hereby executes this Agreement to acknowledge (a) the fairness of this Agreement and (b) that binding such spouse’s community interest, if any, in the Common Shares and any other securities referred to in this Agreement to the terms of this Agreement is in such spouse’s best interest.

SPOUSE OF MANAGEMENT HOLDER

By: /s/ Maday A. Viera
Name: Maday A. Viera
























Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

By: /s/ Miguel Arocho
Name: Miguel Arocho






























Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

By: /s/ Marcelino Zayas
Name: Marcelino Zayas





























Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

By: /s/ Maria Gois
Name: Maria Gois
The spouse of the above signed Management Holder, if applicable, hereby executes this Agreement to acknowledge (a) the fairness of this Agreement and (b) that binding such spouse’s community interest, if any, in the Common Shares and any other securities referred to in this Agreement to the terms of this Agreement is in such spouse’s best interest.

SPOUSE OF MANAGEMENT HOLDER

By: /s/ Renzo Pilotta
Name: Renzo Pilotta























Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

By: /s/ Peter Harrington
Name: Peter Harrington





























Signature Page to Stockholder Agreement

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MANAGEMENT HOLDER

THOMAS M. WHITE 2006 TRUST

By: /s/ Thomas M. White
Name: Thomas M. White
Title: Trustee


























Signature Page to Stockholder Agreement

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EXHIBIT 4.6

DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES
EXCHANGE ACT OF 1934

In this Exhibit 4.6, when we refer to “Evertec, Inc.,” the “Company,” “we,” “us” or “our” or when we otherwise refer to ourselves, we mean Evertec, Inc., excluding, unless otherwise expressly stated or the context requires, our subsidiaries; all references to “common stock” refer only to common stock issued by Evertec, Inc. and not to any common stock issued by any subsidiary.

The general terms and provisions of our common stock are summarized below. This summary does not purport to be complete and is subject to, and is qualified in its entirety by express reference to, the provisions of our charter and amended and restated bylaws, each of which is filed as an exhibit to the Annual Report on Form 10‑K of which this Exhibit 4.6 is a part. We encourage you to read our charter and amended and restated bylaws.

Common Stock

Authorized Shares
The Company has the authority to issue 206,000,000 shares of common stock, par value $0.01 per share; and, subject to certain conditions described below, the Company has the authority to issue 2,000,000 shares of preferred stock, par value $0.01 per share.

Dividends
Any declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors (the “Board”) and will depend on many factors, including our financial condition, earnings, available cash, business opportunities, legal requirements, restrictions in our debt agreements and other contracts, capital requirements, level of indebtedness and other factors that our Board deems relevant. The covenants of our senior secured credit facilities may limit our ability to pay dividends on our common stock.

All shares of our common stock are entitled to share equally in any dividends our Board may declare from legally available sources, subject to the terms of any then outstanding preferred stock and the terms and conditions set forth in any applicable restricted stock award agreement. Provisions of our debt agreements, such as those of our senior secured credit facilities, and other contracts may impose restrictions on our ability to declare dividends with respect to our common stock.

Voting Rights
The holders of our common stock are entitled to one vote per share on each matter properly submitted to the stockholders on which the holders of shares of common stock are entitled to vote. Subject to the rights of the holders of any then-outstanding preferred stock and to the director nomination rights and associated voting agreement of the Stockholder Agreement described in “Item 1A. Risk Factors–Risks Related to Our Structure, Governance and Stock Exchange Listing,” at any annual or special meeting of the stockholders, holders of common stock shall have the exclusive right to vote for the election of directors and on all other matters properly submitted to a vote of the stockholders in accordance with the provisions of our amended and restated certificate of incorporation and amended and restated bylaws.

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Liquidation Rights
Upon liquidation or dissolution of our Company, whether voluntary or involuntary, all shares of our common stock are entitled to share equally in the assets available for distribution to stockholders after payment of all of our prior obligations, including any then-outstanding preferred stock.

Other Matters
The holders of our common stock have no preemptive rights, and our common stock is not subject to further calls or assessments by us. There are no redemption or sinking fund provisions applicable to our common stock.

Preferred Stock

Shares of preferred stock may be issued in one or more series from time to time, with each such series to consist of such number of shares and to have such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, as shall be stated in the resolution or resolutions providing for the issuance of such series adopted by the Board and included in a certificate of designations (a “Preferred Stock Designation”), and, the Board is hereby expressly vested with the authority, to the full extent now or hereafter provided by law, to adopt any such resolution or resolutions, provided that no such series of preferred may be authorized, and no such shares of preferred stock may be issued, without the prior approval of the terms of the Preferred Stock Designation and of the terms of the issuance by at least one director nominated by each Principal Stockholder whose Proportionate Percentage (as both terms are defined in the Stockholder Agreement) is 10% or more and who has the right to nominate a director pursuant to Section 2 of the Stockholder Agreement.

Certain Anti-Takeover, Limited Liability and Indemnification Provisions

Certain provisions in our amended and restated certificate of incorporation, amended and restated bylaws and Stockholder Agreement summarized below may be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or takeover attempt that a stockholder might consider to be in its best interests, including attempts that might result in a premium being paid over the market price for the shares held by stockholders.

“Blank Check” Preferred Stock
Our amended and restated certificate of incorporation authorizes our Board to issue shares of preferred stock, subject to certain conditions as described above.
No Cumulative Voting
Our amended and restated certificate of incorporation does not provide stockholders with the right to cumulative votes in the election of directors.

Director Nomination Rights; Voting Agreement; Removing Directors; Filling Vacancies
The Stockholder Agreement provides that Popular, Inc. (“Popular”), for so long as it, together with its respective affiliates, owns certain percentages of our outstanding common stock, will have the right to nominate a certain number of directors. In addition, if there are any vacancies on our Board as a result of the aggregate number of our directors that Popular has the right to nominate pursuant to the Stockholder Agreement being less than eight, then a committee consisting of our entire Board (other than any directors who are to be replaced because Popular has lost the right to nominate them) has the right to nominate the individuals to fill such vacancies, which nominees must be

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reasonably acceptable to Popular for so long as it owns, together with its affiliates, at least 5% of our outstanding common stock. Popular has agreed to vote all of the shares of our common stock owned by it and its affiliates, and to take all other actions within its control, to cause the election of directors nominated in accordance with the Stockholder Agreement. Similarly, we have agreed to take all actions within our control necessary and desirable to cause the election of directors nominated in accordance with the Stockholder Agreement. Our Stockholder Agreement further clarifies that it does not eliminate the right of stockholders holding majority of our outstanding common stock to remove any such director with or without cause or the right of any of our stockholders to nominate a person for election as a director (whether to fill a vacancy or otherwise) at any meeting of the stockholders in accordance with applicable law, our charter and amended and restated bylaws.

Stockholder Action by Written Consent
Any action required to be or that may be taken at any meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if and only if a consent in writing, setting forth the action so taken, shall be signed by all of the holders of outstanding shares entitled to vote thereon.

Advance Notice Requirements for Stockholder Proposals and Director Nominations
Our amended and restated bylaws provide that stockholders seeking to bring business before an annual meeting of stockholders, or to nominate candidates for election as directors at an annual meeting of stockholders, must provide timely notice thereof in writing. To be timely, a stockholder’s notice generally must be delivered to and received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, that, in the event that the date of such meeting is advanced more than 30 days prior to, or delayed by more than 60 days after, the anniversary of the preceding year’s annual meeting of our stockholders, a stockholder’s notice to be timely must be so delivered not earlier than the close of business on the 120th day prior to such meeting and not later than the close of business on the later of the 90th day prior to such meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Our amended and restated bylaws also specify certain requirements as to the form and content of a stockholder’s notice. The advance notice provisions set forth in our amended and restated bylaws are not applicable to (i) any directors nominated in accordance with the terms of the Stockholder Agreement and (ii) for so long as Popular, together with their respective affiliates, owns greater than 50% of our outstanding common stock, any other business included in the notice of a meeting at the request of Popular. These provisions may preclude stockholders from bringing matters before an annual meeting of stockholders or from making nominations for directors at an annual meeting of stockholders.

Additional Rights of Major Stockholders
Popular has the right, for so long as it owns, together with its affiliates, 10% or more of our outstanding common stock and has the right to nominate at least one director, the approval of at least one director nominated by Popular shall be necessary, to approve (i) any issuance of preferred stock of us or any of our subsidiaries (other than the issuance of preferred stock by one of our wholly owned subsidiaries to us or another of our wholly owned subsidiaries) and (ii) any transfer of equity in Holdings or Evertec Group, in each case subject to certain exceptions.
Popular and certain of its transferees are also entitled to information rights and inspection rights, in each case for so long as it satisfies certain ownership thresholds set forth in the Stockholder Agreement.
In addition, the Stockholder Agreement grants certain demand registration rights to Popular and certain of its transferees and piggyback registration rights to each stockholder, subject to customary cutbacks. Under the Stockholder Agreement, Evertec, Inc. has agreed to assume certain fees and expenses associated with registration.

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The Stockholder Agreement contains customary provisions with respect to registration proceedings, underwritten offerings, and indemnity and contribution rights.

Amendments to Organizational Documents
Our amended and restated certificate of incorporation provides that we have the ability to amend, alter, change or repeal any provision in our certificate of incorporation by (i) the affirmative vote of the stockholders holding at least a majority of shares of our common stock then outstanding and entitled to vote and (ii) the written consent of Popular, for so long as it, together with its respective affiliates, owns at least 20% of our outstanding common stock, and all rights, preferences and privileges set forth in our amended and restated certificate of incorporation are subject to our right to amend, alter, change and/or repeal our amended and restated certificate of incorporation. Similarly, our amended and restated certificate of incorporation and amended and restated bylaws provide that our amended and restated bylaws may be adopted, amended, altered or repealed by the Board, subject to the prior written consent of Popular, for so long as it, together with its respective affiliates, owns at least 10% of our outstanding common stock. Certain provisions of our amended and restated certificate may not be amended without the consent of various interested parties, including (a) the provisions related to the election, removal and replacement of directors (the consent of Popular is required for so long as it owns, together with its affiliates, at least 5% of our outstanding common stock), (b) the provisions related to adopting, amending and repealing our bylaws (the consent of Popular is required for so long as it owns, together with its affiliates, at least 10% of our outstanding common stock) and (c) the provisions related to the waiver of corporate opportunities (the consent of Popular is required in certain circumstances).

Limitation of Officer and Director Liability and Indemnification Arrangements
Our amended and restated certificate of incorporation and amended and restated bylaws limit the liability of our directors to the maximum extent permitted by Puerto Rico law. However, if Puerto Rico law is amended to authorize corporate action further limiting or eliminating the personal liability of directors, then the liability of our directors will be limited or eliminated to the fullest extent permitted by Puerto Rico law, as so amended. The modification or repeal of this provision of our amended and restated certificate of incorporation and amended and restated bylaws will not adversely affect any right or protection of a director existing at the time of such modification or repeal.

Our amended and restated certificate of incorporation and amended and restated bylaws provide that we will, from time to time, to the fullest extent permitted by law, indemnify our directors and officers against all liabilities and expenses in any suit or proceeding, arising out of their status as an officer or director or their activities in these capacities. We also will indemnify any person who, at our request, is or was serving as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise. We may, by action of our Board, provide indemnification to our employees and agents within the same scope and effect as the foregoing indemnification of directors and officers.

The right to be indemnified includes the right of an officer or a director to be paid expenses, including attorneys’ fees, in advance of the final disposition of any proceeding, provided that, if required by law, we receive an undertaking to repay such amount if it will be determined that he or she is not entitled to be indemnified.

Our Board may take certain action it deems necessary to carry out these indemnification provisions, including purchasing insurance policies. Neither the amendment nor the repeal of these indemnification provisions, nor the adoption of any provision of our amended and restated certificate of incorporation inconsistent with these

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indemnification provisions, will eliminate or reduce any rights to indemnification relating to such person’s status or any activities prior to such amendment, repeal or adoption.

We have entered into separate indemnification agreements with each of our non-management directors in connection with his or her appointment to the Board. These indemnification agreements will require us to, among other things, indemnify our directors against liabilities that may arise by reason of their status or service as directors. These indemnification agreements also require us to advance any expenses incurred by the directors as a result of any proceeding against them as to which they could be indemnified and to use reasonable efforts to cause our directors to be covered by any of our insurance policies providing insurance for our directors and officers. A director is not entitled to indemnification by us under such agreements if (i) the director did not act in good faith and in a manner he or she deemed to be reasonable and consistent with, and not opposed to, our best interests or (ii) with respect to any criminal action or proceeding, the director had reasonable cause to believe his or her conduct was unlawful.

Currently, to our knowledge, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification by us is sought, nor are we aware of any threatened litigation or proceeding that may result in a claim for indemnification.
 
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”) may be permitted for our directors, officers and controlling persons under the foregoing provisions or otherwise, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

We believe these provisions will assist in attracting and retaining qualified individuals to serve as directors and officers.
 





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EXHIBIT 10.5

IP PURCHASE AND SALE AGREEMENT
This IP Purchase and Sale Agreement (this “Agreement”), is entered into on June 30, 2010, by and among Popular, Inc., a Puerto Rico corporation (“Popular”), and any Affiliate(s) and/or Subsidiary(ies) of Popular identified on the signature pages hereto (each of Popular and each such Affiliate/Subsidiary, a “Seller”, and collectively, “Sellers”), and EVERTEC, Inc. a Puerto Rico corporation (“Buyer”).
WHEREAS, simultaneously with the execution of this Agreement, Popular, AP Carib Holdings, Ltd., an exempted company organized under the laws of the Cayman Islands with limited liability, Carib Acquisition, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico, and Buyer are parties to that certain Agreement and Plan of Merger, dated as of the date hereof (the “Merger Agreement”);
WHEREAS, Sellers and Buyer now desire to enter into this Agreement for the purpose of selling, conveying, assigning, transferring and delivering to Buyer the Transferred IP (defined below);
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged each Seller and Buyer hereby agree as follows:
1. Definitions. Unless otherwise defined herein, all capitalized terms used herein shall have the same meanings as set forth in the Merger Agreement. The following capitalized terms used in this Agreement shall have the meanings set forth below.
a) “Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with, such Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made.
b) “Control,” and the correlative terms “Controlling” and “Controlled,” means the possession, direct or indirect, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
c) “Effective Time” has the meaning ascribed to such term in the Merger Agreement.
d) “Government Entity” means any federal, national, supranational, state, provincial, Commonwealth of Puerto Rico, local or foreign or similar government, governmental subdivision, regulatory or administrative body or other governmental or quasi-governmental agency, tribunal, commission, court, judicial or arbitral body or other entity with competent jurisdiction, including any Government Antitrust Entity.
e) “Licensed IP” means the know-how and trade secrets (i) owned by each Seller as of the Closing Date and (ii) not subject to the assignment obligations herein, that are reasonably necessary for the use of the Transferred IP as used by Buyer prior to the Closing.
f) “Party” means any Seller or Buyer (and “Parties” means, collectively, all Sellers and Buyer).
g) “Person” means an individual, a corporation, a partnership, an association, a limited liability company, a joint venture, a Government Entity, a trust or other entity or organization.
h) “PR Code” means the Puerto Rico Internal Revenue Code of 1994, as amended, and the regulations promulgated there under.
i) “Transferred Domain Names” means those Internet domain names set forth on Schedule A.
j) “Transferred IP” means, collectively, the Transferred Domain Names, the Transferred Software, the Transferred Trademarks and the Transferred Trade Secrets.
k) “Transferred Software” means the computer software and applications (together with all source and object code forms thereof, user interfaces and documentation related thereto and all intellectual property rights (other than rights in trademarks, service marks, logos, corporate names, Internet domain names and other similar indicators of origin) therein owned by Sellers as of the Closing and set forth on Schedule B, and on Schedule B-1, to the extent agreed upon by Popular and Buyer between the date hereof and the Closing, but excluding any data therein or stored thereby.

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l) “Transferred Trade Secrets” means know how or trade secrets owned by any of the Sellers as of the Closing that were conceived or created during the course of the development or implementation of the Transferred Software.
m) “Transfer Taxes” means all federal, state, Commonwealth of Puerto Rico, local or foreign or other excise, sales, use, value added, transfer (including real property transfer or gains), stamp, documentary, filing, recordation and other similar taxes and fees that may be imposed or assessed as a result of the Agreement, together with any interest, additions or penalties with respect thereto.
n) “Transferred Trademarks” means the trademarks and the service marks listed on Schedule C attached hereto and all formative marks used by any of the Sellers as of the Closing that include or incorporate the marks listed on Schedule C , including all the registrations and applications therefor, all renewals and extensions thereof, all common law rights therein, and all goodwill associated therewith and symbolized thereby.
2. Rules of Interpretation.
a) Schedules referenced in this Agreement are deemed to be incorporated herein by reference.
b) Wherever the word “include,” “includes” or “including” is used in this Agreement, it shall be deemed to be followed by the words “without limitation.”
c) The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
d) The terms defined in the singular have a comparable meaning when used in the plural, and vice versa.
e) The terms “dollars” and “$” mean U.S. Dollars.
f) References herein to the Preamble or the Recitals or a specific Section or Schedule shall refer, respectively, to the Preamble or the Recitals or to Sections or Schedules of this Agreement.
3. Closing. Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement shall take place at the offices of Seller and be effective immediately following the Effective Time (the “Closing”).
4. Purchase & Sale.
a) As of the Closing, each Seller, individually and collectively, hereby irrevocably assigns, transfers, sells, conveys and delivers, or causes to assign, transfer, sell, convey and deliver, to Buyer, and Buyer hereby accepts the assignment, transfer, purchase, conveyance, and delivery of, all of such Sellers’ right, title and interest in and to the Transferred IP worldwide, including all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, dilution, violation or other impairment of the Transferred IP throughout the world in the name of Buyer or its designee.
b) Each Seller (as applicable) shall use commercially reasonable efforts to identify and delete or destroy all copies of source or object codes and related documentation included in the Transferred IP and in its possession and Control within thirty (30) days of the Closing (“Phase Out”). If additional time is required to complete the Phase Out, Buyer shall agree to a reasonable extension. Upon Buyer’s request, Popular will have a duly authorized representative who shall certify in writing that each Seller has completed the Phase Out. Notwithstanding anything contained herein to the contrary, no Seller shall have any obligation to delete or destroy any object code or documentation that could adversely impact its information technology systems or continuity of business or services.
5. License to the Licensed IP.
a) Subject to the terms and conditions set forth herein, each Seller hereby grants to Buyer a perpetual, fully paid-up, irrevocable, royalty-free, non-transferable, non-exclusive license to the Licensed IP, for use in its business solely in connection with the Transferred IP, to the extent and in the manner such Licensed IP had been used by Buyer in connection with its use of the Transferred IP prior to the Closing (“License”). Buyer may assign the License or sublicense any rights granted under the License, in whole or in part, to an Affiliate (“Permitted

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Assignee”), provided that such Permitted Assignee shall be and agrees to be subject to and bound by all the terms and conditions of the License and this Agreement. All sublicenses shall automatically terminate upon the termination of the License.
b) All rights in the Licensed IP not expressly granted to Buyer hereunder are reserved to each Seller applicable.
6. Limited License to the Transferred Trademarks for Phase Out.
a) On the terms and conditions set forth herein, Buyer hereby grants to each Seller a fully paid-up, royalty- free, non-exclusive license (i) for a period of up to ninety (90) days after the Closing, to use and deplete any existing inventory of brochures, stationery, labels, business cards, forms, promotion and advertising materials, signage or any other materials (collectively, “Materials”) that are in possession of Purchaser as of the Closing and bear the Transferred Trademarks or Transferred Domains; and (ii) for a period of up to fifteen (15) days after the Closing to continue to use the Transferred Trademarks on any Internet website of Purchaser solely in a manner consistent with how such Transferred Trademarks were used on such Internet website as of the Closing (“Authorized Use”). Any and all Authorized Use hereunder shall be subject to Buyer’s reasonable direction and control (“Quality Standards”). Sellers, individually and collectively, agree to comply with the Quality Standards and correct, its use to conform to the Quality Standards as may be reasonably requested by Buyer.
b) Except as authorized under any other agreement between any Seller and Buyer, if after ninety (90) days, there still exists any Materials bearing the Transferred Trademarks or Transferred Domains, the Seller shall destroy the same and shall provide Buyer with an officer’s certificate attesting that such destructions has taken place.
c) All rights in the Transferred Trademarks and Transferred Domains not expressly granted to Sellers hereunder are reserved to the Buyer.
7. IP Purchase Price. On the terms set forth herein, in consideration for the sale, assignment and transfer of the Transferred IP, and the transactions contemplated by this Agreement, Buyer shall purchase the Transferred IP for an aggregate purchase price of $45,000,000 in cash (the “IP Purchase Price”). On the date of the Closing, Buyer shall deliver to Popular the IP Purchase Price by wire transfer of immediately available funds to such bank account of Popular as Popular shall designate in writing to Buyer at least three days prior to the Closing.
8. Covenant of Popular. Popular shall take such actions necessary to further the intents and purposes of this Agreement, including causing Popular Auto, Inc., Popular Insurance, Inc., Popular Mortgage, Inc. and Banco Popular de Puerto Rico to grant the rights granted hereunder and fully perform the obligations set forth herein in accordance with this Agreement’s terms and conditions as if all such entities were direct parties hereto.
9. Due Authorization. Each Seller hereby authorizes and requests the Commissioner of Patents of the United States, the Commissioner of Trademarks of the United States, the Register of Copyrights of the United States and any other official of any applicable government entity worldwide, to record all registrations and applications for registration included in the Transferred IP in the name of Buyer, and issue any and all registrations from any and all applications for registration included in the Transferred IP to and in the name of Buyer.
10. Disclaimer of Representations and Warranties. BUYER HEREBY ACKNOWLEDGES THAT SELLERS MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, OTHER THAN THOSE EXPRESSLY CONTAINED IN THIS AGREEMENT AND/OR THE MERGER AGREEMENT. WITHOUT LIMITING THE FOREGOING, SELLERS EXPRESSLY DISCLAIM ALL EXPRESS AND IMPLIED WARRANTIES UNDER THIS AGREEMENT, INCLUDING WARRANTIES OF FREEDOM FROM ERRORS, MERCHANTABILITY, FITNESS FOR USE OR A PARTICULAR PURPOSE, SUITABILITY, TITLE, AND NON- INFRINGEMENT. THE TRANSFERRED IP AND THE LICENSED IP IS PROVIDED TO BUYER UNDER THIS AGREEMENT ON AN “AS IS” BASIS. NOTHING CONTAINED HEREIN SHALL LIMIT THE REPRESENTATIONS AND WARRANTIES IN THE MERGER AGREEMENT.
11. Transfer Taxes. All Transfer Taxes that may be imposed or assessed as a result of the Agreement shall be borne 100% by the Sellers. The Sellers and the Buyer shall cooperate to minimize any Transfer Taxes.
12. Amendment; Waiver. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by each Seller and Buyer, or in the case of a waiver, by the Party against whom the waiver is to be effective. No failure or delay by any Party in

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exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
13. Further Assurances. Sellers and Buyer agree to execute such further documentation and perform such further actions, including any actions or documents required by the applicable Governmental Entity or other authority to document or record the assignment herein or as may be necessary to protect, secure and vest good, valid and marketable title to the Transferred IP in Buyer and to effect the assignment of the Transferred IP. Sellers shall also provide to Buyer any customary instruments of transfer, assumptions, filings or documents, in form and substance reasonably satisfactory to Buyer, as may be required to give effect to this Agreement.
14. Governing Law; Submission to Jurisdiction; Selection of Forum; Waiver of Trial by Jury. Except for the mechanics of the Merger that shall be governed and construed in accordance with the Commonwealth Law, this Agreement shall be governed and construed in accordance with the laws of Delaware, in each case without regard to any conflict of law rules of the Commonwealth or Delaware, as the case may be, that would apply the laws of a different jurisdiction. Each Party agrees that it shall bring any action or Legal Proceeding in respect of any claim arising out of or related to this Agreement or the Transactions or involving any Related Released Party or any Related Released Party of a Related Released Party, exclusively in any federal court located in the State of Delaware or any Delaware state court (the “Chosen Courts”), and solely in connection with claims arising under this Agreement or the Transactions or involving any Related Released Party or any Related Released Party of a Related Released Party (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action or Legal Proceeding in the Chosen Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any Party or Related Released Party or any Related Released Party of a Related Released Party and (iv) agrees that service of process upon such Party in any such action or Legal Proceeding shall be effective if notice is given in accordance with Section 9.2 of the Merger Agreement. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION PERMITTED UNDER THIS SECTION 14. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.
15. Interpretation. This Agreement is intended to implement the provisions of the Merger Agreement, is expressly subject to the terms and conditions thereof, and shall not be construed to enhance, extend or limit the representations and warranties, rights, obligations or remedies of any party thereunder. In case of any conflict between the terms and conditions of this Agreement and the terms and conditions of the Merger Agreement, the terms and conditions of the Merger Agreement shall govern.
16. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.
17. Headings. The heading references herein are for convenience purposes only, and shall not be deemed to limit or affect any of the provisions hereof.
18. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (i) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (ii) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction; provided, however, if any

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one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be reformed by limiting and reducing it to the minimum extent necessary, so as to be enforceable to the extent compatible with the applicable Law.
19. No Assignment or Benefit to Third Parties. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, legal representatives and permitted assigns. No Party may assign any of its rights or delegate any of its obligations under this Agreement without the prior written consent of each other Party, except as provided in Section 19, and any purported assignment or delegation in violation hereof shall be null and void; provided, however, that (i) Buyer shall be permitted, without the consent of Popular, to assign any of its rights and obligations under this Agreement to any of its Subsidiaries or Affiliates or to any financing source for security purposes, provided that, notwithstanding any such assignment, Buyer shall remain responsible for all of its obligations pursuant to this Agreement. Nothing in this Agreement, express or implied, is intended to confer upon any Person other than Buyer and their respective successors, legal representatives and permitted assigns any rights or remedies under or by reason of this Agreement.
20. Any obligation of any Party to any other Party under this Agreement, or any of the Ancillary Agreements, which obligation is performed, satisfied or fulfilled completely by an Affiliate of such Party, shall be deemed to have been performed, satisfied or fulfilled by such Party.

[Remainder of page intentionally left blank]





















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IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by its duly authorized representative.

POPULAR, INC

By: /s/ Jorge A. Junquera
Name: Jorge A. Junquera
Title: Senior Executive Vice President


EVERTEC, INC

By: /s/ Felix M. Villamil
Name:
Title:











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EXHIBIT 10.7

This Amended and Restated Master Service Agreement (the “Master Agreement”) is made as of this September 30, 2010, among POPULAR, INC. (“Popular” or “COMPANY”), a corporation organized and existing under the laws of the Commonwealth of Puerto Rico, BANCO POPULAR DE PUERTO RICO (“BPPR” and, together with Popular, “Popular Parties”), a bank organized and existing under the laws of the Commonwealth of Puerto Rico, and EVERTEC, INC., a corporation organized and existing under the laws of the Commonwealth of Puerto Rico, and its Subsidiaries (hereinafter referred to as “EVERTEC”).

WITNESSETH

WHEREAS, COMPANY, acting through its Subsidiaries, is a financial services provider based in Puerto Rico with operations in Puerto Rico, the United States and the Caribbean; and

WHEREAS, EVERTEC is in the business of, among other things, providing data processing, application processing, check imaging, transmission, telecommunications, credit and debit card transaction processing, and related operational, technical, and consulting services, and such other services as the parties hereto may agree to from time to time;

WHEREAS, Popular and EVERTEC previously entered into a Master Service Agreement on April 1, 2010 (the “2010 MSA”); and

WHEREAS, the parties desire to amend and restate the 2010 MSA in order to validate the services under the 2010 MSA, as well as provide for certain changes and additions to such services and revisions to the terms of the 2010 MSA;

NOW THEREFORE, in consideration of the payments to be made and services to be performed hereunder, upon the terms and subject to the conditions set forth in this Master Agreement and intending to be legally bound, the parties hereto agree to the following terms and conditions:

ARTICLE ONE – GENERAL PROVISIONS

1.1.
Definitions. Capitalized terms not otherwise defined herein will have the meanings set forth in this Section 1.1:
a)
“Affiliate” means, with respect to any Person, any other Person, directly or indirectly, through one or more intermediaries, Controlling, Controlled by, or under common Control with, such Person. Notwithstanding the foregoing,(i) with respect to Apollo, the term “Affiliate” shall (x) include any investment fund with respect to which Apollo Global Management LLC or its Controlled Affiliates (including its and their respective successors) are the sole or, if not sole, primary investment managers and, subject to clause (y) below, each of their Subsidiaries and (y) not include portfolio companies of Apollo Global Management LLC or its Controlled Affiliates and, (ii) with respect to Popular (to the extent that at the time of determination it is engaged in a private equity or similar business), the term “Affiliate” shall not include portfolio companies of Popular or its Controlled Affiliates.
b)
“Agreement and Plan of Merger” means the Agreement and Plan of Merger, dated June 30, 2010, among Popular, AP Carib Holdings Ltd., Carib Acquisition, Inc., and EVERTEC, as it may be amended, restated or supplemented from time to time.
c)
“Apollo” means AP Carib Holdings, Ltd., an exempted company organized under the laws of the Cayman Islands.
d)
“Asset Acquirer” has the meaning set forth in Section 1.5(c).
e)
“Assignee Sub” has the meaning set forth in Section 1.5(b).
f)
“Authorized Locations” means the data centers and other locations owned or leased by EVERTEC, or COMPANY, BPPR, or one of their respective Subsidiaries, as the same may be amended from time to time, for providing the Services and/or maintaining, processing, or storing Company Data under this Master Agreement.
g)
“Banking Affiliate Restrictions” shall mean the restrictions imposed upon the Banking Affiliates by the provisions of Section 23A and Section 23B of the Federal Reserve Act, and by Regulation W of the Federal Reserve Board, as amended from time to time.

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h)
“Banking Affiliate” shall refer to any banking institution, including its respective subsidiaries, that is an affiliate of EVERTEC for purposes of Section 23A and Section 23B of the Federal Reserve Act and Regulation W of the Federal Reserve Board, as amended from time to time.
i)
“beneficially owned”, “beneficial ownership” and similar phrases have the same meanings as such terms have under Rule 13d-3 (or any successor rule then in effect) under the Exchange Act, except that in calculating the beneficial ownership of any Person, such Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire, whether such right is currently exercisable or is exercisable upon the occurrence of a subsequent event. Notwithstanding the foregoing, no Person (the “Initial Person”) shall be deemed to beneficially own any securities beneficially owned by another Person who is not an Affiliate of such Initial Person (the “Other Person”) (disregarding solely for the purposes of determining securities beneficially owned by such Other Person, (i) application of this sentence to any securities that have been Transferred (other than in the form of a pledge, hypothecation or similar grant of a security interest only and which shall not involve the grant of a proxy or other right with respect to the voting of such securities) to such Other Person in compliance with the Stockholder Agreement or other applicable Group Agreement and (ii) any Group Securities with respect to such Other Person), including, without limitation, another Holder that is not an Affiliate of such Initial Person.
j)
“Best Efforts” means the efforts that a prudent Person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved in the time period expressly contemplated or, in the absence of an expressly contemplated time period, in such time period as applicable, in accordance with historical practices and, to the extent there are no historical practices, within a commercially reasonable time period.
k)
“Business Continuity/Disaster Recovery Plan” means the processes, preventive arrangements and measures taken by a party to be able to respond to an Event in order to be able to recuperate and continue offering its services.
l)
“Business Day” will be each day from Monday through Friday, except for Legal Holidays.
m)
“Client” shall mean any person or entity who establishes or maintains a contractual relationship with COMPANY, BPPR, or one of their respective Subsidiaries for obtaining any service or product offered by EVERTEC and/or COMPANY, BPPR, or one of their respective Subsidiaries.
n)
“Common Shares” means the common stock of EVERTEC, par value $1.00 per share (or the common stock of any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries).
o)
“Company Data” means data, records and information of Company, BPPR or one of their respective Subsidiaries that is maintained or processed by EVERTEC, including all Customer Information.
p)
“Confidential Information” means all confidential or proprietary data, information, know-how and documentation not generally known to the public and any and all tangible embodiments thereof, including but not limited to, that which relates to business plans, financial information and projections, agreements with Third Parties, drawings, designs, specifications, estimates, blueprints, plans, data, reports, models, memoranda, notebooks, notes, sketches, artwork, mock-ups, letters, manuals, patents, patent applications, trade secrets, research, products, services, suppliers, customers, markets, software, developments, inventions, processes, technology, Intellectual Property, engineering, hardware configuration, marketing, operations, pricing, distribution, licenses, budgets or finances, and copies of all or portions thereof which in any way related to the business of EVERTEC, or of COMPANY, BPPR, or one of their respective Subsidiaries, as the case may be, whether or not disclosed, designated or marked as proprietary, confidential or otherwise. Confidential Information will include EVERTEC’s physical security systems, access control systems, and specialized recovery equipment and techniques. Confidential Information will include the Customer Information and Company Data of COMPANY, BPPR, or one of their respective Subsidiaries.
q)
“Control Acquirer” has the meaning set forth in Section 1.31(a).
r)
“Control,” and its correlative meanings, “Controlling,” and “Controlled,” means the possession, direct or indirect, or the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
s)
“CPI” means the All Items Consumer Price Index All Urban Consumers, U.S. City Average (1982-84 – 100), which is published by the U.S. Department of Labor, Bureau of Labor Statistics.

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t)
“Disaster Recovery Service Addendum” means the Disaster Recovery Service Addendum, dated as of the date hereof, among Popular, BPPR and EVERTEC, as it may amended, restated or supplemented from time to time.
u)
“Drag-Along Transaction” has the meaning set forth in Section 4(d)(i) of the Stockholder Agreement.
v)
“Dragged Asset Sale” has the meaning set forth in Section 4(d)(vii) of the Stockholder Agreement.
w)
“Encumbrances” means any direct or indirect encumbrances, lien, pledge, security interest, claim, charges, option, right of first refusal or offer, mortgage, deed of trust, easement, or any other restriction or third party right, including restrictions on the right to vote equity interests.
x)
“Event” means any event that requires a party to put into effect its Business Continuity/Disaster Recovery Plan.
y)
“EVERTEC Change of Control” means, with respect to EVERTEC, any:
(i) merger, consolidation or other business combination of EVERTEC (or any Subsidiary or Subsidiaries that alone or together represent all or substantially all of EVERTEC’s consolidated business at that time) or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries that results in the stockholders of EVERTEC (or such Subsidiary or Subsidiaries) or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries or the surviving entity thereof, as applicable, immediately before the consummation of such transaction or a series of related transactions, holding, directly or indirectly, less than 50% of the voting power of EVERTEC (or such Subsidiary or Subsidiaries) or any such successor, other entity or surviving entity, as applicable, immediately following the consummation of such transaction or series of related transactions; provided that this clause shall not be deemed applicable to any merger, consolidation or other business combination, if, as a result of any such merger, consolidation or other business combination, no Person or Group of Persons that had not had “control” of EVERTEC immediately prior to such transaction, as such term is defined under the Bank Holding Company Act of 1956, shall have obtained such “control”;
(ii) Transfer (other than in the form of a pledge, hypothecation or similar grant of a security interest only and which shall not involve the grant of a proxy or other right with respect to the voting of such equity), in one or a series of related transactions, of equity representing 50% or more of the voting power of EVERTEC (or any Subsidiary or Subsidiaries that alone or together represent all or substantially all of EVERTEC’s consolidated business at that time) or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries to a Person or Group of Persons (other than a Transfer of such equity to Apollo Global Management LLC, Popular, any Permitted Ultimate Parent, or their respective Controlled Affiliates);
(iii) transaction in which a majority of the board of directors or equivalent governing body of EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries) immediately following or as a proximate cause of such transaction is comprised of persons who were not members of the board of directors or equivalent governing body of EVERTEC (or such successor or other entity) immediately prior to such transaction (or are not nominated by Apollo Global Management LLC, Popular, any Permitted Ultimate Parent or their respective Controlled Affiliates) except, (X) resulting from the compliance, at the time of an initial public offering of either Holdco or EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries), with the listing requirements, listed company manual or similar rules or regulations of the securities exchange on which Holdco’s or EVERTEC’s (or such successor’s or other entity’s), as the case may be, equity securities will be listed pursuant to such initial public offering, (Y) if a majority of such board of directors is not “independent” under the rules of the applicable securities exchange on the date following such initial public offering upon which Holdco or EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries), as the case may be, first ceases to be a “controlled company” (or similar status) under the rules and regulations of such exchange, resulting from compliance with the rules and regulations of such exchange that first apply upon Holdco or EVERTEC (or such successor’s or other entity’s), as the case may be, ceasing to be a “controlled company” (or similar status), or (Z) the loss of directors of EVERTEC pursuant to Section 2 of the Stockholder Agreement (as in effect on the date hereof or as may be amended with the approval of Popular and BPPR) that does not result in another Person or Group of Persons having the right or ability to appoint a majority of the board of directors or equivalent governing body of Holdco or EVERTEC (or any successor or other entity holding all or

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substantially all the assets of EVERTEC and its Subsidiaries) as a result of such transaction; provided that, for the avoidance of doubt, this clause (Z) shall only apply to the resignation and initial replacement of such directors and not to any subsequent replacement of such directors (whether in connection with another transaction or otherwise); or
(iv) sale or other disposition in one or a series of related transactions of all or substantially all of the assets of EVERTEC and its Subsidiaries (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries) to a Person who is not an Affiliate of EVERTEC at such time.
z)
“Exchange Act” means the Securities Exchange Act of 1934.
aa)
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System.
bb)
“FFIEC” means the Federal Financial Institutions Examination Council.
cc)
“Force Majeure” means causes beyond a Person’s reasonable control, including, but not limited to, acts of God, acts of civil or military authority, war, terrorism, civil commotion, governmental action, explosion, strikes, labor disputes, riots, sabotage, epidemics, fires, floods, hurricanes, earthquakes, or other similar events or disasters.
dd)
“Governmental Authority” means the government or any agency thereof, of any nation, state, commonwealth (including the Commonwealth of Puerto Rico), city, municipality or political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to the government that have regulatory, supervisory, and/or examination authority with respect to COMPANY, BPPR, or one of their respective Subsidiaries and/or of EVERTEC with respect to the matters covered by the Services or their respective operations or financial condition, any quasi governmental entity or arbitral body, any SRO and any applicable stock exchange.
ee)
“Group Agreement” means any agreement governing the acquisition, holding, voting or disposition of securities of a Person; provided, that, so long as Apollo or a subsequent Permitted Controlling Holder is an Affiliate of such Person, such Person is a party to such agreement.
ff)
“Group of Persons” means a group of Persons that would constitute a “group” as determined pursuant to Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
gg)
“Group Securities” means any securities beneficially owned by a Person solely as a result of the Stockholder Agreement or any other Group Agreement and, for the avoidance of doubt, which securities have not been Transferred to such Person or any of its Controlled Affiliates.
hh)
“Holdco Common Shares” means the common stock of Holdco, par value $0.01 per share.
ii)
“Holdco” means Carib Holdings, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico.
jj)
“Holders” means the holders of Holdco Common Shares who are parties to the Stockholder Agreement as set forth in Schedule I thereto, as the same may be amended or supplemented from time to time.
kk)
“Indebtedness” means, with respect to any Person, (a) all indebtedness of such Person, whether or not contingent, for borrowed money, and (b) all obligations of such Person evidenced by notes, bonds, debentures or other similar debt instruments.
ll)
“Initial Person” has the meaning set forth in the definition of “beneficially owned”.
mm)
“Intellectual Property” means any and all trademarks, service marks, copyrights, patents, trade secrets, commercial and/or internet domain names, software, source codes, contract forms, client lists, marketing surveys or other information, the names, features, designs, functionalities and other specifications related to the names of products or services developed or used or that may hereafter be developed offered or sold by any of the parties, and programs, methods of processing, specific design and structure of individual programs and their interaction and unique programming techniques employed therein.
nn)
“Jurisdiction” has the meaning set forth in Section 1.5(b).
oo)
“Legal Holiday” means Saturday, Sunday or any federal and/or local legal holiday in the Commonwealth of Puerto Rico that is observed by EVERTEC, except as otherwise provided in the Service Level Agreement, a Service Addendum, or as agreed to in writing between the parties.

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pp)
“Legal Requirements” mean any applicable federal, state, Puerto Rico, local, municipal, foreign, international, multinational, or other administrative order, constitution, law, ordinance, principle of law, regulation, statute, guidance or treaty issued by a Governmental Authority, and any standards or guidance issued by the FFIEC.
qq)
“Loss(es)” means losses, liabilities, claims, damages, fines, expenses, penalties, interest expense, costs and fees and disbursements (including reasonable legal counsel and experts’ fees and disbursements), net of any amounts recovered with respect thereto under insurance policies covering any liability thereof if and to the extent applicable in each case, individually or collectively.
rr)
“Material Adverse Effect” means, with respect to any Person, any fact, event, change, effect, development, condition or occurrence that has a materially adverse effect on or with respect to any business, assets, liabilities, financial condition, or results of operations of such Person.
ss)
“Merger IP Licenses” has the meaning set forth in Section 1.26.
tt)
“Non-Controlled Public Entity” means a Person which has equity securities listed on national stock exchange and which Person’s Affiliates do not beneficially own securities representing the majority of the voting power to elect the members of the board of directors or other governing body of such Person.
uu)
“Other Person” has the meaning set forth in the definition of “beneficially owned”.
vv)
“Outsourced Processing Contracts” means the agreement(s) pursuant to which (i) Metavante Technologies, Inc. (or its successor, Fidelity National Information Services, Inc.) provides core bank processing services to Banco Popular North America and (ii) Total Systems Services, Inc. provides credit card processing services to BPPR.
ww)
“Permitted Assignment” means a Permitted Subsidiary Assignment or a Permitted Third-Party Assignment.
xx)
“Permitted Controlling Holder” means a Person that (i) beneficially owns equity securities representing a majority of the voting power to elect the directors of EVERTEC or (ii) any successor or any other entity holding all or substantially all of the assets of EVERTEC and its Subsidiaries in a transaction or series of transactions, in each case, without contravening Section 1.5 or without Popular or BPPR validly exercising their termination right pursuant to Section 1.31 provided that such Person shall be a “Permitted Controlling Holder” only with respect to the applicable entity that issues such securities.
yy)
“Permitted Subsidiary Assignment” means an assignment by EVERTEC of any of its rights, duties or obligations under this Master Agreement to an Assignee Sub in compliance with the provisions of Section 1.5.
zz)
“Permitted Third-Party Assignment” means an assignment by EVERTEC of all its rights, duties and obligations under this Master Agreement to an Asset Acquirer in compliance with the provisions of Section 1.5.
aaa)
“Permitted Ultimate Parent” means with respect to a Permitted Controlling Holder, its Ultimate Parent Entity.
bbb)
“Person” means any individual, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, Governmental Authority or other entity of any kind, and will include any assignee and/or successor (by merger or otherwise) of such entity in connection therewith.
ccc)
“Popular Parties Change of Control” means, with respect to Popular and/or BPPR, the acquisition, by a non-Affiliate of the Popular Parties, of (i) more than fifty percent (50%) of the voting power of Popular and/or BPPR, as the case may be or (ii) the legal power to designate a majority of the board of directors (or other persons performing similar functions) of Popular and/or BPPR, as the case may be.
ddd)
“Region” means Puerto Rico, the U.S. Virgin Islands and the British Virgin Islands.
eee)
“Representative” means with respect to a particular Person, any director, officer, partner, member, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.

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fff)
“Services” means any service contracted from EVERTEC by COMPANY, BPPR, or one of their respective Subsidiaries under this Master Agreement, including any System used therewith.
ggg)
“Solvent” with regard to any Person, means that (i) the sum of the assets of such Person, both at a fair valuation and at a present fair salable value, exceeds its liabilities, including contingent, subordinated, unmatured, unliquidated, and disputed liabilities; (ii) such Person has sufficient capital with which to conduct its business; and (iii) such Person has not incurred debts beyond its ability to pay such debts as they mature. For purposes of this definition, “debt” means any liability on a claim, and “claim” means (x) a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) a right to an equitable remedy for breach of performance to the extent such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. With respect to any such contingent liabilities, such liabilities shall be computed at the amount which, in light of all the facts and circumstances existing at the time, represents the amount which can reasonably be expected to become an actual or matured liability.
hhh)
“SPV Affiliate” means with respect to any Person, any Affiliate of such Person, whose direct or indirect interest in the Common Shares constitutes more than 30% (by value) of the equity securities portfolio of such Affiliate.
iii)
“SRO” means any domestic or foreign securities, broker-dealer, investment adviser or insurance industry self-regulatory organization.
jjj)
“Stockholder Agreement” means the Stockholder Agreement among Carib Holdings, Inc. and the holders party thereto dated September 30, 2010.
kkk)
“Subsidiary” means, with respect to any Person, any corporation, association, partnership, limited liability company or other business entity of which 50% or more of the total voting power or equity interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by (a) such Person, (b) such Person and one or more Subsidiaries of such Person, or (c) one or more Subsidiaries of such Person.
lll)
“System” means any hardware, software, technology, applications, or combination thereof used by EVERTEC to provide the Services.
mmm)
“Technology Agreement” means the Technology Agreement to be entered into by EVERTEC and Popular as of the date hereof.
nnn)
“Third Party” means any Person that is not a party to this Master Agreement and is not an Affiliate of any party to this Master Agreement.
ooo)
“Transfer” means any direct or indirect sale, assignment, transfer, conveyance, gift, bequest by will or under intestacy laws, pledge, hypothecation or other Encumbrance, or any other disposition, of the stated security (or any interest therein or right thereto, including the issuance of any total return swap or other derivative whose economic value is primarily based upon the value of the stated security) or of all or part of the voting power (other than the granting of a revocable proxy) associated with the stated security (or any interest therein) whatsoever, or any other transfer of beneficial ownership of the stated security, with or without consideration and whether voluntarily or involuntarily (including by operation of law). Notwithstanding anything to the contrary set forth in this Master Agreement, (i) each of (x) a Transfer of equity interests of Popular and (y) a Change of Control of Popular shall be deemed not to constitute a Transfer of any equity interest beneficially owned by Popular; (ii) each of (x) a Transfer of equity interests of Apollo Global Management LLC or any of its Controlled Affiliates that is not an SPV Affiliate, and (y) a Change of Control of Apollo Global Management LLC or any of its Controlled Affiliates that is not an SPV Affiliate shall be deemed not to constitute a Transfer of any equity interest beneficially owned by Apollo or such Affiliate, as applicable; and (iii) each of (x) a Transfer of equity interests of any Permitted Ultimate Parent or any of its Controlled Affiliates that is not an SPV Affiliate, and (y) a Change of Control of any Permitted Ultimate Parent or any of its Controlled Affiliates that is not an SPV Affiliate shall be deemed not to constitute a Transfer of any security beneficially owned by such Permitted Ultimate Parent Entity or such Controlled Affiliate, as applicable; provided that, for the avoidance of doubt, subject to

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clause (i) above, any Change of Control of an SPV Affiliate shall be deemed to constitute a Transfer of the Common Shares beneficially owned by such SPV Affiliate.
ppp)
“Ultimate Parent Entity” means (i) with respect to Apollo, Apollo Global Management LLC and its successors,(ii) with respect to Popular, Popular and its successors and (iii) with respect to a Permitted Controlling Holder, (x) the Person which (A)(i) Controls such Permitted Controlling Holder or (ii) if no Person Controls such Permitted Controlling Holder, the beneficial owner of a majority of the voting power of such Permitted Controlling Holder and (B) is not itself Controlled by any other Person that is an Ultimate Parent Entity of such Permitted Controlling Holder or (y) if no such Person exists, the Permitted Controlling Holder; provided that, with respect to determining an Ultimate Parent Entity (i) the Control of any entity by a natural person shall be disregarded and (ii) the Control of any Non-Controlled Public Entity by any Person shall be disregarded.
1.2.
Survival. Provisions relating to limitation of liability, indemnity, payment, transition services and other provisions that by their nature are intended to survive shall survive the termination or expiration of this Agreement.
1.3
Relationship between the Parties. The parties hereto are independent contractors, and this Master Agreement will not be construed in any way as establishing a partnership, joint venture, or express or implied agency relationship between or among them.
1.4
Non-Exclusive. Except as otherwise set forth herein or agreed to by the parties in writing, the parties hereto acknowledge that this Master Agreement is not exclusive and nothing contained herein will be construed to create an exclusive relationship between EVERTEC, on the one hand, and COMPANY, BPPR, or any of their respective Subsidiaries, on the other. As such, EVERTEC will not be limited in entering into similar agreements with other Persons to provide the same or similar services.
1.5
Assignment.
a)
Other than a Permitted Assignment pursuant to Section 1.5(b) or (c), this Master Agreement may not be assigned by any party without the prior written consent of the other parties; provided, that any party may assign its rights, duties and obligations under this Master Agreement to its financing sources solely in connection with the granting of a security interest and the enforcement of all rights and remedies that the assigning party has against the other party under this Master Agreement, subject to the claims, defenses and rights, including rights of set off, that such other party may have against the assigning party.
b)
Assignment to Subsidiaries. EVERTEC may assign any of its rights, duties or obligations to a direct or indirect wholly- owned Subsidiary of EVERTEC (an “Assignee Sub”) if (i) such Assignee Sub is identified by EVERTEC to Popular and BPPR at least 20 Business Days prior to the consummation of the proposed assignment; (ii) (A) such proposed assignment is legally required in order for EVERTEC to provide to Popular, BPPR or their respective Subsidiaries, in the country, state, territory or other jurisdiction (“Jurisdiction”) in which the Assignee Sub is organized, the specific services to be performed pursuant to the assignment of this Master Agreement, and only (x) to the extent of such legal requirement and (y) if EVERTEC provides a written opinion of qualified counsel that opines that such legal requirement is applicable and is based upon reasonable assumptions with respect to such legal requirement or (B) Popular has provided its prior written consent, such consent not to be unreasonably delayed, withheld or conditioned; (iii) such Assignee Sub will be Solvent immediately after and giving effect to such proposed assignment and Popular is reasonably satisfied with the terms and conditions of the proposed assignment; (iv) Popular is a third-party beneficiary to the assignment agreement, which is in form and substance that is reasonably satisfactory to Popular, and which provides that the Assignee Sub’s rights under the assignment agreement will be terminated if the Assignee Sub ceases to be a wholly-owned Subsidiary, directly or indirectly, of EVERTEC and (v) EVERTEC remains fully liable with respect to the performance of all its obligations under this Master Agreement and EVERTEC guarantees the performance of all of the obligations of EVERTEC to Popular assumed by Assignee Sub under this Master Agreement, which guarantee provides that, for the avoidance of doubt, after any termination of the proposed assignment, EVERTEC shall continue to be obligated with respect to any obligation undertaken by Assignee Sub prior to such termination.
c)
Assignment to Third Parties. EVERTEC may assign all of its rights, duties and obligations (or those rights, duties and obligations arising after the effectiveness of the assignment) in a transaction with a third-party assignee (an “Asset Acquirer”) if (i) such Asset Acquirer is identified by EVERTEC to Popular and BPPR at least 30 Business Days prior to the consummation of the proposed assignment; (ii) such Asset Acquirer (A) acquires at least 90% of the consolidated gross assets (excluding cash) of EVERTEC and its Subsidiaries and (B) assumes at least 90% of the consolidated gross liabilities (excluding Indebtedness) of EVERTEC

7


and its Subsidiaries (including the assignment and assumption of all commercial agreements between EVERTEC or any of its Subsidiaries, on the one hand, and Popular, BPPR or any of their respective Subsidiaries, on the other hand) through one legal entity; (iii) neither the Asset Acquirer nor any of its Affiliates is engaged, directly or indirectly, in the banking, securities, insurance or lending business, from which they derive aggregate annual revenues from Puerto Rico in excess of $50 million unless none of them has a physical presence in Puerto Rico that is used to conduct any such business; (iv) the Asset Acquirer will be Solvent immediately after and giving effect to such proposed assignment; and (v) EVERTEC reasonably believes that the Asset Acquirer, after completion of the proposed purchase and assumption transaction, will be capable of providing the Services at the level of service required under this Master Agreement.
d)
Cooperation. EVERTEC shall use its reasonable best efforts to cooperate with Popular and BPPR in evaluating whether any proposed assignment pursuant to this Section 1.5 would be in compliance with the requirements of the provisions contained in this Section 1.5, including the ability of Assignee Sub or Asset Acquirer, as applicable, to comply with the terms of this Master Agreement, including, in each case, by providing any non-confidential information regarding the purposes and plans in connection with such proposed assignment other than information that would create any potential liability under applicable Legal Requirements, violate any confidentiality obligation, or that reasonably would be expected to result in the waiver of any attorney-client privilege.
e)
Notice of Objection. Popular or BPPR shall notify EVERTEC in writing within 15 Business Days following receipt of EVERTEC’s notice of the proposed assignment of any objection to any proposed assignment to an Asset Acquirer under Section 1.5(c) unless EVERTEC has failed to satisfy its obligations pursuant to Section 1.5(d) and Popular or BPPR asserts such failure prior to the expiration of the 15 Business Day objection period, in which case such 15 Business Day period shall be tolled until EVERTEC satisfies its obligations pursuant to Section 1.5(d). If BPPR or Popular fails to timely object to such proposed assignment (taking into account any tolling of the 15 Business Day objection period), it shall be deemed to have consented to such proposed assignment.
f)
Implied Consent. Notwithstanding anything contained herein, if Popular, BPPR or any of their respective Controlled Affiliates votes in favor of a transaction resulting in a proposed assignment and was not compelled to do so as part of a Dragged Asset Sale or other requirement of the Stockholder Agreement or any other Group Agreement with respect to securities issued by Holdco or EVERTEC or any successor or other entity that acquired all or substantially all the assets of Holdco or EVERTEC or any of their respective successors then it shall be deemed to have consented to the assignment.
g)
Invalidity of Impermissible Assignments. Any attempted or purported assignment in violation of this Section 1.5 hereof shall be null and void and the assignee’s rights assigned pursuant to any assignment made in compliance with this Section 1.5 will terminate in the event and to the extent of the termination of this Master Agreement.
h)
BPPR Asset Transfer. If BPPR or any of its Subsidiaries transfers, in a single transaction or series of related transactions (including in a merger, business combination, reorganization, or similar transaction (including by operation of law)) 50% or more of BPPR’s consolidated assets in the Region as of the time of transfer, or assets that generate 50% or more of BPPR’s consolidated revenues in the Region for the full twelve-month period ending at the time of transfer, to any Person, then BPPR shall assign (or cause its applicable Subsidiaries to assign) to such Person its rights, duties and obligations under this Master Agreement in respect of the Services provided to the applicable transferors and shall cause such Person to assume its liabilities under this Master Agreement in respect of the Services provided to the applicable transferor. For the avoidance of doubt, no such assignment shall relieve Popular, BPPR or any of their respective Subsidiaries of their obligations under this Master Agreement to the extent Popular, BPPR or any of their respective Subsidiaries survive any such sale of assets, merger, business combination, reorganization, or similar transaction.
1.6.
Plural, Successors, Assignees, Gender, Days. Unless the context of this Master Agreement clearly requires otherwise, references to the plural include the singular and vice versa; references to any Person include such Person’s permitted successors and assignees; references to one gender, masculine, feminine, or neuter, include all genders; the term “day” refers to a calendar day, “including” is not limited but is inclusive; and the words “hereof”, “herein”, “hereby”, “hereunder” and similar terms in this Master Agreement refer to this Master Agreement as a whole and not to any

8


particular provision of this Master Agreement, article, paragraph, section, and/or a subsection, unless otherwise specified.
1.7.
Binding Effect. This Master Agreement and all the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. The parties hereto intend that this Master Agreement will not benefit or create any right or cause of action in, or on behalf of, any Person other than the parties hereto.
1.8.
No Third Party Beneficiaries. Each party intends that this Master Agreement will not benefit, or create any right or cause of action in or on behalf of, any Person other than COMPANY, BPPR, and their respective Subsidiaries, and EVERTEC.
1.9.
Entire Agreement. This Master Agreement, the Agreement and Plan of Merger, the Technology Agreement and other “Ancillary Agreements” (as such term is defined in the Agreement and Plan of Merger) contain the entire understanding of all agreements between the parties hereto with respect to the subject matter hereof and supersede any prior agreement or understanding, oral or written, pertaining to any such matters, which other agreements or understandings will be of no force or effect for any purpose. This Master Agreement may not be amended or supplemented in any manner except by mutual agreement of the parties and as set forth in a writing signed by the parties hereto or their respective permitted successors in interest.
1.10.
Interpretation. The general terms and conditions of this Master Agreement and the Exhibits, Addendums, and Schedules made a part hereof from time to time will be interpreted as a single document. However, in the event of a conflict between the general terms and conditions of this Master Agreement and the terms of any Exhibit, Addendum or Schedule hereto, then the terms of the Schedules, Addendums and Exhibits will prevail and control the interpretation of the Master Agreement with respect to the subject matter of the applicable Schedules, Addendums and/or Exhibits; provided, however, that the specific provisions of each Statement of Work and other written instructions listed in Schedule 3 to Exhibit B relating to the term and termination of such Statement of Work and other written instructions shall be governed in accordance with Schedule 3 to Exhibit B. Furthermore, in the event of any conflict or inconsistency between this Master Agreement and any other document referenced herein, regarding the interpretation of the terms of this Master Agreement, this Master Agreement together with its Schedules, Addendums, and Exhibits will prevail and control.
1.11
Severability. The parties hereto intend all provisions of this Master Agreement to be enforced to the fullest extent permitted by law. Accordingly, should a court of competent jurisdiction determine that the scope of any provision hereof is too broad to be enforced as written, the parties intend that the court should reform the provision to such narrower scope as it determines to be enforceable. If, however, any provision of this Master Agreement is held to be illegal, invalid, or unenforceable under present or future law, such provision will be fully severable, and this Master Agreement will be construed and enforced as if such illegal, invalid, or unenforceable provision were never a part hereof, and the remaining provisions of this Master Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance.
1.12
Waiver. The tardiness or failure by any of the parties hereto in exercising any right or privilege pursuant to this Master Agreement will not operate as a waiver thereof, nor will the exercise of any right by any party serve as an obstacle to the exercise of any other rights, powers or privileges, or any portion thereof. The waiver of any breach of any provision under this Master Agreement by any party will not be deemed to be a waiver of any preceding or subsequent breach under this Master Agreement. No such waiver will be effective unless in writing.
1.13
Governing Law. This Master Agreement will be governed by and interpreted in accordance with the laws of the Commonwealth of Puerto Rico applicable to contracts made and entirely to be performed therein.
1.14
Trial by Jury. The parties hereby mutually agree that no party, nor any permitted assignee, successor, heir or Representative thereof, will seek a jury trial in any lawsuit, proceeding, counterclaim, or any other litigation procedure based upon or arising out of this Master Agreement, or any related agreement or instrument among the parties. None of the parties will seek to consolidate any such action, in which a jury trial has been waived, with any other action in which a jury trial has not been waived. The provisions of this section have been fully negotiated by the parties. The waiver contained herein is irrevocable, constitutes a knowing and voluntary waiver, and will be subject to no exceptions.
1.15
Dispute Resolution; Arbitration. Except as otherwise provided in writing with respect to EVERTEC’s failure to achieve or maintain a Service Level (as such term is defined below), or except as may otherwise be agreed to in writing among the parties, any dispute, controversy or claim between EVERTEC, on the one hand, and the Popular Parties and their respective Subsidiaries, on the other, or against any Representative of one of the parties, related to this Master Agreement, and any dispute or claim related to the relationship or duties contemplated hereunder, including the validity of this

9


clause (a “Dispute”) will be resolved in accordance with this Section. Each party will give written notice (a “Notice of Dispute”) to the others of any Dispute claimed by it within thirty (30) days of learning of the cause of such a Dispute. The Notice of Dispute will include a reasonable description of the basis of the Dispute, including, without limitation, (i) the specific charge or charges being disputed, (ii) if available and/or applicable, the supporting documentation that is reasonably required for verification of the charge or charges, and (iii) any amounts being withheld. Following delivery of a Notice of Dispute, a Representative of each party will meet and will attempt in good faith to resolve the Dispute. Any Dispute that remains unresolved for more than twenty (20) days after the receipt of a Notice of Dispute shall be referred to designated representatives of the parties hereto who shall negotiate in good faith to resolve such dispute (the “Resolution Forum”). If a Dispute is not resolved in the Resolution Forum, the Dispute shall be submitted to the consideration of a representative from the senior management of EVERTEC who shall be identified in a written notice delivered to the Popular Parties from time to time, the Chief Operating Officer, the Chief Financial Officer or the Chief Information Officer of BPPR and the Chief Operating Officer or the Chief Financial Officer of Popular. Any Disputes that may remain unresolved for more than ninety (90) days following the receipt of a Notice of Dispute may be referred to binding arbitration at the request of any party upon written notice to the other. Such arbitration proceeding will be administered by the American Arbitration Association in accordance with the then-current Commercial Arbitration Rules and will be aired in the Commonwealth of Puerto Rico. The arbitration will be governed by the United States Arbitration Act, 9 U.S.C. §§ 1-16 to the exclusion of any provision of state law inconsistent therewith or which would produce a different result. A panel of three neutral arbitrators will determine the Dispute of the parties and render a final award in accordance with the applicable substantive law. If the Dispute is between EVERTEC, on the one hand, and one or both of the Popular Parties and their respective Subsidiaries, on the other hand, each of EVERTEC and the Popular Parties shall select one neutral arbitrator and, unless those parties agree on a third neutral arbitrator, such two arbitrators shall select the third arbitrator (subject to such limitations, if any, mutually agreed by those parties). If the Dispute is between the Popular Parties, than each of the Popular Parties shall select one neutral arbitrator and, unless those parties agree on a third neutral arbitrator, such two arbitrators shall select the third arbitrator (subject to such limitations, if any, mutually agreed by those parties). Strict confidentiality will govern the arbitration proceedings, including all information submitted to the arbitrator and the decision or award entered by the arbitrator. Any court having jurisdiction may enter judgment upon the award rendered by the arbitrator. The terms hereof will not limit any obligation of a party to defend, indemnify or hold harmless another party against court proceedings or other Losses. The procedures specified in this section will be the sole and exclusive procedures for the resolution of Disputes among the parties arising out of or relating to this Master Agreement; provided, however, that a party may request temporary remedies in a court of law to maintain the status quo or to protect goods or property until the arbitration has initiated and the selected arbitrator has had the opportunity to resolve the request for temporary relief. Each party is required to continue to perform its obligations under this Master Agreement pending final resolution of any Dispute arising out of or relating to this Master Agreement, unless to do so would be impossible or impracticable under the circumstances.
1.16
Cumulative Remedies. Except as otherwise expressly provided, all rights and remedies provided for in this Master Agreement will be cumulative and in addition to and not in lieu of any other rights and remedies available to any party at law, in equity or otherwise and will not serve to exclude the exercise of any right or remedy provided by law.
1.17
Subcontracting the Services. EVERTEC may subcontract with Third Parties for the provision of the Services to COMPANY, BPPR and their respective Subsidiaries in accordance with the outsourcing policies and procedures set forth in Exhibit F hereto (the “Outsourcing Policy”), and which shall comply with the regulatory requirements set forth in the FFIEC’s Statement on Risk Management of Outsourced Technology Services, dated November 28, 2000. EVERTEC may amend or supplement the Outsourcing Policy in its sole discretion; provided that any outsourcing of Services will not be subject to the applicable amendment or supplement unless (a) Popular and BPPR have provided their written consent to the applicable amendment or supplement or (b) such amendment or supplement is required by Legal Requirements. Notwithstanding the foregoing, EVERTEC shall remain exclusively and fully responsible and liable towards COMPANY, BPPR, and their respective Subsidiaries for the due performance of such Services by such subcontractors and there shall be no direct relationship whatsoever between COMPANY, BPPR, or their respective Subsidiaries, on the one hand, and such subcontractors, on the other. Upon reasonable advance written notice by COMPANY or BPPR, EVERTEC will provide COMPANY or BPPR, as the case may be, with copies of any documents in EVERTEC’s possession that are related to EVERTEC’s due diligence and risk analysis of the Services to COMPANY, BPPR or any of their respective Subsidiaries; provided, that EVERTEC may redact from such copies information related solely to customers other than COMPANY, BPPR or their respective Subsidiaries.
1.18
Non-solicitation. COMPANY agrees that, during the period commencing on the execution of this Master Agreement and ending upon the one (1) year anniversary of the expiration or termination of this Master Agreement, without the prior written consent of EVERTEC, COMPANY shall not, and it shall cause its Subsidiaries not to, directly or indirectly,

10


(i) induce or encourage any employee of EVERTEC to terminate his or her employment with EVERTEC, (ii) solicit for employment or any similar arrangement any employee of EVERTEC or (iii) hire or assist any other Person in hiring any employee of EVERTEC; provided that COMPANY and its Subsidiaries shall not be restricted from (i) accepting referrals for employment made by a placement agency or employment service so long as such placement agency or employment service has not targeted employees of EVERTEC, (ii) making any general advertisement not targeted at employees of EVERTEC appearing in a newspaper, magazine, Internet sites or trade publication, or (iii) soliciting or hiring any person who has not been an employee of EVERTEC for at least 180 days prior to being solicited or hired by COMPANY or its Subsidiaries and whom neither COMPANY nor any of its Subsidiaries, subject to clauses (i) and (ii) of the proviso, have solicited over such 180-day period.
1.19
Prohibition on Publicity. Neither EVERTEC nor the Popular Parties (or their respective Subsidiaries) may advertise or promote using the name or description of the other parties or party, respectively, without in each instance the express written consent of EVERTEC or the Popular Parties, as applicable.
1.20
Business Days and Legal Holidays. Except as expressly agreed to otherwise for a particular Service, in the event that any action, payment, or time period, under this Master Agreement, becomes due on a day that is a Legal Holiday, such action, payment or time period will be performed and/or expire, as applicable, on the next Business Day immediately following the Legal Holiday.
1.21
Notices. All notices, requests, demands, consents and other communications given or required to be given under this Master Agreement and under the related documents will be in writing and delivered to the applicable party at its main office or any other place as designated by each party in writing.
1.22
Incorporation. All Exhibits, Schedules, Addendums, certificates, agreements and other documents attached hereto and to which reference is made herein are incorporated by reference as if fully set forth herein.
1.23
Headings. The headings used in this Master Agreement are inserted for purposes of convenience of reference only and will not limit or define the meaning of any provisions of this Master Agreement.
1.24
Language. This Master Agreement has been executed in the English language and all Exhibits, Addendums and Schedules to this Master Agreement shall be in English, except that any Addenda in effect prior to the date hereof may be in Spanish.
1.25
Counterparts. This Master Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
1.26
Representations and Warranties. EVERTEC, COMPANY and BPPR each represent and warrant that (i) it has the power and authority to grant the rights and perform the obligations to which it commits herein; (ii) the execution of this Master Agreement by the person representing it will be sufficient to render the Master Agreement binding upon it; (iii) except for consents, approvals, waivers and authorizations relating to COMPANY’s right to assign, or EVERTEC’s right to assume or otherwise make use or benefit from, any license that is (a) the subject of Section 5.25 of the Agreement and Plan of Merger or (b) set forth in a Company IP Agreement (as that term is defined in the Agreement and Plan of Merger), in each case, to use Third Party Intellectual Property (such licenses the “Merger IP Licenses”) that has not been obtained by EVERTEC as of the Effective Date, neither its performance hereunder nor the exercise by the other parties of rights granted by the warranting party hereunder will violate any applicable laws or regulations, or the legal rights of any Third Parties, or the terms of any other agreement to which the warranting party is or becomes a party; and (iv) it has and will maintain an adequate system of internal controls and procedures for financial reporting. Each party is separately responsible for ensuring that its performance and grant of rights do not constitute any such violation during the term of this Master Agreement. Each of the foregoing representations and warranties and any other representations and warranties made throughout this Master Agreement will be deemed provided by the parties on the Effective Date hereof and will be continuous in nature throughout the life of this Master Agreement.
1.27
Specific Performance. COMPANY and EVERTEC agree that if an act or omission of one of the Popular Parties or any of their respective Subsidiaries, on the one hand, or EVERTEC, on the other hand, results in a breach of Section 1.5(h), Section 1.18, Section 2.1(b), Section 2.8, Section 2.9, Section 2.10, Article 5 or Article 6, EVERTEC or the Popular Parties, as applicable, will be irreparably damaged, no adequate remedy at law would exist and damages would be difficult to determine, and that EVERTEC or one of the Popular Parties, as applicable, shall be entitled to an injunction or injunctions to prevent such breach, and to specific performance of the terms of Section 1.5(h), 1.18, Section 2.1(b), Section 2.8, 2.9, Section 2.10, Article 5 or Article 6, as the case may be, in addition to any other remedy at law or equity, without having to post bond or any financial undertaking.

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1.28
Limitation of Actions. No action, regardless of form, arising out of any claimed breach of this Master Agreement or the Services provided hereunder, may be brought by any party more than two (2) years after such party has obtained actual knowledge of the cause of action or after the statute of limitations prescribed by Puerto Rico law, whichever is less.
1.29
Additional Assurances. The parties covenant and agree that subsequent to the execution and delivery of this Master Agreement and without any additional consideration, each will execute and deliver any further legal instruments and perform any acts that are or may become necessary to effectuate the purposes of this Master Agreement.
1.30
No BPPR Guarantee. The parties acknowledge and agree that notwithstanding anything to the contrary contained in this Master Agreement, BPPR is party to this Master Agreement only to the extent that it receives Services from EVERTEC, and BPPR shall be liable to EVERTEC only for the performance of its (and its Subsidiaries’) duties, obligations and payments under this Master Agreement. BPPR shall not guarantee or otherwise be liable for the performance of any duties, obligations or payments of any of BPPR’s Affiliates (other than BPPR itself and BPPR’s Subsidiaries) or for the performance of any duties, obligations or payments of Popular or Popular’s Subsidiaries arising under this Master Agreement.
1.31
EVERTEC Change of Control.

a)
EVERTEC Change of Control. Popular and BPPR shall have the right, subject to Section 1.31(c), to terminate this Master Agreement up to 30 days following the later of (i) the occurrence of an EVERTEC Change of Control or (ii) the date on which EVERTEC provides Popular and BPPR written notice that an EVERTEC Change of Control has occurred or is likely to occur (provided that if EVERTEC has not satisfied its obligations pursuant to Section 1.31(b) and that Popular or BPPR asserts such failure prior to the expiration of the 30-day period then such 30-day period shall be tolled until EVERTEC satisfies its obligations under Section 1.31(b) and provided further that if an EVERTEC Change of Control occurs, and EVERTEC fails to provide Popular and BPPR written notice thereof within 30 days thereof, then Popular and BPPR shall have an unqualified right to terminate this Agreement), unless (w) the Person or Group of Persons proposing to engage in such proposed EVERTEC Change of Control transaction (the “Control Acquirer”) is identified to Popular by EVERTEC at least 30 Business Days prior to such proposed EVERTEC Change of Control; (x) neither the Control Acquirer nor any of its Affiliates is engaged, directly or indirectly, in the banking, securities, insurance or lending business, from which they derive aggregate annual revenues from Puerto Rico in excess of $50 million unless none of them has a physical presence in Puerto Rico that is used to conduct any such business; (y) EVERTEC (or its successor, as applicable) will be Solvent immediately after and giving effect to such proposed EVERTEC Change of Control; and (z) EVERTEC (or its successor, as applicable), after the proposed EVERTEC Change of Control, will be capable of providing the Services at the level of service that is required under this Master Agreement; provided further that if Popular, BPPR or any of their respective Controlled Affiliates votes in favor of the transaction resulting in the EVERTEC Change of Control or Transfers (other than a Transfer in the context of a merger, business combination, reorganization, recapitalization or similar transaction) any equity securities in connection with the transaction resulting in the EVERTEC Change of Control and, in either case, was not compelled to do so as part of a Drag-Along Transaction, a Dragged Asset Sale or other requirement of the Stockholder Agreement or any other Group Agreement with respect to Holdco, EVERTEC or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries, then such termination right shall not apply

b)
Cooperation. EVERTEC shall use its reasonable best efforts to cooperate with Popular and BPPR in evaluating whether any proposed EVERTEC Change of Control would be in compliance with the requirements of this Section 1.31 including the ability of Assignee Sub or Asset Acquirer, as applicable, to comply with the terms of this Master Agreement, including, in each case, by providing any non-confidential information regarding the purposes and plans in connection with such proposed EVERTEC Change of Control other than information that would create any potential liability under Legal Requirements, violate any confidentiality obligation, or that reasonably would be expected to result in the waiver of any attorney-client privilege.

c)
Notice of Objection. If EVERTEC provides at least 30 days’ written notice to Popular and BPPR prior to an EVERTEC Change of Control, BPPR and/or Popular shall notify EVERTEC in writing within 15 Business Days following receipt of EVERTEC’s notice of the proposed EVERTEC Change of Control of any objection to any proposed EVERTEC Change of Control on the basis that it does not satisfy the criteria set forth in clauses (w) through (z) of Section 1.31(a) (unless EVERTEC has failed to satisfy its obligations pursuant to Section 1.31(b) and Popular or BPPR asserts such failure prior to the expiration of the 15 Business Day objection period, in which case such 15 Business Day objection period shall be tolled until

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EVERTEC satisfies its obligations pursuant to Section 1.31(b)). If BPPR or Popular fails to timely object to such proposed assignment (taking into account any tolling of the 15 Business Day objection period), it shall be deemed to have consented to such proposed EVERTEC Change of Control and waived its right of termination under Section 1.31(a).

ARTICLE TWO – THE SERVICES

2.1
Services.

a)
EVERTEC will provide to COMPANY, BPPR, and their respective Subsidiaries the Services which are listed in Exhibit B, attached hereto, including the additional descriptions of certain of such Services in the document Application Processing Base Prices Details included as Schedule 1 to Exhibit B.

b)
Each of COMPANY and BPPR agrees to, and to cause each of its respective Subsidiaries to, receive the Services provided on the date hereof as set forth on Exhibit B (to the extent a Service is provided by EVERTEC to COMPANY, BPPR, or their respective Subsidiaries prior to the date hereof and continuing on the date hereof (except for a Service that relates to a non-recurring, definitive project), such Service shall be added to Exhibit B), including any change, modification, enhancement or upgrade of such Services in accordance with Sections 2.6 and 2.7 (collectively, the “Exclusive Services”), on an exclusive basis from EVERTEC. Subject to the terms of this Master Agreement, COMPANY, BPPR, and their respective Subsidiaries shall not, without the prior written consent of EVERTEC, use a Third Party to provide any of the Exclusive Services and COMPANY, BPPR, and their respective Subsidiaries shall not perform any of the Exclusive Services themselves or through their Subsidiaries (other than through EVERTEC); provided, however, that upon a Release Event (as such term is defined under the Technology Agreement), COMPANY, BPPR, and their respective Subsidiaries shall have the right, in accordance with the terms of the Technology Agreement, to (i) provide for themselves or (ii) use an Affiliate of COMPANY, BPPR and their respective Subsidiaries or a Third Party to provide, an Exclusive Service or Exclusive Services to which such Release Event relates. Such right of COMPANY, BPPR and their respective Subsidiaries to provide an Exclusive Service or Exclusive Services to themselves or to use an Affiliate or Third Party for the provision of the applicable Exclusive Service or Exclusive Services shall immediately cease upon (i) EVERTEC properly exercising its Clawback Right (as that term is defined in the Technology Agreement) or (ii) the rendering of a arbitral decision in accordance with Section 9.1 of the Technology Agreement pursuant to which it is determined that a Release Event did not occur.

c)
If EVERTEC and the Popular Parties, or any of their respective Subsidiaries, agree from time to time upon terms and prices for certain Services, then EVERTEC, on the one hand, and the Popular Parties or any of their appropriate respective Subsidiaries, on the other hand, will execute a separate addendum (each, a “Service Addendum”) setting forth the mutually agreed upon terms and prices for such Services. Each such Service Addendum will be incorporated and, to the extent not incompatible, will be subject to the terms and conditions of this Master Agreement. Nothing herein will be interpreted as imposing an obligation upon EVERTEC to develop new Services, or upon COMPANY, BPPR, or any of their respective Subsidiaries to acquire any additional Services from EVERTEC. The parties agree that regardless if a Service is set forth in a Service Addendum or not, the pricing relative to any and all Services will be set forth in Exhibit B, which will serve as a master list of the Services and corresponding pricing. The parties agree that Exhibit B will be reviewed and updated on an ongoing basis following the Effective Date hereof. Any changes to Exhibit B shall be agreed to by both parties by executing an amended and restated Exhibit B clearly denoting the date any such changes become effective; provided that EVERTEC may amend Exhibit B upon notice to, but without the consent of, the Popular Parties in order to reflect the price adjustments provided in Section 3.1(b), or any change, modification, enhancement or upgrade of the Services permitted pursuant to Section 2.1(b), but for the avoidance of doubt subject to the consent requirements of Sections 2.6 and 2.7.

d)
The Service Addenda set forth in Schedule 2 to Exhibit B are hereby incorporated into this Master Agreement by this reference.

e)
Each Statement of Work (“SOW”) pursuant to which EVERTEC provides Services(s) to COMPANY, BPPR and/or their respective Subsidiaries as of the date hereof (except for any SOW that relates to a non-recurring definitive project) is set forth in Schedule 3 to Exhibit B and is hereby incorporated into this Master Agreement.


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f)
Each SOW to be entered into after the date of this Master Agreement, pursuant to which EVERTEC shall provide Services(s) to COMPANY, BPPR and/or their respective Subsidiaries after the date hereof shall be set forth in Schedule 4 to Exhibit B and shall be incorporated into this Master Agreement.

g)
Notwithstanding anything to the contrary herein, COMPANY, BPPR, and their respective Subsidiaries shall not be obligated (i) to receive any service or product from EVERTEC that is not an Exclusive Service, or (ii) to grant a Right of First Refusal with respect to any service or product, that is outside the scope of the business of EVERTEC.

2.2
Service Personnel. EVERTEC agrees that it will use its Best Efforts to assign qualified, adequately trained, and efficient professionals and personnel who will use their Best Efforts to discharge their obligations under this Master Agreement in an efficient and timely manner and to exercise reasonable care in performing the Services subject to the terms and conditions of each Service.

2.3
Service Level Agreement. The Services will be rendered in a commercially reasonable manner, in accordance with the performance standards and service levels applicable to the Service in question, generally accepted industry practices and procedures used in performing services of a like-kind to the Services but no less than with the same degree of care and diligence practiced prior to the date hereof (the “Service Levels”). Unless agreed to otherwise in writing by the parties, all Service Levels will be subject to the general terms and conditions of the Service Level Agreement attached hereto as Exhibit C (together with Schedule 1 to Exhibit C, the “Service Level Agreement”), which was entered into under, and incorporated into, the 2010 MSA and is further incorporated into this Master Agreement by reference. Furthermore, the parties agree that EVERTEC’s performance levels and procedures for Services for which no Service Level or procedures have been expressly defined shall be no less than the performance levels and procedures prior to the date hereof or, to the extent any such Services have not been provided to COMPANY, BPPR, and their respective Subsidiaries prior to the date hereof, such Services shall be provided at Service Levels that are at least consistent with then prevailing industry standards or as mutually agreed to by the parties. The parties agree that regardless if a Service is set forth in a Service Addendum or not, if the Service is subject to Service Levels, such Service Levels will be set forth in Schedule 1 of the Service Level Agreement which will serve as a master list of all Service Levels applicable to the Services COMPANY, BPPR, and their respective Subsidiaries receive hereunder. The parties agree that Schedule 1 will be reviewed and updated on an ongoing basis following the Effective Date hereof. Any changes to the Service Levels set forth in Schedule 1 shall be agreed to by the parties by executing an amended and restated Schedule 1 clearly denoting the date any such changes become effective. The parties agree that they shall negotiate in good faith with respect to any disputes arising from the updating of Schedule 1.

2.4
Reports and Errors.

a)
COMPANY and BPPR will be responsible for reviewing and reconciling, the reports, statements, files, and any notice, correspondence or communication (collectively, the “Reports”) it or its Subsidiaries receives from EVERTEC and each of Company and BPPR agrees to exercise Best Efforts to do so in a commercially reasonable time period taking into account any deadlines imposed by any Legal Requirements.

b)
Each of COMPANY and BPPR shall exercise Best Efforts to detect and report errors and/or discrepancies (“Errors”) in the Reports received from EVERTEC within a commercially reasonable time period taking into account any deadlines imposed by any Legal Requirements.

c)
The notice given by COMPANY or BPPR to EVERTEC shall specify and describe the Errors detected by COMPANY or BPPR, as the case may be, and the parties shall use their respective Best Efforts and cooperate with each other to obtain and/or provide to each other any available information that may be necessary, relevant and/or useful to identify the cause of any Errors and correct and resolve such Errors.

d)
EVERTEC shall exercise Best Efforts to correct, resolve and/or reprocess the Errors reported to EVERTEC by COMPANY or BPPR within a commercially reasonable time period.

e)
Any party may require that any controversy related to or arising under the provisions of this Section 2.4 be processed as a Dispute pursuant to Section 1.15, but in such case the Dispute shall be immediately addressed by each party’s Representative negotiating in good faith without having to comply with the Dispute Notice and time periods set forth in Section 1.15.




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2.5     Specifications for Services.

a)
Based on COMPANY’s and BPPR’s instructions, EVERTEC will establish the processing parameter settings, features and options (collectively, the “Specifications”) for the Services that will apply to COMPANY, BPPR, and their respective Subsidiaries (including all control and verification mechanisms utilized in each processing function related to the Services).

b)
The parties agree that unless otherwise agreed to in writing by the parties, the Specifications will be derived from or in compliance with the respective terms and conditions established or documented by the parties using means such as, but not limited to: (i) electronic systems used to register service requests; (ii) operational manuals of COMPANY, BPPR, or their respective Subsidiaries provided to EVERTEC; (iii) SOWs; (iv) service standard forms provided by COMPANY, BPPR and/or a Client to EVERTEC; and (v) any other written instructions that may be provided by COMPANY or BPPR to EVERTEC from time to time; provided, that in the event any Specification is documented by the parties pursuant to clauses (i) - (v) in this Section 2.5 and such Specification relates to a recurring Service (as opposed to a definitive project), Exhibit B shall be amended to include such Specification and the corresponding fee agreed to by the parties.

c)
COMPANY will certify and approve all Specifications and modifications thereof before their activation in the production environment. EVERTEC will perform system processing and provide the Services in accordance with the Specifications.

d)
COMPANY will ensure that, throughout the Term of this Master Agreement, all communications networks and devices used by it in receiving the Services under this Master Agreement, including the Internet and any virtual private network, will conform to the Specifications as are agreed to by the parties from time to time.

e)
Should the Specifications call for the use of software owned by or under license to EVERTEC, or should EVERTEC be required to procure hardware, software or other items in order to perform the Services in accordance with the Specifications, (i) COMPANY, BPPR, or one of their respective Subsidiaries may subscribe to a separate license agreement for such software; and/or (ii) EVERTEC will pass through and assign to COMPANY, BPPR, or one of their respective Subsidiaries all warranties provided by the manufacturer(s) and/or licensor(s) of such items; provided, however that all disclaimers and/or limitations of liabilities relating to such software, hardware or other items will be deemed extended to include EVERTEC.

2.6     Modifications to Services.

a)
Subject to Section 8.2, EVERTEC reserves the right to change, modify, enhance or upgrade the manner in which it renders the Services, at any time, provided, however, that any change, modification, enhancement or upgrade does not adversely affect the functionality of the Services, the fees for such Service and/or the agreed upon Service Levels, as applicable, and provided that (i) EVERTEC provides written notice of such modification to COMPANY and BPPR at least forty-five (45) days prior to implementation of any such change, modification, enhancement or upgrade, (ii) such notice describes in reasonable detail the change, modification, enhancement or upgrade to be made by such modification and EVERTEC promptly answers any reasonable inquiries of COMPANY, BPPR, or one of their respective Subsidiaries regarding such change, modification, enhancement or upgrade and (iii) neither COMPANY nor BPPR delivers a written notice to EVERTEC prior to such implementation that it reasonably believes that such change, modification, enhancement or upgrade would be likely to adversely affect its or one of its Subsidiaries’ compliance with applicable Legal Requirements.

b)
Any change, modification, enhancement or upgrade requested or required by COMPANY or BPPR that is not a Mandatory Enhancement or a Supplemental Mandatory Enhancement (a “Requested Enhancement”) will require written notice to EVERTEC. Upon receipt of such notice, EVERTEC will exercise Best Efforts to prepare and present to COMPANY or BPPR, as soon as possible, a written estimate of the costs for the Requested Enhancement and any adjustment in fees that may be necessary as a result thereof. EVERTEC’s Best Efforts will take into consideration the business needs of COMPANY, BPPR, and their respective Subsidiaries and any timeframes for implementation related thereto. The parties will have a period of thirty (30) days following the receipt of the estimate to negotiate in good faith any costs and/or price adjustments. Should the parties be unable to arrive at mutually agreed upon costs and/or price adjustments within such thirty (30) day time period, the changes will not be developed by EVERTEC and

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this Master Agreement will continue in full force in effect under the then current terms and conditions; provided, however, notwithstanding anything to the contrary contained in this Master Agreement, COMPANY, BPPR, and their respective Subsidiaries may, subject to the terms and conditions of the Technology Agreement, have such changes developed by another contractor of COMPANY, BPPR, or one of their respective Subsidiaries. In cooperation with such contractor, EVERTEC will implement the developed changes into the Services.

2.7     Mandatory Enhancements.
    
a)
Subject to Section 8.2, EVERTEC will provide change, modification, enhancement or upgrade to certain Services to ensure that those Services permit COMPANY, BPPR, or their respective Subsidiaries to comply with mandatory changes in COMPANY’s, BPPR’s, or their respective Subsidiaries’ Legal Requirements (the “Mandatory Enhancements”).

b)
EVERTEC shall consult with COMPANY and BPPR, as well as other EVERTEC customers affected by the relevant Mandatory Enhancement, regarding the interpretation of the relevant Legal Requirements as well as the strategy for implementation of the Mandatory Enhancement. Ultimately, the design and implementation of the Mandatory Enhancement shall be based on EVERTEC’s reasonable interpretation of the relevant Legal Requirement and its understanding of the Services affected thereby.

c)
EVERTEC may charge COMPANY or BPPR at the time and material rates set forth in Exhibit B, as applicable, for development hours expended on Mandatory Enhancements for COMPANY, BPPR, or any of their respective Subsidiaries on a prorated basis. The costs will be proportionately allocated among EVERTEC’s affected customers. Any such charges shall be disclosed to COMPANY and BPPR as soon as reasonably possible following the consultations described in Section 2.7(b), including a description of how they are to be calculated and allocated among COMPANY, BPPR, and their appropriate respective Subsidiaries, on the one hand, and EVERTEC’s other affected customers, on the other. If COMPANY or BPPR can reasonably demonstrate that it or its applicable Subsidiary is not subject to the Legal Requirement that is the subject of a given Mandatory Enhancement, COMPANY, BPPR, and their appropriate respective Subsidiaries shall not be charged any development fees for such enhancement.

e)
In the event that COMPANY, BPPR or any of their respective Subsidiaries requests other changes, modifications, enhancements or upgrades to the Services that are different from or in addition to, but requested in connection with, Mandatory Enhancements (the “Supplemental Mandatory Enhancements”), then, provided EVERTEC agrees to make such changes, modifications, enhancements or upgrades (which agreement shall not be unreasonably withheld), COMPANY, BPPR or any of their Subsidiaries that request a Supplemental Mandatory Enhancement, shall be charged a development fee at the time and material rates specified in Exhibit B, as applicable. EVERTEC may charge COMPANY, BPPR or any of their Subsidiaries that request a Supplemental Mandatory Enhancement, an ongoing usage fee for any new Service resulting from (i) Mandatory Enhancements to the extent charged its other customers, or (ii) Supplemental Mandatory Enhancements.

2.8     Non-Circumvention Covenants.
    
a)
EVERTEC agrees that it shall not directly initiate or procure any negotiations or contacts with any Client that are designed or intended to:
(i) induce, cause, or propose to any Client to terminate any of the accounts and/or any other business relationships such Client may have with COMPANY, BPPR, or any of their respective Subsidiaries (including but not limited to accounts or relationships for which COMPANY, BPPR, or their respective Subsidiaries shall have engaged EVERTEC to provide any of the Services); or
(ii) induce, cause, or propose to any Client to seek to transfer such accounts and/or business relationships from COMPANY, BPPR, or their respective Subsidiaries to another Person.

b)
The Popular Parties agree that they shall not, nor cause any of their respective Subsidiaries to, directly initiate or procure any negotiations or contacts with any of EVERTEC’s clients or service providers that are designed or intended to:
(i) induce, cause, or propose to any such client or service provider to (A) terminate any of the accounts and/or any other business relationships such client may have directly with EVERTEC, as applicable or (B) modify the terms of such client’s or service provider’s agreement(s) with EVERTEC in a manner that is adverse to EVERTEC, or
(ii) induce, cause, or propose to any such client or service provider of EVERTEC to (A) reduce or curtail

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the amount or type of services or goods that EVERTEC provides, sells or receives from or to such client or service provider, (B) reduce the amount of business with, prices paid to, or revenue from, a client, (C) increase the prices paid by a service provider or (D) seek to transfer such accounts and/or business relationships from EVERTEC to another Person; provided, that the mere fact that COMPANY, BPPR, or one of their respective Subsidiaries shall have engaged EVERTEC to provide any of the Services to its Clients will not cause such Clients to be considered “clients” or “accounts” and/or “business relationships” of EVERTEC for purposes of this Section.

c)
Nothing in this Section 2.8 shall be interpreted to preclude or prevent either party from (i) distributing marketing materials on its products and services to the general public; or (ii) responding to requests for products and services from the other party’s respective clients or other Persons, but, in the case of EVERTEC, subject to the limitations imposed under Section 2.9(a). In addition, nothing in paragraphs (a) or (b) of this Section shall be interpreted to preclude or prevent EVERTEC from entering into any agreement with a Person in the same industry or a similar industry which offers similar products or services as COMPANY (a “Competitor”) pursuant to which such Competitor will provide to its clients any one or more services similar to the Services; provided, however, that EVERTEC in its dealings with such Competitor shall at all times comply with its confidentiality obligations under this Master Agreement. Nothing in this Section 2.8 shall be deemed to apply to services of the type provided pursuant to the Independent Sales Organization Sponsorship and Services Agreement between BPPR and EVERTEC or services of the type typically provided by Independent Sales Organizations to merchants.

2.9     Non-Compete Covenants.

a)
Notwithstanding the provisions of Section 2.8, EVERTEC agrees that, without Popular’s, or its relevant Subsidiary’s, prior written consent, it shall not offer, provide or market any of the Restricted Payment Processing Services (as defined below) to any of the Strategic Clients (as defined below). Furthermore, the parties agree that they shall cooperate with each other to provide, offer and market the Restricted Payment Processing Services to Strategic Clients. In the event COMPANY, BPPR, and all of their respective Subsidiaries cease to offer any service included in the definition of “Restricted Payment Processing Services” to any of its Clients, such service shall no longer be included in the list of Restricted Payment Processing Services and EVERTEC shall be permitted to offer such service without any restriction.
    
b)
For purposes of this Section:

1. “Restricted Payment Processing Services” means the payment processing services that are currently being offered by COMPANY, BPPR, or one of their respective Subsidiaries to Clients, and that are listed below.
(i)Multi Merchant Pay
(ii)Call Center Pay
(iii)Kiosk
(iv)Check-Out Payment
(v)PER/PER WEB
(vi)Lockbox Retail/Wholesale
(vii)Telepago Online
(viii)IVRU
    
2. “Strategic Clients” means the Clients listed in Exhibit D to this Master Agreement, which shall be subject to the provisions of this Section so long as such Clients maintain an account and/or business relationship with COMPANY, BPPR, or one of their respective Subsidiaries. Exhibit D may be amended only with the prior written consent of Popular and EVERTEC.

2.10     Right of First Refusal.

a)
For purposes of this Section the following terms shall have the corresponding meanings:
1. “COMPANY New Service” means a new service or product created or developed independently by COMPANY, BPPR, or one of their respective Subsidiaries.
2. “Development Project” means the implementation of any development, maintenance, enhancement, modification or other technology projects related to the Services.
3. “EVERTEC New Service” means a new service or product created or developed by EVERTEC internally or by a Third Party unless such service or development is created by, or at the specific request of an EVERTEC client other than COMPANY, BPPR, or one of their respective Subsidiaries.

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4. “Exercise Notice” means notification by Grantee to Grantor of its desire to exercise its Right of First Refusal for a Special Service Project.
5. “Grantor” means the party granting the Right of First Refusal.
6. “Grantee” means the party receiving the Right of First Refusal.
7. “Notice of Intent” means notification by Grantor to Grantee of its intent to implement a Special Service Project.
8. “Option Period” means the period of thirty (30) days following receipt of the Notice of Intent, during which Grantee must deliver its Exercise Notice to Grantor.
9. “Outsourced Processing Service” means the services provided under the Outsourced Processing Contracts.
10. “Right of First Refusal” means the right of the Grantee to be given an opportunity before any other Person to accept or reject an offer.
11. “Special Service Project” means collectively and individually, Development Projects, COMPANY New Services, EVERTEC New Services and Outsourced Processing Service.

b)
Each of EVERTEC, on the one hand, and the Popular Parties and their respective Subsidiaries, on the other hand, shall grant to EVERTEC or the Popular Parties, as applicable, a Right of First Refusal under the following circumstances:
1. Should COMPANY, BPPR, or one of their respective Subsidiaries intend to (i) implement any Development Project, or (ii) create or offer a COMPANY New Service; or
2. Subject to Section 2.1(e), should EVERTEC intend to create or offer an EVERTEC New Service.
3. Should COMPANY, BPPR, or one of their respective Subsidiaries intend to extend or renew any of the Outsourced Processing Contracts or enter into a new agreement to provide any portion of the Outsourced Processing Services.

c)
Upon occurrence of any one of the circumstances listed in paragraph (b), Grantor will send Grantee a Notice of Intent.

d)
If Grantee determines it will exercise its Right of First Refusal, Grantee must send Grantor its Exercise Notice within the Option Period.

e)
Upon Grantor’s receipt of Grantee’s Exercise Notice, the parties will immediately commence good faith negotiations to enter into a definitive agreement for the Special Service Project to be incorporated hereunder as a Service Addendum stating the mutually agreed upon terms and prices for such Services.

f)
Grantor will be entitled to negotiate the Special Service Project with a Third Party and Grantee’s Right of First Refusal will be deemed terminated should one of the following circumstances occur:
1. Grantee notifies Grantor that it will not exercise its Right of First Refusal;
2. Grantee fails to exercise its Right of First Refusal within the Option Period;
3. The parties are unable to reach an agreement by the fiftieth (50th) day following the date of the Exercise Notice; provided, however, that in such case, the terms and conditions for the Special Service Project as offered by or to a Third Party must be as favorable or better to the Grantee than those proposed during the negotiations between the parties; or
4. This Master Agreement is terminated in accordance with Article Nine herein.

g)
In the event that EVERTEC decides not to exercise its Right of First Refusal within the Option Period and COMPANY, BPPR, or one of their respective Subsidiaries contracts the Development Project or COMPANY New Service to a Third Party, COMPANY and BPPR acknowledge and agree that EVERTEC will not be liable for any errors to or impact on the Services as a result of the work performed by such Third Party and will have no obligation under this Master Agreement to correct such errors or impact, unless otherwise agreed to by the parties.

h)
In furtherance of Section 2.10(b)(3), within a sufficient period of time before the expiration of any of the Outsourced Processing Contracts, COMPANY, BPPR, and their appropriate respective Subsidiaries shall provide EVERTEC and its Representatives with access to COMPANY, BPPR, and/or their appropriate respective Subsidiaries’ personnel, documents and Company Data related to such Outsourced Processing Contracts, in each case to the extent permitted under and subject to Legal Requirements and contracts with Third Parties and as is reasonably necessary for EVERTEC to evaluate the Outsourced Processing Services and make a bona fide proposal to offer the Outsourced Processing Services.
    


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2.11    Equipment.
    
a)
EVERTEC will retain all right, title or interest in any EVERTEC equipment supplied to COMPANY, BPPR, or any of their respective Subsidiaries as part of the Services (“EVERTEC Equipment”), and no ownership rights in such EVERTEC Equipment will transfer to COMPANY, BPPR, or any of their respective Subsidiaries. COMPANY, BPPR, and their respective Subsidiaries will, as applicable, provide a suitable and secure environment, free from environmental hazards, and electric power for such EVERTEC Equipment located in premises operated or controlled by COMPANY, BPPR, or one of their respective Subsidiaries, and will keep the EVERTEC Equipment free from all liens, charges, and encumbrances. COMPANY, BPPR, and their respective Subsidiaries, as applicable, will bear the risk of loss of or damage to EVERTEC Equipment (ordinary wear and tear excepted) from any cause except to the extent caused by EVERTEC or its suppliers. COMPANY, BPPR, and their respective Subsidiaries agree that they will not remove, relocate, modify, or interfere with EVERTEC Equipment, or attach EVERTEC Equipment to non-EVERTEC equipment without prior written authorization from EVERTEC.

b)
Title to and risk of loss of any equipment purchased from EVERTEC will pass to COMPANY, BPPR, or their respective Subsidiaries as of delivery, upon which date EVERTEC will have no further obligations of any kind with respect to such purchased equipment, except as set forth in a document executed by the appropriate parties.

c)
All ownership or leasehold interest in a party’s facilities, and associated equipment used in connection with the Services, will at all times remain with that party. If any equipment of COMPANY, BPPR, or any of their respective Subsidiaries (“COMPANY Equipment”) is used to provide the Services, COMPANY, BPPR, or their appropriate respective Subsidiaries, will grant EVERTEC a non-transferable and non-exclusive license to use such COMPANY Equipment in the manner necessary to provide the Services, except as otherwise may be provided in writing.

2.12     Import/Export Control.

a)
The parties acknowledge that equipment, products, software, and technical information (including, but not limited to, technical assistance and training) provided under this Master Agreement may be subject to import or export laws, conventions or regulations, and any use or transfer of the equipment, products, software, and technical information must be in compliance with all such laws, conventions and regulations. The parties will not use, distribute, transfer, or transmit the equipment, products, software, or technical information (even if incorporated into other products) except in compliance with such laws, conventions and regulations. If requested by either party, the other party agrees to sign written assurances and other documents as may be required to comply with such laws, conventions and regulations.

b)
In the event any necessary import or export license cannot be obtained within six (6) months after making an application, no party will have further obligations with respect to providing or purchasing and, if applicable, COMPANY, BPPR, or one of their respective Subsidiaries will return the equipment, products, software, or technical information that is the subject matter of the unsuccessful application.

2.13
Business Continuity/Disaster Recovery Plan and Disaster Recovery Services Addendum. Each party acknowledges that it is responsible for maintaining in effect at all times an appropriate Business Continuity/Disaster Recovery Plan (the “Plan”). EVERTEC warrants that its Plan addresses the continuation of the services it provides to its clients as specified therein, if an Event threatens to impair or disrupt EVERTEC’s delivery of such services. Furthermore, the parties agree that:

a)
Throughout the Term of this Master Agreement, EVERTEC will maintain its Plan in compliance with applicable Legal Requirements.

b)
EVERTEC agrees to exercise Best Efforts to resume the Affected Services (as that term is defined in the Disaster Recovery Services Addendum) within the Recovery Time Objectives established in the Disaster Recovery Services Addendum.

c)
Upon COMPANY’s or BPPR’s reasonable request, EVERTEC shall make available to COMPANY and/or BPPR, for the purpose of responding to questions concerning the Plan and the Disaster Recovery Service Addendum, one or more representatives who are knowledgeable about such Plan and Disaster Recovery Se

19


rvice Addendum, the manner in which it is tested and the manner in which it would be implemented upon the occurrence of an Event.

d)
EVERTEC shall cooperate with COMPANY, BPPR and their respective Subsidiaries on any regulatory review of the Plan and/or the Disaster Recovery Services Addendum. In the event COMPANY or BPPR determines that Legal Requirements necessitate additional disaster recovery services and/or modifications to the existing Plan and/or Disaster Recovery Services Addendum, (1) EVERTEC agrees to cooperate with COMPANY, BPPR and their respective Subsidiaries to resolve any issues raised by COMPANY, BPPR or one of their respective Subsidiaries and/or in assuring that the Plan and the Disaster Recovery Services Addendum complies with the Legal Requirements and (2) COMPANY, BPPR, or one of their respective Subsidiaries shall be charged a development fee at the time and material rates specified in Exhibit B, as applicable and EVERTEC may charge COMPANY, BPPR, or one of their respective Subsidiaries an ongoing usage fee for any new Service that results from the modifications requested in accordance with this Section 2.13.

ARTICLE THREE - PAYMENT FOR SERVICES

3.1    Fees.

a)
In consideration for EVERTEC providing COMPANY, BPPR, and their respective Subsidiaries the Services, each of COMPANY and BPPR agrees to pay, or cause one of its respective Subsidiaries to pay, EVERTEC the corresponding fees set forth in Exhibit B, subject to adjustment as set forth in Section 3.1(b). The parties agree that regardless if a Service is set forth in a Service Addendum or not, the pricing relative to any and all Services will be set forth in Exhibit B, which will serve as a master list of the Services and corresponding pricing. The parties agree that Exhibit B will be reviewed and updated on an ongoing basis following the Effective Date hereof. Any changes to the fees set forth in Exhibit B (other than the adjustments described in Section 3.1(b)) shall be agreed to by both parties by executing an amended and restated Exhibit B clearly denoting the date any such changes become effective.

b)
From and after the second anniversary of the date hereof, the fees set forth in Exhibit B shall be adjusted annually on each yearly anniversary date of this Master Agreement for changes in the CPI after the date hereof; provided that any adjustment shall not exceed 5% per annum.

3.2
Terms of Payment. EVERTEC will send an invoice directly to COMPANY, on or before the fifteenth (15th) day of the month following the month in which the Services are rendered, reflecting the fees and other charges to COMPANY, BPPR, and their respective Subsidiaries for the preceding month. COMPANY, BPPR, or one of their respective Subsidiaries, as applicable, will pay to EVERTEC all undisputed amounts due under this Master Agreement within thirty (30) days from the date of receipt of the invoice, unless otherwise agreed to by the parties for a particular Service in writing. Any undisputed amount due under this Master Agreement that is not paid when due will thereafter bear interest at an annual rate of interest equal to one and a half percent (1.5%), but in no event shall exceed the maximum rate of interest allowed under any Legal Requirement. COMPANY and BPPR agree that, if any properly submitted invoice remains unpaid and undisputed for a period exceeding sixty (60) days, EVERTEC may (i) refuse to provide the Services until such time as all past due amounts are paid in full or (ii) terminate this Master Agreement in accordance with and subject to Section 9.2(a)(2).

3.3
Services Rendered during Legal Holidays. Unless agreed to otherwise in writing, upon request of COMPANY or BPPR, and provided EVERTEC has available resources to comply therewith, EVERTEC will provide the Services to COMPANY, BPPR, and their respective Subsidiaries during Legal Holidays for the fees set forth in Exhibit B or the corresponding Service Addendum, as applicable.

3.4
Additional Services. Any additional services performed by EVERTEC at COMPANY, BPPR, or one of their respective Subsidiaries’ request (or as required by COMPANY, BPPR, or one of their respective Subsidiaries’ act or failure to act under this Master Agreement) over and above the Services listed in Exhibit B of this Master Agreement will be billed at EVERTEC’s standard rates then in effect and disclosed to COMPANY, BPPR, and their respective Subsidiaries for computer and personnel time, equipment, supplies, out-of-pocket costs, and other items and expenses incurred in performing such additional services or as may otherwise be set forth in writing.

3.5
Out-of-pocket and Third Party Expenses. With COMPANY’S or BPPR’s prior written approval, additional costs related to delivery and/or collection, telecommunications (other than the telecommunication installation and maintenance services set forth in Exhibit B) or other incidental services, as well as necessary and reasonable services to be provided through EVERTEC by Third Parties, for COMPANY, BPPR, or one of their respective Subsidiaries’ benefit, incurred

20


during the term of this Master Agreement and that are not contemplated in any of the established fees, costs, charges, will be paid by COMPANY, BPPR, or one of their respective Subsidiaries, as applicable, when invoices and related documents are duly presented. All such out-of-pocket or Third Party charges and administration costs related to the Services will be billed by EVERTEC to COMPANY, BPPR, or one of their respective Subsidiaries at an amount equal to cost; provided that to the extent COMPANY, BPPR, or one of their respective Subsidiaries sets forth any limitations on such charges and costs, COMPANY, BPPR, and their respective Subsidiaries shall not be billed for amounts in excess of such limitations.

3.6
Review of Fees. It is the intent of the parties that the fees charged by EVERTEC to any Banking Affiliate shall be in compliance with applicable Legal Requirements. The fees to be charged by EVERTEC to a Banking Affiliate under this Master Agreement shall be subject to a periodic review by the parties in order to ensure that such fees represent and remain at levels consistent with the market terms that such Banking Affiliate would pay to an independent Third Party for providing similar services. When performing such review, the parties will pay particular attention to any available information on comparable market terms for similar services, and will evaluate and take into consideration the contracting terms and the performance of the Services by EVERTEC under this Master Agreement.

3.7
Taxes. The fees and charges paid by COMPANY, BPPR, and their respective Subsidiaries under this Master Agreement will be inclusive of any applicable sales, use, personal property, excise, services or other taxes in existence as of the Effective Date. Each party will bear its corresponding taxes or contributions related to this Master Agreement, which may, but not be limited to, municipal, Commonwealth or federal taxes, as applicable.

3.8     Disputed Charges; Requests for Information.

a)
Each of COMPANY, BPPR, and their respective Subsidiaries may withhold payment of specific charges within a given invoice that it in good faith disputes or for which it may require additional information from EVERTEC to verify the amounts being charged, provided that COMPANY, BPPR, or such Subsidiary delivers to EVERTEC a written statement on or before the date in which such payment is due, describing in reasonable detail (i) the specific charge or charges being disputed and the basis of the dispute, (ii) if applicable, the supporting documentation that is reasonably required for verification of the charge or charges, and (iii) the amount being withheld.

b)
A charge will be deemed “undisputed” if COMPANY, BPPR, and their respective Subsidiaries do not deliver the aforementioned written statement within the time period provided in this section.

c)
Notwithstanding the foregoing, the parties will have the right to review invoices generated hereunder and claim any under charged or over paid amounts. The parties shall make any such claims within one hundred and twenty (120) days following the date of the invoice.

d)
Any Dispute related to the charges or fees payable under this Master Agreement, if not settled by the parties, shall be resolved in accordance with Section 1.15 hereof.

3.9
Supporting Documentation. EVERTEC will maintain supporting documentation for the amounts billable to, and payments made by, COMPANY, BPPR, and their respective Subsidiaries hereunder in accordance with its practices prior to the Effective Date and applicable record retention requirements. EVERTEC agrees to provide COMPANY, BPPR, and their respective Subsidiaries with such supporting documentation with respect to each invoice as may be reasonably requested by COMPANY, BPPR, and their respective Subsidiaries and with the level of detail required by COMPANY, BPPR, and their respective Subsidiaries from time to time.

3.10
No Right to Set-Off. COMPANY, BPPR, and their respective Subsidiaries shall pay to EVERTEC the full amount of undisputed charges and any disputed charges that are resolved in favor of EVERTEC and other amounts required to be paid by COMPANY, BPPR, and their respective Subsidiaries under this Master Agreement and COMPANY, BPPR, and their respective Subsidiaries shall not set-off, counterclaim or otherwise withhold any amount owed or claimed to be owed to EVERTEC under this Master Agreement on account of any obligation owed by EVERTEC or any of its Subsidiaries, whether or not such obligation has been finally adjudicated, settled or otherwise agreed upon in writing.
ARTICLE FOUR - DISCLAIMER OF WARRANTIES & LIMITED LIABILITY

4.1
DISCLAIMER OF WARRANTIES. EXCEPT AS EXPLICITLY PROVIDED IN THIS MASTER AGREEMENT, THE SERVICES AND ANY EQUIPMENT PROVIDED UNDER THIS MASTER AGREEMENT ARE PROVIDED ON AN “AS IS”, “AS AVAILABLE” BASIS. IN ADDITION, THE PARTIES ACKNOWLEDGE THAT GIVEN THE SERVICES (INCLUDING ANY EQUIPMENT) MAY DEPEND TO SOME EXTENT ON COMPANY, BPPR, AND THEIR RESPECTIVE SUBSIDIARIES’ OWN COMPUTER SYSTEMS, EVERTEC DOES NOT MAKE ANY

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WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF TITLE, QUIET ENJOYMENT, QUIET POSSESSION, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT. FURTHERMORE, EVERTEC DOES NOT MAKE ANY WARRANTIES OF ANY KIND, EXCEPT THOSE MADE IN THIS MASTER AGREEMENT, A SERVICE ADDENDUM OR EXHIBIT C, WITH RESPECT TO LOSS OR CORRUPTION OF DATA, LOSS OR DAMAGE TO EQUIPMENT AND/OR SOFTWARE, SYSTEM RESPONSE TIMES, TELECOMMUNICATION LINES OR OTHER COMMUNICATION DEVICES, QUALITY, AVAILABILITY, RELIABILITY, SECURITY ACCESS DELAYS OR ACCESS INTERRUPTIONS, NOR COMPUTER VIRUSES, BUGS OR ERRORS. EVERTEC DOES NOT MAKE ANY WARRANTIES THAT THE SERVICES WILL NOT BE INTERRUPTED OR ERROR FREE OR AS TO THE RESULTS THAT MAY BE OBTAINED FROM THE USE OF THE SERVICES AND EVERTEC ASSUMES NO RESPONSIBILITY OR LIABILITY IF TELECOMMUNICATION CARRIERS ARE NOT AVAILABLE AT ANY GIVEN TIME. EVERTEC, ITS AFFILIATES, AND THEIR RESPECTIVE REPRESENTATIVES ARE NOT LIABLE, AND EXPRESSLY DISCLAIM ANY LIABILITY FOR THE CONTENT OF ANY DATA OF COMPANY, BPPR, AND THEIR RESPECTIVE SUBSIDIARIES THAT IS TRANSFERRED EITHER TO OR FROM COMPANY, BPPR, AND THEIR RESPECTIVE SUBSIDIARIES OR STORED BY COMPANY, BPPR, AND THEIR RESPECTIVE SUBSIDIARIES VIA THE SERVICES PROVIDED BY EVERTEC. NO ORAL ADVICE OR WRITTEN INFORMATION GIVEN BY EVERTEC REPRESENTATIVES WILL CREATE A WARRANTY; NOR MAY COMPANY, BPPR, AND THEIR RESPECTIVE SUBSIDIARIES RELY ON ANY SUCH INFORMATION OR ADVICE.

4.2
Reliance on COMPANY Provided Data. In performing the Services, EVERTEC will be entitled to rely upon the data, information, instructions, or Specifications provided by COMPANY, BPPR, and their respective Subsidiaries and, therefore, will not be liable to COMPANY, BPPR, and their respective Subsidiaries in the same accord as set forth herein as a limitation of liability, should EVERTEC perform in accordance with such data, information or instructions received from COMPANY, BPPR, and their respective Subsidiaries. If any error results from incorrect input supplied by COMPANY, BPPR, and their respective Subsidiaries, COMPANY, BPPR, and their appropriate respective Subsidiaries will be responsible for discovering and reporting such error and supplying the data necessary to correct such error to EVERTEC, in which case, EVERTEC will exercise Best Efforts to correct the error at COMPANY, BPPR, and their appropriate respective Subsidiaries’ sole expense.

4.3
Force Majeure. EVERTEC will not be liable for any Loss, damage, non-performance, default, or delay under this Master Agreement caused by or due to Force Majeure. In such event, EVERTEC’s obligation will be limited to using commercially reasonable efforts to reinstate the Services within a reasonable period of time once the unforeseen event has been rectified. Except as otherwise provided for herein, EVERTEC’s time for performance or cure hereunder will be extended for a period equal to the duration of the cause.

4.4
Systems and/or Services Not Provided by EVERTEC. To the extent COMPANY, BPPR, or their respective Subsidiaries perform any services themselves or use their own software, hardware, communications devices, Internet services, e-mail systems or other systems or, in the alternative, retain Third Parties to provide such services and systems, the parties acknowledge and agree that terms of this Master Agreement will not be deemed to impose on EVERTEC any obligation to obtain from owners of such systems any licenses or agreements that are necessary in order for EVERTEC to interface the Services with such systems. Nor will EVERTEC have any responsibility or liability in connection with such services or systems not provided by EVERTEC. COMPANY, BPPR, or their respective Subsidiaries will be solely responsible for the installation, operation, maintenance, use, and compatibility of such systems and services. In the event that such systems or services impair COMPANY, BPPR, and their respective Subsidiaries’ use of any Services: (a) COMPANY, BPPR, and their respective Subsidiaries will nonetheless be liable for payment for all Services provided by EVERTEC, and (b) any Specifications generally applicable to the Services will not apply.

4.5
LIMITATION OF LIABILITY.

a)
EXCEPT FOR WILLFUL MISCONDUCT OR GROSS NEGLIGENCE, EVERTEC AND ITS SUBSIDIARIES SHALL NOT BE LIABLE TO COMPANY, BPPR OR ANY OF THEIR RESPECTIVE AFFILIATES PURSUANT TO THIS MASTER AGREEMENT FOR ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL, REMOTE OR SPECULATIVE DAMAGES OR LOSSES, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR ANTICIPATED PROFITS, ROYALTIES, LOST DATA, COST OF PROCUREMENT OF SUBSTITUTE SOFTWARE, EQUIPMENT OR SERVICES, OR ANY OTHER BUSINESS OR OTHER ECONOMIC LOSS ARISING FROM OR RELATED TO ANY EQUIPMENT OR SOFTWARE NOT PROVIDED BY EVERTEC, ANY SERVICES, INCIDENTAL OR OTHERWISE, PROVIDED BY THIRD PARTIES (EXCEPT THOSE SERVICES PROVIDED BY A SUBCONTRACTOR OF EVERTEC UNDER ARTICLE 1.17), AND ANY THIRD PARTY CLAIM (EXCEPT AS OTHERWISE PROVIDED IN ARTICLE TEN OF THIS MASTER

22


AGREEMENT): (I) WHETHER FOR, AMONG OTHER THINGS, SUCH PARTY’S NEGLIGENCE OR MISCONDUCT, BREACH OF WARRANTY OR ANY OBLIGATION ARISING THEREFROM; (II) WHETHER LIABILITY IS ASSERTED IN, AMONG OTHER THINGS, CONTRACT OR TORT (INCLUDING BUT NOT LIMITED TO NEGLIGENCE AND STRICT PRODUCT LIABILITY); (III) WHETHER OR NOT FORESEEABLE; AND (IV) WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE.

b)
EXCEPT FOR WILLFUL MISCONDUCT OR GROSS NEGLIGENCE, COMPANY, BPPR AND THEIR RESPECTIVE SUBSIDIARIES SHALL NOT BE LIABLE TO EVERTEC OR ITS AFFILIATES PURSUANT TO THIS MASTER AGREEMENT FOR ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL, REMOTE OR SPECULATIVE DAMAGES OR LOSSES, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR ANTICIPATED PROFITS, ROYALTIES, LOST DATA, COST OF PROCUREMENT OF SUBSTITUTE SOFTWARE, EQUIPMENT OR SERVICES, OR ANY OTHER BUSINESS OR OTHER ECONOMIC LOSS ARISING FROM OR RELATED TO ANY EQUIPMENT OR SOFTWARE NOT PROVIDED BY COMPANY, BPPR OR THEIR RESPECTIVE SUBSIDIARIES, ANY SERVICES, INCIDENTAL OR OTHERWISE, PROVIDED BY THIRD PARTIES, AND ANY THIRD PARTY CLAIM (EXCEPT AS OTHERWISE PROVIDED IN ARTICLE TEN OF THIS MASTER AGREEMENT): (I) WHETHER FOR, AMONG OTHER THINGS, SUCH PARTY’S NEGLIGENCE OR MISCONDUCT, BREACH OF WARRANTY OR ANY OBLIGATION ARISING THEREFROM; (II) WHETHER LIABILITY IS ASSERTED IN, AMONG OTHER THINGS, CONTRACT OR TORT (INCLUDING BUT NOT LIMITED TO NEGLIGENCE AND STRICT PRODUCT LIABILITY); (III) WHETHER OR NOT FORESEEABLE; AND (IV) WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE, IN EACH CASE, OTHER THAN EXPECTED REVENUES (NET OF EXPECTED COSTS THAT WOULD HAVE OTHERWISE BEEN INCURRED) FOR SERVICES ANTICIPATED TO BE PROVIDED HEREUNDER.

c)
EXCEPT FOR WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OR TO THE EXTENT OTHERWISE PROVIDED UNDER ANY LEGAL REQUIREMENTS, EVERTEC’S LIMIT OF LIABILITY UNDER THIS MASTER AGREEMENT WILL BE THE AMOUNT OF DIRECT DAMAGES SUBJECT TO AN AGGREGATE ANNUAL LIMIT EQUAL TO THE AMOUNT OF PAYMENTS MADE TO EVERTEC BY COMPANY, BPPR, AND THEIR RESPECTIVE SUBSIDIARIES FOR THE SERVICE FOR WHICH THE LIABILITY RELATES DURING THE TWELVE MONTHS PRIOR TO THE ACT, OMISSION OR EVENT THAT GIVES RISE TO THE CLAIM FOR LIABILITY. THIS LIMITATION WILL APPLY NOTWITHSTANDING ANY LIMITED REMEDY PROVIDED HEREIN; PROVIDED, HOWEVER, THAT THIS LIMITATION WILL NOT APPLY TO LOSSES RELATED TO BREACHES OF THE CONFIDENTIALITY PROVISIONS OF THIS MASTER AGREEMENT, NOR TO INTELLECTUAL PROPERTY INDEMNIFICATION PROVISIONS. EACH PARTY HEREBY WAIVES ANY CLAIM THAT THESE EXCLUSIONS DEPRIVE IT OF AN ADEQUATE REMEDY OR CAUSE THIS MASTER AGREEMENT TO FAIL OF ITS ESSENTIAL PURPOSE.

ARTICLE FIVE - CONFIDENTIALITY, PRIVACY & SECURITY OF INFORMATION

5.1     Confidential Information.
a)
The parties acknowledge that in the course of their dealings each may receive (the “Receiving Party”) Confidential Information of the other party (the “Disclosing Party”). As such, the parties are willing to share such Confidential Information provided that the Receiving Party protects the Confidential Information of the Disclosing Party. Confidential Information will not include information that:
1.Is or becomes generally available to the public without breach of this Master Agreement;
2.Was available to the Receiving Party on a non-confidential basis prior to its disclosure by the Disclosing Party;
3.Becomes available to the Receiving Party from a Third Party, provided that the Receiving Party does not have knowledge, after reasonable inquiry, that such Third Party is subject to an obligation of confidentiality with the Disclosing Party;
4.Is independently developed by the Receiving Party without reference to or reliance upon the Confidential Information;
5.Is approved by the Disclosing Party for disclosure; or
6.Is required to be disclosed by applicable Legal Requirements or by a Governmental Authority, but only to the extent so required and solely for such purpose, and the Receiving Party shall otherwise remain obligated to treat such information as Confidential Information pursuant to the terms of this Article 5.


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b)
In any dispute with respect to these exclusions, the burden of proving that information is not Confidential Information will be on the party making such assertion.

5.2     Privacy.
c)
The Receiving Party agrees to protect and hold all Confidential Information in strict confidence and to take all reasonable steps necessary to protect the Confidential Information from unauthorized and/or inadvertent disclosure. Unless in receipt of specific written exemption from the Disclosing Party or required by any Legal Requirements, the Receiving Party will not:
1.use, reproduce, modify or disclose any of the Confidential Information for any purpose other than to perform its obligations under this Master Agreement for which the Confidential Information is being disclosed;
2.disclose any of the Confidential Information other than to Representatives of the Receiving Party who have a reasonable need-to-know in order to discharge their obligations under this Master Agreement, and only to do so when the Representatives have agreed to be bound by the confidentiality provisions of this Master Agreement;
3.remove any proprietary rights legend from the Confidential Information.

d)
The prohibition against the disclosure of Confidential Information includes, but is not limited to, disclosing the substance of the negotiations of the Master Agreement and the existence and/or the terms and conditions thereof, as well as the fact that any similarity exists between the Confidential Information and information independently developed by another Person or entity, and the parties understand that such similarity does not excuse it from abiding by its covenant or other obligations under this Master Agreement.

e)
The Receiving Party will be fully liable for the acts of its Representatives to whom it discloses the Confidential Information.

5.3     Security of Customer Information.

a)
To effect the purposes of this Master Agreement, COMPANY, BPPR or one of their respective Subsidiaries may from time to time provide EVERTEC with information or access to information concerning COMPANY, BPPR, or one of their respective Subsidiaries and persons or entities who obtain financial products or services from COMPANY, BPPR, or their respective Subsidiaries, including without limitation, client account information (“Customer Information”). EVERTEC acknowledges that its right to use the Customer Information may be limited by obligations of Company, BPPR or one of their respective Subsidiaries under the Gramm-Leach-Bliley Act of 1999 (Public Law 106-102, 113 Stat. 1138) (the “Gramm Act”) and its implementing regulations (e.g., Federal Reserve Regulation P, Securities and Exchange Commission Regulation S-P) and other federal and state laws and regulations regarding privacy and the confidentiality of customer records. EVERTEC shall be responsible for establishing and maintaining an information security program that complies with the Legal Requirements. To protect the privacy of the Customer Information, EVERTEC shall: (i) limit access to the Customer Information to its employees and agents who have a need to know to carry out the purposes for which the Customer Information was disclosed; and (ii) use the Customer Information only for purposes of carrying out its obligations hereunder. Furthermore, EVERTEC agrees to (i) protect and hold all Customer Information in strict confidence and to take all reasonable steps necessary to protect the Customer Information from unauthorized and/or inadvertent disclosure; (ii) give immediate verbal and written notification to COMPANY or BPPR, or one of their respective Subsidiaries, as applicable of any court order or legal action requiring the disclosure of Customer Information and, to the extent allowable under the law, hold the Customer Information in confidence while COMPANY, BPPR or one of their respective Subsidiaries seeks a protective order; (iii) give prompt notification of any unauthorized or inadvertent disclosure of the Customer Information; (iv) upon request of COMPANY, BPPR or one of their respective Subsidiaries promptly return or destroy all Customer Information belonging to COMPANY, BPPR, or one of their respective Subsidiaries, as applicable, including all copies thereof; and (v) implement security measures designed to (a) ensure the security, integrity and confidentiality of the Customer Information; (b) protect against any anticipated threats or hazards to the security or integrity of the Customer Information; and (c) protect against unauthorized access to or use of the Customer Information.

b)
Interagency Guidelines. EVERTEC acknowledges the requirements of the Interagency Guidelines Establishing Standards for Safeguarding Customer Information issued by bank regulatory agencies on February 1, 2001, regarding the implementation of security measures to safeguard customer information. EVERTEC represents and warrants to COMPANY, BPPR, and their respective Subsidiaries that it has in place a comprehensive written security program that includes administrative, technical and physical

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safeguards to protect the security, confidentiality and integrity of Customer Information. Furthermore, EVERTEC agrees that COMPANY, BPPR, and their respective Subsidiaries, and any Third Party auditor reasonably designated by COMPANY, BPPR, or their respective Subsidiaries, may, in a manner that is consistent with practices and procedures of the parties prior to the date hereof, at any time (i) solicit a copy of the aforementioned security program and (ii) review, monitor and audit EVERTEC to confirm it has satisfied its obligations pursuant to this paragraph.

c)
Unauthorized Access. EVERTEC also acknowledges the requirements of the Interagency Guidance on Response Programs for Unauthorized Access to Customer Information and Customer Notice issued by bank regulatory agencies on March 29, 2005, regarding implementing effective notification procedures in the event of unauthorized access to Customer Information. As such, the parties acknowledge and agree that EVERTEC shall be responsible for the unauthorized or fraudulent application for, access to or use of the Customer Information by any entity caused by the negligent acts or omissions of EVERTEC, its employees, subcontractors or agents. If EVERTEC becomes aware of any actual or suspected security breach involving unauthorized access (i.e., physical trespass on a secure facility, computing systems intrusion/hacking, loss/theft of a PC (laptop or desktop), loss/theft of printed materials, etc.) to the Customer Information, that either compromises or in EVERTEC’s reasonable judgment may have compromised the Customer Information, EVERTEC shall report such incident within forty-eight (48) hours in writing to COMPANY, BPPR, or one of their respective Subsidiaries, as applicable, and describe in reasonable detail the circumstances surrounding such unauthorized access (including, without limitation, a description of the causes of such breach). Any report under this Section shall include a brief summary of the steps being taken by EVERTEC to remedy such breach. Except as may be strictly required by Legal Requirements, EVERTEC agrees that it will not inform any Third Party of any such security breach without Popular’s, or its applicable Affiliate’s, prior written consent; however, if such disclosure is required by Legal Requirements, EVERTEC agrees to reasonably cooperate with COMPANY, BPPR, and their respective Subsidiaries regarding the content of such disclosure so as to minimize any potential adverse impact upon COMPANY, BPPR, and their respective Subsidiaries and their clients and customers.

5.4
Remedies. In the event of any court order or legal action requiring the disclosure of Confidential Information, the Receiving Party agrees to give immediate verbal and written notification of the order or action to the Disclosing Party, and to the extent allowable under the law and at the expense of the Disclosing Party, hold the Confidential Information while the Disclosing Party seeks a protective order. The Receiving Party acknowledges and agrees that it would be difficult to fully compensate the Disclosing Party for damages resulting from the breach or threatened breach of the foregoing provisions and, accordingly, that, in addition to any other remedies that may be available, in law, at equity or otherwise, the Disclosing Party will be entitled to seek injunctive relief, including, without limitation, temporary restraining orders, preliminary injunctions and permanent injunctions, to enforce such provisions without the necessity of proving actual damages or posting a bond or any other security. This provision with respect to injunctive relief will not, however, diminish the Disclosing Party’s right to claim and recover damages.

5.5
Term of Obligation. Unless indicated otherwise in writing, the parties’ obligations under this Section will survive this Master Agreement for a period of three (3) years following termination hereof. Upon termination of this Master Agreement for any reason, the Receiving Party’s rights to possession and use of any Confidential Information in connection with the performance of its obligations hereunder or otherwise will terminate. Upon the request of the Disclosing Party, the Receiving Party will promptly return or destroy (in either case under certification to said effect) all Confidential Information belonging to the Disclosing Party, including all copies thereof. Should the Receiving Party be required by law to retain any of the Disclosing Party’s Confidential Information for a period longer than the Term of this Master Agreement, including any extension thereof, then the Receiving Party’s obligations under this Section will remain in full force and effect until the expiration of any such legally mandated retention period.

ARTICLE SIX - SECURITY, COMPANY DATA & RECORDS

6.1
Authorized Persons. Each party will designate one or more individuals (hereinafter, “Authorized Persons”) who can (1) carry out transactions in each party’s name; (2) receive information from the other party related to the operation of the Service, including, but not limited to, any provided access code; (3) give written instructions or inform the other party about any action or request for action by the party; (4) notify or issue any document related to this Master Agreement that the Authorized Person deems necessary or convenient. Such Authorized Persons shall be notified to the other parties in writing.



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6.2
Security Measures.

a)
The parties warrant that they have adopted, and will assume responsibility for complying with, any and all appropriate and necessary security measures required for the protection of access to their systems and to the Services by their Representatives and Authorized Persons. As such, the parties warrant that they have established commercially reasonable security procedures to minimize unauthorized access and agree that they will take the necessary measures to maintain the confidentiality of the security procedures and any access codes, passwords, instructions or security equipment. Except as may be specifically set forth in writing, each party represents and warrants to the other parties that it will not alter or disable any hardware or software security programs residing on another party’s hardware or systems. If a network connection is established between COMPANY, BPPR, or one of their respective Subsidiaries, on the one hand, and EVERTEC, on the other hand, each party represents and warrants to the others that its computing environment is free from all generally-known viruses, worms, Trojans and other “malware,” that may disrupt, damage or interfere with the other parties’ network and/or telecommunication facilities. As such, each party agrees to (1) allow the other parties to perform network assessments of its computing environment, and (2) maintain an alert status regarding the security of its computing systems, including, without limitation, all vulnerabilities and security patches or corrective actions, by subscribing to an industry-recognized service, such as CERT or CIAC. Each party understands that, should an assessment reveal inappropriate or inadequate security based on the pre-defined requirements for security, the other parties may, in addition to other remedies each may have, remove such party’s access to its network until such party satisfactorily complies with the security requirements defined.

b)
COMPANY, BPPR, and their respective Subsidiaries’ Authorized Persons agree to comply with all of EVERTEC’s requirements in relation to the security of the EVERTEC computing environment and Authorized Locations, including, without limitation, any subsequently agreed security plan or information processing requirements that may be embodied in any Service Addendum. COMPANY, BPPR, and their appropriate respective Subsidiaries will execute all documents generally required by EVERTEC for access to EVERTEC’s computing environment and Authorized Locations. Further, if any Authorized Person of COMPANY, BPPR, or their respective Subsidiaries, at any time during the life of this Master Agreement, is granted remote access to EVERTEC’s network, or is telecommuting in any capacity, then such person will be subject to additional EVERTEC data security requirements.

c)
Should the Services require access codes or other identification methods to gain access, each party will immediately notify the appropriate other party or parties in writing of any change of Authorized Person or the scope of his/her authority. Until such notification is received, each party may accept, without further inquiry, all declarations, instructions or representations made or issued by the Authorized Person. Furthermore, the parties will not assume responsibility, explicitly or implicitly, for questioning or verifying with the other parties whether the Person who uses or has access to the Service is in fact the Authorized Person or if he/she is acting in accordance with another party’s internal policies and procedures.

6.3
Ownership of Company Data.

a)
Each of COMPANY, BPPR, and their respective Subsidiaries will remain the sole and exclusive owner of its Company Data and Confidential Information, regardless of whether such data is maintained on magnetic tape, magnetic disk, or any other storage or processing device. All Company Data and other Confidential Information will, however, be subject to regulation and examination by the appropriate auditors and Governmental Authorities at the Authorized Locations to the same extent as if such information were on COMPANY, BPPR, or their respective Subsidiaries’ premises. EVERTEC will notify COMPANY, BPPR, and their respective Subsidiaries as soon as reasonably possible of any formal request by any Governmental Authority to examine such information maintained by EVERTEC. COMPANY, BPPR, and their respective Subsidiaries agree that EVERTEC is authorized to provide all such information when properly required to do so by a Governmental Authority, subject to the provisions of Section 5.3 hereof. EVERTEC acknowledges that it will not have or acquire any rights in or to any Company Data or Confidential Information upon termination of this Master Agreement.

b)
EVERTEC will, subject to its internal control and security procedures, permit each of COMPANY, BPPR, and their respective Subsidiaries to have or obtain (by electronic or other means) access to its Company Data, including where appropriate, access through COMPANY, BPPR, or their respective Subsidiaries’ computer terminals and equipment. EVERTEC will furnish COMPANY, BPPR, and their respective Subsidiaries with such written instructions, manuals or other documentation as will be necessary to such operation and access by COMPANY, BPPR, and their respective Subsidiaries.

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6.4
Records and Backup. Each party will maintain its respective records related to the Services in a proper, complete and accurate fashion, and in compliance with all Legal Requirements applicable to each of them. EVERTEC will be responsible for retaining Company Data or other records pertaining to COMPANY, BPPR, and their respective Subsidiaries in accordance with COMPANY, BPPR, and their respective Subsidiaries’ Specifications for the Services, which will take into account COMPANY, BPPR, and their respective Subsidiaries’ record retention policies; provided, however, that COMPANY, BPPR, and their respective Subsidiaries acknowledge that any change in retention periods may result in additional charges and/or increases in the fees for the Services corresponding to the Company Data subject to such retention periods. Any such changes in retention periods will be subject to the provisions of Section 2.7(b) hereof.

ARTICLE SEVEN - INTELLECTUAL PROPERTY

7.1
Title. To the extent EVERTEC uses its own Intellectual Property to provide the Services under this Master Agreement, EVERTEC warrants that it is the owner of all right, title, and interest in and to such Intellectual Property, none of which, to EVERTEC’s best knowledge, infringes any proprietary right of any other Person. As such, the parties agree that, subject to the Legal Requirements and to existing agreements with Third Parties, or except as otherwise expressly agreed to between the parties in writing, EVERTEC is and will remain the owner of its Intellectual Property and all derivative works based thereon and that no title to or ownership of EVERTEC’s Intellectual Property or any part thereof is hereby granted to COMPANY, BPPR, or their respective Subsidiaries. Should EVERTEC use Third Party Intellectual Property to provide the Services, then EVERTEC warrants that it is duly licensed to use such Third Party Intellectual Property to provide the Services and any warranties and infringement indemnities for such Third Party Intellectual Property will be those of the Third Party license agreements with EVERTEC; provided, however, that EVERTEC shall not be obligated to make any representation or warranty that it is duly licensed to use any Third Party Intellectual Property that is the subject of any Merger IP License until the earlier of (i) such time as the COMPANY or EVERTEC, as applicable, has received a consent, approval, waiver or authorization that permits EVERTEC to make use of the Merger IP License following the Effective Date or (ii) the fifth anniversary of the Effective Date. In the alternative, COMPANY, BPPR, and their respective Subsidiaries will be given the opportunity to enter into license agreements directly with such Third Parties. The parties agree that, subject to the Legal Requirements and to existing agreements with Third Parties, or except as otherwise expressly agreed to among the parties, each of COMPANY, BPPR, and their respective Subsidiaries is and shall remain as the owner of its Intellectual Property, and all derivative works based thereon. COMPANY, BPPR, and their respective Subsidiaries’ ownership and proprietary rights shall include any and all rights in and to patents, trademarks, copyrights, and trade secret rights.

7.2
General. Each of COMPANY and BPPR acknowledges that in providing the Services to COMPANY, BPPR, and their respective Subsidiaries, EVERTEC is not transferring any right, title or interest in EVERTEC’s Intellectual Property, or any part or component thereof, to COMPANY, BPPR, or their respective Subsidiaries.

7.3
Developments. Except as otherwise agreed to in writing, any services, technology, processes, methods, software and/or enhancements to EVERTEC Intellectual Property or any Third Party Intellectual Property used or developed for purposes of delivering the Services (collectively, the “IP Developments”), whether developed solely by EVERTEC or jointly by EVERTEC and any other party, including any IP Developments requested or suggested by COMPANY, BPPR, or their respective Subsidiaries or a Client, will be the sole property of EVERTEC and will not be considered “works-made-for-hire”. Except as otherwise agreed to in writing, COMPANY, BPPR, and their respective Subsidiaries will not acquire any ownership right, Intellectual Property right, claim or interest in EVERTEC’s Intellectual Property or in any IP Developments. The parties agree that any services, technology, processes, methods, software and/or enhancements to COMPANY Intellectual Property for purposes of delivering the Services will be the sole property of COMPANY, BPPR, or one of their respective Subsidiaries, as applicable. Except as otherwise agreed to in writing, any Intellectual Property created or developed by EVERTEC as an independent product will be the sole property of EVERTEC and will not be considered a “work-made-for-hire”.

7.4
Cooperation. The parties will cooperate with each other and execute such other documents as may be reasonably deemed necessary by EVERTEC to achieve the objectives of this Article Seven.

7.5
Intellectual Property Infringement.

a)
Subject to the Agreement and Plan of Merger, EVERTEC agrees to defend indemnify and hold harmless COMPANY, BPPR, and their respective Affiliates and Subsidiaries against claims that any of the Services or its Intellectual Property infringes any Intellectual Property Right of a Third Party. EVERTEC will defend COMPANY, BPPR, and their respective Affiliates and Subsidiaries and will pay the damages and costs finally awarded against COMPANY, BPPR, or their respective Affiliates and Subsidiaries.

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b)
If EVERTEC receives notice of an infringement claim or otherwise concludes that its Intellectual Property may infringe the proprietary rights of a Third Party, EVERTEC may in its sole discretion (i) procure the right for COMPANY, BPPR, and their respective Subsidiaries to continue using the affected Intellectual Property; (ii) modify the affected Intellectual Property to make it non-infringing; (iii) replace the affected Intellectual Property with a functional equivalent; or (iv) if EVERTEC determines that options (i) through (iii) are not practicable, terminate COMPANY, BPPR, and their respective Subsidiaries’ right to use the affected Intellectual Property and accept its return against payment of its then- depreciated value, computed on a five (5) year straight-line depreciation schedule commencing as of its installation date.

c)
EVERTEC will have no liability for any claim of infringement and thus no obligation to defend and indemnify COMPANY, BPPR, and their respective Subsidiaries under this Section if such infringement claim is based on
(i)COMPANY, BPPR, and their respective Subsidiaries’ continued use of the affected Intellectual Property after EVERTEC notifies COMPANY, BPPR, and their respective Subsidiaries to discontinue use because of such a claim;
(ii)COMPANY, BPPR, and their respective Subsidiaries’ use of a superseded or altered release of the affected Intellectual Property or any portion thereof, including, but not limited to, COMPANY, BPPR, and their respective Subsidiaries’ failure to use updates or new releases made available by EVERTEC, but only to the extent that such claim would have been avoided but for such failure; (iii) any modification by COMPANY, BPPR, and their respective Subsidiaries or a Third Party to the affected Intellectual Property, but only to the extent that such claim would have been avoided, but for such modification; (iv) COMPANY, BPPR, and their respective Subsidiaries’ use of the affected Intellectual Property without EVERTEC’s written consent; (v) COMPANY, BPPR, and their respective Subsidiaries’ use, operation or combination of the affected Intellectual Property with information, software, specifications, instructions, data, materials or items not supplied or approved by EVERTEC, but only to the extent that such claim would have been avoided but for such combined use; (vi) use of the affected Intellectual Property in a manner not intended by the accompanying and provided documentation; or (vii) COMPANY, BPPR, and their respective Subsidiaries’ misuse of the affected Intellectual Property.

d)
Furthermore, EVERTEC’s obligation to defend COMPANY, BPPR, and their respective Subsidiaries under this section is subject to all of the following conditions: (i) COMPANY, BPPR, or their respective Subsidiaries must notify EVERTEC promptly in writing after the claim is asserted or threatened; (ii) COMPANY, BPPR, or their respective Subsidiaries must give EVERTEC sole control over its defense or settlement; (iii) COMPANY, BPPR, and their respective Subsidiaries does not take a position that is adverse to EVERTEC; and (iv) COMPANY, BPPR, or their respective Subsidiaries must provide EVERTEC with reasonable assistance in defending the claim for which EVERTEC will reimburse COMPANY, BPPR, and their respective Subsidiaries for any reasonable out-of-pocket expenses that COMPANY, BPPR, or their respective Subsidiaries incur in providing such assistance.
e)
COMPANY and BPPR agree to notify EVERTEC promptly in writing if any other type of Third Party claim is brought against COMPANY, BPPR, or their respective Subsidiaries regarding EVERTEC’s Intellectual Property. EVERTEC may, at its option, choose to treat these claims as being covered by this Section.
f)
This Section states EVERTEC’s entire liability and COMPANY’s and BPPR’s exclusive remedies with respect to any Third Party infringement and trade secret misappropriation claims.

ARTICLE EIGHT - REGULATORY COMPLIANCE, AUDIT & SERVICE REVIEWS

8.1
General Regulatory Compliance.

a)
EVERTEC acknowledges that EVERTEC will be solely responsible for monitoring and interpreting (and for complying with) Legal Requirements applicable to EVERTEC, and as such, hereby warrants that EVERTEC will comply with all applicable Legal Requirements, present and future, relating to the conduct and operation of its business.

b)
COMPANY and BPPR acknowledge that each of COMPANY and BPPR will be solely responsible for monitoring and interpreting (and for complying with, to the extent such compliance requires no action by EVERTEC) Legal Requirements applicable to COMPANY and its Subsidiaries and BPPR and its Subsidiaries, as applicable, and as such, hereby warrants that it and its Subsidiaries will comply with all applicable Legal Requirements, present and future, relating to the conduct and operation of its or such Subsidiaries’ business.

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8.2
Legal Requirements.

a)
COMPANY and BPPR shall be responsible for monitoring and interpreting (and for complying with, to the extent such compliance requires no action by EVERTEC) the Legal Requirements. Any such interpretation shall be provided by COMPANY or BPPR to EVERTEC as part of the instructions used to establish the Specifications and EVERTEC will select the technical parameters within EVERTEC’s Systems that will apply to COMPANY, BPPR, and their respective Subsidiaries. EVERTEC shall be responsible for determining that such selections are consistent with COMPANY’s or BPPR’s instructions, as applicable. COMPANY and BPPR, as applicable, shall be responsible for determining that the instructions provided to EVERTEC are consistent with the Legal Requirements and with the terms and conditions of any agreements between COMPANY, BPPR, and their respective Subsidiaries and its Clients.

b)
Subject to Section 8.2(a), EVERTEC shall work with COMPANY and BPPR in developing and implementing a suitable procedure or direction to enable COMPANY, BPPR, and their respective Subsidiaries to comply with Legal Requirements applicable to the Services being provided by EVERTEC to COMPANY, BPPR, and their respective Subsidiaries.

8.3
Audit. EVERTEC, COMPANY, and BPPR acknowledge and agree that the performance of the Services may be subject to regulation by Governmental Authorities. EVERTEC agrees to cooperate, in a manner that is consistent with practices and procedures of the parties prior to the date hereof, with any audit or examination of the Services or COMPANY, BPPR, or their respective Subsidiaries, whether by a Governmental Authority or internal or external auditors of COMPANY, BPPR, or their respective Subsidiaries (“Audit”). Furthermore, EVERTEC agrees to provide any information or material lawfully requested during an Audit, and permitting such auditing parties to inspect or audit EVERTEC with respect to its provision of the Services; provided, however, that all such Audits will be performed at the sole expense of COMPANY, BPPR, or their respective Subsidiaries, as applicable, and each of COMPANY and BPPR agrees to reimburse EVERTEC for all reasonable fees associated with such examination with respect to it or its Subsidiaries.

8.4
Service Center Reviews.

a)
On an annual basis during the Term, EVERTEC shall engage a reputable independent certified public accounting firm of recognized national or regional standing (the “Firm”), to conduct a review of its IT operations and application controls for the Services provided to COMPANY, BPPR, and their respective Subsidiaries, in accordance with industry-wide best practices and FFEIC Guidelines. The aforesaid review shall be conducted in accordance with the American Institute of Certified Public Accountants Statement on Auditing Standards Number 70 (“SAS 70”) or any applicable successor standard, the findings and recommendations of which shall be set forth in a report (the “Service Center Review”). The Service Center Review shall (i) include a Type II Service Auditor’s Report under SAS 70, (ii) cover, at a minimum, a period of six (6) months, (iii) be dated as of September 30 of the year in question, and (iv) be delivered to COMPANY, BPPR, and their respective Subsidiaries on or before December 15 of such year.

b)
The parties agree and acknowledge that prior to the date hereof, EVERTEC periodically provided to COMPANY, BPPR and their respective Subsidiaries and to other EVERTEC customers a report of EVERTEC’s IT operations and applications controls for the services provided to COMPANY, BPPR and their respective Subsidiaries and to other EVERTEC customers (the “Previous Control Reports”). During the Term, Popular and BPPR agree to make a payment to EVERTEC for the Service Center Review within 30 days of EVERTEC’s delivery to COMPANY and BPPR of the Service Center Review. Such payment shall be an amount equal to the excess, if any, of (i) the fees or expenses paid by EVERTEC to the Firm in connection with the first Service Center Review performed during the period between the date of this Master Agreement and the first anniversary of the date hereof, over (ii) the costs, fees and expenses that EVERTEC paid in connection with the Previous Control Reports prepared during the most recent fiscal year completed prior to the date hereof (provided that any costs, fees and expenses allocated to EVERTEC by the Popular Parties in connection with the Previous Control Reports prepared during the most recent fiscal year completed prior to the date hereof shall be deemed to have been “paid” by EVERTEC for purposes of calculating the amount of such excess).

c)
If the Service Center Review contains any recommendations, EVERTEC shall, at its sole cost and expense, promptly take all actions necessary to comply with such recommendations and shall advise COMPANY and BPPR when such compliance is achieved.


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d)
If, at any time during the Term, COMPANY or BPPR has reasonable material concerns regarding (i) the scope of the Service Center Review, (ii) any material qualification in the aforesaid report, and/or (iii) EVERTEC’s operational and application controls and such concerns are not addressed in the Service Center Review to COMPANY’s or BPPR’s reasonable satisfaction (as applicable), COMPANY or BPPR (as applicable) shall so notify EVERTEC and EVERTEC shall promptly meet with COMPANY or BPPR in an effort to resolve such concern.

e)
For all other requests by COMPANY or BPPR to review all or a portion of the Services and EVERTEC’s operation controls relating thereto, outside the scope of an Audit or SAS 70, the parties will agree in writing to the terms and conditions applicable to such review, including the scope of the review and any expenses related thereto.

ARTICLE NINE - TERM & TERMINATION

9.1
Term. This Master Agreement will commence on September 30, 2010 (the “Effective Date”) and will end on September 30, 2025 unless there is a Popular Parties Change of Control prior to such date and EVERTEC notifies COMPANY within thirty (30) days of such Popular Parties Change of Control of its intent to extend this Master Agreement as a result of such Popular Parties Change of Control, in which case this Master Agreement will end on September 30, 2028 (the “Initial Term”), unless earlier terminated in accordance with the provisions of this Master Agreement. After the Initial Term, this Master Agreement shall renew automatically for successive three (3) year periods (each a “Renewal Period” and together with the Initial Term, the “Term”), unless either party gives written notice to the other party not less than one (1) year prior to the then applicable Renewal Period (the date of such notice, the “Notice Date”), of its intent not to renew this Master Agreement.

9.2
Termination for Cause.

a)
This Master Agreement or any of the Services, individually or collectively, may be terminated by either the Popular Parties, on the one hand, or EVERTEC, on the other, if the other party or parties (as applicable):
1. commits a Material Breach of this Master Agreement (or series of breaches that together constitute a Material Breach), which breach is not cured within thirty (30) days following receipt of notice specifying the nature and extent of such breach; provided, however, that if such breach is not reasonably susceptible of cure within such thirty (30) day period, such period will be extended and the party will not be in default hereunder so long as it commences such cure within such thirty (30) day period and diligently pursues such cure and such failure is cured within ninety (90) days following the receipt of such notice;
2. fails to pay any properly submitted invoice providing for material amounts in the aggregate that are undisputed for a period exceeding sixty (60) days pursuant to Section 3.2 of this Master Agreement; or
3. makes any assignment of this Master Agreement, except as expressly provided herein.

b)
For purposes of this Section 9.2 and notwithstanding anything in this Master Agreement to the contrary, “Material Breach” means a breach, or series of breaches, of a party’s duties or obligations (other than a failure to make a payment pursuant to this Master Agreement) that if left uncured for ninety (90) days following receipt of notice from COMPANY or BPPR detailing the relevant deficiency or failure, would result in a Material Adverse Effect on COMPANY and its Subsidiaries (taken as a whole) or BPPR and its Subsidiaries (taken as a whole), as applicable.

c)
Notwithstanding anything in this Master Agreement to the contrary, any breach or default under a particular Service Addendum will give the non-breaching party or parties the right to terminate that particular Service Addendum, subject to the cure periods set forth under Section 9.2(a)(1), and will not automatically operate as a default under any other Service Addendum.

9.3
Effect upon Termination. Unless indicated otherwise in the written termination notice, upon the termination of any Service, all remaining Services will continue in full force and effect; provided, however, that should this Master Agreement be terminated, all Services in effect as of the date of termination will also terminate. Except as otherwise provided for herein, upon termination, all further obligations of the parties pursuant to this Master Agreement or the particular Service that was terminated, whichever the case may be, will terminate (except the obligation of COMPANY, BPPR and their appropriate respective Subsidiaries to make a payment for any unpaid and properly invoiced amounts, in accordance with Section 3.2) without further liability of any party to the others; provided, however, that termination will not release the party that terminates from any liability which at the time of termination had already accrued to the non-terminating party or parties. No party shall be liable to the others for damages of any kind solely as a result of terminating this Master Agreement in accordance with its provisions. Furthermore, any such termination will be without

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prejudice to any rights or remedies any party may have arising out of any breach of any material representation, warranty, covenant or condition by any other party hereto.

9.4
Transition Assistance. EVERTEC agrees that during the time period between (i) the Notice Date, (ii) the date of any termination of this Master Agreement and all Services hereunder pursuant to Section 9.2 hereof, (iii) the date of termination or non-renewal of any individual Service or Services under this Master Agreement with or without the termination of this Master Agreement, or (iv) the date of a Release Event pursuant to Section 3.1 of the Technology Agreement, in the case of each of (i)-(iv) above, to the extent Transition Assistance (defined below) is requested by COMPANY, BPPR or their respective Subsidiary or Subsidiaries (each of (ii), (iii) and (iv), a “Termination Date”), as applicable, and the completion of the transition services contemplated by this Section 9.4, EVERTEC will continue to provide the applicable Service or Services under the terms and conditions that are in effect as of the Notice Date or a Termination Date, as applicable. For a period (the “Transition Period”) commencing on the earlier of (x) the Notice Date and (y) a Termination Date and ending on the earlier of (a) the 18-month anniversary of the earlier of (x) and (y) above and (b) the date on which all applicable Service or Services have been completely transitioned to another provider, EVERTEC will (i) provide COMPANY, BPPR, and their respective Subsidiaries transition support and assistance including, without limitation, providing COMPANY, BPPR, and their respective Subsidiaries or any Third Party reasonably designated by COMPANY, BPPR, or their respective Subsidiaries information and cooperation necessary to effect COMPANY, BPPR, and their respective Subsidiaries’ transition, with business continuity, of the applicable Service or Services and (ii) continue to provide the applicable Service or Services under the terms and conditions that are in effect as of the Notice Date or a Termination Date, as applicable, until such Service or Services have been completely transitioned to another service provider or to COMPANY, BPPR, their respective Subsidiaries ((i) and (ii) collectively, “Transition Assistance”); provided that COMPANY, BPPR, or their respective Subsidiary or Subsidiaries, as applicable, have used or continue to use reasonable efforts to completely transition the applicable Service or Services to another provider and reasonably continue to need such Transition Assistance, the Transition Period shall be extended until such Service or Services shall be completely transitioned to another provider. During the Transition Period, COMPANY, BPPR, and their respective Subsidiaries and EVERTEC shall use their commercially reasonable efforts to completely transition each Service requested by the COMPANY, BPPR, and their respective Subsidiaries to another service provider or to COMPANY, BPPR, and their respective Subsidiaries prior to the end of the Transition Period. In furtherance of and as a part of such Transition Assistance, EVERTEC shall assist COMPANY, BPPR, and their respective Subsidiaries to develop a plan for the complete transition of all Services requested by the COMPANY, BPPR, or their respective Subsidiaries from EVERTEC to COMPANY, BPPR, and their respective Subsidiaries or another service provider, on a reasonable schedule, which shall give consideration to COMPANY, BPPR, and their respective Subsidiaries’ need for the orderly continuation of such Services. Prior to providing any Transition Assistance, EVERTEC shall deliver to COMPANY, BPPR, and their respective Subsidiaries a good faith estimate of all projected expenses and charges. COMPANY, BPPR, and their respective Subsidiaries understand and agree that all expenses and charges for Transition Assistance shall be computed in accordance with EVERTEC’s then current standard prices for such products, materials, and Services (or to the extent such Services were provided pursuant to this Master Agreement, the expenses and charges for such Services shall be the price for such Services under the Master Agreement), which expenses and charges shall be paid by COMPANY, BPPR, or their appropriate respective Subsidiaries in accordance with the provisions of this Master Agreement. Nothing contained herein shall obligate COMPANY, BPPR, or their respective Subsidiaries to receive Transition Assistance from EVERTEC. Notwithstanding anything to the contrary in this Master Agreement, the Transition Assistance Addendum shall survive the expiration or termination of this Master Agreement (or any portion thereof) for any reason.

ARTICLE TEN - INSURANCE AND INDEMNIFICATION

10.1     Insurance.

a)
In the event of an EVERTEC Change of Control and to the extent deemed advisable by COMPANY, BPPR, and their respective Subsidiaries, the parties agree that EVERTEC will maintain in full force and effect during the Term insurance as follows:
1.Statutory workers compensation insurance or a workers’ compensation and employers’ liability insurance, as applicable under state law, with limits to conform with the greater of the amount required by applicable state statutory law or one million dollars ($1,000,000) each accident, including occupational disease coverage;
2.Comprehensive General Liability insurance with limits not less than one million dollars ($1,000,000) per occurrence and two million dollars ($2,000,000) general aggregate including bodily injury, death, property damage, personal injury, advertising injury, contractual liability, independent contractors, broad-form property damage, employers liability stop gap, and products and completed operations coverage;
3.Automobile Liability insurance with limits not less than one million dollars ($1,000,000) each occurrence combined single limit of liability for bodily injury, death, and property damage, including

31


owned and non- owned and hired automobile coverage, as applicable;
4.Umbrella insurance with limits not less than five million dollars ($5,000,000) covering excess of loss over primary liability insurance policies, including Comprehensive General Liability, Comprehensive Automobile Liability, and Workers Compensation and Employers Liability insurance policies, where applicable under state laws;
5.Fidelity and Crime insurance in the amount of not less than ten million dollars ($10,000,000) each occurrence and annual aggregate including Electronic & Computer Crime, Unauthorized Computer Access coverage, and employee dishonesty coverage extended to loss of third parties; and
6.Professional liability insurance (Errors and Omissions) with limits not less than ten million dollars ($10,000,000) each occurrence and annual aggregate including coverage for computer programming and electronic data processing services, network security liability, content injury, privacy injury, regulatory proceedings, dependent loss and third party custodian.

b)
Certificates of Insurance. Certificates of Insurance evidencing all coverage described in this Section shall be furnished to COMPANY or BPPR upon request, and will include the following:
1.The certificate of insurance will state COMPANY, BPPR, and their respective Subsidiaries as additional insureds under its Comprehensive General Liability, Automobile Liability and any other policy protecting against bodily injury or property damage, and that COMPANY, BPPR, and their respective Subsidiaries, although named as additional insureds, shall nonetheless be entitled to recovery for any loss suffered as a result of EVERTEC’s negligence.
2.The certificate of insurance will state a sixty (60) days’ advance written notice to COMPANY and BPPR in the event that the insurance carrier, for any reason, cancel or materially restrict insurance coverage.
3.The certificate of insurance will state that the respective EVERTEC insurance will respond on a primary basis without contribution from any other insurance of COMPANY, BPPR, or their respective Subsidiaries until EVERTEC insurance limits have become exhausted.
c)All insurance carriers will maintain at all times an AM Best rating of A-VII or better for risks insured in Puerto Rico and an AM Best rating of A-VIII for risks insured outside Puerto Rico.
d)Insurance deductibles or retentions shall not exceed one million dollars per insurance policy unless approved in writing by COMPANY and BPPR.

10.2
Indemnity. Each party (the “Indemnifying Party”) hereby agrees to indemnify, defend, protect and hold harmless the other parties, their Affiliates and their respective Representatives, suppliers, Third Party information providers, sub-contractors and permitted assigns and successors in interest (collectively, the “Indemnified Party”) from and against any Losses incurred or suffered by, or asserted against, such Indemnified Party directly or indirectly in relation to or arising from: (a) subject to Section 2.3 of Exhibit C hereof with respect to any failure by EVERTEC to meet its Service Levels, any breach of this Master Agreement, including, but not limited to, any breach of representation or warranty, by the Indemnifying Party; (b) any claim brought by any Third Party against an Indemnified Party based on the Indemnifying Party’s use of the Services; (c) the Indemnified Party’s compliance with the Indemnifying Party’s Specifications or instructions; (d) acts or omissions of the Indemnifying Party and its Representatives in connection with the installation, maintenance, presence, use or removal of equipment or software not provided by the Indemnified Party; (e) claims for infringement of any Third Party Intellectual Property right, arising from the use of any Services or Systems not provided by the Indemnified Party; (f) the Indemnified Party’s use of the Services, Intellectual Property or data supplied by the Indemnifying Party; and (g) claims against the Indemnified Party for damage to, or loss of use of property of Third Parties and/or injury or death of any person to the extent that such damage, injury or death is caused by the negligent act or omission of the Indemnifying Party.

10.3     Indemnification Procedures. With respect to claims covered by Section 10.2 above, the following procedures will apply:

a)
Notice. Promptly after receipt by an Indemnified Party of notice of the commencement or threatened commencement of any civil, criminal, administrative or investigative action or proceeding involving a claim in respect of which the Indemnified Party will seek indemnification pursuant to this Article Ten, the Indemnified Party will notify the Indemnifying Party of such claim in writing. The failure of Indemnified Party to so notify an Indemnifying Party will relieve Indemnifying Party of its obligations under this Section to the extent that Indemnifying Party can demonstrate damages attributable to such failure. Within fifteen (15) days following receipt of written notice from the Indemnified Party relating to any claim, but no later than fifteen (15) days before the date on which any response to a complaint or summons is due, the Indemnifying Party will notify the Indemnified Party in writing if the Indemnifying Party elects to assume control of the defense and settlement of that claim (a “Notice of Election”).

b)
Procedure Following Notice of Election. If the Indemnifying Party delivers a Notice of Election relating to any claim within the required notice period, the Indemnifying Party will be entitled to have sole control

32


over the defense and settlement of such claim; provided that (i) the Indemnified Party will be entitled to participate in the defense of such claim and to employ counsel at its own expense to assist in the handling of such claim; and (ii) the Indemnifying Party will notify the Indemnified Party before ceasing to defend against such claim, and will not compromise or settle such claim without the Indemnified Party’s prior written consent if such compromise or settlement would impose a penalty or limitation upon the Indemnified Party, including, without limitation, an injunction or other equitable relief, or such compromise or settlement does not include the release of the Indemnified Party from all liability arising from or relating to such claim. After the Indemnifying Party has delivered a Notice of Election relating to any claim, the Indemnifying Party will not be liable to the Indemnified Party for any legal expenses incurred by the Indemnified Party in connection with the defense of that claim. In addition, the Indemnifying Party will not be required to indemnify the Indemnified Party for any amount paid or payable by the Indemnified Party in the settlement of any claim for which the Indemnifying Party has delivered a timely Notice of Election if such amount was agreed to without the written consent of the Indemnifying Party.

c.
Procedure Where No Notice of Election Is Delivered. If the party which is the Indemnifying Party does not deliver a Notice of Election relating to any claim within the required notice period, the Indemnified Party will have the right to defend the claim in such manner as it may deem appropriate, and the failure of the Indemnifying Party to deliver such Notice of Election will not affect the indemnification obligations of such party under this Master Agreement.

d.
Cooperation. When seeking indemnification, the Indemnified Party will at all times reasonably cooperate with the Indemnifying Party in the defense or settlement of any claim which is subject to this Article Ten.

e.
Entitlement to Payment. In the event an Indemnifying Party elects not to assume control of the defense and settlement of that claim, the Indemnified Party will be entitled to payment by the Indemnifying Party upon the Indemnified Party’s settlement of the claim or the adjudication of liability, whichever first occurs.

10.4
Subrogation. In the event that a party will be obligated to indemnify another party pursuant to this Article Ten, the Indemnifying Party will, upon payment of such indemnity in full, be subrogated to all rights of the Indemnified Party with respect to the claims to which such indemnification relates. The Indemnified Party will reasonably cooperate with Indemnifying Party, including by the execution of appropriate documents, to enable the Indemnifying Party to receive the benefit of the right of subrogation outlined in this Section.

ARTICLE ELEVEN - SERVICES FOR CLIENTS

11.1
Scope of Services. EVERTEC acknowledges that the Services are intended to enable COMPANY, BPPR, and their respective Subsidiaries to manage effectively:

a)
COMPANY, BPPR and their respective Subsidiaries’ internal operations, and
b)
COMPANY, BPPR and their respective Subsidiaries’ performance and delivery of services and products for COMPANY, BPPR and their respective Subsidiaries’ respective Clients (hereinafter collectively referred to as the “Popular Services and Products”).

11.2
Provided EVERTEC is given the opportunity to (i) coordinate with COMPANY and BPPR and approve the Specifications for the Services, COMPANY, BPPR or one of their respective Subsidiaries proposes to offer under a written agreement between COMPANY, BPPR or one of their respective Subsidiaries and a Client that includes the provision of such Services (“Client Agreements”); and (ii) review and accept changes to any applicable operating manuals of COMPANY, BPPR or their respective Subsidiaries that impact EVERTEC with respect to its provision of the Services, EVERTEC shall use Best Efforts to ensure that the Services are provided in a manner that allows COMPANY, BPPR and their respective Subsidiaries to act in accordance with the corresponding Client Agreements and operating manuals for each of the Popular Services and Products. In the event that COMPANY, BPPR or their respective Subsidiaries make any change to any Popular Service and Product that requires a change or modification to the Services, such change shall be processed and implemented pursuant to this Master Agreement.

11.3
Special Representations Regarding EVERTEC’s Performance of Services under Service Agreements with Governmental Agencies. In connection with any Client Agreement wherein the Client is a Governmental Authority of the Commonwealth of Puerto Rico, EVERTEC shall comply with the requirements set forth in Executive Order 1991-24 and Circular Letter 1300-25-98 of the Treasury Department, including but not limited to, certifying to the pertinent Governmental Agency that EVERTEC has filed its Puerto Rico income tax returns for the last five (5) years and has made the corresponding payments (or has entered into a payment plan).

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11.4     Client Agreements.

a)
EVERTEC will have no liability or obligation under any Client Agreement, whether through an outsourcing arrangement or through reselling of the Services; provided, however, that EVERTEC shall be responsible to COMPANY, BPPR, and their respective Subsidiaries for any Losses caused by a breach of any of its obligations under this Master Agreement. COMPANY, BPPR, and their respective Subsidiaries will have no authority to bind EVERTEC to any terms or conditions of the Service in connection with or as part of any Client Agreement, except as otherwise provided by the parties in writing.

b)
EVERTEC agrees to assist COMPANY, BPPR, and their respective Subsidiaries with the investigation of any claims arising under a Client Agreement. Furthermore, EVERTEC will refer to COMPANY, BPPR, and their respective Subsidiaries any complaint that is received by EVERTEC, in which case, EVERTEC will be notified of the results of any investigation performed by COMPANY, BPPR, or their respective Subsidiaries within five (5) days following the receipt of the referral for investigation.

c)
COMPANY, BPPR, and their respective Subsidiaries are responsible for any acts or omissions by Clients that, if performed by COMPANY, BPPR, and their respective Subsidiaries, would constitute a breach of this Master Agreement. COMPANY, BPPR, and their respective Subsidiaries are responsible for all fees and expenses that are payable to EVERTEC under this Master Agreement regardless if COMPANY, BPPR, and their respective Subsidiaries receive payment from the Client for the Services provided. Any charge-back or credit arrangements between COMPANY, BPPR, and their respective Subsidiaries and a Client are the responsibility of COMPANY, BPPR, and their respective Subsidiaries, and do not affect COMPANY, BPPR, and their respective Subsidiaries’ liability for the payment of such fees and expenses.

d)
Notwithstanding any limit of liability herein, COMPANY hereby agrees to indemnify, defend, protect and hold harmless EVERTEC Indemnitee from and against any Losses incurred or suffered by, or asserted against, such EVERTEC Indemnitee directly or indirectly in relation to or arising from any claim brought by any Third Party against an EVERTEC Indemnitee based on (i) a Client’s use of the Services in a manner inconsistent with this Master Agreement; and (ii) any breach of a Client Agreement by COMPANY, BPPR, or their respective Subsidiaries or a Client to the extent such breach is not attributable to a breach of this Master Agreement by EVERTEC.

[Signature page follows]



























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IN WITNESS WHEREOF, the parties hereto have caused this Master Agreement to be executed by their duly authorized Representatives as of the date first written above.
Popular, Inc.
EVERTEC, Inc.
By:    /s/ Ivan Pagani    
By:    /s/ Félix M. Villamil

Name:
Name:
Title:
Title:
 
 
Banco Popular de Puerto Rico
 
By:    /s/ Ileana González

 
Name:
 
Title:
 








































[Signature Page to Amended and Restated Master Service Agreement]

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EXHIBIT 10.8

TECHNOLOGY AGREEMENT
This TECHNOLOGY AGREEMENT (this “Agreement”) is made and entered into as of September 30, 2010 (the “Effective Date”), by and between Popular, Inc., a Puerto Rico corporation (“Popular”), and EVERTEC, Inc., a Puerto Rico corporation (together with its subsidiaries, “EVERTEC”) (each a “Party” and, collectively, the “Parties”).
WHEREAS, Popular, AP Carib Holdings Ltd (“Apollo”), Carib Acquisition, Inc., and EVERTEC have entered into an Agreement and Plan of Merger, dated as of June 30, 2010, as amended (the “Merger Agreement”);
WHEREAS, simultaneously with the closing of the transactions contemplated by the Merger Agreement (the “Closing”), Popular, Banco Popular de Puerto Rico (“BPPR”), and EVERTEC are entering into an Amended and Restated Master Service Agreement, made as of the date hereof (the “MSA”), under which EVERTEC, among other things, uses its proprietary technology to provide certain services to Popular;
WHEREAS, the availability of such services and technology is critical to Popular and its Affiliates in the conduct and continuity of their businesses and, therefore, Popular desires access to the proprietary technology in the event of certain circumstances as specifically described herein;
WHEREAS, in order to provide for such access, Popular and EVERTEC, each agreed in the Merger Agreement to deliver, at Closing, a Technology Escrow Agreement duly executed by Popular, EVERTEC and the Technology Escrow Agent reflecting and consistent with the Technology Escrow Agreement Term Sheet attached to the Merger Agreement as Exhibit 1.1(a)(H); and
WHEREAS, in order to effect the intent and purposes of the Merger Agreement, the Parties desire to enter into this Technology Agreement, as supplemented by the Three-Party Master Beneficiary Escrow Service Agreement to be entered into by and among Popular, EVERTEC, and Iron Mountain Intellectual Property Management, Inc. (“Iron Mountain”) simultaneously with this Agreement (the “MBESA”), substantially in the form of the agreement attached hereto as Exhibit A;
NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants set forth herein, and for other good and valuable consideration, Popular and EVERTEC hereby agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION AND RULES OF CONSTRUCTION
Section 1.1 Definitions. The following capitalized terms used in this Agreement shall have the meanings set forth below.
“AAA” means the American Arbitration Association.
“Affiliate” means, with respect to any Person, any other Person, directly or indirectly, through one or more intermediaries, Controlling, Controlled by, or under common Control with, such Person. Notwithstanding the foregoing, (i) with respect to Apollo, the term “Affiliate” shall (x) include any investment fund with respect to which Apollo Global Management LLC or its Controlled Affiliates (including its and their respective successors) are the sole or, if not sole, primary investment managers and, subject to clause (y) below, each of their Subsidiaries and (y) not include portfolio companies of Apollo Global Management LLC or its Controlled Affiliates and, (ii) with respect to Popular (to the extent that at the time of determination it is engaged in a private equity or similar business), the term “Affiliate” shall not include portfolio companies of Popular or its Controlled Affiliates.
“Arbitration Procedures” has the meaning set forth in Section 9.1(a). “Agreement” has the meaning set forth in the Preamble.
“Apollo” has the meaning set forth in the Recitals.
“Asset Acquirer” has the meaning set forth in Section 10.6(c). “Assignee Sub” has the meaning set forth in Section 10.6(b). “Bankruptcy Code” has the meaning set forth in Section 10.14. “Bankruptcy Event” shall have the meaning set forth in Section 10.14.

1


“beneficially owned”, “beneficial ownership” and similar phrases have the same meanings as such terms have under Rule 13d-3 (or any successor rule then in effect) under the Exchange Act, except that in calculating the beneficial ownership of any Person, such Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire, whether such right is currently exercisable or is exercisable upon the occurrence of a subsequent event. Notwithstanding the foregoing, no Person (the “Initial Person”) shall be deemed to beneficially own any securities beneficially owned by another Person who is not an Affiliate of such Initial Person (the “Other Person”) (disregarding solely for the purposes of determining securities beneficially owned by such Other Person, (i) application of this sentence to any securities that have been Transferred (other than in the form of a pledge, hypothecation or similar grant of a security interest only and which shall not involve the grant of a proxy or other right with respect to the voting of such securities) to such Other Person in compliance with the Stockholder Agreement or other applicable Group Agreement and (i) any Group Securities with respect to such Other Person), including without limitation, another Holder that is not an Affiliate of such Initial Person.
“BPPR” has the meaning set forth in the Recitals.
“Business Day” means any day other than a Saturday, a Sunday or a day on which banks in New York, New York or San Juan, Puerto Rico are authorized or obligated by Law or executive order to close.
“Change of Control” means, with respect to a Person, the acquisition, by a non-Affiliate of such Person, of (i) more than fifty percent (50%) of the voting power of such Person or (ii) the legal power to designate a majority of the board of directors (or other persons performing similar functions) of such Person.
“Chosen Courts” has the meaning set forth in Section 10.9.
“Clawback Right” has the meaning set forth in Section 5.1.
“Common Shares” means the common stock of EVERTEC, par value $1.00 per share (or the common stock of any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries).
“Commonwealth” means the Commonwealth of Puerto Rico.
“Control Acquirer” has the meaning set forth in Section 10.7(a).
“Confidential Information” has the meaning set forth in the MSA.
“Control,” and the correlative terms “Controlling” and “Controlled,” means the possession, direct or indirect, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Closing” shall have the meaning set forth in the Recitals.
“Cured Service” has the meaning set forth in Section 5.1.
“Deposit Account” has the meaning set forth in the MBESA.
“Deposit Bundle” has the meaning set forth in Section 2.1.
“Deposit Materials” means the software (including all source and object code forms) and related documentation, libraries, files, scripts, databases, specifications, tools, database schema, designs, and other tangible embodiments of technology and documentation therefor, the intellectual property rights of which are owned by EVERTEC, its successors or assigns and used either (i) by Popular or any of its Affiliates in any of their respective businesses; or (ii) by or on behalf of EVERTEC in providing services under the MSA to or on behalf of Popular (or any of its Affiliates that receives services under the MSA), excluding the software and other technology used only in the Merchant Acquiring Business, the TicketPop Business, and the ATH Network Business (as “Merchant Acquiring Business”, “TicketPop Business” and “ATH Network Business” are defined in the Merger Agreement). For the avoidance of doubt, Deposit Materials do not include any materials to the extent that the intellectual property rights therein are licensed by EVERTEC from a third party.
“Drag-Along Transaction” has the meaning set forth in Section 4(d)(i) of the Stockholder Agreement.
“Dragged Asset Sale” has the meaning set forth in Section 4(d)(vii) of the Stockholder Agreement.

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“Encumbrances” means any direct or indirect encumbrances, lien, pledge, security interest, claim, charges, option, right of first refusal or offer, mortgage, deed of trust, easement, or any other restriction or third-party right, including restrictions on the right to vote equity interests.
“Elected License” has the meaning set forth in Section 4.3.
“Excess Deposit Materials” has the meaning set forth in Section 4.1.
“EVERTEC” has the meaning set forth in the Preamble.
“EVERTEC Change of Control” means, with respect to EVERTEC, any:
(i) merger, consolidation or other business combination of EVERTEC (or any Subsidiary or Subsidiaries that alone or together represent all or substantially all of EVERTEC’s consolidated business at that time) or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries that results in the stockholders of EVERTEC (or such Subsidiary or Subsidiaries) or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries or the surviving entity thereof, as applicable, immediately before the consummation of such transaction or a series of related transactions, holding, directly or indirectly, less than fifty percent (50%) of the voting power of EVERTEC (or such Subsidiary or Subsidiaries) or any such successor, other entity or surviving entity, as applicable, immediately following the consummation of such transaction or series of related transactions; provided that this clause (i) shall not be deemed applicable to any merger, consolidation or other business combination if, as a result of any such merger, consolidation or other business combination, no Person or Group of Persons that had not had “control” of EVERTEC immediately prior to such transaction, as such term is defined under the Bank Holding Company Act of 1956, shall have obtained such “control”;
(ii) Transfer (other than in the form of a pledge, hypothecation or similar grant of a security interest only and which shall not involve the grant of a proxy or other right with respect to the voting of such equity), in one or a series of related transactions, of equity representing fifty percent (50%) or more of the voting power of EVERTEC (or any Subsidiary or Subsidiaries that alone or together represent all or substantially all of EVERTEC’s consolidated business at that time) or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries to a Person or Group of Persons (other than an Transfer of such equity to Apollo Global Management LLC, Popular, any Permitted Ultimate Parent, or their respective Controlled Affiliates);
(iii) transaction in which a majority of the board of directors or equivalent governing body of EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries) immediately following or as a proximate cause of such transaction is comprised of persons who were not members of the board of directors or equivalent governing body of EVERTEC (or such successor or other entity) immediately prior to such transaction (or are not nominated by Apollo Global Management LLC, Popular, any Permitted Ultimate Parent or their respective Controlled Affiliates) except, (X) resulting from the compliance, at the time of an initial public offering of either Holdco or EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries), with the listing requirements, listed company manual or similar rules or regulations of the securities exchange on which Holdco’s or EVERTEC’s (or such successor’s or other entity’s), as the case may be, equity securities will be listed pursuant to such initial public offering, (Y) if a majority of such board of directors is not “independent” under the rules of the applicable securities exchange on the date following such initial public offering upon which Holdco or EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries), as the case may be, first ceases to be a “controlled company” (or similar status) under the rules and regulations of such exchange, resulting from compliance with the rules and regulations of such exchange that first apply upon Holdco or EVERTEC (or such successor’s or other entity’s), as the case may be, ceasing to be a “controlled company” (or similar status), or (Z) the loss of directors of EVERTEC pursuant to Section 2 of the Stockholder Agreement (as in effect on the date hereof or as may be amended with the approval of Popular and BPPR) that does not result in another Person or Group of Persons having the right or ability to appoint a majority of the board of directors or equivalent governing body of Holdco or EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries) as a result of such transaction; provided that, for the avoidance of doubt, this clause (Z) shall only apply to the resignation and initial replacement of such directors and not to any subsequent replacement of such directors (whether in connection with another transaction or otherwise); or

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(i) sale or other disposition in one or a series of related transactions of all or substantially all of the assets of EVERTEC and its Subsidiaries (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries) to a Person who is not an Affiliate of EVERTEC at such time.
“Exchange Act” means the Securities Exchange Act of 1934.
“Future Deposits” had the meaning set forth in Section 2.2.
“Government Entity” means the government or any agency thereof, of any nation, state, commonwealth (including the Commonwealth of Puerto Rico), city, municipality or political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to the government that have regulatory, supervisory, and/or examination authority with respect to BPPR and/or of EVERTEC, any quasi Government Entity or arbitral body, any SRO and any applicable stock exchange.
“Group Agreement” means any agreement governing the acquisition, holding, voting or disposition of securities of a Person; provided that, so long as Apollo or a subsequent Permitted Controlling Holder is an Affiliate of such Person, such Person is a party to such agreement.
“Group of Persons” means a group of Persons that would constitute a “group” as determined pursuant to Section 13 (d) of the Exchange Act and the rules and regulations promulgated thereunder.
“Group Securities” means any securities beneficially owned by a Person solely as a result of the Stockholder Agreement or any other Group Agreement and, for the avoidance of doubt, which securities have not been Transferred to such Person or any of its Controlled Affiliates.
“Holdco” means Carib Holdings, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico.
“Holdco Common Shares” means the common stock of Holdco, par value $0.01 per share.
“Holders” means the holders of Holdco Common Shares who are parties to the Stockholder Agreement as set forth in Schedule I thereto, as the same may be amended or supplemented from time to time.
“Improper Release” has the meaning set forth in Section 3.3.
“Indebtedness” means, with respect to any Person, (a) all indebtedness of such Person, whether or not contingent, for borrowed money, and (b) all obligations of such Person evidenced by notes, bonds, debentures or other similar debt instruments.
“Initial Deposit” has the meaning set forth in Section 2.1.
“Initial Person” has the meaning set forth in the definition of “beneficially owned.”
“Jurisdiction” has the meaning set forth in Section 10.6(b).
“IP Purchase and Sale Agreement” means that certain IP Purchase and Sale Agreement, dated as of the date hereof, between EVERTEC and Popular.
“Law” means any federal, national, supranational, state, provincial, Commonwealth, local or foreign or similar law, statute, ordinance, rule, regulation, code, Order, writ, judgment, injunction, directive, guideline or decree enacted, issued, promulgated, enforced or entered by a Government Entity or Self-Regulatory Organization (including, for the sake of clarity, any policy statement or interpretation that has the force of law with respect to any of the foregoing, and including common law).
“Legal Holiday” means Saturday, Sunday or any legal holiday in the Commonwealth of Puerto Rico that is observed by EVERTEC.
“Losses” has the meaning set forth in Section 8.1.
“Master Services Agreement” means the Amended and Restated Master Services Agreement, dated as of the date hereof, among Popular, BPPR and EVERTEC, as it may be amended, restated or supplemented from time to time.
“Material Breach” has the meaning set forth in the MSA.

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“MBESA” has the meaning set forth in the Recitals.
“Merger Agreement” has the meaning set forth in the Recitals.
“MSA” has the meaning set forth in the Recitals.
“Non-Controlled Public Entity” means a Person which has equity securities listed on national stock exchange and which Person’s Affiliates do not beneficially own securities representing the majority of the voting power to elect the members of the board of directors or other governing body of such Person.
“Order” means any order, injunction, judgment, decree, writ or other enforcement action of a Government Entity.
“Other Person” has the meaning set forth in the definition of “beneficially owned”.
“Party” and “Parties” have the meaning set forth in the Preamble.
“Permitted Assignment” means a Permitted Subsidiary Assignment or a Permitted Third-Party Assignment.
“Permitted Controlling Holder” means a Person that (i) beneficially owns equity securities representing a majority of the voting power to elect the directors of EVERTEC or (ii) any successor or any other entity holding all or substantially all of the assets of EVERTEC and its Subsidiaries in a transaction or series of transactions, in each case, without contravening Section 10.6 or without Popular validly exercising its termination right pursuant to Section 10.7 provided that such Person shall be a “Permitted Controlling Holder” only with respect to the applicable entity that issues such securities.
“Permitted Subsidiary Assignment” means an assignment by EVERTEC of any of its rights, duties or obligations under this Agreement to an Assignee Sub in compliance with the provisions of Section 10.6.
“Permitted Third-Party Assignment” means an assignment by EVERTEC of all its rights, duties and obligations under this Agreement to an Asset Acquirer in compliance with the provisions of Section 10.6.
“Permitted Ultimate Parent” means with respect to a Permitted Controlling Holder, its Ultimate Parent Entity.
“Person” shall be construed broadly and shall include, without limitation, an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Government Entity or any department, agency or political subdivision thereof.
“Popular” has the meaning set forth in the Preamble.
“Release Event” has the meaning set forth in Section 3.1.
“Requested Improvements” has the meaning set forth in Section 3.1(e).
“Rights” has the meaning set forth in Section 4.1.
“Self-Regulatory Organization” means the Financial Industry Regulatory Authority, the American Stock Exchange, the National Futures Association, the Chicago Board of Trade, the New York Stock Exchange, any national securities exchange (as defined in the Securities Exchange Act of 1934, as amended), any other securities exchange, futures exchange, contract market, any other exchange or corporation or similar self-regulatory body or organization.
“Service Failure” has the meaning set forth in Section 3.1(a).
“Service Fees” has the meaning set forth in the MBESA.
“Solvent” with regard to any Person, means that (i) the sum of the assets of such Person, both at a fair valuation and at a present fair salable value, exceeds its liabilities, including contingent, subordinated, unmatured, unliquidated and disputed liabilities; (ii) such Person has sufficient capital with which to conduct its business; and (iii) such Person has not incurred debts beyond its ability to pay such debts as they mature. For purposes of this definition, “debt” means any liability on a claim, and “claim” means (x) a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) a right to an equitable remedy for breach of performance to the extent such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to

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judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. With respect to any such contingent liabilities, such liabilities shall be computed at the amount which, in light of all the facts and circumstances existing at the time, represents the amount which can reasonably be expected to become an actual or matured liability.
“Specified Materials” has the meaning set forth in Section 4.3.
“Specified Term” has the meaning set forth in Section 4.3.
“SPV Affiliate” means with respect to any Person, any Affiliate of such Person, whose direct or indirect interest in the Common Shares constitutes more than thirty percent (30%) (by value) of the equity securities portfolio of such Affiliate.
“Stockholder Agreement” means the Stockholder Agreement among Carib Holdings, Inc. and the holders party thereto dated September 30, 2010.
“Subsidiary” means, with respect to any Person, any corporation, association, partnership, limited liability company or other business entity of which fifty percent (50%) or more of the total voting power or equity interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by (a) such Person, (b) such Person and one or more Subsidiaries of such Person, or (c) one or more Subsidiaries of such Person.
“Term” has the meaning set forth in Section 7.1.
“Transfer” means any direct or indirect sale, assignment, transfer, conveyance, gift, bequest by will or under intestacy laws, pledge, hypothecation or other Encumbrance, or any other disposition, of the stated security (or any interest therein or right thereto, including the issuance of any total return swap or other derivative whose economic value is primarily based upon the value of the stated security) or of all or part of the voting power (other than the granting of a revocable proxy) associated with the stated security (or any interest therein) whatsoever, or any other transfer of beneficial ownership of the stated security, with or without consideration and whether voluntarily or involuntarily (including by operation of law). Notwithstanding anything to the contrary set forth in this Agreement, (i) each of (x) a Transfer of equity interests of Popular and (y) a Change of Control of Popular shall be deemed not to constitute a Transfer of any equity interest beneficially owned by Popular; (ii) each of (x) a Transfer of equity interests of Apollo Global Management LLC or any of its Controlled Affiliates that is not an SPV Affiliate, and (y) a Change of Control of Apollo Global Management LLC or any of its Controlled Affiliates that is not an SPV Affiliate shall be deemed not to constitute a Transfer of any equity interest beneficially owned by Apollo or such Affiliate, as applicable, and (iii) each of (x) a Transfer of equity interests of any Permitted Ultimate Parent or any of its Controlled Affiliates that is not an SPV Affiliate, and (y) a Change of Control of any Permitted Ultimate Parent or any of its Controlled Affiliates that is not an SPV Affiliate shall be deemed not to constitute a Transfer of any security beneficially owned by such Permitted Ultimate Parent Entity or such Controlled Affiliate, as applicable; provided that, for the avoidance of doubt, subject to clause (i) above, any Change of Control of an SPV Affiliate shall be deemed to constitute a Transfer of the Common Shares beneficially owned by such SPV Affiliate.
“Transition Period” has the meaning set forth in the MSA.
“Ultimate Parent Entity” means (i) with respect to Apollo, Apollo Global Management LLC and its successors, (ii) with respect to Popular, Popular and its successors and (iii) with respect to a Permitted Controlling Holder, (x) the Person which (A)(i) Controls such Permitted Controlling Holder or (ii) if no Person Controls such Permitted Controlling Holder, the beneficial owner of a majority of the voting power of such Permitted Controlling Holder and (B) is not itself Controlled by any other Person that is an Ultimate Parent Entity of such Permitted Controlling Holder or, (y) if no such Person exists, the Permitted Controlling Holder; provided that, with respect to determining an Ultimate Parent Entity (i) the Control of any entity by a natural person shall be disregarded and (ii) the Control of any Non-Controlled Public Entity by any Person shall be disregarded.
“Work Request” has the meaning set forth in the MBESA.


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Section 1.2 Rules of Interpretation.
(a) Wherever the word “include,” “includes” or “including” is used in this Agreement, it shall be deemed to be followed by the words “without limitation.”
(b) The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(c) The terms defined in the singular have a comparable meaning when used in the plural, and vice versa.
(d) References herein to the Preamble or the Recitals shall refer, respectively, to the Preamble or the Recitals of this Agreement.
ARTICLE II
ESCROW DEPOSITS
Section 2.1 Initial Deposit. Within ninety (90) days after the Effective Date, EVERTEC shall (i) identify the Deposit Materials that are applicable to each of the application categories listed on Exhibit B or such other categories that are mutually agreed upon by the Parties (each, a “Deposit Bundle”); and (ii) pursuant to the terms of the MBESA, shall deliver one copy of the most recent version of the Deposit Materials applicable to each Deposit Bundle, and all other Deposit Materials, if any, that are not applicable to any particular Deposit Bundle, to Iron Mountain along with instructions to deposit each such Deposit Bundle into a separate Deposit Account designated by the application categories set forth in Exhibit B and/or any other mutually agreed upon categories (collectively, the “Initial Deposit”).
Section 2.2 Deposit Updates. Following the Initial Deposit, on a semi-annual basis during the term of the MSA and thereafter for the term of any Transition Period, EVERTEC will deliver to Iron Mountain pursuant to the MBESA the then-current versions of the Deposit Materials and any new Deposit Materials (“Future Deposits”) for deposit into the applicable existing Deposit Account(s) and/or one or more new Deposit Accounts, as applicable. All Future Deposits will automatically be deemed part of the Deposit Materials; provided, however, that EVERTEC will not be required to deposit any Future Deposits that are not used (i) by Popular or any of its Affiliates in their respective businesses or (ii) by or on behalf of EVERTEC in providing services under the MSA to or on behalf of Popular (or any of its Affiliates that receive services under the MSA). Notwithstanding the foregoing, following any Release Event as set forth below with respect to any one or more Deposit Bundles, EVERTEC shall deliver to the Escrow Agent a current copy of each such Deposit Bundle for redeposit into each such applicable Deposit Account.
ARTICLE III
ESCROW RELEASES
Section 3.1 Release Events. Popular shall have the right and option to obtain the release of the Deposit Materials upon the occurrence of any of the following events (“Release Events”):
(a) failure of, or failure to provide, a service (including any transition service) under the MSA that has a material adverse impact on or significantly degrades the availability, use or performance of such service or the relevant business of Popular or any of its Affiliates, if such failure remains uncured seventy-two (72) hours after written notice thereof to EVERTEC (“Service Failure”) or a Material Breach (as defined in the MSA) by EVERTEC under the MSA that is not cured within the time period specified under the MSA (in either case, Popular shall have the right and option to obtain the release of only those Deposit Bundles affected by the Service Failure or Material Breach and any other Deposit Bundles that are reasonably necessary to use and support the affected Deposit Bundles);
(b) expiration or termination of the MSA for any reason;
(c) EVERTEC is subject to a voluntarily or involuntary bankruptcy proceeding;
(d) regulatory requirement (in which case, Popular shall have the right and option to obtain the release of only those Deposit Bundles affected by the regulatory requirement and any other Deposit Bundles that are reasonably necessary to use and support the affected Deposit Bundles);

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(e) EVERTEC declines Popular’s request for certain improvements, enhancements or other developments (“Requested Improvements”) that EVERTEC is capable of fulfilling (in which case, Popular shall have the right and option to obtain the release of only those Deposit Bundles reasonably necessary to enable the development and support of the Requested Improvements, and Popular will not use such Deposit Bundles except in connection with the development and maintenance of the Requested Improvements); provided, however, in this case Iron Mountain shall not be authorized to release the Deposit Materials unless Popular certifies that the following conditions are met: (A) Popular has negotiated with a third-party vendor an arrangement to prepare the Requested Improvements, (B) after negotiating the arrangement with a third-party vendor Popular offers EVERTEC the right to prepare the Requested Improvements for a price that is equal to that negotiated between Popular and the third-party vendor and upon terms and conditions substantially equivalent to those offered by the third-party vendor (provided that the terms and conditions that EVERTEC would need to meet would not require the delivery of the Requested Improvements in source code form to Popular or require the transfer of the ownership of the intellectual property rights in the Requested Improvements), and (C) EVERTEC does not unconditionally accept such offer within ten (10) business days of its receipt thereof; and
(f) EVERTEC notifies Popular that it is incapable for any reason of fulfilling or otherwise does not accept Popular’s request for Requested Improvements or EVERTEC accepts Popular’s request for Requested Improvements and fails to satisfy, in any material respect, any material terms upon which the Parties have agreed such Requested Improvements will be provided (in which case, Popular shall have the right and option to obtain the release of only those Deposit Bundles reasonably necessary to enable the development and support of the Requested Improvements, and Popular will not use such Deposit Bundles except in connection with the development and maintenance of the Requested Improvements).
Section 3.2 Release Requests. To obtain the release of any Deposit Materials, Popular shall submit to Iron Mountain: (i) a Work Request to release such Deposit Materials that specifies the Deposit Account(s) to be released; and (ii) a certification that a Release Event has occurred (and in the case of Section 3.1(e), the required certification) with respect to such Deposit Account(s).
Section 3.3 Release Disputes. If EVERTEC does not agree that a Release Event has occurred, it may dispute the basis for the release through the Arbitration Procedures, but in no event shall any such dispute prevent or delay the release of any Deposit Materials. If it is finally determined in such arbitration (after any permitted appeals) that a Release Event did not in fact occur (an “Improper Release”), then (i) EVERTEC will resume providing the relevant services (if and to the extent EVERTEC had ceased providing such services in accordance with the MSA) and Popular will deliver such Deposit Materials to Iron Mountain for redeposit into the applicable Deposit Account(s) and destroy any copies thereof still in its possession; (ii) any Elected License with respect to such Deposit Materials would terminate; and (iii) Popular shall pay to EVERTEC an amount equal to the greater of (A) the fees paid or payable by Popular to EVERTEC during the preceding twelve (12) months with respect to the service(s) for which the Deposit Materials were specified by Popular for release from escrow pursuant to an Improper Release; and (B) Five Million Dollars (US $5,000,000). Such payment will be considered liquidated damages for any damages that EVERTEC may have then incurred as a result of the release (other than future damages that EVERTEC may incur as a result of any unauthorized use or disclosure of the Deposit Materials).
ARTICLE IV
LICENSE
Section 4.1 Grant of Rights. EVERTEC hereby grants to Popular a perpetual, worldwide, irrevocable, non-exclusive right and license (with the right to sublicense to its Affiliates and to third-party contractors solely for the benefit of Popular and its Affiliates) to use, reproduce, modify, create derivative works of, distribute, display and otherwise exploit the Deposit Materials for the benefit of its business and the businesses of its Affiliates (provided that, for clarity, the foregoing rights of distribution and public display shall apply only to object code forms or publicly available versions of the Deposit Materials) (collectively, the “Rights”).
Section 4.2 Limitations. Popular agrees that it shall not exercise the Rights unless and until a Release Event occurs. Further, upon the occurrence of a Release Event, Popular may, at its option, exercise the Rights under the applicable Elected License for the applicable Deposit Materials, but Popular and its Affiliates shall not exercise

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any Rights with respect to any Deposit Materials for which Popular does not elect to receive an Elected License or with respect to which the Specified Term of such Elected License has expired and was not renewed.
Section 4.3 Election of Rights. Within ten (10) days following the release of any Deposit Materials, Popular shall send to EVERTEC written notice specifying (a) the Deposit Materials with respect to which it elects to exercise the Rights, which may be all or any part of the Deposit Materials released pursuant to Section 3.2 (the “Specified Materials”), and (b) the applicable term or terms of the license for which Popular elects to exercise the Rights with respect to such Deposit Materials, which term(s) may be perpetual, term-limited or renewable, in each case, as specified by Popular (the “Specified Term”). In each case, the rights of Popular and its Affiliates that are specified pursuant to this Section 4.3 are referred to herein as the “Elected License”.
Section 4.4 End of the Specified Term. Within ninety (90) days following the expiration of the Specified Term under any Elected License, an officer of Popular shall certify in writing that, to the extent permitted by Law, all the Specified Materials (excluding any data or other information contained therein that is owned by Popular, its Affiliates or any of their respective customers) licensed under such Elected License, together with any Future Developments based upon such Specified Materials, have been permanently deleted or destroyed (or otherwise disposed of pursuant to EVERTEC’s reasonable instructions) and that no copies of any of the foregoing remain in Popular’s possession or control, directly or indirectly, subject only to the requirements of any applicable Law or Government Entity. Furthermore, Popular will transfer in writing all Rights under the applicable Elected License back to EVERTEC, as a result of which Popular, pursuant to Section 4.2, will be prohibited from exercising such Rights. If Popular does not comply with the requirements set forth in this Section 4.4, Popular hereby consents to EVERTEC being granted equitable relief, such as specific performance to compel Popular to comply with those requirements.
Section 4.1 Excess Deposit Materials. In the event that the release of the contents of a Deposit Account results in Popular receiving Deposit Materials that are not Specified Materials (“Excess Deposit Materials”), Popular will deliver such Excess Deposit Materials to Iron Mountain for redeposit into escrow and destroy any copies thereof still in its possession.
ARTICLE V
CLAWBACK RIGHT
Section 5.1 Clawback Right. If, during the term of the MSA, (i) a Release Event occurs and Popular elects to obtain the release of Deposit Materials pursuant to the terms and conditions of this Agreement and the MBESA, and (ii) following such release, the circumstances giving rise to such Release Event are cured (with respect to circumstances that are capable of cure) and the circumstances are such that EVERTEC is capable of resuming services enabled by such Deposit Materials without there being a Release Event, then so long as EVERTEC is capable of adequately providing the service(s) applicable to such Deposit Materials in accordance with the terms and conditions of the MSA that gave rise to the Release Event (each, a “Cured Service”), EVERTEC will have the right, upon reasonable prior notice and subject to the conditions set forth below, (A) to require that Popular return to EVERTEC or destroy such Deposit Materials with respect to such Cured Service and all copies thereof, (B) require that any Elected License associated with such Deposit Materials for the Cured Service would terminate, and (C) resume providing the Cured Service to Popular under the MSA (a, b and c, collectively the “Clawback Right”); provided, however, that if EVERTEC exercises the Clawback Right, EVERTEC will (without limiting any right or remedy of Popular under the MSA) (1) reimburse Popular for all of Popular’s out-of-pocket costs and expenses incurred in connection with the Release Event and Popular’s efforts to resume the service under the MSA that gave rise to Popular’s release request; (2) ensure a transition back to the Cured Service at EVERTEC’s cost with minimal disruption to business continuity; and (3) promptly deliver to Iron Mountain one copy of any such Deposit Materials for redeposit into escrow in accordance with the terms of the MBESA.
Section 5.2 Limitations. Notwithstanding Section 5.1, EVERTEC may not exercise the Clawback Right to the extent that such exercise would result in:
(a) a violation of Law, or
(b) Popular breaching a contract that it entered into with a third party to provide Popular with services previously provided by EVERTEC under the MSA or otherwise required after a Service Failure or a termination or break-

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up fee under such a contract, and Popular has used commercially reasonable efforts without compromising its business continuity to avoid the condition giving rise to such breach or such termination or break-up fee provision; provided, however, that EVERTEC may exercise the Clawback Right under this subsection (b) if Popular:
(i) does not notify EVERTEC that the exercise would result in its breach of a third-party contract within thirty (30) days following the date that EVERTEC notifies Popular in writing that it is exercising the Clawback Right, or
(ii) does so timely notify EVERTEC of the likelihood of a breach of contract and EVERTEC agrees to indemnify and defend Popular with respect to liability to the third party for a claim of breach of contract.
Section 5.3 Clawback Disputes. If the Parties do not mutually agree both: (i) that EVERTEC is capable of adequately providing the service under the MSA that gave rise to Popular’s release request, and (ii) upon the amount of the reimbursement to Popular pursuant to the preceding paragraph, the Parties will submit the matter(s) to arbitration in accordance with the Arbitration Procedures.
ARTICLE VI
FEES
Section 6.1 FMV. Upon the release of any Deposit Materials, Popular and EVERTEC will negotiate in good faith to reach an agreement as to the fair market value (“FMV”) of the Elected License. If after thirty (30) days following the release of Deposit Materials from escrow (or, if such release requires the approval of a Government Entity, ten (10) days after the receipt of such approval), EVERTEC and Popular cannot reach a binding agreement as to the FMV for the Elected License, the matter will be determined in accordance with the Arbitration Procedures. In connection with the arbitration, each Party may present testimony and a report of a valuation expert.
Section 6.2 Payment. Once FMV has been determined, Popular will pay to EVERTEC the amount due (whether, at Popular’s election, the full amount due for a Specified Term of a perpetual duration, or the applicable amount due for a Specified Term of limited duration). If Popular elects a Specified Term of limited duration, then such Specified Term will automatically renew for additional successive terms of a duration equal to the initial renewable Specified Term elected by Popular under the Elected License, unless canceled by Popular in writing delivered to EVERTEC at least thirty (30) days prior to the expiration of the then-current term, and Popular will pay the applicable renewal fee upon such renewal.
Section 6.3 Failure to Pay. If Popular fails to make such payment within thirty (30) days of the Parties entering into a binding agreement as to FMV or final determination of FMV through arbitration (after any permitted appeals or the time for appeal has lapsed), then, following written notice thereof and failure to cure such non-payment or post an equivalent bond within an additional ten (10) days, EVERTEC shall have the right upon written notice to Popular (i) to terminate the MSA, including EVERTEC’s obligation to provide transition services thereunder; and (ii) to require that Popular (A) cease exercising its rights under the Elected License, and (B) return or destroy all copies of the Deposit Materials in its possession or control. Furthermore, Popular will transfer in writing all Rights under the applicable Elected License back to EVERTEC, as a result of which Popular, pursuant to Section 4.2, will be prohibited from exercising such Rights. If Popular does not comply with the requirements in the foregoing Subsection 6.3(ii), Popular hereby consents to EVERTEC being granted equitable relief, such as specific performance and injunctive relief, to compel Popular to comply with such requirements. If the Parties do not mutually agree both: (i) that EVERTEC is capable of adequately providing the service under the MSA that gave rise to Popular’s release request, and (ii) upon the amount of the reimbursement to Popular pursuant to the preceding paragraph, the Parties will submit the matter(s) to arbitration in accordance with the Arbitration Procedures.
ARTICLE VII
TERM
Section 7.1 Term. The term of this Agreement shall commence on the Effective Date and shall continue indefinitely.


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ARTICLE VIII
APPORTIONMENT OF INDEMNIFICATION OBLIGATIONS
Section 8.1 Apportionment of Liability. Popular shall be responsible for, and shall reimburse EVERTEC for, any direct and indirect damages, liabilities, losses, costs, and expenses (including reasonable attorney’s fees and out of pocket disbursements) (“Losses”) paid by EVERTEC to Iron Mountain pursuant to a claim brought by Iron Mountain against EVERTEC under Section 7 of the MBESA (an “Iron Mountain Claim”), solely to the extent that such Iron Mountain Claim arises from any (A) Deposit Materials that were part of the Initial Deposit and the intellectual property rights of which were owned by EVERTEC or its subsidiaries as of the Closing; or (B) copies of such Deposit Materials. For the avoidance of doubt, EVERTEC shall be responsible and liable for all Losses arising from an Iron Mountain Claim to the extent such Iron Mountain Claim arises from any (i) Deposit Materials that were part of the Initial Deposit but for which EVERTEC or any of its subsidiaries did not own the intellectual property rights until after the Closing; or (ii) Deposit Materials that were neither part of the Initial Deposit nor copies of Deposit Materials that were part of the Initial Deposit.
Section 8.2 Defense of an Iron Mountain Claim. The Parties shall cooperate to determine in good faith which party shall control and direct the defense, and exercise the other rights of EVERTEC, pursuant to Section 7 of the MBESA. In the event that the Parties do not promptly each make such a determination, the Party who bears (or based on the Iron Mountain Claim, is reasonably likely to bear) the greater responsibility for the Iron Mountain Claim shall have the primary right and power to direct and control the defense of any Iron Mountain Claim; provided that, both Parties shall cooperate fully, and each Party shall have the right (at its own expense and cost) to participate in such defense. Notwithstanding the foregoing, neither Party shall enter into any settlement or agreement that would prejudice the other Party’s rights in the Deposit Materials or under this Agreement or the MBESA, or otherwise impose any liability or obligation on the other Party, without the prior written consent of such Party.
Section 8.3 Procedures. EVERTEC will promptly notify Popular of any Iron Mountain Claim. Any dispute in connection with the obligations under this Article VIII shall be settled in accordance with the Arbitration Procedures.
ARTICLE IX
DISPUTE RESOLUTION
Section 9.1 Arbitration Procedures.
(a) Any controversy or claim solely as between the Parties arising out of or relating to this Agreement, or the breach of the same, shall be settled by binding arbitration in accordance with the following arbitration procedures (the “Arbitration Procedures”). A matter submitted for resolution by arbitration shall be arbitrated in accordance with the then- existing commercial arbitration rules of the AAA by a panel of three (3) independent arbitrators, with one appointed by each Party, and the two appointees selecting the third arbitrator in accordance with such rules. If either Party hereto fails to select an arbitrator within ten (10) days after notice of such failure from the other party or the AAA, then the AAA shall appoint such arbitrator. If the two appointees are unable to agree on the third arbitrator, then the AAA shall select the same using the foregoing qualification.
(b) The arbitration hearing shall be held in San Juan, Puerto Rico, at such date, time and place as established by the arbitrators and the proceedings shall be conducted in English. Witnesses whose native language is not English may give oral or written testimony in their native language, with appropriate translation into English. Documentary evidence in Spanish may be submitted, with appropriate translation into English.
(c) The arbitrators must render their arbitral decision and award and give a written opinion setting forth the basis of their decision, all not later than ninety (90) days after the conclusion of the arbitration. The factual determinations of the Arbitration Panel shall be final, and an arbitration decision may only be appealed on procedural grounds.
(d) Each Party shall take or cause to be taken all reasonable action to facilitate the conduct of the arbitration and the rendering of the arbitral award at the earliest possible date.

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(e) The costs of the arbitration shall be borne and paid equally by the Parties.
Section 9.2 Injunctive Relief. The Parties recognize and acknowledge that in the event of a potential, anticipatory or actual breach of this Agreement, it may be necessary or appropriate for the non-breaching Party to seek injunctive relief, if and to the extent legally available, in order to avoid harm or further harm to the non-breaching Party. If a Party desires injunctive relief, it may pursue the same in any court of competent jurisdiction; provided, however, that, if granted, such injunctive relief shall apply only to prevent a breach or further breaches and shall remain in effect only so long as the court deems necessary or appropriate to permit resolution of the underlying disputes in accordance with this Article IX. Neither the seeking of injunctive relief nor the granting thereof is intended or shall result in the application of a substantive or procedural law other than the applicable governing law pursuant to this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Confidentiality. Popular’s use of Deposit Materials that comprise Confidential Information will be subject to confidentiality obligations under the MSA, which confidentiality obligations will survive any termination of the MSA. Furthermore, notwithstanding anything in the MSA that would require a lesser degree of care or diligence, Popular will use its best efforts to hold all Deposit Materials that comprise Confidential Information in strict confidence to protect the Deposit Materials from unauthorized disclosure and use. Furthermore, notwithstanding anything in the MSA to the contrary, Popular’s obligations with respect to confidentiality and use of the Deposit Materials shall survive termination of this Agreement.
Section 10.2 Costs and Expenses. Except as otherwise specified in this Agreement, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants incurred in fulfilling the obligations under this Agreement, shall be paid by the Party incurring such costs and expenses. Popular shall pay all Service Fees.
Section 10.3 Notices. All notices, requests, claims, demands and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered by hand, courier or overnight delivery service if transmitted prior to 5 p.m. on a Business Day, upon delivery (and otherwise such notice, request, claim, demand or other communication shall be deemed not to have been given until the next Business Day), or (b) if mailed, four Business Days after deposit in certified or registered mail and with first-class postage prepaid, or (c) in the case of facsimile notice, when sent and transmission is confirmed if transmitted prior to 5 p.m. on a Business Day in the place of receipt (and otherwise such notice, request, claim, demand or other communication shall be deemed not to have been given until the next Business Day), and, regardless of method, addressed to the Party at its address or facsimile number set forth below (or at such other address or facsimile number as the Party shall furnish to the other Party in accordance with this Section 10.3):
If to Seller:
Popular, Inc.
209 Muñoz Rivera Avenue
Hato Reyes, Puerto Rico 00918
Telephone: (787) 758-7208
Telecopy: (787) 754-4984
Email: rcarrion@bppr.com
Attention: Richard L. Carrión
CEO & President
copy to: Ignacio Álvarez, Esq.
Executive Vice President & General Counsel
igalvarez@bppr.com
with copies to:
Sullivan & Cromwell LLP
125 Broad Street

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New York, New York 10004
Telephone: (212) 558-4000
Telecopy: (212) 291-9156
Email: toumeyd@sullcrom.com
Attention: Donald J. Toumey

if to the Company:
EVERTEC, Inc.
Carr #176, Km 1.3
Cupey Bajo, Rio Piedras
Puerto Rico 00926
P.O. Box 364527
San Juan, Puerto Rico 00936
Telephone: (787) 759-9999
Telecopy: (787) 250-7356
Email: fvillamil@evertecinc.com
Attention: Felix Villamil
President
copy to: Luisa Wert, Esq
lwert@evertecinc.com

with copies to:
Akin Gump Strauss Hauer & Feld LLP
One Bryant Park
New York, NY 10036
Telephone: (212) 872-1000
Telecopy: (212) 872-1002
Email: aweinstein@akingump.com
Attention: Adam K. Weinstein
Section 10.4 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (i) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (ii) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
Section 10.5 Entire Agreement. This Agreement (including all the Exhibits hereto), the MBESA and the MSA constitute the entire agreement between the Parties with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, oral or written, between the Parties with respect to the subject matter hereof and thereof.
Section 10.6 Assignment.
(a) Assignment. Other than a Permitted Assignment pursuant to this Section 10.6, this Agreement or the MBESA may not be assigned by either Party without the prior written consent of the other Party; provided that either Party may assign its rights, duties and obligations under this Agreement or the MBESA to its financing sources solely in connection with the grant of a security interest and the enforcement of all rights and remedies that the assigning party has against the other party under this Agreement or the MBESA (as applicable), subject to claims, defenses and rights, including rights of set off, that such other party may have against the assigning party.

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(b) Assignment to Subsidiaries. EVERTEC may assign any of its rights, duties or obligations under this Agreement or the MBESA to a direct or indirect wholly-owned Subsidiary of EVERTEC (an “Assignee Sub”) if (i) such Assignee Sub is identified by EVERTEC to Popular at least 20 Business Days prior to the consummation of the proposed assignment; (ii) (A) such proposed assignment is legally required in order for EVERTEC to perform for Popular or its Subsidiaries, in the country, state, territory or other jurisdiction (“Jurisdiction”) in which the Assignee Sub is organized, the specific obligations required to be performed pursuant to the assignment of this Agreement or the MBESA (as applicable), and only (x) to the extent of such legal requirement and (y) if EVERTEC provides a written opinion of qualified counsel that opines that such legal requirement is applicable and is based upon reasonable assumptions with respect to such legal requirement or (B) Popular has provided its prior written consent, such consent not to be unreasonably delayed, withheld or conditioned; (iii) such Assignee Sub will be Solvent immediately after and giving effect to such proposed assignment and Popular is reasonably satisfied with the terms and conditions of the proposed assignment; (iv) Popular is a third-party beneficiary to the assignment agreement, which is in form and substance that is reasonably satisfactory to Popular, and which provides that the Assignee Sub’s rights under the assignment agreement will be terminated if the Assignee Sub ceases to be a wholly-owned Subsidiary, directly or indirectly, of EVERTEC; and (v) EVERTEC remains fully liable with respect to the performance of all its obligations under this Agreement or the MBESA (as applicable) and EVERTEC guarantees the performance of all of the obligations of EVERTEC to Popular assumed by Assignee Sub under this Agreement or the MBESA (as applicable), which guarantee provides that, for the avoidance of doubt, after any termination of the proposed assignment, EVERTEC shall continue to be obligated with respect to any obligation undertaken by Assignee Sub prior to such termination.
(c) Assignment to Third Parties. EVERTEC may assign all of its rights, duties and obligations under this Agreement or the MBESA (or those rights, duties and obligations arising after the effectiveness of the assignment) in a transaction with a third-party assignee (an “Asset Acquirer”) if (i) such Asset Acquirer is identified by EVERTEC to Popular at least 30 Business Days prior to the consummation of the proposed assignment; (ii) such Asset Acquirer (A) acquires at least ninety percent (90%) of the consolidated gross assets (excluding cash) of EVERTEC (including all intellectual property rights in the Deposit Materials), and (B) assumes at least 90% of the consolidated gross liabilities (excluding Indebtedness) of EVERTEC and its Subsidiaries (including the assignment and assumption of all commercial agreements between EVERTEC or any of its Subsidiaries, on the one hand, and Popular, BPPR or any of their respective Subsidiaries, on the other hand) through one legal entity; (iii) neither the Asset Acquirer nor any of its Affiliates is engaged, directly or indirectly, in the banking, securities, insurance or lending business, from which they derive aggregate annual revenues from the Commonwealth of Puerto Rico in excess of $50 million unless none of them has a physical presence in the Commonwealth of Puerto Rico that is used to conduct any such business; (iv) the Asset Acquirer will be Solvent immediately after and giving effect to such proposed assignment; and (v) EVERTEC reasonably believes that the Asset Acquirer, after completion of the proposed purchase and assumption transaction, will be capable of performing the obligations and duties of EVERTEC under this Agreement or the MBESA (as applicable). For clarity, this Agreement and the MBESA shall be considered a “commercial agreement” for purposes of clause (ii) in the immediately preceding sentence and in the corresponding provision in the MSA.
(d) Cooperation. EVERTEC shall use its reasonable best efforts to cooperate with Popular in evaluating whether any proposed assignment pursuant to this Section 10.6 would be in compliance with the requirements of the provisions contained in this Section 10.6, including the ability of Assignee Sub or Asset Acquirer, as applicable, to comply with the terms of this Agreement, including, in each case, by providing any non-confidential information regarding the purposes and plans in connection with such proposed assignment other than information that would create any potential liability under applicable Law, violate any confidentiality obligation, or that reasonably would be expected to result in the waiver of any attorney-client privilege.
(e) Notice Obligation. Popular shall notify EVERTEC in writing within 15 Business Days following receipt of EVERTEC’s notice of the proposed assignment of any objection to any proposed assignment to an Asset Acquirer under Section 10.6(c) unless EVERTEC has failed to satisfy its obligations pursuant to Section 10.6(d) and Popular asserts such failure prior to the expiration of the 15 Business Day objection period, in which case such 15 Business Day period shall be tolled until EVERTEC satisfies its obligations pursuant to Section 10.6(d). If Popular fails to timely object to such proposed assignment (taking into account any tolling of the 15 Business Day objection period), it shall be deemed to have consented to such proposed assignment.

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(f) Implied Consent. Notwithstanding anything contained herein, if Popular, BPPR or any of their respective Controlled Affiliates votes in favor of a transaction resulting in a proposed assignment and was not compelled to do so as part of a Dragged Asset Sale or other requirement of the Stockholder Agreement or any other Group Agreement with respect to securities issued by Holdco or EVERTEC or any successor or other entity that acquired all or substantially all the assets of Holdco or EVERTEC or any of their respective successors then it shall be deemed to have consented to the assignment.
(g) Invalidity of Impermissible Assignments. Any attempted or purported assignment in violation of this Section 10.6 hereof shall be null and void and the assignee’s rights assigned pursuant to any assignment made in compliance with this Section 10.6 will terminate in the event and to the extent of the termination of this Agreement or the MBESA (as applicable).
Section 10.7 EVERTEC Change of Control.
(a) EVERTEC Change of Control. Popular shall have the right, subject to Section 10.7(c), to terminate this Agreement or the MBESA, up to 30 days following the later of (i) the occurrence of an EVERTEC Change of Control or (ii) the date on which EVERTEC provides Popular written notice that an EVERTEC Change of Control has occurred or is likely to occur (provided that if EVERTEC has not satisfied its obligations pursuant to Section 10.7(b) and that Popular asserts such failure prior to the expiration of the 30 day period then such 30 day period shall be tolled until EVERTEC satisfies its obligations under Section 10.7(b) and provided further that if an EVERTEC Change of Control occurs, and EVERTEC fails to provide Popular written notice thereof within 30 days thereof, then Popular shall have an unqualified right to terminate this Agreement), unless (w) the Person or Group of Persons proposing to engage in such proposed EVERTEC Change of Control transaction (the “Control Acquirer”) is identified to Popular by EVERTEC at least 30 Business Days prior to such proposed EVERTEC Change of Control; (x) neither the Control Acquirer nor any of its Affiliates is engaged, directly or indirectly, in the banking, securities, insurance or lending business, from which they derive aggregate annual revenues from the Commonwealth of Puerto Rico in excess of $50 million unless none of them has a physical presence in the Commonwealth of Puerto Rico that is used to conduct any such business; (y) EVERTEC (or its successor, as applicable) will be Solvent immediately after and giving effect to such proposed EVERTEC Change of Control; and (z) EVERTEC (or its successor, as applicable), after the proposed EVERTEC Change of Control, will be capable of performing the obligations and duties of EVERTEC under this Agreement or the MBESA (as applicable); provided further that if Popular, BPPR or any of their respective Controlled Affiliates votes in favor of the transaction resulting in the EVERTEC Change of Control or Transfers (other than a Transfer in the context of a merger, business combination, reorganization, recapitalization or similar transaction) any equity securities in connection with the transaction resulting in the EVERTEC Change of Control and, in either case, was not compelled to do so as part of a Drag-Along Transaction, a Dragged Asset Sale or other requirement of the Stockholder Agreement or any other Group Agreement with respect to Holdco, EVERTEC or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries, then such termination right shall not apply.
(b) Cooperation. EVERTEC shall use its reasonable best efforts to cooperate with Popular in evaluating whether any proposed EVERTEC Change of Control would be in compliance with the requirements of this Section 10.7 including the ability of Assignee Sub or Asset Acquirer, as applicable, to comply with the terms of this Agreement or the MBESA (as applicable), including, in each case, by providing any non-confidential information regarding the purposes and plans in connection with such proposed EVERTEC Change of Control other than information that would create any potential liability under Law, violate any confidentiality obligation, or that reasonably would be expected to result in the waiver of any attorney-client privilege.
(c) Notice of Objection. If EVERTEC provides at least 30 days written notice to Popular prior to an EVERTEC Change of Control, Popular shall notify EVERTEC in writing within 15 Business Days following receipt of EVERTEC’s notice of the proposed EVERTEC Change of Control of any objection to any proposed EVERTEC Change of Control on the basis that it does not satisfy the criteria set forth in clauses (w) through (z) of Section 10.7(a) (unless EVERTEC has failed to satisfy its obligations pursuant to Section 10.7(b) and Popular asserts such failure prior to the expiration of the 15 Business Day objection period, in which case such 15 Business Day objection period shall be tolled until EVERTEC satisfies its obligations pursuant to Section 10.7(b)). If Popular fails to timely object to such proposed assignment (taking into account any tolling of the 15 Business Day objection

15


period), it shall be deemed to have consented to such proposed EVERTEC Change of Control and waived its right of termination under Section 10.7(a).
Section 10.8 Amendment; Waiver. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Popular and EVERTEC, or in the case of a waiver, by the Party against whom the waiver is to be effective. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.
Section 10.9 Governing Law. This Agreement shall be governed and construed in accordance with the laws of Delaware without regard to any conflict of law rules thereof that would apply to the laws of a different jurisdiction. Each Party hereto agrees that it shall bring any action for injunctive relief in accordance with Section 9.2 exclusively in any federal court located in the State of Delaware or any Delaware state court (the “Chosen Courts”), and solely in connection with an action for injunctive relief brought in accordance with Section 9.2 (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action in the Chosen Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any Party hereto and (iv) agrees that service of process upon such Party in any such action for injunctive relief brought in accordance with Section 9.2 shall be effective if notice is given in accordance with Section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
Section 10.10 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.
Section 10.11 Headings. The heading references herein and the table of contents hereof are for convenience purposes only, and shall not be deemed to limit or affect any of the provisions hereof.
Section 10.12 No Additional Rights. Except as expressly provided otherwise in this Agreement, the Parties hereto agree that no provisions of this Agreement shall grant to either Party hereto any additional rights to the other Party’s proprietary information, technology or know-how.
Section 10.13 Further Assurances. The Parties agree to take all further actions, execute all further documents and otherwise cooperate in good faith to further the intents and purposes of this Agreement. Without limiting the foregoing, in the event that Iron Mountain no longer offers the services it has agreed to provide under the MBESA, terminates the MBESA pursuant to Section 6(a)(v) thereunder the Parties will negotiate in good faith to select and enter into an agreement with a new third-party escrow agent, and EVERTEC will deposit all Deposit Materials and Future Deposits with such escrow agent in accordance with the terms of this Agreement.
Section 10.14 Bankruptcy. The licenses granted herein shall be deemed to be, for purposes of Section 365(n) of The Bankruptcy Reform Act of 1978, as amended, and codified as 11 U.S.C. §§ 101 et. seq. (the “Bankruptcy Code”), licenses to rights in “intellectual property” as defined in Section 101 of the Bankruptcy Code. The Parties agree that Popular shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code. In the event that EVERTEC becomes the subject of a bankruptcy proceeding under the Bankruptcy Code (either voluntarily or involuntarily) (a “Bankruptcy Event”), Popular shall be entitled, at its option, to: (i) retain all of

16


its rights under this Agreement pursuant to Section 365(n) of the Bankruptcy Code, or (ii) to receive a complete duplicate of, or complete access to, all subject matter licensed hereunder to Popular constituting “intellectual property” under Section 101 of the Bankruptcy Code and all embodiments thereof. If such intellectual property is not already in Popular’s possession, it shall be promptly delivered to Popular upon Popular’s written request (i) upon any such commencement of a Bankruptcy Event, unless EVERTEC agrees to continue to perform all of its obligations under this Agreement, or (ii) upon the rejection of this Agreement by or on behalf of EVERTEC. For the avoidance of doubt, nothing contained in this Section 10.14 shall limit the rights of Popular under the MBESA.
[signature page follows]





























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IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by its duly authorized representative.
POPULAR, INC

By: /s/ Ivan Pagan Mejia
Name: Ivan Pagan Mejia
Title: Senior Vice President

EVERTEC, INC

By: /s/ Felix M. Villamil
Name: Felix Villamil
Title: President
















18

        

EXHIBIT 10.9

AMENDED AND RESTATED
INDEPENDENT SALES ORGANIZATION
SPONSORSHIP AND SERVICES AGREEMENT

This Amended and Restated Independent Sales Organization Sponsorship and Services Agreement (this “Agreement”), effective as of this 30th day of September, 2010 (the “Effective Date”) is entered into by and between EVERTEC, INC., a corporation organized under the laws of the Commonwealth of Puerto Rico (“EVERTEC”) and BANCO POPULAR DE PUERTO RICO, a bank organized under the laws of the Commonwealth of Puerto Rico (“BPPR”).

RECITALS
WHEREAS, BPPR is a member in good standing of VISA U.S.A., Inc. and VISA International, Inc. (collectively, “VISA”) and MasterCard International, Inc. (“MCI” and, together with VISA, the ATH Network and any other credit and/or debit card companies (private label or otherwise) of which BPPR is a member in good standing or is otherwise authorized to provide sponsorship of non-member agents, the “Associations”), and BPPR is qualified to provide sponsorship of non-member agents into the Associations;
WHEREAS, EVERTEC wishes to engage in the business of marketing Merchant Services (as defined herein) to Merchants (as defined herein) and potential Merchants with respect to each Association;
WHEREAS, in order to provide the Merchant Services with respect to an Association, EVERTEC must be sponsored by a member of such Association, and BPPR, as a member of the Associations, wishes to sponsor EVERTEC on the terms set forth herein;
WHEREAS, in addition to BPPR’s agreement to sponsor EVERTEC into the Associations as set forth herein, BPPR also agrees to provide access to the ATH Network through which Merchants and Government-Merchants may accept Transactions;
WHEREAS, the Associations have each adopted rules and regulations relating to the provision of Merchant Services by third-party agents to which BPPR, as a result of its membership in the Associations, and EVERTEC, as a result of BPPR’s sponsorship pursuant to this Agreement, are subject; and
WHEREAS, Popular and EVERTEC previously entered into an Independent Sales Organization Sponsorship and Services Agreement on June 30, 2010, as amended (the “Existing ISO”), and the parties desire to amend and restate the Existing ISO in order to provide for certain changes and additions to such services and revisions to the terms of the Existing ISO.
THE AGREEMENT
NOW THEREFORE, in consideration of the premises, the mutual agreements contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONAL PROVISIONS
Section 1.1 Certain Definitions. As used in this Agreement, the following terms have the meanings set forth below:
“ACH” means the Automated Clearing House payment system.




“ACH File” means the daily file created by EVERTEC and transmitted to the Federal Reserve in the prescribed ACH format by a financial institution participating in the ACH that contains (i) a list of the ACH Transactions to debit or credit Merchants and/or Government-Merchants, as applicable, for the sum of Sales Records, Credit Records and Merchant Chargebacks received by EVERTEC and (ii) Merchant Transaction Processing Fees calculated by EVERTEC.
“ACH Returns” means ACH Transactions that cannot be posted to a Merchant’s or a Government-Merchant’s bank account due to erroneous information, insufficient funds, closed accounts or other reasons and that are returned through the Federal Reserve to the originating financial institution.
“ACH Transaction” means an Electronic Record of amounts to be deposited or debited to a bank account at a financial institution participating in the ACH.
“Acquiring Member” means a licensee or member of an Association that is authorized by the Association to enter Transactions into or receive Transactions from the Association’s settlement and authorization systems.
“Affiliate” means, with respect to any Person, any other Person, directly or indirectly, through one or more intermediaries, Controlling, Controlled by, or under common Control with, such Person. Notwithstanding the foregoing, (i) with respect to Apollo, the term “Affiliate” shall (x) include any investment fund with respect to which Apollo Global Management LLC or its Controlled Affiliates (including its and their respective successors) are the sole or, if not sole, primary investment managers and, subject to clause (y) below, each of their Subsidiaries and (y) not include portfolio companies of Apollo Global Management LLC or its Controlled Affiliates and, (ii) with respect to Popular (to the extent that at the time of determination it is engaged in a private equity or similar business), the term “Affiliate” shall not include portfolio companies of Popular or its Controlled Affiliates.
“Agreement” has the meaning set forth in the Preamble.
“Alleged Breaching Party” has the meaning set forth in Section 9.2(a).
“Apollo” means AP Carib Holdings, Ltd., an exempted company organized under the laws of the Cayman Islands.
“Assessments” means those fees paid by Acquiring Members, other than Interchange Fees and Association Dues, for participation in the programs offered by each Association, usually as a percentage of monthly sales volume, as the due dates and amounts of such fees may be changed from time to time by each respective Association’s Board of Directors.
“Asset Acquirer” has the meaning set forth in Section 11.1(c).
“Assignee Sub” has the meaning set forth in Section 11.1(b).
“Association” has the meaning set forth in the Recitals.
“Association Dues” means any fees and rebates imposed by any of the Associations pursuant to such Association’s regulations for use of such Association’s equipment, settlement and authorization systems, automated retrieval systems, BIN licensing, arbitration filings, fines for non-compliance with such regulations and such other charges as such Association may from time to time impose, excluding the Interchange Fees and Assessments.
“ATH Network” means the interbank network connecting the ATMs of various financial institutions in the Region, and is also the debit card network for ATH-linked ATM cards.

2



“ATM” means automated teller machine (ATM) or automatic banking machine (ABM) which is a computerized telecommunications device that provides the clients of a financial institution with access to financial transactions in a public space without the need for a cashier, human clerk or bank teller.
“Authorization Center” means the service desk to be established and maintained by EVERTEC to be contacted by a Merchant to obtain authorization codes and other instructions with respect to handling Cards according to the Merchant Program Procedures.
“beneficially owned”, “beneficial ownership” and similar phrases have the same meanings as such terms have under Rule 13d-3 (or any successor rule then in effect) under the Exchange Act, except that in calculating the beneficial ownership of any Person, such Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire, whether such right is currently exercisable or is exercisable upon the occurrence of a subsequent event. Notwithstanding the foregoing, no Person (the “Initial Person”) shall be deemed to beneficially own any securities beneficially owned by another Person who is not an Affiliate of such Initial Person (the “Other Person”) (disregarding solely for the purposes of determining securities beneficially owned by such Other Person, (i) application of this sentence to any securities that have been Transferred (other than in the form of a pledge, hypothecation or similar grant of a security interest only and which shall not involve the grant of a proxy or other right with respect to the voting of such securities) to such Other Person in compliance with the Stockholder Agreement or other applicable Group Agreement and (ii) any Group Securities with respect to such Other Person), including without limitation, another Holder that is not an Affiliate of such Initial Person.
“BIN” means a unique bank identification number assigned and licensed by VISA, or an interbank card association number assigned and licensed by MCI, to an Acquiring Member for such Acquiring Member’s use in issuing Cards (if applicable), entering Transactions into or receiving Transactions from such Association’s settlement and authorization systems.
“BPPR” has the meaning set forth in the Preamble.
“BPPR Referral Compensation” has the meaning set forth in Section 3.2(a).
“BPPR Sponsorship Fees” means $1,000 per year.
“BSA” has the meaning set forth in Section 3.7.
“Business Day” shall mean a day that is not a U.S. nationally recognized bank holiday and on which a branch of the Federal Reserve that is used for settlement is open for business.
“Card” means a card bearing the Trademark of an Association, or any other card, including debit cards and credit cards, that may be used by a Cardholder to authorize and charge purchases to such Cardholder’s Cardholder Account as part of Transactions completed in-person upon the Cardholder’s presentment of the card and signing of a Sales Record or by mail, Internet or telephone order, in each case in accordance with the applicable Rules.
“Cardholder” means a Person who has a Cardholder Account with an Issuing Member, or a Person who has a card that can be used to obtain cash through the ATH Network.
“Cardholder Account” means an arrangement between a Person and an Issuing Member whereby such Person may use one or more Cards issued by such Issuing Member to conduct Transactions or obtain a Cash Disbursement.
“Cash Disbursement” means the use of a Card to obtain cash from a financial institution in accordance with the applicable Rules of such financial institution.

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“Change of Control” means, with respect to a Person, the acquisition, by a non-Affiliate of such Person, of (i) more than fifty percent (50%) of the voting power of such Person or (ii) the legal power to designate a majority of the board of directors (or other persons performing similar functions) of such Person.
“Chosen Courts” has the meaning set forth in Section 11.5.
“Common Shares” means the common stock of EVERTEC, par value $1.00 per share (or the common stock of any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries).
“Control,” and its correlative meanings, “Controlling,” and “Controlled,” means the possession, direct or indirect, or the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Control Acquirer” has the meaning set forth in Section 11.11(a).
“CPI” means the All Items Consumer Price Index All Urban Consumers, U.S. City Average (1982-84 – 100), which is published by the U.S. Department of Labor, Bureau of Labor Statistics.
“Credit Records” means all documents, or the Electronic Record of such documents, used to evidence any refund or price adjustment to be credited to a Cardholder Account from the sale of services or Products, which documents or Electronic Records shall be in the form supplied by EVERTEC and approved by BPPR.
“DDA” means a direct deposit account.
“Default Notice” has the meaning set forth in Section 9.2(a).
“Designated Merchant” has the meaning set forth in Section 2.4(a).
“Dispute” has the meaning set forth in Section 9.2(a).
“Disclosing Party” has the meaning set forth in Section 5.1.
“Drag-Along Transaction” has the meaning set forth in Section 4(d)(i) of the Stockholder Agreement.
“Dragged Asset Sale” has the meaning set forth in Section 4(d)(vii) of the Stockholder Agreement.
“Effective Date” has the meaning set forth in the Preamble.
“Electronic Record” means data that is transcribed in a form supplied by EVERTEC that is approved by BPPR and suitable for electronic processing.
“Encumbrances” means any direct or indirect encumbrances, lien, pledge, security interest, claim, charges, option, right of first refusal or offer, mortgage, deed of trust, easement, or any other restriction or third-party right, including restrictions on the right to vote equity interests.
“Event of Default” means the occurrence of any of the following:
(i)
either party fails to pay any undisputed, material amounts due to the other party under this Agreement and such failure(s) continue(s) for a period of 60 days after notice has been sent to the non-paying party;
(ii)
either party (A) files for bankruptcy, receivership, reorganization, liquidation or any similar proceedings applicable to banks or corporations, as applicable, or (B) has such a proceeding instituted against it and such proceeding is not dismissed within 60 days;

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(iii)
a party fails to observe any material obligation specified in this Agreement that results in a Material Breach, and such failure is not cured within 30 days (or in the event such breach can be cured but cannot be reasonably cured within 30 days, within such longer period of time (not to exceed 90 days) as is required to cure the same, provided the breaching party diligently pursues remedial action to completion) of a notice specifying the breach; or
(iv)
either party makes an assignment of this Agreement, except as expressly provided herein.
“EVERTEC” has the meaning set forth in the Preamble.
“EVERTEC Change of Control” means, with respect to EVERTEC, any:
(i)
merger, consolidation or other business combination of EVERTEC (or any Subsidiary or Subsidiaries that alone or together represent all or substantially all of EVERTEC’s consolidated business at that time) or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries that results in the stockholders of EVERTEC (or such Subsidiary or Subsidiaries) or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries or the surviving entity thereof, as applicable, immediately before the consummation of such transaction or a series of related transactions, holding, directly or indirectly, less than 50% of the voting power of EVERTEC (or such Subsidiary or Subsidiaries) or any such successor, other entity or surviving entity, as applicable, immediately following the consummation of such transaction or series of related transactions; provided that this clause (i) shall not be deemed applicable to any merger, consolidation or other business combination, if, as a result of any such merger, consolidation or other business combination, no Person or Group of Persons that had not had “control” of EVERTEC immediately prior to such transaction, as such term is defined under the Bank Holding Company Act of 1956, shall have obtained such “control”;
(ii)
Transfer (other than in the form of a pledge, hypothecation or similar grant of a security interest only and which shall not involve the grant of a proxy or other right with respect to the voting of such equity), in one or a series of related transactions, of equity representing 50% or more of the voting power of EVERTEC (or any Subsidiary or Subsidiaries that alone or together represent all or substantially all of EVERTEC’s consolidated business at that time) or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries to a Person or Group of Persons (other than an Transfer of such equity to Apollo Global Management LLC, Popular, any Permitted Ultimate Parent, or their respective Controlled Affiliates);
(iii)
transaction in which a majority of the board of directors or equivalent governing body of EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries) immediately following or as a proximate cause of such transaction is comprised of persons who were not members of the board of directors or equivalent governing body of EVERTEC (or such successor or other entity) immediately prior to such transaction (or are not nominated by Apollo Global Management LLC, Popular, any Permitted Ultimate Parent or their respective Controlled Affiliates) except, (X) resulting from the compliance, at the time of an initial public offering of either Holdco or EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries), with the listing requirements, listed company manual or similar rules or regulations of the securities exchange on which Holdco’s or EVERTEC’s (or such successor’s or other entity’s), as the case may be, equity securities will be listed pursuant to such initial public offering, (Y) if a majority of such board of directors is not “independent” under the rules of the applicable securities exchange on the date following such initial public offering upon which Holdco or EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries), as the case may be, first ceases to be a “controlled company” (or similar status) under the rules and regulations of such exchange, resulting from compliance with the rules and regulations of such exchange that first apply upon Holdco or EVERTEC (or such successor’s or other entity’s), as the case may be, ceasing to be a “controlled company” (or similar status), or (Z)

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the loss of directors of EVERTEC pursuant to Section 2 of the Stockholder Agreement (as in effect on the date hereof or as may be amended with the approval of Popular and BPPR) that does not result in another Person or Group of Persons having the right or ability to appoint a majority of the board of directors or equivalent governing body of Holdco or EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries) as a result of such transaction; provided that, for the avoidance of doubt, this clause (Z) shall only apply to the resignation and initial replacement of such directors and not to any subsequent replacement of such directors (whether in connection with another transaction or otherwise); or
(iv)
sale or other disposition in one or a series of related transactions of all or substantially all of the assets of EVERTEC and its Subsidiaries (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries) to a Person who is not an Affiliate of EVERTEC at such time.
“EVERTEC Reserve Account” means a money market account maintained at BPPR and owned jointly by EVERTEC and BPPR, in which the Reserve Amount is to be maintained on deposit by EVERTEC, bearing interest at then-current market rates as offered by BPPR to the general public.
“Excess Reserve” has the meaning set forth in Section 2.8(b).
“Exchange Act” means the Securities Exchange Act of 1934.
“Existing ISO” has the meaning set forth in the Recitals.
“Federal Reserve” means the Federal Reserve Bank of New York.
“Government Entity” means any federal, state, Commonwealth of Puerto Rico, local or foreign government, governmental subdivision, administrative body or other governmental or quasi-governmental agency, tribunal, court or other entity with competent jurisdiction.
“Government-Merchant” means each of the various municipalities, government agencies, public corporations and other governmental entities in the Commonwealth of Puerto Rico, which are set forth in Exhibit A; provided, that, when a Person that is a Government-Merchant enters into a Merchant Agreement, such Person shall no longer be considered a Government-Merchant for purposes of this Agreement.
“Government-Merchant Agreements” means the agreements which are set forth in Exhibit A and are in effect as of the date hereof between BPPR and the Government-Merchants (or any successor or new agreement that may be entered solely between BPPR and Government-Merchants) for services rendered by BPPR to enable such Government-Merchants to accept and process payment of goods and services from their customers by means of Cards or other transaction media.
“Government-Merchant Fees” shall have the meaning set forth in Section 6.3(b).
“Group Agreement” means any agreement governing the acquisition, holding, voting or disposition of securities of a Person; provided that so long as Apollo or a subsequent Permitted Controlling Holder is an Affiliate of such Person, such Person is a party to such agreement.
“Group of Persons” means a group of Persons that would constitute a “group” as determined pursuant to Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
“Group Securities” means any securities beneficially owned by a Person solely as a result of the Stockholder Agreement or any other Group Agreement and, for the avoidance of doubt, which securities have not been Transferred to such Person or any of its Controlled Affiliates.

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“Government Services Addendum” means the Service Addendum - Merchant and Electronic Payment Services to Government Entities, dated as of June 30, 2010, among Popular, BPPR and EVERTEC.
“Hold Account” means a non-interest-bearing deposit account maintained at BPPR for diversion of Merchant funds when there is evidence of fraudulent Transactions or serious violation of applicable Rules by such Merchant.
“Holdco” means Carib Holdings, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico.
“Holdco Common Shares” means the common stock of Holdco, par value $0.01 per share.
“Holders” means the holders of Holdco Common Shares who are parties to the Stockholder Agreement as set forth in Schedule I thereto, as the same may be amended or supplemented from time to time.
“ICA” means a unique intercard bank association number assigned and licensed by MCI to an Acquiring Member for such Acquiring Member’s use in issuing Cards (if applicable), entering Transactions into or receiving Transactions from such Association’s settlement and authorization systems.
“Indebtedness” means, with respect to any Person, (a) all indebtedness of such Person, whether or not contingent, for borrowed money, and (b) all obligations of such Person evidenced by notes, bonds, debentures or other similar debt instruments.
“Independent Sales Organization” or “ISO” means any organization that (i) is not a member of VISA or MCI (or any other Association), (ii) is registered with and sponsored by a VISA or MCI (or any other Association) member and (iii) provides services to a VISA or MCI (or any other Association) member in connection with the member’s merchant or Card issuing program.
“Indirect Processor Agreement” shall have the meaning set forth in Section 3.1(c).
“Initial Person” has the meaning set forth in the definition of “beneficially owned.”
“Initial Term” shall have the meaning set forth in Section 9.1.
“Interchange Fee” means the fee that is paid daily by an Acquiring Member to an Association for entering Sales Records and Credit Records and settling Transactions into such Association’s settlement networks.
“Issuing Member” means a licensee or member of an Association that is authorized by such Association to issue Cards.
“Jurisdiction” has the meaning set forth in Section 11.1(b).
“Law” means any law, statute, ordinance, rule, regulation, code, order, injunction, judgment, decree, writ or other enforcement action enacted, issued, promulgated, enforced or entered by a Government Entity (including, for the sake of clarity, any policy statement or interpretation that has the force of law with respect to any of the foregoing, and including common law).
“Material Adverse Effect” means, with respect to any Person, any fact, event, change, effect, development, condition or occurrence that has a materially adverse effect on or with respect to any business, assets, liabilities, financial condition, or operations of such Person.
“Material Breach” means a breach, or series of breaches, of a party’s obligations (other than a failure to make a payment pursuant to this Agreement) that if left uncured for 90 days following receipt of notice from the

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other party (the “Non-breaching Party”) specifying the breach would result in a Material Adverse Effect on the Non-breaching Party and its Subsidiaries (taken as a whole).
“MCI” has the meaning set forth in the Recitals.
“Merchant” means any Person, other than BPPR and EVERTEC, who is or becomes a party to a Merchant Agreement; provided, however, that the term shall not include a Government-Merchant which is a party to a Government-Merchant Agreement.
“Merchant Acquiring Business” means the business engaged in by BPPR, directly through its Merchant Business division and indirectly through EVERTEC, in each case prior to the Effective Date, enabling Merchants and Government-Merchants to accept and process payment of goods and services from their customers by means of Cards or other transaction media, including the signing up and underwriting of Merchants and Government-Merchants for accepting such means of payment, providing POS card-based transaction processing services and electronic payment and settlement services (including PIN and signature debit transaction authorization, settlement and exception processing, gift, private label, stored value and prepaid card processing and certain payments-related reselling services), the sale of products and services related thereto, including terminal deployment services and other value added services (including Card-acquiring debit portfolio management services related to the foregoing, and certain data processing services).
“Merchant Agreement” means (i) the written agreement among a Merchant, EVERTEC and BPPR pursuant to which EVERTEC provides Merchant Services to such Merchant and allows such Merchant to participate in the Merchant Program, and (ii) any agreement defined as a Merchant Agreement under the Merchant and TicketPop Business Transfer and Reorganization Agreement between BPPR and EVERTEC, dated as of June 30, 2010, as such agreement may be amended, restated or supplemented from time to time, (iii) any agreement that may be entered into during the Initial Term and any Renewal Term by and among BPPR, EVERTEC and the applicable Government-Merchant, and (iv) any successor agreement to an existing Government-Merchant Agreements that may be entered into by and among BPPR, EVERTEC and the applicable Government-Merchant; provided, however, that for the avoidance of doubt, as used herein, the term “Merchant Agreement” shall not include any Government-Merchant Agreement.
“Merchant Application” means an application, in a form acceptable to EVERTEC and BPPR, whereby a potential Merchant applies to participate in the Merchant Program.
“Merchant Application Approval Policy” means the written policy set forth in Exhibit B regarding acceptance of Merchants, as such policy may be amended in accordance with Section 2.4(c).
“Merchant Chargeback” means a Transaction or other item denied or returned by an Issuing Member after such Transaction was entered into the appropriate settlement network for payment in accordance with applicable Rules, or for which payment to a Merchant or a Government-Merchant has been refused or reversed in accordance with applicable Rules.
“Merchant Loss” means any loss or extraordinary expense (including reasonable legal fees related to such loss or extraordinary expense) for any reason attributable to a Merchant or a Government-Merchant, including any loss due to a Merchant Chargeback, Merchant business failure or any fraudulent or illegal, or allegedly fraudulent or illegal, practice of such Merchant or Government-Merchant, except in the event such Merchant Loss was caused by the fraud or misconduct of BPPR.
“Merchant Program” means the package of (i) services provided by EVERTEC and (ii) services provided by BPPR, in each case, pursuant to a Merchant Agreement to a Merchant (and in the case of BPPR, also to a Government-Merchant pursuant to a Government-Merchant Agreement), enabling such Merchant and Government-Merchant to make sales to Cardholders and permitting the Merchant and Government-Merchant to present Sales Records to EVERTEC (or, in the case of Government-Merchants, to BPPR) for payment and processing, including Transaction authorization and processing services and related services.

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“Merchant Program Procedures” means the procedures, as required by the Rules, that are to be followed by each of EVERTEC, BPPR and each Merchant and Government-Merchant in the handling of Transactions, in a manner consistent with past practices under the Merchant Acquiring Business, which shall be documented by mutual agreement by the parties within 60 days from the Effective Date as such procedures may be amended from time to time upon the mutual consent of BPPR and EVERTEC; provided that the procedures shall conform with the Rules; provided, further, that the Rules shall govern in the event of any conflict with such procedures.
“Merchant Reserve Account” means a non-interest bearing deposit account maintained at BPPR and owned by EVERTEC for the deposit of funds received from Merchants pursuant to their respective Merchant Agreements as collateral against losses (i.e., reserves).
“Merchant Services” means services provided by each of BPPR and EVERTEC to Merchants (and, in the case of Government-Merchants, by BPPR with the assistance of EVERTEC under this Agreement) pursuant to the Merchant Program.
“Merchant Transaction Processing Fees” means the fees charged by EVERTEC to a Merchant (or, in the case of Government-Merchants, the fees charged by BPPR) for processing Sales Records and Merchant Chargebacks, participating in the Merchant Program and supplying card authorization services, monthly statements, equipment and other supplies and services as identified in or authorized under the Merchant Application, Merchant Agreement (or, in the case of Government-Merchants, under the Government-Merchant Agreement) or any other ancillary materials.
“Notice of Dispute” has the meaning set forth in Section 9.2(a).
“Non-breaching Party” has the meaning set forth in the definition of Material Breach.
“Non-Controlled Public Entity” means a Person which has equity securities listed on national stock exchange and which Person’s Affiliates do not beneficially own securities representing the majority of the voting power to elect the members of the board of directors or other governing body of such Person.
“Operating Account” means a deposit account maintained at BPPR and owned by EVERTEC for the purpose of debiting and crediting Merchant DDAs with respect to amounts due and payable to EVERTEC under the Merchant Agreements.
“Original Paper” means the Merchant’s or Government-Merchant’s copy of a Sales Record or Credit Record transcribed in writing on a paper form that has been approved by both BPPR and EVERTEC for use under this Agreement.
“Other Person” has the meaning set forth in the definition of “beneficially owned.”
“Payment Card Industry Data Security Standards” means the set of comprehensive requirements for enhancing payment account data security developed by the founding payment brands of the PCI Security Standards Council, as may be amended from time to time.
“Permitted Assignment” means a Permitted Subsidiary Assignment or a Permitted Third-Party Assignment.
“Permitted Controlling Holder” means a Person that (i) beneficially owns equity securities representing a majority of the voting power to elect the directors of EVERTEC or (ii) any successor or any other entity holding all or substantially all of the assets of EVERTEC and its Subsidiaries in a transaction or series of transactions, in each case, without contravening Section 11.1 or without BPPR validly exercising its termination right pursuant to Section 11.11 provided that such Person shall be a “Permitted Controlling Holder” only with respect to the applicable entity that issues such securities.

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“Permitted Subsidiary Assignment” means an assignment by EVERTEC of any of its rights, duties or obligations under this Agreement to an Assignee Sub in compliance with the provisions of Section 11.1.
“Permitted Third-Party Assignment” means an assignment by EVERTEC of all its rights, duties and obligations under this Agreement to an Asset Acquirer in compliance with the provisions of Section 11.1.
“Permitted Ultimate Parent” means with respect to a Permitted Controlling Holder, its Ultimate Parent Entity.
“Person” means an individual, a corporation, a partnership, an association, a limited liability company, a joint venture, a Government Entity, a trust or other entity or organization.
“PIN” means a personal identification number and the security regulations associated therewith that is assigned by or on behalf of certain Associations to Cardholders to enhance the security of Transactions.
“Popular” means Popular, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico.
“POS” means point-of-sale.
“Products” means goods or services sold or rendered by Merchants.
“Proprietary Information” has the meaning set forth in Section 5.1.
“Referred Merchant” means a potential Merchant that was referred to EVERTEC by BPPR and who consequently executes a Merchant Agreement with EVERTEC and BPPR following the Effective Date.
“Region” shall have the meaning set forth in Section 2.13.
“Renewal Term” shall have the meaning set forth in Section 9.1.
“Representative” means, with respect to a particular Person, any director, officer, partner, member, employee, agent, subcontractor, consultant, advisor or other representative of such Person, including legal counsel, accountants and financial advisors.
“Reserve Amount” means $500,000.
“Reserve Deficiency” has the meaning set forth in Section 2.8(b).
“Retrieval” means the production of the original, or an acceptable facsimile of, a Sales Record, Credit Record or other supporting documentation by the Merchant or Government-Merchant at the request of BPPR or an Issuing Member.
“Retrieval Request” means a written or electronic request by an Issuing Member to BPPR and/or EVERTEC, in the manner permitted by the corresponding Association, for the Retrieval of a Sales Record or Credit Record, either in the form of microfilm, Original Paper, Electronic Record or facsimile previously delivered in Electronic Record form to EVERTEC.
“Rules” means, as applicable, the written rules and regulations, system manuals and procedures and service levels, standards and requirements issued by an Association, and any interpretations thereof by such Association, as the same may be amended from time to time.
“Sales Records” means all documents, or the Electronic Record of such documents, in such format as is approved by BPPR and EVERTEC, used to evidence the sale of Products through the use of Cards.

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“Settlement Account” means a deposit account owned by BPPR to receive the net funds wired daily by the respective Associations in payment for Sales Records entered into their respective settlement networks offset by Association Dues, Assessments, Interchange Fees, Merchant Chargebacks and other amounts pursuant to the Rules.
“Solvent” with regard to any Person, means that (i) the sum of the assets of such Person, both at a fair valuation and at a present fair salable value, exceeds its liabilities, including contingent, subordinated, unmatured, unliquidated, and disputed liabilities; (ii) such Person has sufficient capital with which to conduct its business; and (iii) such Person has not incurred debts beyond its ability to pay such debts as they mature. For purposes of this definition, “debt” means any liability on a claim, and “claim” means (x) a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) a right to an equitable remedy for breach of performance to the extent such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. With respect to any such contingent liabilities, such liabilities shall be computed at the amount which, in light of all the facts and circumstances existing at the time, represents the amount which can reasonably be expected to become an actual or matured liability.
“SPV Affiliate” means with respect to any Person, any Affiliate of such Person, whose direct or indirect interest in the Common Shares constitutes more than 30% (by value) of the equity securities portfolio of such Affiliate.
“Stockholder Agreement” means the Stockholder Agreement among Carib Holdings, Inc. and the holders party thereto dated September 30, 2010.
“Subsidiary” means, with respect to any Person, any corporation, association, partnership, limited liability company or other business entity of which 50% or more of the total voting power or equity interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by (a) such Person, (b) such Person and one or more Subsidiaries of such Person, or (c) one or more Subsidiaries of such Person.
“Trademark” means any trademark, service mark, Internet domain name, trade dress, trade, corporate or business name, whether or not registered, and all applications and registrations for the foregoing, including all renewals and extensions of same, and all goodwill associated therewith and symbolized thereby.
“Transaction” means the consummation of a sale of services or Products or the initiation of a credit to a Cardholder by a Merchant or a Government-Merchant by means of a Sales Record.
“Transfer” means any direct or indirect sale, assignment, transfer, conveyance, gift, bequest by will or under intestacy laws, pledge, hypothecation or other Encumbrance, or any other disposition, of the stated security (or any interest therein or right thereto, including the issuance of any total return swap or other derivative whose economic value is primarily based upon the value of the stated security) or of all or part of the voting power (other than the granting of a revocable proxy) associated with the stated security (or any interest therein) whatsoever, or any other transfer of beneficial ownership of the stated security, with or without consideration and whether voluntarily or involuntarily (including by operation of law). Notwithstanding anything to the contrary set forth in this Agreement, (i) each of (x) a Transfer of equity interests of Popular and (y) a Change of Control of Popular shall be deemed not to constitute a Transfer of any equity interest beneficially owned by Popular; (ii) each of (x) a Transfer of equity interests of Apollo Global Management LLC or any of its Controlled Affiliates that is not an SPV Affiliate, and (y) a Change of Control of Apollo Global Management LLC or any of its Controlled Affiliates that is not an SPV Affiliate shall be deemed not to constitute a Transfer of any equity interest beneficially owned by Apollo or such Affiliate, as applicable, and (iii) each of (x) a Transfer of equity interests of any Permitted Ultimate Parent or any of its Controlled Affiliates that is not an SPV Affiliate, and (y) a Change of Control of any Permitted Ultimate Parent or any of its Controlled Affiliates that is not an SPV Affiliate shall be deemed not to constitute a Transfer of any security beneficially owned by such Permitted Ultimate Parent Entity or such Controlled Affiliate, as applicable; provided that, for the avoidance of doubt, subject to clause (i) above, any Change of Control of an SPV Affiliate shall be deemed to constitute a Transfer of the Common Shares beneficially owned by such SPV Affiliate.

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“Transmittal” means the process whereby Sales Records and Credit Records are electronically transferred in the form of Electronic Records.
“Ultimate Parent Entity” means (i) with respect to Apollo, Apollo Global Management LLC and its successors, (ii) with respect to Popular, Popular and its successors and (iii) with respect to a Permitted Controlling Holder, (x) the Person which (A)(i) Controls such Permitted Controlling Holder or (ii) if no Person Controls such Permitted Controlling Holder, the beneficial owner of a majority of the voting power of such Permitted Controlling Holder and (B) is not itself Controlled by any other Person that is an Ultimate Parent Entity of such Permitted Controlling Holder or, (y) if no such Person exists, the Permitted Controlling Holder; provided that, with respect to determining an Ultimate Parent Entity (i) the Control of any entity by a natural person shall be disregarded and (ii) the Control of any Non-Controlled Public Entity by any Person shall be disregarded.
“VISA” has the meaning set forth in the Recitals.
Section 1.2 Interpretational Provisions.
(a) Exhibits and Schedules referenced in this Agreement are deemed to be incorporated herein by reference, in each case as such Exhibits and Schedules may be amended from time to time in accordance with the provisions contained herein.
(b) Wherever the word “include,” “includes” or “including” is used in this Agreement, it shall be deemed to be followed by the words “without limitation.”
(c) The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(d) The terms defined in the singular have a comparable meaning when used in the plural, and vice versa.
(e) The terms “dollars” and “$” mean U.S. Dollars.
(f) References herein to the Preamble or the Recitals, or a specific Article, Section, Schedule or Exhibit shall refer, respectively, to the Preamble or the Recitals or to Articles, Sections, Schedules or Exhibits of this Agreement.

ARTICLE II

RESPONSIBILITIES

Section 2.1 EVERTEC Responsibilities – General.
(a) ISO Registration. EVERTEC shall register with, obtain approvals from and file such forms with each of the Associations as are required under such Association’s Rules in order to provide the Merchant Services hereunder as an ISO for BPPR as Acquiring Member.
(b) Marketing Activities. EVERTEC shall market the Merchant Program consistent with the practices of the Merchant Acquiring Business, including, by:
(i) marketing the Merchant Program to potential Merchants and encourage them to become Merchants;
(ii) assisting potential Merchants in completing all documents required by BPPR to apply to the Merchant Program in accordance with the Merchant Application Approval Policy and

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forwarding to BPPR, in electronic format, the Merchant Applications it receives as promptly as reasonably practicable;
(iii) producing and paying for the materials used by EVERTEC in marketing the Merchant Program, which materials will comply in all material respects with the Rules and shall be approved in advance of their use by BPPR in its reasonable discretion; and
(iv) monitoring and supervising the performance of its employees and marketing Representatives involved in the Merchant Program to ensure compliance with Merchant Program Procedures, the Merchant Application Approval Policy and all applicable Rules.
(c) Equipment and Materials.
(i) EVERTEC will sell or make arrangements for the sale to, or the finance, lease or rental by Merchants of all point-of-sale and other terminals and equipment necessary for each Merchant (and will assist BPPR in making such arrangements with Government-Merchants) to participate in the Merchant Program. EVERTEC will install and, if requested by the Merchant (or if requested by the Government-Merchant to BPPR), maintain the terminals and equipment at no expense to BPPR. Neither EVERTEC nor any Merchant (nor any Government-Merchant) will be required to purchase terminals and equipment from BPPR. EVERTEC may, at its option, provide the services set forth in this Section 2.1(c)(i) itself or through one or more subcontractors or third parties.
(ii) EVERTEC will (A) provide Merchants with training materials and will use reasonable efforts to train Merchants to operate the terminals and equipment to enable Merchants to fulfill their obligations under the Merchant Program, and (B) assist BPPR in providing such materials and trainings to Government-Merchants.
(iii) As between BPPR and EVERTEC, EVERTEC will be responsible for the distribution, delivery and expense of all supplies reasonably necessary for the Merchants and Government-Merchants to perform their duties under the Merchant Program, including Sales Records, Transmittals, deposit envelopes, printer paper and ribbons.
(d) Merchant Accounts.
(i) EVERTEC will input such data for each approved Merchant (and assist BPPR in managing the corresponding data for the Government-Merchants) in databases as is necessary for such Merchant or Government-Merchant to participate in the Merchant Program. EVERTEC will maintain the data files in a manner reasonably designed to assure that all Merchant and Government-Merchant charges are input promptly.
(ii) EVERTEC will input all necessary new account information into EVERTEC’s information system in a manner reasonably designed to render all exception reports turned on and available.
(iii) EVERTEC will monitor all Merchant DDAs daily in accordance with the Rules to attempt to minimize Merchant Losses and shall provide BPPR with summary reports thereof in a form reasonably agreed between BPPR and EVERTEC; provided, however, that the DDA’s for Government-Merchants shall be monitored by BPPR.
(e) EVERTEC will (i) respond to inquiries from Merchants concerning the Merchant Program in a manner consistent with the practices of the Merchant Acquiring Business, and (ii) direct to and coordinate with BPPR any inquiries from Government-Merchants.

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(f) Merchant Services. EVERTEC, at its expense and at all times in a manner reasonably acceptable to BPPR in a manner consistent with the practices of the Merchant Acquiring Business, will provide all necessary functions for the Merchant Program through qualified industry vendors (subject to the provisions of Section 2.12) or, at its discretion, will provide and develop internally the necessary systems and capabilities, consistent with the practices of the Merchant Acquiring Business, including:
(i) maintaining electronic authorization and draft capture applications and network;
(ii) maintaining an Authorization Center for voice authorization, referrals and Merchant instructions;
(iii) maintaining Merchant accounting and clearing systems;
(iv) creating and transmitting to BPPR daily ACH Files for Merchant payments;
(v) rendering monthly Merchant statements;
(vi) processing Merchant Chargebacks and Retrieval Requests in accordance with the Rules;
(vii) providing customer service to Merchants;
(viii) assisting BPPR in performing the services listed in (i) through (vii) above for Government-Merchants; and
(ix) providing BPPR with copies of all reports with respect to EVERTEC’s obligations under this Agreement reasonably necessary for BPPR to fulfill its obligations hereunder.
(g) EVERTEC will, in a manner consistent with the practices of the Merchant Acquiring Business, promptly resolve rejected Transactions identified by EVERTEC, including rejected Transactions funded to the Merchant (“edit rejects”) and rejected Transactions not funded to the Merchant (“Transmittal rejects”). If necessary, EVERTEC will use commercially reasonable efforts to recover funds directly from the Merchants for all rejected Transactions that are not curable. BPPR will, in a manner consistent with its past practices, promptly resolve rejected Transactions of Government-Merchants, including edit rejects and Transmittal rejects. If necessary, BPPR will use commercially reasonable efforts to recover funds directly from the Government-Merchants for all rejected Transactions that are not curable.
(h) EVERTEC will, in a manner consistent with the practices of the Merchant Acquiring Business, promptly identify the reasons for each ACH credit or debit rejected, correct system data as necessary and thereafter either credit the Merchant (or remit to BPPR for credit to the Government-Merchant) for the funds through an ACH Transaction or pursue all commercially reasonable efforts to collect the funds due from the Merchant (or assist BPPR to collect the funds due from the Government-Merchant), as appropriate. EVERTEC is now, and shall remain during the Initial Term and any Renewal Term, compliant with the Rules, including the Payment Card Industry Data Security Standards.
(i) EVERTEC will be responsible for “front line” customer claim receipt services.
Section 2.2 Merchant Transaction and Fee Settlement.
(a) The Settlement Account shall be established at BPPR, and all settlement funds with respect to Merchant Transactions and Association Fees shall be processed through the Settlement Account.
(b) As between BPPR and EVERTEC, EVERTEC shall be responsible for collecting from Merchants all fees, fines and charges relating to Transactions or the Merchant’s acceptance of Cards in payment for Products;

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provided, that, with respect to the Government-Merchant Agreements, BPPR shall be responsible for collecting all fees and other payments payable to BPPR under the Government-Merchant Agreements.
Section 2.3 Merchant Chargeback Responsibilities. EVERTEC will, in a manner consistent with the practices of the Merchant Acquiring Business, respond to an Issuing Member’s request for information in accordance with the Rules in the event a Merchant initiates a Chargeback, and shall assist BPPR in responding to an Issuing Member’s request for information in accordance with the Rules in the event a Government-Merchant initiates a Chargeback.
Section 2.4 Merchant Agreements.
(a) EVERTEC shall contract with potential Merchants accepted for participation in the Merchant Program using the form of Merchant Agreement as has been reasonably approved by BPPR and EVERTEC; provided that EVERTEC shall have the exclusive authority to establish fees and charges applicable to each Merchant for such participation subject to applicable Law and the Rules. EVERTEC shall be the sole owner of all economic rights and benefits of, under and relating to Merchant Agreements (and to the amounts payable to EVERTEC by BPPR, subject to and as provided in Section 6.3(b), with respect to Government-Merchant Agreements); provided, however, that EVERTEC shall not have the right to sell, assign, transfer or encumber such rights without the prior written consent of BPPR, which consent may be granted or denied at BPPR’s sole discretion, except that EVERTEC may assign its rights (including, for the avoidance of doubt, any of its economic rights and benefits of, under and relating to Merchant Agreements), duties and obligations under this Agreement in connection with the grant of a security interest for any securitization or financing transactions, and the enforcement of any rights or remedies that EVERTEC has against BPPR under this Agreement; provided further that, (i) in the event BPPR requests from EVERTEC to provide the Merchant Services at reduced fees or charges to certain Merchants designated by BPPR (the “Designated Merchants”), then BPPR shall pay EVERTEC on a monthly basis the difference between (x) EVERTEC’s standard fees and charges and (y) the reduced fees and charges mutually agreed to by the parties hereto for the Merchant Services provided to such Designated Merchants, and (ii) the Discount Sharing Agreement, which is attached hereto as Exhibit D and incorporated herein, shall remain in full force and effect with respect to the merchants identified in Exhibit D, as the same may be amended from time to time by mutual agreement of the parties hereto.
(b) EVERTEC shall follow the normal and customary underwriting and approval processes as reasonably agreed by BPPR and EVERTEC to evaluate potential Merchants for Merchant Services in accordance with the Merchant Application Approval Policy and all applicable Rules. EVERTEC will not enter into a Merchant Agreement with any potential Merchant that does not, in EVERTEC’s reasonable judgment, meet the standards set forth in the Merchant Application Approval Policy without the prior written consent of BPPR; provided that all Merchants party to a Merchant Agreement and all Government-Merchants party to a Government-Merchant Agreement shall be deemed to satisfy the Merchant Application Approval Policy.
(c) BPPR may amend the Merchant Application Approval Policy, but only in reasonable conformity with its credit underwriting policies and procedures and industry standards regarding such matters, upon 30 days written notice to EVERTEC; provided that in the event of change in applicable Rules or Law, BPPR shall only be required to provide such advance notice to the extent reasonably practicable. BPPR agrees to review periodically with EVERTEC the Merchant Application Approval Policy in order to eliminate changes that might unnecessarily result in a reduction of the economic benefits EVERTEC and BPPR reasonably should expect to achieve under this Agreement.
(d) Each party may terminate any Merchant Agreement in accordance with the terms thereof. Parties shall notify each other in any case where such party reasonably suspects fraud, security breaches or a default by any Merchant, subject to restrictions under applicable Law.
Section 2.5 Telecommunications Links. EVERTEC will be responsible for arranging for and overseeing the installation and maintenance of a direct communications link between EVERTEC and each Merchant (and, if applicable, between BPPR and a Government-Merchant,) and, as between BPPR and EVERTEC, EVERTEC will assume all costs associated therewith.

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Section 2.6 Reserved.
Section 2.7 Notices; Legal Proceedings. EVERTEC will give BPPR prompt written notice whenever:
(i) EVERTEC receives notice from any Government Entity of any alleged non-compliance by EVERTEC or any of its Representatives with any Law applicable to the Merchant Program;
(ii) the Internal Revenue Service or any other taxing authority alleges any default by EVERTEC in the payment of any material taxes or threatens to make a material assessment against EVERTEC relating to the Merchant Program; or
(iii) any litigation or proceeding relating to the Merchant Program is brought against EVERTEC or BPPR or names EVERTEC or BPPR as a party.
Section 2.8 EVERTEC Reserve Account.
(a) EVERTEC Reserve Account. As of or no later than five Business Days following the Effective Date, EVERTEC shall have on deposit with BPPR a money market account in the Reserve Amount, denominated as the EVERTEC Reserve Account. The EVERTEC Reserve Account shall remain at BPPR as provided in Section 2.8(d).
(b) Reserve Amount. If at any time the amount in the EVERTEC Reserve Account is less than the Reserve Amount (such difference, the “Reserve Deficiency”), BPPR shall give notice to EVERTEC of the amount of the Reserve Deficiency and EVERTEC shall, within three Business Days of such notice, deposit an amount into the EVERTEC Reserve Account equal to the Reserve Deficiency. If at any time the amount in the EVERTEC Reserve Account is greater than the Reserve Amount (such difference, the “Excess Reserve”), BPPR shall give notice to EVERTEC of the amount of the Excess Reserve and remit an amount equal to the Excess Reserve to the Operating Account. EVERTEC agrees that, in the event that EVERTEC fails to make a deposit into the EVERTEC Reserve Account as required by this Section 2.8(b), BPPR may withdraw the required amount from the Operating Account and deposit it into the EVERTEC Reserve Account.
(c) In the event that any Association requests that EVERTEC provide collateral in order to perform its obligations under this Agreement, then EVERTEC shall negotiate directly with the Association the terms (including the amount and type of collateral) and conditions under which EVERTEC would provide the collateral.
(d) EVERTEC Reserve Account Upon Termination. The EVERTEC Reserve Account shall remain at BPPR throughout the Initial Term and Renewal Term, and for a period of not less than 180 days from the last date any Merchant in the Program submits a Merchant Transaction. No funds may be withdrawn from the EVERTEC Reserve Account except as provided in Section 2.8(b).
Section 2.9 Hold Account. EVERTEC will establish the Hold Account at BPPR. EVERTEC will monitor daily Merchant activity and if, in its sole judgment, certain Merchants or certain Transactions are likely fraudulent or otherwise not in compliance with applicable Rules, EVERTEC will immediately notify BPPR of such activity. BPPR shall change the Merchant bank account information to cause such Merchant funds to be deposited into the Hold Account. EVERTEC will thereupon promptly investigate each such suspicious incident and promptly notify BPPR of the result of each such investigation. EVERTEC will, on a monthly basis, notify BPPR of all cumulative Merchant Losses so discovered and verified and BPPR shall transfer an equivalent amount of funds from the Hold Account or any Merchant Reserve Account, at EVERTEC’s request, to the Operating Account. If in any case EVERTEC’s investigation determines that no violation of applicable Rules and no Merchant Losses have occurred, EVERTEC will promptly instruct BPPR to release to the Merchant’s DDAs any funds diverted to the Hold Account because of the alleged violation to the Merchant’s DDA. EVERTEC shall have view-only access to the Hold Account and the EVERTEC Reserve Account. EVERTEC shall not have the ability to withdraw funds from either the Hold Account or the EVERTEC Reserve Account.

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Section 2.10 Merchant Reserve Account. EVERTEC may require, as a term of each Merchant Agreement, that a Merchant fund a Merchant Reserve Account. The parties agree that all right, title and interest with respect to the Merchant Reserve Account shall be owned by EVERTEC, subject to such rights relative to repayment of certain amounts held in the Merchant Reserve Account as are granted, if any, pursuant to the terms of the relevant Merchant Agreement, and subject to BPPR’s right to indemnity and under the terms of each such Merchant Agreement. For the avoidance of doubt, the parties hereby agree that EVERTEC and, if allowed pursuant to the terms of any Merchant Agreement, BPPR shall have full access to any Merchant Reserve Account, including the ability to withdraw funds therefrom.
Section 2.11 Security Interest in Accounts. In order to secure EVERTEC’s obligations under this Agreement and BPPR’s rights to indemnity and reimbursement pursuant to Section 9.4, and solely for such purposes, EVERTEC hereby grants to BPPR a contractual possessory security interest in, and hereby pledges to BPPR, all of EVERTEC’s right, title and interest, of whatever nature, whether now owned or existing or hereafter created, acquired or arising, in and to (i) the EVERTEC Reserve Account, the Hold Account and, to the extent set forth in Section 2.10, above, the Merchant Reserve Accounts, (ii) all funds in and proceeds of such accounts and (iii) all writings evidencing such accounts. EVERTEC agrees to take all actions as may be reasonably required from time to time to establish and maintain such security interests as set forth hereinabove. EVERTEC shall execute all documents necessary to grant and perfect a security interest in favor of BPPR under Puerto Rico law.
Section 2.12 Subcontractors; Third-Party Vendors.
(a) EVERTEC may subcontract with third parties for the provision of the Merchant Services to Merchants and the fulfillment of its obligations to BPPR hereunder in accordance with EVERTEC’s outsourcing policies and procedures (which shall comply with the regulatory requirements in FFIEC’s Statement on Risk Management of Outsourced Technology Services dated November 28, 2000 and all applicable Rules), with the understanding that EVERTEC shall remain responsible and liable towards the Merchants and to BPPR for the due performance of such Merchant Services and obligations by such subcontractors and that there shall be no direct relationship whatsoever between the BPPR, on the one hand, and such subcontractors, on the other hand.
(b) Any obligations under this Agreement not directly performed by EVERTEC shall be conducted by qualified industry vendors that EVERTEC reasonably believes to be competent and that meet or exceed any requirements under the Rules or as may be required under applicable Law.
Section 2.13 Merchant Referral. EVERTEC agrees to refer exclusively to BPPR all Merchants and potential Merchants, doing business in Puerto Rico, the U.S. Virgin Islands or the British Virgin Islands (the “Region”), that inquire about, request, or otherwise evidence an interest, to EVERTEC’s knowledge, in banking services and products. All such referrals shall be communicated to BPPR by EVERTEC in a reasonably agreed upon manner. BPPR may provide EVERTEC with promotional and informational materials and supplies relating to BPPR’s banking services and products, at BPPR’s expense.

ARTICLE III
BPPR RESPONSIBILITIES

Section 3.1 BPPR Responsibilities – General.
(a) BPPR shall provide all commercially reasonable assistance as is requested by EVERTEC to obtain the approvals and file the registrations required by any Association in order for EVERTEC to provide the Merchant Services hereunder as an ISO for BPPR as Acquiring Member. BPPR shall (i) take all commercially reasonable action necessary to remain an Acquiring Member of the Associations through the Initial Term and any Renewal Term and (ii) maintain the minimum liquidity, assets, capital and earnings required by each Association so as to sponsor EVERTEC in a manner consistent with the Merchant Acquiring Business and in a manner reasonably designed to support the Merchant Acquiring Business during the Initial Term and any Renewal Term, as reasonably agreed by the parties hereto.

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(b) BPPR shall act as the Acquiring Member for Merchant Agreements executed by EVERTEC and BPPR.
(c) BPPR shall provide (i) all services to the Merchants and Government-Merchants hereunder in accordance with the applicable Rules and (ii) shall continue to provide its functions described in any three-party agreement among BPPR, EVERTEC and any third party (“Indirect Processor Agreement”)  consistent with the practices of the Merchant Acquiring Business, including but not limited to following the normal and customary underwriting and approval processes as reasonably agreed by BPPR and EVERTEC to evaluate potential Merchants for Merchant Services, or customers of any third party under an Indirect Processor Agreement, in accordance with the Merchant Application Approval Policy and all applicable Rules.
(d) BPPR will obtain copies for EVERTEC of any Association’s manuals and publications that are available to Acquiring Members, and BPPR will forward to EVERTEC all material information routinely provided by each Association that would be reasonably necessary or appropriate for EVERTEC’s fulfillment of its obligations under this Agreement, to the extent permitted under the Rules. EVERTEC will reimburse BPPR for all costs reasonably incurred pursuant to this Section 3.1(d), if any.
(e) BPPR will maintain fraud detection and control systems as set forth in Section 3.5 below, and shall also maintain a disaster recovery plan as may be required by any applicable Law. BPPR shall be responsible for complying with all Law applicable to it related to screening, customer identification and know your customer, including the BSA, the USA PATRIOT Act and the applicable requirements and regulations promulgated and issued by the U.S. Department of the Treasury’s Office of Foreign Assets Control and the Financial Crimes Enforcement Network. BPPR shall use commercially reasonable efforts to monitor Merchants pursuant to such Law for ongoing compliance with any anti-money laundering and BSA requirements.
(f) BPPR will notify EVERTEC as soon as practicable following BPPR’s receipt of written notice from any Association regarding a change in such Association’s Assessments.
(g) BPPR will notify EVERTEC as soon as practicable following BPPR’s receipt of written notice from any Association regarding changes in the basis for calculation of Interchange Fees by such Association.
(h) BPPR is now, and shall remain during the Initial Term and any Renewal Term, compliant with the Rules, including but not limited to, the Payment Card Industry Data Security Standards.
(i) During the Initial Term and any Renewal Term, (i) BPPR shall use its reasonable best efforts to ensure that each Government-Merchant Agreement remains in full force and effect and (ii) BPPR shall not act, or fail to act, in any manner that would give a Government-Merchant under any Government-Merchant Agreement the right to terminate, modify or accelerate such Government-Merchant Agreement.
(j) Upon the expiration of each Government-Merchant Agreement, BPPR and EVERTEC shall use their respective reasonable best efforts to cause the applicable municipality, government agency, public corporation or other governmental entity to enter into a Merchant Agreement with BPPR and EVERTEC.
(k) BPPR shall, on a monthly basis, account to EVERTEC for all fees, revenue and other payments that are paid to BPPR by Government-Merchants and the amounts that BPPR pays to EVERTEC in connection with the Government-Merchant Agreements pursuant to Section 6.3. EVERTEC may reasonably request from BPPR work papers that support the accounting provided to EVERTEC and BPPR shall provide such workpapers within three Business Days of receiving any such request. Upon its receipt of the workpapers, EVERTEC shall have twenty (20) Business Days to dispute any accounting provided by BPPR and, in the event of a dispute, the parties shall negotiate in good faith to resolve such dispute. Any dispute, if not settled by the parties, shall be resolved in accordance with the dispute resolution mechanism set forth in Section 9.2(a), except that a dispute solely under this section shall not be considered an Event of Default. Any amounts owed to EVERTEC upon the resolution of a dispute shall be paid to EVERTEC within three Business Days of such resolution.

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Section 3.2 Merchant Referral.
(a) BPPR agrees to refer exclusively to EVERTEC potential Merchants (including any Government-Merchants) that inquire about, request, or otherwise evidence an interest, to BPPR’s knowledge, in Merchant Services with respect to such business. All such referrals shall be communicated to EVERTEC by BPPR in a reasonably agreed upon manner. If EVERTEC enters into a Merchant Agreement with such potential Merchant, BPPR shall be paid a referral fee of $25 for each Referred Merchant (the “BPPR Referral Compensation”).
(b) In accordance with EVERTEC’s procedures and instructions for referrals, BPPR will actively cooperate with EVERTEC, on an exclusive basis and at EVERTEC’s expense (such expense to be agreed by the parties in advance), in marketing EVERTEC’s Merchant Services and in locating, investigating and referring potential Merchants to EVERTEC, and provide marketing assistance to EVERTEC for the purpose of retaining and signing new Merchants in exchange for the BPPR Referral Compensation; provided that BPPR shall make no representations or warranties regarding EVERTEC’s Merchant Services. With respect to any such potential Merchants, BPPR shall:
(i) provide EVERTEC with such information and assistance as EVERTEC may reasonably request and BPPR may legally provide in connection with EVERTEC’s review of any corresponding Merchant Application for Merchant Services, and/or EVERTEC’s administration or collection efforts regarding any Merchant referred by BPPR; and
(ii) establish a Settlement Account for each Merchant for the deposit of paper Transaction records and/or the electronic settlement of electronic Transactions, and, if applicable, remit paper Transaction records to EVERTEC in accordance with EVERTEC’s procedures.
(c) EVERTEC shall provide BPPR with promotional and informational materials and supplies relating to the Merchant Services, at EVERTEC’s expense.
Section 3.3 Settlement Responsibilities.  
(a) BPPR is authorized to, and shall be responsible for remitting to Merchants and Government-Merchants, all funds held in the Settlement Account and/or received in settlement of Merchant Transactions.
(b) BPPR shall maintain the Merchant and Government-Merchant files and BINs with the Associations as are listed on Exhibit C hereto and such additional Merchant and Government-Merchant files and BINs as may be reasonably requested by EVERTEC from time to time for EVERTEC’s use for the purpose of providing Merchant Services. EVERTEC agrees to pay the costs charged by the Associations for all BINs required for the Merchants and Government-Merchants. BPPR will, at EVERTEC’s request and expense during the Initial Term or any Renewal Term, procure one or more dedicated BIN/ICA(s) from the Association to facilitate the Merchant Program.
(c) BPPR will establish separate Operating Accounts and Settlement Accounts for each BIN. BPPR will direct the daily net funds wired by the Associations to be deposited into the corresponding Settlement Account.
(d) BPPR will receive daily ACH Files from EVERTEC, edit and format them as necessary, and transmit them to the Federal Reserve for credit to the Merchants and Government-Merchants. The next day payment to the Federal Reserve for this file will be debited to the applicable Settlement Account.  
(e) BPPR will provide view-only system access to EVERTEC (or fax equivalents, at EVERTEC’s request) to review balances and daily activity in all Settlement Accounts and Operating Accounts to facilitate daily reconcilement.
(f) Each Business Day, BPPR will transmit in a data file ACH Return information received from the Federal Reserve to EVERTEC for resolution of rejected Transactions. This file will include the Merchant number, routing transit, Merchant DDA number, amount, reason codes and the original settlement date, and any other information required to process the ACH Return (including the relevant information regarding the Government-Merchant accounts,

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if applicable). Funds paid or received from the Federal Reserve for the ACH Returns will be debited or credited to the Merchant Reserve Account, or in the absence of a Merchant Reserve Account for such Merchant, to the corresponding DDA for the Merchant (or for the Government-Merchant, as applicable).  
(g) BPPR agrees to assign a sufficient number of qualified staff members to reasonably assist EVERTEC in the resolution of settlement and Merchant Chargeback problems.
(h) BPPR will submit as required all statistical information requested by Associations including quarterly statements and will provide copies of all non-confidential information and statements to EVERTEC to the extent permitted by any applicable Rules or Law. EVERTEC will provide, at its own expense, all reasonable information to BPPR to assist BPPR with compliance therewith.
(i) BPPR will debit the Settlement Account or Operating Account, as applicable, for all Assessment and Association Dues as incurred that apply to Merchants and/or Government-Merchants, as well as all Merchant Losses incurred by BPPR, and will provide documentation to EVERTEC that substantiates such debits including copies of quarterly reports.
(j) BPPR, as the Acquiring Member, agrees to represent EVERTEC’s interest in disputes that might arise from time to time with an Association over compliance with Rules and Association Dues; provided that EVERTEC shall pay any Association Dues relating to the Merchant Program and any and all costs reasonably incurred by BPPR in disputing the same, including but not limited to reasonable associated legal fees.
Section 3.4 Non-Solicit.
(a) During the Initial Term and any Renewal Term and for one year following the termination of this Agreement (for any reason), BPPR shall not, and shall cause any ISO for which BPPR acts as the Acquiring Member not to, solicit any Merchants (or any merchants that were Merchants upon the expiration of the Initial Term or any Renewal Term, as applicable) for the provision of any Merchant Services; provided, that in the event EVERTEC is unable or unwilling to perform its obligations under this Agreement with respect to any BPPR banking customer that is a Merchant, the prohibition set forth in this Section 3.4 shall not apply to such BPPR banking customer unless EVERTEC notifies BPPR in writing that it is willing and able to perform its obligations under this Agreement with respect to such BPPR banking customer prior to BPPR’s entry into a sponsorship agreement with another ISO to serve such banking customer.
(b) Notwithstanding the foregoing, nothing herein shall be construed to prevent BPPR from soliciting Merchants for other banking services and products offered by BPPR.
Section 3.5 Fraud Detection. BPPR will have in place a fraud detection system to identify and monitor potentially fraudulent activity as may be mandated by applicable Law.
Section 3.6 Servicing and Monitoring of Merchant Card Accounts. The parties hereto agree that all Card accounts of Merchants shall be serviced as follows:
(a) Each Merchant shall open and maintain a designated deposit account or accounts at BPPR. BPPR shall be permitted access to any funds in such account to the extent funds are needed to fund fees, Assessments, Merchant Chargebacks, returned items or any other obligations of a Merchant to EVERTEC, BPPR, the Associations or any Card issuing bank or account holder.
(b) BPPR shall comply with all reasonable requests of EVERTEC to conduct investigations, supply information or perform any other act or thing relating to investigating Merchant activities and condition. Notwithstanding the foregoing, nothing in this Section 3.6(b) shall be construed to require BPPR to take any action that is in violation of applicable Law or regulation, the Rules or BPPR’s deposit agreement with any Merchant. BPPR represents and warrants to EVERTEC that each deposit agreement with a Merchant and a Government-Merchant that is in effect as of the date hereof does not conflict with the corresponding Merchant Agreement or Government-Merchant Agreement,

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as the case may be. EVERTEC shall be responsible for all reasonable expenses incurred by BPPR in connection with compliance with a request by EVERTEC pursuant to this Section 3.6(b).
Section 3.7 Compliance with Laws. BPPR shall be responsible for complying with all Laws applicable to it related to screening, customer identification and know your customer, including the Bank Secrecy Act (the “BSA”), the USA PATRIOT Act and the applicable requirements and regulations promulgated and issued by the Office of Foreign Assets Control and the Financial Crimes Enforcement Network. EVERTEC shall use commercially reasonable efforts to cooperate with, and assist, BPPR monitor Merchants pursuant to such Law for ongoing compliance with any money laundering and bank secrecy requirements, it being understood and agreed that EVERTEC shall use reasonable best efforts to enhance its BSA and other anti-money laundering policies and procedures in accordance with applicable Law, and EVERTEC shall implement such policies and procedures as soon as practicable, at which time, EVERTEC shall also undertake such monitoring of Merchants and Government-Merchants. Each party shall be responsible for making any and all filings with any Governmental Entity that may be required to be made by such party under such Laws; provided that each party shall cooperate and provide information to the other party, to the maximum extent permitted by Law, as needed for such filings.
Section 3.8 Settlement Risk. BPPR shall not be responsible for the systemic risk of loss of the Associations or the failure of the Associations to effect settlement of Transactions or to perform its obligations hereunder in the event of such failure; provided that this Section 3.8 shall not relieve BPPR of its obligations in the settlement process once the funds or information is received from the Associations.
Section 3.9 Notices; Legal Proceedings. BPPR will cause its Chief Financial Officer to give EVERTEC prompt written notice whenever:
(i) BPPR receives notice from any Government Entity of any alleged non-compliance by BPPR or any of its subsidiaries, affiliates or Representatives with any Law applicable to the Merchant Program;
(ii) the Internal Revenue Service or any other taxing authority alleges any default by BPPR in the payment of any material taxes or threatens to make a material assessment against BPPR relating to the Merchant Program; or
(iii) any litigation or proceeding relating to the Merchant Program is brought against EVERTEC or BPPR or names EVERTEC or BPPR as a party.

ARTICLE IV

EXCLUSIVITY

Section 4.1 (a) Throughout the Initial Term and any Renewal Term, BPPR shall be the Acquiring Member for the Merchant Services provided in the Region; provided, however, if BPPR is unable (for any reason other than a Person’s refusal to enter into a Merchant Agreement with BPPR through no fault of BPPR) or unwilling to act as the Acquiring Member for any Person at any time during the Initial Term or any Renewal Term, EVERTEC may enter into an agreement with another financial institution which shall be the sponsoring bank for such Person so long as EVERTEC makes a good faith determination (and provides prompt written notice to BPPR of such determination) that the provision of such services to such Person does not pose an unreasonable financial, reputational or regulatory risk to EVERTEC and/or BPPR; provided, further, that any determination by EVERTEC with respect to a regulatory risk to BPPR shall be made in consultation with BPPR. BPPR shall advise EVERTEC of BPPR’s decision to not act as the Acquiring Member for any Person within three Business Days of its receipt of EVERTEC’s notice that it wishes to provide Merchant Services to such Person; provided, further, that prior to entering into an agreement with another financial institution which shall be the sponsoring bank for such Person, EVERTEC shall provide BPPR with written notice at least five Business Days prior to entering into such agreement and BPPR may elect to act as the Acquiring Member for such Person pursuant to the terms of this Agreement upon notice to EVERTEC during such five Business Day period.

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(b) In addition to its obligation under Section 3.2, throughout the Initial Term and any Renewal Term, BPPR shall use EVERTEC as the ISO for any Acquiring Member business conducted by BPPR in the Region, and BPPR shall not sponsor any Person into the Associations, or into any other card scheme such as Discover Financial Services, L.P. or American Express Travel Related Services, as an ISO in the Region, other than EVERTEC; provided, however, if EVERTEC is unable or unwilling to act as the ISO for any Association, or to act as the ISO for providing merchant acquiring business to any other card scheme for which BPPR serves as the sponsoring bank (for any reason other than such card scheme’s refusal to allow EVERTEC to act as the ISO for its business with BPPR), BPPR may enter into an ISO agreement with another provider which shall act as the ISO for the merchant acquiring business for the corresponding Association or card scheme; provided, further, that prior to entering into an ISO agreement with another provider, BPPR shall provide EVERTEC with written notice at least five Business Days prior to entering into such ISO Agreement and EVERTEC may elect to provide such services pursuant to the terms of this Agreement upon notice to BPPR during such five Business Day period.

ARTICLE V

CONFIDENTIALITY

Section 5.1 Confidentiality Regarding Proprietary Information. Each Party hereto acknowledges and agrees that all data, printed and written material, and other information furnished by the other Party (the “Disclosing Party”) in connection with the methods in which the Disclosing Party conducts its services under the Merchant Program (the “Proprietary Information”), shall be regarded as confidential and proprietary. Proprietary Information includes information pertaining to business methods, details regarding the functioning of the Merchant accounting and reporting system and computer systems, trade secrets, know-how, inventions, techniques, processes, programs, schematics, software source code, customer lists, financial information, sales business and marketing. The other Party’s use of the Disclosing Party’s Proprietary Information is limited to the term of this Agreement. Neither Party shall disclose any of the other Party’s Proprietary Information except as described in this Section 5.1. Each Party agrees to irreversibly and irretrievably destroy or return to the other Party all of the latter’s Proprietary Information in its possession within 30 days of this Agreement terminating; provided, however, that each Party shall be permitted to retain one copy of such Proprietary Information for archival purposes. This Section 5.1 shall not apply to any Proprietary Information that (i) is or becomes generally available to the public other than as a result of any breach of this Agreement by the Disclosing Party or its Representatives, (ii) becomes available to the other Party on a nonconfidential basis from a source other than the Disclosing Party (which disclosure is not, and is not the result of, a breach of any confidentiality obligation), or (iii) was in the possession of the other Party before the Effective Date and was not subject to any confidentiality obligations. In the event that a Party is requested or becomes legally compelled to disclose any Proprietary Information of the Disclosing Party, other than BPPR in the event such disclosure is required by a banking regulatory agency having jurisdiction over BPPR or any of its affiliates (but in such case will nevertheless provide prompt written notice to EVERTEC unless prohibited by any applicable Rules or Law), such Party will provide the Disclosing Party with prompt written notice (unless prohibited by Law or court orders) so that it may seek a protective order or other appropriate remedy or waive compliance with the provisions of this Agreement and such Party will cooperate with the Disclosing Party in the effort of the Disclosing Party to obtain a protective order or other remedy. In the event that a protective order or other remedy is not obtained or the Disclosing Party waives compliance with the provisions of this Agreement, the other Party will furnish only that portion of the Disclosing Party’s Proprietary Information that is legally required to be disclosed and will exercise reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the Disclosing Party’s Proprietary Information. Notwithstanding anything to the contrary contained herein, each Party acknowledges that the Disclosing Party is the owner of the Disclosing Party’s Proprietary Information and the other Party has received access thereto solely for its use in performing its obligations pursuant to this Agreement. Nothing in this Agreement shall be construed as a transfer of ownership of Proprietary Information by either party.

Section 5.2 Confidentiality Regarding Customer and Cardholder Information.
(a) EVERTEC acknowledges that customers of BPPR have an expectation of privacy with respect to their financial transactions and personal data, and hereby agrees that any and all such information EVERTEC may acquire with respect to said customers during the term of this Agreement (i) shall be regarded by EVERTEC as

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confidential; (ii) shall not be disclosed to any other person or entity except in accordance with the provisions of this Agreement or other agreement between BPPR and EVERTEC entered into pursuant to this Agreement; and (iii) will be returned to BPPR on request within 30 days after the expiration or earlier termination of this Agreement. In the event that EVERTEC is requested or becomes legally compelled to disclose any such information, EVERTEC will provide BPPR with prompt written notice so that BPPR or its customer may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Section 5.2(a) and EVERTEC will cooperate with BPPR in the effort of BPPR or its customer to obtain a protective order or other remedy. In the event that a protective order or other remedy is not obtained or BPPR waives compliance with the provisions of this Section 5.2(a), EVERTEC will furnish only that portion of the information that is legally required to be disclosed and will exercise reasonable efforts to obtain reliable assurances that confidential treatment will be accorded the information.
(b) EVERTEC will maintain all Cardholder information under its control or possession in a safe and secure manner, in compliance with the Rules and data security standards and requirements established by each applicable Association, including Payment Card Industry Data Security Standards, and report to BPPR upon request with respect to EVERTEC’s internal policies and procedures relating thereto.
(c) BPPR will maintain all Cardholder information under its control or possession in a safe and secure manner, in compliance with the Rules and data security standards and requirements established by each applicable Association, Payment Card Industry Data Security Standards, and report to Associations as required by the Rules and to EVERTEC if so requested by the Association relating to internal policies and procedures related to Cardholder information security.

ARTICLE VI
FEES AND CHARGES

Section 6.1 Merchant Transaction Processing Fees and Other Charges. The Merchant Transaction Processing Fees and other charges must comply with applicable Rules and Laws.

Section 6.2 Changes in Merchant Transaction Processing Fees and Other Charges. EVERTEC may amend the Merchant Transaction Processing Fees and monthly charges as often and in such amounts as it desires, except where such amendment is prohibited by the Rules (and except, for the avoidance of doubt, with respect to the Government-Merchant Agreements).
Section 6.3 EVERTEC Compensation. (a) All Merchant Transaction Processing Fees (and, subject to and to the extent provided in Section 6.3(b), an amount equal to those arising and payable to BPPR under the Government-Merchant Agreements) will accrue to the benefit of EVERTEC. EVERTEC will collect the corresponding Merchant Transaction Processing Fees from Merchants through ACH debits to the applicable Merchant DDA on a daily or monthly basis, as appropriate pursuant to the Merchant Agreement for credit to the Operating Account. Monthly settlements shall occur on the first day of each calendar month for all Transactions posted in the immediately preceding calendar month, by ACH transfer from funds in the Operating Account to a deposit account designated by EVERTEC from time to time. Merchant Transaction Processing Fees charged to Government-Merchants by BPPR shall be collected by BPPR in the manner agreed to with the corresponding Government-Merchants.
(b) In full consideration for the support services to be provided by EVERTEC to BPPR hereunder with respect to the services provided by BPPR to the Government-Merchants, all revenue, fees and other payments payable to BPPR solely for Merchant Services provided by BPPR under the Government-Merchant Agreements (the “Government-Merchant Fees”) will accrue to the benefit of EVERTEC and BPPR will pay to EVERTEC an amount equal to the Government-Merchant Fees, when and as the Government-Merchant Fees are received by BPPR. During the term of each Government-Merchant Agreement, BPPR shall not, without the prior written consent of EVERTEC, change or otherwise modify the Government-Merchant Fee that BPPR is entitled to receive under such Government-Merchant Agreement as of the Effective Date.


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Section 6.4 BPPR Compensation. BPPR shall be entitled to (i) the BPPR Sponsorship Fees, (ii) the BPPR Referral Compensation and (iii) a fee for fraud monitoring services; provided, that, in the case of clause (iii) of this Section 6.4, (A) BPPR shall only be entitled to such fee to the extent such service is rendered by BPPR for EVERTEC and (B) such fee shall be reasonably established between EVERTEC and BPPR, based on BPPR’s standard interdepartmental cost allocation procedures as of the Effective Date. EVERTEC in its sole discretion may terminate the provision of any fraud monitoring service provided by BPPR pursuant to Section 3.5. From and after the second anniversary of the date hereof, the fees set forth in clauses (ii) and (iii) of the first sentence of this Section 6.4 shall be adjusted annually on each yearly anniversary date of this Agreement for changes in the CPI after the date hereof; provided, that any such adjustment shall not exceed 5% per annum.

ARTICLE VII

REGISTRATION COMPLIANCE AND AUDIT

Section 7.1 VISA/MCI Requirements.
(a) Both parties hereto shall abide by the Rules at all times. EVERTEC further agrees to provide each of its marketing Representatives with materials and information provided to EVERTEC by BPPR or any Association pertaining to the Rules. EVERTEC shall, in a manner consistent with the practices of the Merchant Acquiring Business, ensure that all Representatives are familiar with, and will comply with, the Rules. BPPR and EVERTEC agree that, in the event of any inconsistency between this Agreement and the Rules, the Rules will govern.
(b) EVERTEC agrees to conduct the Merchant Program in a manner consistent with the practices of the Merchant Acquiring Business, and to refrain from engaging in conduct that creates a risk of injury to the Association or that may adversely affect the integrity of the Association.
(c) EVERTEC will disclose all Merchant Transaction Processing Fees clearly and conspicuously to Merchants in writing in accordance with the Rules, prior to any payment or the execution of any Merchant Agreement by a potential Merchant.
(d) The parties hereto will comply with all terms of the Merchant Agreement as are applicable to EVERTEC as an ISO and the provider of the Merchant Services for Merchants, on the one hand, and to BPPR, on the other hand as the Acquiring Member.
(e) Subject to Article V, upon request of BPPR reasonably related to the provision of Merchant Services under this Agreement or the request of any Association or any regulatory agency, EVERTEC will provide records containing Merchant information or Government-Merchant information, as applicable, to BPPR, any Association or any regulatory agency, as soon as possible but no later than five Business Days from EVERTEC’s receipt of a request for such information.
(f) At any reasonable time, BPPR, any Association or banking regulatory agency may conduct, at such party’s expense, financial and procedural audits of EVERTEC as reasonably necessary to confirm compliance with this Agreement and the Rules. Except in circumstances where BPPR reasonably believes a financial loss or liability might otherwise occur, BPPR will give EVERTEC reasonable prior notice of any such audit by BPPR. EVERTEC will promptly supply such auditors with information requested by them but only as it relates to the Merchant Program. EVERTEC will provide BPPR with a copy of any audits performed by any such third party or banking regulatory agency, but in the case of audits by regulatory agencies, only if, and to the extent, allowed by said banking regulatory agency. EVERTEC shall provide BPPR with unaudited internal reports on a quarterly basis.

ARTICLE VIII
REPRESENTATIONS AND WARRANTIES

Section 8.1 Representations and Warranties of EVERTEC. EVERTEC hereby represents and warrants to BPPR that:

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(a) EVERTEC has been duly organized, is validly existing as a corporation in good standing under the laws of the Commonwealth of Puerto Rico and has all power and authority (corporate or other) necessary to conduct its business substantially in the manner in which such business is currently conducted.
(b) EVERTEC has the power and authority to enter into, deliver and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement and the consummation by EVERTEC of the transactions contemplated hereby have been duly and validly approved by all requisite corporate action on the part of EVERTEC, and when executed and delivered by EVERTEC and BPPR, this Agreement the will constitute valid and binding obligation of EVERTEC enforceable in accordance with its terms.
(c) The execution, delivery and performance by EVERTEC of this Agreement and the consummation of the transactions contemplated hereby by EVERTEC will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any Encumbrance upon any property or assets of EVERTEC pursuant to any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which EVERTEC is a party, by which EVERTEC is bound or to which any of EVERTEC’s property or assets is subject, (ii) result in any violation of the provisions of EVERTEC’s charter, by-laws or similar organizational documents or (iii) result in the violation of any law or statute or any judgment, order, rule or regulation of any Government Entity, other than as would not, individually or in the aggregate, materially impair or delay the ability of EVERTEC to perform its obligations under this Agreement.
(d) No action of, or filing with, any Government Entity is required by EVERTEC to consummate the transactions contemplated under this Agreement other than any such action or filing the failure of which to obtain or make would not, individually or in the aggregate, materially impair or delay the ability of EVERTEC to perform its obligations under this Agreement.
Section 8.2 Representations and Warranties of BPPR. BPPR hereby represents and warrants to EVERTEC that:
(a) BPPR has been duly organized, is validly existing as a commercial bank in good standing under the laws of the Commonwealth of Puerto Rico and has all power and authority (corporate or other) necessary to conduct its business substantially in the manner in which such business is currently conducted.
(b) BPPR has the power and authority to enter into, deliver and perform its obligations under this Agreement. BPPR is an Acquiring Member of the Associations. The execution, delivery and performance of this Agreement and the consummation by BPPR of the transactions contemplated hereby have been duly and validly approved by all requisite regulatory and corporate action on the part of BPPR, and when executed and delivered by BPPR and EVERTEC, this Agreement the will constitute valid and binding obligation of BPPR enforceable in accordance with its terms.
(c) The execution, delivery and performance by BPPR of this Agreement and the consummation of the transactions contemplated hereby by BPPR will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any Encumbrance upon any property or assets of BPPR pursuant to any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which BPPR is a party, by which BPPR is bound or to which any of BPPR’s property or assets is subject, (ii) result in any violation of the provisions of BPPR’s charter, by-laws or similar organizational documents or (iii) result in the violation of any law or statute or any judgment, order, rule or regulation of any Government Entity, other than as would not, individually or in the aggregate, materially impair or delay the ability of BPPR to perform its obligations under this Agreement.
(d) No action of, or filing with, any Government Entity is required by BPPR to consummate the transactions contemplated under this Agreement other than any such action or filing the failure of which to obtain or make would not, individually or in the aggregate, materially impair or delay the ability of BPPR to perform its obligations under this Agreement

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(e) Exhibit A contains a true, complete and accurate list of all the Government-Merchant Agreements in effect on this date pursuant to which BPPR provides merchant and electronic payment services to the Government-Merchants. Each Government-Merchant Agreement set forth in Exhibit A (i) is valid, binding, enforceable and in full force and effect and (ii) will continue to be valid, binding, enforceable and in full force and effect on identical terms following the execution and delivery of this Agreement. Neither BPPR nor, to BPPR’s knowledge, any other party to a Government-Merchant Agreement is in breach or default and no event has occurred which with notice or lapse of time or both would constitute a breach or default by BPPR or, to BPPR’s knowledge, any Government-Merchant, or permit termination, modification or acceleration by BPPR or any Government-Merchant under any Government-Merchant Agreement. BPPR has not received any notice that a Government-Merchant that is a party to any Government-Merchant Agreement intends to exercise any termination rights, or where applicable not renew, any such Government-Merchant Agreement.
(f) BPPR represents, warrants and covenants that it is, and during the Initial Term and any Renewal Term of this Agreement it will remain, in compliance with the Payment Card Industry Data Security Standard developed by MCI and VISA, VISA’s Cardholder Information Security Program, and MasterCard Site Data Protection Program, as each may be amended from time to time, at its expense.

ARTICLE IX

TERM, TERMINATION, DEFAULT, INDEMNIFICATION

Section 9.1 Term. This Agreement will become effective on the Effective Date and, unless terminated earlier in accordance with the provisions of this Agreement, shall remain in effect until December 31, 2025 (“Initial Term”) and shall automatically renew for successive three-year periods (each, a “Renewal Term”) unless either party provides the other with written notice of termination at least one year prior to the end of the Initial Term or any Renewal Term.
Section 9.2 Termination.
(a) If an Event of Default occurs, in addition to all other recourse and remedies available to the non-defaulting party, the non-defaulting party will have the right to terminate this Agreement in accordance with the provisions set forth in the applicable default section; provided that if a party claims that an Event of Default described in clause (i) or (iii) of the definition thereof has occurred the following dispute mechanism shall apply (and the non-defaulting party will not have the right to terminate this Agreement while such dispute is pending as set forth below). The party claiming that an Event of Default described in clause (i) or (iii) of the definition thereof has occurred shall deliver written notice to the other party (the “Alleged Breaching Party”) that reasonable description of the circumstances giving rise to the alleged Event of Default (the “Default Notice”). The Alleged Breaching Party may dispute such claim (a “Dispute”) by giving written notice (a “Notice of Dispute”) to the other party within 30 days of receiving a Default Notice. The Notice of Dispute will include a reasonable description of the basis of the Dispute and supporting documentation. Any Dispute that remains unresolved for more than 20 days after the receipt of a Notice of Dispute shall be referred to designated representatives of the parties hereto who shall negotiate in good faith to resolve such dispute (the “Resolution Forum”). If the Dispute is not resolved in the Resolution Forum within 20 days following referral to the Resolution Forum, the Dispute shall be submitted to the consideration of the each party’s designated representatives. Any Disputes that may remain unresolved for more than 90 days following the receipt of a Notice of Dispute may be referred to binding arbitration at the request of any party upon written notice to the other. Such arbitration proceeding will be administered by the American Arbitration Association in accordance with the then current Commercial Arbitration Rules and will be aired in the Commonwealth of Puerto Rico. The arbitration will be governed by the United States Arbitration Act, 9 U.S.C. §§ 1-16 to the exclusion of any provision of state law inconsistent therewith or which would produce a different result. A panel of three neutral arbitrators will determine the Dispute of the parties and render a final award in accordance with the applicable substantive law. Each party shall select one neutral arbitrator and, unless the parties agree on a third neutral arbitrator, such two arbitrators shall select the third arbitrator (subject to such limitations, if any, mutually agreed by the parties). Strict confidentiality will govern the arbitration proceedings, including all information submitted to the arbitrator and the decision or award entered by the arbitrator. Any court having jurisdiction may enter judgment upon the award rendered by the arbitrator. The procedures specified in this section will be the sole and exclusive procedures for the resolution of Disputes between the parties

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under this Agreement; provided, however, that a party may request temporary remedies in a court of law to maintain the status quo or to protect goods or property until the arbitration has initiated and the selected arbitrator has had the opportunity to resolve the request for temporary relief. Each party is required to continue to perform its obligations under this Agreement pending final resolution of any Dispute arising out of or relating to this Agreement, unless to do so would be impossible or reasonably impracticable under the circumstances.
(b) This Agreement shall automatically terminate with respect to one or more Associations upon EVERTEC’s loss of its registration in such Association due to revocation or non-renewal of such registration by such Association after any cure period available to EVERTEC under the Rules has expired.
(c) If (i) an Association prohibits EVERTEC from providing, or prohibits BPPR from allowing EVERTEC to provide, the services set forth in this Agreement or (ii) an Association notifies BPPR that its status as an Acquiring Member shall terminate, this Agreement will, after the expiration of any notice and/or cure period, terminate with respect to the applicable Association. In addition, either party may terminate this Agreement immediately upon notice to the other party, in the event BPPR becomes subject to any change in Law that would prohibit BPPR from continuing the business described in this Agreement. Notwithstanding the foregoing, if any Association prohibits BPPR from allowing EVERTEC to provide the services set forth in this Agreement, (i) EVERTEC may, in its sole discretion, enter into any other sponsorship agreements with other financial institutions so as not be precluded from conducting the merchant services business and (ii) BPPR may, in its sole discretion, enter into any other sponsorship agreements with other ISOs so as not to be precluded from conducting the merchant services business. EVERTEC shall not be in violation of the provisions of Article IV (Exclusivity) by virtue of its entering into an agreement with another sponsor bank for the reasons set forth in this Section 9.2(c). BPPR shall not be in violation of the provisions of Article IV (Exclusivity) by virtue of its entering into an agreement with another ISO for the reasons set forth in this Section 9.2(c), and the provisions of Section 3.4 shall not prevent BPPR from soliciting Merchants (as contemplated in Section 3.4) under the circumstances set forth in this Section 9.2(c).
(d) Notwithstanding anything to the contrary herein, BPPR or EVERTEC, as applicable, may elect to terminate this Agreement upon any material breach by the other Party of the provisions contained in Article IV (Exclusivity); provided that any dispute that arises in connection with Article IV (Exclusivity), shall be resolved pursuant to the dispute resolution mechanism set forth in Section 9.2(a), but in such case the dispute shall be immediately addressed by each party’s representative in the Dispute Forum.
Section 9.3 Effect of Termination.
(a) Expiration or the earlier termination of this Agreement for any reason shall not terminate either party’s obligations described in Articles 5, 9, 10 or 11, or the obligation of either party to pay amounts due hereunder that arise prior to or upon such expiration or termination, all of which survive the expiration or termination of this Agreement; provided that BPPR understands and agrees that EVERTEC’s obligation to pay compensation to BPPR under Section 6.4 shall terminate on the termination of this Agreement, except that EVERTEC shall pay BPPR the BPPR Referral Compensation for any potential Merchant referred by BPPR prior to such termination that executes a Merchant Agreement within 30 days following the date of such termination.
(b) Upon the expiration or termination for any reason of this Agreement, BPPR shall transfer and assign the Merchant Agreements and all of its rights, title, interests, duties and obligations in the Merchant Program under this Agreement (including the related Merchant Accounts and Merchant Reserve Accounts) to a VISA, MCI or ATH Network Member designated by EVERTEC in EVERTEC’s written notice to BPPR and BPPR shall assist EVERTEC and such designated member in the conversion of the Merchants to said member or designated processor; it being understood and agreed to by the parties hereto that EVERTEC is entitled to complete ownership and portability of the Merchants as permitted by the Rules and has the absolute right to have the Merchant Agreement assigned, transferred and conveyed upon the termination of this Agreement as set forth herein. EVERTEC shall pay all costs actually incurred by BPPR in connection with such deconversion and/or assignment upon termination of this Agreement, except that no costs shall be paid in the event EVERTEC terminates this Agreement due to an Event of Default by BPPR. Once the transition and deconversion is completed:

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(i) First, all amounts owed by EVERTEC to BPPR pursuant to the terms of this Agreement shall become due and payable; and
(ii) Second, all amounts owed by BPPR to EVERTEC pursuant to the terms of this Agreement shall become due and payable.
Section 9.4 Indemnification.
(a) EVERTEC Indemnification. All Merchant Losses incurred by BPPR for any reason other than gross negligence, willful misconduct or fraud of BPPR will be paid by EVERTEC. EVERTEC will indemnify, defend and hold BPPR harmless from and against any and all obligations, charges, liabilities, costs, fees, or expenses, including court costs and reasonable attorneys’ fees (including allocated costs of internal counsel) that BPPR may incur or that may be claimed against BPPR by any person as a result of: (i) any Material Breach of any covenant or obligation of EVERTEC or its Representatives under this Agreement, (ii) any Material Breach of any representation or warranty of EVERTEC under this Agreement or (iii) any Merchant Loss.
(b) BPPR Indemnification. BPPR will indemnify, defend and hold EVERTEC harmless from and against any and all obligations, charges, liabilities, costs, fees, increased taxes (excluding taxes based on BPPR’s net income) or expenses, including court costs and reasonable attorneys’ fees (including allocated costs of internal counsel) that EVERTEC may incur or that may be claimed against EVERTEC by any person as a result of: (i) any Material Breach of any representation, warranty, covenant or obligation of BPPR or its Representatives under this Agreement or (ii) breach of any of its obligations to any Merchant as set forth in this Agreement or in any Merchant Agreement.
(c) Reimbursement of BPPR. Except where a different treatment is expressly provided in this Agreement, EVERTEC hereby agrees to indemnify and reimburse BPPR for and against any and all costs, whether incurred prior to or after the expiration or earlier termination of this Agreement, of the following nature incurred by BPPR under the Merchant Program on and after the Effective Date: charges imposed on BPPR by third parties relating to processing Merchant Transactions, including (i) Interchange Fees, (ii) application fees, (iii) Chargeback fees, except to the extent such Merchant Chargeback arises as a result of the gross negligence, willful misconduct or fraud by BPPR, (iv) ACH reject fees, (v) ISO registration fees, (vi) Association fines, assessments and charges resulting from actions or omissions of EVERTEC, (vii) high risk registration fees for Merchants and (viii) similar third-party charges related to the Merchant Program. It is expressly understood and agreed that, except as otherwise provided herein, EVERTEC will not be liable for any of BPPR’s internal costs relating to the Merchant Program, including BPPR’s costs for labor and benefits, and BPPR’s ordinary business operating costs (e.g., rent, utilities, etc.).
(d) Debiting of EVERTEC Accounts. EVERTEC agrees that, in the event BPPR incurs any expense, loss, damage, liability or other cost that BPPR in good faith believes is covered by EVERTEC’s obligations pursuant to Section 9.4(a), BPPR may reimburse itself therefor by immediately debiting any or all of the EVERTEC Reserve Account, the Hold Account and the applicable Merchant Reserve Account, in such order as BPPR may in its sole judgment deem appropriate. BPPR will promptly provide EVERTEC with documentation that substantiates such debits; provided, with respect to any exceptional debits (i.e., debits occurring outside the course of normal daily settlement items), BPPR will notify EVERTEC within one Business Day. Any amounts thereof disputed by EVERTEC or with respect to which BPPR has not yet sustained an actual loss shall be placed in escrow, in a Money Market Account at BPPR, pending resolution of such dispute. BPPR will pay EVERTEC from the escrow account, any amounts finally resolved as not to be owed to BPPR hereunder. After BPPR has been fully reimbursed for a Merchant Loss pursuant to Section 9.4(a), at the request of EVERTEC, BPPR will assign to EVERTEC any and all of BPPR’s subrogation rights under or related to the Merchant Agreement (including any guarantees, security or otherwise) related to the indebtedness of such Merchant.






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ARTICLE X

NAMES AND TRADEMARKS

Section 10.1 BPPR Name. Neither EVERTEC nor any of its Representatives may use BPPR’s Trademarks, or any marks confusingly similar thereto, in any correspondence, promotional, marketing, solicitation or other materials, or promote BPPR’s programs in any way without BPPR’s prior written consent. EVERTEC will obtain BPPR’s written consent before EVERTEC or any third party, at EVERTEC’s direction or with its consent, produces or distributes any materials relating or referring to the Merchant Program. All approved correspondence, materials and/or oral solicitations directed by EVERTEC or its marketing Representatives to potential Merchants, or produced by any third party, concerning BPPR’s programs must prominently identify BPPR by its name (i.e., BANCO POPULAR DE PUERTO RICO) and strictly adhere to all other guidelines set forth by BPPR and the Associations.

Section 10.2 Association and Card Trademarks. EVERTEC acknowledges that the Associations are the sole owners of their respective Trademarks. EVERTEC will not contest the ownership of such marks, and any Association may at any time and immediately without advance notice prohibit EVERTEC from using its marks for any reason. Subject to the each Association’s Rules and any agreement between EVERTEC and such Association, EVERTEC will have no right or authority under this Agreement to use or to permit use of the Trademarks owned by any Association or BPPR by any of its own Representatives. Solicitation material used by EVERTEC must clearly disclose that any transaction processing agreement will be between the Merchant and BPPR.

ARTICLE XI
MISCELLANEOUS

Section 11.1 Assignment.
(a) Assignment. Other than a Permitted Assignment pursuant to Section 2.4(a) or Section 11.1(b) or (c), this Agreement may not be assigned by any party without the prior written consent of the other party; provided that either party may assign its rights, duties and obligations under this Agreement to its financing sources solely in connection with the granting of a security interest and the enforcement of all rights and remedies that the assigning party has against the other party under this Agreement, subject to the claims, defenses and rights, including rights of set off, that such other party may have against the assigning party.
(b) Assignment to Subsidiaries. EVERTEC may assign any of its rights, duties or obligations to a direct or indirect wholly owned Subsidiary of EVERTEC (an “Assignee Sub”) if (i) such Assignee Sub is identified by EVERTEC to BPPR at least 20 Business Days prior to the consummation of the proposed assignment; (ii) (A) such proposed assignment is legally required in order for EVERTEC to provide to BPPR or its Subsidiaries, in the country, state, territory or other jurisdiction (“Jurisdiction”) in which the Assignee Sub is organized, the specific obligations required to be performed pursuant to the assignment of this Agreement, and only (x) to the extent of such legal requirement and (y) if EVERTEC provides a written opinion of qualified counsel that opines that such legal requirement is applicable and is based upon reasonable assumptions with respect to such legal requirement or (B) BPPR has provided its prior written consent, such consent not to be unreasonably delayed, withheld or conditioned; (iii) such Assignee Sub will be Solvent immediately after and giving effect to such proposed assignment and BPPR is reasonably satisfied with the terms and conditions of the proposed assignment; (iv) BPPR is a third-party beneficiary to the assignment agreement, which is in form and substance that is reasonably satisfactory to BPPR, and which provides that the Assignee Sub’s rights under the assignment agreement will be terminated if the Assignee Sub ceases to be a wholly owned Subsidiary, directly or indirectly, of EVERTEC; and (v) EVERTEC remains fully liable with respect to the performance of all its obligations under this Agreement and EVERTEC guarantees the performance of all of the obligations of EVERTEC to BPPR assumed by Assignee Sub under this Agreement, which guarantee provides that, for the avoidance of doubt, after any termination of the proposed assignment, EVERTEC shall continue to be obligated with respect to any obligation undertaken by Assignee Sub prior to such termination.
(c) Assignment to Third Parties. EVERTEC may assign all of its rights, duties and obligations (or those rights, duties and obligations arising after the effectiveness of the assignment) in a transaction with a third-party

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assignee (an “Asset Acquirer”) if (i) such Asset Acquirer is identified by EVERTEC to BPPR at least 30 Business Days prior to the consummation of the proposed assignment; (ii) such Asset Acquirer (A) acquires at least 90% of the consolidated gross assets (excluding cash) of EVERTEC and its Subsidiaries and (B) assumes at least 90% of the consolidated gross liabilities (excluding Indebtedness) of EVERTEC and its Subsidiaries (including the assignment and assumption of all commercial agreements between EVERTEC or any of its Subsidiaries, on the one hand, and Popular, BPPR or any of their respective Subsidiaries, on the other hand) through one legal entity; (iii) neither the Asset Acquirer nor any of its Affiliates is engaged, directly or indirectly, in the banking, securities, insurance or lending business, from which they derive aggregate annual revenues from the Commonwealth of Puerto Rico in excess of $50 million unless none of them has a physical presence in the Commonwealth of Puerto Rico that is used to conduct any such business; (iv) the Asset Acquirer will be Solvent immediately after and giving effect to such proposed assignment; and (v) EVERTEC reasonably believes that the Asset Acquirer, after completion of the proposed purchase and assumption transaction, will be capable of performing all of the obligations and duties of EVERTEC under this Agreement.
(d) Cooperation. EVERTEC shall use its reasonable best efforts to cooperate with BPPR in evaluating whether any proposed assignment pursuant to this Section 11.1 would be in compliance with the requirements of the provisions contained in this Section 11.1, including the ability of Assignee Sub or Asset Acquirer, as applicable, to comply with the terms of this Agreement, including, in each case, by providing any non-confidential information regarding the purposes and plans in connection with such proposed assignment other than information that would create any potential liability under applicable Law, violate any confidentiality obligation, or that reasonably would be expected to result in the waiver of any attorney-client privilege.
(e) Notice of Objection. BPPR shall notify EVERTEC in writing within 15 Business Days following receipt of EVERTEC’s notice of the proposed assignment of any objection to any proposed assignment to an Asset Acquirer under Section 11.1(c) unless EVERTEC has failed to satisfy its obligations pursuant to Section 11.1(d) and BPPR asserts such failure prior to the expiration of the 15 Business Day objection period, in which case such 15 Business Day period shall be tolled until EVERTEC satisfies its obligations pursuant to Section 11.1(d). If BPPR fails to timely object to such proposed assignment (taking into account any tolling of the 15 Business Day objection period), it shall be deemed to have consented to such proposed assignment.     
(f) Implied Consent. Notwithstanding anything contained herein, if Popular, BPPR or any of their respective Controlled Affiliates votes in favor of a transaction resulting in a proposed assignment and was not compelled to do so as part of a Dragged Asset Sale or other requirement of the Stockholder Agreement or any other Group Agreement with respect to securities issued by Holdco or EVERTEC or any successor or other entity that acquired all or substantially all the assets of Holdco or EVERTEC or any of their respective successors then it shall be deemed to have consented to the assignment.
(g) Invalidity of Impermissible Assignments. Any attempted or purported assignment in violation of this Section 11.1 hereof shall be null and void and the assignee’s rights assigned pursuant to any assignment made in compliance with this Section 11.1 will terminate in the event and to the extent of the termination of this Agreement.
(h) BPPR Asset Transfer. If BPPR or any of its Subsidiaries transfers, in a single transaction or series of related transactions (including in a merger, business combination, reorganization, or similar transaction (including by operation of law)) 50% or more of BPPR’s consolidated assets in the Region as of the time of transfer, or assets that generate 50% or more of BPPR’s consolidated revenues in the Region for the full twelve-month period ending at the time of transfer, to any Person, then BPPR shall assign to such Person its rights, duties and obligations under this Agreement and shall cause such Person to assume BPPR’s liabilities under this Agreement. For the avoidance of doubt, no such assignment shall relieve BPPR of its obligations under this Agreement to the extent BPPR survives any such sale of assets, merger, business combination, reorganization, or similar transaction.
Section 11.2 Notices. All notices, requests, demands, consents and other communications given or required to be given under this Agreement shall be in writing and delivered to the applicable party at its main office.

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Section 11.3 Amendment; Waiver. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by each party, or in the case of a waiver, by the party or parties against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
Section 11.4 Entire Agreement. This Agreement and the Loss Sharing Agreement contain the entire understanding among the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters.
Section 11.5 Governing Law; Submission to Jurisdiction; Selection of Forum; Waiver of Trial by Jury. This Agreement shall be governed and construed in accordance with the laws of the Commonwealth of Puerto Rico without regard to principles of conflicts of law thereof that would require application of a different law. Each party agrees that it shall bring any action or legal proceeding in respect of any claim arising out of or related to this Agreement or the transactions contemplated by this Agreement, exclusively in the United States District Court for the District of Puerto Rico or any Puerto Rico State court, in each case, sitting in San Juan, Puerto Rico (the “Chosen Courts”), and solely in connection with claims arising under this Agreement or the transactions contemplated by this Agreement (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action or legal proceeding in the Chosen Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party and (iv) agrees that service of process upon such party in any such action or legal proceeding shall be effective if notice is given in accordance with Section 11.2. Each party irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated by this Agreement.
Section 11.6 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.
Section 11.7 Construction. The heading references herein are for convenience purposes only, and shall not be deemed to limit or affect any of the provisions hereof. The language used will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party.
Section 11.8 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any person or any circumstance, is invalid or unenforceable, (i) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (ii) the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
Section 11.9 Independent Contractors. EVERTEC shall be an independent contractor of BPPR, and nothing contained herein shall be construed to imply the existence of a partnership or joint venture between EVERTEC and BPPR, nor to make EVERTEC an agent of BPPR or BPPR an agent of EVERTEC. EVERTEC shall not, under any circumstances or conditions, or for any purpose or reason whatsoever, claim to be or imply that EVERTEC or any of its employees are agents, officers, directors or employees of BPPR. Neither party hereby shall have, nor represent itself as having, any right, power or authority to create any obligations, express or implied, on behalf of or binding on the other party.
Section 11.10 Effect on Existing ISO. This Agreement amends and restates the Existing ISO and the Government Services Addendum, and upon the Effective Date, the provisions of this Agreement shall supersede the provisions of the Existing ISO and the Government Services Addendum, which shall no longer be in effect, other than any accrued obligations that are outstanding as of the Effective Date.

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Section 11.11 EVERTEC Change of Control.
(a) EVERTEC Change of Control. BPPR shall have the right, subject to Section 11.11(c), to terminate this Agreement up to 30 days following the later of (i) the occurrence of an EVERTEC Change of Control or (ii) the date on which EVERTEC provides BPPR written notice that an EVERTEC Change of Control has occurred or is likely to occur (provided that if EVERTEC has not satisfied its obligations pursuant to Section 11.11(b) and that BPPR asserts such failure prior to the expiration of the 30-day period then such 30-day period shall be tolled until EVERTEC satisfies its obligations under Section 11.11(b)) and provided further that if an EVERTEC Change of Control occurs, and EVERTEC fails to provide BPPR written notice thereof within 30 days thereof, then BPPR shall have an unqualified right to terminate this Agreement), unless (w) the Person or Group of Persons proposing to engage in such proposed EVERTEC Change of Control transaction (the “Control Acquirer”) is identified to BPPR by EVERTEC at least 30 Business Days prior to such proposed EVERTEC Change of Control; (x) neither the Control Acquirer nor any of its Affiliates is engaged, directly or indirectly, in the banking, securities, insurance or lending business, from which they derive aggregate annual revenues from the Commonwealth of Puerto Rico in excess of $50 million unless none of them has a physical presence in the Commonwealth of Puerto Rico that is used to conduct any such business; (y) EVERTEC (or its successor, as applicable) will be Solvent immediately after and giving effect to such proposed EVERTEC Change of Control; and (z) EVERTEC (or its successor, as applicable), after the proposed EVERTEC Change of Control, will be capable of performing all of the obligations and duties of EVERTEC under this Agreement; provided further that if Popular, BPPR or any of their respective Controlled Affiliates votes in favor of the transaction resulting in the EVERTEC Change of Control or Transfers (other than a Transfer in the context of a merger, business combination, reorganization, recapitalization or similar transaction) any equity securities in connection with the transaction resulting in the EVERTEC Change of Control and, in either case, was not compelled to do so as part of a Drag-Along Transaction, a Dragged Asset Sale or other requirement of the Stockholder Agreement or any other Group Agreement with respect to Holdco, EVERTEC or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries, then such termination right shall not apply.
(b) Cooperation. EVERTEC shall use its reasonable best efforts to cooperate with BPPR in evaluating whether any proposed EVERTEC Change of Control would be in compliance with the requirements of this Section 11.11 including the ability of Assignee Sub or Asset Acquirer, as applicable, to comply with the terms of this Agreement, including, in each case, by providing any non-confidential information regarding the purposes and plans in connection with such proposed EVERTEC Change of Control other than information that would create any potential liability under applicable Law, violate any confidentiality obligation, or that reasonably would be expected to result in the waiver of any attorney-client privilege.
(c) Notice of Objection. If EVERTEC provides at least 30 days’ written notice to BPPR prior to an EVERTEC Change of Control, BPPR shall notify EVERTEC in writing within 15 Business Days following receipt of EVERTEC’s notice of the proposed EVERTEC Change of Control of any objection to any proposed EVERTEC Change of Control on the basis that it does not satisfy the criteria set forth in clauses (w) through (z) of Section 11.11(a) (unless EVERTEC has failed to satisfy its obligations pursuant to Section 11.11(b) and BPPR asserts such failure prior to the expiration of the 15 Business Day objection period, in which case such 15 Business Day objection period shall be tolled until EVERTEC satisfies its obligations pursuant to Section 11.11(b)). If BPPR fails to timely object to such proposed assignment (taking into account any tolling of the 15 Business Day objection period), it shall be deemed to have consented to such proposed EVERTEC Change of Control and waived its right of termination under Section 11.11(a).
Section 11.12 Specific Performance. BPPR agrees that if an act or omission of BPPR results in a breach of Section 11.1(h), EVERTEC will be irreparably damaged, no adequate remedy at law would exist and damages would be difficult to determine, and that EVERTEC shall be entitled to an injunction or injunctions to prevent such breach, and to specific performance of the terms of Section 11.1(h) in addition to any other remedy at law or equity, without having to post bond or any financial undertaking.

(Signatures begin on the following page)



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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

BANCO POPULAR DE PUERTO RICO

By: /s/ Ileana González
Name:
Title:

EVERTEC, INC

By: /s/ Felix M. Villamil
Name:
Title:







































[Signature Page to Amended and Restated ISO Agreement]

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EXHIBIT 10.10

AMENDED AND RESTATED ATH NETWORK PARTICIPATION AGREEMENT
This Amended and Restated ATH Network Participation Agreement (the “Agreement”) is dated as of this September 30, 2010 (the “Effective Date”), by and between BANCO POPULAR DE PUERTO RICO, a bank organized and existing under the laws of the Commonwealth of Puerto Rico (“BPPR”) and EVERTEC, Inc. (“EVERTEC”), a corporation organized and existing under the laws of the Commonwealth of Puerto Rico.
WITNESSETH
WHEREAS, EVERTEC is the owner and operator of the electronic funds transfer system known as the ATH Network in which eligible financial institutions (“Participants”) participate for the interchange of transactions;
WHEREAS, EVERTEC has entered into individual and separate agreements with Participants (a) for the sharing of POS and ATM terminals among all other Participants in the ATH Network, (b) for performing certain switch operation services necessary to effect certain selected electronic fund transfer and other transactions at Participants’ POS and ATM terminals throughout the ATH Network, and (c) for the use of the Licensed Marks to describe the common usage of the ATH Network, Participants’ terminals and Participants’ debit cards issued for use within the ATH Network;
WHEREAS, EVERTEC has granted BPPR’s cardholders access to the ATH Network pursuant to the terms and conditions of the Agreement, dated March 1, 2000 (the “2000 ATH Network Agreement”), by and between GM Group, Inc. (predecessor-in-interest to EVERTEC) and BPPR;
WHEREAS, the parties desire to amend and restate the 2000 ATH Network Agreement in order (i) to update the description of services provided to BPPR by EVERTEC under the 2000 ATH Network Agreement and the riders thereto (the “2000 Service Riders”) and (ii) for EVERTEC to continue to grant BPPR’s cardholders access to the ATH Network pursuant to the terms of this Agreement and the Operating Rules;
WHEREAS, EVERTEC wishes to grant, and BPPR wishes to obtain, a license for the use of the Licensed Marks in connection with BPPR’s participation in the ATH Network.
NOW, THEREFORE, in consideration of the payments to be made and services to be performed hereunder, upon the terms and subject to the conditions set forth in this Agreement and intending to be legally bound, the parties hereto agree to the following terms and conditions:
ARTICLE ONE – DRAFTING OF THE AGREEMENT
1.1.
Definitions. Terms (capitalized or otherwise) that are used herein but not otherwise defined herein will have the meanings set forth in the Operating Rules and Exhibit A to this Agreement.
1.2.
Plural, Successors, Assignees, Gender, Days. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular and vice versa; references to any Person include such Person’s permitted successors and assignees; references to one gender, masculine, feminine, or neuter, include all genders; the term “day” refers to a calendar day, “including” is not limited but is inclusive; the words “hereof”, “herein”, “hereby”, “hereunder” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement, article, paragraph, section, and/or a subsection, unless otherwise specified.
1.3.
Interpretation.
a)
The general terms and conditions of this Agreement and the Exhibits, Addenda, Schedules and Riders made a part hereof from time to time will be interpreted as a single document. However, in the event of a conflict between the general terms and conditions of this Agreement and the terms of any Exhibit, Addendum, Schedule or Rider hereto, then the terms of the Schedules, Addenda, Exhibits and Riders will prevail and control the interpretation of the Agreement with respect to the subject matter of the applicable Schedules, Addenda, Exhibits and/or Riders. Furthermore, in the event of any conflict or inconsistency between this Agreement and any other document referenced hereto, regarding the interpretation of the terms of this Agreement, this Agreement together with its Schedules, Addenda, Exhibits and Riders will prevail and control.
b)
Notwithstanding the foregoing, in the event of a conflict or inconsistency between the terms of this Agreement or any Exhibit, Addendum, Schedule, or Rider hereto on the one hand and the Operating Rules on the other hand, the Operating Rules will prevail and control.
1.4.
Headings. The headings used in this Agreement are inserted for purposes of convenience of reference only and will not limit or define the meaning of any provisions of this Agreement.




1.5.
Language. This Agreement has been executed in the English language and all Schedules, Addenda, Exhibits and Riders to this Agreement shall be in English.
ARTICLE TWO – THE SERVICES
2.1
General. EVERTEC will provide the Standard Services (as that term is defined below) to BPPR set forth herein and more fully described in the Operating Rules. Furthermore, the Operating Rules describe certain optional services where BPPR must “opt-in” to receive such optional services (the “Optional Services” and together with the “Standard Services,” the “Services”). BPPR may indicate its decision to “opt-in” to an Optional Service by requesting the addition of the Optional Service and the corresponding fees to Schedule F; provided, that for certain Optional Services, EVERTEC and BPPR will also execute a separate rider to this Agreement (each a “Service Rider”) setting forth the mutually agreed upon terms and conditions for such Optional Services. Each such Service Rider will be incorporated and, to the extent not incompatible, will be subject to the terms and conditions of this Agreement. Except as otherwise provided herein, nothing herein will be interpreted as imposing an obligation upon EVERTEC to develop new services, or upon BPPR to acquire any additional services from EVERTEC.
2.2
Description.
a)
Standard Services. EVERTEC will provide the following services to BPPR in accordance with this Agreement and the Operating Rules (collectively, the “Standard Services”):
i.
Authorization Services – The ATH Network will forward BPPR’s Terminal Participant transactions to the Issuer Participant, or vice versa, as the case may be, through the available routes. Upon receipt of a response, the ATH Network will log the transaction and relay the response back to the terminal. Transactions that are not ATH branded card transactions are referred to the corresponding card issuing institution for processing. Transactions originated by terminals may be authorized by BPPR or by the ATH Network. If BPPR elects to have EVERTEC authorize transactions made by BPPR cardholders, BPPR shall provide a positive file to EVERTEC for processing, in a magnetic tape or other electronic form of transmission with the information and format required by EVERTEC. If BPPR elects to do its own processing of transactions on a host-to-host basis, but have EVERTEC provide stand-in authorization, BPPR shall provide EVERTEC with negative files in a magnetic tape or other electronic transmission with the information and format required by EVERTEC. BPPR must opt into any stand-in authorization service by requesting the addition of such service to Schedule F.
ii.
Financial Settlement – The ATH Network will perform a daily settlement of all POS and ATM transactions among Participants and provide to Participants detailed reports related to those transactions. The reports will include financial information and all switch and interchange fees.
iii.
ATM Terminal Services – Host-to-host connection of BPPR to EVERTEC’s computer center to process authorization requests from ATM terminals. 
iv.
ATM Monitoring Services – Provides BPPR the ability to maintain a reasonable uptime in their terminals.  The ATH Network will constantly monitor all BPPR terminals, 365 days a year, 24 hours a day.  The service includes tracking of opened incident tickets, notification to BPPR custodians previously confirmed in writing by BPPR, and escalation of incident tickets.
v.
Gateway Services – The ATH Network is linked to one or more processors that process transactions through national and international networks permitting the interchange of transactions among participating institutions in the various networks.  Cardholders of BPPR (as the Issuer Participant) will be able to use their cards at the terminal of entities participating in the national and international networks.  BPPR (as the Terminal Participant) will be able to request authorization for cards issued by other entities that participate in those networks. Transaction settlement is included in the daily settlement reports generated by the ATH Network.
b)
Optional Services. EVERTEC will provide the Optional Services set forth in Schedule F in accordance with this Agreement and the Operating Rules.  
c)
BPPR agrees to receive the Services (to the extent a Service is provided by EVERTEC to BPPR prior to the date hereof and continuing on the date hereof but is not described above or set forth in Schedule F, such Service shall be added to a Service Rider or Schedule F, as applicable), including any change, modification, enhancement or upgrade of such Services in accordance with Section 2.9 (collectively, the “Exclusive Services”), on an exclusive basis from EVERTEC. Subject to the terms of this Agreement, BPPR shall not, without the prior written consent of EVERTEC, use a Third Party to provide any of the Exclusive Services and BPPR shall not perform any of the Exclusive Services itself or through its Affiliates (other than through EVERTEC).

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2.3
Service Personnel. EVERTEC agrees that it will use its Best Efforts to assign qualified, adequately trained, and efficient professionals and personnel who will use their Best Efforts to discharge their obligations under this Agreement in an efficient and timely manner and to exercise reasonable care in performing the Services subject to the terms, conditions and prices established in the corresponding Service Riders.
2.4
Consulting Services. General consulting services that EVERTEC provides to BPPR on a time and material basis can be provided through the execution of a purchase order or a Service Rider that will form a part of and be subject to the general terms and conditions of this Agreement.
2.5
Participants. The parties agree that it is in their respective best interest that other institutions be encouraged and permitted to participate in the ATH Network. Therefore, EVERTEC shall have the right to contract with other financial institutions to act as Participants in the ATH Network, at EVERTEC’s sole discretion and pursuant to a separate agreement with each such institution, and without prior written notice to, or approval from, BPPR.
2.6
Service Level Agreements.
a)
The Services will be rendered in a commercially reasonable manner in accordance with the generally accepted industry practices and procedures used in performing services of a like-kind to the Services (the “Standard of Care”). Any applicable performance standards or service levels relating to a particular Service (“Service Levels”) will be as set forth in the Operating Rules or a corresponding Service Rider, as applicable.
b)
If EVERTEC fails to meet the Service Levels, EVERTEC will (i) investigate and report to BPPR on the root cause(s) of such failure; (ii) advise BPPR of the status of remedial efforts being undertaken with respect to such failure; (iii) notify BPPR of the steps which EVERTEC believes should be taken to correct the cause of such failure; and (iv) promptly correct the cause of such failure. The failure of EVERTEC to meet or exceed the Service Levels will not, in and of itself, constitute a breach of the corresponding Service Rider, nor this Agreement, unless such failure also constitutes a breach of the Standard of Care.
2.7
Service Deficiencies. BPPR will notify EVERTEC immediately upon discovery of any evidence that might indicate that there is any failure, malfunction, defect or non-conformity in the Services. Except as otherwise provided for in the Service Levels set forth in the Operating Rules or of a particular Service Rider, if EVERTEC and BPPR determine that the cause of the problem is exclusively imputable to EVERTEC, EVERTEC will exercise Best Efforts to provide a solution to the problem at its own cost, otherwise any corrections to the Services will be at BPPR’s expense. BPPR will be responsible for making appropriate adjustments within its capacity and control as may be reasonably necessary to mitigate adverse effects until EVERTEC remedies the deficiency or problem.
2.8
Reports and Forms.
a)
EVERTEC will produce and send to BPPR the reports identified in the Operating Rules and/or Service Riders, as applicable. The frequency of the reports will also be specified in the Operating Rules and/or Service Riders, as applicable. BPPR will be responsible for promptly reviewing and reconciling the reports, statements and files, and any notice, correspondence or communication it receives from EVERTEC. Should BPPR identify any omission or discrepancy between its records and the data provided by EVERTEC, or if it has an objection to information in any report, it must notify EVERTEC in writing within ten (10) days following the receipt of the report. EVERTEC will process the investigation according to the procedures set forth in the Operating Rules. BPPR agrees and acknowledges that its failure to report the omission, discrepancy or objection within the time set forth in this Section 2.8 will release EVERTEC from any liability regarding such omission, discrepancy or objection.
b)
Should a form be needed in conjunction with the Services, BPPR will use one provided or accepted by EVERTEC. All information provided to EVERTEC by BPPR must be complete and legible. EVERTEC may, but is not required to, communicate with BPPR in order to verify the incomplete or illegible information and will not be held responsible for any errors in rendering the Services due to incomplete or illegible information provided by BPPR.
2.9
Modifications to Services.
a)
EVERTEC reserves the right to change, modify, enhance or upgrade the manner in which it renders the Services, at any time; provided, however, that any change, modification, enhancement or upgrade does not materially adversely effect the functionality of the Services nor the agreed upon Service Levels. EVERTEC will provide BPPR with timely prior written notice of any change, modification, enhancement or upgrade to any Service.
b)
Any change, modification, enhancement or upgrade requested or required by BPPR will require ninety (90) days’ prior written notice to EVERTEC. Upon receipt of such notice, EVERTEC will prepare and present to BPPR within thirty (30) days following the receipt of the notice, a written estimate of the costs for such changes, as well as any adjustment in fees that may be necessary as a result thereof. The parties will have a period of thirty (30) days following the receipt of the estimate to negotiate in good faith any costs and/or price adjustments. Subject to Section 2.2(c), should the parties be unable to arrive

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at mutually agreed upon costs and/or price adjustments within such thirty (30) day time period, the changes will not be implemented and this Agreement will continue in full force in effect under the then current terms and conditions.
2.10
Development Projects.
a)
For purposes of this Section, the following terms shall have the corresponding meanings:
1.
“Development Project” means any development, maintenance and other technology projects related to the Services.
2.
“Exercise Notice” means notification by EVERTEC of its desire to exercise its Right of First Refusal for a Development Project.
3.
“Right of First Refusal” means the right of EVERTEC to be given an opportunity before any other Person to accept or reject an offer with respect to a Development Project.
4.
“Notice of Intent” means written notification by BPPR to EVERTEC of its intent to implement a Development Project.
5.
“Option Period” means the period of thirty (30) days following receipt of the Notice of Intent, during which EVERTEC must deliver its Exercise Notice.
b)
BPPR hereby grants to EVERTEC a Right of First Refusal with respect to any Development Project.
c)
Should BPPR intend to implement a Development Project, it shall send EVERTEC a Notice of Intent. If EVERTEC determines that it will exercise its Right of First Refusal, EVERTEC must send BPPR its Exercise Notice within the Option Period. If EVERTEC exercises its Right of First Refusal, BPPR and EVERTEC will immediately commence good faith negotiations to enter into a definitive agreement for the Development Project to be incorporated hereunder as a Service Rider stating the mutually agreed upon terms and prices for such Services.
d)
BPPR will be entitled to negotiate the Development Project with a Third Party and EVERTEC’s Right of First Refusal will be deemed terminated should one of the following circumstances occur:
a)
EVERTEC notifies BPPR that EVERTEC will not exercise the Right of First Refusal;
b)
EVERTEC fails to exercise the Right of First Refusal within the Option Period;
c)
The parties are unable to reach an agreement by the fiftieth (50th) day following the date of the Exercise Notice; provided, however, that in such case, the terms and conditions for the Development Project as offered by or to a Third Party must be as favorable or better to BPPR than those proposed during the negotiations between the parties; or
d)
This Agreement is terminated in accordance with Article Four herein.
e)
In the event that EVERTEC decides not to exercise the Right of First Refusal within the Option Period and BPPR contracts the Development Project to a Third Party, BPPR acknowledges and agrees that EVERTEC will not be liable for any errors to or impact on the Services as a result of the work performed by such Third Party and will have no obligation under this Agreement to correct such errors or impact.
2.11
Equipment.
a)
EVERTEC will retain all right, title or interest in any EVERTEC equipment supplied to BPPR as part of the Services, and no ownership rights in such EVERTEC equipment will transfer to BPPR. BPPR will provide a suitable and secure environment free from environmental hazards and electric power for such EVERTEC equipment and will keep the EVERTEC equipment free from all liens, charges, and encumbrances. BPPR will bear the risk of loss of or damage to EVERTEC equipment (ordinary wear and tear excepted) from any cause except to the extent caused by EVERTEC or its suppliers. As such, BPPR agrees that it will provide a Loss Payable Clause in BPPR’s general liability and property causality insurance policies in an amount equal to the value of the equipment EVERTEC equipment will not be removed, relocated, modified, interfered with, or attached to non-EVERTEC equipment by BPPR without prior written authorization from EVERTEC.
b)
Title to and risk of loss of any equipment purchased from EVERTEC will pass to BPPR as of delivery, upon which date EVERTEC will have no further obligations of any kind with respect to such purchased equipment, except as set forth in the Operating Rules or an applicable Service Rider. BPPR hereby grants EVERTEC a purchase money security interest in any equipment purchased by BPPR, together with all improvements and accessories at any time made or acquired, to secure the payment in full by BPPR of the purchase price of such equipment to EVERTEC. BPPR agrees that EVERTEC will have the right to file or record this Agreement and all such financing statements and/or other appropriate documents, pursuant to applicable law to evidence and perfect EVERTEC’s security interest. At EVERTEC’s request BPPR will cooperate with EVERTEC in executing such financing statements.

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c)
All ownership interest in a party’s facilities and associated equipment used in connection with the Services will at all times remain with that party. If any BPPR equipment is used to provide the Services, BPPR grants EVERTEC a non-transferable and non-exclusive license to use such BPPR equipment in the manner necessary to provide the Services.
2.12
Import/Export Control.
a)
The parties acknowledge that equipment, products, software, and technical information (including, but not limited to, technical assistance and training) provided under this Agreement may be subject to import or export laws, conventions or regulations, and any use or transfer of the equipment, products, software, and technical information must be in compliance with all such laws, conventions and regulations. The parties will not use, distribute, transfer, or transmit the equipment, products, software, or technical information (even if incorporated into other products) except in compliance with such laws, conventions and regulations. If requested by either party, the other party agrees to sign written assurances and other documents as may be required to comply with such laws, conventions and regulations.
b)
In the event any necessary import or export license cannot be obtained within six (6) months after making an application, neither party will have further obligations with respect to providing or purchasing and, if applicable, BPPR will return the equipment, products, software, or technical information that is the subject matter of the unsuccessful application.
2.13
Contingency Planning. Each party acknowledges that it is responsible for maintaining in effect at all times an appropriate Business Continuity Plan. EVERTEC warrants that it has a Business Continuity Plan that addresses the continuation of the majority of the services it provides to its clients if an Event threatens to impair or disrupt EVERTEC’s delivery of such services. Any terms and conditions for a particular Service that the parties desire to include in EVERTEC’s Business Continuity Plan will be agreed to by the parties. EVERTEC’s Business Continuity Plan is not a guarantee that BPPR will be able to communicate with EVERTEC’s systems at all times if the loss of connection itself is due to an event of Force Majeure or is otherwise beyond EVERTEC’S control. Upon BPPR’s reasonable request, EVERTEC will make available to BPPR, for the purpose of responding to questions concerning EVERTEC’s Business Continuity Plan, one or more Representatives who are knowledgeable about the Business Continuity Plan, the manner in which it is tested and the manner in which it would be implemented in the event EVERTEC experiences an Event.
ARTICLE THREE – PAYMENT FOR SERVICES
3.1
Fees. EVERTEC will charge BPPR the fees and prices for the Services set forth in Schedule F. BPPR also agrees to pay applicable Participants the corresponding fees set forth in Schedule F. The parties agree that regardless of whether a Service is set forth in a Service Rider, the pricing related to any and all the Services shall be set forth in Schedule F.
3.2
Settlement. Settlement of all transactions will occur at the end of each Business Day, or as otherwise provided in the Operating Rules. All settlement will be performed in accordance with the Operating Rules.
3.3
Terms of Payment. With respect to all the fees that are not collected through the settlement procedures set forth in Section 3.2, EVERTEC will send an invoice directly to BPPR on or before the fifteenth (15th) day of the month following the month in which the Services are rendered, reflecting the fees and other charges to BPPR for the preceding month. EVERTEC will debit BPPR’s ACH Payment Account the undisputed amount due on the invoice on the tenth (10th) calendar day following the date the invoice is sent to BPPR. Any amount due under this Agreement that is not paid when due will thereafter bear interest at an annual rate of interest equal to one and a half percent (1.5%), but in no event to exceed the maximum rate of interest allowed under any applicable law. BPPR agrees that, if any properly submitted invoice remains unpaid and undisputed for a period exceeding sixty (60) days (regardless if the Service Rider indicates payments will not be made via the ACH Payment Account), EVERTEC may (i) deduct such amount from BPPR’s ACH Payment Account; (ii) refuse to provide the Services, until such time as all past due amounts are paid in full.  
3.4
Additional Services. Any additional services performed by EVERTEC at BPPR’s request (or as required by BPPR’s act or failure to act) over and above the Services listed in the corresponding Service Riders hereto will be billed at EVERTEC’s standard rates then in effect for computer and personnel time, equipment, supplies, out-of-pocket costs, and other items and expenses incurred in performing such additional services or as may otherwise be set forth in any Service Rider.
3.5
Out-of-pocket and Third-Party Expenses. With BPPR’S prior approval, additional costs related to delivery and/or collection, telecommunications or other incidental services, as well as necessary and reasonable services to be provided through EVERTEC by Third Parties, for BPPR’s benefit, incurred during the term of this Agreement and that are not contemplated in any of the established fees, costs, and charges, will be paid by BPPR when invoices and related documents are duly presented. All such out-of-pocket or Third‑Party charges and administration costs related

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to the Services will be billed by EVERTEC to BPPR at cost plus a 20% administrative fee for overhead incurred by EVERTEC in the management of invoices, resources and other administrative tasks.
3.6
Modifications to Fees. The fees to be charged under this Agreement will be subject to change from time to time by EVERTEC in its sole discretion; provided, that EVERTEC will notify BPPR of any changes at least thirty (30) days’ prior to such changes entering into effect and provided further that any fees charged under this Agreement shall be consistent with the fees charged to other participants of the ATH Network and taking into account BPPR’s transaction volumes. In addition to the foregoing, the fees charged by EVERTEC to BPPR shall be in compliance with applicable Legal Requirements, in particular, the provisions of Section 23A and Section 23B of the Federal Reserve Act, and Regulation W of the Board of Governors of the Federal Reserve System, as amended from time to time. The fees to be charged by EVERTEC to BPPR under this Agreement shall be subject to periodic review by the parties in order to ensure compliance with the previous sentence.
3.7
Taxes. The fees and charges paid by BPPR under this Agreement will be inclusive of any applicable sales, use, personal property, excise, services or other taxes in existence as of the Effective Date. Each party will bear its corresponding taxes or contributions related to this Agreement, which may include, but not be limited to, municipal, Commonwealth or federal taxes, as applicable.
3.8
Disputed Charges; Requests for Information.
a)
BPPR will pay undisputed charges when such payments are due. BPPR may withhold payment of specific charges within a given invoice that it in good faith disputes or for which it reasonably requires information from EVERTEC to verify the amounts being charged, provided that BPPR delivers to EVERTEC a written statement either via facsimile or e-mail to be followed by signed letter (“Notice of Dispute”).
b)
The Notice of Dispute will include a detailed description of (i) the specific charge or charges being disputed and the basis of the dispute, (ii) if applicable, the supporting documentation that is reasonably required for verification of the charge or charges, and (iii) the amount being withheld.
c)
If the Notice of Dispute is received prior to the date EVERTEC is set to debit the amount as set forth in Section 3.3 above, EVERTEC will not debit for such disputed amounts until the dispute is resolved, provided that the amount in dispute is greater than one thousand dollars ($1,000.00). A charge will be deemed “undisputed” if BPPR does not deliver a Notice of Dispute within the time period provided in this paragraph.
d)
With respect to charges that are disputed in good faith, BPPR will pay interest at the rate set forth in Section 3.3 on amounts withheld which are later determined to be valid. Such interest will be calculated from the invoice due date to the date such amount is actually paid.
e)
The provisions of this Section 3.8 will not be construed to prohibit BPPR from disputing fees and expenses in the amount of one thousand dollars ($1,000.00) or less. All disputes under this Section 3.8, if not settled by the parties, will be settled pursuant to Section 11.14 of this Agreement.
3.9
Supporting Documentation. EVERTEC will maintain supporting documentation for the amounts billable to, and payments made by, BPPR hereunder in accordance with its practices prior to the Effective Date and applicable record retention requirements. EVERTEC agrees to provide BPPR with such supporting documentation with respect to each invoice as may be reasonably requested by BPPR.
ARTICLE FOUR – TERM & TERMINATION
4.1
Term. This Agreement will enter into effect on the Effective Date and will continue in effect until September 30, 2025, unless there is a Change of Control of Popular and/or BPPR prior to such date and EVERTEC notifies BPPR within thirty (30) days of such Change of Control of Popular and/or BPPR, in which case this Agreement will end on September 30, 2028 (the “Initial Term”), unless earlier terminated in accordance with the provisions of this Agreement. After the Initial Term, this Agreement shall renew automatically for successive three (3) year periods (each a “Renewal Period” and together with the Initial Term, the “Term”), unless either party gives written notice to the other party not less than one (1) year prior to the then applicable Renewal Period of its intent not to renew this Agreement.
4.2
Automatic Termination. This Agreement will terminate automatically upon the enactment of any applicable law of any Governmental Authority, or decision or order of any court of competent jurisdiction prohibiting the maintenance, use or sharing of the terminals by any of the parties and/or the rendering of the Services by EVERTEC.
4.3
Termination for Cause.
a)
This Agreement may be terminated by either party if the other party:

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1.
commits a Material Breach of this Agreement (or series of breaches that together constitute a Material Breach), which breach is not cured within thirty (30) days following receipt of notice specifying the nature and extent of such breach; provided, however, that if such breach is not reasonably susceptible of cure within such thirty (30) day period, such period will be extended and the party will not be in default hereunder so long as it commences such cure within such thirty (30) day period and diligently pursues such cure and such failure is cured within ninety (90) days following the receipt of such notice;
2.
fails to pay any properly submitted invoice providing for material amounts in the aggregate that are undisputed for a period exceeding sixty (60) days pursuant to Section 3.3 of this Agreement; or
3.
makes any assignment of this Agreement, except as expressly provided herein.
b)
For purposes of Section 4.3(a), “Material Breach” (i) with respect to BPPR, shall include, but not be limited to, (a) any activities or actions of BPPR which reflect adversely on the business reputation of EVERTEC, any Participant or the ATH Network, (b) any breach of the license provisions set forth in Section 7.1 of this Agreement or (c) any failure to pay any properly submitted invoice providing for material amounts in the aggregate that are undisputed for a period exceeding sixty (60) days pursuant to Section 3.3 of this Agreement, and (ii) with respect to EVERTEC, means a breach, or series of breaches, of EVERTEC’s duties or obligations that, if left uncured for ninety (90) days following receipt of notice from BPPR detailing the relevant breach, would result in a Material Adverse Effect on BPPR.
c)
Notwithstanding anything in this Agreement to the contrary, any Material Breach under a particular Service Rider will give the non-breaching party the right to terminate that particular Service Rider, subject to the cure periods set forth under Section 4.3(a)(1), and will not automatically operate as a default under any other Service Rider.
4.4
Effect upon Termination.
a)
Upon the termination of this Agreement, BPPR shall (unless EVERTEC otherwise agrees to in writing):
1.
BPPR shall remove and/or disconnect, at its own cost and expense, any and all communication lines and modems connecting its terminals to EVERTEC’s ATH Network or other computer systems.
2.
BPPR shall pay to EVERTEC and/or any Participant any outstanding fees within five (5) Business Days from the date of termination.
3.
BPPR shall not use, transfer, operate or market in any manner any program or system, or material of any kind developed by EVERTEC in conjunction with, or related to the Services.
4.
The license granted to BPPR hereunder shall expire and terminate immediately and BPPR shall immediately and completely (i) discontinue all use of the Licensed Marks and Intellectual Property of EVERTEC; (ii) remove all signs bearing the Licensed Marks from its terminals; and (iii) destroy and/or reissue any cards issued by BPPR that bear the Licensed Mark.
5.
BPPR shall cease and discontinue any use of any advertising and promotional materials relating to BPPR’s participation in the ATH Network.
b)
Not later than thirty (30) days after termination of this Agreement, EVERTEC will deliver to BPPR all the documents, plastic cards, materials, records, and formats in its possession, if any, belonging to BPPR, and all of the tapes and records where any BPPR Data is recorded.
c)
Except as otherwise provided for herein, upon termination, all further obligations of the parties pursuant to this Agreement or the particular Service Rider that was terminated, whichever the case may be, will terminate without further liability of either party to the other; provided, however that termination will not release the party that terminates from any liability which at the time of termination had already accrued to the non-terminating party.
d)
Neither party shall be liable to the other for damages of any kind solely as a result of terminating this Agreement in accordance with its provisions.
e)
Furthermore, any termination will be without prejudice to any rights or remedies any party may have arising out of any breach of any material representation, warranty, covenant or condition by any other party hereto.
ARTICLE FIVE – CONFIDENTIALITY, PRIVACY & SECURITY OF INFORMATION
5.1
Confidential Information.
a)
The parties acknowledge that in the course of their dealings each may receive (the “Receiving Party”) Confidential Information of the other party (the “Disclosing Party”). As such, the parties are willing to share such Confidential

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Information provided that the Receiving Party protects the Confidential Information of the Disclosing Party. Confidential Information will not include information that:
1.
Is or becomes generally available to the public without breach of this Agreement;
2.
Was available to the Receiving Party on a non-confidential basis prior to its disclosure by the Disclosing Party;
3.
Becomes available to the Receiving Party from a Third Party, provided that such Third Party is not subject to an obligation of confidentiality with the Disclosing Party;
4.
Is independently developed by the Receiving Party without reference to or reliance upon the Confidential Information;
5.
Is approved by the Disclosing Party for disclosure; or
6.
Is required to be disclosed by applicable Legal Requirements or by a Governmental Authority, but only to the extent so required and solely for such purpose, and the Receiving Party shall otherwise remain obligated to treat such information as Confidential Information pursuant to this Article Five.
b)
In any dispute with respect to these exclusions, the burden of proving that information is not Confidential Information will be on the party making such assertion.
5.2
Privacy.
a)
The Receiving Party agrees to protect and hold all Confidential Information in strict confidence and to take all reasonable steps necessary to protect the Confidential Information from unauthorized and/or inadvertent disclosure. Unless in receipt of specific written exemption from the Disclosing Party, the Receiving Party will not:
1.
use, reproduce, modify or disclose any of the Confidential Information for any purpose other than to perform its obligations under this Agreement for which the Confidential Information is being disclosed;
2.
disclose any of the Confidential Information other than to Representatives of the Receiving Party who have a reasonable need-to-know in order to discharge their obligations under this Agreement, and only to do so when the Representatives have agreed to be bound by the confidentiality provisions of this Agreement;
3.
remove any proprietary rights legend from the Confidential Information.
b)
The prohibition against the disclosure of Confidential Information includes, but is not limited to, disclosing the substance of the negotiations of the Agreement and the existence and/or the terms and conditions thereof, as well as the fact that any similarity exists between the Confidential Information and information independently developed by another Person or entity, and the parties understand that such similarity does not excuse it from abiding by its covenant or other obligations under this Agreement.
c)
The Receiving Party will be fully liable for the acts of its Representatives to whom it discloses the Confidential Information.
5.3
Security of Customer Information.
a)        To effect the purposes of this Agreement, BPPR may from time to time provide EVERTEC with information or access to information concerning BPPR and persons or entities who obtain financial products or services from BPPR, including without limitation, client account information (“Customer Information”). EVERTEC acknowledges that its right to use the Customer Information may be limited by obligations of BPPR under the Gramm-Leach-Bliley Act of 1999 (Public Law 106-102, 113 Stat. 1138) (the “Gramm Act”) and its implementing regulations (e.g., Federal Reserve Regulation P, Securities and Exchange Commission Regulation S-P) and other federal and state laws and regulations regarding privacy and the confidentiality of customer records. EVERTEC shall be responsible for establishing and maintaining an information security program that complies with the Legal Requirements. To protect the privacy of the Customer Information, EVERTEC shall: (i) limit access to the Customer Information to its employees and agents who have a need‑to‑know to carry out the purposes for which the Customer Information was disclosed; and (ii) use the Customer Information only for purposes of carrying out its obligations hereunder. Furthermore, EVERTEC agrees to (i) protect and hold all Customer Information in strict confidence and to take all reasonable steps necessary to protect the Customer Information from unauthorized and/or inadvertent disclosure; (ii) give immediate verbal and written notification to BPPR, as applicable of any court order or legal action requiring the disclosure of Customer Information and, to the extent allowable under the law, hold the Customer Information in confidence while BPPR seeks a protective order; (iii) give prompt notification of any unauthorized or inadvertent disclosure of the Customer Information; (iv) upon request of BPPR, promptly return or destroy all Customer Information belonging to BPPR, including all copies thereof; and (v) implement security measures designed to (a) ensure the security, integrity and confidentiality of the Customer Information; (b) protect against any anticipated threats or hazards to the security or integrity of the Customer Information; and (c) protect against unauthorized access to or use of the Customer Information.

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b)    Interagency Guidelines. EVERTEC acknowledges the requirements of the Interagency Guidelines Establishing Standards for Safeguarding Customer Information issued by bank regulatory agencies on February 1, 2001, regarding the implementation of security measures to safeguard customer information. EVERTEC represents and warrants to BPPR that it has in place a comprehensive written security program that includes administrative, technical and physical safeguards to protect the security, confidentiality and integrity of Customer Information. Furthermore, EVERTEC agrees that BPPR and any Third Party auditor reasonably designated by BPPR may, in a manner that is consistent with practices and procedures of the parties prior to the date hereof, at any time (i) solicit a copy of the aforementioned security program and (ii) review, monitor and audit EVERTEC to confirm it has satisfied its obligations pursuant to this paragraph.
c)        Unauthorized Access. EVERTEC also acknowledges the requirements of the Interagency Guidance on Response Programs for Unauthorized Access to Customer Information and Customer Notice issued by bank regulatory agencies on March 29, 2005, regarding implementing effective notification procedures in the event of unauthorized access to Customer Information. As such, the parties acknowledge and agree that EVERTEC shall be responsible for the unauthorized or fraudulent application for, access to or use of the Customer Information by any entity caused by the negligent acts or omissions of EVERTEC, its employees, subcontractors or agents. If EVERTEC becomes aware of any actual or suspected security breach involving unauthorized access (i.e., physical trespass on a secure facility, computing systems intrusion/hacking, loss/theft of a PC (laptop or desktop), loss/theft of printed materials, etc.) to the Customer Information, that either compromises or in EVERTEC’s reasonable judgment may have compromised the Customer Information, EVERTEC shall report such incident within forty-eight (48) hours in writing to BPPR and describe in reasonable detail the circumstances surrounding such unauthorized access (including, without limitation, a description of the causes of such breach). Any report under this Section shall include a brief summary of the steps being taken by EVERTEC to remedy such breach. Except as may be strictly required by Legal Requirements, EVERTEC agrees that it will not inform any Third Party of any such security breach without BPPR’s prior written consent; however, if such disclosure is required by Legal Requirements, EVERTEC agrees to reasonably cooperate with BPPR regarding the content of such disclosure so as to minimize any potential adverse impact upon BPPR and its clients and customers.
5.4
Remedies. In the event of any court order or legal action requiring the disclosure of Confidential Information, the Receiving Party agrees to give immediate verbal and written notification of the order or action to the Disclosing Party, and to the extent allowable under the law and at the expense of the Disclosing Party, hold the Confidential Information while the Disclosing Party seeks a protective order. The Receiving Party acknowledges and agrees that it would be difficult to fully compensate the Disclosing Party for damages resulting from the breach or threatened breach of the foregoing provisions and, accordingly, that, in addition to any other remedies that may be available, in law, at equity or otherwise, the Disclosing Party will be entitled to seek injunctive relief, including without limitation temporary restraining orders, preliminary injunctions and permanent injunctions, to enforce such provisions without the necessity of proving actual damages or posting a bond or any other security. This provision with respect to injunctive relief will not, however, diminish the Disclosing Party’s right to claim and recover damages.
5.5
Term of Obligation. Unless indicated otherwise in a Service Rider, the parties’ obligations under this Section will survive this Agreement for a period of three (3) years following termination hereof. Upon termination of this Agreement for any reason, the Receiving Party’s rights to possession and use of any Confidential Information in connection with the performance of its obligations hereunder or otherwise will terminate. Upon the request of the Disclosing Party, the Receiving Party will promptly return or destroy (in either case under certification to said effect) all Confidential Information belonging to the Disclosing Party, including all copies thereof. Should the Receiving Party be required by law to retain any of the Disclosing Party’s Confidential Information for a period longer than the Term of this Agreement, including any extension thereof, then the Receiving Party’s obligations under this Section will remain in full force and effect until the expiration of any such legally mandated retention period.
ARTICLE SIX – SECURITY, BPPR DATA & RECORDS
6.1
Authorized Persons. BPPR will designate one or more individuals (hereinafter, “Authorized Persons”) who must be identified in the corresponding Service Rider so that as to the specific Service, the Authorized Person can (1) carry out transactions in BPPR’s name; (2) receive information from EVERTEC related to the operation of the Service, including, but not limited to, any EVERTEC‑provided access code; (3) give written instructions or inform EVERTEC about any action or request for action by BPPR; (4) notify or issue any document related to this Agreement that the Authorized Person deems necessary or convenient.
6.2
Security Measures.
a)
BPPR warrants that it has adopted, and will assume responsibility for complying with, any and all appropriate and necessary security measures required for the protection of access to its systems and to the Services by its Representatives and Authorized Persons. As such, BPPR warrants that it has established commercially reasonable security procedures to minimize

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unauthorized access and it agrees that it will take the necessary measures to maintain the confidentiality of the security procedures and any access codes, passwords, instructions or security equipment.
b)
Except as may be specifically set forth in a given Service Rider, BPPR represents and warrants that it will not alter or disable any hardware or software security programs residing on EVERTEC’s hardware or systems. If a network connection is established between BPPR and EVERTEC, BPPR represents and warrants that its computing environment is free from all generally known viruses, worms, Trojans and other “malware,” that may disrupt, damage or interfere with EVERTEC’s network and/or telecommunication facilities. As such, BPPR agrees to (1) allow EVERTEC to perform network assessments of BPPR’s computing environment, and (2) maintain an alert status regarding the security of its computing systems, including without limitation all vulnerabilities and security patches or corrective actions, by subscribing to an industry-recognized service, such as CERT or CIAC. BPPR understands that, should an EVERTEC assessment reveal inappropriate or inadequate security based on the pre-defined requirements for security, EVERTEC may, in addition to other remedies it may have, remove BPPR’s access to the EVERTEC network until BPPR satisfactorily complies with the security requirements defined. Furthermore, BPPR agrees to conduct an annual security audit to ensure that its security practices and procedures include, at a minimum, adequate levels of (a) physical security to protect against theft, tampering or damage; (b) personnel and access controls to protect against unauthorized access to and use of EVERTEC systems or Services; and (c) network security to ensure secure capture, storage and distribution of information.
c)
BPPR Authorized Persons agree to comply with all of EVERTEC’s requirements in relation to the security of the EVERTEC computing environment and Authorized Locations, including without limitation any subsequently agreed security plan or information processing requirements that may be embodied in any Service Rider. BPPR will execute all documents generally required by EVERTEC for access to EVERTEC’s computing environment and Authorized Locations. Further, if any BPPR Authorized Person, at any time during the life of this Agreement, is granted remote access to EVERTEC’s network, or is telecommuting in any capacity, then such person will be subject to additional EVERTEC data security requirements.
d)
Should the Services require access codes or other identification methods to gain access, BPPR will immediately notify EVERTEC in writing of any change of Authorized Person or the scope of his/her authority. Until such notification is received, EVERTEC may accept, without further inquiry, all declarations, instructions or representations made or issued by the Authorized Person. Furthermore, EVERTEC will not assume responsibility, explicitly or implicitly, for questioning or verifying with BPPR whether the Person who uses or has access to the Service is in fact the Authorized Person or if he/she is acting in accordance with BPPR’s internal policies and procedures.
6.3
Ownership of BPPR Data.
a)
BPPR will remain the sole and exclusive owner of its BPPR Data and Confidential Information, regardless of whether such data is maintained on magnetic tape, magnetic disk, or any other storage or processing device. All BPPR Data and other Confidential Information will, however, be subject to regulation and examination by the appropriate auditors and Governmental Authorities at the Authorized Locations to the same extent as if such information were on BPPR’s premises. EVERTEC will notify BPPR as soon as reasonably possible of any formal request by any Governmental Authority to examine such information maintained by EVERTEC. BPPR agrees that EVERTEC is authorized to provide all such information when properly required to do so by a Governmental Authority, subject to the provisions of Section 5.4. EVERTEC acknowledges that it will not have or acquire any rights in or to any BPPR Data or Confidential Information upon termination of this Agreement.
b)
EVERTEC will, subject to its internal control and security procedures, permit BPPR to have or obtain (by electronic or other means) access to its BPPR Data, including where appropriate, access through BPPR’s computer terminals and equipment. EVERTEC will furnish BPPR with such written instructions, manuals or other documentation as will be necessary to such operation and access by BPPR.
6.4
Records and Backup. Each party will maintain its respective records related to the Services in a proper, complete and accurate fashion, and in compliance with all applicable laws applicable to each of them; provided, however, that EVERTEC will not be responsible for retaining any BPPR Data or other records pertaining to BPPR other than for backup purposes and BPPR assumes all responsibility for retaining all such BPPR Data in accordance with its own record retention policies. Except as may be specifically provided in a Service Rider, EVERTEC does not assume any record retention responsibility for BPPR; provided, however, that EVERTEC will maintain a backup of BPPR Data for ten (10) Business Days (in printed form, magnetic tape or other electronic media), from which reconstruction of lost or damaged items or data can be made. The parties will cooperate to ensure compliance with any reasonable requirements established by EVERTEC for the record keeping of BPPR Data necessary for use of the Services.
ARTICLE SEVEN – INTELLECTUAL PROPERTY

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7.1
License. EVERTEC hereby grants to BPPR a non-exclusive, non-transferable, limited, royalty free license to use the Licensed Marks, and BPPR hereby agrees and binds itself to use the Licensed Marks, within the United States territories, the Commonwealth of Puerto Rico, and any other country, provided that the Licensed Mark is registered or subject to registration in such other country. BPPR agrees that its use of the Licensed Marks and any of EVERTEC’s Intellectual Property must comply with the terms of any accompanying license agreement and the ATH Network Branding Standards, which form a part of this Agreement and the Operating Rules.
7.2
Title. BPPR acknowledges that EVERTEC’s Intellectual Property used in connection with the provision of Services under this Agreement is valuable property of EVERTEC. EVERTEC warrants that it is the owner of all right, title, and interest in and to such Intellectual Property, none of which, to EVERTEC’s best knowledge, infringes any proprietary right of any other Person. As such, the parties agree that, subject to applicable law and to existing agreements with Third Parties, or except as otherwise expressly agreed to between the parties, EVERTEC is and will remain the owner of its Intellectual Property and all derivative works based thereon and that no title to or ownership of EVERTEC’s Intellectual Property or any part thereof is hereby granted to BPPR. Should EVERTEC use the intellectual property of a Third Party to provide the Services, then EVERTEC warrants that it is duly licensed to do so and any warranties and infringement indemnities for such intellectual property will be those of the Third Party license agreements with EVERTEC. In the alternative, BPPR will be given the opportunity to enter into license agreements directly with such Third Parties.
7.3
Developments. Any services, technology, processes, methods, software and/or enhancements to EVERTEC Intellectual Property or any Third‑Party Intellectual Property used or developed for purposes of delivering the Services (collectively, the “Developments”), whether developed solely by EVERTEC or jointly by EVERTEC and any other party, including any Developments requested or suggested by BPPR, will be the sole property of EVERTEC and will not be considered “works-made-for-hire”. BPPR will not acquire any ownership right, Intellectual Property right, claim or interest in EVERTEC’s Intellectual Property or in any Developments.
7.4
Cooperation. The parties will cooperate with each other and execute such other documents as may be reasonably deemed necessary by EVERTEC to achieve the objectives of this Article Seven.

7.5
Intellectual Property Infringement.
a)
Subject to the Merger Agreement, EVERTEC agrees to defend and indemnify BPPR against claims that its Intellectual Property infringes any Intellectual Property Right of a Third Party. EVERTEC will defend BPPR and will pay the damages and costs finally awarded against BPPR. Notwithstanding anything to the contrary herein, to the extent that Popular has an indemnity obligation to Parent (as that term is defined in the Merger Agreement) and/or EVERTEC under the Merger Agreement with respect to any claim of Intellectual Property infringement, EVERTEC shall have no liability to BPPR for such claim under this Agreement.
b)
If EVERTEC receives notice of an infringement claim or otherwise concludes that its Intellectual Property may infringe the proprietary rights of a Third Party, EVERTEC may in its sole discretion: (i) procure the right for BPPR to continue using the affected Intellectual Property; (ii) modify the affected Intellectual Property to make it non-infringing; (iii) replace the affected Intellectual Property with a functional equivalent; or (iv) if EVERTEC determines that options (i) through (iii) are not practicable, terminate BPPR’s right to use the affected Intellectual Property and accept its return against payment of its then-depreciated value, computed on a five (5) year straight-line depreciation schedule commencing as of its installation date.
c)
EVERTEC will have no liability for any claim of infringement and thus no obligation to defend and indemnify BPPR under this Section if such infringement claim is based on (i) BPPR’s continued use of the affected Intellectual Property after EVERTEC notifies BPPR to discontinue use because of such a claim; (ii) BPPR’s use of a superseded or altered release of the affected Intellectual Property or any portion thereof, including, but not limited to, BPPR’s failure to use updates or new releases made available by EVERTEC; (iii) any BPPR or Third‑Party modification to the affected Intellectual Property; (iv) BPPR’s use of the affected Intellectual Property without EVERTEC’s written consent; (v) BPPR’s use, operation or combination of the affected Intellectual Property with information, software, specifications, instructions, data, materials or items not supplied by EVERTEC, (vi) use of the affected Intellectual Property in a manner not intended by the accompanying and provided documentation; or (vii) BPPR’s misuse of the affected Intellectual Property.
d)
Furthermore, EVERTEC’s obligation to defend BPPR under this section is subject to all of the following conditions: (i) BPPR must notify EVERTEC promptly in writing after the claim is asserted or threatened; (ii) BPPR must give EVERTEC sole control over its defense or settlement; (iii) BPPR does not take a position that is adverse to EVERTEC; and (iv) BPPR must provide EVERTEC with reasonable assistance in defending the claim for which EVERTEC will reimburse BPPR for any reasonable out-of-pocket expenses that BPPR incurs in providing such assistance.

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e)
BPPR agrees to notify EVERTEC promptly in writing if any other type of Third Party claim is brought against BPPR regarding EVERTEC’s Intellectual Property. EVERTEC may, at its option, choose to treat these claims as being covered by this Section.
f)
BPPR agrees to give EVERTEC prompt notice of any act of any Third Party (including any Participant) which may constitute an infringement of EVERTEC's Intellectual Property or rights to the Licensed Marks. BPPR further agrees to assist EVERTEC in any action brought by EVERTEC to prosecute and maintain EVERTEC's legal rights thereto.
g)
BPPR agrees to indemnify EVERTEC for any and all costs and expenses (including reasonable attorneys’ fees) incurred by EVERTEC in any action brought by EVERTEC to maintain its legal rights to the Licensed Mark and Intellectual Property which arises as a result of any direct or indirect action or omission on the part of BPPR.
h)
This Section states EVERTEC’s entire liability and BPPR’s exclusive remedies with respect to any Third Party infringement and trade secret misappropriation claims.

ARTICLE EIGHT – COMPLIANCE, AUDIT & SERVICE REVIEWS
8.1
Compliance.
a)
Each of the parties agrees to comply with applicable laws which may be applicable to the performance of their respective obligations under this Agreement, as well as the use of the Services provided hereunder.
b)
Each party hereto shall be and hereby is subrogated to any and all rights and claims of the other party against any Participant, with respect to such Participant’s regulatory compliance, including, without limitation, compliance with the error and dispute resolution procedures specified in any Regulatory Requirement.
c)
BPPR agrees to comply with the Operating Rules at all times during the Term of this Agreement. BPPR acknowledges that EVERTEC reserves the right to modify the Operating Rules at any time, which changes will enter into effect no less than thirty (30) days following notification of such changes to BPPR.
d)
Each of the parties herein, at its own expense, shall apply for and obtain and/or renew in a timely fashion, any and all permits and authorizations required by the applicable Governmental Authorities for the installation, operation and sharing of all of their present and future terminals.
e)
EVERTEC and BPPR acknowledge and agree that the performance of the Services may be subject to regulation by Governmental Authorities. BPPR acknowledges that BPPR will be solely responsible for BPPR’s compliance with applicable laws applicable to BPPR, and as such, hereby warrants that BPPR will comply with all applicable laws, present and future, relating to the conduct and operation of its business and performance of its obligations hereunder.
8.2
Audit.
a)
Each of the parties agrees that it will keep current and accurate books of accounts and records, in accordance with its standard operating procedures, with respect to the transactions effected pursuant to this Agreement. During the Term of this Agreement, each party shall permit the other party’s designated auditors and supervisory authorities to review its books and records with respect to such transactions, upon prior written notice, during normal business hours.
b)
EVERTEC agrees to cooperate with Governmental Authorities in conjunction with any audit or examination of the Services in accordance with applicable laws. Furthermore, in conjunction with any audit or examination of BPPR by a Governmental Authority, EVERTEC agrees to cooperate with any request of such Governmental Authority to review the Services, including, without limitation, providing any information or material lawfully requested by a Governmental Authority, and permitting such Governmental Authority to inspect or audit EVERTEC with respect to its provision of the Services in accordance with applicable laws; provided, however, that all such audits and examinations will be performed at the sole expense of BPPR and BPPR agrees to reimburse EVERTEC for all reasonable fees associated with such examination.
8.3
Service Reviews.
a)
On an annual basis during the Term, EVERTEC shall engage its independent certified public accountants to conduct a review of the operational controls of the ATH Network Services as provided and available to all Participants. The aforesaid review shall be conducted in accordance with the American Institute of Certified Public Accountants Statement on Auditing Standards Number 70 (“SAS 70”) or any successor standard, the findings and recommendations of which shall be set forth in a report (the “Service Review”). The Service Review shall include a Type II Service Auditor’s Report under SAS 70 or any successor standard.
b)
Any findings and recommendations of the Service Review will be set forth in a report which will be the sole property of EVERTEC. Subject to each Participant’s execution and delivery of a customary access letter (to the extent required by the

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independent certified public accountant that prepares the Service Review), EVERTEC shall deliver to each Participant, no less than on an annual basis, a copy of the Service Review promptly after such report is received by EVERTEC.
c)
It is expressly agreed that EVERTEC is under no obligation to take any action or otherwise correct any findings or recommendations that may be included in the Service Review report.
d)
If, at any time during the Term, BPPR has reasonable material concerns regarding EVERTEC’s operational controls and such concerns are not addressed in the scope of the Service Review, BPPR will so notify EVERTEC and EVERTEC will promptly meet with BPPR in an effort to resolve BPPR’s concerns.
e)
Upon BPPR’s request, EVERTEC will deliver to BPPR a certification of its compliance with regards to this section.
ARTICLE NINE – DISCLAIMER OF WARRANTIES & LIMITED LIABILITY
9.1
DISCLAIMER OF WARRANTIES. THE SERVICES AND ANY EQUIPMENT PROVIDED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS”, “AS AVAILABLE” BASIS. IN ADDITION, THE PARTIES ACKNOWLEDGE THAT GIVEN THE SERVICES (INCLUDING ANY EQUIPMENT) MAY DEPEND TO SOME EXTENT ON BPPR’S OWN COMPUTER SYSTEMS, EVERTEC DOES NOT MAKE ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF TITLE, QUIET ENJOYMENT, QUIET POSSESSION, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT. FURTHERMORE, EVERTEC DOES NOT MAKE ANY WARRANTIES OF ANY KIND WITH RESPECT TO LOSS OR CORRUPTION OF DATA, LOSS OR DAMAGE TO EQUIPMENT AND/OR SOFTWARE, SYSTEM RESPONSE TIMES, TELECOMMUNICATION LINES OR OTHER COMMUNICATION DEVICES, QUALITY, AVAILABILITY, RELIABILITY, SECURITY ACCESS DELAYS OR ACCESS INTERRUPTIONS, NOR COMPUTER VIRUSES, BUGS OR ERRORS. EVERTEC DOES NOT MAKE ANY WARRANTIES THAT THE SERVICES WILL NOT BE INTERRUPTED OR ERROR FREE OR AS TO THE RESULTS THAT MAY BE OBTAINED FROM THE USE OF THE SERVICES AND EVERTEC ASSUMES NO RESPONSIBILITY OR LIABILITY IF TELECOMMUNICATION CARRIERS ARE NOT AVAILABLE AT ANY GIVEN TIME. EVERTEC, ITS AFFILIATES, AND THEIR RESPECTIVE REPRESENTATIVES ARE NOT LIABLE, AND EXPRESSLY DISCLAIM ANY LIABILITY FOR THE CONTENT OF ANY DATA TRANSFERRED EITHER TO OR FROM BPPR OR STORED BY BPPR VIA THE SERVICES PROVIDED BY EVERTEC. NO ORAL ADVICE OR WRITTEN INFORMATION GIVEN BY EVERTEC REPRESENTATIVES WILL CREATE A WARRANTY; NOR MAY BPPR RELY ON ANY SUCH INFORMATION OR ADVICE.
9.2
Reliance on BPPR‑Provided Data. In performing the Services, EVERTEC will be entitled to rely upon the data, information, instructions, or specifications provided by BPPR and, therefore, will not be liable to BPPR in the same accord as set forth herein as a limitation of liability, should EVERTEC perform in accordance with such data, information, instructions or specifications received from BPPR. If any error results from incorrect input supplied by BPPR, BPPR will be responsible for discovering and reporting such error and supplying the data necessary to correct such error to EVERTEC, in which case, EVERTEC will exercise Best Efforts to correct the error at BPPR’s sole expense.
9.3
Exclusion of Liability. EVERTEC will not be liable for any Loss, damage, non-performance, default, or delay under this Agreement caused by or due to Force Majeure. In such event, EVERTEC’s obligation will be limited to using commercially reasonable efforts to reinstate the Services within a reasonable period of time once the unforeseen event has been rectified. Except as otherwise provided for herein, EVERTEC’s time for performance or cure hereunder will be extended for a period equal to the duration of the cause. Furthermore, neither party will be liable to the other party if there is any mechanical failure of a terminal, communication lines or any related equipment.
9.4
Systems and/or Services Not Provided by EVERTEC. To the extent BPPR performs any services itself or uses its own software, hardware, communications devices, Internet services, e-mail systems or other systems or, in the alternative, retains Third Parties to provide such services and systems, the parties acknowledge and agree that terms of this Agreement will not be deemed to impose on EVERTEC any obligation to obtain from owners of such systems any licenses or agreements that are necessary in order for EVERTEC to interface the Services with such systems. Nor will EVERTEC have any responsibility or liability in connection with such services or systems not provided by EVERTEC. BPPR will be solely responsible for the installation, operation, maintenance, use, and compatibility of such systems and services. In the event that such systems or services impair BPPR’s use of any Services: (a) BPPR will nonetheless be liable for payment for all Services provided by EVERTEC, and (b) any specifications generally applicable to the Services will not apply.



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9.5
LIMITATION OF LIABILITY.
a)
IN ADDITION TO ANY OTHER LIMITATION OF LIABILITY ESTABLISHED IN THIS AGREEMENT, THE OPERATING RULES OR ANY SERVICE RIDER HERETO, AND TO THE EXTENT PERMITTED BY ANY APPLICABLE LAW AND EXCEPT IN THE CASE OF WILLFUL MISCONDUCT OR GROSS NEGLIGENCE, UNDER NO CIRCUMSTANCES SHALL EVERTEC (OR ANY OF ITS AFFILIATES (OTHER THAN BPPR)) BE LIABLE TO BPPR OR ANY OTHER PERSON FOR LOSSES OR DAMAGES WHICH FALL INTO EACH OF THE FOLLOWING CATEGORIES: (I) LOST REVENUES, LOST PROFITS OR LOSS OF BUSINESS, (II) LOSS OF OR DAMAGE TO GOODWILL, OR LOSS OF ANTICIPATED SAVINGS, (III) LOSS OF OR CORRUPTION TO DATA, OR (IV) ANY INCIDENTAL, INDIRECT, EXEMPLARY, CONSEQUENTIAL OR SPECIAL DAMAGES OF ANY KIND, INCLUDING (IN EACH CASE) SUCH DAMAGES ARISING FROM ANY BREACH OF THIS AGREEMENT OR ANY TERMINATION OF THIS AGREEMENT, AND (IN EACH CASE) WHETHER SUCH LIABILITY IS ASSERTED ON THE BASIS OF CONTRACT, NEGLIGENCE, OTHER TORT, STATUTE OR OTHERWISE AND WHETHER OR NOT FORESEEABLE, EVEN IF EVERTEC HAS BEEN ADVISED OR WAS AWARE OF THE POSSIBILITY OF SUCH LOSS OR DAMAGES.
b)
EXCEPT FOR WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OR TO THE EXTENT OTHERWISE PROVIDED UNDER ANY LEGAL REQUIREMENT, EVERTEC’S AGGREGATE LIABILITY UNDER THIS AGREEMENT WILL BE THE AMOUNT OF DIRECT DAMAGES SUBJECT TO AN AGGREGATE ANNUAL LIMIT EQUAL TO THE AMOUNT OF PAYMENTS MADE TO EVERTEC BY BPPR FOR THE SERVICE FOR WHICH THE LIABILITY RELATES DURING THE TWELVE MONTHS PRIOR TO THE ACT, OMISSION OR EVENT THAT GIVES RISE TO THE CLAIM FOR LIABILITY. NOTHING IN THIS AGREEMENT SHALL EXCLUDE OR LIMIT EVERTEC’S LIABILITY FOR DEATH OR PERSONAL INJURY CAUSED BY EVERTEC’S NEGLIGENCE OR OTHERWISE LIMIT OR EXCLUDE EVERTEC’S LIABILITY FOR DAMAGES TO THE EXTENT THAT SUCH LIMITATION OR EXCLUSION IS NOT PERMITTED BY APPLICABLE LAW. THIS LIMITATION WILL APPLY NOTWITHSTANDING ANY LIMITED REMEDY PROVIDED HEREIN; PROVIDED, HOWEVER, THAT THIS LIMITATION WILL NOT APPLY TO LOSSES RELATED TO BREACHES OF THE CONFIDENTIALITY PROVISIONS OF THIS AGREEMENT, NOR TO INTELLECTUAL PROPERTY INDEMNIFICATION PROVISIONS. EACH PARTY HEREBY WAIVES ANY CLAIM THAT THESE EXCLUSIONS DEPRIVE IT OF AN ADEQUATE REMEDY OR CAUSE THIS AGREEMENT TO FAIL OF ITS ESSENTIAL PURPOSE.
c)
The foregoing sets forth BPPR’s exclusive remedy for breach of this Agreement by EVERTEC. The provisions of this section allocate the risks between EVERTEC and BPPR and EVERTEC’s pricing reflects the allocation of risk and limitation of liability specified herein.
ARTICLE TEN – INSURANCE & INDEMNIFICATION
10.1
Insurance. Each of the parties agrees to maintain adequate insurance coverage from reputable providers in amounts complying with industry standards for such party’s respective operations and the performance of its obligations under this Agreement. All such insurance policies will be carried at such party’s own expense. If either party requests any additional coverage of the other party, the costs associated with such coverage will be paid by the party requesting such additional coverage.
10.2
BPPR’s Indemnity. BPPR hereby agrees to indemnify, defend, protect and hold harmless EVERTEC, its Affiliates (except for BPPR) and their respective Representatives, suppliers, Third Party information providers, sub-contractors and permitted assigns and successors in interest (collectively the “EVERTEC Indemnitee”) from and against any Losses incurred or suffered by, or asserted against, such EVERTEC Indemnitee directly or indirectly in relation to or arising from: (a) any breach of this Agreement by BPPR; (b) any claim brought by any Third Party against an EVERTEC Indemnitee based on BPPR’s use of the Services; (c) EVERTEC’s compliance with BPPR’s Specifications or instructions; (d) acts or omissions of BPPR and its Representatives in connection with the installation, maintenance, presence, use or removal of equipment or software not provided by EVERTEC; (e) claims for infringement of any Third Party Intellectual Property right, arising from the use of any services or systems not provided by EVERTEC; (f) EVERTEC’s use of Intellectual Property or data supplied by BPPR; (g) the use of the Internet or the placement or transmission of any materials on the Internet by BPPR; (h) breach of contract and/or the warranties of merchantability and/or fitness for particular purpose, and related in any way to any service or product sold or offered by BPPR and/or any of its Affiliates at and/or through the BPPR’s electronic payment system; and (i) the contents of BPPR’s online web site and/or any other web site of BPPR’s Affiliates violates any copyright, proprietary right of any Third Party, state and federal regulations, or contains any matter that is libelous, scandalous or relates to products or services the offering or sale of which would in any manner be against the law.

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10.3
EVERTEC’S Indemnity. Unless otherwise provided for in this Agreement, EVERTEC hereby agrees to indemnify, defend, protect and hold harmless BPPR, its Affiliates and their respective Representatives, suppliers, Third Party information providers, sub-contractors and permitted assigns and successors in interest (collectively the “BPPR Indemnitee”) from and against all claims against BPPR Indemnitee for damage to, or loss of use of property of Third Parties and/or injury or death of any person to the extent that such damage, injury or death is caused by the negligent act or omission of EVERTEC in connection with EVERTEC’s performance of the Services under this Agreement.
10.4
Indemnification Procedures. With respect to claims covered by Sections 10.2 or 10.3 above, the following procedures will apply:
a)
Notice. Promptly after receipt by a party entitled to indemnification (the “indemnitee”) of notice of the commencement or threatened commencement of any civil, criminal, administrative or investigative action or proceeding involving a claim in respect of which the indemnitee will seek indemnification pursuant to this Article Ten, the indemnitee will notify the party obligated hereunder to indemnify the indemnitee (“indemnitor”) of such claim in writing. The failure of indemnitee to so notify an indemnitor will relieve indemnitor of its obligations under this Section to the extent that indemnitor can demonstrate damages attributable to such failure. Within fifteen (15) days following receipt of written notice from the indemnitee relating to any claim, but no later than fifteen (15) days before the date on which any response to a complaint or summons is due, the indemnitor will notify the indemnitee in writing if the indemnitor elects to assume control of the defense and settlement of that claim (a “Notice of Election”).
b)
Procedure Following Notice of Election. If the indemnitor delivers a Notice of Election relating to any claim within the required notice period, the indemnitor will be entitled to have sole control over the defense and settlement of such claim; provided that (i) the indemnitee will be entitled to participate in the defense of such claim and to employ counsel at its own expense to assist in the handling of such claim; and (ii) the indemnitor will notify the indemnitee before ceasing to defend against such claim, and will not compromise or settle such claim without the indemnitee’s prior written consent if such compromise or settlement would impose a penalty or limitation upon the indemnitee, including, without limitation, an injunction or other equitable relief, or such compromise or settlement does not include the release of the indemnitee from all liability arising from or relating to such claim. After the indemnitor has delivered a Notice of Election relating to any claim, the indemnitor will not be liable to the indemnitee for any legal expenses incurred by the indemnitee in connection with the defense of that claim. In addition, the indemnitor will not be required to indemnify the indemnitee for any amount paid or payable by the indemnitee in the settlement of any claim for which the indemnitor has delivered a timely Notice of Election if such amount was agreed to without the written consent of the indemnitor.
c)
Procedure Where No Notice of Election Is Delivered. If the party which is the indemnitor does not deliver a Notice of Election relating to any claim within the required notice period, the indemnitee will have the right to defend the claim in such manner as it may deem appropriate, and the failure of the indemnitor to deliver such Notice of Election will not affect the indemnification obligations of such party under this Agreement.
d)
Cooperation. When seeking indemnification, the indemnitee will at all times reasonably cooperate with the indemnitor in the defense or settlement of any claim which is subject to this Article Ten.
e)
Entitlement to Payment. In the event an indemnitor elects not to assume control of the defense and settlement of that claim, the indemnitee will be entitled to payment by the indemnitor upon the indemnitee’s settlement of the claim or the adjudication of liability, whichever first occurs.
10.5
Subrogation. In the event that a party will be obligated to indemnify the other party pursuant to this Article Ten, the indemnitor will, upon payment of such indemnity in full, be subrogated to all rights of the indemnitee with respect to the claims to which such indemnification relates. The indemnitee will reasonably cooperate with indemnitor, including the execution of appropriate documents, to enable the indemnitor to receive the benefit of the right of subrogation outlined in this Section 10.5.
ARTICLE ELEVEN – MISCELLANEOUS
11.1.
Survival. The parties’ respective confidentiality and indemnification obligations, as well as the provisions governing limits of liability, will survive any termination of this Agreement.
11.2.
Relationship between the Parties. EVERTEC and BPPR shall at all times be deemed to be independent contractors, and nothing contained in this Agreement shall be construed in any way as establishing a partnership, joint venture, express or implied agency relationship between EVERTEC and BPPR. EVERTEC and BPPR will have no authority to enter into contracts on each other’s behalf, to hire or fire employees of one another or in any way to obligate each other to any third party. EVERTEC has the sole right to supervise, manage, contract, direct, perform or cause to be performed, all of the services to be performed by EVERTEC under this Agreement.

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11.3.
Non-Exclusive. Except as otherwise set forth herein or agreed to by the parties in writing, the parties hereto acknowledge that this Agreement is not exclusive and nothing contained herein will be construed to create an exclusive relationship between EVERTEC and BPPR. As such, EVERTEC will not be limited in entering into similar agreements with other Persons to provide the same or similar services.
11.4.
Other Agreements. EVERTEC shall have the right to subcontract and/or to enter into separate agreements with any other person, firm or corporation to provide any or all of the services contemplated in this Agreement. Furthermore, EVERTEC shall have the right to enter into separate agreements to provide to any non-Participant any or all of the services contemplated in this Agreement.
11.5.
Assignment.
a)
Each party hereto may sell, transfer, lease, assign or otherwise dispose of any of its ATM terminals; provided, however that: (i) such party shall give written notice to the other party not less than two (2) Business Days prior to such transfer, and (ii) such transfer shall not, by itself, cause the acquirer of such ATM terminals to become a Participant or to acquire any right to participate or have access to the ATH Network. The party transferring such ATM terminals shall take, at its expense, all reasonable steps to disconnect said ATM terminals from the ATH Network and to ensure compliance by the acquirer with the provisions of this paragraph.
b)
Assignment. Other than a Permitted Assignment pursuant to Section 11.5(c) or (d), this Agreement may not be assigned by either party without the prior written consent of the other party; provided, that either party may assign its rights, duties and obligations under this Agreement to its financing sources solely in connection with the granting of a security interest and the enforcement of all rights and remedies that the assigning party has against the other party under this Agreement, subject to the claims, defenses and rights, including rights of set off, that such other party may have against the assigning party.
c)
Assignment to Subsidiaries. EVERTEC may assign any of its rights, duties or obligations to a direct or indirect wholly-owned Subsidiary of EVERTEC (an “Assignee Sub”) if (i) such Assignee Sub is identified by EVERTEC to BPPR at least 20 Business Days prior to the consummation of the proposed assignment; (ii) (A) such proposed assignment is legally required in order for EVERTEC to provide to BPPR or its Subsidiaries, in the country, state, territory or other jurisdiction (“Jurisdiction”) in which the Assignee Sub is organized, the specific obligations required to be performed pursuant to the assignment of this Agreement, and only (x) to the extent of such legal requirement and (y) if EVERTEC provides a written opinion of qualified counsel that opines that such legal requirement is applicable and is based upon reasonable assumptions with respect to such legal requirement or (B) BPPR has provided its prior written consent, such consent not to be unreasonably delayed, withheld or conditioned; (iii) such Assignee Sub will be Solvent immediately after and giving effect to such proposed assignment and BPPR is reasonably satisfied with the terms and conditions of the proposed assignment; (iv) BPPR is a third-party beneficiary to the assignment agreement, which is in form and substance that is reasonably satisfactory to BPPR, and which provides that the Assignee Sub’s rights under the assignment agreement will be terminated if the Assignee Sub ceases to be a wholly-owned Subsidiary, directly or indirectly, of EVERTEC; and (v) EVERTEC remains fully liable with respect to the performance of all its obligations under this Agreement and EVERTEC guarantees the performance of all of the obligations of EVERTEC to BPPR assumed by Assignee Sub under this Agreement, which guarantee provides that, for the avoidance of doubt, after any termination of the proposed assignment, EVERTEC shall continue to be obligated with respect to any obligation undertaken by Assignee Sub prior to such termination.
d)
Assignment to Third Parties. EVERTEC may assign all of its rights, duties and obligations (or those rights, duties and obligations arising after the effectiveness of the assignment) in a transaction with a third-party assignee (an “Asset Acquirer”) if (i) such Asset Acquirer is identified by EVERTEC to BPPR at least 30 Business Days prior to the consummation of the proposed assignment; (ii) such Asset Acquirer (A) acquires at least 90% of the consolidated gross assets (excluding cash) of EVERTEC and its Subsidiaries and (B) assumes at least 90% of the consolidated gross liabilities (excluding Indebtedness) of EVERTEC and its Subsidiaries (including the assignment and assumption of all commercial agreements between EVERTEC or any of its Subsidiaries, on the one hand, and Popular, BPPR or any of their respective Subsidiaries, on the other hand) through one legal entity; (iii) neither the Asset Acquirer nor any of its Affiliates is engaged, directly or indirectly, in the banking, securities, insurance or lending business, from which they derive aggregate annual revenues from the Commonwealth of Puerto Rico in excess of $50 million unless none of them has a physical presence in the Commonwealth of Puerto Rico that is used to conduct any such business; (iv) the Asset Acquirer will be Solvent immediately after and giving effect to such proposed assignment; and (v) EVERTEC reasonably believes that the Asset Acquirer, after completion of the proposed purchase and assumption transaction, will be capable of performing the obligations and duties of EVERTEC under this Agreement.
e)
Cooperation. EVERTEC shall use its reasonable best efforts to cooperate with BPPR in evaluating whether any proposed assignment pursuant to this Section 11.5 would be in compliance with the requirements of the provisions contained in this Section 11.5, including the ability of Assignee Sub or Asset Acquirer, as applicable, to comply with the terms of this

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Agreement, including, in each case, by providing any non-confidential information regarding the purposes and plans in connection with such proposed assignment other than information that would create any potential liability under applicable Legal Requirements, violate any confidentiality obligation, or that reasonably would be expected to result in the waiver of any attorney-client privilege.
f)
Notice of Objection. BPPR shall notify EVERTEC in writing within 15 Business Days following receipt of EVERTEC’s notice of the proposed assignment of any objection to any proposed assignment to an Asset Acquirer under Section 11.5(d) unless EVERTEC has failed to satisfy its obligations pursuant to Section 11.5(e) and BPPR asserts such failure prior to the expiration of the 15 Business Day objection period, in which case such 15 Business Day period shall be tolled until EVERTEC satisfies its obligations pursuant to Section 11.5(e). If BPPR fails to timely object to such proposed assignment (taking into account any tolling of the 15 Business Day objection period), it shall be deemed to have consented to such proposed assignment.            
g)
Implied Consent. Notwithstanding anything contained herein, if Popular, BPPR or any of their respective Controlled Affiliates votes in favor of a transaction resulting in a proposed assignment and was not compelled to do so as part of a Dragged Asset Sale or other requirement of the Stockholder Agreement or any other Group Agreement with respect to securities issued by Holdco or EVERTEC or any successor or other entity that acquired all or substantially all the assets of Holdco or EVERTEC or any of their respective successors, then it shall be deemed to have consented to the assignment.
h)
Invalidity of Impermissible Assignments. Any attempted or purported assignment in violation of this Section 11.5 hereof shall be null and void and the assignee’s rights assigned pursuant to any assignment made in compliance with this Section 11.5 will terminate in the event and to the extent of the termination of this Agreement.
i)
BPPR Asset Transfer. If BPPR or any of its Subsidiaries transfers, in a single transaction or series of related transactions (including in a merger, business combination, reorganization, or similar transaction (including by operation of law)), 50% or more of BPPR's consolidated assets in the Region as of the time of transfer, or assets that generate 50% or more of BPPR's consolidated revenues in the Region for the full twelve‑month period ending at the time of transfer, to any Person, then BPPR shall assign to such Person its rights, duties and obligations under this Agreement in respect of the Services provided to BPPR and shall cause such Person to assume its liabilities under this Agreement in respect of the Services provided to BPPR. For the avoidance of doubt, no such assignment shall relieve BPPR of its obligations under this Agreement to the extent BPPR survives any such sale of assets, merger, business combination, reorganization, or similar transaction.
11.6.
EVERTEC Change of Control.
a)
EVERTEC Change of Control. BPPR shall have the right, subject to Section 11.6(c), to terminate this Agreement up to 30 days following the later of (i) the occurrence of an EVERTEC Change of Control or (ii) the date on which EVERTEC provides BPPR written notice that an EVERTEC Change of Control has occurred or is likely to occur (provided that if EVERTEC has not satisfied its obligations pursuant to Section 11.6(b) and that BPPR asserts such failure prior to the expiration of the 30‑day period then such 30‑day period shall be tolled until EVERTEC satisfies its obligations under Section 11.6(b), and provided further that if an EVERTEC Change of Control occurs, and EVERTEC fails to provide BPPR written notice thereof within 30 days thereof, then BPPR shall have an unqualified right to terminate this Agreement), unless (w) the Person or Group of Persons proposing to engage in such proposed EVERTEC Change of Control transaction (the “Control Acquirer”) is identified to BPPR by EVERTEC at least 30 Business Days prior to such proposed EVERTEC Change of Control; (x) neither the Control Acquirer nor any of its Affiliates is engaged, directly or indirectly, in the banking, securities, insurance or lending business, from which they derive aggregate annual revenues from the Commonwealth of Puerto Rico in excess of $50 million unless none of them has a physical presence in the Commonwealth of Puerto Rico that is used to conduct any such business; (y) EVERTEC (or its successor, as applicable) will be Solvent immediately after and giving effect to such proposed EVERTEC Change of Control; and (z) EVERTEC (or its successor, as applicable), after the proposed EVERTEC Change of Control, will be capable of performing the obligations and duties of EVERTEC under this Agreement; provided further that if Popular, BPPR or any of their respective Controlled Affiliates votes in favor of the transaction resulting in the EVERTEC Change of Control or Transfers (other than a Transfer in the context of a merger, business combination, reorganization, recapitalization or similar transaction) any equity securities in connection with the transaction resulting in the EVERTEC Change of Control and, in either case, was not compelled to do so as part of a Drag-Along Transaction, a Dragged Asset Sale or other requirement of the Stockholder Agreement or any other Group Agreement with respect to Holdco, EVERTEC or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries, then such termination right shall not apply.
b)
Cooperation. EVERTEC shall use its reasonable best efforts to cooperate with BPPR in evaluating whether any proposed EVERTEC Change of Control would be in compliance with the requirements of this Section 11.6 including the ability of Assignee Sub or Asset Acquirer, as applicable, to comply with the terms of this Agreement, including, in each case, by providing any non-confidential information regarding the purposes and plans in connection with such proposed EVERTEC

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Change of Control other than information that would create any potential liability under Legal Requirements, violate any confidentiality obligation, or that reasonably would be expected to result in the waiver of any attorney-client privilege.
c)
Notice of Objection. If EVERTEC provides at least 30 days written notice to BPPR prior to an EVERTEC Change of Control, BPPR shall notify EVERTEC in writing within 15 Business Days following receipt of EVERTEC’s notice of the proposed EVERTEC Change of Control of any objection to any proposed EVERTEC Change of Control on the basis that it does not satisfy the criteria set forth in clauses (w) through (z) of Section 11.6(a) (unless EVERTEC has failed to satisfy its obligations pursuant to Section 11.6(b) and BPPR asserts such failure prior to the expiration of the 15 Business Day objection period, in which case such 15 Business Day objection period shall be tolled until EVERTEC satisfies its obligations pursuant to Section 11.6(b)). If BPPR fails to timely object to such proposed assignment (taking into account any tolling of the 15 Business Day objection period), it shall be deemed to have consented to such proposed EVERTEC Change of Control and waived its right of termination under Section 11.6(a).
11.7.
Binding Effect. This Agreement and all the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. The parties hereto intend that this Agreement will not benefit or create any right or cause of action in, or on behalf of, any Person other than the parties hereto.
11.8.
No Third‑Party Beneficiaries. Each party intends that this Agreement will not benefit, or create any right or cause of action in or on behalf of, any Person other than BPPR and EVERTEC.
11.9.
Entire Agreement. This Agreement contains the entire understanding of all agreements between the parties hereto with respect to the subject matter hereof and supersedes any prior agreement or understanding, oral or written, pertaining to any such matters which agreements or understandings will be of no force or effect for any purpose. This Agreement may not be amended or supplemented in any manner except by mutual agreement of the parties and as set forth in a writing signed by the parties hereto or their respective permitted successors‑in‑interest.
11.10.
Incorporation. The Operating Rules, ATH Network Branding Standards, Exhibits, Schedules, Exhibits, Schedules, Addenda, Riders certificates, agreements and other documents attached hereto and to which reference is made herein are incorporated by reference as if fully set forth herein.
11.11.
Severability. The parties hereto intend all provisions of this Agreement to be enforced to the fullest extent permitted by law. Accordingly, should a court of competent jurisdiction determine that the scope of any provision is too broad to be enforced as written, the parties intend that the court should reform the provision to such narrower scope as it determines to be enforceable. If, however, any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future law, such provision will be fully severable, and this Agreement will be construed and enforced as if such illegal, invalid, or unenforceable provision were never a part hereof, and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance.
11.12.
Waiver. The tardiness or failure by any of the parties hereto in exercising any right or privilege pursuant to this Agreement will not operate as a waiver thereof, nor will the exercise of any right by any party serve as an obstacle to the exercise of any other rights, powers or privileges, or any portion thereof. The waiver of any breach of any provision under this Agreement by any party will not be deemed to be a waiver of any preceding or subsequent breach under this Agreement. No such waiver will be effective unless in writing.
11.13.
Governing Law. This Agreement will be governed by and interpreted in accordance with the laws of the Commonwealth of Puerto Rico applicable to contracts made and entirely to be performed therein. BPPR agrees to submit to the jurisdiction and venue of the Court of First Instance of Puerto Rico for claims arising under this Agreement.
11.14.
Trial by Jury. The parties hereby mutually agree that no party, nor any permitted assignee, successor, heir or Representative of thereof will seek a jury trial in any lawsuit, proceeding, counterclaim, or any other litigation procedure based upon or arising out of this Agreement, or any related agreement or instrument between the parties. None of the parties will seek to consolidate any such action, in which a jury trial has been waived, with any other action in which a jury trial has not been waived. The provisions of this section have been fully negotiated by the parties. The waiver contained herein is irrevocable, constitutes a knowing and voluntary waiver, and will be subject to no exceptions.
11.15.
Consultation; Arbitration. Any dispute, controversy or claim between the parties or against any Representative of the other related to this Agreement and any dispute or claim related to the relationship or duties contemplated hereunder, including the validity of this clause (a “Dispute”) will be resolved as set forth in this section. Each party will give written notice (“Notice of Dispute”) to the other party of any Dispute claimed by it. Following delivery of a Notice of Dispute, a Representative of each party will meet and will attempt in good faith to resolve the Dispute. Any Dispute

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that remains unresolved for more than twenty (20) days after the receipt of a Notice of Dispute shall be referred to designated representatives of the parties hereto who shall negotiate in good faith to resolve such dispute (the “Resolution Forum”). If a Dispute is not resolved in the Resolution Forum, the Dispute shall be submitted to the consideration of the Chief Operating Officer and the Chief Financial Officer of EVERTEC and the Chief Operating Officer, the Chief Financial Officer and/or the Chief Information Officer of BPPR. Any Disputes that may remain unresolved for more than ninety (90) days following the receipt of a Notice of Dispute may be referred to binding arbitration at the request of any party upon written notice to the other. Such arbitration proceeding will be administered by the American Arbitration Association in accordance with the then current Commercial Arbitration Rules and will be aired in the Commonwealth of Puerto Rico. The arbitration will be governed by the United States Arbitration Act, 9 U.S.C. §§ 1-16 to the exclusion of any provision of state law inconsistent therewith or which would produce a different result. A single, neutral arbitrator will determine the Dispute of the parties and render a final award in accordance with the applicable substantive law. Strict confidentiality will govern the arbitration proceedings, including all information submitted to the arbitrator and the decision or award entered by the arbitrator. Any court having jurisdiction may enter judgment upon the award rendered by the arbitrator. The terms hereof will not limit any obligation of a party to defend, indemnify or hold harmless another party against court proceedings or other Losses. The procedures specified in this section will be the sole and exclusive procedures for the resolution of Disputes between the parties arising out of or relating to this Agreement; provided, however, that a party may request temporary remedies in a court of law to maintain the status quo or to protect goods or property until the arbitration has initiated and the selected arbitrator has had the opportunity to resolve the request for temporary relief. Each party is required to continue to perform its obligations under this Agreement pending final resolution of any Dispute arising out of or relating to this Agreement, unless to do so would be impossible or impracticable under the circumstances. All Disputes between BPPR and Participants will be resolved in accordance with the Operating Rules.
11.16.
Cumulative Remedies. Except as otherwise expressly provided, all rights and remedies provided for in this Agreement will be cumulative and in addition to and not in lieu of any other rights and remedies available to either party at law, in equity or otherwise and will not serve to exclude the exercise of any right or remedy provided by law.
11.17.
Non-Solicitation. BPPR agrees that, during the period commencing on the execution of this Agreement and ending upon the one (1) year anniversary of the expiration or termination of this Agreement, without the prior written consent of EVERTEC, BPPR shall not, and it shall cause its Subsidiaries not to, directly or indirectly, (i) induce or encourage any employee of EVERTEC to terminate his or her employment with EVERTEC, (ii) solicit for employment or any similar arrangement any employee of EVERTEC or (iii) hire or assist any other Person in hiring any employee of EVERTEC; provided that BPPR and its Subsidiaries shall not be restricted from (i) accepting referrals for employment made by a placement agency or employment service so long as such placement agency or employment service has not targeted employees of EVERTEC, (ii) making any general advertisement not targeted at employees of EVERTEC appearing in a newspaper, magazine, Internet sites or trade publication, or (iii) soliciting or hiring any person who has not been an employee of EVERTEC for at least 180 days prior to being solicited or hired by BPPR or its Subsidiaries and whom neither BPPR nor any of its Subsidiaries, subject to clauses (i) and (ii) of the proviso, have solicited over such 180‑day period.
11.18.
Prohibition on Publicity. Except for general marketing presentations promoting the ATH Network, listings of actual Participants in the ATH Network and related disclosures and activities, neither party may advertise or promote using the name or description of the other party including, but not limited to, disclosing the existence or contents of this Agreement, without in each instance the express written consent of the other party.
11.19.
Business Days and Legal Holidays. In the event that any action, payment, or time period, under this Agreement, becomes due on a day that is a Legal Holiday, such action, payment or time period will be performed and/or expire, as applicable, on the next Business Day immediately following the Legal Holiday.
11.20.
Notices. All notices, requests, demands, consents and other communications given or required to be given under this Agreement and under the related documents will be in writing and delivered to the applicable party at its main office or any other place as designated by the parties in writing.
11.21.
Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
11.22.
Representations and Warranties. EVERTEC and BPPR each represent and warrant that (i) it has the power and authority to grant the rights and perform the obligations to which it commits herein; (ii) the execution of this Agreement by the person representing it will be sufficient to render the Agreement binding upon it; (iii) neither its performance hereunder nor the exercise by the other party of rights granted by the warranting party hereunder will violate any applicable laws or regulations, or the legal rights of any Third Parties, or the terms of any other agreement

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to which the warranting party is or becomes a party; and (iv) it has and will maintain an adequate system of internal controls and procedures for financial reporting. Each party is separately responsible for ensuring that its performance and grant of rights do not constitute any such violation during the term of this Agreement. Each of the foregoing representations and warranties and any other representations and warranties made throughout this Agreement will be deemed provided by the parties on the Effective Date hereof and will be continuous in nature throughout the life of this Agreement.
11.23.
Specific Performance. BPPR and EVERTEC agree that if an act or omission of BPPR or any of its Subsidiaries, on the one hand, or EVERTEC, on the other hand, results in a breach of Section 2.2(c), Section 2.10, Section 11.5(i), Section 11.17, Article 5 or Article 6, EVERTEC or BPPR, as applicable, will be irreparably damaged, no adequate remedy at law would exist and damages would be difficult to determine, and that EVERTEC or BPPR, as applicable, shall be entitled to an injunction or injunctions to prevent such breach, and to specific performance of the terms of Section 2.2(c), Section 2.10, Section 11.5(i), Section 11.17, Article 5 or Article 6, as the case may be, in addition to any other remedy at law or equity, without having to post bond or any financial undertaking.
11.24.
Limitation of Actions. No action, regardless of form, arising out of any claimed breach of this Agreement or the Services provided hereunder, may be brought by either party more than two (2) years after the cause of action has accrued or after the statute of limitations prescribed by Puerto Rico law, whichever is less.
11.25.
Additional Assurances. Both parties covenant and agree that subsequent to the execution and delivery of this Agreement and without any additional consideration, each will execute and deliver any further legal instruments and perform any acts that are or may become necessary to effectuate the purposes of this Agreement.
11.26.
Amendment and Restatement. This Agreement (1) amends and restates the 2000 ATH Network Agreement and the 2000 Service Riders and (2) upon the Effective Date, the provisions of this Agreement shall supersede the provisions of the 2000 ATH Network Agreement and the 2000 Service Riders, each of which shall no longer be in effect, other than any accrued obligations that are outstanding as of the Effective Date.
[Signature Page Follows]























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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized Representatives as of the date first written above.
 
BANCO POPULAR DE PUERTO RICO
  
EVERTEC, INC.
 
 
 
 
By:
  
/s/ Ileana González
  
By:
  
/s/ Félix M. Villamil
Name:
  
Ileana González
  
Name:
  
 
Title:
  
SVP
  
Title:
  
 













































[Signature Page to Amended and Restated ATH Network Participation Agreement]

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Exhibit A - Defined Terms

1.
“ACH Payment Account” means the Automated Clearing House bank account established by BPPR as described in the Operating Rules.
2.
“Affiliate” means, with respect to any Person, any other Person, directly or indirectly, through one or more intermediaries, Controlling, Controlled by, or under common Control with, such Person. Notwithstanding the foregoing, (i) with respect to Apollo, the term “Affiliate” shall (x) include any investment fund with respect to which Apollo Global Management LLC or its Controlled Affiliates (including its and their respective successors) are the sole or, if not sole, primary investment managers and, subject to clause (y) below, each of their Subsidiaries and (y) not include portfolio companies of Apollo Global Management LLC or its Controlled Affiliates and, (ii) with respect to Popular (to the extent that at the time of determination it is engaged in a private equity or similar business), the term “Affiliate” shall not include portfolio companies of Popular or its Controlled Affiliates.
3.
“Apollo” means AP Carib Holdings, Ltd., an exempted company organized under the laws of the Cayman Islands.
4.
“Asset Acquirer” has the meaning set forth in Section 11.5(d).
5.
“Assignee Sub” has the meaning set forth in Section 11.5(c).
6.
“Authorized Locations” means the data centers and other locations owned or leased by EVERTEC, as the same may be amended from time to time, for providing the Services and/or maintaining, processing, or storing BPPR Data under this Agreement.
7.
“beneficially owned”, “beneficial ownership” and similar phrases have the same meanings as such terms have under Rule 13d-3 (or any successor rule then in effect) under the Exchange Act, except that in calculating the beneficial ownership of any Person, such Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire, whether such right is currently exercisable or is exercisable upon the occurrence of a subsequent event. Notwithstanding the foregoing, no Person (the “Initial Person”) shall be deemed to beneficially own any securities beneficially owned by another Person who is not an Affiliate of such Initial Person (the “Other Person”) (disregarding solely for the purposes of determining securities beneficially owned by such Other Person, (i) application of this sentence to any securities that have been Transferred (other than in the form of a pledge, hypothecation or similar grant of a security interest only and which shall not involve the grant of a proxy or other right with respect to the voting of such securities) to such Other Person in compliance with the Stockholder Agreement or other applicable Group Agreement and (ii) any Group Securities with respect to such Other Person), including without limitation, another Holder that is not an Affiliate of such Initial Person.
8.
“Best Efforts” means the efforts that a prudent Person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved in the time period expressly contemplated or, in the absence of an expressly contemplated time period, in such time period as applicable, in accordance with historical practices and, to the extent there are no historical practices, within a commercially reasonable time period.
9.
“BPPR” has the meaning set forth in the Recitals.
10.
“BPPR Data” means BPPR’s data, records and information maintained and processed by EVERTEC, including all Customer Information.
11.
“Business Continuity Plan” means the processes, preventive arrangements and measures taken by a party to be able to respond to an Event in order to be able to continue offering its services without interruption or significant changes.
12.
“Business Day” means any day other than a Saturday, a Sunday or a day on which banks in New York, New York or San Juan, Puerto Rico are authorized or obligated by Law or executive order to close.
13.
“Change of Control” means, with respect to any Person, the acquisition, by a non-Affiliate of such Person, of (a) more than fifty percent (50%) of the voting power of such Person or (b) the legal power to designate a majority of the board of directors (or other persons performing similar functions) of such Person.
14.
“Common Shares” means the common stock of EVERTEC, par value $1.00 per share (or the common stock of any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries).
15.
“Confidential Information” means all confidential or proprietary data, information, know‑how and documentation not generally known to the public and any and all tangible embodiments thereof, including, but not limited to, that which relates to business plans, financial information and projections, agreements with Third Parties, drawings, designs, specifications, estimates, blueprints, plans, data, reports, models, memoranda, notebooks, notes, sketches, artwork, mock-ups, letters, manuals, patents, patent applications, trade secrets, research, products, services, suppliers, customers, markets, software, developments, inventions, processes, technology, Intellectual Property, engineering, hardware configuration, marketing, operations, pricing, distribution, licenses, budgets or finances, and copies of all or portions thereof which in any way related to the business of EVERTEC or BPPR, as the case may be, whether or not disclosed, designated or marked as proprietary, confidential or otherwise. Confidential Information will include EVERTEC’s physical security systems, access control systems, and specialized recovery equipment and techniques. Confidential Information will include BPPR’s Customer Information and BPPR Data.
16.
“Control,” and its correlative meanings, “Controlling,” and “Controlled,” means the possession, direct or indirect, or the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
17.
“Control Acquirer” has the meaning set forth in Section 11.6(a).
18.
“Customer Information” means any and all non-public personal information made available to EVERTEC or EVERTEC Representatives for the purpose of obtaining any service or product offered by EVERTEC and/or BPPR for personal, family or household purposes.
19.
“Drag-Along Transaction” has the meaning set forth in Section 4(d)(i) of the Stockholder Agreement.
20.
“Dragged Asset Sale” has the meaning set forth in Section 4(d)(vii) of the Stockholder Agreement.

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21.
“Encumbrances” means any direct or indirect encumbrances, lien, pledge, security interest, claim, charges, option, right of first refusal or offer, mortgage, deed of trust, easement, or any other restriction or third‑party right, including restrictions on the right to vote equity interests.
22.
“Event” means those events that require a party to put into effect its Business Continuity Plan.
23.
“EVERTEC Change of Control” means, with respect to EVERTEC, any:
(i) merger, consolidation or other business combination of EVERTEC (or any Subsidiary or Subsidiaries that alone or together represent all or substantially all of EVERTEC’s consolidated business at that time) or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries that results in the stockholders of EVERTEC (or such Subsidiary or Subsidiaries) or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries or the surviving entity thereof, as applicable, immediately before the consummation of such transaction or a series of related transactions, holding, directly or indirectly, less than 50% of the voting power of EVERTEC (or such Subsidiary or Subsidiaries) or any such successor, other entity or surviving entity, as applicable, immediately following the consummation of such transaction or series of related transactions; provided that this clause (i) shall not be deemed applicable to any merger, consolidation or other business combination, if, as a result of any such merger, consolidation or other business combination, no Person or Group of Persons that had not had “control” of EVERTEC immediately prior to such transaction, as such term is defined under the Bank Holding Company Act of 1956, shall have obtained such “control”;
(ii) Transfer (other than in the form of a pledge, hypothecation or similar grant of a security interest only and which shall not involve the grant of a proxy or other right with respect to the voting of such equity), in one or a series of related transactions, of equity representing 50% or more of the voting power of EVERTEC (or any Subsidiary or Subsidiaries that alone or together represent all or substantially all of EVERTEC’s consolidated business at that time) or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries to a Person or Group of Persons (other than a Transfer of such equity to Apollo Global Management LLC, Popular, any Permitted Ultimate Parent, or their respective Controlled Affiliates);
(iii) transaction in which a majority of the board of directors or equivalent governing body of EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries) immediately following or as a proximate cause of such transaction is comprised of persons who were not members of the board of directors or equivalent governing body of EVERTEC (or such successor or other entity) immediately prior to such transaction (or are not nominated by Apollo Global Management LLC, Popular, any Permitted Ultimate Parent or their respective Controlled Affiliates), except (X) resulting from the compliance, at the time of an initial public offering of either Holdco or EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries), with the listing requirements, listed company manual or similar rules or regulations of the securities exchange on which Holdco’s or EVERTEC’s (or such successor’s or other entity’s), as the case may be, equity securities will be listed pursuant to such initial public offering, (Y) if a majority of such board of directors is not “independent” under the rules of the applicable securities exchange on the date following such initial public offering upon which Holdco or EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries), as the case may be, first ceases to be a “controlled company” (or similar status) under the rules and regulations of such exchange, resulting from compliance with the rules and regulations of such exchange that first apply upon Holdco or EVERTEC (or such successor’s or other entity’s), as the case may be, ceasing to be a “controlled company” (or similar status), or (Z) the loss of directors of EVERTEC pursuant to Section 2 of the Stockholder Agreement (as in effect on the date hereof or as may be amended with the approval of Popular and BPPR) that does not result in another Person or Group of Persons having the right or ability to appoint a majority of the board of directors or equivalent governing body of Holdco or EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries) as a result of such transaction; provided that, for the avoidance of doubt, this clause (Z) shall only apply to the resignation and initial replacement of such directors and not to any subsequent replacement of such directors (whether in connection with another transaction or otherwise); or (iv) sale or other disposition in one or a series of related transactions of all or substantially all of the assets of EVERTEC and its Subsidiaries (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries) to a Person who is not an Affiliate of EVERTEC at such time.
24.
“Exchange Act” means the Securities Exchange Act of 1934.
25.
“Force Majeure” means causes beyond a Person’s reasonable control, including, but not limited to, acts of God, acts of civil or military authority, war, terrorism, civil commotion, governmental action, explosion, strikes, labor disputes, riots, sabotage, epidemics, fires, floods, hurricanes, earthquakes, or other similar events or disasters.
26.
“Governmental Authority” means the government or any agency thereof, of any nation, state, commonwealth (including the Commonwealth of Puerto Rico), city, municipality or political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to the government that have regulatory, supervisory, and/or examination authority with respect to BPPR and/or of EVERTEC with respect to the matters covered by the Services or their respective operations or financial condition, any quasi‑governmental entity or arbitral body, any SRO and any applicable stock exchange.
27.
“Group Agreement” means any agreement governing the acquisition, holding, voting or disposition of securities of a Person; provided, that, so long as Apollo or a subsequent Permitted Controlling Holder is an Affiliate of such Person, such Person is a party to such agreement.
28.
“Group of Persons” means a group of Persons that would constitute a “group” as determined pursuant to Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
29.
“Group Securities” means any securities beneficially owned by a Person solely as a result of the Stockholder Agreement or any other Group Agreement and, for the avoidance of doubt, which securities have not been Transferred to such Person or any of its Controlled Affiliates.
30.
“Holdco Common Shares” means the common stock of Holdco, par value $0.01 per share.
31.
“Holdco” means Carib Holdings, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico.

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32.
“Holders” means the holders of Holdco Common Shares who are parties to the Stockholder Agreement as set forth in Schedule I thereto, as the same may be amended or supplemented from time to time.
33.
“Indebtedness” means, with respect to any Person, (a) all indebtedness of such Person, whether or not contingent, for borrowed money, and (b) all obligations of such Person evidenced by notes, bonds, debentures or other similar debt instruments.
34.
“Initial Person” has the meaning set forth in the definition of “beneficially owned.”
35.
“Intellectual Property” means the Licensed Marks and any and all trademarks, service marks, copyrights, patents, trade secrets, commercial and/or internet domain names, software, source codes, systems, programs, instructions, manuals, and written material (including reports, formats, tapes, listings and other programming documentation) contract forms, client lists, marketing surveys or other information, the names, features, designs and other specifications related to the names of products or services developed or used or that may hereafter be developed offered or sold by EVERTEC, and methods of processing, specific design and structure of individual programs and their interaction and unique programming techniques employed therein.
36.
“Jurisdiction” has the meaning set forth in Section 11.5(e).
37.
“Legal Holiday” means Saturday, Sunday or any legal holiday in the Commonwealth of Puerto Rico that is observed by EVERTEC.
38.
“Legal Requirements” mean any applicable federal, state, Puerto Rico, local, municipal, foreign, international, multinational, or other administrative order, constitution, law, ordinance, principle of law, regulation, statute, guidance or treaty issued by a Governmental Authority.
39.
“Licensed Marks” means collectively, the ATH® logo and the ATH® word mark and any other trademarks or service marks used by EVERTEC in connection with the ATH® Network.
40.
“Loss(es)” means losses, lost profits, liabilities, claims, damages, fines, expenses, penalties, interest expense, costs and fees and disbursements, (including legal counsel and experts’ fees and disbursements), net of any amounts recovered with respect thereto under insurance policies covering any liability thereof if and to the extent applicable in each case, individually or collectively.
41.
“Material Adverse Effect” means, with respect to any Person, any fact, event, change, effect, development, condition or occurrence that has a materially adverse effect on or with respect to any business, assets, liabilities, financial condition, or results of operations of such Person.
42.
“Merger Agreement” means the Agreement and Plan of Merger, dated June 30, 2010, among Popular, AP Carib Holdings Ltd., Carib Acquisition, Inc. and EVERTEC, as it may be amended, restated or supplemented from time to time.
43.
“Non-Controlled Public Entity” means a Person which has equity securities listed on national stock exchange and which Person’s Affiliates do not beneficially own securities representing the majority of the voting power to elect the members of the board of directors or other governing body of such Person.
44.
“Operating Rules” means the ATH Network Operating Rules as such rules may be amended by EVERTEC from time to time.
45.
“Other Person” has the meaning set forth in the definition of “beneficially owned.”
46.
“Permitted Assignment” means a Permitted Subsidiary Assignment or a Permitted Third-Party Assignment.
47.
“Permitted Controlling Holder” means a Person that (i) beneficially owns equity securities representing a majority of the voting power to elect the directors of EVERTEC or (ii) any successor or any other entity holding all or substantially all of the assets of EVERTEC and its Subsidiaries in a transaction or series of transactions, in each case, without contravening Section 11.5 or without BPPR validly exercising its termination right pursuant to Section 11.6 provided that such Person shall be a “Permitted Controlling Holder” only with respect to the applicable entity that issues such securities.
48.
“Permitted Subsidiary Assignment” means an assignment by EVERTEC of any of its rights, duties or obligations under this Agreement to an Assignee Sub in compliance with the provisions of Section 11.5.
49.
“Permitted Third-Party Assignment” means an assignment by EVERTEC of all its rights, duties and obligations under this Agreement to an Asset Acquirer in compliance with the provisions of Section 11.5.
50.
“Permitted Ultimate Parent” means with respect to a Permitted Controlling Holder, its Ultimate Parent Entity.
51.
“Person” shall be construed broadly and shall include, without limitation, an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Governmental Entity or any department, agency or political subdivision thereof.
52.
“Popular” means Popular, Inc., a corporation organized and existing under the laws of the Commonwealth of Puerto Rico.
53.
“Region” means Puerto Rico, the U.S. Virgin Islands and the British Virgin Islands.
54.
“Representative” means with respect to a particular Person, any director, officer, partner, member, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.
55.
“Services” has the meaning set forth in Section 2.1.
56.
“Solvent” with regard to any Person, means that (i) the sum of the assets of such Person, both at a fair valuation and at a present fair salable value, exceeds its liabilities, including contingent, subordinated, unmatured, unliquidated, and disputed liabilities; (ii) such Person has sufficient capital with which to conduct its business; and (iii) such Person has not incurred debts beyond its ability to pay such debts as they mature. For purposes of this definition, “debt” means any liability on a claim, and “claim” means (x) a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) a right to an equitable remedy for breach of performance to the extent such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. With respect to any such contingent liabilities, such liabilities shall be computed at the amount which, in light of all the facts and circumstances existing at the time, represents the amount which can reasonably be expected to become an actual or matured liability.

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57.
“SPV Affiliate” means with respect to any Person, any Affiliate of such Person, whose direct or indirect interest in the Common Shares constitutes more than 30% (by value) of the equity securities portfolio of such Affiliate.
58.
“SRO” means any domestic or foreign securities, broker-dealer, investment adviser or insurance industry self-regulatory organization.
59.
“Stockholder Agreement” means the Stockholder Agreement among Carib Holdings, Inc. and the holders party thereto dated September 30, 2010.
60.
“Subsidiary” means, with respect to any Person, any corporation, association, partnership, limited liability company or other business entity of which 50% or more of the total voting power or equity interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by (a) such Person, (b) such Person and one or more Subsidiaries of such Person, or (c) one or more Subsidiaries of such Person.
61.
“Third Party” means any Person that is not a party to this Agreement and is not an Affiliate of any party to this Agreement.
62.
“Transfer” means any direct or indirect sale, assignment, transfer, conveyance, gift, bequest by will or under intestacy laws, pledge, hypothecation or other Encumbrance, or any other disposition, of the stated security (or any interest therein or right thereto, including the issuance of any total return swap or other derivative whose economic value is primarily based upon the value of the stated security) or of all or part of the voting power (other than the granting of a revocable proxy) associated with the stated security (or any interest therein) whatsoever, or any other transfer of beneficial ownership of the stated security, with or without consideration and whether voluntarily or involuntarily (including by operation of law). Notwithstanding anything to the contrary set forth in this Agreement, (i) each of (x) a Transfer of equity interests of Popular and (y) a Change of Control of Popular shall be deemed not to constitute a Transfer of any equity interest beneficially owned by Popular; (ii) each of (x) a Transfer of equity interests of Apollo Global Management LLC or any of its Controlled Affiliates that is not an SPV Affiliate, and (y) a Change of Control of Apollo Global Management LLC or any of its Controlled Affiliates that is not an SPV Affiliate shall be deemed not to constitute a Transfer of any equity interest beneficially owned by Apollo or such Affiliate, as applicable, and (iii) each of (x) a Transfer of equity interests of any Permitted Ultimate Parent or any of its Controlled Affiliates that is not an SPV Affiliate, and (y) a Change of Control of any Permitted Ultimate Parent or any of its Controlled Affiliates that is not an SPV Affiliate shall be deemed not to constitute a Transfer of any security beneficially owned by such Permitted Ultimate Parent Entity or such Controlled Affiliate, as applicable; provided that, for the avoidance of doubt, subject to clause (i) above, any Change of Control of an SPV Affiliate shall be deemed to constitute a Transfer of the Common Shares beneficially owned by such SPV Affiliate.
63.
“Ultimate Parent Entity” means (i) with respect to Apollo, Apollo Global Management LLC and its successors, (ii) with respect to Popular, Popular and its successors and (iii) with respect to a Permitted Controlling Holder, (x) the Person which (A)(i) Controls such Permitted Controlling Holder or (ii) if no Person Controls such Permitted Controlling Holder, the beneficial owner of a majority of the voting power of such Permitted Controlling Holder and (B) is not itself Controlled by any other Person that is an Ultimate Parent Entity of such Permitted Controlling Holder or, (y) if no such Person exists, the Permitted Controlling Holder; provided that, with respect to determining an Ultimate Parent Entity (i) the Control of any entity by a natural person shall be disregarded and (ii) the Control of any Non-Controlled Public Entity by any Person shall be disregarded.















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EXHIBIT 10.11

ATH SUPPORT AGREEMENT

ATH SUPPORT AGREEMENT, dated as of September 30, 2010 (this “Agreement”), by and between Banco Popular de Puerto Rico (“BPPR”), a bank organized and existing under the laws of the Commonwealth of Puerto Rico, and EVERTEC, Inc., a Puerto Rico corporation organized and existing under the laws of the Commonwealth of Puerto Rico (the “EVERTEC”).

WHEREAS, BPPR transferred to EVERTEC the Transferred Assets (including among other things, in exchange for (1) New Shares and (2) the assumption by EVERTEC of the Assumed Liabilities, pursuant to the terms and conditions of the Merchant and Ticketpop Business Transfer and Reorganization Agreement, dated as of June 30, 2010, as amended (the “Business Transfer Agreement”);
WHEREAS, prior to the Effective Time, BPPR and its Affiliates (1) promoted, supported and marketed the ATH Network and the ATH Debit Cards and (2) issued ATH Debit Cards;
WHEREAS, EVERTEC has provided to BPPR and its Affiliates, certain data processing, applications, processing, check imaging, transmission, telecommunications, credit and debit card transaction processing, and related operational, technical, and consulting services, and shall continue to provide such services pursuant to the terms of the Amended and Restated Master Services Agreement (the “Master Agreement”), dated as of the date hereof, among Popular, Inc. (“Popular”), BPPR and EVERTEC, as it may be amended, extended, supplemented or renewed from time to time; and
WHEREAS, in the connection with the foregoing, the parties hereto wish to clarify that BPPR and its Affiliates will continue to support the ATH Network and to promote and support Cards that bear the symbol of the ATH Network as set forth below.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree as follows:
1. Definitions. All capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Business Transfer Agreement. As used in this Agreement, the following terms shall have the meanings set forth below:
“AAA” means the American Arbitration Association.
“Affiliate” means, with respect to any Person, any other Person, directly or indirectly, through one or more intermediaries, Controlling, Controlled by, or under common Control with, such Person. Notwithstanding the foregoing, (i) with respect to Apollo, the term “Affiliate” shall (x) include any investment fund with respect to which Apollo Global Management LLC or its Controlled Affiliates (including its and their respective successors) are the sole or, if not sole, primary investment managers and, subject to clause (y) below, each of their Subsidiaries and (y) not include portfolio companies of Apollo Global Management LLC or its Controlled Affiliates and (ii) with respect to Popular (to the extent that at the time of determination it is engaged in a private equity or similar business), the term “Affiliate” shall not include portfolio companies of Popular or its Controlled Affiliates.
“Apollo” means AP Carib Holdings, Ltd., an exempted company organized under the laws of the Cayman Islands.
“Arbitration Panel” has the meaning set forth in Section 10(a).
“Arbitration Procedures” has the meaning set forth in Section 10(a).
“Asset Acquirer” has the meaning set forth in Section 7(d).
“Assignee Sub” has the meaning set forth in Section 7(c).
“ATH Debit Cards” has the meaning set forth in Section 3(a).
“ATH Issuer Participants” means the group of financial institutions that issue Cards that bear the symbol of the ATH Network and grants cardholders’ access to the ATH Network.

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“beneficially owned,” “beneficial ownership” and similar phrases have the same meanings as such terms have under Rule 13d-3 (or any successor rule then in effect) under the Exchange Act, except that in calculating the beneficial ownership of any Person, such Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire, whether such right is currently exercisable or is exercisable upon the occurrence of a subsequent event. Notwithstanding the foregoing, no Person (the “Initial Person”) shall be deemed to beneficially own any securities beneficially owned by another Person who is not an Affiliate of such Initial Person (the “Other Person”) (disregarding solely for the purposes of determining securities beneficially owned by such Other Person, (i) application of this sentence to any securities that have been Transferred (other than in the form of a pledge, hypothecation or similar grant of a security interest only and which shall not involve the grant of a proxy or other right with respect to the voting of such securities) to such Other Person in compliance with the Stockholder Agreement or other applicable Group Agreement and (i) any Group Securities with respect to such Other Person), including without limitation, another Holder that is not an Affiliate of such Initial Person.
“BPPR” has the meaning set forth in the Recitals.
“Business Day” means any day other than a Saturday, a Sunday or a day on which banks in New York, New York or San Juan, Puerto Rico are authorized or obligated by Law or executive order to close.
“Card Association” means (i) the Bank Card Associations and (ii) any other credit card company or debit card network.
“Change of Control” means, with respect to a Person, the acquisition, by a non-Affiliate of such Person, of (i) more than fifty percent (50%) of the voting power of such Person or (ii) the legal power to designate a majority of the board of directors (or other persons performing similar functions) of such Person.
“Common Shares” means the common stock of EVERTEC, par value $1.00 per share (or the common stock of any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries).
“Commonwealth” means the Commonwealth of Puerto Rico.
“Control Acquirer” has the meaning set forth in Section 8(a).
“Control,” and its correlative meanings, “Controlling,” and “Controlled,” means the possession, direct or indirect, or the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Credit Card” means any card, plate or single credit device that may be used from time to time to obtain credit from BPPR (or licensee of BPPR) as member of a Card Association.
“Debit Card” means a card with a magnetic strip bearing the symbol(s) of one or more Card Associations and/or the ATH Network, as applicable, which enables the holder to pay for goods and services by authorizing an electronic debit to the cardholder’s designated account with the corresponding Issuing Member.
“Debit Proportion” equals, for each Issuance Period, the (i) number of ATH Debit Cards issued by BPPR during such Issuance Period divided by (ii) number of ATH Debit Cards and Dual Branded Debit Cards issued by BPPR during such Issuance Period.
“Drag-Along Transaction” has the meaning set forth in Section 4(d)(i) of the Stockholder Agreement.
“Dragged Asset Sale” has the meaning set forth in Section 4(d)(vii) of the Stockholder Agreement.
“Dual Branded Debit Cards” has the meaning set forth in Section 3(a).
“Encumbrances” means any direct or indirect encumbrances, lien, pledge, security interest, claim, charges, option, right of first refusal or offer, mortgage, deed of trust, easement, or any other restriction or third-party right, including restrictions on the right to vote equity interests.
“EVERTEC Change of Control” means, with respect to EVERTEC, any: (i) merger, consolidation or other business combination of EVERTEC (or any Subsidiary or Subsidiaries that alone or together represent all or substantially all of EVERTEC’s consolidated business at that time) or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries that results in the stockholders of EVERTEC (or such Subsidiary or Subsidiaries) or any successor or other entity holding all or substantially all the assets of EVERTEC

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and its Subsidiaries or the surviving entity thereof, as applicable, immediately before the consummation of such transaction or a series of related transactions, holding, directly or indirectly, less than 50% of the voting power of EVERTEC (or such Subsidiary or Subsidiaries) or any such successor, other entity or surviving entity, as applicable, immediately following the consummation of such transaction or series of related transactions; provided that this clause (i) shall not be deemed applicable to any merger, consolidation or other business combination, if, as a result of any such merger, consolidation or other business combination, no Person or Group of Persons that had not had “control” of EVERTEC immediately prior to such transaction, as such term is defined under the Bank Holding Company Act of 1956, shall have obtained such “control”; (ii) Transfer (other than in the form of a pledge, hypothecation or similar grant of a security interest only and which shall not involve the grant of a proxy or other right with respect to the voting of such equity), in one or a series of related transactions, of equity representing 50% or more of the voting power of EVERTEC (or any Subsidiary or Subsidiaries that alone or together represent all or substantially all of EVERTEC’s consolidated business at that time) or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries to a Person or Group of Persons (other than a Transfer of such equity to Apollo Global Management LLC, Popular, any Permitted Ultimate Parent, or their respective Controlled Affiliates); (iii) transaction in which a majority of the board of directors or equivalent governing body of EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries) immediately following or as a proximate cause of such transaction is comprised of persons who were not members of the board of directors or equivalent governing body of EVERTEC (or such successor or other entity) immediately prior to such transaction (or are not nominated by Apollo Global Management LLC, Popular, any Permitted Ultimate Parent or their respective Controlled Affiliates) except, (X) resulting from the compliance, at the time of an initial public offering of either Holdco or EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries), with the listing requirements, listed company manual or similar rules or regulations of the securities exchange on which Holdco’s or EVERTEC’s (or such successor’s or other entity’s), as the case may be, equity securities will be listed pursuant to such initial public offering, (Y) if a majority of such board of directors is not “independent” under the rules of the applicable securities exchange on the date following such initial public offering upon which Holdco or EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries), as the case may be, first ceases to be a “controlled company” (or similar status) under the rules and regulations of such exchange, resulting from compliance with the rules and regulations of such exchange that first apply upon Holdco or EVERTEC (or such successor’s or other entity’s), as the case may be, ceasing to be a “controlled company” (or similar status), or (Z) the loss of directors of EVERTEC pursuant to Section 2 of the Stockholder Agreement (as in effect on the date hereof or as may be amended with the approval of Popular and BPPR) that does not result in another Person or Group of Persons having the right or ability to appoint a majority of the board of directors or equivalent governing body of Holdco or EVERTEC (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries) as a result of such transaction; provided that, for the avoidance of doubt, this clause (Z) shall only apply to the resignation and initial replacement of such directors and not to any subsequent replacement of such directors (whether in connection with another transaction or otherwise); or (iv) sale or other disposition in one or a series of related transactions of all or substantially all of the assets of EVERTEC and its Subsidiaries (or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries) to a Person who is not an Affiliate of EVERTEC at such time.
“Exchange Act” means the Securities Exchange Act of 1934.
“Government Entity” means any federal, national, supranational, state, provincial, Commonwealth, local or foreign or similar government, governmental subdivision, regulatory or administrative body or other governmental or quasi- governmental agency, tribunal, commission, court, judicial or arbitral body or other entity with competent jurisdiction.
“Group Agreement” means any agreement governing the acquisition, holding, voting or disposition of securities of a Person; provided that, so long as Apollo or a subsequent Permitted Controlling Holder is an Affiliate of such Person, such Person is a party to such agreement.
“Group of Persons” means a group of Persons that would constitute a “group” as determined pursuant to Section 13 (d) of the Exchange Act and the rules and regulations promulgated thereunder.

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“Group Securities” means any securities beneficially owned by a Person solely as a result of the Stockholder Agreement or any other Group Agreement and, for the avoidance of doubt, which securities have not been Transferred to such Person or any of its Controlled Affiliates.
“Holdco Common Shares” means the common stock of Holdco, par value $0.01 per share.
“Holdco” means Carib Holdings, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico.
“Holders” means the holders of Holdco Common Shares who are parties to the Stockholder Agreement as set forth in Schedule I thereto, as the same may be amended or supplemented from time to time.
“Indebtedness” means, with respect to any Person, (a) all indebtedness of such Person, whether or not contingent, for borrowed money, and (b) all obligations of such Person evidenced by notes, bonds, debentures or other similar debt instruments.
“Initial Person” has the meaning set forth in the definition of “beneficially owned.” “Issuance Period” has the meaning set forth in Section 3(b).
“Jurisdiction” has the meaning set forth in Section 7(c).
“Law” means any federal, national, supranational, state, provincial, Commonwealth, local or foreign or similar law, statute, ordinance, rule, regulation, code, order, writ, judgment, injunction, directive, guideline or decree enacted, issued, promulgated, enforced or entered by a Government Entity or Self-Regulatory Organization (including, for the sake of clarity, any policy statement or interpretation that has the force of law with respect to any of the foregoing, and including common law).
“Legal Holiday” means Saturday, Sunday or any legal holiday in the Commonwealth of Puerto Rico that is observed by EVERTEC.
“Master Agreement” has the meaning set forth in the Recitals.
“MCI” means MasterCard International, Inc.
“Measurement Period” has the meaning set forth in Section 2.
“Minimum Debit Proportion” shall be equal to [***] %.
“New Minimum Debit Proportion” has the meaning set forth in Section 3(b).
“Non-Controlled Public Entity” means a Person which has equity securities listed on national stock exchange and which Person’s Affiliates do not beneficially own securities representing the majority of the voting power to elect the members of the board of directors or other governing body of such Person.
“Other Person” has the meaning set forth in the definition of “beneficially owned.”
“Out of Proportion Issuance” has the meaning set forth in Section 3(b).
“Permitted Assignment” means a Permitted Subsidiary Assignment or a Permitted Third-Party Assignment.
“Permitted Controlling Holder” means a Person that (i) beneficially owns equity securities representing a majority of the voting power to elect the directors of EVERTEC or (ii) any successor or any other entity holding all or substantially all of the assets of EVERTEC and its Subsidiaries in a transaction or series of transactions, in each case, without contravening Section 7 or without BPPR validly exercising its termination right pursuant to Section 8 provided that such Person shall be a “Permitted Controlling Holder” only with respect to the applicable entity that issues such securities.
“Permitted Subsidiary Assignment” means an assignment by EVERTEC of any of its rights, duties or obligations under this Agreement to an Assignee Sub in compliance with the provisions of Section 7.
“Permitted Third-Party Assignment” means an assignment by EVERTEC of all its rights, duties and obligations under this Agreement to an Asset Acquirer in compliance with the provisions of Section 7.
“Permitted Ultimate Parent” means with respect to a Permitted Controlling Holder, its Ultimate Parent Entity.


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*** Confidential Information has been omitted and filed separately with the Securities and Exchange Commission. [***] indicates that confidential treatment has been requested with respect to this omitted information.
“Person” shall be construed broadly and shall include, without limitation, an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Governmental Entity or any department, agency or political subdivision thereof.
“Popular” means Popular, Inc., a corporation organized and existing under the laws of the Commonwealth of Puerto Rico.
“Records” has the meaning set forth in Section 9.
“Region” means Puerto Rico, the U.S. Virgin Islands and the British Virgin Islands.
“Representatives” means, with respect to any Person, such Person’s directors, officers, employees, attorneys, accountants and other advisors or representatives.
“Self-Regulatory Organization” means the FINRA, the American Stock Exchange, the National Futures Association, the Chicago Board of Trade, the NYSE, any national securities exchange (as defined in the Exchange Act), any other securities exchange, futures exchange, contract market, any other exchange or corporation or similar self-regulatory body or organization.
“Shortfall” has the meaning set forth in Section 3(b).
“Solvent” with regard to any Person, means that (i) the sum of the assets of such Person, both at a fair valuation and at a present fair salable value, exceeds its liabilities, including contingent, subordinated, unmatured, unliquidated, and disputed liabilities; (ii) such Person has sufficient capital with which to conduct its business; and (iii) such Person has not incurred debts beyond its ability to pay such debts as they mature. For purposes of this definition, “debt” means any liability on a claim, and “claim” means (x) a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) a right to an equitable remedy for breach of performance to the extent such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. With respect to any such contingent liabilities, such liabilities shall be computed at the amount which, in light of all the facts and circumstances existing at the time, represents the amount which can reasonably be expected to become an actual or matured liability.
“SPV Affiliate” means with respect to any Person, any Affiliate of such Person, whose direct or indirect interest in the Common Shares constitutes more than 30% (by value) of the equity securities portfolio of such Affiliate.
“Stockholder Agreement” means the Stockholder Agreement among Carib Holdings, Inc. and the holders party thereto dated September 30, 2010.
“Subsidiary” means, with respect to any Person, any corporation, association, partnership, limited liability company or other business entity of which 50% or more of the total voting power or equity interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by (a) such Person, (b) such Person and one or more Subsidiaries of such Person, or (c) one or more Subsidiaries of such Person.
“Transfer” means any direct or indirect sale, assignment, transfer, conveyance, gift, bequest by will or under intestacy laws, pledge, hypothecation or other Encumbrance, or any other disposition, of the stated security (or any interest therein or right thereto, including the issuance of any total return swap or other derivative whose economic value is primarily based upon the value of the stated security) or of all or part of the voting power (other than the granting of a revocable proxy) associated with the stated security (or any interest therein) whatsoever, or any other transfer of beneficial ownership of the stated security, with or without consideration and whether voluntarily or involuntarily (including by operation of law). Notwithstanding anything to the contrary set forth in this Agreement, (i) each of (x) a Transfer of equity interests of Popular and (y) a Change of Control of Popular shall be deemed not to constitute a Transfer of any equity interest beneficially owned by Popular; (ii) each of (x) a Transfer of equity interests of Apollo Global Management LLC or any of its Controlled Affiliates that is not an SPV Affiliate, and (y) a Change of Control of Apollo Global Management LLC or any of its Controlled Affiliates that is not an SPV Affiliate shall be deemed not to constitute a Transfer of any equity interest beneficially owned by Apollo or such Affiliate,

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as applicable; and (iii) each of (x) a Transfer of equity interests of any Permitted Ultimate Parent or any of its Controlled Affiliates that is not an SPV Affiliate, and (y) a Change of Control of any Permitted Ultimate Parent or any of its Controlled Affiliates that is not an SPV Affiliate shall be deemed not to constitute a Transfer of any security beneficially owned by such Permitted Ultimate Parent or such Controlled Affiliate, as applicable; provided that, for the avoidance of doubt, subject to clause (i) above, any Change of Control of an SPV Affiliate shall be deemed to constitute a Transfer of the Common Shares beneficially owned by such SPV Affiliate.
“Ultimate Parent Entity” means (i) with respect to Apollo, Apollo Global Management LLC and its successors, (ii) with respect to Popular, Popular and its successors and (iii) with respect to a Permitted Controlling Holder, (x) the Person which (A)(i) Controls such Permitted Controlling Holder or (ii) if no Person Controls such Permitted Controlling Holder, the beneficial owner of a majority of the voting power of such Permitted Controlling Holder and (B) is not itself Controlled by any other Person that is an Ultimate Parent Entity of such Permitted Controlling Holder or, (y) if no such Person exists, the Permitted Controlling Holder; provided that, with respect to determining an Ultimate Parent Entity (i) the Control of any entity by a natural person shall be disregarded and (ii) the Control of any Non-Controlled Public Entity by any Person shall be disregarded.
“VISA” means VISA U.S.A., Inc. and VISA International, Inc.
2. BPPR Representations and Warranties. BPPR represents and warrants to EVERTEC that:
(a) as of the date hereof, the only Dual Branded Debit Card (as defined below) issued by BPPR or any of its Affiliates is a Debit Card that bears the symbols of the ATH Network and VISA; and
(b) prior to the date hereof, BPPR provided to EVERTEC a true, complete and correct report that sets forth the number of ATH Debit Cards and Dual Branded Debit Cards issued by BPPR during the most recent twelve calendar month period ended prior to the date of Closing (the “Measurement Period”).
3. ATH Support by BPPR. During the term of this Agreement BPPR shall, and shall cause each of its Affiliates to:
(a) promote, support and market (including, but not limited to, the use of advertising, promotions, direct mailing, e-marketing, public relations, brochures, signage and creation of appropriate links on BPPR’s website) the (i) ATH Network and the ATH brand, (ii) Debit Cards that only bear the symbol of the ATH Network (the “ATH Debit Cards”) and (iii) Debit Cards that bear the symbol of the ATH Network and another Card Association (the “Dual Branded Debit Cards”), in a manner no less favorable to EVERTEC than the manner in which BPPR and its Affiliates promoted, supported and marketed the ATH Network, ATH Debit Cards and Dual Branded Debit Cards prior to the Effective Time;
(b) in each successive twelve-month period starting on October 1, 2010 (each such period, an “Issuance Period”), issue an amount of ATH Debit Cards that is above the Minimum Debit Proportion; provided that:
(i) notwithstanding the foregoing, if, during any applicable Issuance Period, BPPR issues an amount of ATH Debit Cards that causes the Debit Proportion to fall below the Minimum Debit Proportion (the “Out of Proportion Issuance”), BPPR shall promptly notify EVERTEC of the facts and circumstances giving rise to or that may result in the Out of Proportion Issuance; and following such notification (1) EVERTEC shall excuse such Out of Proportion Issuance if the parties mutually agree, subject to Section 10 herein, that the Out of Proportion Issuance is not materially detrimental to EVERTEC (when compared to the amount and type of Debit Card issuances during the Measurement Period) or (2) the parties shall, subject to Section 10 herein, negotiate in good faith a mutually acceptable plan for BPPR to issue an amount of ATH Debit Cards in subsequent Issuance Periods that is above the Minimum Debit Proportion;
(ii) notwithstanding the foregoing, BPPR shall not be deemed to be in breach of this Section 3(b) during an applicable Issuance Period, if, during such Issuance Period, as a result of factors that are outside the control of BPPR:
(x) there is a change in demand for Debit Cards, including a reduction in demand for ATH Debit Cards, and/or an increase in demand for Dual Branded Debit Cards; or
(y) new payment technologies are developed in the market and result in a reduction in demand for Debit Cards, including a reduction in demand for ATH Debit Cards; and

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(iii) in the event of an Out of Proportion Issuance that occurs or arises as a result of factors in Section 3(b) (ii), the parties shall, subject to Section 10 herein, negotiate in good faith a new mutually agreeable Minimum Debit Proportion (the “New Minimum Debit Proportion”) that is appropriate for the then-prevailing market factors and conditions; and
(c) not (i) promote, support or market Debit Cards that are not ATH Debit Cards or Dual Branded Debit Cards or (ii) promote, support or market Credit Cards, in each case, in a manner that is targeted to negatively impact the issuance or use of ATH Debit Cards or Dual Branded Debit Cards, or (iii) create incentives (economic or otherwise) for BPPR’s or its Affiliates’ personnel to take any of the actions in (i) or (ii).
4. Dual Branded Debit Cards. During the term of this Agreement, without the prior written consent of EVERTEC, BPPR shall not, directly or indirectly, enter into any agreement with MCI or any other Card Association to issue Dual Branded Debit Cards. Without limiting the foregoing, in the event that BPPR desires to enter into such an agreement, it shall consult with EVERTEC and BPPR shall provide true, complete and correct documentation and other support requested by EVERTEC to demonstrate that entry by BPPR into an agreement with MCI or any other Card Association to issue Dual Branded Debit Cards will have a direct economic benefit to EVERTEC, in which case EVERTEC will make a good faith determination (based on such documentation and support) whether to consent to BPPR’s entry into any agreement with MCI or any other Card Association to issue Dual Branded Debit Cards.
5. ATH Support by EVERTEC. During the term of this Agreement, EVERTEC shall:
(a) promote, support and market the ATH Network and ATH brand in a manner that is in the best interest of each of the ATH Network, the ATH Issuer Participants and EVERTEC;
(b) use commercially reasonable efforts to maintain competitive economics for ATH Issuer Participants; and
(c) use commercially reasonable efforts to (i) enhance the functionality and technology of the ATH Debit Card, and its related servicing and reporting capabilities, (ii) develop new products and technologies that improve the features of the ATH Debit Card and (iii) maintain the competitiveness of the ATH product.
For the avoidance of doubt, BPPR shall not be required to satisfy its obligations under Sections 3 and 4 in this Agreement if EVERTEC commits a material breach of its obligations under this Section 5, which breach is not cured within sixty (60) days following receipt of written notice from BPPR specifying the nature and extent of such breach; provided, however, that if such breach is not reasonably susceptible of cure within such sixty (60) day period, such period will be extended and EVERTEC will not be in breach hereunder so long as it commences such cure within such sixty (60) day period and diligently pursues such cure and such failure is cured within one hundred eighty (180) days following the receipt of such notice; provided, further, that BPPR must satisfy its obligations under Section 4 until such time as a court of competent jurisdiction renders a non-appealable decision that EVERTEC has committed a material breach of its obligations under Section 5 and has failed to cure such breach in accordance with this sentence.
6. Term. This Agreement shall terminate on the earlier of (a) the fifteenth anniversary of the date hereof; or (b) the termination of the Master Agreement.
7. Assignment.
(a) Assignment. Other than a Permitted Assignment pursuant to Section 7(b) or (c), this Agreement may not be assigned by either party without the prior written consent of the other party; provided, that either party may assign its rights, duties and obligations under this Agreement to its financing sources solely in connection with the granting of a security interest and the enforcement of all rights and remedies that the assigning party has against the other party under this Agreement, subject to the claims, defenses and rights, including rights of set off, that such other party may have against the assigning party.
(b) Assignment to Subsidiaries. EVERTEC may assign any of its rights, duties or obligations to a direct or indirect wholly-owned Subsidiary of EVERTEC (an “Assignee Sub”) if (i) such Assignee Sub is identified by EVERTEC to BPPR at least 20 Business Days prior to the consummation of the proposed assignment; (ii) (A) such proposed assignment is legally required in order for EVERTEC to perform for BPPR or its Subsidiaries, in the country, state, territory or other jurisdiction (“Jurisdiction”) in which the Assignee Sub is organized, the specific

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obligations required to be performed pursuant to the assignment of this Agreement, and only (x) to the extent of such legal requirement and (y) if EVERTEC provides a written opinion of qualified counsel that opines that such legal requirement is applicable and is based upon reasonable assumptions with respect to such legal requirement or (B) BPPR has provided its prior written consent, such consent not to be unreasonably delayed, withheld or conditioned; (iii) such Assignee Sub will be Solvent immediately after and giving effect to such proposed assignment and BPPR is reasonably satisfied with the terms and conditions of the proposed assignment; (iv) BPPR is a third-party beneficiary to the assignment agreement, which is in form and substance that is reasonably satisfactory to BPPR, and which provides that the Assignee Sub’s rights under the assignment agreement will be terminated if the Assignee Sub ceases to be a wholly-owned Subsidiary, directly or indirectly, of EVERTEC; and (v) EVERTEC remains fully liable with respect to the performance of all its obligations under this Agreement and EVERTEC guarantees the performance of all of the obligations of EVERTEC to BPPR assumed by Assignee Sub under this Agreement, which guarantee provides that, for the avoidance of doubt, after any termination of the proposed assignment, EVERTEC shall continue to be obligated with respect to any obligation undertaken by Assignee Sub prior to such termination.
(c) Assignment to Third Parties. EVERTEC may assign all of its rights, duties and obligations (or those rights, duties and obligations arising after the effectiveness of the assignment) in a transaction with a third-party assignee (an “Asset Acquirer”) if (i) such Asset Acquirer is identified by EVERTEC to BPPR at least 30 Business Days prior to the consummation of the proposed assignment; (ii) such Asset Acquirer (A) acquires at least 90% of the consolidated gross assets (excluding cash) of EVERTEC and its Subsidiaries and (B) assumes at least 90% of the consolidated gross liabilities (excluding Indebtedness) of EVERTEC and its Subsidiaries (including the assignment and assumption of all commercial agreements between EVERTEC or any of its Subsidiaries, on the one hand, and Popular, BPPR or any of their respective Subsidiaries, on the other hand) through one legal entity; (iii) neither the Asset Acquirer nor any of its Affiliates is engaged, directly or indirectly, in the banking, securities, insurance or lending business, from which they derive aggregate annual revenues from the Commonwealth of Puerto Rico in excess of $50 million unless none of them has a physical presence in the Commonwealth of Puerto Rico that is used to conduct any such business; (iv) the Asset Acquirer will be Solvent immediately after and giving effect to such proposed assignment; and (v) EVERTEC reasonably believes that the Asset Acquirer, after completion of the proposed purchase and assumption transaction, will be capable of performing the obligations and duties of EVERTEC under this Agreement.
(d) Cooperation. EVERTEC shall use its reasonable best efforts to cooperate with BPPR in evaluating whether any proposed assignment pursuant to this Section 7 would be in compliance with the requirements of the provisions contained in this Section 7, including the ability of Assignee Sub or Asset Acquirer, as applicable, to comply with the terms of this Agreement, including, in each case, by providing any non-confidential information regarding the purposes and plans in connection with such proposed assignment other than information that would create any potential liability under
applicable Legal Requirements, violate any confidentiality obligation, or that reasonably would be expected to result in the waiver of any attorney-client privilege.
(e) Notice of Objection. BPPR shall notify EVERTEC in writing within 15 Business Days following receipt of EVERTEC’s notice of the proposed assignment of any objection to any proposed assignment to an Asset Acquirer under Section 7(c) unless EVERTEC has failed to satisfy its obligations pursuant to Section 7(d) and BPPR asserts such failure prior to the expiration of the 15 Business Day objection period, in which case such 15 Business Day period shall be tolled until EVERTEC satisfies its obligations pursuant to Section 7(d). If BPPR fails to timely object to such proposed assignment (taking into account any tolling of the 15 Business Day objection period), it shall be deemed to have consented to such proposed assignment.
(f) Implied Consent. Notwithstanding anything contained herein, if Popular, BPPR or any of their respective Controlled Affiliates votes in favor of a transaction resulting in a proposed assignment and was not compelled to do so as part of a Dragged Asset Sale or other requirement of the Stockholder Agreement or any other Group Agreement with respect to securities issued by Holdco or EVERTEC or any successor or other entity that acquired all or substantially all the assets of Holdco or EVERTEC or any of their respective successors then it shall be deemed to have consented to the assignment.

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(g) Invalidity of Impermissible Assignments. Any attempted or purported assignment in violation of this Section 7 hereof shall be null and void and the assignee’s rights assigned pursuant to any assignment made in compliance with this Section 7 will terminate in the event and to the extent of the termination of this Agreement.
(h) BPPR Asset Transfer. If BPPR or any of its Subsidiaries transfers, in a single transaction or series of related transactions (including in a merger, business combination, reorganization, or similar transaction (including by operation of law)) 50% or more of BPPR’s consolidated assets in the Region as of the time of transfer, or assets that generate 50% or more of BPPR’s consolidated revenues in the Region for the full twelve month period ending at the time of transfer, to any Person, then BPPR shall assign to such Person its rights, duties and obligations under this Agreement and shall cause such Person to assume BPPR’s liabilities under this Agreement. For the avoidance of doubt, no such assignment shall relieve BPPR of its obligations under this Agreement to the extent BPPR survives any such sale of assets, merger, business combination, reorganization, or similar transaction.
8. EVERTEC Change of Control.
(a) EVERTEC Change of Control. BPPR shall have the right, subject to Section 8(c), to terminate this Agreement up to 30 days following the later of (i) the occurrence of an EVERTEC Change of Control or (ii) the date on which EVERTEC provides BPPR written notice that an EVERTEC Change of Control has occurred or is likely to occur (provided that if EVERTEC has not satisfied its obligations pursuant to Section 8(b) and that BPPR asserts such failure prior to the expiration of the 30 day period then such 30 day period shall be tolled until EVERTEC satisfies its obligations under Section 8(b) and provided further that if an EVERTEC Change of Control occurs, and EVERTEC fails to provide BPPR written notice thereof within 30 days thereof, then BPPR shall have an unqualified right to terminate this Agreement), unless (w) the Person or Group of Persons proposing to engage in such proposed EVERTEC Change of Control transaction (the “Control Acquirer”) is identified to BPPR by EVERTEC at least 30 Business Days prior to such proposed EVERTEC Change of Control; (x) neither the Control Acquirer nor any of its Affiliates is engaged, directly or indirectly, in the banking, securities, insurance or lending business, from which they derive aggregate annual revenues from the Commonwealth of Puerto Rico in excess of $50 million unless none of them has a physical presence in the Commonwealth of Puerto Rico that is used to conduct any such business; (y) EVERTEC (or its successor, as applicable) will be Solvent immediately after and giving effect to such proposed EVERTEC Change of Control; and (z) EVERTEC (or its successor, as applicable), after the proposed EVERTEC Change of Control, will be capable of performing the obligations and duties of EVERTEC under this Agreement; provided further that if Popular, BPPR or any of their respective Controlled Affiliates votes in favor of the transaction resulting in the EVERTEC Change of Control or Transfers (other than a Transfer in the context of a merger, business combination, reorganization, recapitalization or similar transaction) any equity securities in connection with the transaction resulting in the EVERTEC Change of Control and, in either case, was not compelled to do so as part of a Drag-Along Transaction, a Dragged Asset Sale or other requirement of the Stockholder Agreement or any other Group Agreement with respect to Holdco, EVERTEC or any successor or other entity holding all or substantially all the assets of EVERTEC and its Subsidiaries, then such termination right shall not apply.
(b) Cooperation. EVERTEC shall use its reasonable best efforts to cooperate with BPPR in evaluating whether any proposed EVERTEC Change of Control would be in compliance with the requirements of this Section 8 including the ability of Assignee Sub or Asset Acquirer, as applicable, to comply with the terms of this Agreement, including, in each case, by providing any non-confidential information regarding the purposes and plans in connection with such proposed EVERTEC Change of Control other than information that would create any potential liability under Legal Requirements, violate any confidentiality obligation, or that reasonably would be expected to result in the waiver of any attorney-client privilege.
(c) Notice of Objection. If EVERTEC provides at least 30 days’ written notice to BPPR prior to an EVERTEC Change of Control, BPPR shall notify EVERTEC in writing within 15 Business Days following receipt of EVERTEC’s notice of the proposed EVERTEC Change of Control of any objection to any proposed EVERTEC Change of Control on the basis that it does not satisfy the criteria set forth in clauses (w) through (z) of Section 8(a) (unless EVERTEC has failed to satisfy its obligations pursuant to Section 8(b) and BPPR asserts such failure prior to the expiration of the 15 Business Day objection period, in which case such 15 Business Day objection period shall be tolled until EVERTEC satisfies its obligations pursuant to Section 8(b)). If BPPR fails to timely object to such proposed assignment (taking into account any tolling of the 15 Business Day objection period), it shall be

9


deemed to have consented to such proposed EVERTEC Change of Control and waived its right of termination under Section 8(a).
9. Access. During the term of this Agreement, BPPR agrees to maintain, in a manner that is consistent with BPPR’s practices prior to the date hereof, accurate books, ledgers, files reports, manuals, plans and other material pertaining to its activities described in Section 3 (collectively, “Records”). Upon reasonable advance written notice from EVERTEC, BPPR shall make the Records available for audit and inspection by EVERTEC and its Representatives (at EVERTEC’s sole expense), during regular business hours.
10. Arbitration Procedures.
(a) If the parties are unable to reach mutual agreement with respect to a controversy between the parties that arises out of or relates to an Out of Proportion Issuance within 30 days after BPPR’s notice to EVERTEC of an Out of Proportion Issuance, the controversy shall be settled by binding arbitration in accordance with the following arbitration procedures (the “Arbitration Procedures”). A matter submitted for resolution by arbitration shall be arbitrated in accordance with the then existing commercial arbitration rules of the AAA by a panel of three (3) independent arbitrators (the “Arbitration Panel”), with one appointed by each party hereto, and the two appointees selecting the third arbitrator in accordance with such rules. If either party hereto fails to select an arbitrator within ten (10) days after notice of such failure from the other party or the AAA, then the AAA shall appoint such arbitrator. If the two appointees are unable to agree on the third arbitrator, then the AAA shall select the same using the foregoing qualification.
(b) The arbitration hearing shall be held in San Juan, Puerto Rico, at such date, time and place as established by the arbitrators and the proceedings shall be conducted in English. Witnesses whose native language is not English may give oral or written testimony in their native language, with appropriate translation into English. Documentary evidence in Spanish may be submitted, with appropriate translation into English.
(c) The arbitrators must render their arbitral decision and award and give a written opinion setting forth the basis of their decision, all not later than sixty (60) days after the conclusion of the arbitration. The factual determinations of the Arbitration Panel shall be final, and an arbitration decision may only be appealed on procedural grounds.
(d) Each party hereto shall take or cause to be taken all reasonable action to facilitate the conduct of the arbitration and the rendering of the arbitral award at the earliest possible date.
(e) The costs of the arbitration shall be borne and paid equally by the parties hereto.
11. Notices. All notices requests, demands, consents and other communications given or required to be given under this Agreement and under the related documents will be in writing and served by personal delivery upon the applicable party for whom it is intended, or delivered to such party by registered or certified mail, return receipt requested, at such party’s main office or any other place as designated by the parties in writing.
12. Amendments; Waivers. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the parties hereto, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
13. Entire Agreement. This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters.
14. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.
15. Governing Law; Waiver of Trial by Jury. This Agreement shall be governed and construed in accordance with the laws of the Commonwealth of Puerto Rico without regard to any conflict of law rules thereof that would

10


apply the laws of a different jurisdiction. Each party hereto irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated by this Agreement.
16. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (i) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (ii) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction; provided, however, if any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be reformed by limiting and reducing it to the minimum extent necessary, so as to be enforceable to the extent compatible with the applicable Law.
[Signature page follows]























11



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

BANCO POPULAR DE PUERTO RICO

By: /s/ Ileana Gonzalez
Name:
Title:

EVERTEC, INC

By: /s/ Félix M. Villamil
Name:
Title:























[Signature Page to ATH Support Agreement]

12



EXHIBIT 10.13

CREDIT AGREEMENT
Dated as of November 27, 2018,

Among
EVERTEC, INC.,
as Parent,
EVERTEC Group, LLC,
as Borrower,
The Several Lenders
from Time to Time Parties Hereto,
and
BANK OF AMERICA, N.A.,
as Administrative Agent, Collateral Agent, Swingline Lender and L/C Issuer
__________________
BANK OF AMERICA, N.A.,
MERRILL LYNCH PIERCE, FENNER & SMITH INCORPORATED,
SUNTRUST ROBINSON HUMPHREY, INC.,
CITIBANK, N.A.,
GOLDMAN SACHS BANK USA, and
JPMORGAN CHASE BANK, N.A.,
as Joint Lead Arrangers and Joint Bookrunners,

DEUTSCHE BANK SECURITIES INC.,
as Joint Bookrunner

and

FIRSTBANK PUERTO RICO, and
SCOTIABANK DE PUERTO RICO,
as Co-Syndication Agents





TABLE OF CONTENTS
ARTICLE I
 
 
 
DEFINITIONS
 
 
 
SECTION 1.01.
Defined Terms
1

SECTION 1.02.
Terms Generally
40

SECTION 1.03.
Accounting Terms
41

SECTION 1.04.
Exchange Rates; Currency Equivalents
41

SECTION 1.05.
Additional Alternative Currencies
41

SECTION 1.06.
Change of Currency
42

SECTION 1.07.
Times of Day; Rates
42

SECTION 1.08.
Letter of Credit Amounts
42

SECTION 1.09.
Limited Condition Transactions
42

 
 
 
ARTICLE II
 
 
 
THE CREDITS
 
 
 
SECTION 2.01.
Commitments.
43

SECTION 2.02.
Loans and Borrowings
43

SECTION 2.03.
Requests for Borrowings
44

SECTION 2.04.
Swingline Loans
44

SECTION 2.05.
Letters of Credit
46

SECTION 2.06.
[Reserved]
51

SECTION 2.07.
Funding of Borrowings
51

SECTION 2.08.
Interest Elections
52

SECTION 2.09.
Termination and Reduction of Commitments
53

SECTION 2.10.
Repayment of Loans; Evidence of Debt
54

SECTION 2.11.
Repayment of Term Loans and Revolving Facility Loans
55

SECTION 2.12.
Prepayment of Loans
66

SECTION 2.13.
Fees
57

SECTION 2.14.
Interest
58

SECTION 2.15.
Inability to Determine Rates
59

SECTION 2.16.
Increased Costs
59

SECTION 2.17.
Break Funding Payments
60

SECTION 2.18.
Taxes
60

SECTION 2.19.
Payments Generally; Pro Rata Treatment; Sharing of Set-offs
62

SECTION 2.20.
Mitigation Obligations; Replacement of Lenders
63

SECTION 2.21.
Illegality
64

SECTION 2.22.
Incremental Commitments
64

SECTION 2.23.
Extended Term Loans and Extended Revolving Commitments
66

SECTION 2.24.
Refinancing Term Loans
67

SECTION 2.25.
Replacement Revolving Commitments
68

SECTION 2.26.
Cash Collateral
69

SECTION 2.27.
Defaulting Lenders
69


i


SECTION 2.28.
Alternate Rate of Interest
71

 
 
 
ARTICLE III
 
 
 
 
REPRESENTATIONS AND WARRANTIES
 
 
 
SECTION 3.01.
Organization; Powers
72

SECTION 3.02.
Authorization
72

SECTION 3.03.
Enforceability
72

SECTION 3.04.
Governmental Approvals
72

SECTION 3.05.
Financial Statements
72

SECTION 3.06.
No Material Adverse Effect
73

SECTION 3.07.
Title to Properties; Possession Under Leases
73

SECTION 3.08.
Subsidiaries
73

SECTION 3.09.
Litigation; Compliance with Laws
73

SECTION 3.10.
Federal Reserve Regulations
74

SECTION 3.11.
Investment Company Act
74

SECTION 3.12.
Use of Proceeds
74

SECTION 3.13.
Taxes
74

SECTION 3.14.
No Material Misstatements
74

SECTION 3.15.
Employee Benefit Plans
75

SECTION 3.16.
Environmental Matters
75

SECTION 3.17.
Security Documents
75

SECTION 3.18.
EEA Financial Institution
76

SECTION 3.19.
Solvency
76

SECTION 3.20.
Labor Matters
77

SECTION 3.21.
No Default
77

SECTION 3.22.
Intellectual Property; Licenses, Etc.
77

SECTION 3.23.
Senior Debt
77

SECTION 3.24.
Insurance
77

SECTION 3.25.
Anti-Money Laundering
77

SECTION 3.26.
Anti-Corruption and Sanctions
77

 
 
 
ARTICLE IV
 
 
 
CONDITIONS OF LENDING
 
 
 
SECTION 4.01.
All Credit Events
78

SECTION 4.02.
First Credit Event
78

 
 
 
ARTICLE V
 
 
 
AFFIRMATIVE COVENANTS
 
 
 
SECTION 5.01.
Existence; Businesses and Properties
80

SECTION 5.02.
Insurance
80

SECTION 5.03.
Taxes
81


ii


SECTION 5.04.
Financial Statements, Reports, etc.
81

SECTION 5.05.
Litigation and Other Notices
82

SECTION 5.06.
Compliance with Laws
83

SECTION 5.07.
Maintaining Records; Access to Properties and Inspections
83

SECTION 5.08.
Use of Proceeds
83

SECTION 5.09.
Compliance with Environmental Laws
83

SECTION 5.10.
Further Assurances; Additional Security
83

SECTION 5.11.
Rating
85

SECTION 5.12.
Designation of Unrestricted Subsidiaries
85

 
 
 
ARTICLE VI
 
 
 
NEGATIVE COVENANTS
 
 
 
SECTION 6.01.
Indebtedness
85

SECTION 6.02.
Liens
88

SECTION 6.03.
[Reserved]
91

SECTION 6.04.
Investments, Loans and Advances
91

SECTION 6.05.
Mergers, Consolidations, Sales of Assets and Acquisitions
93

SECTION 6.06.
Restricted Payments
94

SECTION 6.07.
Transactions with Affiliates
95

SECTION 6.08.
Line of Business
96

SECTION 6.09.
Limitation on Payments and Modifications of Certain Indebtedness; Modifications of Organization Documents
97

SECTION 6.10.
Financial Performance Covenant
97

SECTION 6.11.
Limitation on Dividend Blockers and Other Negative Pledges
97

SECTION 6.12.
No Other “Designated Senior Debt”
98

SECTION 6.13.
Changes in Fiscal Year
98

 
 
 
ARTICLE VII
 
 
 
EVENTS OF DEFAULT
 
 
 
SECTION 7.01.
Events of Default
98

SECTION 7.02.
Application of Funds
100

 
 
 
ARTICLE VIII
 
 
 
THE AGENTS
 
 
 
SECTION 8.01.
Appointment
101

SECTION 8.02.
Delegation of Duties
102

SECTION 8.03.
Exculpatory Provisions
102

SECTION 8.04.
Reliance by Agents
103

SECTION 8.05.
Notice of Default
103

SECTION 8.06.
Non-Reliance on Administrative Agent, Collateral Agent and Other Lenders
103

SECTION 8.07.
Indemnification
104


iii


SECTION 8.08.
Agents in their Individual Capacity
104

SECTION 8.09.
Successor Agents
104

SECTION 8.10.
Payments Set Aside
105

SECTION 8.11.
Administrative Agent May File Proofs of Claim
105

SECTION 8.12.
Collateral and Guaranty Matters
106

SECTION 8.13.
Additional Agents
106

SECTION 8.14.
Intercreditor Agreements and Collateral Matters
106

SECTION 8.15.
Withholding Taxes
107

SECTION 8.16.
Certain ERISA Matters
107

SECTION 8.17.
Puerto Rico Filings
108

 
 
 
ARTICLE IX
 
 
 
MISCELLANEOUS
 
 
 
SECTION 9.01.
Notices; Communications
108

SECTION 9.02.
Survival of Agreement
109

SECTION 9.03.
Effectiveness
109

SECTION 9.04.
Successors and Assigns
109

SECTION 9.05.
Expenses; Indemnity
113

SECTION 9.06.
Right of Set-off
114

SECTION 9.07.
Applicable Law
114

SECTION 9.08.
Waivers; Amendment
115

SECTION 9.09.
Interest Rate Limitation
116

SECTION 9.10.
Entire Agreement
116

SECTION 9.11.
WAIVER OF JURY TRIAL
117

SECTION 9.12.
Severability
117

SECTION 9.13.
Counterparts
117

SECTION 9.14.
Headings
117

SECTION 9.15.
Jurisdiction; Consent to Service of Process
117

SECTION 9.16.
Confidentiality
118

SECTION 9.17.
Platform; Borrower Materials
119

SECTION 9.18.
Release of Liens, Guarantees and Pledges
119

SECTION 9.19.
Judgment Currency
120

SECTION 9.20.
USA PATRIOT Act Notice
120

SECTION 9.21.
No Advisory or Fiduciary Responsibility
120

SECTION 9.22.
Affiliated Lenders
121

SECTION 9.23.
Acknowledgment and Consent to Bail-In of EEA Financial Institutions
121

SECTION 9.24.
Flood Matters
122

 
 
 
Exhibits and Schedules
Exhibit A
Agreed Security Principles
 
Exhibit B
Form of Assignment and Acceptance
 
Exhibit C
Auction Procedures
 
Exhibit D
Form of Borrowing Request/Interest Rate Request
 
Exhibit E
Form of Swingline Borrowing Request
 
Exhibit F
Form of Affiliated Lender Assignment and Acceptance
 

iv


Exhibit G
Form of Guarantee Agreement
 
Exhibit H
Form of Collateral Agreement
 
Exhibit I
Form of Perfection Certificate
 
Exhibit J
Form of First Lien Intercreditor Agreement
 
Exhibit K
Form of Global Intercompany Note
 
Exhibit L
Form of Compliance Certificate
 
Schedule 1.01A
Closing Date Security Documents
 
Schedule 1.01B
Existing Letters of Credit
 
Schedule 2.01
Closing Date Commitments
 
Schedule 3.04
Governmental Approvals
 
Schedule 3.09(b)
Compliance with Law
 
Schedule 4.02(b)
Local Counsel
 
Schedule 5.10(h)
Post-Closing Collateral Matters
 
Schedule 6.01
Existing Indebtedness
 
Schedule 6.02
Existing Liens
 
Schedule 6.04
Existing Investments
 
Schedule 6.07
Existing Transactions with Affiliates
 
Schedule 9.01
Notice Information
 


v


CREDIT AGREEMENT dated as of November 27, 2018 (this “Agreement”), among EVERTEC, Inc., a Puerto Rico corporation (“Parent”), EVERTEC Group, LLC, a Puerto Rico limited liability company (the “Borrower”), the Lenders party hereto from time to time and BANK OF AMERICA, N.A., as Administrative Agent, Collateral Agent, Swingline Lender and L/C Issuer.
WHEREAS, the Borrower has requested the Lenders to provide (a) tranche A term loans on the Closing Date in an aggregate principal amount not in excess of $220,000,000, (b) tranche B term loans on the Closing Date in an aggregate principal amount not in excess of $325,000,000 and (c) revolving credit loans, swingline loans and letters of credit in an aggregate principal amount at any time outstanding not in excess of $125,000,000;
NOW, THEREFORE, the Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions set forth herein. Accordingly the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01.     Defined Terms

As used in this Agreement, the following terms shall have the meanings specified below:
“ABR” shall mean, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Rate in effect on such day plus ½ of 1% and (c) the Eurocurrency Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that, the Eurocurrency Rate for any day shall be based on the Eurocurrency Rate at approximately 11:00 a.m. London time on such day; provided, further that if the ABR shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement. Any change in ABR due to a change in the Prime Rate, the Federal Funds Rate or the Eurocurrency Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Rate or the Eurocurrency Rate, respectively.
“ABR Borrowing” shall mean a Borrowing comprised of ABR Loans.
“ABR Loan” shall mean any ABR Term Loan, ABR Revolving Loan or Swingline Loan.
“ABR Revolving Facility Borrowing” shall mean a Borrowing comprised of ABR Revolving Loans.
“ABR Revolving Loan” shall mean any Revolving Facility Loan bearing interest at a rate determined by reference to the ABR in accordance with the provisions of Article II.
“ABR Term Loan” shall mean any Term Loan bearing interest at a rate determined by reference to the ABR in accordance with the provisions of Article II.
“Acquired Indebtedness” shall mean Indebtedness of any Person existing at the time that such Person becomes a Subsidiary, or is merged or consolidated with or into a Subsidiary in a transaction permitted hereunder, or Indebtedness of any Person that is assumed by any Subsidiary in connection with an acquisition of assets from such Person permitted by Section 6.05; provided that such Indebtedness was not incurred in contemplation of or in connection with such Person becoming a Subsidiary (or such merger or consolidation) or such acquisition.
“Additional Agents” shall mean the persons identified as the Joint Lead Arrangers, Joint Bookrunners and Co-Syndication Agents on the cover page of this Agreement.
“Additional Credit Extension Amendment” shall mean an amendment to this Agreement (which may be in the form of an amendment and restatement of this Agreement) providing for any Incremental Commitments pursuant to Section 2.22, Extended Term Loans and/or Extended Revolving Commitments pursuant to Section 2.23, Refinancing Term Loans pursuant to Section 2.24 and/or Replacement Revolving Commitments pursuant to Section 2.25, which shall be consistent with the applicable provisions of this Agreement (including the definition of “Class”) and otherwise reasonably satisfactory to the parties thereto. Each Additional Credit Extension Amendment shall be executed by the Administrative Agent, the Swingline Lender (to the extent Section 9.08 would require the consent of the Swingline Lender for any amendment effected in such Additional Credit Extension Amendment), the L/C Issuer (to the extent Section 9.08 would require the consent of the L/C Issuer for any amendment effected in such Additional Credit Extension Amendment), the Loan Parties and the other parties

1


specified in the applicable Section of this Agreement (but not any other Lender not specified in the applicable Section of this Agreement), but shall not effect any amendments that would require the consent of each affected Lender or all Lenders pursuant to the proviso in Section 9.08(b) unless such consents have been obtained. Any Additional Credit Extension Amendment may include conditions for delivery of opinions of counsel and other documentation consistent with the conditions in Section 4.02 and certificates confirming satisfaction of conditions consistent with Section 4.01, all to the extent reasonably requested by the Administrative Agent or the other parties to such Additional Credit Extension Amendment.
“Additional Revolving Commitments” shall have the meaning assigned to such term in Section 2.22(a).
“Additional Term Loan Commitments” shall have the meaning assigned to such term in Section 2.22(a).
“Additional Term Loans” shall mean term loans made pursuant to Additional Term Loan Commitments.
“Adjustment Date” shall have the meaning assigned to such term in the definition of “Pricing Grid.”
“Administrative Agent” shall mean Bank of America in its capacity as administrative agent under any of the Loan Documents or any successor administrative agent.
“Administrative Agent Fees” shall have the meaning assigned to such term in Section 2.13(d).
“Administrative Agent’s Office” shall mean, with respect to any currency, the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 9.01 with respect to such currency, or such other address or account with respect to such currency as the Administrative Agent may from time to time notify to Parent and the Lenders.
“Administrative Questionnaire” shall mean an Administrative Questionnaire in a form supplied by the Administrative Agent.
“Affiliate” shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified.
“Affiliated Lender” shall mean, at any time, any Lender that is the Sponsor or an Affiliate of the Sponsor (other than Parent or any of its subsidiaries or controlled Affiliates) at such time.
“Agent Parties” shall have the meaning assigned to such term in Section 9.17.
“Agents” shall mean the Administrative Agent and the Collateral Agent.
“Agreed Security Principles” shall mean the principles set forth on Exhibit A.
“Agreement” shall have the meaning assigned to such term in the preamble to this Agreement.
“Alternative Currency” shall mean any currency (other than Dollars) that is approved in accordance with Section 1.05.
“Alternative Currency Equivalent” shall mean, at any time, with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Alternative Currency as determined by the Administrative Agent or the L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of such Alternative Currency with Dollars.
“Anti-Corruption Laws” shall mean all laws, rules, and regulations of any jurisdiction applicable to Parent or any of its subsidiaries from time to time concerning or relating to bribery or corruption.
“Anti-Money Laundering Laws” shall mean any and all laws, judgments, orders, executive orders, decrees, ordinances, rules, regulations, statutes, case law or treaties applicable to Parent or any of its subsidiaries or Affiliates, related to terrorism financing or money laundering including any applicable provision of the USA PATRIOT Act and The Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act,” 31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959).
“Applicable Commitment Fee” shall mean for any day 0.25% per annum; provided, that on and after the first Adjustment Date after the Closing Date, the Applicable Commitment Fee will be determined pursuant to the Pricing Grid.

2


“Applicable ECF Percentage” shall mean, with respect to any Excess Cash Flow Period, (a) if the Total Secured Net Leverage Ratio at the end of the Excess Cash Flow Period is greater than or equal to 2.25:1.00, 50%, (b) if the Total Secured Net Leverage Ratio at the end of the Excess Cash Flow Period is less than 2.25:1.00 but greater than or equal to 1.75:1.00, 25% and (c) if the Total Secured Net Leverage Ratio as the end of the Excess Cash Flow Period is less than 1.75:1.00, 0%.
“Applicable Margin” shall mean for any day (i) with respect to any Term A Loan, 2.25% per annum in the case of any Eurocurrency Loan and 1.25% per annum in the case of any ABR Loan, (ii) with respect to any Term B Loan, 3.50% per annum in the case of any Eurocurrency Loan and 2.50% per annum in the case of any ABR Loan and (iii) with respect to any Revolving Facility Loan, (A) 2.25% per annum in the case of any Eurocurrency Loan and (B) 1.25% per annum in the case of any ABR Loan and (iv) with respect to Swingline Loans, 1.25% per annum; provided, that on and after the first Adjustment Date after the Closing Date, the Applicable Margin with respect to any Term A Loan, Revolving Facility Loans and Swingline Loans will be determined pursuant to the Pricing Grid.
“Applicable Time” shall mean, with respect to any borrowings and payments in any Alternative Currency, the local time in the place of settlement for such Alternative Currency as may be determined by the Administrative Agent or the L/C Issuer, as the case may be, to be necessary for timely settlement on the relevant date in accordance with normal banking procedures in the place of payment.
“Approved Fund” shall have the meaning assigned to such term in Section 9.04(b).
“Asset Sale” shall mean any loss, damage, destruction or condemnation of, or any sale, transfer or other disposition (including any sale and leaseback of assets) to any person of any asset or assets of Parent or any Subsidiary.
“Assignee” shall have the meaning assigned to such term in Section 9.04(b).
“Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Lender and an Assignee, and accepted by the Administrative Agent and the Borrower (if required by Section 9.04), in the form of Exhibit B or such other form as shall be approved by the Administrative Agent and reasonably satisfactory to the Borrower.
“Auction” shall have the meaning assigned to such term in Section 2.12(g).
“Auction Manager” shall mean a Joint Lead Arranger, Joint Bookrunner or another investment bank of recognized standing selected by the Borrower and reasonably satisfactory to the Administrative Agent that will manage the Auction Prepayment Offer.
“Auction Notice” shall mean an auction notice given by the Borrower in accordance with the Auction Procedures with respect to an Auction Prepayment Offer.
“Auction Prepayment” shall have the meaning assigned to such term in Section 2.12(g).
“Auction Prepayment Offer” shall have the meaning assigned to such term in Section 2.12(g).
“Auction Procedures” shall mean the auction procedures with respect to Auction Prepayment Offers set forth in Exhibit C.
“Auto-Extension Letter of Credit” shall have the meaning assigned to such term in Section 2.05(b).
“Auto-Reinstatement Letter of Credit” shall have the meaning assigned to such term in Section 2.05(b).
“Availability Period” shall mean, with respect to each Class of Revolving Facility Loans, the period from and including the Closing Date to but excluding the earlier of the applicable Revolving Facility Maturity Date and, in the case of each of the Revolving Facility Loans, Revolving Facility Borrowings, Swingline Loans, Swingline Borrowings and Letters of Credit, the date of termination of the applicable Revolving Facility Commitments.
“Available Unused Commitment” shall mean, with respect to a Revolving Facility Lender at any time, an amount equal to the Dollar Equivalent of the amount by which (a) the Revolving Facility Commitment of such Revolving Facility Lender at such time exceeds (b) the Revolving Facility Credit Exposure of such Revolving Facility Lender at such time.

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“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
“Bail-In Legislation” shall mean, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.
“Bank of America” shall mean Bank of America, N.A.
“Bankruptcy Code” shall mean Title 11 of the United State Code, as amended, or any similar federal or state law for the relief of debtors.
“Beneficial Ownership Certification” shall mean a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230.
“Benefit Plan” shall mean any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan.”
“Board” shall mean the Board of Governors of the Federal Reserve System of the United States of America.
“Board of Directors” shall mean, with respect to any Person, (i) in the case of any corporation, the board of directors of such Person, (ii) in the case of any limited liability company, the board of managers of such Person, (iii) in the case of any partnership, the Board of Directors of the general partner of such Person and (iv) in any other case, the functional equivalent of the foregoing or, in each case, any duly authorized committee of such body.
“Borrower” shall have the meaning assigned to such term in the preamble hereto, together with its permitted successors.
“Borrowing” shall mean a group of Loans of a single Type in a single currency under a single Class and made on a single date and, in the case of Eurocurrency Loans, as to which a single Interest Period is in effect.
“Borrowing Minimum” shall mean $1,000,000.
“Borrowing Multiple” shall mean $1,000,000.
“Borrowing Request” shall mean a request by the Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit D.
“Budget” shall have the meaning assigned to such term in Section 5.04(e).
“Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in the state where the Administrative Agent’s Office with respect to Loans denominated in Dollars is located and:
(a)    if such day relates to any interest rate settings as to a Eurocurrency Loan denominated in Dollars, any fundings, disbursements, settlements and payments in Dollars in respect of any such Eurocurrency Loan, or any other dealings in Dollars to be carried out pursuant to this Agreement in respect of any such Eurocurrency Loan, means any such day on which dealings in deposits in Dollars are conducted by and between banks in the London interbank eurodollar market;
(b)    if such day relates to any interest rate settings as to a Eurocurrency Loan denominated in Euro, any fundings, disbursements, settlements and payments in Euro in respect of any such Eurocurrency Loan, or any other dealings in Euro to be carried out pursuant to this Agreement in respect of any such Eurocurrency Loan, means a TARGET Day;

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(c)    if such day relates to any interest rate settings as to a Eurocurrency Loan denominated in a currency other than Dollars or Euro, means any such day on which dealings in deposits in the relevant currency are conducted by and between banks in the London or other applicable offshore interbank market for such currency; and
(d)    if such day relates to any fundings, disbursements, settlements and payments in a currency other than Dollars or Euro in respect of a Eurocurrency Loan denominated in a currency other than Dollars or Euro, or any other dealings in any currency other than Dollars or Euro to be carried out pursuant to this Agreement in respect of any such Eurocurrency Loan (other than any interest rate settings), means any such day on which banks are open for foreign exchange business in the principal financial center of the country of such currency.
“Capital Expenditures” shall mean, for any person in respect of any period, the aggregate of all expenditures incurred by such person during such period that, in accordance with GAAP, are or should be included in “additions to property, plant or equipment” or similar items reflected in the statement of cash flows of such person.
“Capital Lease Obligations” of any person shall mean the obligations of such person to pay rent or other amounts under any lease of (or other similar arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases or financing leases on a balance sheet of such person under GAAP and, for purposes hereof, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.
“Capitalized Software Expenditures” shall mean, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by a person during such period in respect of licensed or purchased software or internally developed software and software enhancements that, in accordance with GAAP, are or are required to be reflected as capitalized costs on the consolidated balance sheet of such person and its subsidiaries.
“Cash Collateralize” shall mean to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the L/C Issuer, Swingline Lender or the Lenders (as applicable), as collateral for L/C Obligations, Obligations in respect of Swingline Loans, or obligations of Lenders to fund participations in respect of either thereof (as the context may require), cash or deposit account balances or, if the Administrative Agent, the L/C Issuer or Swingline Lender shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to (a) the Administrative Agent and (b) the L/C Issuer or the Swingline Lender (as applicable). “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
“Cash Interest Expense” shall mean, with respect to Parent and the Subsidiaries on a consolidated basis for any period, Interest Expense for such period to the extent such amounts are paid in cash for such period, excluding, without duplication, in any event (a) pay in kind Interest Expense or other non-cash Interest Expense (including as a result of the effects of purchase accounting), (b) to the extent included in Interest Expense, the amortization and write-off of any debt issuance costs, commissions, financing fees paid by, or on behalf of, Parent or any Subsidiary, including such fees paid in connection with the Transactions, and the expensing of any bridge, commitment or other financing fees, including those paid in connection with the Transactions, or any amendment of this Agreement, (c) the amortization of debt discounts, if any, or fees in respect of Swap Agreements and (d) any other expenses included in Interest Expense not paid in cash.
“Cash Management Agreement” shall mean any agreement relating to cash management services (including treasury, depository, overdraft, credit or debit card, electronic funds transfer, ACH services and other cash management arrangements).
“Change of Control” shall mean:
(a)    any person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Closing Date), other than any combination of the Permitted Holders, shall have beneficial ownership (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of Voting Stock of Parent representing 50% or more of the voting power of the Voting Stock of Parent;
(b)    Parent shall cease to directly or indirectly own 100% of the Equity Interests of Borrower;
(c)    during any period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board of Directors of Parent (together with any new directors who were (i) nominated or appointed by the Board of Directors of Parent or (ii) approved by the Board of Directors of Parent as director candidates prior to their election to the Board of Directors of Parent) cease for any reason to constitute at least a majority of the Board of Directors of Parent; or

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(d)    any “change of control” (or similar event) shall occur under any Material Indebtedness.
“Change in Law” shall mean (a) the adoption of any law, rule, regulation or treaty after the Closing Date, (b) any change in any law, rule, regulation or treaty or in the interpretation, implementation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender or L/C Issuer (or, for purposes of Section 2.05(c)(i)(A) or 2.16(b), by any Lending Office of such Lender or by such Lender’s or L/C Issuer’s holding company, if any) with any written request, rule, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date; 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 or in the implementation thereof and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.
“Charges” shall have the meaning assigned to such term in Section 9.09.
“Class” shall mean (i) with respect to any Commitment, its character as a Revolving Facility Commitment, Extended Revolving Commitment, Replacement Revolving Commitment, Term A Loan Commitment, Term B Loan Commitment, Other Term A Loan Commitments, Other Term B Loan Commitments, commitment in respect of Extended Term Loans or commitment in respect of Refinancing Term Loans (whether established by way of new Commitments or by way of conversion or extension of existing Commitments or Loans) designated as a “Class” in an Additional Credit Extension Amendment and (ii) with respect to any Loan or Borrowing, whether such Loans or the Loans comprising such Borrowing, are made pursuant to the Revolving Facility Commitments, Extended Revolving Commitments or Replacement Revolving Commitments, Term A Loan, Term B Loan, Other Term A Loan, Other Term B Loan, Extended Term Loan or a Refinancing Term Loan (whether made pursuant to new Commitments or by way of conversion or extension of existing Loans) designated as a “Class” in an Additional Credit Extension Amendment; provided that notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, the borrowing and repayment of Revolving Facility Loans shall be made on a pro rata basis across all Classes of Revolving Facility Commitments (except to the extent that any applicable Additional Credit Extension Amendment pursuant to Section 2.23 or 2.25 provides that the Class of Revolving Facility Loans established thereunder shall be entitled to less than pro rata repayments), and any termination of Revolving Facility Commitments shall be made on a pro rata basis across all Classes of Revolving Facility Commitments (except to the extent that any applicable Additional Credit Extension Amendment pursuant to Section 2.23 or 2.25 provides that the Class of Revolving Facility Commitments established thereunder shall be entitled to less than pro rata treatment). Commitments or Loans that have different maturity dates, pricing (other than upfront fees and other similar fees) or other terms shall be designated separate Classes. There shall be a maximum of three Classes of Revolving Facility Commitments.
“Closing Date” shall mean November 27, 2018, the date of the initial borrowings hereunder.
“Code” shall mean the Internal Revenue Code of 1986.
“Collateral” shall mean all the “Collateral” (or equivalent term) as defined in any Security Document and shall also include the Mortgaged Properties and all other property that is now or hereafter subject to any Lien in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to any Security Documents and which has not been released from such Lien in accordance with the Loan Documents at the time of determination.
“Collateral Agent” shall mean Bank of America in its capacity as collateral agent for the Secured Parties under this Agreement and the Security Documents, or any successor collateral agent pursuant hereto and thereto.
“Collateral Agreement” shall mean the Collateral Agreement, dated as of the Closing Date, among the Loan Parties and the Collateral Agent, substantially in the form of Exhibit H.
“Collateral Requirement” shall mean the requirement that (in each case subject to Section 5.10(g) and the Agreed Security Principles):
(a)    on the Closing Date, the Collateral Agent shall have received (x) the Security Documents set forth on Schedule 1.01A from the parties set forth thereon and (y) from each Loan Party, a counterpart of the Guarantee Agreement duly executed and delivered on behalf of such person;

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(b)    on the Closing Date, (i) the Collateral Agent shall have received a pledge of all the issued and outstanding Equity Interests of (x) the Borrower and (y) each Subsidiary owned on the Closing Date directly by any Loan Party and (ii) the Collateral Agent shall have received all certificates or other instruments (if any) representing such Equity Interests, together with stock powers or other instruments of transfer with respect thereto endorsed in blank (to the extent appropriate in the applicable jurisdiction);
(c)    (i) on the Closing Date and at all times thereafter, all Indebtedness of Parent and each Subsidiary having, in the case of each instance of Indebtedness, an aggregate principal amount in excess of $5,000,000 (other than (A) intercompany current liabilities in connection with the cash management operations of Parent and its Subsidiaries or (B) to the extent that a pledge of such promissory note or instrument would violate applicable law) that is owing to any Loan Party shall be evidenced by a promissory note or an instrument and shall have been pledged pursuant to the Collateral Agreement (or other applicable Security Document as reasonably required by the Collateral Agent), and (ii) the Collateral Agent shall have received all such promissory notes or instruments, together with note powers or other instruments of transfer with respect thereto endorsed in blank (to the extent appropriate in the applicable jurisdiction);
(d)    in the case of any person that becomes a Subsidiary after the Closing Date, subject to Section 5.10(g) and the Agreed Security Principles, the Collateral Agent shall have received (i) a supplement to the applicable Guarantee Agreement and (ii) a supplement to the Collateral Agreement (or other applicable Security Document as reasonably required by the Collateral Agent), as applicable, in the form specified therein or otherwise reasonably acceptable to the Administrative Agent, duly executed and delivered on behalf of such Subsidiary;
(e)    after the Closing Date, (i) all the outstanding Equity Interests of (A) any person that becomes a Subsidiary Loan Party after the Closing Date and (B) subject to Section 5.10(g) and the Agreed Security Principles, all the Equity Interests that are acquired by a Loan Party after the Closing Date, shall have been pledged pursuant to the Collateral Agreement (or other applicable Security Document as reasonably required by the Collateral Agent) and (ii) the Collateral Agent shall have received all certificates or other instruments (if any) representing such Equity Interests, together with stock powers or other instruments of transfer with respect thereto endorsed in blank (to the extent appropriate in the applicable jurisdiction);
(f)    on the Closing Date and at all times thereafter, except as otherwise contemplated by any Security Document, all documents and instruments, including Uniform Commercial Code financing statements or equivalent filings in foreign jurisdictions, required by law or reasonably requested by the Collateral Agent to be filed, registered or recorded to create the Liens intended to be created by the Security Documents (in each case, including any supplements thereto) and perfect such Liens to the extent required by, and with the priority required by, the Security Documents, shall have been filed, registered or recorded or delivered to the Collateral Agent for filing, registration or the recording concurrently with, or promptly following, the execution and delivery of each such Security Document;
(g)    after the Closing Date (solely to the extent required by Section 5.10(c) or 5.10(d)), the Collateral Agent shall have received (i) counterparts of each Mortgage to be entered into with respect to each Mortgaged Property duly executed and delivered by the record owner of such Mortgaged Property and suitable for recording or filing and (ii) such other documents including, but not limited to, any consents, agreements and confirmations of third parties, as the Collateral Agent may reasonably request with respect to any such Mortgage or Mortgaged Property and evidence that all filing and recording taxes and fees have been paid or otherwise provided for in a manner reasonably acceptable to the Collateral Agent;
(h)    after the Closing Date, the Collateral Agent shall have received (i) in the case of any Mortgaged Property located in the United States or any territory thereof, or any foreign jurisdiction with respect to which title insurance is available and customarily obtained in connection with transactions similar to the Transactions, a policy or policies or marked up unconditional binder of title insurance or the foreign equivalent thereof, as applicable, paid for by a Loan Party, issued by one or more title insurance companies reasonably acceptable to the Collateral Agent insuring the Liens of each Mortgage as a valid first lien on the Mortgaged Property described therein, free of other Liens except Permitted Liens, together, with such customary endorsements (to the extent available in the subject jurisdiction and including zoning endorsements where reasonably appropriate and available) as the Collateral Agent may reasonably request or (ii) in any foreign jurisdiction to the extent title insurance is not so available and customarily obtained, but a title opinion is customarily obtained (and can be so obtained at a commercially reasonable cost), a title opinion covering the matters customarily covered in title opinions in the applicable jurisdiction, in form and substance reasonably acceptable to the Collateral Agent;

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(i)    after the Closing Date (solely to the extent a Mortgage on such property is required by Section 5.10(c) or 5.10(d)), the Collateral Agent shall have received a completed “Life-of-Loan” Federal Emergency Management Agency Standard Flood Hazard Determination with respect to each Mortgaged Property located in the United States (together with a notice about special flood hazard area status and flood disaster assistance) duly executed by the applicable Loan Party relating thereto;
(j)    after the Closing Date (solely to the extent required by Section 5.10(c) or 5.10(d)), the Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.02 and any applicable provisions of the Security Documents, including, without limitation, flood insurance policies, each of which shall be endorsed or otherwise amended to include a “standard” or “New York” lender’s loss payable or mortgagee endorsement or other similar endorsement in each applicable jurisdiction (to the extent applicable) and shall name the Collateral Agent as loss payee, mortgagee, and/or additional insured, as applicable, in form and substance reasonably satisfactory to the Administrative Agent;
(k)    on the Closing Date, the Collateral Agent shall have received evidence of the insurance required by the terms of this Agreement and the Mortgages;
(l)    except as otherwise contemplated by this Agreement or any Security Document, each Loan Party shall have obtained all consents and approvals required to be obtained by it in connection with (i) the execution and delivery of all Security Documents (or supplements thereto) to which it is a party and the granting by it of the Liens thereunder and (ii) the performance of its obligations thereunder; and
(m)    after the Closing Date, the Collateral Agent shall have received (i) such other Security Documents as may be required to be delivered pursuant to Section 5.10, and (ii) upon reasonable request by the Collateral Agent, evidence of compliance with any other requirements of Section 5.10.
“Commitment Fee” shall have the meaning assigned to such term in Section 2.13(a).
“Commitments” shall mean, with respect to any Lender, such Lender’s Revolving Facility Commitment, Term A Loan Commitment, Term B Loan Commitment, Incremental Term Loan Commitment, commitment in respect of Extended Term Loans or commitment in respect of Refinancing Term Loans.
“Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor thereto.
“Compliance Certificate” shall mean a certificate of a Financial Officer of Parent substantially in the form of Exhibit L hereto, with such changes thereto as may be agreed by the Administrative Agent.
“Conduit Lender” shall mean any special purpose entity organized and administered by any Lender for the purpose of making Loans otherwise required to be made by such Lender and designated by such Lender in a written instrument; provided, that the designation by any Lender of a Conduit Lender shall not relieve the designating Lender of any of its obligations to fund a Loan under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender; provided, further, that a Conduit Lender shall be entitled to the benefits of Sections 2.16, 2.17, 2.18 and 9.05 (subject to the limitations and requirements of those Sections) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 9.04(b) but no Conduit Lender shall (a) be entitled to receive any greater amount pursuant to Section 2.16, 2.17, 2.18 or 9.05 than the designating Lender would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender unless the designation of such Conduit Lender was made with the prior written consent of the Borrower (not to be unreasonably withheld or delayed) or (b) be deemed to have any Commitment.
“Consolidated Debt” at any date shall mean the sum of (without duplication) all Indebtedness (other than letters of credit or bank guarantees, to the extent undrawn) consisting of Capital Lease Obligations, Indebtedness for borrowed money and Disqualified Stock of Parent and the Subsidiaries determined on a consolidated basis on such date.
“Consolidated Net Income” shall mean, with respect to any person for any period, the aggregate of the Net Income of such person and its subsidiaries for such period, on a consolidated basis; provided that, without duplication,

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(i)any net after tax extraordinary, nonrecurring or unusual gains or losses or income or expense or charge (less all fees and expenses relating thereto), including, without limitation, any severance, relocation or other restructuring expenses, any expenses related to any reconstruction, decommissioning, recommissioning or reconfiguration of fixed assets for alternative uses, fees, expenses or charges relating to facilities closing costs, curtailments or modifications to pension and post-retirement employee benefit plans, excess pension charges, acquisition integration costs, facilities opening costs, project start-up costs, business optimization costs, in each case, shall be excluded,
(ii)any net after-tax income or loss from disposed, abandoned, transferred, closed or discontinued operations and any net after-tax gain or loss on disposal of disposed, abandoned, transferred, closed or discontinued operations, shall be excluded,
(iii)    any net after-tax gain or loss (less all fees and expenses or charges relating thereto) attributable to business dispositions or asset dispositions other than in the ordinary course of business (as determined in good faith by Parent) shall be excluded,
(iv)    any net after-tax income or loss (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of indebtedness, Swap Agreements or other derivative instruments shall be excluded,
(v)        (A) the Net Income for such period of any person that is not a Subsidiary of such person, or is an Unrestricted Subsidiary or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or distributions or other payments paid in cash (or to the extent converted into cash) to the referent person or a Subsidiary thereof (other than an Unrestricted Subsidiary of such referent person) in respect of such period and (B) the Net Income for such period shall include any ordinary course dividend, distribution or other payment in cash received from any person in excess of the amounts included in clause (A) which is distributed within six months of the end of the fiscal year in which it is earned,
(vi)    Consolidated Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period,
(vii)    effects of purchase accounting adjustments (including the effects of such adjustments pushed down to such person and its Subsidiaries) in component amounts required or permitted by GAAP, resulting from the application of purchase accounting in relation to any consummated acquisition or the amortization or write-off of any amounts thereof, net of taxes, shall be excluded,
(viii)    any impairment charges or asset write-offs (other than write-offs of inventory and accounts receivable), in each case pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP, shall be excluded,
(ix)    any (a) non-cash compensation charges or expenses or (b) costs or expenses realized in connection with or resulting from stock appreciation or similar rights, stock options or other rights shall be excluded,
(x)    non-cash gains, losses, income and expenses resulting from fair value accounting required by the applicable standard under GAAP and related interpretations shall be excluded,
(xi)    any currency translation gains and losses related to currency remeasurements, including but not limited to, Indebtedness, and any net loss or gain resulting from Swap Agreements for currency exchange risk, shall be excluded,
(xii)    the non-cash portion of “straight-line” rent expense shall be excluded, and the cash portion of “straight-line” rent expense which exceeds the amount expensed in respect of such rent expense shall be included,
(xiii)    to the extent covered by insurance and actually reimbursed, or, so long as such person has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within 365 days), expenses with respect to liability or casualty events or business interruption shall be excluded,
(xiv)    non-cash charges for deferred tax asset valuation allowances shall be excluded, and

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(xv)    the Net Income for such period of any subsidiary of such person shall be excluded to the extent that the declaration or payment of dividends or similar distributions by such subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such subsidiary or its equityholders, unless such restrictions with respect to the payment of dividends or similar distributions have been legally waived.
“Consolidated Total Assets” shall mean, as of any date, the total assets of Parent and the Subsidiaries, determined on a consolidated basis in accordance with GAAP.
“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and “Controls” and “Controlled” shall have meanings correlative thereto.
“Credit Event” shall have the meaning assigned to such term in Article IV.
“Cumulative Credit” shall mean, at any date, an amount, not less than zero in the aggregate, determined on a cumulative basis equal to, without duplication (and without duplication of amounts that otherwise increased the amount available for Investments pursuant to Section 6.04):
(a)    $154,000,000, plus
(b)    the Cumulative Excess Cash Flow Amount on such date of determination, plus
(c)    the cumulative amount of net cash proceeds received after the Closing Date and on or prior to such time from the sale of Equity Interests (other than Disqualified Stock) of Parent; provided, that this clause (c) shall exclude any proceeds of sales of Equity Interests financed as contemplated by Section 6.04(e)(iii), proceeds of Equity Interests used to make Investments pursuant to Section 6.04(s), proceeds of Equity Interests used to make a Restricted Payment in reliance on clause (x) of the first proviso to Section 6.06(c) and any amounts used to finance the payments or distributions in respect of any Junior Financing pursuant to Section 6.09(b)(iii), plus
(d)    100% of the aggregate principal amount of any Indebtedness (including the liquidation preference or maximum fixed repurchase price, as the case may be, of any Disqualified Stock) of Parent or any Subsidiary issued after the Closing Date (other than Indebtedness issued to a Subsidiary), which has been converted into or exchanged for Equity Interests (other than Disqualified Stock) in Parent; provided that this clause (d) shall exclude the conversion or exchange of any Junior Financing to Equity Interest pursuant to Section 6.09(b)(iii), plus
(e)    100% of the aggregate amount received by Parent or any Subsidiary in cash (and the fair market value (as determined in good faith by Parent) of property other than cash received by Parent or any Subsidiary) after the Closing Date from:
(i)    the sale (other than to Parent or any Subsidiary) of the Equity Interests of an Unrestricted Subsidiary, or
(ii)    any dividend or other distribution by an Unrestricted Subsidiary, plus
(f)    in the event any Unrestricted Subsidiary has been redesignated as a Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, Parent or any Subsidiary, the fair market value (as determined in good faith by the Parent) of the Investments of Parent or any Subsidiary in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable), plus
(g)    an amount equal to any returns (including dividends, interest, distributions, returns of principal, profits on sale, repayments, income and similar amounts) actually received by Parent or any Subsidiary in respect of any Investments made pursuant to Section 6.04(j), minus
(h)    any amounts thereof used to make Investments pursuant to Section 6.04(j)(ii) after the Closing Date and prior to such time, minus

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(i)    any amounts thereof used to make Restricted Payments pursuant to Section 6.06(e) after the Closing Date and prior to such time, minus
(j)    any amounts thereof used to make payments or distributions in respect of Junior Financings pursuant to Section 6.09(b)(iv)(y).
“Cumulative Excess Cash Flow Amount” shall mean, at any date, an amount, not less than zero in the aggregate, determined on a cumulative basis equal to the sum, for each Excess Cash Flow Period, (x) Excess Cash Flow for such Excess Cash Flow Period minus (y) the Applicable ECF Percentage of Excess Cash Flow for such Excess Cash Flow Period.
“Current Assets” shall mean, with respect to Parent and the Subsidiaries on a consolidated basis at any date of determination, all assets (other than cash and Permitted Investments or other cash equivalents) that would, in accordance with GAAP, be classified on a consolidated balance sheet of Parent and the Subsidiaries as current assets at such date of determination, other than amounts related to current or deferred Taxes based on income or profits.
“Current Liabilities” shall mean, with respect to Parent and the Subsidiaries on a consolidated basis at any date of determination, all liabilities that would, in accordance with GAAP, be classified on a consolidated balance sheet of Parent and the Subsidiaries as current liabilities at such date of determination, other than (a) the current portion of any Indebtedness, (b) accruals of Interest Expense (excluding Interest Expense that is due and unpaid), (c) accruals for current or deferred Taxes based on income or profits, (d) accruals, if any, of transaction costs resulting from the Transactions, (e) accruals of any costs or expenses related to bonuses, pension and other post-retirement benefit obligations, and (f) accruals for add-backs to EBITDA included in clauses (a)(iv) through (a)(vi) of the definition of such term.
“Damages” shall have the meaning assigned to such term in Section 9.05(b).
“Debtor Relief Laws” shall mean the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
“Declined Amounts” shall have the meaning assigned to such term in Section 2.12(e).
“Default” shall mean any event or condition which, but for the giving of notice, lapse of time or both would constitute an Event of Default.
“Defaulting Lender” shall mean, subject to Section 2.27(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, any L/C Issuer, the Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent, the L/C Issuer or the Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become, or has a direct or indirect parent company that has become, the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements

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made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.27(b)) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Borrower, the L/C Issuers, the Swingline Lender and each other Lender promptly following such determination.
“Delaware LLC” shall mean any limited liability company organized or formed under the laws of the State of Delaware.
“Delaware Divided LLC” shall mean any Delaware LLC which has been formed upon consummation of a Delaware LLC Division.
“Delaware LLC Division” shall mean the statutory division of any Delaware LLC into two or more Delaware LLCs pursuant to Section 18-217 of the Delaware Limited Liability Company Act.
“Designated Non-Cash Consideration” shall mean the fair market value (as determined in good faith by Parent) of non-cash consideration received by Parent or one of its Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-Cash Consideration pursuant to a certificate of a Responsible Officer, setting forth the basis of such valuation, less the amount of cash or cash equivalents received in connection with a subsequent sale of such Designated Non-Cash Consideration.
“Disinterested Director” shall mean, with respect to any person and transaction, a member of the Board of Directors of such person who does not have any material direct or indirect financial interest in or with respect to such transaction.
“Disqualified Stock” shall mean, with respect to any person, any Equity Interests of such person that, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is redeemable or exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior Payment in Full), (b) is redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part, (c) provides for the scheduled payments of dividends in cash or (d) at the option of the holders thereof, is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Stock, in each case, prior to the date that is ninety-one (91) days after the earlier of (x) the then Latest Maturity Date and (y) the date of Payment in Full; provided, however, that (i) only the portion of the Equity Interests that so mature or are mandatorily redeemable, are so convertible or exchangeable or are so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; (ii) if such Equity Interests are issued to any employee or to any plan for the benefit of employees of Parent or any Subsidiary or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Stock solely because they may be required to be repurchased by Parent in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; and (iii) any class of Equity Interests of such person that by its terms authorizes such person to satisfy its obligations thereunder by delivery of Equity Interests that are not Disqualified Stock shall not be deemed to be Disqualified Stock.
“Dollar Equivalent” shall mean, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in any Alternative Currency, the equivalent amount thereof in Dollars as determined by the Administrative Agent or the L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of Dollars with such Alternative Currency.
“Dollars” or “$” shall mean lawful money of the United States of America.
“EBITDA” shall mean, with respect to Parent and the Subsidiaries on a consolidated basis for any period, the Consolidated Net Income of Parent and the Subsidiaries for such period plus (a) the sum of (in each case without duplication and to the extent the respective amounts described in subclauses (i) through (viii) of this clause (a) otherwise reduced such Consolidated Net Income for the respective period for which EBITDA is being determined):
(i)    provision for Taxes based on income, profits or capital of Parent and the Subsidiaries for such period, including, without limitation, state franchise and similar Taxes and foreign withholding Taxes,
(ii)    Interest Expense (and to the extent not included in Interest Expense, (x) all cash dividend payments (excluding items eliminated in consolidation) on any series of preferred stock or Disqualified Stock and (y) costs of

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surety bonds in connection with financing activities) of Parent and the Subsidiaries for such period (net of interest income of Parent and its Subsidiaries for such period),
(iii)    depreciation and amortization expenses of Parent and the Subsidiaries for such period including, without limitation, the amortization of intangible assets, deferred financing fees and Capitalized Software Expenditures and amortization of unrecognized prior service costs and actuarial gains and losses related to pensions and other post-employment benefits,
(iv)    any expenses or charges (other than depreciation or amortization expense as described in the preceding clause (iii)) related to any issuance of Equity Interests, Investment, acquisition, disposition, recapitalization or the incurrence, modification or repayment of Indebtedness permitted to be incurred by the Existing Credit Agreement and this Agreement (including a refinancing thereof) (whether or not successful), including (x) such fees, expenses or charges related to the incurrence of the obligations under the Existing Credit Agreement and the Obligations and (y) any amendment or other modification of the Obligations or other Indebtedness,
(v)    business optimization expenses and other restructuring charges or reserves (which, for the avoidance of doubt, shall include those related to facility closure, facility consolidations, retention, severance, systems establishment costs, contract termination costs, future lease commitments and excess pension charges),
(vi)    any other non-cash charges (excluding the write off of any receivables or inventory); provided, that, for purposes of this subclause (vi) of this clause (a), any non-cash charges or losses shall be treated as cash charges or losses in any subsequent period during which cash disbursements attributable thereto are made (but excluding, for the avoidance of doubt, amortization of a prepaid cash item that was paid in a prior period),
(vii)    any costs or expense incurred pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, to the extent that such cost or expenses are funded with cash proceeds contributed to the capital of Parent or net cash proceeds of an issuance of Equity Interests of Parent (other than Disqualified Stock) solely to the extent that such net cash proceeds are excluded from the calculation of the Cumulative Credit, and
(viii)    any deductions (less any additions) attributable to minority interests except, in each case, to the extent of cash paid (or received),
minus (b) the sum of (without duplication and to the extent the amounts described in this clause (b) increased such Consolidated Net Income for the respective period for which EBITDA is being determined) non-cash items increasing Consolidated Net Income of Parent and the Subsidiaries for such period (but excluding the recognition of deferred revenue or any such items (x) in respect of which cash was received in a prior period or will be received in a future period or (y) which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges that reduced EBITDA in any prior period).
For purposes of determining EBITDA under this Agreement, before giving effect, on a Pro Forma Basis, to any relevant transaction (within the meaning of the definition of “Pro Forma Basis”) occurring after the Closing Date, EBITDA for the fiscal quarter ended December 31, 2017 shall be deemed to be $37,028,706, EBITDA for the fiscal quarter ended March 31, 2018 shall be deemed to be $53,968,502, EBITDA for the fiscal quarter ended June 30, 2018 shall be deemed to be $53,767,377 and EBITDA for the fiscal quarter ended September 30, 2018 shall be deemed to be $52,103,224.
“EEA Financial Institution” shall mean (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” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway and any other state that is a member of the European Economic Area.
“EEA Resolution Authority” shall mean 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.

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“Eligible Person” shall mean any person other than (i) Parent or any of its Affiliates, (ii) a natural person or any holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural person, (iii) any Defaulting Lender or (iv) an Ineligible Institution.
“EMU” shall mean the economic and monetary union in accordance with the Treaty of Rome 1957, as amended by the Single European Act 1986, the Maastricht Treaty of 1992 and the Amsterdam Treaty of 1998.
“EMU Legislation” shall mean the legislative measures of the European Council for the introduction of, changeover to or operation of a single or unified European currency.
“Environment” shall mean ambient and indoor air, surface water and groundwater (including potable water), the land surface or subsurface strata, natural resources such as flora and fauna, and wetlands, the workplace or as otherwise defined in any Environmental Law.
“Environmental Laws” shall mean all applicable laws (including common law), rules, regulations, codes, ordinances, orders, decrees or judgments, promulgated or entered into by any Governmental Authority, relating in any way to the Environment, the generation, management, Release or threatened Release of, or exposure to, any Hazardous Material or to human health and safety (to the extent relating to the Environment or Hazardous Materials).
“Equity Interests” of any person shall mean any and all shares, interests, rights to purchase or otherwise acquire, warrants, options, participations or other equivalents of or interests in (however designated) equity or ownership of such person, including any preferred stock, any limited or general partnership interest and any limited liability company membership interest, and any securities or other rights or interests convertible into or exchangeable for any of the foregoing; provided that Equity Interests shall not include any debt securities that are convertible into or exchangeable for any Equity Interests.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time and any final regulations promulgated and the rulings issued thereunder.
“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with Parent or a Subsidiary, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.
“ERISA Event” shall mean (a) any Reportable Event or the requirements of Section 4043(b) of ERISA apply with respect to a Plan; (b) the failure to meet the minimum funding standard under Section 412 of the Code or Section 302 of ERISA with respect to a Plan, whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (d) the incurrence by Parent, any of its Subsidiaries or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Plan or Multiemployer Plan; (e) the receipt by Parent, any of its Subsidiaries or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or to appoint a trustee to administer any Plan under Section 4042 of ERISA; (f) the incurrence by Parent, any of its Subsidiaries or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan (including a cessation of operations that is treated as a withdrawal under Section 4062(e) of ERISA) or Multiemployer Plan; (g) the receipt by Parent, any of its Subsidiaries or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from Parent, any of its Subsidiaries or any ERISA Affiliate of any notice, concerning the impending imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; (h) the conditions for imposition of a lien under Section 303(k) of ERISA shall have been met with respect to any Plan; or (i) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA (as in effect prior to the effective date of the Pension Act).
“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.
“Euro” shall mean the lawful currency of the Participating Member States introduced in accordance with the EMU Legislation.
“Eurocurrency Borrowing” shall mean a Borrowing comprised of Eurocurrency Loans.
“Eurocurrency Loan” shall mean any Eurocurrency Term Loan or Eurocurrency Revolving Loan.

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“Eurocurrency Rate” shall mean, with respect to any Eurocurrency Loan for any Interest Period, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes of the administration of such rate for Dollars or any Alternative Currency for a period equal in length to such Interest Period), which rate is approved by the Administrative Agent, as published on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) (the “LIBO Screen Rate”) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for deposits in Dollars or the applicable Alternative Currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period; provided that if the LIBO Screen Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
“Eurocurrency Revolving Facility Borrowing” shall mean a Borrowing comprised of Eurocurrency Revolving Loans.
“Eurocurrency Revolving Loan” shall mean any Revolving Facility Loan bearing interest at a rate determined by reference to the Eurocurrency Rate in accordance with the provisions of Article II.
“Eurocurrency Term Loan” shall mean any Term Loan bearing interest at a rate determined by reference to the Eurocurrency Rate in accordance with the provisions of Article II.
“Event of Default” shall have the meaning assigned to such term in Section 7.01.
“Excess Cash Flow” shall mean, with respect to Parent and the Subsidiaries on a consolidated basis for any Excess Cash Flow Period, EBITDA of Parent and the Subsidiaries on a consolidated basis for such Excess Cash Flow Period, minus, without duplication,
(a)    Cash Interest Expense of Parent and the Subsidiaries for such Excess Cash Flow Period,
(b)    permanent repayments or prepayments of any Indebtedness (other than repayments of revolving loans unless accompanied by a corresponding permanent reduction in revolving commitments) made in cash by Parent or any Subsidiary during such Excess Cash Flow Period (other than any mandatory or voluntary prepayment or Auction Prepayments of the Loans), but only to the extent that the Indebtedness so prepaid cannot be reborrowed or redrawn and such prepayments do not occur in connection with a refinancing of all or any portion of such Indebtedness,
(c)    (i) Capital Expenditures by Parent and the Subsidiaries on a consolidated basis during such Excess Cash Flow Period that are paid in cash, (ii) Capitalized Software Expenditures, and (iii) the aggregate consideration paid in cash during the Excess Cash Flow Period in respect of Permitted Business Acquisitions and other Investments permitted hereunder less any amounts received in respect thereof as a return of capital,
(d)    Taxes paid in cash by Parent and the Subsidiaries on a consolidated basis during such Excess Cash Flow Period,
(e)    an amount equal to any increase in Working Capital of Parent and the Subsidiaries for such Excess Cash Flow Period,
(f)    amounts paid in cash during such Excess Cash Flow Period on account of (A) items that were accounted for as non-cash reductions of Net Income in determining Consolidated Net Income or as non-cash reductions of Consolidated Net Income in determining EBITDA of Parent and the Subsidiaries in a prior Excess Cash Flow Period and (B) reserves or accruals established in purchase accounting,
(g)    to the extent not deducted in the computation of Net Proceeds in respect of any asset disposition or condemnation giving rise thereto, the amount of any mandatory prepayment of Indebtedness (other than Indebtedness created hereunder or under any other Loan Document), together with any interest, premium or penalties required to be paid (and actually paid) in connection therewith,
(h)    Restricted Payments made in cash pursuant to Sections 6.06(c), (f), (g), (h) and (i) during such Excess Cash Flow Period; and
(i)    the amount related to items that were added to or not deducted from Net Income in calculating Consolidated Net Income or were added to or not deducted from Consolidated Net Income in calculating EBITDA to

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the extent such items represented a cash payment (which had not reduced Excess Cash Flow upon the accrual thereof in a prior Excess Cash Flow Period), or an accrual for a cash payment, by Parent and the Subsidiaries or did not represent cash received by Parent and the Subsidiaries, in each case on a consolidated basis during such Excess Cash Flow Period,
plus, without duplication,
(j)    an amount equal to any decrease in Working Capital for such Excess Cash Flow Period,
(k)    all amounts referred to in clauses (b) and (c) above to the extent funded with the proceeds of the issuance or the incurrence of Indebtedness (including Capital Lease Obligations and purchase money Indebtedness, but excluding, solely as relating to Capital Expenditures, proceeds of Revolving Facility Loans), the sale or issuance of any Equity Interests (including any capital contributions) and any loss, damage, destruction or condemnation of, or any sale, transfer or other disposition (including any sale and leaseback of assets and any mortgage or lease of Real Property) to any person of any asset or assets, in each case to the extent there is a corresponding deduction from Excess Cash Flow above,
(l)    any extraordinary or nonrecurring gain realized in cash during such Excess Cash Flow Period (except to the extent such gain consists of Net Proceeds subject to Section 2.12(b)),
(m)    to the extent deducted in the computation of EBITDA, cash interest income, and
(n)    the amount related to items that were deducted from or not added to Net Income in connection with calculating Consolidated Net Income or were deducted from or not added to Consolidated Net Income in calculating EBITDA to the extent either (i) such items represented cash received by Parent or any Subsidiary or (ii) such items do not represent cash paid by Parent or any Subsidiary, in each case on a consolidated basis during such Excess Cash Flow Period.
For the avoidance of doubt, Excess Cash Flow shall not be calculated on a Pro Forma Basis.
“Excess Cash Flow Period” shall mean each fiscal year of Parent, commencing with the fiscal year ending December 31, 2019.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time and any successor thereto.
“Excluded Indebtedness” shall mean all Indebtedness not incurred in violation of Section 6.01 (other than Refinancing Term Loans and Indebtedness incurred pursuant to Section 6.01(r)(i)).
“Excluded Property” shall have the meaning assigned to such term in the Collateral Agreement.
“Excluded Subsidiary” shall mean (a) any Unrestricted Subsidiary, (b) any subsidiary that is not a Wholly-Owned Subsidiary and (c) any Immaterial Subsidiary designated as an Excluded Subsidiary (i) on the Perfection Certificate delivered on the Closing Date or (ii) pursuant to an Officer’s Certificate delivered to the Administrative Agent after the Closing Date.
“Excluded Swap Obligation” shall mean, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act (or the application or official interpretation thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act (determined after giving effect to Section 3 of the Guarantee Agreement, any other keepwell, support, or other agreement for the benefit of such Guarantor and any and all guarantees of such Guarantor’s Swap Obligations by other Specified Loan Parties) at the time the Guarantee of such Guarantor becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.
“Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender, any Swingline Lender, any L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document, the following Taxes:

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(a)    Taxes imposed on (or measured by) its net income or franchise Taxes imposed on (or measured by) its overall gross income by a jurisdiction as a result of such recipient being organized or having its principal office located in or, in the case of any Lender, having its applicable Lending Office located in, such jurisdiction (or any political subdivision thereof) or as a result of any other present or former connection with such jurisdiction (including as a result of such Lender engaging in a trade or business in (or being resident in) such jurisdiction for tax purposes) but excluding any connection with such jurisdiction arising solely from such recipient having executed, delivered, enforced, become a party to, performed its obligations, received payments, received or perfected a security interest under, and/or engaged in any other transaction pursuant to, any Loan Document),
(b)    any Taxes in the nature of the branch profits tax imposed by Section 884(a) of the Code that is imposed by any jurisdiction described in clause (a) above,
(c)    any withholding Tax that is attributable to a Lender’s, Swingline Lender’s or L/C Issuer’s failure to comply with Section 2.18(e) and (f), and
(d)    any Taxes imposed pursuant to FATCA.
“Existing Class” shall mean a Class of Existing Term Loans or a Class of Existing Revolving Commitments.
“Existing Credit Agreement” shall mean the Credit Agreement, dated as of April 17, 2013, as amended prior to the Closing Date, among the Borrower, EVERTEC Intermediate Holdings, LLC, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent for such lenders.
“Existing Letter of Credit” shall mean the Letters of Credit originally issued under the Existing Credit Agreement and set forth on Schedule 1.01B.
“Existing Revolving Commitments” shall have the meaning assigned to such term in Section 2.23(b).
“Existing Term Loans” shall have the meaning assigned to such term in Section 2.23(a).
“Extended Class” shall mean a Class of Extended Term Loans or a Class of Extended Revolving Commitments.
“Extended Revolving Commitments” shall have the meaning assigned to such term in Section 2.23(b).
“Extended Term Loans” shall have the meaning assigned to such term in Section 2.23(a).
“Extending Lender” shall have the meaning assigned to such term in Section 2.23(c).
“Extension Effective Date” shall have the meaning assigned to such term in Section 2.23(c).
“Extension Election” shall have the meaning assigned to such term in Section 2.23(c).
“Extension Request” means a Revolving Extension Request or a Term Extension Request.
“Facility” shall mean the respective facility and commitments utilized in making Loans and credit extensions hereunder, it being understood that as of the Closing Date there are three Facilities, i.e., the Term A Facility, the Term B Facility and the Revolving Facility (and no Incremental Term Facility), and thereafter, may include any Incremental Term Facility, any Class of Refinancing Term Loans and any Class of Replacement Revolving Commitments.
“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations promulgated thereunder or official interpretations thereof and any agreements entered into pursuant to current Section 1471(b)(1) of the Code (or any amended or successor version described above) and any intergovernmental agreement or treaty (and any related law, regulation or official administrative guidance) among Governmental Authorities implementing such Sections of the Code.
“Federal Funds Rate” shall mean, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal

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Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.
“Fee Letter” shall mean that certain Fee Letter dated November 3, 2018 by and among the Borrower, Merrill Lynch Pierce, Fenner & Smith Incorporated and the Administrative Agent.
“Fees” shall mean the Commitment Fees, the L/C Participation Fees, the L/C Issuer Fees and the Administrative Agent Fees.
“Financial Officer” of any person shall mean the Chief Financial Officer, principal accounting officer, Treasurer, Assistant Treasurer or Controller of such person.
“Financial Performance Covenant” shall mean the covenant set forth in Section 6.10.
“FIRREA” shall mean the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.
“First Lien Intercreditor Agreement” shall mean an intercreditor agreement among the holders of First Lien Obligations or their representatives, substantially in the form of Exhibit J, with such changes thereto as may be agreed by the Administrative Agent.
“First Lien Obligations” shall mean the Obligations and the Other First Lien Obligations.
“First Lien Secured Net Debt” at any date shall mean (a) the aggregate principal amount of Consolidated Debt of Parent and its Subsidiaries outstanding at such date (after giving effect to all incurrences and repayment of all Indebtedness on such date) that consists of, without duplication, (i) Capital Lease Obligations and (ii) other Indebtedness that in each case is then secured by Liens on property or assets of Parent or its Subsidiaries (other than (x) property or assets held in a defeasance or similar trust or arrangement for the benefit of the Indebtedness secured thereby and (y) Liens that are expressly subordinated to the Liens securing the Obligations), less (b) up to $60,000,000 of unrestricted cash and cash equivalents (determined in accordance with GAAP) of Parent and its Subsidiaries at such date (after giving effect to all transactions to occur on such date).
“First Lien Secured Net Leverage Ratio” shall mean, on any date, the ratio of (a) First Lien Secured Net Debt as of such date to (b) EBITDA for the Test Period most recently ended as of such date, all determined on a consolidated basis in accordance with GAAP.
“Flood Insurance Laws” shall mean, collectively, (i) the National Flood Insurance Reform Act of 1994 (which comprehensively revised the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973) as now or hereafter in effect or any successor statute thereto, (ii) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto, and (iii) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.
“Fronting Exposure” shall mean at any time there is a Defaulting Lender, (a) with respect to the L/C Issuer, such Defaulting Lender’s Revolving Facility Percentage of the outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swingline Lender, such Defaulting Lender’s Revolving Facility Percentage of Swingline Loans other than Swingline Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.
“GAAP” shall mean generally accepted accounting principles in effect from time to time in the United States, applied on a consistent basis, subject to the provisions of Section 1.03.
“Global Intercompany Note” shall mean a promissory note executed by Parent and the Subsidiaries, substantially in the form of Exhibit K.
“Governmental Authority” shall mean any federal, state, commonwealth, provincial, municipality, local or foreign court or governmental agency, authority, instrumentality or regulatory or legislative body (for the avoidance of doubt, “Governmental Authority” shall include any court or governmental agency, authority, instrumentality or regulatory or legislative body of the Commonwealth of Puerto Rico and any subdivision thereof).

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“Guarantee” of or by any person (the “guarantor”) shall mean (a) any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other monetary obligation payable or performable by another person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (iv) entered into for the purpose of assuring in any other manner the holders of such Indebtedness or other obligation of the payment thereof or to protect such holders against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of the guarantor securing any Indebtedness (or any existing right, contingent or otherwise, of the holder of Indebtedness to be secured by such a Lien) of any other person, whether or not such Indebtedness or other obligation is assumed by the guarantor; provided, however, the term “Guarantee” shall not include endorsements for deposit or collection in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition or disposition of assets permitted by this Agreement (other than such obligations with respect to Indebtedness). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such person is required to perform thereunder) as determined by such person in good faith.
“Guarantee Agreement” shall mean (i) the Guarantee Agreement, dated as of the Closing Date, among the Loan Parties party thereto and the Administrative Agent, substantially in the form of Exhibit G, and (ii) any additional guarantee agreement governed by the laws of a non-U.S. jurisdiction in accordance with the Agreed Security Principles.
“Guarantors” shall mean, collectively, (a) Parent, (b) the Subsidiary Loan Parties and (c) with respect to the payment and performance of the Secured Obligations (other than of the Borrower), the Borrower.
“guarantor” shall have the meaning assigned to such term in the definition of the term “Guarantee.”
“Hazardous Materials” shall mean all pollutants, contaminants, wastes, chemicals, materials, substances and constituents, including, without limitation, explosive or radioactive substances or petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls or radon gas, of any nature subject to regulation, or which can give rise to liability under, any Environmental Law.
“ISP” shall mean the International Standby Practices, International Chamber of Commerce Publication No. 590 (or such later version thereof as may be in effect at the applicable time).
“Immaterial Subsidiary” shall mean any subsidiary that, together with its subsidiaries, did not (a) have assets with an aggregate value in excess of 4.0% of the Consolidated Total Assets as of the last day of the fiscal quarter of Parent most recently ended or EBITDA (for such subsidiary and its subsidiaries) representing in excess of 5.0% of EBITDA (for Parent and the Subsidiaries on a consolidated basis) for the Test Period most recently ended or (b) taken together with all other Immaterial Subsidiaries, have assets with an aggregate value in excess of 10.0% of Consolidated Total Assets as of the last day of the fiscal quarter of Parent most recently ended or EBITDA representing in excess of 10.0% of EBITDA (for Parent and the Subsidiaries on a consolidated basis) for the Test Period most recently ended.
“Incremental Amount” shall mean, on or after the Closing Date, the sum of (a) the greater of (X) $200,000,000 and (Y) at the time of incurrence under Section 2.22 or 6.01(v), 100% of EBITDA on a Pro Forma Basis for the Test Period most recently ended, plus (b) the amount of any voluntary prepayment of any Term Loans (including the amount of actual cash expended in connection with any Auction Prepayment pursuant to Section 2.12(g)) and/or any permanent reduction of the Revolving Facility Commitments; provided that the relevant prepayment or reduction is not funded with the proceeds of any long-term Indebtedness (other than any Revolving Facility Loan or Swingline Loan), plus (c) the maximum principal amount of Indebtedness that may be incurred at such time that would not cause the First Lien Secured Net Leverage Ratio on a Pro Forma Basis to exceed 3.25 to 1.00; provided that in calculating the First Lien Secured Net Leverage Ratio for purposes of this definition only, (i) all Revolving Facility Commitments shall be assumed to be fully drawn and (ii) the cash proceeds of any Incremental Commitments incurred on such date shall be excluded in the calculation of the First Lien Secured Net Leverage Ratio. The Borrower may select use of the Incremental Amount between clauses (a), (b) and (c) in such order as it determines (which shall be specified in the applicable Additional Credit Extension Amendment) and, in the case of a concurrent use of clauses (a) or (b) and clause (c), the amount utilized under clause (a) or (b) shall not be required to be given pro forma effect in calculating the First Lien Secured Net Leverage Ratio in clause (c). The Borrower may redesignate any Indebtedness originally designated as incurred under clause (a) or (b) as having been incurred under clause (c), so long as at the time of such

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redesignation, the Borrower would be permitted to incur under clause (c) the aggregate principal amount of indebtedness being so redesignated (for purposes of clarity, with any such redesignation having the effect of increasing the Borrower’s ability to incur indebtedness under clause (a) or (b) as of the date of such redesignation by the amount of indebtedness so redesignated).
“Incremental Commitments” shall mean the Additional Revolving Commitments, the Additional Term Loan Commitments, the Other Term A Loan Commitments and the Other Term B Loan Commitments.
“Incremental Commitments Effective Date” shall have the meaning assigned to such term in Section 2.22(b).
“Incremental Equivalent Debt” shall mean Indebtedness of a Loan Party in the form of notes issued in a public or private offering; provided that (i) such Indebtedness shall be secured by the Collateral on a pari passu basis with the Secured Obligations and shall be subject to the First Lien Intercreditor Agreement, (ii) the terms of such Indebtedness shall not provide for any scheduled repayment, mandatory redemption or sinking fund obligations prior to the then Latest Maturity Date (other than customary offers to repurchase upon a change of control, asset sale or event of loss (so long as, in the case of a change of control offer to purchase provision, a change of control would not be triggered thereunder unless a Change of Control is also triggered hereunder, and in the case of an asset sale or event of loss offer to purchase provision, the net proceeds of any asset sale are permitted to be applied to the prepayment of the Loans on a not less than ratable basis than such Indebtedness) and customary acceleration rights after an event of default) and (iii) the covenants, events of default, guarantees and other terms of such Indebtedness (other than pricing and redemption premiums), taken as a whole, shall not be more restrictive to Parent and the Subsidiaries than those set forth in this Agreement; provided that a certificate of the Chief Financial Officer of Parent delivered to the Administrative Agent in good faith at least three Business Days (or such shorter period as the Administrative Agent may reasonably agree) prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that Parent has determined in good faith that such terms and conditions satisfy the requirement in this clause (iii) shall be conclusive evidence that such terms and conditions satisfy the requirement in this clause (iii).
“Incremental Term Facility” shall mean the Incremental Term Loan Commitments and the Incremental Term Loans made hereunder.
“Incremental Term Facility Maturity Date” shall mean, with respect to any series or tranche of Incremental Term Loans established pursuant to an Additional Credit Extension Amendment, the maturity date for such series or tranche as set forth in such Additional Credit Extension Amendment.
“Incremental Term Lender” shall mean a Lender with an Incremental Term Loan Commitment or an outstanding Incremental Term Loan.
“Incremental Term Loan Commitment” shall mean an Additional Term Loan Commitment, Other Term A Loan Commitment or Other Term B Loan Commitment.
“Incremental Term Loan Installment Date” shall have, with respect to any series or tranche of Incremental Term Loans established pursuant to an Additional Credit Extension Amendment, the meaning assigned to such term in Section 2.11(a)(iii).
“Incremental Term Loans” shall mean Term Loans made by one or more Lenders to the Borrower pursuant to Section 2.22. Incremental Term Loans may be made in the form of additional Term A Loans, additional Term B Loans or, to the extent permitted by Section 2.22 and provided for in the relevant Additional Credit Extension Amendment, Other Term A Loans or Other Term B Loans.
“Indebtedness” of any person shall mean, if and to the extent (other than with respect to clause (h) below) the same would constitute indebtedness or a liability in accordance with GAAP, without duplication, (a) all obligations of such person for borrowed money, (b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such person issued or assumed as the deferred purchase price of property or services (other than such obligations accrued in the ordinary course), to the extent the same would be required to be shown as a long-term liability on a balance sheet prepared in accordance with GAAP, (d) all Capital Lease Obligations of such person, (e) all net payments that such person would have to make in the event of an early termination, on the date Indebtedness of such person is being determined, in respect of outstanding Swap Agreements, (f) the principal component of all obligations, contingent or otherwise, of such person as an account party in respect of letters of credit, (g) the principal component of all obligations of such person in respect of bankers’ acceptances, (h) all Guarantees by such person of Indebtedness described in clauses (a) through (g) above and (i) the amount of all obligations of such person with respect to the redemption, repayment or other repurchase of any Disqualified Stock (excluding accrued dividends that have not increased the liquidation preference of such Disqualified Stock); provided,

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that Indebtedness shall not include (A) trade payables, accrued expenses and intercompany liabilities arising in the ordinary course of business, (B) prepaid or deferred revenue arising in the ordinary course of business, (C) purchase price holdbacks arising in the ordinary course of business in respect of a portion of the purchase prices of an asset to satisfy unperformed obligations of the seller of such asset or (D) earn-out obligations until such obligations become a liability on the balance sheet of such person in accordance with GAAP. The Indebtedness of any person shall include the Indebtedness of any partnership in which such person is a general partner, other than to the extent that the instrument or agreement evidencing such Indebtedness expressly limits the liability of such person in respect thereof.
“Indemnified Taxes” shall mean all Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document.
“Indemnitee” shall have the meaning assigned to such term in Section 9.05(b).
“Ineligible Institution” shall mean (x) the Persons identified in writing to the Joint Lead Arrangers by Parent as “Ineligible Institutions” prior to the Closing Date, and (y) any competitors of the Parent or its Subsidiaries identified in writing to the Administrative Agent by Parent as “Ineligible Institutions” from time to time after the Closing Date, with the consent of the Administrative Agent (not to be unreasonably withheld or delayed); provided that (i) a Person shall cease to be an Ineligible Institution when Parent delivers a notice to such effect to the Administrative Agent, (ii) the addition of any Person as an Ineligible Institution after the Closing Date shall not be effective until the third Business Day after the Administrative Agent consents to the addition of such Person as an Ineligible Institution, (iii) the identification of any Person as an Ineligible Institution after the Closing Date shall not apply to retroactively disqualify any Person that was a Lender or a participant prior to the effectiveness of the addition of such Person as an Ineligible Institution and (iv) any notice to the Administrative Agent adding or removing an Ineligible Institution shall be delivered to the Administrative Agent in accordance with Section 9.01 in order for such update to be effective.
“Information” shall have the meaning assigned to such term in Section 3.14(a).
“Information Memorandum” shall mean the Lender Presentation provided to the Lenders and the Private Supplement provided to the Lenders (other than Public Lenders), dated November 8, 2018.
“Intellectual Property Rights” shall have the meaning assigned to such term in Section 3.22.
“Interest Election Request” shall mean a request by the Borrower to convert or continue a Term Borrowing or Revolving Facility Borrowing in accordance with Section 2.08.
“Interest Expense” shall mean, with respect to any person for any period, the sum of (a) gross interest expense of such person for such period on a consolidated basis, including (i) the amortization of debt discounts, (ii) the amortization of all fees (including fees with respect to interest rate Swap Agreements) payable in connection with the incurrence of Indebtedness to the extent included in interest expense and (iii) the portion of any payments or accruals with respect to Capital Lease Obligations allocable to interest expense and (b) capitalized interest of such person. For purposes of the foregoing, gross interest expense shall be determined after giving effect to any net payments made or received and costs incurred by Parent and the Subsidiaries with respect to interest rate Swap Agreements, and interest on a Capital Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by Parent to be the rate of interest implicit in such Capital Lease Obligation in accordance with GAAP; provided that, for purposes of calculating Interest Expense, no effect shall be given to the discount and/or premium resulting from the bifurcation of derivatives under FASB ASC 815 and related interpretations as a result of the terms of the Indebtedness to which such Interest Expense relates.
“Interest Payment Date” shall mean, (a) as to any Eurocurrency Loan, the last day of each Interest Period applicable to such Loan and the scheduled maturity date of such Loan; provided, however, that if any Interest Period for a Eurocurrency Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any ABR Loan (including a Swingline Loan), the last Business Day of each March, June, September and December and the scheduled maturity date of such Loan.
“Interest Period” shall mean, as to each Eurocurrency Loan, the period commencing on the date such Eurocurrency Loan is disbursed or converted to or continued as a Eurocurrency Loan and ending on the date one, two, three or six months (or twelve months if agreed to by each applicable Lender or such period of shorter than one month (i) if agreed to by each applicable Lender in the case of any Revolving Facility Loan or (ii) as may be consented to by the Administrative Agent in the case of any Term Loan) thereafter, as selected by Parent; provided that:

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(a)    any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;
(b)    any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and
(c)    no Interest Period for any Loan shall extend beyond the maturity date of such Loan.
Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.
“Investment” shall have the meaning assigned to such term in Section 6.04.
“ISP” shall mean, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).
“Issuer Documents” shall mean, with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and the Borrower (or any Subsidiary) regarding the rights and obligations between the Borrower (or any Subsidiary) and the L/C Issuer in connection with the issuance of Letters of Credit.
“Joint Bookrunners” shall mean Bank of America, N.A. (solely with respect to the Term B Facility), Merrill Lynch Pierce, Fenner & Smith Incorporated (or any other registered broker-dealer wholly-owned by Bank of America Corporation to which all or substantially all of Bank of America Corporation’s or any of its subsidiaries’ investment banking, commercial lending services or related businesses may be transferred following the date of this Agreement) (solely with respect to the Term A Facility and the Revolving Credit Facility), SunTrust Robinson Humphrey, Inc., Citibank, N.A., Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A. and Deutsche Bank Securities Inc., in their capacities as joint bookrunners of the facilities hereunder on the Closing Date.
“Joint Lead Arrangers” shall mean Bank of America, N.A. (solely with respect to the Term B Facility), Merrill Lynch Pierce, Fenner & Smith Incorporated (or any other registered broker-dealer wholly-owned by Bank of America Corporation to which all or substantially all of Bank of America Corporation’s or any of its subsidiaries’ investment banking, commercial lending services or related businesses may be transferred following the date of this Agreement) (solely with respect to the Term A Facility and the Revolving Credit Facility), SunTrust Robinson Humphrey, Inc., Citibank, N.A., Goldman Sachs Bank USA and JPMorgan Chase Bank, N.A., in their capacities as joint lead arrangers of the facilities hereunder on the Closing Date.
“Junior Financing” shall have the meaning assigned to such term in Section 6.09(b).
“Junior Liens” shall mean Liens (other than Liens securing the Obligations) that are subordinated to the Liens granted under the Loan Documents on customary terms pursuant to an intercreditor agreement reasonably satisfactory to the Administrative Agent (it being understood that Junior Liens are not required to be pari passu with other Junior Liens, and that Indebtedness secured by Junior Liens may have Liens that are senior in priority to, or pari passu with, or junior in priority to, other Liens constituting Junior Liens).
“Latest Maturity Date” shall mean, at any time of determination, the latest of (i) the Latest Revolving Facility Maturity Date, (ii) the Term A Facility Maturity Date, (iii) the Term B Facility Maturity Date, (iv) any Incremental Term Facility Maturity Date and (v) the maturity date of any Refinancing Term Loans.
“Latest Revolving Facility Maturity Date” shall mean, at any time of determination, the later of (i) the Revolving Facility Maturity Date, (ii) the maturity date of any Extended Revolving Commitments and (iii) the maturity date of any Replacement Revolving Commitments.
“L/C Alternative Currency” shall mean (i) Mexican Pesos and (ii) any other currency (other than Dollars) that is approved as an “L/C Alternative Currency” in accordance with Section 1.05.
“L/C Credit Extension” shall mean, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

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“L/C Disbursement” shall mean any drawing or other payment made by the L/C Issuer under any Letter of Credit.
“L/C Disbursement Participation” shall mean, with respect to each Lender, such Lender’s funding of its participation in any Unreimbursed L/C Disbursement in accordance with its Revolving Facility Percentage. All L/C Disbursement Participations shall be denominated in Dollars.
“L/C Issuer” shall mean (i) with respect to the Existing Letters of Credit only, JPMorgan Chase Bank, N.A., (ii) Bank of America, N.A. and (iii) any successor L/C Issuer pursuant to Section 2.05(l), 8.09 or 9.04(i).
“L/C Issuer Fees” shall have the meaning assigned to such term in Section 2.13(b).
“L/C Obligations” shall mean, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed L/C Disbursements. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.08. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.13 or 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.
“L/C Participation Fee” shall have the meaning assigned to such term in Section 2.13(b).
“Lender” shall mean (i) each financial institution listed on Schedule 2.01 and (ii) each Person that became or becomes a “Lender” hereunder pursuant to Section 9.04, 2.22, 2.23 or 2.25, in each case, other than any such Person that has ceased to be a party hereto pursuant to an Assignment and Acceptance in accordance with Section 9.04 or upon payment in full of the Obligations held by such Person.
“Lending Office” shall mean, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent, which office may include any Affiliate of such Lender or any domestic or foreign branch of such Lender or such Affiliate. Unless the context otherwise requires each reference to a Lender shall include its applicable Lending Office.
“Letter of Credit” shall mean any letter of credit issued hereunder, providing for the payment of cash upon the honoring of a presentation thereunder and including any Existing Letters of Credit. A Letter of Credit may be a commercial letter of credit or a standby letter of credit. Letters of Credit shall be issued in Dollars or in an Alternative Currency.
“Letter of Credit Application” shall mean an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.
“Letter of Credit Expiration Date” shall mean the day that is five Business Days prior to the Latest Revolving Facility Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).
“Letter of Credit Sublimit” shall mean an amount equal to the lesser of (a) $60,000,000 and (b) the aggregate amount of the Revolving Facility Commitments. The Letter of Credit Sublimit is part of, and not in addition to, the Revolving Facility.
“LIBO Screen Rate” shall have the meaning assigned to it in the definition of “Eurocurrency Rate.”
“LIBOR Successor Rate” shall have the meaning assigned to such term in Section 2.28.
“LIBOR Successor Rate Conforming Changes” shall mean, with respect to any proposed LIBOR Successor Rate, any conforming changes to the definitions of ABR, Eurocurrency Rate and Interest Period, timing and frequency of determining rates and making payments of interest and other administrative matters as may be appropriate, in the discretion of the Administrative Agent, to reflect the adoption of such LIBOR Successor Rate and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such LIBOR Successor Rate exists, in such other manner of administration as the Administrative Agent determines in consultation with the Borrower).
“Lien” shall mean, with respect to any asset, (a) any mortgage, preferred mortgage, deed of trust, easement, right of way or other encumbrance on title to real property, lien, notice of claim of lien, hypothecation, pledge, charge, security interest or similar encumbrance in or on such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement,

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capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset; provided that in no event shall an operating lease or an agreement to sell be deemed to constitute a Lien.
“Limited Condition Transaction” shall mean (a) any acquisition or similar Investment by one or more of Parent and its Subsidiaries of any assets, business or person permitted to be acquired by this Agreement, in each case whose consummation is not conditioned on the availability of, or on obtaining, third-party financing and (b) any repayment, repurchase or refinancing of Indebtedness with respect to which an irrevocable (which may be conditional) notice of repayment (or similar notice) is required to be delivered.
“Loan Documents” shall mean this (i) Agreement, (ii) the Guarantee Agreement, (iii) the Letters of Credit, (iv) each Issuer Document, (v) the Security Documents, (vi) any Notes, (vii) any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.26, (viii) each Additional Credit Extension Amendment and (ix) amendments, supplements and joinders to the Loan Documents.
“Loan Parties” shall mean Parent, the Borrower and the Subsidiary Loan Parties.
“Loans” shall mean the Term A Loans, the Term B Loans, the Incremental Term Loans (if any), the Refinancing Term Loans (if any), the Revolving Facility Loans and the Swingline Loans.
“Local Time” shall mean, with respect to a Loan or Borrowing made to the Borrower, New York City time (daylight or standard, as applicable).
“Management Group” shall mean the group consisting of the directors, executive officers and other management personnel of Parent and its Subsidiaries, as the case may be, on the Closing Date together with (x) any new directors whose election by such Boards of Directors or whose nomination for election by the shareholders of Parent, was approved by a vote of a majority of the Board of Directors of Parent then still in office who were either directors on the Closing Date or whose election or nomination was previously so approved and (y) executive officers and other management personnel of the Parent and its Subsidiaries hired at a time when the directors on the Closing Date together with the directors so approved constituted a majority of the Board of Directors of Parent.
“Margin Stock” shall have the meaning assigned to such term in Regulation U.
“Material Acquisition” shall mean (a) a Permitted Business Acquisition for which the aggregate cash and non-cash consideration (including assumed Indebtedness, the good faith estimate by Parent of the maximum amount of any deferred purchase price obligations (including any earn out payments) and Equity Interests) exceeds $100,000,000, or (b) a series of related Permitted Business Acquisitions in any twelve (12) month period, for which the aggregate cash and non-cash consideration (including assumed Indebtedness, the good faith estimate by Parent of the maximum amount of any deferred purchase price obligations (including any earn out payments) and Equity Interests) for all such Permitted Business Acquisitions exceeds $100,000,000; provided, that, for any Permitted Business Acquisition or series of Permitted Business Acquisitions to qualify as a “Material Acquisition”, the Administrative Agent shall have received (not fewer than ten (10) Business Days (or such lesser period of time as may be agreed to by the Administrative Agent in its sole discretion) prior to the consummation of such Permitted Business Acquisition or the last in a series of related Permitted Business Acquisitions) a Material Acquisition Election Certificate with respect to such Permitted Business Acquisition or series of Permitted Business Acquisitions.
“Material Acquisition Election Certificate” shall mean a certificate of a Financial Officer of Parent, in form and substance reasonably satisfactory to the Administrative Agent, (a) certifying that the applicable Permitted Business Acquisition or series of related Permitted Business Acquisitions meet the criteria set forth in clause (a) or (b) (as applicable) of the definition of “Material Acquisition”, and (b) notifying the Administrative Agent that Parent has elected to treat such Permitted Business Acquisition or series of related Permitted Business Acquisitions as a “Material Acquisition.”
“Material Adverse Effect” shall mean (i) a material adverse effect on the business, property, operations or condition (financial or otherwise) of Parent and its Subsidiaries, taken as a whole, or (ii) an adverse effect on the validity and enforceability of any of the Loan Documents or the rights and remedies of the Agents and the Lenders thereunder.
“Material Indebtedness” shall mean Indebtedness (other than Loans and Letters of Credit) of any one or more of Parent or any Subsidiary in an aggregate principal amount exceeding $50,000,000.

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“Material Subsidiary” shall mean any Subsidiary other than Immaterial Subsidiaries. For the avoidance of doubt, the Borrower is a Material Subsidiary.
“Maximum Rate” shall have the meaning assigned to such term in Section 9.09.
“Merchant Agreement” shall mean any contract entered into with a merchant relating to the provision of Merchant Services.
“Merchant Services” shall mean services provided to merchants relating to the authorization, transaction capture, settlement, chargeback handling and Internet-based transaction processing of credit, debit, stored-value and loyalty card and other payment transactions (including provision of point of service devices and other equipment necessary to capture merchant transactions and other ancillary services).
“Minimum Collateral Amount” shall mean, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances provided to reduce or eliminate Fronting Exposure during the existence of a Defaulting Lender, an amount equal to 105% of the Fronting Exposure of the L/C Issuer with respect to Letters of Credit issued and outstanding at such time, (ii) with respect to Cash Collateral consisting of cash or deposit account balances provided in accordance with the provisions of Section 2.26(a)(i), an amount equal to 105% of the Outstanding Amount of all LC Obligations, and (iii) otherwise, an amount determined by the Administrative Agent and the L/C Issuer in their sole discretion.
“Moody’s” shall mean Moody’s Investors Service, Inc.
“Mortgaged Properties” shall mean the Owned Real Properties owned by any Loan Party that are encumbered by a Mortgage pursuant to Section 5.10(c) or 5.10(d).
“Mortgages” shall mean, collectively, the mortgages, trust deeds, deeds of trust, deeds to secure debt, assignments of leases and rents, charges and other security documents delivered with respect to Mortgaged Properties in a form and substance reasonably acceptable to the Administrative Agent, as amended, supplemented or otherwise modified from time to time.
“MSA” shall mean that certain Amended and Restated Master Service Agreement dated as of September 30, 2010, Popular, Banco Popular de Puerto Rico and Parent, as amended, restated, supplemented or otherwise modified from time to time.
“Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which Parent or any Subsidiary or any ERISA Affiliate (other than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414) is making or accruing an obligation to make contributions, or has within any of the preceding six plan years made or accrued an obligation to make contributions.
“Net Income” shall mean, with respect to any person, the net income (loss) attributable to such person’s common stockholders, determined in accordance with GAAP.
“Net Proceeds” shall mean:
(a)    100% of the cash proceeds actually received by Parent or any Subsidiary (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise and including casualty insurance settlements and condemnation awards, but only as and when received) from any Asset Sale pursuant to Section 6.05(e), net of (i) attorneys’ fees, accountants’ fees, investment banking fees, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, required debt payments and required payments of other obligations relating to the applicable asset to the extent such debt or obligations are secured by a Lien permitted hereunder (other than pursuant to the Loan Documents) on such asset which Lien ranks prior to the Liens securing the Obligations, other customary expenses and brokerage, consultant and other customary fees actually incurred in connection therewith, (ii) Taxes paid or payable as a result thereof, and (iii) the amount of any reasonable reserve established in accordance with GAAP against any adjustment to the sale price or any liabilities (other than any taxes deducted pursuant to clause (i) above) (x) related to any of the applicable assets and (y) retained by Parent or any Subsidiary including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations (however, the amount of any subsequent reduction of such reserve (other than in connection with a payment in respect of any such liability) shall be deemed to be cash proceeds of such Asset Sale occurring on the date of such reduction); provided, that, if Parent shall deliver a certificate of a Responsible Officer of

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Parent to the Administrative Agent promptly following receipt of any such proceeds setting forth Parent’s intention to use any portion of such proceeds, to acquire, maintain, develop, construct, improve, upgrade or repair assets useful in the business of Parent and the Subsidiaries or to make investments in Permitted Business Acquisitions, in each case within 12 months of such receipt, such portion of such proceeds shall not constitute Net Proceeds except to the extent not, within 12 months of such receipt, so used or contractually committed to be so used (it being understood that if any portion of such proceeds are not so used within such 12-month period but within such 12-month period are contractually committed to be used, then such remaining portion if not so used within 18 months of such receipt shall constitute Net Proceeds as of such date without giving effect to this proviso); provided, further, that (x) no net cash proceeds calculated in accordance with the foregoing realized in any fiscal year shall constitute Net Proceeds in such fiscal year until the aggregate amount of all such net cash proceeds in such fiscal year shall exceed $15,000,000 (and thereafter only net cash proceeds in excess of such amount shall constitute Net Proceeds) and (y) no net cash proceeds calculated in accordance with the foregoing realized in a single transaction or series of related transactions shall constitute Net Proceeds unless such net cash proceeds shall exceed $5,000,000; and
(b)    100% of the cash proceeds from the incurrence, issuance or sale by Parent or any Subsidiary of any Indebtedness (other than Excluded Indebtedness), net of all taxes and fees (including investment banking fees), commissions, costs and other expenses, in each case incurred in connection with such issuance or sale.
“New York Courts” shall have the meaning assigned to such term in Section 9.15.
“Non-Consenting Lender” shall have the meaning assigned to such term in Section 2.20(c).
“Non-Defaulting Lender” shall mean each Lender that is not a Defaulting Lender.
“Non-Extension Notice Date” shall have the meaning assigned to such term in Section 2.05(b).
“Non-Reinstatement Deadline” shall have the meaning assigned to such term in Section 2.05(b).
“Note” shall have the meaning assigned to such term in Section 2.10(e).
“Obligations” shall mean (a) the due and punctual payment by the Borrower of (i) the unpaid principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans made to the Borrower, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by the Borrower hereunder in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) and obligations to provide cash collateral, and (iii) all other monetary obligations of the Borrower to any of the Secured Parties under this Agreement and each of the other Loan Documents, including obligations to pay fees, expense reimbursement obligations and indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of the Borrower under or pursuant to this Agreement and each of the other Loan Documents and (c) the due and punctual payment and performance of all the obligations of each other Loan Party under or pursuant to this Agreement and each of the other Loan Documents, and the obligation of the Loan Parties to reimburse any amount in respect of any of the foregoing that the Administrative Agent or any Lender, in each case in its sole discretion, may elect to pay or advance on behalf of the Loan Parties.
“Officer’s Certificate” shall mean a certificate signed by a Financial Officer of Parent.
“OID” shall have the meaning assigned to such term in Section 2.22(a).
“Organization Document” shall mean, (a) with respect to any corporation, the charter or certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement or limited liability company agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

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“Other First Lien Obligations” shall mean the “Other First Lien Obligations” as defined in the First Lien Intercreditor Agreement, including any interest accruing after commencement of any bankruptcy or insolvency proceeding with respect to any holder of Other First Lien Obligations whether or not allowed in such proceeding.
“Other First Lien Secured Parties” shall mean the “Other First Lien Secured Parties” as defined in the First Lien Intercreditor Agreement.
“Other First Liens” shall mean Liens on the Collateral securing loans or notes on a pari passu basis with the Liens securing the Obligations (such loans or notes, the “Other First Lien Debt”), which may be granted under the Loan Documents to the Collateral Agent (if acceptable to the Collateral Agent in its sole discretion) for the benefit of the holders of such Other First Lien Debt or under separate security documents to a collateral agent for the benefit of the holders of the Other First Lien Debt and, in each case, shall be subject to the First Lien Intercreditor Agreement.
“Other Taxes” shall mean all present or future stamp, court, recording, filing or documentary Taxes or any other excise or property Taxes arising from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document.
“Other Term A Loan Commitments” shall have the meaning assigned to such term in Section 2.22(a).
“Other Term A Loans” shall mean term loans that (i) have annual scheduled amortization in excess of 1.00% of the original aggregate principal amount of such term loans, (ii) have a final maturity of five years or less, (iii) are primarily syndicated to commercial banks in the primary syndication thereof and (iv) have interest rates, amortization (subject to the foregoing clause (i)), maturity (subject to the foregoing clause (ii)) and/or other terms different from the Term A Loans.
“Other Term B Loan Commitments” shall have the meaning assigned to such term in Section 2.22(a).
“Other Term B Loans” shall mean term loans that (i) are not Other Term A Loans and (ii) have interest rates, amortization, maturity and/or other terms different from any other existing Class of Term Loans.
“Outstanding Amount” shall mean (i) with respect to any Loans on any date, the Dollar Equivalent amount of the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of such Loans occurring on such date; (ii) with respect to Swingline Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of such Swingline Loans occurring on such date; and (iii) with respect to any L/C Obligations on any date, the Dollar Equivalent amount of the aggregate outstanding amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by the Borrower of Unreimbursed L/C Disbursements.
“Owned Real Property” shall mean each parcel of Real Property that is owned in fee by any Loan Party that has an individual fair market value (as determined by Parent in good faith) of at least $15,000,000 (provided that such $15,000,000 threshold shall not be applicable in the case of Real Property that is integrally related to the ownership or operation of a Mortgaged Property or otherwise necessary for such Mortgaged Property to be in compliance with all requirements of law applicable to such Mortgaged Property); provided that, with respect to any Real Property that is partially owned in fee and partially leased by any Loan Party, Owned Real Property will include only that portion of such Real Property that is owned in fee and only if (i) such portion that is owned in fee has an individual fair market value (as determined by Parent in good faith) of at least $15,000,000 (provided that such $15,000,000 threshold shall not be applicable in the case of Real Property that is integrally related to the ownership or operation of a Mortgaged Property or otherwise necessary for such Mortgaged Property to be in compliance with all requirements of law applicable to such Mortgaged Property) and (ii) a mortgage in favor of the Collateral Agent (for the benefit of the Secured Parties) is permitted on such portion of Real Property owned in fee by applicable law and by the terms of any lease, or other applicable document governing any leased portion of such Real Property.
“Paid in Full” and “Payment in Full” shall have the meanings assigned to such terms in the Collateral Agreement.
“Parent” shall have the meaning assigned to such term in the preamble to this Agreement, together with its permitted successors.
“Participant” shall have the meaning assigned to such term in Section 9.04(c)(i).
“Participant Register” shall have the meaning assigned to such term in Section 9.04(c)(iii)

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“Participating Member State” shall mean each state so described in any EMU Legislation.
“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.
“Pension Act” shall mean the Pension Protection Act of 2006, as amended from time to time and any successor thereto.
“Perfection Certificate” shall mean the Perfection Certificate substantially in the form of Exhibit I.
“Permitted Business Acquisition” shall mean any acquisition by Parent or any Subsidiary of all or any substantial part of the assets of any other person or division or line of business of another person, or Equity Interests of another Person that becomes a Subsidiary thereby, or any merger, consolidation or amalgamation with another person (or any subsequent investment made in a person, division or line of business previously acquired in a Permitted Business Acquisition), if immediately after giving effect thereto: (i) no Event of Default shall have occurred and be continuing or would result therefrom; (ii) all transactions related thereto shall be consummated in accordance with applicable laws; (iii) to the extent required by Section 5.10, any person acquired in such acquisition, if acquired by a Loan Party, shall be merged into a Loan Party or become, following the consummation of such acquisition in accordance with Section 5.10 and subject to the Agreed Security Principles, a Subsidiary Loan Party; and (iv) the aggregate amount of such acquisitions and investments in assets that are not owned by Loan Parties or in Equity Interests in persons that are not Loan Parties or do not become Subsidiary Loan Parties following the consummation of such acquisition shall not exceed the greater of (X) $150,000,000 and (Y) at the time of any such acquisition, 75% of the EBITDA on a Pro Forma Basis for the Test Period most recently ended.
“Permitted Holder” shall mean each of (i) the Sponsor, (ii) the Management Group, with respect to Voting Stock representing not more than 10% of the voting power of the Voting Stock of Parent, (iii) any Person (x) that has no material assets other than the capital stock of Parent, (y) that, directly or indirectly, holds or acquires beneficial ownership of 100% on a fully diluted basis of the Voting Stock of Parent, and (z) of which, no other Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Closing Date) other than any of the other Permitted Holders specified in clauses (i) and (ii), beneficially owns Voting Stock of such Person representing more than the greater of (A) 50% and (B) the percentage beneficially owned by the Permitted Holders specified in clauses (i) and (ii)) of the voting power of the Voting Stock thereof, and (iv) any “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Closing Date) the members of which include any of the other Permitted Holders specified in clauses (i) and (ii) and that, directly or indirectly, hold or acquire beneficial ownership of the Voting Stock of Parent (a “Permitted Holder Group”), so long as (1) each member of the Permitted Holder Group has voting rights proportional to the percentage of ownership interests held or acquired by such member, and (2) no other Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Closing Date) other than any of the other Permitted Holders specified in clauses (i) and (ii), beneficially owns Voting Stock of Parent representing more than the greater of (A) 50% of the Voting Stock of Parent and (B) the percentage of the Voting Stock of Parent beneficially owned by the Permitted Holders specified in clauses (i) and (ii)) of the Voting Stock held by the Permitted Holder Group. “Beneficial ownership” has the meaning given in Rules 13d-3 and 13d-5 under the Exchange Act.
“Permitted Investments” shall mean:
(a)    direct obligations of the United States of America or any member of the European Union or any agency thereof or obligations guaranteed by the United States of America or any member of the European Union or any agency thereof, in each case with maturities not exceeding two years;
(b)    time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust company that is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America having capital, surplus and undivided profits in excess of $250,000,000 and whose long-term debt, or whose parent holding company’s long-term debt, is rated A (or such similar equivalent rating or higher by at least one “nationally recognized statistical rating organization” registered under Section 15E of the Exchange Act);
(c)    repurchase obligations with a term of not more than 180 days for underlying securities of the types described in clause (a) above entered into with a bank meeting the qualifications described in clause (b) above;
(d)    commercial paper, maturing not more than one year after the date of acquisition, issued by a corporation (other than an Affiliate of the Borrower) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any

28


investment therein is made of P-1 (or higher) according to Moody’s, or A-1 (or higher) according to S&P (or such similar equivalent rating or higher by at least one “nationally recognized statistical rating organization” registered under Section 15E of the Exchange Act);
(e)    securities with maturities of two years or less from the date of acquisition issued or fully guaranteed by any State, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least A by S&P or A by Moody’s (or such similar equivalent rating or higher by at least one “nationally recognized statistical rating organization” registered under Section 15E of the Exchange Act);
(f)    shares of mutual funds whose investment guidelines restrict 95% of such funds’ investments to those satisfying the provisions of clauses (a) through (e) above;
(g)    money market funds that (i) comply with the criteria set forth in 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; and
(h)    time deposit accounts, certificates of deposit and money market deposits in an aggregate face amount not in excess of 0.5% of the Consolidated Total Assets of Parent and the Subsidiaries, on a consolidated basis, as of the end of Parent’s most recently completed fiscal year; and
(i)    instruments equivalent to those referred to in clauses (a) through (h) above denominated in any foreign currency comparable in credit quality and tenor to those referred to above and commonly used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Subsidiary organized in such jurisdiction.
“Permitted Liens” shall have the meaning assigned to such term in Section 6.02.
“Permitted Refinancing Indebtedness” shall mean any Indebtedness issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund (collectively, to “Refinance”) the Indebtedness being Refinanced (or previous refinancings thereof constituting Permitted Refinancing Indebtedness) (and, in the case of revolving Indebtedness being Refinanced, to effect a corresponding reduction in the commitments with respect to such revolving Indebtedness being Refinanced); provided, that with respect to any Indebtedness being Refinanced: (a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so Refinanced (plus unpaid accrued interest and premium (including tender premiums) thereon and underwriting discounts, defeasance costs, fees, commissions and expenses), (b) except with respect to Section 6.01(i), the weighted average life to maturity of such Permitted Refinancing Indebtedness is greater than or equal to the shorter of (i) the weighted average life to maturity of the Indebtedness being Refinanced and (ii) the weighted average life to maturity that would result if all payments of principal on the Indebtedness being Refinanced that were due on or after the date that is one year following the then Latest Maturity Date were instead due on the date that is one year following the then Latest Maturity Date, (c) if the Indebtedness being Refinanced is subordinated in right of payment to the Obligations under this Agreement, such Permitted Refinancing Indebtedness shall be subordinated in right of payment to such Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being Refinanced, (d) if the Indebtedness being Refinanced is Indebtedness of one or more Loan Parties, such Permitted Refinancing Indebtedness shall not be incurred by any Subsidiary that is not a Loan Parties and (e) no Permitted Refinancing Indebtedness shall have greater guarantees or security than the Indebtedness being Refinanced; provided that any Indebtedness secured by a Junior Lien may be Refinanced with Indebtedness that is secured by other Junior Liens that are senior in priority to the Junior Liens securing such Indebtedness being Refinanced, so long as the Liens securing such refinancing Indebtedness are subject to intercreditor terms that, vis-à-vis the Obligations, are no less favorable to the Lenders than those set forth in the intercreditor agreement governing such Indebtedness being Refinanced.
“person” or “Person” shall mean any natural person, corporation, business trust, joint venture, association, company, partnership, limited liability company or government, individual or family trusts, or any agency or political subdivision thereof.
“Plan” shall mean any employee pension benefit plan (other than a Multiemployer Plan) that is, (i) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, (ii) sponsored or maintained (at the time of determination or at any time within the five years prior thereto) by Parent, any of its Subsidiaries or any ERISA Affiliate, and (iii) in respect of which Parent, any of its Subsidiaries or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

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“Platform” shall have the meaning assigned to such term in Section 9.17(a).
“Pledged Collateral” shall have the meaning assigned to such term in the Collateral Agreement.
“Popular” shall mean Popular, Inc., a Puerto Rico corporation.
“PR Code” shall mean the Puerto Rico Internal Revenue Code of 2011 and the regulations promulgated and rulings issued thereunder.
“Pricing Grid” shall mean, with respect to the Term A Loans, the Revolving Facility Loans and the Applicable Commitment Fee, the table set forth below:
Term A Loans and Revolving Facility Loans:
Pricing Level
Total Secured
Net Leverage Ratio
Applicable Margin for Eurocurrency Loans
Applicable Margin for ABR Loans
1
Greater than or equal to 3.00 to 1.00
2.50%
1.50%
2
Less than 3.00 to 1.00 and greater than or equal to 2.50 to 1.00
2.25%
1.25%
3
Less than 2.50 to 1.00 and greater than or equal to 2.00 to 1.00
2.00%
1.00%
4
Less than 2.00 to 1.00
1.75%
0.75%


Applicable Commitment Fee:
Pricing Level
Total Secured
Net Leverage Ratio
Applicable
Commitment Fee
1
Greater than or equal to 3.50 to 1.00
0.500%
2
Less than 3.50 to 1.00 and greater than or equal to 3.00 to 1.00
0.375%
3
Less than 3.00 to 1.00
0.250%

For the purposes of the Pricing Grid, changes in the Applicable Margin and Applicable Commitment Fee resulting from changes in the Total Secured Net Leverage Ratio shall become effective on the date (the “Adjustment Date”) of delivery of the relevant financial statements pursuant to Section 5.04, and shall remain in effect until the next change to be effected pursuant to this paragraph. If any financial statements referred to above are not delivered within the time periods specified in Section 5.04, then, at the option of the Administrative Agent or the Required Lenders, until the date that is three Business Days after the date on which such financial statements are delivered, pricing level 1 shall apply as of the first Business Day after the date on which such financial statements were to have been delivered but were not delivered.
Notwithstanding anything to the contrary contained above in this definition or elsewhere in this Agreement, if it is subsequently determined that the Total Secured Net Leverage Ratio set forth in any Compliance Certificate delivered to the Administrative Agent pursuant to Section 5.04(c) is inaccurate as a result of any fraud, intentional misrepresentation or willful misconduct of Parent or any of its subsidiaries or any officer thereof and the result is that the Lenders received interest or fees for any period based on an Applicable Margin and the Applicable Commitment Fee that is less than that which would have been applicable had the Total Secured Net Leverage Ratio been accurately determined, then, for all purposes of this Agreement, the “Applicable Margin” and the “Applicable Commitment Fee” for any day occurring within the period covered by such Compliance Certificate shall retroactively be deemed to be the relevant percentage as based upon the accurately determined Total Secured Net Leverage Ratio for such period, and any shortfall in the interest or fees theretofore paid by the Borrower for the relevant period pursuant to this Agreement as a result of the miscalculation of the Total Secured Net Leverage Ratio shall be deemed to be (and shall be) due and payable under the relevant provisions of this Agreement, as applicable, at the time the interest or fees for such period were required to be paid pursuant to said Section (and shall remain due and payable until paid in full, together with all amounts owing under Section 2.14, in accordance with the terms of this Agreement), but shall be paid for the ratable account of the Lenders at the time that such determination is made.
“Primary L/C Issuer” shall mean Bank of America, in its capacity as an L/C Issuer.

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“primary obligor” shall have the meaning given to such term in the definition of the term “Guarantee.”
“Prime Rate” shall mean the rate of interest per annum publicly announced from time to time by Bank of America as its prime rate. The “Prime Rate” is a rate set by Bank of America based upon various factors including Bank of America’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. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.
“Pro Forma Basis” shall mean, as to any person, for any events as described below that occur subsequent to the commencement of a period for which the financial effect of such events is being calculated, and giving effect to the events for which such calculation is being made, such calculation as will give pro forma effect to such events as if such events occurred on the first day of the four consecutive fiscal quarter period ended on or before the occurrence of such event (the “Reference Period”): (i) in making any determination of EBITDA, effect shall be given to (a) any Asset Sale, any acquisition, Investment, disposition, merger, amalgamation, consolidation (or any similar transaction or transactions not otherwise permitted under Section 6.04 or 6.05 that require a waiver or consent of the Required Lenders and such waiver or consent has been obtained), any dividend, distribution or other similar payment, any designation of any Subsidiary as an Unrestricted Subsidiary and any Subsidiary Redesignation, and (b) any restructurings of the business of Parent or any of its Subsidiaries that Parent or any of its Subsidiaries has made and/or has determined to make during the Reference Period or subsequent to such Reference Period and on or prior to or simultaneously with the date of calculation of EBITDA and are expected to have a continuing impact and are factually supportable, which would include the amount of cost savings projected by Parent in good faith net of the amount of actual benefits realized or expected to be realized prior to or during such date from actions taken or to be taken in connection with any Asset Sale, acquisition, Investment, disposition, merger, amalgamation, consolidation or any strategic cost initiative, which adjustments Parent determines are reasonable as set forth in an Officer’s Certificate of Parent; provided that (x) any such projected cost savings are reasonably identifiable and expected by Parent to be realized within 18 months of such Asset Sale, acquisition, Investment, disposition, merger, amalgamation, consolidation or strategic cost initiative and (y) the aggregate amount added back pursuant to this clause (i)(b) for any period of four fiscal quarters shall not exceed 15% of EBITDA for such period (calculated prior to giving effect to this clause (i)(b) (the foregoing, together with any transactions related thereto or in connection therewith, the “relevant transactions”), in each case that occurred during the Reference Period (or, in the case of determinations made pursuant to the definition of the term “Pro Forma Compliance” or pursuant to Sections 2.12(g), 6.01, 6.02, 6.04, 6.05, 6.06 and 6.09, occurring during the Reference Period or thereafter and through and including the date upon which the respective Permitted Business Acquisition or relevant transaction is consummated), and (ii) (A) any Subsidiary Redesignation then being designated, effect shall be given to such Subsidiary Redesignation and all other Subsidiary Redesignations after the first day of the relevant Reference Period and on or prior to the date of the respective Subsidiary Redesignation then being designated, collectively, and (B) any designation of a Subsidiary as an Unrestricted Subsidiary, effect shall be given to such designation and all other designations of Subsidiaries as Unrestricted Subsidiaries after the first day of the relevant Reference Period and on or prior to the date of the then applicable designation of a Subsidiary as an Unrestricted Subsidiary, collectively.
Pro forma calculations made pursuant to the definition of the term “Pro Forma Basis” shall be determined in good faith by a Responsible Officer of Parent and may include, all adjustments used in connection with the calculation of “Adjusted EBITDA” as set forth in the Information Memorandum to the extent such adjustments, without duplication, continue to be applicable. Parent shall deliver to the Administrative Agent an Officer’s Certificate setting forth such demonstrable or additional operating expense reductions and other operating improvements, synergies or cost savings and information and calculations supporting them in reasonable detail.
For purposes of this definition, any amount in a currency other than Dollars will be converted to Dollars based on the average exchange rate for such currency for the most recent twelve month period immediately prior to the date of determination in a manner consistent with that used in calculating EBITDA for the applicable period.
“Pro Forma Compliance” shall mean, at any date of determination, that Parent and its Subsidiaries shall be in compliance, after giving effect on a Pro Forma Basis to the relevant transactions (including the assumption, the issuance, incurrence and permanent repayment of Indebtedness), with the Financial Performance Covenant recomputed as at the last day of the most recently ended fiscal quarter of Parent and its Subsidiaries for which the financial statements and certificates required pursuant to Section 5.04 have been or were required to have been delivered (provided, that prior to first delivery of financial statements after the Closing Date, such covenant shall be deemed to have applied to Parent’s most recently completed fiscal quarter).
“Projections” shall mean the projections of Parent and the Subsidiaries included in the Information Memorandum and any other projections and any forward-looking statements (including statements with respect to booked business) of such

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entities furnished to the Lenders or the Administrative Agent by or on behalf of Parent or any of the Subsidiaries prior to the Closing Date.
“PTE” shall mean a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Public Lender” shall have the meaning assigned to such term in Section 9.17.
“Puerto Rico Filings” shall have the meaning assigned to such term in Section 8.17.
“Qualified Eligible Contract Participant Guarantor” shall mean, in respect of any Swap Obligation, each Loan Party that has total assets exceeding $10,000,000 at the time the relevant Guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
“Qualified Equity Interests” shall mean any Equity Interests of Parent other than Disqualified Stock.
“Real Property” shall mean, collectively, all right, title and interest (including, without limitation, any leasehold estate) in and to any and all parcels of or interests in real property owned in fee or leased by any Loan Party, together with, in each case, all easements, hereditaments and appurtenances relating thereto, and all improvements situated, placed or constructed upon, or fixed to or incorporated into, or which becomes a component part of or which is permanently moored to, such real property, and appurtenant fixtures incidental to the ownership or lease thereof.
“Reference Period” shall have the meaning assigned to such term in the definition of the term “Pro Forma Basis.”
“Refinance” shall have the meaning assigned to such term in the definition of the term “Permitted Refinancing Indebtedness,” “Refinancing” and “Refinanced” shall have a correlative meaning.
“Refinancing Term Effective Date” shall have the meaning assigned to such term in Section 2.24(b).
“Refinancing Term Lender” shall have the meaning assigned to such term in Section 2.24(b).
“Refinancing Term Loan Installment Date” shall have, with respect to any series or tranche of Refinancing Term Loans established pursuant to a Additional Credit Extension Amendment, the meaning assigned to such term in Section 2.11(a)(iv).
“Refinancing Term Loans” shall have the meaning assigned to such term in Section 2.24(a).
“Register” shall have the meaning assigned to such term in Section 9.04(b)(iv).
“Regulation U” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“Regulation X” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“Related Fund” shall mean, with respect to any Lender that is a fund that invests in bank or commercial loans and similar extensions of credit, any other fund that invests in bank or commercial loans and similar extensions of credit and is advised or managed by (a) such Lender, (b) an Affiliate of such Lender or (c) an entity (or an Affiliate of such entity) that administers, advises or manages such Lender.
“Related Parties” shall mean, with respect to any specified person, such person’s Affiliates and the respective directors, trustees, officers, employees, agents and advisors of such person and such person’s Affiliates.
“Release” shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, emanating or migrating in, into, onto or through the Environment.
“Replaced Revolving Commitments” shall have the meaning assigned to such term in Section 2.25(a).

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“Replacement Revolving Commitment” shall have the meaning assigned to such term in Section 2.25(a).
“Replacement Revolving Lender” shall have the meaning assigned to such term in Section 2.25(b).
“Reportable Event” shall mean any reportable event as defined in Section 4043(c) of ERISA or the regulations issued thereunder, other than those events as to which the 30-day notice period referred to in Section 4043(c) of ERISA has been waived, with respect to a Plan (other than a Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Code).
“Repricing Transaction” shall mean each of (a) the repayment, prepayment, refinancing or replacement of all or a portion of the Term B Loans with the proceeds of any secured term loans incurred by Parent or any Subsidiary which have an effective interest cost or weighted average yield (as determined by the Administrative Agent consistent with generally accepted financial practice and, in any event, excluding any arrangement or commitment fees in connection therewith) that is less than the effective interest cost or weighted average yield (as determined by the Administrative Agent on the same basis) of the Term B Loans (or portion thereof) so repaid, prepaid, refinanced or replaced or repriced and (b) any amendment, waiver or other modification to, or consent under, this Agreement which has the effect of reducing the effective yield (to be determined by the Administrative Agent on the same basis as set forth in the preceding clause (a)) of the Term B Loans; provided that in no event shall any such repayment, repayment, refinancing, substitution, replacement, amendment, waiver, modification or consent in connection with a Change of Control or a Transformative Acquisition constitute a Repricing Transaction. Any determination by the Administrative Agent of any effective interest rate as contemplated by preceding clauses (a) and (b) shall be conclusive and binding on all Lenders, and the Administrative Agent shall have no liability to any Person with respect to such determination.
“Required Class Lenders” shall mean, at any time, (i) with respect to any Term Facility, Lenders having Loans and unused Commitments under such Term Facility representing more than 50% of the sum of all Loans and unused Commitments under such Term Facility at such time and (ii) with respect to any Revolving Facility, Lenders having Revolving Facility Commitments under such Revolving Facility representing more than 50% of all Revolving Facility Commitments under such Revolving Facility at such time (and, if the Revolving Facility Commitments under such Revolving Facility have been terminated, Lenders having Revolving Facility Credit Exposures under such Revolving Facility representing more than 50% of all Revolving Facility Credit Exposures under such Revolving Facility at such time); provided that the amount of any participation in any Swingline Loan and Unreimbursed L/C Disbursements that any Defaulting Lender has failed to fund that has not been reallocated to and funded by another Lender shall be deemed to be held by the Lender that is the Swingline Lender or applicable L/C Issuer, as the case may be, in making the determination of the “Required Class Lenders” with respect to the Revolving Facility.
“Required Covenant Lenders” shall mean, at any time, the Lenders under the Classes with respect to which the Financial Performance Covenant is applicable at such time having Loans and unused Commitments under such Classes that are Term Facilities, Revolving Facility Commitments (and, if the Revolving Facility Commitments have been terminated, Lenders having Revolving Facility Credit Exposures) representing more than 50% of all Loans and unused Commitments under such Classes that are Term Facilities and Revolving Facility Commitments (and, if the Revolving Facility Commitments have been terminated, all Revolving Facility Credit Exposures); provided that the amount of any participation in any Swingline Loan and Unreimbursed L/C Disbursements that any Defaulting Lender has failed to fund that has not been reallocated to and funded by another Lender shall be deemed to be held by the Lender that is the Swingline Lender or applicable L/C Issuer, as the case may be, in making the determination of the “Required Covenant Lenders” with respect to the Revolving Facility.
“Required Lenders” shall mean, at any time, Lenders having Term Loans and Commitments (and, if the Revolving Facility Commitments have been terminated, Revolving Facility Credit Exposures) that, taken together, represent more than 50% of the sum of all Term Loans and Commitments (and, if the Revolving Facility Commitments have been terminated, Revolving Facility Credit Exposures) at such time. The Loans, Commitments and Revolving Facility Credit Exposures of any Defaulting Lender shall be disregarded in determining Required Lenders at any time; provided that the amount of any participation in any Swingline Loan and Unreimbursed L/C Disbursements that any Defaulting Lender has failed to fund that has not been reallocated to and funded by another Lender shall be deemed to be held by the Lender that is the Swingline Lender or applicable L/C Issuer, as the case may be, in making the determination of the “Required Lenders.”
“Required Revolving Lenders” shall mean, at any time, Lenders having Revolving Facility Commitments (and, if the Revolving Facility Commitments have been terminated, Revolving Facility Credit Exposures) that, taken together, represent more than 50% of the sum of all Revolving Facility Commitments (and, if the Revolving Facility Commitments have been terminated, Revolving Facility Credit Exposures) at such time. The Revolving Facility Commitments and Revolving Facility Credit Exposures of any Defaulting Lender shall be disregarded in determining Required Revolving Lenders at any time; provided that the amount of any participation in any Swingline Loan and Unreimbursed L/C Disbursements that any Defaulting

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Lender has failed to fund that has not been reallocated to and funded by another Lender shall be deemed to be held by the Lender that is the Swingline Lender or applicable L/C Issuer, as the case may be, in making the determination of the “Required Revolving Lenders.”
“Required Prepayment Date” shall have the meaning assigned to such term in Section 2.12(e).
“Responsible Officer” of any person shall mean any executive officer or Financial Officer of such person and, solely for purposes of any notices given pursuant to Article II, any other officer or similar official thereof designated by any of the foregoing officers in a notice to the Administrative Agent.
“Restricted Payments” shall have the meaning assigned to such term in Section 6.06.
“Revaluation Date” shall mean (a) with respect to any Loan denominated in an Alternative Currency, each of the following: (i) each date of a Borrowing of a Eurocurrency Revolving Loan denominated in an Alternative Currency, (ii) each date of a continuation of a Eurocurrency Revolving Loan denominated in an Alternative Currency pursuant to Section 2.08, and (iii) such additional dates as the Administrative Agent shall determine or the Required Class Lenders under the Revolving Facility shall require; and (b) with respect to any Letter of Credit denominated in an Alternative Currency, each of the following: (i) each date of issuance of any such Letter of Credit, (ii) each date of an amendment of any such Letter of Credit having the effect of increasing the amount thereof, (iii) each date of any payment by the L/C Issuer under any such Letter of Credit, and (iv) such additional dates as the Administrative Agent or the L/C Issuer shall determine or the Required Class Lenders under the Revolving Facility shall require.
“Revolving Extension Request” shall have the meaning assigned to such term in Section 2.23(b).
“Revolving Facility Borrowing” shall mean a Borrowing comprised of Revolving Facility Loans of a single Class.
“Revolving Facility Commitments” shall mean, with respect to any Revolving Facility Lender, the commitment of such Revolving Facility Lender to make Revolving Facility Loans pursuant to Section 2.01(c), as such commitment may be (a) reduced from time to time pursuant to Section 2.09, (b) reduced or increased from time to time pursuant to assignments by or to such Lender under Section 9.04, and (c) increased as provided under Section 2.22. The initial amount of each Revolving Facility Lender’s Revolving Facility Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance or Additional Credit Extension Amendment pursuant to which such Lender shall have assumed its Revolving Facility Commitment, as applicable. The aggregate amount of the Revolving Facility Lenders’ Revolving Facility Commitment as of the Closing Date is $125,000,000. The Revolving Facility Commitments include the Additional Revolving Commitments, Extended Revolving Commitments and Replacement Revolving Commitments.
“Revolving Facility Credit Exposure” shall mean the sum of (a) the aggregate Outstanding Amount of the Revolving Facility Loans at such time, (b) the Outstanding Amount of Swingline Loans at such time and (c) the Outstanding Amount of the L/C Obligations at such time. The Revolving Facility Credit Exposure of any Lender at any time shall be the product of (x) such Revolving Facility Lender’s Revolving Facility Percentage and (y) the aggregate Revolving Facility Credit Exposure at such time.
“Revolving Facility Lender” shall mean a Lender with a Revolving Facility Commitment or with Revolving Facility Credit Exposure.
“Revolving Facility Loans” shall mean loans made by a Lender pursuant to Section 2.01(c). Each Revolving Facility Loan shall be a Eurocurrency Loan or an ABR Loan.
“Revolving Facility Maturity Date” shall mean November 27, 2023, the date that is five years after the Closing Date.
“Revolving Facility Percentage” shall mean, with respect to any Revolving Facility Lender, the percentage of the total Revolving Facility Commitments representing such Lender’s Revolving Facility Commitment. If the Revolving Facility Commitments have terminated or expired, the Revolving Facility Percentages shall be determined based upon the Revolving Facility Commitments most recently in effect, giving effect to any assignments pursuant to Section 9.04.
“S&P” shall mean Standard & Poor’s Ratings Group, Inc.
“Same Day Funds” shall mean (a) with respect to disbursements and payments in Dollars, immediately available funds, and (b) with respect to disbursements and payments in an Alternative Currency, same day or other funds as may be

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determined by the Administrative Agent or the L/C Issuer, as the case may be, to be customary in the place of disbursement or payment for the settlement of international banking transactions in the relevant Alternative Currency.
“Sanctioned Country” shall mean, at any time, a country, region or territory which is itself the subject or target of any Sanctions (on the Closing Date, Cuba, Iran, North Korea, Syria and Crimea).
“Sanctioned Person” shall mean, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or by the United Nations Security Council, the European Union, any European Union member state or Her Majesty’s Treasury of the United Kingdom, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clause (a) or (b).
“Sanctions” shall mean economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state or Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority.
“Scheduled Unavailability Date” shall have the meaning assigned to such term in Section 2.28.
“SEC” shall mean the Securities and Exchange Commission or any successor thereto.
“Secured Cash Management Agreement” shall mean any Cash Management Agreement that is entered into by and between the Parent or any Subsidiary and any Person that (i) with respect to any Cash Management Agreement in effect on the Closing Date, is a Lender, an Agent, a Joint Lead Arranger, a Joint Bookrunner or an Affiliate of a Lender, an Agent, a Joint Lead Arranger or a Joint Bookrunner on the Closing Date or (ii) at the time it enters into a Cash Management Agreement, is a Lender, an Agent, a Joint Lead Arranger, a Joint Bookrunner or an Affiliate of a Lender, an Agent, a Joint Lead Arranger or a Joint Bookrunner.
“Secured Swap Agreement” shall mean any Swap Agreement that is entered into by and between the Parent or any Subsidiary and any Person that (i) with respect to any Swap Agreement in effect on the Closing Date, is a Lender, an Agent, a Joint Lead Arranger, a Joint Bookrunner or an Affiliate of a Lender, an Agent, a Joint Lead Arranger or a Joint Bookrunner on the Closing Date or (ii) at the time it enters into a Swap Agreement, is a Lender, an Agent, a Joint Lead Arranger, a Joint Bookrunner or an Affiliate of a Lender, an Agent, a Joint Lead Arranger or a Joint Bookrunner.
“Secured Obligations” shall mean (a) the Obligations, (b) the due and punctual payment and performance of all obligations of Parent or Subsidiary under each Secured Swap Agreement and (c) the due and punctual payment and performance of all obligations of Parent or any Subsidiary under each Secured Cash Management Agreement, but excluding, with respect to each Guarantor that is not a Qualified Eligible Contract Participant Guarantor, the Excluded Swap Obligations of such Guarantor.
“Secured Parties” shall have the meaning assigned to such term in the Collateral Agreement.
“Security Documents” shall mean collectively, the Collateral Agreement, the Mortgages granted by any Loan Party and each of the security agreements and other instruments and documents executed and delivered pursuant to any of the foregoing or pursuant to Section 4.02 or 5.10.
“Settlement” shall mean the transfer of cash or other property with respect to any credit, charge or debit card charge, check or other instrument, electronic funds transfer, or other type of paper-based or electronic payment, transfer or charge transaction for which a person acts as a processor, remitter, funds recipient or funds transmitter for its customers in the ordinary course of business.
“Settlement Assets” shall mean any cash, receivable or other property, including a Settlement Receivable, due or conveyed to a person in consideration for a Settlement made or arranged, or to be made or arranged, by such person or an Affiliate of such person.
“Settlement Indebtedness” shall mean any payment or reimbursement obligation in respect of a Settlement Payment.

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“Settlement Lien” shall mean any Lien relating to any Settlement or Settlement Indebtedness (and may include, for the avoidance of doubt, the grant of a Lien in or other assignment of a Settlement Asset in consideration of a Settlement Payment, Lien securing intraday and overnight overdraft and automated clearinghouse exposure, and similar Liens)
“Settlement Payment” shall mean the transfer, or contractual undertaking (including by automated clearinghouse transaction) to effect a transfer, of cash or other property to effect a Settlement.
“Settlement Receivable” shall mean any general intangible, payment intangible, or instrument representing or reflecting an obligation to make payments to or for the benefit of a person in consideration for and in the amount of a Settlement made or arranged, or to be made or arranged, by such person.
“Similar Business” shall mean the businesses engaged in by Parent and the Subsidiaries as of the Closing Date or any business or activity that is reasonably similar or complementary thereto or a reasonable extension, development or expansion thereof or ancillary thereto.
“Specified Loan Party” shall mean any Loan Party that is not an “eligible contract participant” under the Commodity Exchange Act (determined prior to giving effect to Section 3 of the Guarantee Agreement).
“Specified Prepayment Debt” shall mean any senior unsecured, senior secured or subordinated loans and/or notes of any Loan Party, no part of the principal of which is required to be paid (whether by way of mandatory sinking fund, mandatory redemption, mandatory prepayment or otherwise), prior to the date that is six months after the then Latest Maturity Date (it being understood that any required offer to purchase such Indebtedness as a result of a change of control or asset sale shall not violate the foregoing restriction (so long as, in the case of a change of control offer to purchase provision, a change of control would not be triggered thereunder unless a Change of Control is also triggered hereunder, and in the case of an asset sale offer to purchase provision, the net proceeds of any asset sale are permitted to be applied to the prepayment of the Loans first or, in the case of Indebtedness secured by Other First Liens, on a not less than ratable basis than such Indebtedness)) and the terms and conditions of which (other than with respect to pricing, amortization, final maturity and collateral), taken as a whole, are not materially less favorable to Parent and its Subsidiaries than this Agreement or are otherwise reasonably acceptable to the Administrative Agent; provided that (i) in respect of any senior secured Indebtedness with Liens on the Collateral (which may be Liens that are pari passu with, or junior to, the Liens on the Collateral securing the Obligations), such Liens shall be Other First Liens or Junior Liens and (ii) in respect of any subordinated Indebtedness, such Indebtedness shall be subject to customary subordination provisions reasonably satisfactory to the Administrative Agent.
“Sponsor” shall mean Popular or any of its Affiliates (but not including, however, any of Popular’s portfolio companies).
“Spot Rate” for a currency shall mean the rate determined by the Administrative Agent or the L/C Issuer, as applicable, to be the rate quoted by the person acting in such capacity as the spot rate for the purchase by such person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date as of which the foreign exchange computation is made; provided that the Administrative Agent or the L/C Issuer may obtain such spot rate from another financial institution designated by the Administrative Agent or the L/C Issuer if the person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency; provided, further, that the L/C Issuer may use such spot rate quoted on the date as of which the foreign exchange computation is made in the case of any Letter of Credit denominated in an Alternative Currency.
“subsidiary” shall mean, with respect to any Person, (1) any corporation, association or other business entity (other than a partnership, joint venture or limited liability company) of which more than 50% of the total voting power of the Voting Stock is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, (2) any partnership, joint venture or limited liability company of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (y) such Person or any Subsidiary of such Person is a controlling general partner or otherwise Controls such entity and (3) any Person that is consolidated in the consolidated financial statements of the specified Person in accordance with GAAP.
“Subsidiary” shall mean, unless the context otherwise requires, a subsidiary of Parent, including the Borrower. Notwithstanding the foregoing (and except for purposes of the definition of “Unrestricted Subsidiary” contained herein), an

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Unrestricted Subsidiary shall be deemed not to be a Subsidiary of Parent or any of its Subsidiaries for purposes of this Agreement.
“Subsidiary Loan Party” shall mean (a) each Wholly-Owned Subsidiary of Parent (other than the Borrower) on the Closing Date and (b) each Subsidiary of Parent that becomes, or is required pursuant to Section 5.10 to become, a party to a Guarantee Agreement after the Closing Date, in each case, until released from such Guarantee Agreement in accordance with the Loan Documents. The Subsidiary Loan Parties on the Closing Date are indicated as such on Schedule 1 of the Perfection Certificate.
“Subsidiary Redesignation” shall have the meaning assigned to such term in Section 5.12.
“Swap Agreement” shall mean any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided, that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of Parent or any of the Subsidiaries shall be a Swap Agreement.
“Swap Obligations” shall mean with respect to any Guarantor any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.
“Swingline Borrowing” shall mean a Borrowing comprised of Swingline Loans.
“Swingline Borrowing Request” shall mean a request by the Borrower substantially in the form of Exhibit E or such other form as approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.
“Swingline Lender” shall mean Bank of America, in its capacity as a lender of Swingline Loans and its successors in such capacity.
“Swingline Loans” shall mean the swingline loans made to the Borrower pursuant to Section 2.04.
“Swingline Sublimit” shall mean an amount equal to the lesser of (a) $20,000,000 and (b) the aggregate amount of the Revolving Facility Commitments. The Swingline Sublimit is part of, and not in addition to, the Revolving Facility Commitments.
“TARGET Day” shall mean any day on which the Trans European Automated Real time Gross Settlement Express Transfer (TARGET) payment system (or, if such payment system ceases to be operative, such other payment system (if any) determined by the Administrative Agent to be a suitable replacement) is open for the settlement of payments in Euro.
“Taxes” shall mean all present or future sales, use, income, gross receipts, volume of business, excise and property and other taxes, levies, imposts, duties (including stamp duties), deductions, charges (including ad valorem charges) or withholdings imposed by any Governmental Authority and all interest, additions to tax and penalties related thereto.
“Term A Loan Commitment” shall mean with respect to each Lender, the commitment of such Lender to make Term A Loans as set forth in Section 2.01. The initial amount of each Lender’s Term A Loan Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Term A Loan Commitment, as applicable. The aggregate amount of the Term A Loan Commitments on the Closing Date is $220,000,000.
“Term A Facility” shall mean the Term A Loan Commitments and the Term A Loans made hereunder.
“Term A Facility Maturity Date” shall mean November 27, 2023, the date that is five years after the Closing Date.
“Term A Lenders” shall mean a Lender with a Term A Loan Commitment or an outstanding Term A Loan.
“Term A Loan Installment Date” shall have the meaning assigned to such term in Section 2.11(a)(i).

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“Term A Loans” shall mean the term loans made by the Lenders to the Borrower pursuant to Section 2.01(a) and any Incremental Term Loans in the form of Term A Loans made by the Incremental Term Lenders.
“Term B Facility” shall mean the Term B Loan Commitments and the Term B Loans made hereunder.
“Term B Facility Maturity Date” shall mean November 27, 2024, the date that is six years after the Closing Date.
“Term B Lenders” shall mean a Lender with a Term B Loan Commitment or an outstanding Term B Loan.
“Term B Loan Commitment” shall mean with respect to each Lender, the commitment of such Lender to make Term B Loans as set forth in Section 2.01. The initial amount of each Lender’s Term B Loan Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Term B Loan Commitment, as applicable. The aggregate amount of the Term B Loan Commitments on the Closing Date is $325,000,000.
“Term B Loan Installment Date” shall have the meaning assigned to such term in Section 2.11(a)(ii).
“Term B Loans” shall mean the term loans made by the Lenders to the Borrower pursuant to Section 2.01(b) and any Incremental Term Loans in the form of Term B Loans made by the Incremental Term Lenders.
“Term Borrowing” shall mean a Borrowing comprised of Term Loans of a single Class.
“Term Extension Request” shall have the meaning assigned to such term in Section 2.23(a).
“Term Facility” shall mean the Term A Facility, the Term B Facility, any Incremental Term Facility, Extended Term Loans and/or Refinancing Term Facility.
“Term Facility Maturity Date” shall mean (i) with respect to the Term A Facility, the Term A Facility Maturity Date, (ii) with respect to the Term B Facility, the Term B Facility Maturity Date and (iii) with respect to any Incremental Term Facility, the Incremental Term Facility Maturity Date for such Incremental Term Facility.
“Term Lender” shall mean a Lender with a Term Loan Commitment or an outstanding Term Loan.
“Term Loan Commitment” shall mean any Term A Loan Commitment, any Term B Loan Commitment or any Incremental Term Loan Commitment.
“Term Loan Installment Date” shall mean any Term A Loan Installment Date, Term B Loan Installment Date, any Refinancing Term Loan Installment Date or any Incremental Term Loan Installment Date.
“Term Loans” shall mean the Term A Loans, the Term B Loans, the Incremental Term Loans, Extended Term Loans and/or the Refinancing Term Loans.
“Test Period” shall mean, on any date of determination, the period of four consecutive fiscal quarters of Parent then most recently ended (taken as one accounting period) for which financial statements have been (or were required to be) delivered pursuant to Section 5.04(a) or 5.04(b).
“Total Net Debt” at any date shall mean (a) the aggregate principal amount of Consolidated Debt of Parent and the Subsidiaries outstanding at such date (after giving effect to all incurrences and repayment of all Indebtedness on such date), less (b) up to $60,000,000 of unrestricted cash and cash equivalents (determined in accordance with GAAP) of Parent and Subsidiaries at such date (after giving effect to all transactions to occur on such date).
“Total Net Leverage Ratio” shall mean, on any date, the ratio of (a) Total Net Debt as of the last day of the Test Period most recently ended as of such date to (b) EBITDA for the Test Period most recently ended as of such date, all determined on a consolidated basis in accordance with GAAP.
“Total Secured Net Debt” at any date shall mean (a) the aggregate principal amount of Consolidated Debt of Parent and the Subsidiaries outstanding at such date (after giving effect to all incurrences and repayment of all Indebtedness on such date) that consists of, without duplication, (i) Capital Lease Obligations and (ii) other Indebtedness that in each case is then secured by Liens on property or assets of Parent or any Subsidiary (other than property or assets held in a defeasance or similar trust or arrangement for the benefit of the Indebtedness secured thereby), less (b) up to $60,000,000 of unrestricted cash and

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cash equivalents (determined in accordance with GAAP) of Parent and the Subsidiaries at such date (after giving effect to all transactions to occur on such date).
“Total Secured Net Leverage Ratio” shall mean, on any date, the ratio of (a) Total Secured Net Debt as of the last day of the Test Period most recently ended as of such date to (b) EBITDA for the Test Period most recently ended as of such date, all determined on a consolidated basis in accordance with GAAP.
“Transactions” shall mean, collectively, (a) the execution and delivery of the Loan Documents, the creation of the Liens pursuant to the Security Documents, and the initial borrowings hereunder; (b) the repayment in full of all loans under the Existing Credit Agreement and the termination of the commitments thereunder; and (c) the payment of all fees and expenses to be paid in connection with the foregoing.
“Transformative Acquisition” shall mean any acquisition by Parent or any Subsidiary that is either (a) not permitted by the terms of the Loan Documents immediately prior to the consummation of such acquisition or (b) permitted by the terms of Loan Documents immediately prior to the consummation of such acquisition, but would not provide Parent and its Subsidiaries with adequate flexibility under the Loan Documents for the continuation and/or expansion of the combined operations following such consummation, as determined by Parent acting in good faith.
“Type” shall mean, when used in respect of any Loan or Borrowing, the rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined.
“UCP” shall have the meaning assigned to such term in Section 2.05(h).
“Unfunded Pension Liability” shall mean, as of the most recent valuation date for the applicable Plan, the excess of (1) the Plan’s actuarial present value (determined on the basis of reasonable assumptions employed by the independent actuary for such Plan for purposes of Section 412 of the Code or Section 302 of ERISA) of its benefit liabilities (as defined in Section 4001(a)(16) of ERISA) over (2) the fair market value of the assets of such Plan.
“Uniform Commercial Code” shall mean the Uniform Commercial Code as the same may from time to time be in effect in the State of New York or the Uniform Commercial Code (or similar code or statute) of another jurisdiction, to the extent it may be required to apply to any item or items of Collateral.
“United States” shall mean the United States of America, including (other than for U.S. federal income tax purposes), for the avoidance of doubt, the Commonwealth of Puerto Rico.
“Unreimbursed L/C Disbursement” shall have the meaning specified in Section 2.05(f).
“Unrestricted Subsidiary” shall mean (i) any subsidiary of Parent designated by Parent as an Unrestricted Subsidiary pursuant to Section 5.12 subsequent to the Closing Date, except to the extent redesignated as a Subsidiary in accordance with such Section 5.12, and (ii) any subsidiary of an Unrestricted Subsidiary.
“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)), as amended from time to time and any successor thereto, including the Beneficial Ownership Regulation.
“Voting Stock” shall mean for any Person, Equity Interests of that Person generally entitled to vote for the election of the Board of Directors of such Person.
“Waivable Mandatory Prepayment” shall mean a mandatory prepayment pursuant to Section 2.12(b) (other than any mandatory prepayment with Net Proceeds described in clause (b) of the definition of “Net Proceeds”) or Section 2.12(c).
“Weighted Average Life to Maturity” when applied to any Indebtedness at any date, shall mean the number of years obtained by dividing (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (2) the then outstanding principal amount of such Indebtedness.

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“Wholly-Owned Subsidiary” of any person shall mean a subsidiary of such person, all of the Equity Interests of which (other than directors’ qualifying shares or nominee or other similar shares required pursuant to applicable law) are owned by such person or another Wholly-Owned Subsidiary of such person.
“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
“Working Capital” shall mean, with respect to Parent and the Subsidiaries on a consolidated basis at any date of determination, Current Assets at such date of determination minus Current Liabilities at such date of determination; provided, that, for purposes of calculating Excess Cash Flow, increases or decreases in Working Capital shall be calculated without regard to any changes in Current Assets or Current Liabilities as a result of (a) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent or (b) the effects of purchase accounting.
“Write-Down and Conversion Powers” shall mean, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
SECTION 1.02.    Terms Generally

(a)With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(i)The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.
(ii)Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.
(iii)The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”
(iv)The word “will” shall be construed to have the same meaning and effect as the word “shall.”
(v)Any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document).
(vi)Any reference herein to any Person shall be construed to include such Person’s successors and assigns.
(vii)The words “hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof.
(viii)All references in a Loan Document to Articles, Sections, Preliminary Statements, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Preliminary Statements, Exhibits and Schedules to, the Loan Document in which such references appear.
(ix)Any reference to any law (or provision thereof) shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time.
(x)The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
(b)In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”
(c)Any financial ratios shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
(d)Any reference herein to a merger, transfer, consolidation, amalgamation, assignment, sale, disposition or transfer, or similar term, shall be deemed to include a division of or by a limited liability company, or an allocation of assets to a series of limited liability companies (or the unwinding of such a division or allocation), as if it were a merger, transfer, consolidation, amalgamation, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. Any division of a limited liability company shall constitute a separate Person hereunder (and each division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person).

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SECTION 1.03.    Accounting Terms

Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided, that, if Parent notifies the Administrative Agent that Parent requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Closing Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies Parent that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then (x) such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith, and (y) Parent shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Notwithstanding any other provision contained herein, (i) all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of Parent or any of its Subsidiaries at “fair value”, as defined therein and (ii) the accounting for operating leases and capital leases under GAAP as in effect on the Closing Date (including Accounting Standards Codification 840) shall apply for the purposes of determining compliance with the provisions of this Agreement, including the definition of “Capital Lease Obligations”.
SECTION 1.04.     Exchange Rates; Currency Equivalents

(a)     The Administrative Agent or the L/C Issuer shall determine the Spot Rates as of each Revaluation Date to be used for calculating Dollar Equivalent amounts and Outstanding Amounts denominated in Alternative Currencies or L/C Alternative Currencies, respectively. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur. Except for purposes of financial statements delivered by Loan Parties hereunder or calculating financial covenants hereunder or except as otherwise provided herein, the applicable amount of any currency (other than Dollars) for purposes of the Loan Documents shall be such Dollar Equivalent amount as so determined by the Administrative Agent or the L/C Issuer, as applicable. No Default or Event of Default shall arise as a result of any limitation or threshold set forth in Dollars in Article VI or paragraph (f) or (j) of Section 7.01 being exceeded solely as a result of changes in currency exchange rates from those rates applicable on the first day of the fiscal quarter in which such determination occurs or in respect of which such determination is being made.

(b)     Wherever in this Agreement in connection with a Borrowing, conversion, continuation or prepayment of a Eurocurrency Loan or the issuance, amendment or extension of a Letter of Credit, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Borrowing, Eurocurrency Loan or Letter of Credit is denominated in an Alternative Currency or an L/C Alternative Currency, such amount shall be the relevant Alternative Currency Equivalent of such Dollar amount (rounded to the nearest unit of such Alternative Currency or L/C Alternative Currency, with 0.5 of a unit being rounded upward), as determined by the Administrative Agent or the L/C Issuer, as the case may be.

SECTION 1.05.     Additional Alternative Currencies

(a)     The Borrower may from time to time request that Eurocurrency Revolving Loans be made in a currency other than an existing Alternative Currency and/or Letters of Credit be issued in a currency other than an existing L/C Alternative Currency; provided that such requested currency is a lawful currency (other than Dollars) that is readily available and freely transferable and convertible into Dollars. In the case of any such request with respect to the making of Eurocurrency Revolving Loans, such request shall be subject to the approval of the Administrative Agent; and in the case of any such request with respect to the issuance of Letters of Credit, such request shall be subject to the approval of the Administrative Agent and the L/C Issuer.

(b)     Any such request shall be made to the Administrative Agent not later than 11:00 a.m., 20 Business Days prior to the date of the desired Credit Event (or such other time or date as may be agreed by the Administrative Agent and, in the case of any such request pertaining to Letters of Credit, the L/C Issuer, in its or their sole discretion). In the case of any such request pertaining to Eurocurrency Loans, the Administrative Agent shall promptly notify each Revolving Facility Lender thereof; and in the case of any such request pertaining to Letters of Credit, the Administrative Agent shall promptly notify the L/C Issuer thereof. Each Revolving Facility Lender (in the case of any such request pertaining to Eurocurrency Loans) or the L/C Issuer (in the case of a request pertaining to Letters of Credit) shall notify the Administrative Agent, not later than 11:00 a.m., 10 Business Days after receipt of such request whether it consents, in its sole discretion, to the making of Eurocurrency Loans or the issuance of Letters of Credit, as the case may be, in such requested currency.


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(c)     Any failure by a Revolving Facility Lender or the L/C Issuer, as the case may be, to respond to such request within the time period specified in the preceding sentence shall be deemed to be a refusal by such Revolving Facility Lender or the L/C Issuer, as the case may be, to permit Eurocurrency Loans to be made or Letters of Credit to be issued in such requested currency. If the Administrative Agent and all the Revolving Facility Lenders consent to making Eurocurrency Loans in such requested currency, the Administrative Agent shall so notify the Borrower and such currency shall thereupon be deemed for all purposes to be an “Alternative Currency” hereunder for purposes of any Borrowings of Eurocurrency Revolving Loans; and if the Administrative Agent and the L/C Issuer consent to the issuance of Letters of Credit in such requested currency, the Administrative Agent shall so notify the Borrower and such currency shall thereupon be deemed for all purposes to be an “L/C Alternative Currency” hereunder for purposes of any Letter of Credit issuances. If the Administrative Agent shall fail to obtain consent to any request for an additional currency under this Section 1.05, the Administrative Agent shall promptly so notify the Borrower. The Required Class Lenders of the Revolving Facility may give notice to the Borrower that any Alternative Currency ceases to be an Alternative Currency hereunder, and such notice shall be effective 20 Business Days after such notice. The Administrative Agent or the L/C Issuer may give notice to the Borrower than any Alternative Currency or L/C Alternative Currency, respectively, is no longer readily available and freely transferable and convertible into Dollars, and upon such notice such currency shall cease to be an Alternative Currency or L/C Alternative Currency, as applicable, hereunder.

SECTION 1.06.     Change of Currency

(a)     Each obligation of the Borrower to make a payment denominated in the national currency unit of any member state of the European Union that adopts the Euro as its lawful currency after the Closing Date shall be redenominated into Euro at the time of such adoption (in accordance with the EMU Legislation). If, in relation to the currency of any such member state, the basis of accrual of interest expressed in this Agreement in respect of that currency shall be inconsistent with any convention or practice in the London interbank market for the basis of accrual of interest in respect of the Euro, such expressed basis shall be replaced by such convention or practice with effect from the date on which such member state adopts the Euro as its lawful currency; provided that if any Borrowing in the currency of such member state is outstanding immediately prior to such date, such replacement shall take effect, with respect to such Borrowing, at the end of the then current Interest Period.

(b)     Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be appropriate to reflect the adoption of the Euro by any member state of the European Union and any relevant market conventions or practices relating to the Euro.

(c)     Each provision of this Agreement also shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be appropriate to reflect a change in currency of any other country and any relevant market conventions or practices relating to the change in currency.

SECTION 1.07. Times of Day; Rates

Unless otherwise specified, all references herein to times of day shall be references to Local Time.
The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to the administration, submission or any other matter related to the rates in the definition of “Eurocurrency Rate” or with respect to any comparable or successor rate thereto.
SECTION 1.08. Letter of Credit Amounts

Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the Dollar Equivalent of the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the Dollar Equivalent of the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.
SECTION 1.09.     Limited Condition Transactions

Notwithstanding anything to the contrary herein, for purposes of (a) determining compliance with any financial ratio or test, any First Lien Secured Net Leverage Ratio test, any Total Secured Net Leverage Ratio test or any Total Net Leverage Ratio test and/or the availability under any baskets set forth in this Agreement expressed as a percentage of EBITDA or Consolidated Total Assets or (b) other than for purposes of satisfying conditions precedent to any Credit Event, determining the accuracy of representations and warranties and/or whether a Default or Event of Default (or any type of Default or Event of Default) shall

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have occurred and be continuing, in each case in connection with any Limited Condition Transaction (including the assumption or incurrence of Indebtedness in connection therewith), the determination of whether the relevant condition is satisfied may be made,
(i)in the case of any acquisition or Investment (including with respect to any Indebtedness assumed or incurred in connection therewith), at the time of (or on the basis of the financial statements for the most recently ended Test Period at the time of), at the election of Parent, either (A) the execution of the definitive agreement with respect to such acquisition or Investment or (B) the consummation of such acquisition or Investment, and
(ii)in the case of any repayment of Indebtedness (including with respect to any Indebtedness assumed or incurred in connection therewith), at the time of (or on the basis of the financial statements for the most recently ended Test Period at the time of), at the election of the Borrower, (A) delivery of irrevocable (which may be conditional) notice with respect to such payment of Indebtedness or (B) the making of such repayment,
in each case, after giving effect, on a Pro Forma Basis, to (1) the relevant Limited Condition Transaction and/or any related Indebtedness (including the intended use of proceeds thereof) and (2) to the extent definitive documents in respect thereof have been executed or the declaration of any notice with respect to any repayment of Indebtedness has been given (which definitive documents, declaration or notice has not terminated or expired without the consummation thereof), any additional Limited Condition Transaction and/or any related Indebtedness (including the intended use of proceeds thereof) that Parent has elected to be determined as set forth in this Section 1.09. If Parent has exercised such an election under this Section 1.09 in respect of any Limited Condition Transaction or related Indebtedness, then, in connection with any subsequent calculation of financial ratios, tests, caps or baskets expressed as a percentage of EBITDA (other than any such test under Section 6.06 or 6.10) on or following the date of determination of whether the relevant condition is satisfied, as elected by Parent in accordance with this Section 1.09, and prior to the earlier of (x) the date on which such Limited Condition Transaction or related Indebtedness is consummated and (y) the date that the definitive agreements, declaration or notice, as applicable, for such Limited Condition Transaction or related Indebtedness are terminated, abandoned, withdrawn or expire, as applicable, without consummation thereof, any such financial ratio, test, cap or basket shall be calculated on a Pro Forma Basis assuming such Limited Condition Transaction or related Indebtedness and the other transactions in connection therewith have been consummated.
ARTICLE II

THE CREDITS
SECTION 2.01. Commitments.

Subject to the terms and conditions set forth herein:
(a)    each Term A Lender agrees to make Term A Loans to the Borrower on the Closing Date in a principal amount not to exceed such Lender’s Term A Loan Commitment;
(b)    each Term B Lender agrees to make Term B Loans to the Borrower on the Closing Date in a principal amount not to exceed such Lender’s Term B Loan Commitment;
(c)    each Revolving Facility Lender agrees to make Revolving Facility Loans to the Borrower from time to time during the Availability Period in Dollars or any Alternative Currency in an aggregate principal amount that will not result in (i) such Lender’s Revolving Facility Credit Exposure exceeding such Lender’s Revolving Facility Commitment or (ii) the total Revolving Facility Credit Exposure exceeding the total Revolving Facility Commitment; and
(d)    within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Facility Loans. Amounts repaid or prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans and Borrowings

(a)     Each Revolving Facility Loan and Term Loan shall be made as part of a Borrowing consisting of Loans under the same Class and of the same Type made by the Lenders ratably in accordance with their respective Commitments under the applicable Facility. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided, that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b)     Subject to Section 2.15, each Borrowing (other than a Swingline Borrowing) shall be comprised entirely of ABR Loans or Eurocurrency Loans as the Borrower may request in accordance herewith. Each Swingline Borrowing shall be an ABR Borrowing. Each Lender at its option may make any ABR Loan or Eurocurrency Loan by causing any domestic or

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foreign branch or Affiliate of such Lender to make such Loan; provided, that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement and such Lender shall not be entitled to any amounts payable under Section 2.16 solely in respect of increased costs resulting from such exercise and existing at the time of such exercise.

(c)     At the commencement of each Interest Period for any Eurocurrency Borrowing, such Borrowing shall be in an aggregate amount not less than the Borrowing Minimum and, in the case of a Eurocurrency Revolving Facility Borrowing, that is an integral multiple of the Borrowing Multiple. Subject to Section 2.04(c) and Section 2.05(e), at the time that each Term Borrowing or Revolving Facility Borrowing is made, such Borrowing shall be in an aggregate amount that is not less than the Borrowing Minimum and, in the case of a Eurocurrency Revolving Facility Borrowing, that is an integral multiple of the Borrowing Multiple; provided, that an ABR Revolving Facility Borrowing may be in an aggregate amount that is equal to the entire unused balance of the Commitments. Borrowings of more than one Type and under more than one Facility may be outstanding at the same time; provided, that there shall not at any time be more than a total of 10 Eurocurrency Borrowings outstanding under this Agreement.

(d)     Notwithstanding anything to the contrary in this Agreement, any Lender may exchange, continue or rollover all of the portion of its Loans in connection with any refinancing, extension, loan modification or similar transaction permitted by the terms of this Agreement, pursuant to a cashless settlement mechanism approved by the Borrower, the Administrative Agent, and such Lender.

SECTION 2.03. Requests for Borrowings

To request a Revolving Facility Borrowing and/or a Term Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurocurrency Borrowing, not later than 10:00 a.m. (x) three Business Days before the date of any proposed Borrowing denominated in Dollars and (y) four Business Days before the date of any proposed Borrowing denominated in an Alternative Currency or (b) in the case of an ABR Borrowing, not later than 10:00 a.m., on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or facsimile to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by a Responsible Officer of the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:
(iii)the Class of Loans comprising such Borrowing;
(iv)the aggregate amount of the requested Borrowing;
(v)the date of such Borrowing, which shall be a Business Day;
(vi)whether such Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing; provided that any Borrowing denominated in an Alternative Currency shall be a Eurocurrency Borrowing;
(vii)in the case of a Eurocurrency Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;
(viii)in the case of a Eurocurrency Revolving Facility Borrowing, the currency in which such Borrowing is to be denominated (which shall be Dollars or an Alternative Currency); and
(ix)the location and number of the Borrower’s account to which funds are to be disbursed.
If no election as to the currency of any Revolving Facility Borrowing is made, then the requested Borrowing shall be made in Dollars. If no election as to the Type of Revolving Facility Borrowing or Term Borrowing is specified, then the requested Borrowing shall be (x) an ABR Borrowing in the case of Loans denominated in Dollars or (y) a Eurocurrency Borrowing with an Interest Period of one month’s duration in the case of Revolving Facility Loans denominated in an Alternative Currency. If no Interest Period is specified with respect to any requested Eurocurrency Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each applicable Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
SECTION 2.04. Swingline Loans

(a)     The Swingline. Subject to the terms and conditions set forth herein, the Swingline Lender may, in its sole discretion, agree, in reliance upon the agreements of the other Revolving Facility Lenders set forth in this Section 2.04, to make loans in Dollars (each such loan, a “Swingline Loan”) to the Borrower from time to time on any Business Day during the Availability Period in an aggregate amount not to exceed at any time outstanding the Swingline Sublimit, notwithstanding the fact that such Swingline Loans, when aggregated with the Revolving Facility Percentage of the Outstanding Amount of Revolving Facility Loans and L/C Obligations of the Revolving Facility Lender acting as Swingline Lender, may exceed the amount of such Lender’s Revolving Facility Commitment; provided, however, that after giving effect to any Swingline Loan, (i) the Revolving

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Facility Credit Exposure shall not exceed the total Revolving Facility Commitments, and (ii) the aggregate Revolving Facility Credit Exposure of any Revolving Facility Lender (other than the Swingline Lender) shall not exceed such Revolving Facility Lender’s Revolving Facility Commitment, and provided, further, that the Borrower shall not use the proceeds of any Swingline Loan to refinance any outstanding Swingline Loan. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.04, prepay under Section 2.12, and reborrow under this Section 2.04. Each Swingline Loan shall be an ABR Loan. Immediately upon the making of a Swingline Loan, each Revolving Facility Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swingline Lender a risk participation in such Swingline Loan in an amount equal to the product of such Lender’s Revolving Facility Percentage times the amount of such Swingline Loan.

(b)     Borrowing Procedures. Each Swingline Borrowing shall be made upon the Borrower’s irrevocable notice to the Swingline Lender and the Administrative Agent, which may be given by telephone. Each such notice must be received by the Swingline Lender and the Administrative Agent not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $100,000 and (ii) the requested borrowing date, which shall be a Business Day. Each such telephonic notice must be confirmed promptly by delivery to the Swingline Lender and the Administrative Agent of a written Swingline Borrowing Request, appropriately completed and signed by a Responsible Officer of the Borrower. Promptly after receipt by the Swingline Lender of any telephonic Swingline Loan request, the Swingline Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swingline Loan request and, if not, the Swingline Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof. Unless the Swingline Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of the proposed Swingline Borrowing (A) directing the Swingline Lender not to make such Swingline Loan as a result of the limitations set forth in the provisos to the first sentence of Section 2.04(a), or (B) that one or more of the applicable conditions specified in Section 4.01 is not then satisfied, then, subject to the terms and conditions hereof, the Swingline Lender may, not later than 3:00 p.m. on the borrowing date specified in such Swingline Borrowing Request, make the amount of its Swingline Loan available to the Borrower at the account of the Borrower specified in such Swingline Borrowing Request.

(c)     Refinancing of Swingline Loans.

(i)    The Swingline Lender at any time in its sole and absolute discretion may request, on behalf of the Borrower (which hereby irrevocably authorizes the Swingline Lender to so request on its behalf), that each Revolving Facility Lender make an ABR Revolving Loan in an amount equal to such Revolving Facility Lender’s Revolving Facility Percentage of the amount of Swingline Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Borrowing Request for purposes hereof) and in accordance with the requirements of Section 2.02, without regard to the Borrowing Minimum and Borrowing Multiples, but subject to the unutilized portion of the Revolving Facility Commitments and the conditions set forth in Section 4.01. The Swingline Lender shall furnish the Borrower with a copy of the applicable Borrowing Request promptly after (other than the delivery of a Borrowing Request) delivering such notice to the Administrative Agent. Each Revolving Facility Lender shall make an amount equal to its Revolving Facility Percentage of the amount specified in such Borrowing Request available to the Administrative Agent in Same Day Funds (and the Administrative Agent may apply Cash Collateral available with respect to the applicable Swingline Loan) for the account of the Swingline Lender at the Administrative Agent’s Office for Dollar-denominated payments not later than 1:00 p.m. on the day specified in such Borrowing Request, whereupon, subject to Section 2.04(c)(ii), each Revolving Facility Lender that so makes funds available shall be deemed to have made an ABR Revolving Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the Swingline Lender.
(ii)    If for any reason any Swingline Loan cannot be refinanced by such an ABR Revolving Facility Borrowing in accordance with Section 2.04(c)(i), the request for ABR Revolving Loans submitted by the Swingline Lender as set forth herein shall be deemed to be a request by the Swingline Lender that each of the Revolving Facility Lenders fund its risk participation in the relevant Swingline Loan and each Revolving Facility Lender’s payment to the Administrative Agent for the account of the Swingline Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such participation.
(iii)    If any Revolving Facility Lender fails to make available to the Administrative Agent for the account of the Swingline Lender any amount required to be paid by such Revolving Facility Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i), the Swingline Lender shall be entitled to recover from such Revolving Facility Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swingline Lender at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the Swingline Lender in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Swingline Lender in connection with the foregoing. If such Revolving Facility Lender pays such amount (with interest and

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fees as aforesaid), the amount so paid shall constitute such Lender’s ABR Revolving Loan included in the relevant ABR Revolving Facility Borrowing or funded participation in the relevant Swingline Loan, as the case may be. A certificate of the Swingline Lender submitted to any Revolving Facility Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.
(iv)    Each Revolving Facility Lender’s obligation to make ABR Revolving Loans pursuant to Section 2.04(c)(i) or to purchase and fund risk participations in Swingline Loans pursuant to Section 2.04(c)(ii) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the Swingline Lender, the Borrower or any other person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make ABR Revolving Loans pursuant to Section 2.04(c)(i) is subject to the conditions set forth in Section 4.01. No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swingline Loans, together with interest as provided herein.
(d)     Repayment of Participations.
(i)    At any time after any Revolving Facility Lender has purchased and funded a risk participation in a Swingline Loan, if the Swingline Lender receives any payment on account of such Swingline Loan, the Swingline Lender will distribute to such Revolving Facility Lender its Revolving Facility Percentage thereof in the same funds as those received by the Swingline Lender.
(ii)    If any payment received by the Swingline Lender in respect of principal or interest on any Swingline Loan is required to be returned by the Swingline Lender under any of the circumstances described in Section 8.10 (including pursuant to any settlement entered into by the Swingline Lender in its discretion), each Revolving Facility Lender shall pay to the Swingline Lender its Revolving Facility Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent will make such demand upon the request of the Swingline Lender. The obligations of the Revolving Facility Lenders under this clause shall be absolute and unconditional and survive Payment in Full and the termination of this Agreement.
(e)     Interest for Account of Swingline Lender. The Swingline Lender shall be responsible for invoicing the Borrower for interest on the Swingline Loans. Until each Revolving Facility Lender funds its ABR Revolving Loan or risk participation pursuant to this Section 2.04 to refinance such Revolving Facility Lender’s Revolving Facility Percentage of any Swingline Loan, interest in respect of such Revolving Facility Percentage shall be solely for the account of the Swingline Lender.

(f)     Payments Directly to Swingline Lender. The Borrower shall make all payments of principal and interest in respect of the Swingline Loans directly to the Swingline Lender.

SECTION 2.05. Letters of Credit

(a)     General. Subject to the terms and conditions set forth herein, in addition to the Loans provided for in Section 2.01, the Borrower may request that the L/C Issuer, in reliance on the agreements of the Revolving Facility Lenders set forth in this Section 2.05, issue, at any time and from time to time during the period from and including the Closing Date until the Letter of Credit Expiration Date, Letters of Credit denominated in Dollars or in one or more L/C Alternative Currencies for its own account or the account of any of its Subsidiaries in such form as is acceptable to the L/C Issuer in its reasonable determination. Letters of Credit issued hereunder shall constitute utilization of the Revolving Facility Commitments. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof.

(b)     Notice of Issuance, Amendment, Extension, Reinstatement or Renewal.
i.To request the issuance of a Letter of Credit (or the amendment of the terms and conditions, extension of the terms and conditions, extension of the expiration date, or reinstatement of amounts paid, or renewal of an outstanding Letter of Credit), the Borrower shall deliver (or transmit by electronic communication, if arrangements for doing so have been approved by the L/C Issuer) to the L/C Issuer and to the Administrative Agent not later than (i) in the case of a Letter of Credit denominated in Dollars, 11:00 a.m. at least two Business Days (or such later date and time as the Administrative Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be and (ii) in the case of a Letter of Credit denominated in an L/C Alternative Currency, 11:00 a.m. at least four Business Days (or such later date and time as the Administrative Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be, in each case, a notice requesting the

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issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, extended, reinstated or renewed, and specifying the date of issuance, amendment, extension, reinstatement or renewal (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with clause (d) of this Section 2.05), the amount of such Letter of Credit, the name and address of the beneficiary thereof, the purpose and nature of the requested Letter of Credit and such other information as shall be necessary to prepare, amend, extend, reinstate or renew such Letter of Credit. If requested by the L/C Issuer, the Borrower also shall submit a Letter of Credit Application and reimbursement agreement on the L/C Issuer’s standard form in connection with any request for a Letter of Credit. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of Letter of Credit Application and reimbursement agreement or other agreement submitted by the Borrower to, or entered into by the Borrower with, the L/C Issuer relating to any Letter of Credit, the terms and conditions of this Agreement shall control.
ii.If the Borrower so requests in any applicable Letter of Credit Application (or the amendment of an outstanding Letter of Credit), the L/C Issuer may, in its sole and absolute discretion, agree to issue a standby Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon by the Borrower and the L/C Issuer at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Revolving Facility Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the date permitted pursuant to Section 2.05(d); provided, however, that the L/C Issuer shall not (x) permit any such extension if (A) the L/C Issuer has determined that it would not be permitted at such time to issue such Letter of Credit in its extended form under the terms hereof except that the expiration date may be extended to a date that is no more than one year from the then-current expiration date, or (y) it has received notice (which may be in writing or by telephone (if promptly confirmed in writing)) on or before the day that is five Business Days before the Non-Extension Notice Date from the Administrative Agent that the Required Class Lenders under the Revolving Facility have elected not to permit such extension or (ii) be obligated to permit such extension if it has received notice (which may be in writing or by telephone (if promptly confirmed in writing)) on or before the day that is seven Business Days before the Non-Extension Notice Date from the Administrative Agent, any Revolving Facility Lender or the Borrower that one or more of the applicable conditions specified in Section 4.01 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.
iii.If the Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a standby Letter of Credit that permits the automatic reinstatement of all or a portion of the stated amount thereof after any drawing thereunder (each, an “Auto-Reinstatement Letter of Credit”). Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a specific request to the L/C Issuer to permit such reinstatement. Once an Auto-Reinstatement Letter of Credit has been issued, except as provided in the following sentence, the Revolving Facility Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to reinstate all or a portion of the stated amount thereof in accordance with the provisions of such Letter of Credit. Notwithstanding the foregoing, if such Auto-Reinstatement Letter of Credit permits the L/C Issuer to decline to reinstate all or any portion of the stated amount thereof after a drawing thereunder by giving notice of such non-reinstatement within a specified number of days after such drawing (the “Non-Reinstatement Deadline”), the L/C Issuer shall not permit such reinstatement if it has received a notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Reinstatement Deadline (A) from the Administrative Agent that the Required Class Lenders under the Revolving Facility have elected not to permit such reinstatement or (B) from the Administrative Agent, any Revolving Facility Lender or the Borrower that one or more of the applicable conditions specified in Section 4.01 is not then satisfied (treating such reinstatement as an L/C Credit Extension for purposes of this clause) and, in each case, directing the L/C Issuer not to permit such reinstatement.

(c)     Limitations on Amounts, Issuance and Amendment. A Letter of Credit shall be issued, amended, extended, reinstated or renewed only if (and upon issuance, amendment, extension, reinstatement or renewal of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, extension, reinstatement or renewal (x) the Outstanding Amount of all L/C Obligations shall not exceed the Letter of Credit Sublimit that would be in effect at any time prior to the expiration of all Letters of Credit outstanding at such time (after giving effect to the scheduled maturity of any Revolving Facility Commitment occurring prior to the expiration of all such Letters of Credit), (y) the total Revolving Facility Credit Exposure shall not exceed the total Revolving Facility Commitments at any time prior to the expiration of all Letters of Credit outstanding at such time (after giving effect to the scheduled maturity of any Revolving Facility Commitment occurring prior to the expiration of all such Letters of Credit) and (z) no Lender’s Revolving Facility Credit Exposure shall exceed such Lender’s Revolving Facility Commitments.
iv.The L/C Issuer shall not be under any obligation to issue any Letter of Credit if:
1.any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Change in Law shall prohibit, or request that the L/C Issuer

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refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;
2.the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer applicable to letters of credit;
3.except as otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter of Credit is in an initial stated amount less than $100,000, in the case of a commercial Letter of Credit, or $100,000, in the case of a standby Letter of Credit;
4.except as otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter of Credit is to be denominated in a currency other than Dollars or an L/C Alternative Currency;
5.such Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder; or
6.a default of any Revolving Facility Lender’s obligations to fund under Section 2.05(f) exists or any Revolving Facility Lender is at such time a Defaulting Lender hereunder, unless the L/C Issuer has entered into satisfactory arrangements with the Borrower or such Revolving Facility Lender to eliminate the L/C Issuer’s risk with respect to such Revolving Facility Lender, including the delivery of Cash Collateral, satisfactory to the L/C Issuer (in its sole discretion) with the Borrower or such Lender to eliminate the L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 2.27) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which the L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion.
v.The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.
vi.The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof.

(d)     Expiration Date. Each Letter of Credit shall have a stated expiration date no later than the earlier of (i) the date twelve months after the date of the issuance of such Letter of Credit (or, in the case of any extension of the expiration date thereof, whether automatic or by amendment, twelve months after the then‑current expiration date of such Letter of Credit) and (ii) the Letter of Credit Expiration Date, unless such expiring date shall be approved, with respect to clause (i), by the L/C Issuer and the Required Revolving Lenders or, with respect to clause (ii), by the L/C Issuer and all of the Revolving Facility Lenders.

(e)     Participations.
vii.By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount or extending the expiration date thereof), and without any further action on the part of the L/C Issuer or the Lenders, the L/C Issuer hereby grants to each Revolving Facility Lender, and each Revolving Facility Lender hereby acquires from the L/C Issuer, a participation in such Letter of Credit equal to such Lender’s Revolving Facility Percentage of the aggregate amount available to be drawn under such Letter of Credit. Each Revolving Facility Lender acknowledges and agrees that its obligation to acquire participations pursuant to this clause (e) in respect of Letters of Credit is absolute, unconditional and irrevocable and shall not be affected by any circumstance whatsoever, including any amendment, extension, reinstatement or renewal of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Revolving Facility Commitments.
viii.In consideration and in furtherance of the foregoing, each Revolving Facility Lender hereby absolutely, unconditionally and irrevocably agrees to pay to the Administrative Agent, for the account of the L/C Issuer, such Lender’s Revolving Facility Percentage of each L/C Disbursement made by the L/C Issuer not later than 1:00 p.m. on the Business Day specified in the notice provided by the Administrative Agent to the Revolving Facility Lenders pursuant to Section 2.05(f) until such L/C Disbursement is reimbursed by the Borrower or at any time after any reimbursement payment is required to be refunded to the Borrower for any reason, including after the Revolving Facility Maturity Date. Such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each such payment shall be made in the same manner as provided in Section 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment obligations of the Revolving Facility Lenders pursuant to this Section 2.05), and the Administrative Agent shall promptly pay to the L/C Issuer the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to Section 2.05(f), the Administrative Agent shall distribute such payment to the L/C Issuer or, to the extent that the Revolving Facility Lenders have made payments pursuant to this clause (e) to reimburse the L/C Issuer, then to such Lenders and the L/C Issuer as their interests may appear. Any payment made by a Lender pursuant to this clause (e) to reimburse the L/C Issuer for any L/C Disbursement shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such L/C Disbursement.
ix.Each Revolving Facility Lender further acknowledges and agrees that its participation in each Letter of Credit will be automatically adjusted to reflect such Lender’s Revolving Facility Percentage of the aggregate amount available to be drawn under such Letter of Credit at each time such Lender's Revolving Facility Commitment is amended pursuant to the operation of Section 2.22 or 2.25, as a result of an assignment in accordance with Section 9.04 or otherwise pursuant to this Agreement.

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x.If any Revolving Facility Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.05(e), then, without limiting the other provisions of this Agreement, the L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the L/C Issuer in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Revolving Facility Loan included in the relevant Revolving Facility Borrowing or L/C Disbursement Participation. A certificate of the L/C Issuer submitted to any Revolving Facility Lender (through the Administrative Agent) with respect to any amounts owing under this clause (e)(iv) shall be conclusive absent manifest error.

(f)     Reimbursement. If the L/C Issuer shall make any L/C Disbursement in respect of a Letter of Credit, the Borrower shall reimburse the L/C Issuer in respect of such L/C Disbursement by paying to the Administrative Agent an amount equal to such L/C Disbursement not later than 12:00 noon on (i) the Business Day that the Borrower receives notice of such L/C Disbursement, if such notice is received prior to 10:00 a.m. or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time; provided that, if such L/C Disbursement is not less than Borrowing Minimum, the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or Section 2.04 that such payment be financed with a Borrowing of ABR Loans or Swingline Loan in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting Borrowing of ABR Loans or Swingline Loan. In the case of a Letter of Credit denominated in an L/C Alternative Currency, the Borrower shall reimburse the L/C Issuer in Dollars, unless the L/C Issuer shall have specified in such notice that it will accept reimbursement in the L/C Alternative Currency in which such Letter of Credit was so denominated. In the case of any such reimbursement in Dollars of a drawing under a Letter of Credit denominated in an L/C Alternative Currency, the L/C Issuer shall notify the Borrower of the Dollar Equivalent of the amount of the drawing promptly following the determination thereof. If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Revolving Facility Lender of the applicable L/C Disbursement, the payment then due from the Borrower in respect thereof (the “Unreimbursed L/C Disbursement”) and such Lender’s Revolving Facility Percentage thereof. In such event, the Borrower shall be deemed to have requested a Borrowing of ABR Revolving Loans to be disbursed on the date of payment by the L/C Issuer under a Letter of Credit in an amount equal to the Unreimbursed L/C Disbursement, without regard to the Borrowing Minimum or Borrowing Multiple for the principal amount of ABR Revolving Loans, but subject to the amount of the unutilized portion of the aggregate Revolving Facility Commitments and the conditions set forth in Section 4.01 (other than the delivery of a Borrowing Request). Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.05(f) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

(g)     Obligations Absolute.
xi.The obligation of the Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Disbursement shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:
1.any lack of validity or enforceability of this Agreement, any other Loan Document or any Letter of Credit, or any term or provision herein or therein;
2.the existence of any claim, counterclaim, setoff, defense or other right that the Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;
3.any draft, demand, certificate or other document presented under such Letter of Credit that appears on its face to be valid proving to be forged, fraudulent, invalid or insufficient in any respect or any statement in such draft or other document being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;
4.waiver by the L/C Issuer of any requirement that exists for the L/C Issuer’s protection and not the protection of the Borrower or any waiver by the L/C Issuer which does not in fact materially prejudice the Borrower;
5.honor of a demand for payment presented electronically even if such Letter of Credit requires that demand be in the form of a draft;
6.any payment made by the L/C Issuer in respect of an otherwise complying item presented after the date specified as the expiration date of, or the date by which documents must be received under such Letter of Credit if presentation after such date is authorized by the UCC, the ISP or the UCP, as applicable;

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7.any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law;
8.any adverse change in the relevant exchange rates or in the availability of the relevant L/C Alternative Currency to the Borrower or any Subsidiary or in the relevant currency markets generally;
9.any amendment or waiver of or any consent to departure from all or any of the provisions of this Agreement, any Letter of Credit or any other Loan Document; or
10.any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.05, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder.
xii.The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will immediately notify the L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.
xiii.None of the Administrative Agent, the Lenders, the L/C Issuer, or any of their Related Parties shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit by the L/C Issuer or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms, any error in translation or any consequence arising from causes beyond the control of the L/C Issuer; provided that the foregoing shall not be construed to excuse the L/C Issuer from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the L/C Issuer’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the L/C Issuer (as finally determined by a court of competent jurisdiction), the L/C Issuer shall be deemed to have exercised care in each such determination, and that:
1.the L/C Issuer may replace a purportedly lost, stolen, or destroyed original Letter of Credit or missing amendment thereto with a certified true copy marked as such or waive a requirement for its presentation;
2.the L/C Issuer may accept documents that appear on their face to be in substantial compliance with the terms of a Letter of Credit without responsibility for further investigation, regardless of any notice or information to the contrary, and may make payment upon presentation of documents that appear on their face to be in substantial compliance with the terms of such Letter of Credit and without regard to any non-documentary condition in such Letter of Credit;
3.the L/C Issuer shall have the right, in its sole discretion, to decline to accept such documents and to make such payment if such documents are not in strict compliance with the terms of such Letter of Credit; and
4.this sentence shall establish the standard of care to be exercised by the L/C Issuer when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof (and the parties hereto hereby waive, to the extent permitted by applicable law, any standard of care inconsistent with the foregoing).
Without limiting the foregoing, none of the Administrative Agent, the Lenders, the L/C Issuer, or any of their Related Parties shall have any liability or responsibility by reason of (i) any presentation that includes forged or fraudulent documents or that is otherwise affected by the fraudulent, bad faith, or illegal conduct of the beneficiary or other Person, (ii) the L/C Issuer declining to take-up documents and make payment (A) against documents that are fraudulent, forged, or for other reasons by which that it is entitled not to honor or (B) following a Borrower’s waiver of discrepancies with respect to such documents or request for honor of such documents or (iii) the L/C Issuer retaining proceeds of a Letter of Credit based on an apparently applicable attachment order, blocking regulation, or third-party claim notified to such L/C Issuer.
(h)     Applicability of ISP and UCP. Unless otherwise expressly agreed by the L/C Issuer and the Borrower when a Letter of Credit is issued, (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits (the “UCP”), as most recently published by the International Chamber of Commerce at the time of issuance shall apply to each commercial Letter of Credit. Notwithstanding the foregoing, the L/C Issuer shall not be responsible to the Borrower for, and the L/C Issuer’s rights and remedies against the Borrower shall not be impaired by, any action or inaction of the L/C Issuer required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the Law or any order of a jurisdiction where the L/C Issuer or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.

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(i)     The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article VIII with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article VIII included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.

(j)     Disbursement Procedures. The L/C Issuer for any Letter of Credit shall, within the time allowed by applicable laws or the specific terms of the Letter of Credit following its receipt thereof, examine all documents purporting to represent a demand for payment under such Letter of Credit. The L/C Issuer shall promptly after such examination notify the Administrative Agent and the Borrower in writing of such demand for payment if the L/C Issuer has made or will make an L/C Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the L/C Issuer and the Lenders with respect to any such L/C Disbursement.

(k)     Interim Interest. If the L/C Issuer for any Letter of Credit shall make any L/C Disbursement, then, unless the Borrower shall reimburse such L/C Disbursement in full on the date such L/C Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such L/C Disbursement is made to but excluding the date that the Borrower reimburses such L/C Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that if the Borrower fails to reimburse such L/C Disbursement when due pursuant to Section 2.05(f), then Section 2.14(c) shall apply. Interest accrued pursuant to this clause (k) shall be for the account of the L/C Issuer, except that interest accrued on and after the date of payment by any Lender pursuant to Section 2.05(f) to reimburse the L/C Issuer shall be for the account of such Lender to the extent of such payment.

(l)    Replacement of the Issuing Bank. Any L/C Issuer may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced L/C Issuer and the successor L/C Issuer. The Administrative Agent shall notify the Lenders of any such replacement of any L/C Issuer. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced L/C Issuer pursuant to Section 2.13. From and after the effective date of any such replacement, (x) the successor L/C Issuer shall have all the rights and obligations of an L/C Issuer under this Agreement with respect to Letters of Credit to be issued thereafter and (y) references herein to the term “L/C Issuer” shall be deemed to refer to such successor or to any previous L/C Issuer, or to such successor and all previous L/C Issuers, as the context shall require. After the replacement of an L/C Issuer hereunder, the replaced L/C Issuer shall remain a party hereto and shall continue to have all the rights and obligations of an L/C Issuer under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

(m)     Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Borrower shall be obligated to reimburse the L/C Issuer hereunder for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.

SECTION 2.06. [Reserved]

SECTION 2.07. Funding of Borrowings

(a)     Each Lender shall make each Term Loan or Revolving Facility Loan to be made by it hereunder available to the Administrative Agent in Same Day Funds at the Administrative Agent’s Office for the applicable currency not later than 1:00 p.m., in the case of any Loan denominated in Dollars, and not later than the Applicable Time specified by the Administrative Agent in the case of any Revolving Facility Loan denominated in an Alternative Currency, in each case on the Business Day specified in the applicable Borrowing Request. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower as specified in the Borrowing Request; provided, however, that if, on the date the Borrowing Request with respect to a Revolving Facility Borrowing denominated in Dollars is given by the Borrower, there are Unreimbursed L/C Disbursements outstanding, then the proceeds of such Borrowing, first, shall be applied to the payment in full of any such Unreimbursed L/C Disbursements, and, second, shall be made available to the Borrower as provided above.

(b)     Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of Eurocurrency Loans (or, in the case of any Borrowing of ABR Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the

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Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.07(a) (or, in the case of a Borrowing of ABR Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.07(a)) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in Same Day Funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to ABR Loans under the applicable Facility. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

SECTION 2.08. Interest Elections

(a)     Each Borrowing of Revolving Facility Loans or Term Loans initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurocurrency Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurocurrency Borrowing, may elect Interest Periods therefor, all as provided in this Section; provided, that except as otherwise provided herein, a Eurocurrency Loan may be continued or converted only on the last day of an Interest Period for such Eurocurrency Loan. The Borrower may elect different options with respect to different portions of the affected Revolving Facility Borrowing or Term Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Swingline Borrowings, which may not be converted or continued. Notwithstanding anything to the contrary herein, Loans denominated in any Alternative Currency may only be made, and maintained, as Eurocurrency Loans.

(b)     To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if such Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or facsimile to the Administrative Agent of a written Interest Election Request in the form of Exhibit D and signed by a Responsible Officer of the Borrower.

(c)     Each telephonic and written Interest Election Request shall be irrevocable and shall specify the following information in compliance with Section 2.02:
xiv.the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
xv.the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
xvi.whether the resulting Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing; and
xvii.if the resulting Borrowing is a Eurocurrency Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period.”
If any such Interest Election Request requests a Eurocurrency Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.
(d)     Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender to which such Interest Election Request relates of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e)    If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurocurrency Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing; provided, that any Loan denominated in an Alternative Currency shall instead be continued as a Eurocurrency Borrowing with an Interest Period of one month’s duration. Notwithstanding any contrary provision hereof, if a Default or Event of Default has occurred and is continuing and the Administrative Agent so notifies the Borrower, then, so long as a Default or Event of Default is continuing (i) no outstanding

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Borrowing may be converted to or continued as a Eurocurrency Borrowing and (ii) unless repaid, each Eurocurrency Borrowing shall (A) in the case of such a Borrowing made in Dollars, be converted to an ABR Borrowing at the end of the Interest Period applicable thereto and (B) in the case of such a Borrowing made in an Alternative Currency be continued as a Eurocurrency Revolving Facility Borrowing with an Interest Period of one month’s duration.

SECTION 2.09. Termination and Reduction of Commitments

(a)     Unless previously terminated, (i) the Revolving Facility Commitments shall terminate on the Revolving Facility Maturity Date, (ii) the Term A Loan Commitments shall be automatically and permanently reduced to $0 upon the funding of the Term A Loans on the Closing Date, and (iii) Term A Loan Commitments shall be automatically and permanently reduced to $0 upon the funding of the Term A Loans on the Closing Date.

(b)     The Borrower may at any time terminate, or from time to time reduce the Revolving Facility Commitments; provided, that (i) each such reduction shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 (or, if less, the remaining amount of the Revolving Facility Commitments), (ii) the Borrower shall not terminate or reduce the Revolving Facility Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.12, (x) the total Revolving Facility Credit Exposure would exceed the total Revolving Facility Commitments, (y) the aggregate principal amount of Swingline Loans would exceed the Swingline Sublimit or (z) the Outstanding Amount of all L/C Obligations not fully Cash Collateralized hereunder would exceed the Letter of Credit Sublimit and (iii) each reduction shall be applied ratably among all Classes of Revolving Facility Commitments.

(c)     The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Revolving Facility Commitments under clause (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the applicable Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided, that a notice of termination of the Revolving Facility Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the applicable Lenders in accordance with their respective Commitments.

SECTION 2.10. Repayment of Loans; Evidence of Debt

(a)     The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each applicable Revolving Facility Lender the then unpaid principal amount of each applicable Revolving Facility Loan to the Borrower on the applicable Revolving Facility Maturity Date, (ii) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.11, and (iii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the Latest Revolving Facility Maturity Date.

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

(c)     The Administrative Agent shall maintain accounts in which it shall record (i) the amount and currency of each Loan made hereunder, the Class and Type thereof, the Interest Period (if any) applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) any amount received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(d)     The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided, that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to pay the Obligations in accordance with the terms of this Agreement.

(e)    Any Lender may request that Loans made by it be evidenced by a promissory note (a “Note”). In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender or its registered assigns and in a form approved by the Administrative Agent and reasonably acceptable to the Borrower. Thereafter, unless otherwise agreed to by the applicable Lender, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the payee named therein or its registered assigns).

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SECTION 2.11. Repayment of Term Loans and Revolving Facility Loans

Subject to the other paragraphs of this Section:
xviii.The Borrower shall repay to the Administrative Agent, in Dollars, for the ratable account of the Term A Lenders, (A) on the last Business Day of each month set forth in the table below (each, a “Term A Loan Installment Date”), the principal amount of Term A Loans equal to the product of (x) the original aggregate principal amount of Term A Loans on the Closing Date multiplied by (y) the percentage set forth in the table below opposite the applicable Term A Loan Installment Date and (B) on the Term A Facility Maturity Date, the remaining outstanding principal amount of all Term A Loans:
Term A Loan Installment Date:
Percentage:
March 2019
1.250%
June 2019
1.250%
September 2019
1.250%
December 2019
1.250%
March 2020
1.250%
June 2020
1.250%
September 2020
1.250%
December 2020
1.250%
March 2021
1.250%
June 2021
1.250%
September 2021
1.250%
December 2021
1.250%
March 2022
1.875%
June 2022
1.875%
September 2022
1.875%
December 2022
1.875%
March 2023
2.500%
June 2023
2.500%
September 2023
2.500%

xix.The Borrower shall repay to the Administrative Agent, in Dollars, for the ratable account of the Term B Lenders, (A) on the last Business Day of each March, June, September and December, commencing with March 31, 2019 (each, a “Term B Loan Installment Date”), a principal amount in respect of the Term B Loans equal to 0.25% of the original aggregate principal amount of Term B Loans on the Closing Date and (B) on the Term B Facility Maturity Date, the remaining outstanding principal amount of all Term B Loans.
xx.In the event that any Incremental Term Loans are made on an Incremental Commitments Effective Date, the Borrower shall repay such Incremental Term Loans on the dates and in the amounts set forth in the Additional Credit Extension Amendment (each such date being referred to as an “Incremental Term Loan Installment Date”).
xxi.In the event that any Refinancing Term Loans are made on a Refinancing Term Effective Date, the Borrower shall repay such Refinancing Term Loans on the dates and in the amounts set forth in the Additional Credit Extension Amendment (each such date being referred to as a “Refinancing Term Loan Installment Date”).
xxii.The Refinancing Term Loans of any Class shall mature as provided in the applicable Additional Credit Extension Amendment.
a.To the extent not previously paid, outstanding Revolving Facility Loans shall be due and payable on the applicable Revolving Facility Maturity Date.
b.(i) Any mandatory prepayment of Term Loans pursuant to Section 2.12(b) and (c) shall be applied so that the aggregate amount of such prepayment is allocated among each Class of Term Loans pro rata based on the aggregate principal amount of outstanding Term Loans, irrespective of whether such outstanding Term Loans are ABR Loans or Eurocurrency Loans, with the application of such mandatory prepayment within each Class of Term Loans applied to the remaining installments of such Class on a pro rata basis among such remaining installments (except that any mandatory prepayment with Net Proceeds described in clause (b) of the definition of “Net Proceeds” shall be applied to such remaining installments in direct order of maturity). Prior to the repayment of any Term Loan, the Borrower may select the Borrowing or Borrowings to be repaid (subject to the foregoing) and shall notify the Administrative Agent by telephone (confirmed by facsimile) of such selection not later than 1:00 p.m. (i) in the case of an ABR Borrowing, one Business Day before the scheduled date of such

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repayment and (ii) in the case of a Eurocurrency Borrowing, three Business Days before the scheduled date of such repayment; and
(ii)    Any optional prepayments of the Term Loans pursuant to Section 2.12(a) shall be applied to the remaining installments of the Term Loans as the Borrower may direct under the applicable Class or Classes of Term Loans as the Borrower may direct.
SECTION 2.12. Prepayment of Loans
.
c.The Borrower shall have the right at any time and from time to time to prepay any Loan in whole or in part, without premium or penalty (except as set forth in this Section and Section 2.17), in an aggregate principal amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum or, if less, the principal amount of Loans of any Class outstanding, upon prior notice to the Administrative Agent by telephone (confirmed by facsimile) (x) in the case of an ABR Loan, not less than one Business Day prior to the date of prepayment, (y) in the case of Eurocurrency Loans denominated in Dollars, not less than three Business Days prior to the date of prepayment and (z) in the case of a Eurocurrency Revolving Loan denominated in an Alternative Currency, not less than four Business Days prior to the date of prepayment. Each notice delivered by the Borrower pursuant to this Section 2.12(a) shall be irrevocable; provided, that such notice may state that it is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Each such notice shall be signed by a Responsible Officer of the Borrower and shall specify the date and amount of such prepayment and the Class(es) and the Type(s) of Loans to be prepaid and, if Eurocurrency Loans are to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify each applicable Lender of its receipt of each such notice, and of the amount of such Lender’s pro rata share of such prepayment. In the event that, on or prior to the date which is six months after the Closing Date, the Borrower makes any prepayment or amendment of Term B Loans in connection with any Repricing Transaction (other than in connection with a Change of Control or Transformative Acquisition), the Borrower shall pay to the Administrative Agent, for the ratable account of the Term B Lenders, a prepayment premium of 1% of the amount of the Term B Loans being so prepaid, refinanced, substituted or replaced or amended.
d.Subject to Section 2.12(e) and (f), the Borrower shall apply 100% of all Net Proceeds promptly upon receipt thereof by Parent or any Subsidiary to prepay Loans in accordance with clause (c) of Section 2.11; provided that, with respect to Net Proceeds from Asset Sales, the Borrower may use a portion of such Net Proceeds to prepay or repurchase Other First Lien Debt (to the extent required by the terms of such Other First Lien Debt) in an amount not to exceed the product of (x) the amount of such Net Proceeds multiplied by (y) a fraction, the numerator of which is the outstanding principal amount of the Other First Lien Debt and the denominator of which is the sum of the outstanding principal amount of such Other First Lien Debt and the outstanding principal amount of Term Loans.
e.Subject to Section 2.12(e) and (f), within five Business Days after financial statements have been delivered pursuant to Section 5.04(a) and the related Compliance Certificate has been delivered pursuant to Section 5.04(c) for any Excess Cash Flow Period, the Borrower shall prepay an aggregate principal amount of Term Loans equal to (i) the Applicable ECF Percentage of Excess Cash Flow for such Excess Cash Flow Period less (ii) (x) the aggregate principal amount of Term Loans prepaid pursuant to Section 2.12(a) or Section 2.12(g) (in the amount of actual cash expended), excluding (A) any prepayments funded with proceeds of long-term indebtedness (other than Revolving Facility Loans) or issuances of Equity Interests and (B) prepayments applied to amortization payments on the Term Loans due in such Excess Cash Flow Period, and (y) the aggregate principal amount of Revolving Facility Loans prepaid pursuant to Section 2.12(a) to the extent the Revolving Facility Commitments are correspondingly reduced pursuant to Section 2.09, in each case, during such Excess Cash Flow Period or after the end of such Excess Cash Flow Period but before the prepayment under this Section 2.12(c) for such period is due; provided that no such prepayment shall be due if the Applicable ECF Percentage of Excess Cash Flow for such Excess Cash Flow Period is less than $10,000,000.
f.If the Administrative Agent notifies the Borrower at any time (including on any Revaluation Date) that the Revolving Facility Credit Exposure at such time exceeds an amount equal to 105% of the Revolving Facility Commitments then in effect, then, within two Business Days after receipt of such notice, the Borrower shall prepay the Revolving Facility Loans and/or the Swingline Loans and/or the Borrower shall Cash Collateralize the L/C Obligations in an aggregate amount (allocated among the Revolving Facility Loans, Swingline Loans and/or L/C Obligations as selected by the Borrower) sufficient to reduce the Revolving Facility Credit Exposure as of such date of payment to an amount not to exceed 100% of the Revolving Facility Commitments then in effect. The Administrative Agent may, at any time and from time to time after any such initial deposit of such Cash Collateral, require that additional Cash Collateral be provided in order to protect against the results of further exchange rate fluctuations.
g.Anything contained herein to the contrary notwithstanding, not less than three Business Days prior to the date (the “Required Prepayment Date”) on which the Borrower is required to make any Waivable Mandatory Prepayment, the Borrower shall notify Administrative Agent of the amount subject to such prepayment requirement, and Administrative Agent will promptly thereafter notify each Lender holding an outstanding Term Loan of the amount of such Lender’s pro rata share of

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such Waivable Mandatory Prepayment and such Lender’s option to refuse such amount. Each such Lender may exercise such option by giving written notice to the Administrative Agent of its election to do so on or before the second Business Day prior to the Required Prepayment Date (it being understood that any Lender which does not notify the Administrative Agent of its election to exercise such option on or before the first Business Day prior to the Required Prepayment Date shall be deemed to have elected, as of such date, to accept the Waivable Mandatory Prepayment). On the Required Prepayment Date, the Borrower shall pay to the Administrative Agent the amount of the Waivable Mandatory Prepayment less the amount of the Declined Amounts, which amount shall be applied by the Administrative Agent to prepay the Term Loans of those Lenders that have elected to accept such Waivable Mandatory Prepayment (which prepayment shall be applied to the scheduled installments of principal of the Term Loans in the applicable Class(es) of Term Loans in accordance with Section 2.11(c)), and (ii) the Borrower may retain a portion of the Waivable Mandatory Prepayment in an amount equal to that portion of the Waivable Mandatory Prepayment otherwise payable to those Lenders that have elected to exercise such option and decline such Waivable Mandatory Prepayment (such declined amounts, the “Declined Amounts”). Such Declined Amounts retained by the Borrower may be used for any purpose not otherwise prohibited by this Agreement.
h.Notwithstanding any other provisions of this Section 2.12 to the contrary, (i) to the extent that any repatriation (or other intercompany distribution or transfer) to the Borrower, directly or indirectly, from a Subsidiary organized outside the United States and the Commonwealth of Puerto Rico as a distribution or dividend (or other intercompany transfer) of any amount required to mandatorily prepay the Term Loans pursuant to Section 2.12(b) or (c) is prohibited or delayed by applicable local law from being repatriated to Puerto Rico, the portion of any such amount so affected will not be required to be applied to repay Term Loans at the times provided in Section 2.12(b) or (c), as applicable, for so long, but only for so long, as the applicable local law will not permit repatriation to the Commonwealth of Puerto Rico (the Borrower hereby agreeing to cause the applicable Subsidiary to promptly use commercially reasonable efforts to take all actions reasonably required by the applicable local law to permit such repatriation), and once such repatriation of any of such affected amount is permitted under the applicable local law, such affected amount will be promptly applied (net of additional taxes payable or reserved against as a result thereof) to the prepayment of the Term Loans pursuant to Section 2.12(b) or (c), as applicable, to the extent provided herein, (ii) to the extent that the Borrower has determined in good faith that repatriation (or other intercompany distribution or transfer) to the Borrower, directly or indirectly, from a Subsidiary organized outside the United States and the Commonwealth of Puerto Rico as a distribution or dividend (or other intercompany transfer) of any amount required to mandatorily prepay the Term Loans pursuant to Section 2.12(b) or (c) would have a material adverse tax cost consequence with respect to such affected amount, such amount so affected need not be prepaid at such time and (iii) to the extent that the Borrower has determined in good faith that repatriation to the Borrower, directly or indirectly, from a Subsidiary organized outside the United States and the Commonwealth of Puerto Rico would give rise to a risk of liability for the directors of such Subsidiaries; provided that, in the case of clauses (i), (ii) and (iii), Parent and its Subsidiaries shall take commercially reasonable actions under applicable law to permit such repatriation and without material adverse tax consequences and without giving rise to risk of liability for the directors of the applicable Subsidiaries. The portion of any mandatory prepayment that may be subject to the operation of this Section 2.12(f) shall be limited (A) in the case of any prepayment pursuant to Section 2.12(b), to the Net Proceeds received by a Subsidiary that is not organized under the laws of the United States, any State thereof or the Commonwealth of Puerto Rico in respect of an Asset Sale by such Subsidiary and (B) in the case of any mandatory prepayment pursuant to Section 2.12(c), to the portion of the applicable Excess Cash Flow attributable to Subsidiaries that are not organized under the laws of the United States, any State thereof or the Commonwealth of Puerto Rico.
i.Notwithstanding anything to the contrary contained in this Section 2.12 or any other provision of this Agreement, the Borrower may prepay any Class or Classes of outstanding Term Loans (each, an “Auction Prepayment Offer”) at a discount to par pursuant to one or more auctions (each, an “Auction”) on the following basis (any such prepayment, an “Auction Prepayment”):
i.All Term Lenders (other than Defaulting Lenders) of the applicable Class or Classes shall be permitted (but not required) to participate in each Auction. Any such Lender who elects to participate in an Auction may choose to offer all or part of such Lender’s Term Loans of the applicable Class for prepayment. Each Term Lender shall notify the Administrative Agent within the period specified in the offer if it determines to participate in such Auction.
ii.Each Auction Prepayment shall be subject to the conditions that (A) the Administrative Agent shall have received a certificate to the effect that (I) immediately prior to and after giving effect to the Auction Prepayment and on the date of any delivery of an Auction Notice (as defined in Exhibit C), no Default or Event of Default shall have occurred and be continuing, (II) as of the date of the Auction Notice, the Borrower is not in possession of any material non-public information with respect to Parent or any of its subsidiaries that (x) has not been disclosed to the Lenders (other than Lenders that do not wish to receive material non-public information with respect to Parent or any of its subsidiaries) prior to such date and (y) if not disclosed to the Lenders, could reasonably be expected to have a material effect (whether negative or positive) upon, or otherwise be material to, (1) a Lender’s decision to participate in any Auction or (2) the market price of the Term Loans subject to such Auction, (III) each of the conditions to such Auction Prepayment has been satisfied and (IV) the Borrower shall be in Pro Forma Compliance after giving effect to the Auction Prepayment, (B) immediately prior to and after giving effect to the Auction Prepayment, the sum of the unused Revolving Facility Commitments plus unrestricted cash and cash equivalents held by Loan Parties shall not be less than $25,000,000, (C) each offer of prepayment made pursuant to this Section 2.12(g) must be

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in an amount not less than $1,000,000 in principal amount of Term Loans, calculated on the face amount thereof unless another amount is agreed to by the Administrative Agent, (D) no Auction Prepayment shall be made from the proceeds of any Revolving Facility Loan or Swingline Loan, (E) any Auction Prepayment shall be offered to all Lenders with Term Loans on a pro rata basis, (F) all Term Loans so prepaid by the Borrower shall automatically be canceled and retired by the Borrower on the applicable settlement date (and for the avoidance of doubt, may not be reborrowed) and (G) no more than one Auction Prepayment Offer may be ongoing at any one time and no more than five Auction Prepayment Offers may be made in any one fiscal year (unless the Administrative Agent consents in its reasonable discretion).
iii.The Borrower must terminate any Auction Prepayment Offer if it fails to satisfy one or more of the conditions set forth above in Section 2.12(g)(ii) that are required to be met at the time at which the Term Loans would have been prepaid pursuant to such Auction Prepayment Offer. If the Borrower commences any Auction Prepayment Offer (and all relevant requirements set forth above that are required to be satisfied at the time of the commencement of such Auction Prepayment Offer have in fact been satisfied), and if at such time of commencement the Borrower reasonably believes that all required conditions set forth above that are required to be satisfied at the time of the consummation of such Auction Prepayment Offer shall be satisfied, then the Borrower shall have no liability to any Term Lender or any other person for any termination of such Auction Prepayment Offer as a result of its failure to satisfy one or more of the conditions set forth above that are required to be met at the time that otherwise would have been the time of consummation of such Auction Prepayment Offer, and any such failure shall not result in any Default or Event of Default hereunder. All Term Loans prepaid by the Borrower pursuant to this Section 2.12(g) shall be accompanied by all accrued interest on the par principal amount so prepaid to, but not including, the date of the Auction Prepayment. The par principal amount of Term Loans prepaid pursuant to this Section 2.12(g) shall be applied to reduce the final installment payment of principal thereof pursuant to Section 2.11(a)(i), (ii), (iii) or (iv), as applicable.
iv.Each Auction shall comply with the Auction Procedures and any such other procedures established by the Administrative Agent in its reasonable discretion and agreed to by the Borrower.
v.The Auction Manager acting in its capacity as such hereunder shall be entitled to the benefits of the provisions of Article VIII and Section 9.05 to the same extent as if each reference therein to the “Administrative Agent” were a reference to the Auction Manager, and the Administrative Agent shall cooperate with the Auction Manager as reasonably requested by the Auction Manager in order to enable it to perform its responsibilities and duties in connection with each Auction Prepayment Offer.
vi.This Section 2.12(g) shall neither (A) require the Borrower to undertake any Auction nor (B) limit or restrict the Borrower from making voluntary prepayments of Term Loans in accordance with Section 2.12(a).

SECTION 2.13. Fees

(a)     The Borrower agrees to pay to each Revolving Facility Lender (other than any Defaulting Lender), through the Administrative Agent, on the last Business Day of March, June, September and December in each year, and the date on which the Revolving Facility Commitments of all the Revolving Facility Lenders shall be terminated as provided herein, a commitment fee in Dollars (the “Commitment Fee”) on the actual daily amount of the Available Unused Commitment of such Lender under the Revolving Facility during the preceding quarter (or other period commencing with the Closing Date or ending with the date on which the last of the Revolving Facility Commitments of such Lender shall be terminated) at a rate equal to the Applicable Commitment Fee. All Commitment Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. For the purpose of calculating any Revolving Facility Lender’s Commitment Fee, the outstanding Swingline Loans during the period for which such Revolving Facility Lender’s Commitment Fee is calculated shall be deemed to be zero. The Commitment Fee due to each Revolving Facility Lender shall commence to accrue on the Closing Date and shall cease to accrue on the date on which the last of the Commitments of such Revolving Facility Lender shall be terminated as provided herein.

(b)     The Borrower from time to time agrees to pay (i) to each Revolving Facility Lender (other than any Defaulting Lender), through the Administrative Agent, on the last Business Day of March, June, September and December of each year and on the date on which the Revolving Facility Commitments of all the Lenders shall be terminated as provided herein, a fee in Dollars (an “L/C Participation Fee”) on such Lender’s Revolving Facility Percentage of the daily aggregate Outstanding Amount of L/C Obligations (excluding the portion thereof attributable to Unreimbursed L/C Disbursements in respect of Letters of Credit) during the preceding quarter (or shorter period commencing with the Closing Date or ending with the Revolving Facility Maturity Date or the date on which the applicable Revolving Facility Commitments shall be terminated) at the rate per annum equal to the Applicable Margin for Eurocurrency Revolving Facility Borrowings effective for each day in such period and (ii) directly to the L/C Issuer for its own account a fronting fee (x) with respect to each commercial Letter of Credit, at a rate per annum equal to the percentage separately agreed upon between the Borrower and the L/C Issuer, computed on the Dollar Equivalent of the amount of such Letter of Credit, and payable upon the issuance thereof, (y) with respect to any amendment of a commercial Letter of Credit increasing the amount of such Letter of Credit, at a rate separately agreed between the Borrower and the L/C Issuer, computed on the Dollar Equivalent of the amount of such increase, and payable upon the effectiveness of such amendment, and (z) with respect to each standby Letter of Credit, at the rate per annum equal to 0.25%,

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computed on the Dollar Equivalent of the daily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears (collectively under this clause (ii), “L/C Issuer Fees”). Such L/C Issuer Fees shall be due and payable on the last Business Day of each March, June, September and December in respect of the most recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the Revolving Facility Maturity Date and thereafter on demand. In addition, the Borrower shall pay directly to the L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable. All L/C Participation Fees and L/C Issuer Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days.

(c)     During the period commencing at the time any Lender became a Defaulting Lender until such time, if any, as such Lender is no longer a Defaulting Lender, no Commitment Fee shall accrue with respect to any of the applicable Revolving Facility Commitments of such Defaulting Lender. Any Commitment Fees owing to any Defaulting Lender which accrued during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall be deferred and shall be payable only if and when such Lender is no longer a Defaulting Lender.

(d)     The Borrower agrees to pay to the Administrative Agent, for the account of the Administrative Agent, the agency fees set forth in the Fee Letter, as amended, restated, supplemented or otherwise modified from time to time, at the times specified therein (the “Administrative Agent Fees”).

(e)     All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that L/C Issuer Fees shall be paid directly to the applicable L/C Issuers and Administrative Agent Fees shall be for the account of the Administrative Agent. Once paid, none of the Fees shall be refundable under any circumstances.

SECTION 2.14. Interest

(a)     The Revolving Facility Loans (including each Swingline Loan), the Term A Loans and the Term B Loans comprising each ABR Borrowing shall bear interest at (i) the ABR plus (ii) the Applicable Margin.

(b)     The Revolving Facility Loans, the Term A Loans and Term B Loans comprising each Eurocurrency Borrowing shall bear interest at (i) the Eurocurrency Rate for the Interest Period in effect for such Borrowing plus (ii) the Applicable Margin.

(c)     Notwithstanding the foregoing, if any principal of or interest on any Loan or any Fees or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2.00% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2.00% plus the rate applicable to ABR Revolving Loans as provided in paragraph (a) of this Section; provided, that this paragraph (c) shall not apply to any Event of Default that has been waived by the Lenders pursuant to Section 9.08.

(d)     Accrued interest on each Loan shall be payable in arrears (i) on each Interest Payment Date for such Loan, (ii) in the case of Revolving Facility Loans, upon termination of the applicable Revolving Facility Commitments and (iii) in the case of the Term Loans, on the applicable Term Facility Maturity Date; provided, that (x) interest accrued pursuant to Section 2.14(c) shall be payable on demand, and (y) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan and any Swingline Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment.

(e)     Except as otherwise specifically provided for herein, all interest hereunder shall be computed on the basis of a year of 360 days, except that (i) interest computed by reference to the ABR at times when the ABR is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and (ii) in the case of interest in respect of Eurocurrency Loans denominated in Alternative Currencies as to which market practice (as reasonably determined by the Administrative Agent) differs from the foregoing, such interest will be calculated in accordance with such market practice, and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable ABR or Eurocurrency Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

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SECTION 2.15. Inability to Determine Rates

If prior to the commencement of any Interest Period for a Eurocurrency Borrowing:
(a)    the Administrative Agent determines (which determination shall be conclusive absent manifest error) that (i) deposits in Dollars or the applicable Alternative Currency are not being offered to banks in the London interbank eurocurrency market for the applicable amount and Interest Period of such Eurocurrency Loan (the “Impacted Loan”) or (ii) adequate and reasonable means do not exist for ascertaining the Eurocurrency Rate for such Interest Period; or
(b)    the Administrative Agent is advised by the Required Lenders or the Required Class Lenders under the Revolving Facility that the Eurocurrency Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;then the Administrative Agent shall give notice thereof to the Borrower and the applicable Lenders by telephone or facsimile as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the applicable Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurocurrency Borrowing denominated in the applicable currency shall be ineffective and (A) in the case of any Borrowing denominated in Dollars, on the last day of the Interest Period applicable thereto such Borrowing shall be converted to or continued as an ABR Borrowing and (B) in the case of any Borrowing denominated in an Alternative Currency, such Borrowing shall be repaid at the end of the then current Interest Period, and (ii) if any Borrowing Request requests a Eurocurrency Borrowing in Dollars, such Borrowing shall be made as an ABR Borrowing.
Notwithstanding the foregoing, if the Administrative Agent has made the determination described in clause (a)(i) of the preceding paragraph, the Administrative Agent, in consultation with the Borrower and the Required Lenders, may establish an alternative interest rate for the Impacted Loans, in which case, such alternative rate of interest shall apply with respect to the Impacted Loans until (1) the Administrative Agent revokes the notice delivered with respect to the Impacted Loans, (2) the Administrative Agent or the Required Lenders notify the Administrative Agent and the Borrower that such alternative interest rate does not adequately and fairly reflect the cost to such Lenders of funding the Impacted Loans or (3) any Lender reasonably determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for such Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to such alternative rate of interest or to determine or charge interest rates based upon such rate or any Governmental Authority has imposed material restrictions on the authority of such Lender to do any of the foregoing and provides the Administrative Agent and the Borrower written notice thereof.
SECTION 2.16. Increased Costs

(a)     If any Change in Law shall:
vii.impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Eurocurrency Rate) or L/C Issuer; or
viii.subject any recipient to any Taxes (other than (A) Indemnified Taxes, (B) Other Taxes or (C) Excluded Taxes) with respect to its loans, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
ix.impose on any Lender or the L/C Issuer or the London interbank market any other condition affecting this Agreement or Eurocurrency Loans made by such Lender or any Letter of Credit or participation therein; and
the result of any of the foregoing shall be to increase the cost to such Lender of making, continuing, converting to or maintaining any Loan or of maintaining its obligation to make any such Loan or to increase the cost to such Lender or L/C Issuer of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or L/C Issuer hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or L/C Issuer, as applicable, such additional amount or amounts as will compensate such Lender or L/C Issuer, as applicable, for such additional costs incurred or reduction suffered.
(b)     If any Lender or L/C Issuer determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or L/C Issuer’s capital or on the capital of such Lender’s or L/C Issuer’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit or Swingline Loans held by, such Lender, or the Letters of Credit issued by such L/C Issuer, to a level below that which such Lender or such L/C Issuer or such Lender’s or such L/C Issuer’s holding company could have achieved but for such

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Change in Law (taking into consideration such Lender’s or such L/C Issuer’s policies and the policies of such Lender’s or such L/C Issuer’s holding company with respect to capital adequacy), then from time to time the Borrower shall pay to such Lender or such L/C Issuer, as applicable, such additional amount or amounts as will compensate such Lender or such L/C Issuer or such Lender’s or such L/C Issuer’s holding company for any such reduction suffered.

(c)     A certificate of a Lender or an L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or L/C Issuer or its holding company, as applicable, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or L/C Issuer, as applicable, the amount shown as due on any such certificate within 10 days after receipt thereof.

(d)     Promptly after any Lender or any L/C Issuer has determined that it will make a request for increased compensation pursuant to this Section 2.16, such Lender or L/C Issuer shall notify the Borrower thereof. Failure or delay on the part of any Lender or L/C Issuer to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or L/C Issuer’s right to demand such compensation; provided, that the Borrower shall not be required to compensate a Lender or an L/C Issuer pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or L/C Issuer, as applicable, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or L/C Issuer’s intention to claim compensation therefor; provided, further, that if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

SECTION 2.17. Break Funding Payments

In the event of (a) the continuation, conversion, payment or prepayment of any principal of any Eurocurrency Loan other than on the last day of an Interest Period applicable thereto (including (i) as a result of an Event of Default, (ii) in connection with any Auction Prepayment or (iii) the occurrence during an Interest Period of a Revolving Facility Maturity Date), (b) the failure to borrow, convert, continue or prepay any Eurocurrency Loan on the date specified in any notice delivered pursuant hereto or (c) the assignment of any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.20, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurocurrency Loan, such loss, cost or expense to any Lender shall be deemed to be the amount determined by such Lender (it being understood that the deemed amount shall not exceed the actual amount) to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Eurocurrency Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue a Eurocurrency Loan, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for deposits in dollars of a comparable amount and period from other banks in the Eurocurrency market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.
SECTION 2.18 . Taxes

(a)     Unless otherwise required by applicable laws, all payments by or on account of any obligation of any Loan Party hereunder or under any other Loan Documents shall be made free and clear of and without deduction for any Taxes; provided, that if any applicable withholding agent shall be required to deduct any Taxes in respect of such payments, then (i) if such Taxes are Indemnified Taxes or Other Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after all required deductions (including deductions applicable to additional sums payable under this Section 2.18) have been made by the applicable withholding agent, the applicable Lender (or, in the case of a payment made to the Administrative Agent for its own account, the Administrative Agent) receives an amount equal to the sum it would have received had no such deduction been made, (ii) the applicable withholding agent shall make such deductions and (iii) the applicable withholding agent shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b)     In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c)    The Borrower shall indemnify the Administrative Agent and each Lender within 10 days after written demand therefor or 5 Business Days before any such Indemnified Taxes or Other Taxes are due (whichever is later), for the full amount of any Indemnified Taxes or Other Taxes payable by the Administrative Agent or such Lender, as applicable (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.18), and any reasonable

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expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or by the Administrative Agent on its own behalf, on behalf of another Agent or on behalf of a Lender, shall be conclusive absent manifest error.

(d)     As soon as practicable after any payment of Indemnified Taxes or Other Taxes by a Loan Party to a Governmental Authority, such Loan Party 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.

(e)     Any Lender that is entitled to an exemption from or reduction of withholding Tax under the law of a jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to any payments under this Agreement shall deliver to the Borrower and the Administrative Agent at any time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent to permit such payments to be made without such withholding Tax or at a reduced rate.

(f)     Any Lender shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter as prescribed by applicable law or upon the reasonable request of the Borrower or the Administrative Agent), duly executed and properly completed copies of Internal Revenue Service Form W-9 or W-8, as applicable, certifying that it is not subject to U.S. federal backup withholding.

(g)     If the Administrative Agent or a Lender determines, in its sole discretion exercised in good faith, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by a Loan Party or with respect to which such Loan Party has paid additional amounts pursuant to this Section 2.18, it shall pay over such refund to such Loan Party (but only to the extent of indemnity payments made, or additional amounts paid, by such Loan Party under this Section 2.18 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender (including any Taxes imposed with respect to such refund) as is determined by the Administrative Agent or Lender in good faith and in its sole discretion, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that such Loan Party, upon the request of the Administrative Agent or such Lender agrees to repay as soon as reasonably practicable the amount paid over to such Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This Section shall not be construed to require the Administrative Agent or any Lender to make available its Tax returns (or any other information relating to its Taxes which it deems confidential) to the Loan Parties or any other person. Notwithstanding anything to the contrary in this Section 2.18(g), in no event will the Administrative Agent or a Lender be required to pay any amount to any Loan Party pursuant to this Section 2.18(g) the payment of which would place the Administrative Agent or such Lender (as applicable) in a less favorable net after-Tax position than the Administrative Agent or such Lender (as applicable) would have been in if the Indemnified Taxes or Other Taxes giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Indemnified Taxes or Other Taxes had never been paid.

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

(i)     For all purposes of this Section 2.18, the term “Lender” shall include any Swingline Lender or any L/C Issuer, and the term “applicable law” shall include FATCA.

(j)     Each Lender hereby authorizes the Administrative Agent to deliver to the Loan Parties and to any successor or replacement Administrative Agent any documentation provided by such Lender to the Administrative Agent pursuant to this Section 2.18.

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SECTION 2.19. Payments Generally; Pro Rata Treatment; Sharing of Set-offs

(a)     The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of drawings under Letters of Credit, or of amounts payable under Section 2.16, 2.17, or 2.18, or otherwise) free and clear of and without condition or deduction for any defense, recoupment, set-off or counterclaim. Except as otherwise expressly provided herein and except with respect to principal of and interest on Revolving Facility Loans denominated in an Alternative Currency, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agent’s Office in Dollars and in Same Day Funds not later than 2:00 p.m. on the date specified herein. Except as otherwise expressly provided herein, all payments by the Borrower hereunder with respect to principal and interest on Loans denominated in an Alternative Currency shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agent’s Office in such Alternative Currency and in Same Day Funds not later than the Applicable Time specified by the Administrative Agent on the dates specified herein. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent to the applicable account designated to the Borrower by the Administrative Agent, except payments to be made directly to the applicable L/C Issuer or the Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.16, 2.17, 2.18, 2.26 and 9.05 shall be made directly to the persons entitled thereto. Without limiting the generality of the foregoing, the Administrative Agent may require that any payments due under this Agreement be made in the continental United States. The Administrative Agent shall distribute any such payments received by it for the account of any other person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. Any payment required to be made by the Administrative Agent hereunder shall be deemed to have been made by the time required if the Administrative Agent shall, at or before such time, have taken the necessary steps to make such payment in accordance with the regulations or operating procedures of the clearing or settlement system used by the Administrative Agent to make such payment.

(b)     Unless Section 7.02 applies, if at any time insufficient funds are received by and available to the Administrative Agent from the Borrower to pay fully all amounts of principal, Unreimbursed L/C Disbursements interest and fees then due from the Borrower hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due from the Borrower hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties and (ii) second, towards payment of principal of Loans, and Unreimbursed L/C Disbursements then due from the Borrower hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and Unreimbursed L/C Disbursements then due to such parties.

(c)     If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Term Loans, Revolving Facility Loans, or participations in Letters of Credit or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Term Loans, Revolving Facility Loans, and participations in Letters of Credit and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase participations in the Term Loans, Revolving Facility Loans, and participations in Letters of Credit and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Term Loans, Revolving Facility Loans, and participations in Letters of Credit and Swingline Loans; provided, that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph (c) shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including Sections 2.12(g), 2.24 and 2.25) or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in Letters of Credit to any assignee or participant (other than Parent of any of its subsidiaries) or the application of any Cash Collateral provided for in Section 2.26. The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

(d)     Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the applicable L/C Issuer hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the applicable L/C Issuer, as

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applicable, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the applicable L/C Issuer, as applicable, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or L/C Issuer with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Federal Funds Rate.

(e)     If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(c), 2.05(e), 2.07 or 2.19(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

(f)     Payments in respect of any Revolving Facility received by the Administrative Agent shall be allocated among the Lenders of each Class of Revolving Facility Commitments ratably, except that, unless an Event of Default has occurred and is continuing, payments received on the Revolving Facility Maturity Date of any Class shall be applied to principal of and interest accrued on Revolving Facility Loans of such Class and to fees accrued in respect of Revolving Facility Commitments of such Class and paid to Lenders thereof ratably.

SECTION 2.20. Mitigation Obligations; Replacement of Lenders

(a)     Each Lender may make any Credit Event to the Borrower through any Lending Office, provided that the exercise of this option shall not affect the obligation of the Borrower to repay any Obligation in accordance with the terms of this Agreement. If any Lender requests compensation under Section 2.16, or requires the Borrower to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18, then, at the request of the Borrower, such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.16 or 2.18, as applicable, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender in any material respect. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b)     If any Lender requests compensation under Section 2.16, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18, and in each case, such Lender has declined or is unable to designate a different Lending Office in accordance with Section 2.20(a), or if any Lender is a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided, that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and, if in respect of any Revolving Facility Commitment or Revolving Facility Loan, the Swingline Lender and the L/C Issuer), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, and participations in L/C Obligations and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.16 or payments required to be made pursuant to Section 2.18, such assignment will result in a reduction in such compensation or payments. Nothing in this Section 2.20 shall be deemed to prejudice any rights that the Borrower may have against any Lender that is a Defaulting Lender. No action by or consent of the removed Lender shall be necessary in connection with such assignment, which shall be immediately and automatically effective upon payment of such purchase price. In connection with any such assignment the Borrower, Administrative Agent and the replacement Lender shall otherwise comply with Section 9.04.

(c)     If any Lender (such Lender, a “Non-Consenting Lender”) has failed to consent to a proposed amendment, waiver, discharge or termination which pursuant to the terms of Section 9.08 requires the consent of all of the Lenders affected or of all Lenders and with respect to which the Required Lenders shall have granted their consent, then the Borrower shall have the right (unless such Non-Consenting Lender grants such consent) at its sole expense (including with respect to the processing and recordation fee referred to in Section 9.04(b)(ii)(B)) to replace such Non-Consenting Lender by deeming such Non-Consenting Lender to have assigned its Loans and Commitments hereunder to one or more assignees reasonably acceptable to (i) the Administrative Agent (unless, in the case of an assignment of Term Loans, such assignee is a Lender, an Affiliate of a Lender or an Approved Fund) and (ii) if in respect of any Revolving Facility Commitment or Revolving Facility Loan, the Swingline Lender and the L/C Issuer; provided, that (without duplication): such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, and funded participations in L/C Obligations and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder including the amount equal to any premium payable

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pursuant to Section 2.12(a) if such replacement of a Non-Consenting Lender is in connection with a Repricing Transaction as if such assignment were a prepayment, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts (including any such premium)). No action by or consent of the Non-Consenting Lender shall be necessary in connection with such assignment, which shall be immediately and automatically effective upon payment of such purchase price. In connection with any such assignment the Borrower, Administrative Agent and the replacement Lender shall otherwise comply with Section 9.04.

SECTION 2.21. Illegality

If any Lender reasonably determines that any change in law has made it unlawful, or that any Governmental Authority has asserted after the Closing Date that it is unlawful, for any Lender or its applicable Lending Office to perform any of its obligations hereunder or make, maintain or fund any Eurocurrency Loans or charge interest with respect to any credit extension at the Eurocurrency Rate in any currency, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligations of such Lender to make or continue Eurocurrency Loans in such currency, to charge interest at the Eurocurrency Rate or to convert ABR Borrowings to Eurocurrency Borrowings shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall upon demand from such Lender (with a copy to the Administrative Agent), either (i) in the case of Loans denominated in Dollars if the affected Lender may lawfully continue to maintain such Loans as Eurocurrency Loans until the last day of such Interest Period, convert all Eurocurrency Loans of such Lender to ABR Loans on the last day of such Interest Period (or, otherwise, immediately convert such Eurocurrency Loans to ABR Loans) or (ii) prepay such Eurocurrency Loans. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.
SECTION 2.22. Incremental Commitments

(a)The Borrower may by written notice to the Administrative Agent elect to seek (w) commitments (“Additional Revolving Commitments”) to increase the Revolving Facility Commitments of any Class, (x) commitments (“Additional Term Loan Commitments”) to increase the aggregate principal amount of any existing Class of Term Loans, (y) commitments (“Other Term A Loan Commitments”) to establish a Class of Other Term A Loans or (z) commitments (“Other Term B Loan Commitments”) to establish a new Class of Other Term B Loans; provided that:
(i)the aggregate amount of all Incremental Commitments after the Closing Date, together with all Incremental Equivalent Debt incurred after the Closing Date and outstanding at such time, shall not exceed the Incremental Amount;
(ii)any such increase or any new Class shall be in an aggregate amount of $25,000,000 or any whole multiple of $5,000,000 in excess thereof; provided that such amount may be less than $25,000,000 if such amount represents all remaining availability under the limit set forth in the preceding clause (i);
(iii)no existing Lender shall be required to provide any Incremental Commitments;
(iv)except as to amortization and final maturity date (which shall, subject to clauses (vii), (viii) and (x) of this proviso, be determined by the Borrower and the Incremental Term Lenders in their sole discretion), the Other Term A Loans shall have (x) the same terms as the Term A Loans (including with respect to pricing) or (y) terms that are less favorable to the Incremental Term Lenders providing such Other Term A Loans than the terms of the Term A Loans in the reasonable determination of the Administrative Agent, except to the extent such provisions apply only after the Term A Facility Maturity Date or such other provisions apply equally for the benefit of the Term A Lenders (including with respect to pricing) and, to the extent applicable (other than pricing and amortization), the Revolving Facility Lenders;
(v)except as to pricing, amortization and final maturity date (which shall, subject to clauses (vii), (viii), (x) and (xii) of this proviso, be determined by the Borrower and the Incremental Term Lenders in their sole discretion), the Other Term B Loans shall have (x) the same terms as the Term B Loans or (y) such other terms as shall be reasonably satisfactory to the Administrative Agent; provided that (a) the covenants and other terms applicable to Other Term B Loans shall not be materially more favorable (when taken as a whole) to the Incremental Term Lenders providing the Other Term B Loans than those applicable to any Facility then outstanding (except to the extent such terms apply only after the Latest Maturity Date or such covenants or other terms apply equally for the benefit of the other Lenders) and (b) at the sole discretion of the Borrower and the Incremental Term Lenders providing the Other Term B Loans, any prepayment premium for the existing Term B Loans may be increased or the period applicable thereto may be extended to be the same as Other Term B Loans;
(vi)as of each date of borrowing under any Additional Term Loan Commitments, Other Term A Loan Commitments or Other Term B Loan Commitments or effectiveness of Additional Revolving Commitments, (A) each of the conditions set forth in Section 4.01 shall be satisfied and (B) Parent shall be in Pro Forma Compliance (assuming all Revolving Facility Commitments are fully drawn and without netting the cash proceeds of any Incremental Commitments being funded on such date in calculating the Total Secured Net Leverage Ratio);
(vii)the final maturity date of any Other Term A Loan shall be no earlier than the Term A Facility Maturity Date, and the final maturity date of any Other Term B Loan shall be no earlier than the Term B Facility Maturity Date;

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(viii)the Weighted Average Life to Maturity of any Other Term A Loan shall not be shorter than the remaining Weighted Average Life to Maturity of the existing Term A Loans, and the Weighted Average Life to Maturity of any Other Term B Loans shall not be shorter than the remaining Weighted Average Life to Maturity of the existing Term B Loans;
(ix)(A) the security interest and guaranties benefiting the Incremental Term Loans will rank pari passu in right of payment and security with the existing Facilities, (B) no Person shall guarantee the obligations with respect to any Incremental Term Loans unless such Person is a Loan Party and (C) no Incremental Term Loans will be secured by any property that does not constitute Collateral under the existing Facilities;
(x)the Other Term A Loans shall share on a pro rata basis (or if agreed by the Incremental Term Lenders providing such Other Term A Loans, on a less than pro rata basis) in any mandatory prepayment or voluntary prepayment of the Term A Loans hereunder, and the Other Term B Loans shall share on a pro rata basis (or if agreed by the Incremental Term Lenders providing such Other Term B Loans, on a less than pro rata basis) in any mandatory prepayment or voluntary prepayment of the Term B Loans hereunder;
(xi)the Additional Revolving Commitments shall have the same terms as the Revolving Facility Commitments that is being increased (except that the Lenders providing Additional Revolving Commitments may receive customary upfront fees in connection therewith), and the Additional Term Loans shall have the same terms as the Term Loans of the Class that is being increased; and
(xii)in the event that the Applicable Margin for any Other Term B Loans is greater than the Applicable Margin for the existing Term B Loans by more than 50 basis points, then the Applicable Margin for the existing Term B Loans shall be increased to the extent necessary so that the Applicable Margin (at each analogous point in the Pricing Grid, if applicable) for the Other Term B Loans is 50 basis points higher than the Applicable Margin for the existing Term B Loans; provided that in determining the Applicable Margin applicable to the existing Term B Loans and Other Term B Loans, (x) original issue discount or upfront or similar fees (collectively, “OID”) payable by Parent or any of its subsidiaries to the Lenders of the existing Term B Loans or the Other Term B Loans, in the primary syndication thereof shall be included (with OID being equated to interest based on an assumed four-year life to maturity), (y) customary arrangement or commitment fees payable to arrangers (or their respective affiliates) shall be excluded; and (z) if the ABR or Eurocurrency Rate “floor” for the Other Term B Loans is greater than the ABR or Eurocurrency Rate “floor,” respectively, for the existing Term B Loans the difference between such floor for the Other Term B Loans and the existing Term B Loans shall be equated to an increase in the Applicable Margin for purposes of this clause (xii) (but shall result in an increase in the “floor” (not the Applicable Margin) of the existing Term B Loan if this provision is triggered).

(b)Each such notice shall specify (x) the date (each, an “Incremental Commitments Effective Date”) on which the Borrower proposes that the Incremental Commitments shall be effective, which shall be a Business Day and (y) the identity of the Persons (each of which shall be an Eligible Person and the consent of the Persons specified in Section 9.04(b)(i) shall have been received with respect thereto to the extent as would be required if the Lender of the Incremental Commitment were an assignee) whom the Borrower proposes would provide the Incremental Commitments and the portion of the Incremental Commitment to be provided by each such Person. As a condition precedent to the effectiveness of any Incremental Commitments, the Borrower shall deliver to the Administrative Agent an Officer’s Certificate certifying that, before and after giving effect to the Incremental Commitments (and assuming full utilization thereof) the requirements of Section 2.22(a) are satisfied, and setting forth the calculation of the available Incremental Amount.

(c)On each Incremental Commitments Effective Date, each Incremental Term Lender shall make an Incremental Term Loan of the applicable Class to the Borrower in a principal amount equal to its Incremental Term Loan Commitment. The Borrower shall prepay any Revolving Facility Loans outstanding on the Incremental Commitments Effective Date with respect to any Additional Revolving Commitment (and pay any additional amounts required pursuant to Section 2.17) to the extent necessary to keep the outstanding Revolving Facility Loans pro rata across all Classes of Revolving Facility Commitments arising from any nonratable increase in the Revolving Facility Commitments. If there is a new borrowing of Revolving Facility Loans on such Incremental Commitments Effective Date, the Revolving Facility Lenders after giving effect to such Additional Revolving Commitments shall make such Revolving Facility Loans in accordance with Section 2.01(c).

(d)The Incremental Commitments shall be documented by an Additional Credit Extension Amendment executed by the Persons providing the Incremental Commitments (and the other Persons specified in the definition of Additional Credit Extension Amendment but no other existing Lender), and the Additional Credit Extension Amendment may provide for such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 2.22.

(e)This Section 2.22 shall supersede any provisions in Section 2.19 or Section 9.08 to the contrary.


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SECTION 2.23. Extended Term Loans and Extended Revolving Commitments

(a)The Borrower may at any time and from time to time request that all or a portion of the Term Loans of any Class (the Loans of such applicable Class, the “Existing Term Loans”) be converted into a new Class of Term Loans (the Loans of such applicable Class, the “Extended Term Loans”) in accordance with this Section 2.23(a). In order to establish any Extended Term Loans, the Borrower shall provide a notice to the Administrative Agent (a “Term Extension Request”) setting forth the proposed terms of the Extended Term Loans to be established, which shall be identical to those applicable to the Existing Term Loans from which such Extended Term Loans are to be converted except that:
(i)the maturity date of the Extended Term Loans shall be later than the maturity date of the Existing Term Loans, and the Weighted Average Life to Maturity of such Extended Term Loans shall be longer than the then remaining Weighted Average Life to Maturity of the Existing Term Loans;
(ii)all or any of the scheduled amortization payments of principal of the Extended Term Loans may be delayed to later dates than the scheduled amortization payments of principal of the Existing Term Loans;
(iii)(A) the interest rates (including through fixed interest rates), interest margins, rate floors, upfront fees, funding discounts, OID and premiums with respect to the Extended Term Loans may be different than those for the Existing Term Loans and/or (B) additional fees and/or premiums may be payable to the Extending Lenders providing such Extended Term Loans in addition to or in lieu of any of the items contemplated by the preceding clause (A);
(iv)the Extended Term Loans may have optional prepayment terms (including call protection and prepayment premiums) and mandatory prepayment terms as may be agreed between the Borrower and the Extending Lenders so long as such Extended Term Loans do not participate on a greater than pro rata basis in any such mandatory prepayments as compared to existing Term Lenders of the applicable Class; and
(v)the Borrower and its Subsidiaries may be subject to covenants and other terms for the benefit of the Extending Lenders that apply only after the Latest Maturity Date (before giving effect to the Extended Term Loans).

(b)The Borrower may at any time and from time to time request that all or a portion of the Revolving Facility Commitments of any Class (the Commitments of such applicable Class, the “Existing Revolving Commitments”) be converted into a new Class of Revolving Facility Commitments (the Commitments of such applicable Class, the “Extended Revolving Commitments”) in accordance with this Section 2.23(b). In order to establish any Extended Revolving Commitments, the Borrower shall provide a notice to the Administrative Agent (a “Revolving Extension Request”) setting forth the proposed terms of the Extended Revolving Commitments to be established, which shall be identical to those applicable to the Existing Revolving Commitments from which such Extended Revolving Commitments are to be converted except that:
(i)the maturity date of the Extended Revolving Commitments shall be later than the maturity date of the Existing Revolving Commitments;
(ii)(A) the interest rates (including through fixed interest rates), interest margins, rate floors, upfront fees, undrawn revolving commitment fees, funding discounts, OID and premiums with respect to the Extended Revolving Commitments may be different than those for the Existing Revolving Commitments and/or (B) additional fees and/or premiums may be payable to the Extending Lenders in addition to or in lieu of any of the items contemplated by the preceding subclause (A);
(iii)the Borrower and its Subsidiaries may be subject to covenants and other terms for the benefit of the Extending Lenders that apply only after the Latest Revolving Facility Maturity Date (before giving effect to the Extended Revolving Commitments).

(c)Each Extension Request shall specify the date (the “Extension Effective Date”) on which the Borrower proposes that the conversion of an Existing Class into an Extended Class shall be effective, which shall be a Business Day. Each Lender of an Existing Class that is requested to be extended shall be offered the opportunity to convert its Existing Class into the Extended Class on the same basis as each other Lender of such Existing Class. Any Lender (to the extent applicable, an “Extending Lender”) wishing to have all or a portion of its Existing Class subject to such Extension Request converted into an Extended Class shall notify the Administrative Agent (an “Extension Election”) on or prior to the date specified in such Extension Request of the amount of its Existing Class subject to such Extension Request that it has elected to convert into an Extended Class; provided that (x) the Borrower may specify in its Extension Request that a Lender may convert all (but not less than all) of its Existing Class into the Extended Class, in which event a partial conversion by a Lender will not be permitted and (y) no existing Lender shall be required to be an Extending Lender. In the event that the aggregate portion of the Existing Class subject to Extension Elections exceeds the amount of the Extended Class requested pursuant to the Extension Request, the portion of the Existing Class converted shall be allocated on a pro rata basis based on the amount of the Existing Class included in each such Extension Election. Notwithstanding the conversion of any Existing Revolving Commitment into an Extended Revolving Commitment, such Extended Revolving Commitment shall be treated identically with all Existing Revolving Commitments for purposes of the obligations of a Revolving Facility Lender in respect of Letters of Credit under Section 2.05, except that the applicable Additional Credit Extension Amendment may provide that the maturity date for the Letters of Credit may be extended and the related obligations to issue Letters of Credit may be continued so long as each applicable L/C Issuer

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has consented to such extensions in its sole discretion (it being understood that no consent of any other Lender shall be required in connection with any such extension).

(d)An Extended Class shall be established pursuant to an Additional Credit Extension Amendment executed by the Extending Lenders (and the other Persons specified in the definition of “Additional Credit Extension Amendment” but no other existing Lender). No Additional Credit Extension Amendment shall provide for any Class of (x) Extended Term Loans in an aggregate principal amount that is less than $25,000,000 or (y) Extended Revolving Commitments in an aggregate principal amount that is less than $5,000,000. In addition to any terms and changes required or permitted by Section 2.23(a), the Additional Credit Extension Amendment shall amend the scheduled amortization payments pursuant to Section 2.11 with respect to the Existing Term Loans from which the Extended Term Loans were converted to reduce each scheduled principal repayment amounts for the Existing Term Loans in the same proportion as the amount of Existing Term Loans to be converted pursuant to such Additional Credit Extension Amendment.

(e)Notwithstanding anything to the contrary contained in this Agreement, on the Extension Effective Date, (i) the principal amount of each Existing Term Loan shall be deemed reduced by an amount equal to the principal amount converted into an Extended Term Loan, (ii) the amount of each Existing Revolving Commitment shall be deemed reduced by an amount equal to the amount converted into an Extended Revolving Commitment and (iii) if, on any Extension Effective Date with respect to any Revolving Facility Commitments, any Loans of any Extending Lender are outstanding under the applicable Existing Revolving Commitments, such Loans (and any related participations) shall be deemed to be converted into Loans (and related participations) made pursuant to the Extended Revolving Commitments in the same proportion as such Extending Lender’s Existing Revolving Commitments are converted to Extended Revolving Commitments.

(f)This Section 2.23 shall supersede any provisions in Section 2.19 or Section 9.08 to the contrary. Each Extended Class shall be documented by an Additional Credit Extension Amendment executed by the Extending Lenders providing such Extended Class (and the other persons specified in the definition of “Additional Credit Extension Amendment” but no other existing Lender), and the Additional Credit Extension Amendment may provide for such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 2.23.

SECTION 2.24. Refinancing Term Loans

(a)The Borrower may at any time and from time to time, by written notice to the Administrative Agent, request the establishment of one or more additional Classes of Term Loans under this Agreement or an increase to an existing Class of Term Loans under this Agreement (“Refinancing Term Loans”); provided that:
(i)the proceeds of such Refinancing Term Loans shall be used, concurrently or substantially concurrently with the incurrence thereof, solely to refinance all or any portion of any outstanding Term Loans;
(ii)each Class of Refinancing Term Loans shall be in an aggregate amount of not less than $25,000,000 (or such other amount necessary to repay any Class of outstanding Term Loans in full);
(iii)such Refinancing Term Loans shall be in an aggregate principal amount not greater than the aggregate principal amount outstanding of Term Loans to be refinanced plus any accrued interest, premiums, fees, costs and expenses related thereto (including any OID or upfront fees);
(iv)the final maturity date of such Refinancing Term Loans shall be later than the maturity date of the Term Loans being refinanced, and the Weighted Average Life to Maturity of such Refinancing Term Loans shall be longer than the then remaining Weighted Average Life to Maturity of each Class of Term Loans being refinanced;
(v)(A) the pricing, rate floors, discounts, fees and optional and mandatory prepayment provisions applicable to such Refinancing Term Loans shall be as agreed between the Borrower and the Refinancing Term Lenders so long as, in the case of any mandatory prepayment provisions, such Refinancing Term Lenders do not participate on a greater than pro rata basis in any such prepayments as compared to Term Lenders holding Term Loans to be refinanced and (B) the covenants and other terms applicable to such Refinancing Term Loans (excluding those terms described in the immediately preceding clause (A)), which shall be as agreed between the Borrower and the lenders providing such Refinancing Term Loans, shall not be materially more favorable (when taken as a whole) to the Refinancing Term Lenders than those applicable to any Term Loans then outstanding under this Agreement (as determined by the Borrower in good faith), except to the extent such covenants and other terms apply solely to any period after the Latest Maturity Date or such covenants or other terms apply equally for the benefit of the other Lenders;
(vi)no existing Lender shall be required to provide any Refinancing Term Loans;
(vii)no Refinancing Term Loans shall be guaranteed by any Person that is not a Loan Party or secured by any asset that is not Collateral; and
(viii)the Refinancing Term Loans shall rank pari passu in right of payment and of security with the existing Loans, on terms and pursuant to documentation applicable to the Term Loans being refinanced.

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(b)Each such notice shall specify (x) the date (each, a “Refinancing Term Effective Date”) on which the Borrower proposes that the Refinancing Term Loans be made, which shall be a Business Day and (y) the identity of the Persons (each of which shall be an Eligible Person and the consent of the Persons specified in Section 9.04(b)(i) shall have been received with respect thereto to the extent as would be required if the Lender of the Refinancing Term Loan were an assignee) whom the Borrower proposes would provide the Refinancing Term Loans and the portion of the Refinancing Term Loans to be provided by each such Person. On each Refinancing Term Effective Date, each Person with a commitment for a Refinancing Term Loan (each such Person, a “Refinancing Term Lender”) shall make a Refinancing Term Loan to the Borrower in a principal amount equal to such Person’s commitment therefore.

(c)This Section 2.24 shall supersede any provisions in Section 2.19 or Section 9.08 to the contrary. The Refinancing Term Loans shall be documented by an Additional Credit Extension Amendment executed by the Persons providing the Refinancing Term Loans (and the other Persons specified in the definition of “Additional Credit Extension Amendment” but no other existing Lender), and the Additional Credit Extension Amendment may provide for such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 2.24.

SECTION 2.25. Replacement Revolving Commitments

(a)The Borrower may at any time and from time to time, by written notice to the Administrative Agent, request the establishment of one or more additional Classes of Revolving Facility Commitments (“Replacement Revolving Commitments”) to replace all or a portion of any existing Classes of Revolving Facility Commitments under this Agreement (“Replaced Revolving Commitments”); provided that:
(i)substantially concurrently with the effectiveness of the Replacement Revolving Commitments, all or an equivalent portion of the Revolving Facility Commitments in effect immediately prior to such effectiveness shall be terminated, and all or an equivalent portion of the Revolving Facility Loans then outstanding, together with all interest thereon, and all other amounts accrued for the benefit of the Revolving Facility Lenders, shall be repaid or paid (it being understood, however, that any Letters of Credit issued and outstanding under the Replaced Revolving Commitments shall be deemed to have been issued under the Replacement Revolving Commitments if the amount of such Letters of Credit would exceed the remaining amount of commitments under the Replaced Revolving Commitments after giving effect to the reduction contemplated hereby);
(ii)such Replacement Revolving Commitments shall be in an aggregate amount not greater than the aggregate amount of Replaced Revolving Commitments to be replaced plus any accrued interest, premiums, fees, costs and expenses related thereto (including any OID or upfront fees);
(iii)the final maturity date of such Replacement Revolving Commitments shall be later than the maturity date of the Replaced Revolving Commitments, and the Replacement Revolving Commitments shall not be subject to any amortization;
(iv)the Letter of Credit Sublimit under such Replacement Revolving Commitments shall be as agreed between the Borrower, the Lenders providing such Replacement Revolving Commitments, the Administrative Agent and the L/C Issuer thereunder (or any replacement L/C Issuer);
(v)(A) the pricing, rate floors, discounts, fees and prepayment provisions applicable to such Replacement Revolving Commitments shall be as agreed between the Borrower and the Replacement Revolving Lenders so long as, in the case of any mandatory or optional prepayment provisions, such Replacement Revolving Lenders do not participate on a greater than pro rata basis in any such prepayments as compared to Replaced Revolving Commitments and (B) the covenants and other terms applicable to such Replacement Revolving Commitments (excluding those terms described in the immediately preceding clause (A)), which shall be as agreed between the Borrower and the lenders providing such Replacement Revolving Commitments, shall not be materially more favorable (when taken as a whole) to the lenders providing the Replacement Revolving Commitments than those applicable to the Replaced Revolving Commitments (as determined by the Borrower in good faith), except to the extent such covenants and other terms apply solely to any period after the Latest Revolving Facility Maturity Date or such covenants or other terms apply equally for the benefit of the other Lenders;
(vi)no existing Lender shall be required to provide any Replacement Revolving Commitments; and
(vii)no Replacement Revolving Commitments shall be guaranteed by any Person that is not a Loan Party or secured by any asset that is not Collateral; and
(viii)the Replacement Revolving Commitments shall rank pari passu in right of payment and of security with the existing Revolving Facility Commitments.

(b)Each such notice shall specify (x) the date on which the Borrower proposes that the Replacement Revolving Commitments become effective, which shall be a Business Day and (y) the identity of the Persons (each of which shall be an Eligible Person and the consent of the Persons specified in Section 9.04(b)(i) shall have been received with respect thereto to the extent as would be required if the Lender of the Replacement Revolving Commitments were an assignee) whom the Borrower proposes would provide the Replacement Revolving Commitments (each such person, a “Replacement Revolving Lender”) and the portion of the Replacement Revolving Commitments to be provided by each such Person.

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(c)This Section 2.25 shall supersede any provisions in Section 2.19 or Section 9.08 to the contrary. The Replacement Revolving Commitments shall be documented by an Additional Credit Extension Amendment executed by the Persons providing the Replacement Revolving Commitments (and the other Persons specified in the definition of “Additional Credit Extension Amendment” but no other existing Lender), and the Additional Credit Extension Amendment may provide for such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 2.25.

SECTION 2.26. Cash Collateral

(a)     If (i) the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an Unreimbursed L/C Disbursement, (ii) as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, (iii) the Borrower shall be required to provide Cash Collateral pursuant to Section 7.01, or (iv) there shall exist a Defaulting Lender, the Borrower shall immediately (in the case of clause (iii) above), or within one Business Day following any request by the Administrative Agent or the L/C Issuer (in all other cases), provide Cash Collateral in an amount not less than the applicable Minimum Collateral Amount (determined in the case of Cash Collateral provided pursuant to clause (iv) above, after giving effect to Section 2.27 (a)(iv) and any Cash Collateral provided by the Defaulting Lender). If at any time the Administrative Agent determines that any funds held as Cash Collateral are subject to any right or claim of any Person other than the Administrative Agent or that the total amount of such funds is less than the aggregate Outstanding Amount of all L/C Obligations, the Borrower will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited as Cash Collateral, an amount equal to the excess of (x) such aggregate Outstanding Amount over (y) the total amount of funds, if any, then held as Cash Collateral that the Administrative Agent determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit as Cash Collateral, such funds shall be applied, to the extent permitted under applicable Laws, to reimburse the L/C Issuer.

(b)     The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the L/C Issuer and the Lenders, and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.26(c). If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent or the L/C Issuer as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrower will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency. All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America. The Borrower shall pay on demand therefor from time to time all customary account opening, activity and other administrative fees and charges in connection with the maintenance and disbursement of Cash Collateral.

(c)     Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.26 or Section 2.27 or 7.02 in respect of Letters of Credit or Swingline Loans shall be held and applied to the satisfaction of the specific L/C Obligations, Swingline Loans, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may be provided for herein.

(d)     Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or to secure other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 9.04(b)(ii)(B)) or (ii) the determination by the Administrative Agent and the L/C Issuer that there exists excess Cash Collateral; provided, however, the Person providing Cash Collateral and the L/C Issuer may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.

SECTION 2.27. Defaulting Lenders

(a)    Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

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(i)    Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the penultimate sentence of Section 9.08(b) and in the definition of “Required Lenders”.
(ii)    Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 9.06 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the L/C Issuer or Swingline Lender hereunder; third, to Cash Collateralize the L/C Issuer’s Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.26; fourth, as the Borrower may request (so long as no Default or Event of Default has occurred and is continuing), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the L/C Issuer’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit to be issued under this Agreement, in accordance with Section 2.26; sixth, to the payment of any amounts owing to the Lenders, the L/C Issuer or Swingline Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or the Swingline Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default has occurred and is continuing, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or Unreimbursed L/C Disbursements in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.01 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Disbursement Participations owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Obligations owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C Obligations and Swingline Loans are held by the Lenders pro rata in accordance with the Commitments hereunder without giving effect to Section 2.27(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.27(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(iii)    Certain Fees.
(A)    No Defaulting Lender shall be entitled to receive any fee payable under Section 2.13(a) for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender for such period).
(B)    Each Defaulting Lender shall be entitled to receive L/C Participation Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Revolving Facility Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.26.
(C)    With respect to any Commitment Fee or L/C Participation Fee not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C Obligations or Swingline Loans that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to the L/C Issuer and Swingline Lender, as applicable, the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s or Swingline Lender’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.
(iv)    Reallocation of Revolving Facility Percentages to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in L/C Obligations and Swingline Loans shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Revolving Facility Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that such reallocation does not cause the aggregate Revolving Facility Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Revolving Facility Commitment. Subject to Section 9.23, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender

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arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.
(v)    Cash Collateral, Repayment of Swingline Loans. If the reallocation described in clause (a)(iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under applicable Law, (x) first, prepay Swingline Loans in an amount equal to the Swingline Lender’s Fronting Exposure and (y) second, Cash Collateralize the L/C Issuer’s Fronting Exposure in accordance with the procedures set forth in Section 2.26.
(b)     Defaulting Lender Cure. If the Borrower, the Administrative Agent, Swingline Lender and the L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Revolving Facility Loans and funded and unfunded participations in Letters of Credit and Swingline Loans to be held on a pro rata basis by the Lenders in accordance with their Revolving Facility Percentages (without giving effect to Section 2.27(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
SECTION 2.28. Alternate Rate of Interest

Notwithstanding anything to the contrary in this Agreement or any other Loan Documents, if the Administrative Agent determines (which determination shall be conclusive absent manifest error), or the Borrower or Required Lenders notify the Administrative Agent (with, in the case of the Required Lenders, a copy to the Borrower) that the Borrower or Required Lenders (as applicable) have determined, that:
(a)     adequate and reasonable means do not exist for ascertaining Eurocurrency Rate for any requested Interest Period, including, without limitation, because the LIBO Screen Rate is not available or published on a current basis and such circumstances are unlikely to be temporary; or

(b)     the administrator of the LIBO Screen Rate or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which LIBOR or the LIBO Screen Rate shall no longer be made available, or used for determining the interest rate of loans (such specific date, the “Scheduled Unavailability Date”), or

(c)     syndicated loans currently being executed, or that include language similar to that contained in this Section, are being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate to replace LIBOR,
then, reasonably promptly after such determination by the Administrative Agent or receipt by the Administrative Agent of such notice, as applicable, the Administrative Agent, the Borrower and Parent may amend this Agreement to replace LIBOR with an alternate benchmark rate (including any mathematical or other adjustments to the benchmark (if any) incorporated therein), giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated syndicated credit facilities for such alternative benchmarks (any such proposed rate, a “LIBOR Successor Rate”), together with any proposed LIBOR Successor Rate Conforming Changes and any such amendment shall become effective at 5:00 p.m. (New York time) on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and the Borrower unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders do not accept such amendment.
If no LIBOR Successor Rate has been determined and the circumstances under clause (a) above exist or the Scheduled Unavailability Date has occurred (as applicable), the Administrative Agent will promptly so notify the Borrower and each Lender.  Thereafter, (x) the obligation of the Lenders to make or maintain Eurocurrency Rate Loans shall be suspended (to the extent of the affected Eurocurrency Loans or Interest Periods), and (y) the Eurocurrency Rate component shall no longer be utilized in determining the ABR. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurocurrency Loans (to the extent of the affected Eurocurrency Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Borrowing of ABR Loans (subject to the foregoing clause (y)) in the amount specified therein.
Notwithstanding anything else herein, any definition of “LIBOR Successor Rate” shall provide that in no event shall such LIBOR Successor Rate be less than zero for purposes of this Agreement.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES
On the date of each Credit Event, each of Parent and the Borrower represents and warrants to each of the Lenders that:
SECTION 3.01. Organization; Powers

Each of Parent and the Material Subsidiaries (a) is a partnership, limited liability company, unlimited liability company or corporation duly organized, validly existing and in good standing (or, if applicable in a foreign jurisdiction, enjoys the equivalent status under the laws of any jurisdiction of organization outside the United States) under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to own its property and assets and to carry on its business as now conducted and (c) is qualified to do business in each jurisdiction where such qualification is required, except where the failure so to qualify would not reasonably be expected to have a Material Adverse Effect. Each Loan Party has the power and authority to execute, deliver and perform its obligations under each of the Loan Documents and each other agreement or instrument contemplated thereby to which it is or will be a party and, in the case of the Borrower, to borrow and otherwise obtain credit hereunder.
SECTION 3.02. Authorization

The execution, delivery and performance by each Loan Party of each of the Loan Documents to which it is a party, and the receipt of credit extensions hereunder and the transactions forming a part of the Transactions (a) have been duly authorized by all corporate, stockholder, partnership, limited liability company or other organizational action required to be obtained by such Loan Party, (b) will not violate the Organization Documents of such Loan Party, (c) will not violate (i) any provision of law, statute, rule or regulation, or any applicable order of any court or any rule, regulation or order of any Governmental Authority or (ii) any provision of any indenture, agreement or other instrument to which such Loan Party is a party or by which it or any of its property is or may be bound, (d) will not be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under, give rise to a right of or result in any cancellation or acceleration of any right or obligation (including any payment) or to a loss of a material benefit under any such indenture, agreement or other instrument, and (e) result not in the creation or imposition of any Lien upon or with respect to any property or assets now owned or hereafter acquired by such Loan Party, other than Permitted Liens, except in the case of clause (c) or (d) as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.03. Enforceability

This Agreement has been duly executed and delivered by Parent and the Borrower and constitutes, and each other Loan Document when executed and delivered by each Loan Party that is party thereto will constitute, a legal, valid and binding obligation of such Loan Party enforceable against each such Loan Party in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or other similar laws affecting creditors’ rights generally, (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (iii) implied covenants of good faith and fair dealing.
SECTION 3.04.    Governmental Approvals

No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with the Transactions, the perfection or maintenance of the Liens created under the Security Documents or the exercise by any Agent or any Lender of its rights under the Loan Documents or the remedies in respect of the Collateral, except for (a) the filing of Uniform Commercial Code financing statements and equivalent filings in the non-U.S. jurisdictions, (b) filings with the United States Patent and Trademark Office and the United States Copyright Office and comparable offices in foreign jurisdictions and equivalent filings in non-U.S. jurisdictions, (c) recordation of the Mortgages and equivalent recordation in non-U.S. jurisdictions, (d) such as have been made or obtained and are in full force and effect, (e) such actions, consents and approvals the failure of which to be obtained or made would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and (f) filings or other actions listed on Schedule 3.04.
SECTION 3.05.    Financial Statements

(a)     The unaudited consolidated balance sheet of Parent as at September 30, 2018, and related consolidated statements of income, stockholders’ equity and cash flows of Parent for the nine months ended September 30, 2018 and 2017, present fairly, in all material respects and in accordance with GAAP consistently applied through the periods covered thereby, the consolidated financial position of Parent as at such date, and the consolidated results of operations, changes in stockholders’

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equity and cash flows of Parent for the periods then ended, except as otherwise expressly indicated therein, including the notes thereto, subject to the absence of footnotes and to normal year-end audit adjustments and to any other adjustments described therein.

(b)     The audited consolidated balance sheets of Parent as at December 31, 2016 and 2017, and the related audited consolidated statements of income, stockholders’ equity and cash flows for the years ended December 31, 2016 and 2017, present fairly, in all material respects and in accordance with GAAP consistently applied throughout the periods covered thereby, the consolidated financial position of Parent as at such dates and the consolidated results of operations, changes in stockholders’ equity and cash flows of Parent for the years then ended.

SECTION 3.06.    No Material Adverse Effect

Since December 31, 2017, there has been no event or circumstance that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.07.    Title to Properties; Possession Under Leases

(a)     Each of Parent and the Subsidiaries has valid fee simple title to, or valid leasehold interests in, or easements or other limited property interests in, all its Real Properties (including all Mortgaged Properties) and has valid title to its personal property and assets, in each case, except for Permitted Liens and except for defects in title that do not materially interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes and except where the failure to have such title would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. All such properties and assets are free and clear of Liens, other than Permitted Liens.

(b)     None of Parent or its Subsidiaries are in default under any leases to which it is a party, except for such defaults as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. All of Parent’s or Subsidiaries’ leases are in full force and effect, except leases in respect of which the failure to be in full force and effect would not reasonably be expected to have a Material Adverse Effect. Parent and each of the Subsidiaries enjoys peaceful and undisturbed possession under all such leases, other than leases in respect of which the failure to enjoy peaceful and undisturbed possession would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(c)     Each of Parent and the Subsidiaries owns or possesses, or is licensed to use, all patents, trademarks, service marks, trade names and copyrights, all applications for any of the foregoing and all licenses and rights with respect to the foregoing necessary for the present conduct of its business, without any conflict (of which Parent has been notified in writing) with the rights of others, and free from any burdensome restrictions on the present conduct of Parent, except where such conflicts and restrictions would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

SECTION 3.08.    Subsidiaries

(a)     Schedule 1 of the Perfection Certificates sets forth, as of the Closing Date, the name of each subsidiary of Parent, the jurisdiction of organization of such subsidiary, the form of organization of such subsidiary, the record owners of the Equity Interests of such subsidiary and the percentage of each class of Equity Interests owned by Parent or any of its subsidiaries, whether such subsidiary is a Loan Party, and if such subsidiary is not a Loan Party, the reason it is not a Loan Party.

(b)     As of the Closing Date, there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than stock options granted to employees or directors and directors’ qualifying shares) of any nature relating to any Equity Interests of any of the Subsidiaries.

SECTION 3.09 Litigation; Compliance with Laws

(a)     There are no actions, suits or proceedings at law or in equity or by or on behalf of any Governmental Authority or in arbitration now pending, or, to the knowledge of Parent, threatened in writing against or affecting Parent or any of the Subsidiaries or any business, property or rights of any such person which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(b)     Except as set forth on Schedule 3.09(b), none of Parent, any Subsidiary nor any of their respective properties or assets is in violation of (nor will the continued operation of their material properties and assets as currently conducted violate) any law (including the USA PATRIOT Act), rule or regulation (including any zoning, building, ordinance, code or approval or any building permit, but excluding any Environmental Laws, which are subject to Section 3.16) or any restriction of record or

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agreement affecting any Mortgaged Property, or is in default with respect to any judgment, writ, injunction or decree of any Governmental Authority, where such violation or default would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

SECTION 3.10.    Federal Reserve Regulations

(a)     None of Parent and the Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock.

(b)     No part of the proceeds of any Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, (i) to purchase or carry Margin Stock or to extend credit to others for the purpose of purchasing or carrying Margin Stock or to refund indebtedness originally incurred for such purpose, or (ii) for any purpose that entails a violation of, or that is inconsistent with, the provisions of the Regulations of the Board, including Regulation U or Regulation X.

SECTION 3.11. Investment Company Act

None of Parent and the Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.
SECTION 3.12.    Use of Proceeds

The Borrower will use the proceeds of the Revolving Facility Loans and Swingline Loans, and may request the issuance of Letters of Credit, solely for general corporate purposes (including, without limitation, for Permitted Business Acquisitions and for any permitted purpose under the Loan Documents). The Borrower will use the proceeds of the Term Loans made on the Closing Date to refinance Indebtedness under the Existing Credit Agreement and for the payment of fees and expenses payable in connection with the Transactions. The proceeds of Incremental Term Loans shall be used as set forth in the Additional Credit Extension Amendment establishing such Incremental Term Loans. The proceeds of Refinancing Term Loans shall be used to refinance the Term Loans specified in the Additional Credit Extension Amendment establishing such Refinancing Term Loans and for fees and expenses related thereto.
SECTION 3.13.    Taxes

Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect:
(a)    Each of Parent and the Subsidiaries (i) has filed or caused to be filed all Tax returns required to have been filed by it and each such Tax return is true and correct; and (ii) has timely paid or caused to be timely paid all Taxes shown to be due and payable by it on such Tax returns and all other Taxes due and payable, including in its capacity as a withholding agent, except in each case for Taxes that are being contested in good faith by appropriate proceedings in accordance with Section 5.03 and for which Parent or any of the Subsidiaries, as the case may be, has set aside on its books adequate reserves in accordance with GAAP; and
(b)    As of the Closing Date, with respect to each of Parent and the Subsidiaries, there are no claims being asserted in writing with respect to any Taxes.
SECTION 3.14. No Material Misstatements

(a)     (i) All written information included in the Information Memorandum and (ii) all other written information concerning Parent the Subsidiaries, the Transactions and any other transactions contemplated hereby or delivered under any other Loan Document or otherwise prepared by or on behalf of the foregoing or their representatives (including all reports, financial statements, certificates or other information) made available to any Lenders or the Administrative Agent in connection with the Transactions or the other transactions contemplated hereby (other than the Projections, estimates and information of a general economic nature or general industry nature) (the “Information”), when taken as a whole, is true and correct in all material respects, at the Closing Date (in the case of the Information Memorandum) or at the time furnished (in the case of any other Information), and does not, taken as a whole, as of any such date contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, taken as a whole, not materially misleading in light of the circumstances under which such statements were made.


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(b)     The Projections and estimates and information of a general economic nature prepared by or on behalf of any Loan Party or any of its representatives and that have been made available to any Lenders or the Administrative Agent in connection with the Transactions or the other transactions contemplated hereby (i) have been prepared in good faith based upon assumptions believed by the Loan Parties to be reasonable as of the date thereof (it being understood that actual results may vary materially from the Projections), as of the date such Projections and estimates were furnished to the Lenders and as of the Closing Date, and (ii) as of the Closing Date, have not been modified in any material respect by any Loan Party.

(c)     As of the Closing Date, the information included in the Beneficial Ownership Certification, if applicable, is true and correct in all respects.

SECTION 3.15.    Employee Benefit Plans

(a)     Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect: (i) each Plan is in compliance with the applicable provisions of ERISA and the Code; (ii) no Reportable Event has occurred during the past five years as to which Parent, any Subsidiary or any ERISA Affiliate was required to file a report with the PBGC; (iii) as of the most recent valuation date preceding the date of this Agreement, no Plan has any Unfunded Pension Liability; (iv) no ERISA Event has occurred or is reasonably expected to occur; (v) none of Parent, any Subsidiary or any ERISA Affiliate (A) has received any written notification that any Multiemployer Plan is in reorganization or has been terminated within the meaning of Title IV of ERISA, or has knowledge that any Multiemployer Plan is reasonably expected to be in reorganization or to be terminated or (B) has incurred or is reasonably expected to incur any withdrawal liability to any Multiemployer Plan; and (vi) neither Parent nor any of its Subsidiaries has engaged in a “prohibited transaction” (as defined in Section 406 of ERISA or Code Section 4975) in connection with any employee pension benefit plan (as defined in Section 3(2) of ERISA) that would subject Parent or any of its Subsidiaries to tax.

(b)     Each of Parent and its Subsidiaries is in compliance (i) with all applicable provisions of law and all applicable regulations and published interpretations thereunder with respect to any employee pension benefit plan or other employee benefit plan governed by the laws of a jurisdiction other than the United States and (ii) with the terms of any such plan, except, in each case, for such noncompliance that would not reasonably be expected to have a Material Adverse Effect.

(c)     Except as would not reasonably be expected to result in a Material Adverse Effect, there are no pending or, to the knowledge of Parent, threatened claims (other than claims for benefits in the normal course), sanctions, actions or lawsuits, asserted or instituted against any Plan or any person as fiduciary or sponsor of any Plan that would reasonably be expected to result in liability to Parent or any of its Subsidiaries.

SECTION 3.16.    Environmental Matters

Except as to matters that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (i) no written notice has been received by Parent or any of its Subsidiaries, and there are no judicial, administrative or other actions, suits or proceedings pending or, to Parent’s knowledge, threatened which allege a violation of or liability under any Environmental Laws, in each case relating to Parent or any of its Subsidiaries, (ii) each of Parent and its Subsidiaries and their respective operations and properties are in compliance with all applicable Environmental Laws and each of them has all environmental permits, licenses and other approvals necessary for its operations to comply with all applicable Environmental Laws and is in compliance with the terms of such permits, licenses and other approvals, (iii) there has been no Release or threat of Release of any Hazardous Material at, on, under or from any property currently owned, operated or leased or, to Parent’s knowledge, formerly owned, operated or leased, by Parent or any of its Subsidiaries that could reasonably be expected to give rise to any cost, liability or obligation of Parent or any of its Subsidiaries under any Environmental Laws, and Parent or any of its Subsidiaries have not disposed of or arranged for disposal or treatment, or arranged for transport for disposal or treatment, of any Hazardous Materials at any location in a manner that would reasonably be expected to give rise to any liability of Parent or any of its Subsidiaries under any Environmental Laws and (iv) neither Parent nor any of its Subsidiaries is a party or subject to any order, decree or agreement which imposes any obligation or liability under any Environmental Laws.
SECTION 3.17.    Security Documents

(a)     Each Security Document is effective to create in favor of the Collateral Agent (for the benefit of the Secured Parties) a legal, valid and enforceable security interest in the Collateral described therein and proceeds thereof to the fullest extent permitted under applicable law. In the case of the Pledged Collateral described in a Security Document and to the extent appropriate in the applicable jurisdictions, when certificates or promissory notes, as applicable, representing such Pledged Collateral are delivered to the Collateral Agent, and in the case of the other Collateral described in such Security Document (other than Intellectual Property (as defined in the Collateral Agreement)), except as otherwise provided in the Collateral

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Agreement, when financing statements and other filings specified in the Perfection Certificate are filed in the offices specified in the Perfection Certificate, the Collateral Agent (for the benefit of the Secured Parties) shall have a perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and, subject to Section 9-315 of the New York Uniform Commercial Code, the proceeds thereof, as security for the Obligations to the extent perfection in such Collateral can be obtained by filing Uniform Commercial Code financing statements, in each case prior and superior in right to the Lien of any other person (except for Permitted Liens).

(b)     When the Collateral Agreement or a summary thereof is properly filed in the United States Patent and Trademark Office and the United States Copyright Office or the Trademark Division of the Puerto Rico State Department, and, with respect to Collateral in which a security interest cannot be perfected by such filings, upon the proper filing of the financing statements referred to in paragraph (a) above, the Collateral Agent (for the benefit of the Secured Parties) shall have a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties thereunder in the Intellectual Property filed with the United States Patent and Trademark Office and the United States Copyright Office or the Trademark Division of the Puerto Rico State Department, in each case prior and superior in right to the Lien of any other person, except for Permitted Liens (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office or the Trademark Division of the Puerto Rico State Department may be necessary to perfect a Lien on registered trademarks and patents, trademark and patent applications and registered copyrights acquired by a Loan Party after the Closing Date).

(c)     The Mortgages executed and delivered after the Closing Date pursuant to Section 5.10 will be, effective to create in favor of the Collateral Agent (for the benefit of the Secured Parties) a legal, valid and enforceable Lien on all of the applicable Loan Parties’ right, title and interest in and to the Mortgaged Property thereunder and the proceeds thereof (to the extent feasible in the applicable jurisdiction), and when such Mortgages are filed or recorded in the proper real estate filing or recording offices, and all relevant mortgage taxes and recording charges are duly paid, the Collateral Agent (for the benefit of the Secured Parties) shall have a perfected Lien on, and security interest in, all right, title, and interest of the applicable Loan Parties in such Mortgaged Property and, to the extent applicable, subject to Section 9-315 of the Uniform Commercial Code, the proceeds thereof (to the extent feasible in the applicable jurisdiction), in each case prior and superior in right to the Lien of any other person, except for Permitted Liens.

(d)     Notwithstanding anything herein (including this Section 3.17) or in any other Loan Document to the contrary, other than to the extent set forth in a pledge agreement (if any), neither Parent nor any other Loan Party makes any representation or warranty as to the effects of perfection or non-perfection, the priority or the enforceability of any pledge of or security interest in any Equity Interests of any Subsidiary, or as to the rights and remedies of the Agents or any Lender with respect thereto, under foreign law.

SECTION 3.18.    EEA Financial Institution

No Loan Party is an EEA Financial Institution.
SECTION 3.19.    Solvency

(a)     On the Closing Date, immediately after giving effect to the transactions to occur on such date, (i) the fair value of the assets of Parent and its subsidiaries on a consolidated basis, at a fair valuation, will exceed the debts and liabilities, direct, subordinated, contingent or otherwise, of Parent and its subsidiaries on a consolidated basis; (ii) the present fair saleable value of the property of Parent and its subsidiaries on a consolidated basis will be greater than the amount that will be required to pay the probable liability of Parent and its subsidiaries on a consolidated basis on their debts and other liabilities, direct, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii) Parent and its subsidiaries on a consolidated basis will be able to pay their debts and liabilities, direct, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) Parent and its subsidiaries on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted following such date.

(b)     Neither Parent or the Borrower intends to, or believes that it or any of its subsidiaries will, incur debts beyond its ability to pay such debts as they mature, taking into account the timing and amounts of cash to be received by it or any such subsidiary and the timing and amounts of cash to be payable on or in respect of its Indebtedness or the Indebtedness of any such subsidiary.

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SECTION 3.20.    Labor Matters

Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect: (a) there are no strikes or other labor disputes pending or threatened against Parent or any of its Subsidiaries; (b) the hours worked and payments made to employees of Parent and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable law dealing with such matters; and (c) all payments due from Parent or any of the Subsidiaries or for which any claim may be made against Parent or any of the Subsidiaries, on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of Parent or such Subsidiary to the extent required by GAAP. Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect, the consummation of the Transactions will not give rise to a right of termination or right of renegotiation on the part of any union under any material collective bargaining agreement to which Parent or any of the Subsidiaries (or any predecessor) is a party or by which Parent or any of the Subsidiaries (or any predecessor) is bound.
SECTION 3.21. No Default

No Default or Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.
SECTION 3.22.    Intellectual Property; Licenses, Etc.

Except as would not reasonably be expected to have a Material Adverse Effect, (a) Parent and each of its Subsidiaries owns, or possesses the right to use, all of the patents, registered trademarks, registered service marks or trade names, registered copyrights or mask works, domain names, applications and registrations for any of the foregoing (collectively, “Intellectual Property Rights”) that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other person, (b) to the best knowledge of Parent, Parent and its Subsidiaries are not interfering with, infringing upon, misappropriating or otherwise violating Intellectual Property Rights of any person, and (c) no claim or litigation regarding any of the foregoing is pending or, to the best knowledge of Parent, threatened.
SECTION 3.23. Senior Debt

The Obligations constitute “Senior Debt” (or the equivalent thereof) and “Designated Senior Debt” (or the equivalent thereof, if any) under the documentation governing any subordinated Indebtedness permitted to be incurred hereunder or any Permitted Refinancing Indebtedness in respect thereof constituting subordinated Indebtedness.
SECTION 3.24. Insurance

Schedule 12 of the Perfection Certificate sets forth a true, complete and correct description, in all material respects, of all material insurance maintained by Parent as of the Closing Date. Except as would not reasonably be expected to have a Material Adverse Effect, all insurance maintained by Parent is in full force and effect, all premiums have been duly paid and Parent has not received notice of violation or cancellation thereof.
SECTION 3.25. Anti-Money Laundering

To the knowledge of senior management of each Loan Party, no Loan Party, none of its subsidiaries, none of its controlled Affiliates and none of the respective officers, directors, brokers or agents of such Loan Party, such subsidiary or controlled Affiliate has violated or is in violation of any applicable Anti-Money Laundering Law.
SECTION 3.26. Anti-Corruption and Sanctions

Parent has implemented and maintains in effect policies and procedures designed to ensure compliance by Parent, its subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and Parent, its subsidiaries and their respective officers and employees and, to the knowledge of Parent, its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects and are not knowingly engaged in any activity that would reasonably be expected to result in Borrower being designated as a Sanctioned Person. None of (a) Parent, any of its subsidiaries or any of their respective directors, officers or employees, or (b) to the knowledge of Parent, any agent of Parent or any of its subsidiaries that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Borrowing or Letter of Credit, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions.

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ARTICLE IV

CONDITIONS OF LENDING

The obligations of (a) the Lenders to make Loans and (b) any L/C Issuer to permit any L/C Credit Extension hereunder (each, a “Credit Event”) are subject to the satisfaction of the following conditions:
SECTION 4.01. All Credit Events

On the date of each borrowing of Loans (including the Closing Date) and on the date of each L/C Credit Extension (including the Closing Date):
(a)    The Administrative Agent shall have received, in the case of a Borrowing, a Borrowing Request as required by Section 2.03 or, in the case of an L/C Credit Extension, the applicable L/C Issuer and the Administrative Agent shall have received a Letter of Credit Application as required by Section 2.05(b).
(b)    The representations and warranties set forth in the Loan Documents shall be true and correct in all material respects as of such date, as applicable, with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date) (provided that representations and warranties that are qualified by materiality shall be true and correct in all respects).
(c)    At the time of and immediately after such Borrowing or L/C Credit Extension, as applicable, no Default or Event of Default shall have occurred and be continuing.
Each such borrowing and each L/C Credit Extension shall be deemed to constitute a representation and warranty by the Borrower on the date of such borrowing or L/C Credit Extension as to the matters specified in paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. First Credit Event

On the Closing Date:
(a)    The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include facsimile or e-mail transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.
(b)    The Administrative Agent shall have received, on behalf of itself, the Collateral Agent, the L/C Issuer and the Lenders, a written opinion of (i) Cleary Gottlieb Steen & Hamilton LLP, counsel for the Loan Parties, and (ii) each local or foreign counsel specified on Schedule 4.02(b), in each case (A) dated the Closing Date, (B) addressed to the Administrative Agent, the Collateral Agent, the L/C Issuer and the Lenders and (C) in form and substance reasonably satisfactory to the Administrative Agent.
(c)    The Administrative Agent shall have received with respect to each Loan Party, each of the items referred to in clauses (i), (ii) and (iii) below:
(i)    a copy of the Organization Documents of such Loan Party, (A) in the case of a corporation, certified as of a recent date by the Secretary of State (or other similar official) of the jurisdiction of its organization, and a certificate as to the good standing (to the extent such concept or a similar concept exists under the laws of such jurisdiction) of such Loan Party as of a recent date from such Secretary of State (or other similar official) or (B) in the case of a partnership or limited liability company, certified by the Secretary or Assistant Secretary of such Loan Party (or of the general partner or managing member of such Loan Party);
(ii)    a certificate of the Secretary or Assistant Secretary or similar officer of each Loan Party dated the Closing Date and certifying
(A)    that attached thereto is a true and complete copy of the Organization Documents of such Loan Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below,

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(B)    that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such person is a party and, in the case of the Borrower, the borrowings and credit extensions hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Closing Date,
(C)    that the Organization Documents of such Loan Party has not been amended since the date of the last amendment thereto disclosed pursuant to clause (i) above,
(D)    as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party and
(E)    as to the absence of any pending proceeding for the dissolution or liquidation of such Loan Party; and
(iii)    a certificate of a director or an officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary or similar officer executing the certificate pursuant to clause (ii) above.
(d)    Except for matters to be completed following the Closing Date in accordance with Section 5.10(h), the elements of the Collateral Requirement required to be satisfied on the Closing Date shall have been satisfied and the Administrative Agent shall have received a completed Perfection Certificate dated the Closing Date and signed by a Responsible Officer of Parent, together with all attachments contemplated thereby, and the results of a search of the Uniform Commercial Code (or equivalent), tax and judgment lien filings made with respect to the Loan Parties in the jurisdictions contemplated by the Perfection Certificate, lien searches with the United States Patent and Trademark Office, United States Copyright Office and the Trademark Division of the Puerto Rico State Department and copies of the financing statements (or similar documents) disclosed by such search and evidence reasonably satisfactory to the Administrative Agent that the Liens indicated by such financing statements (or similar documents) are Permitted Liens or have been released concurrently with the closing of the Transactions on the Closing Date.
(e)    All Indebtedness under the Existing Credit Agreement shall have been, or shall be substantially concurrently with the initial borrowing hereunder, repaid and all commitments thereunder terminated, and the Administrative Agent shall have received a customary payoff letter evidencing such repayment and termination.
(f)    The Lenders shall have received a customary solvency certificate signed by the Chief Financial Officer of Parent confirming the solvency of Parent and its subsidiaries on a consolidated basis after giving effect to the Transactions on the Closing Date.
(g)    The Agents shall have received all fees payable thereto or to any Lender on or prior to the Closing Date and, to the extent invoiced, all other amounts due and payable pursuant to the Loan Documents on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all reasonable out-of-pocket expenses (including reasonable fees, charges and disbursements of Cahill Gordon & Reindel llp) required to be reimbursed or paid by the Loan Parties hereunder or under any Loan Document.
(h)    The Administrative Agent shall have received all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation, the USA PATRIOT Act (including the Beneficial Ownership Regulation) that has been requested not less than five (5) Business Days prior to the Closing Date.
(i)    The Administrative Agent shall have received a certificate, dated the Closing Date and signed by the Chief Financial Officer of Parent, confirming that:
(i)    on the Closing Date, both before and after giving effect to the Credit Events and the other Transactions occurring on such date, no Default or Event of Default shall have occurred and be continuing; and
(ii)    the representations and warranties contained in Article III of this Agreement shall be true and correct in all material respects on and as of such date except to the extent such representations and warranties relate solely to an earlier date in which event such representations and warranties shall have been true in all material respects on and as of such earlier date (provided that representations and warranties that are qualified by materiality shall be true and correct in all respects).
For purposes of determining compliance with the conditions specified in this Section 4.02, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be

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consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Administrative Agent responsible for the transactions contemplated by the Loan Documents shall have received notice from such Lender prior to the Closing Date specifying its objection thereto and such Lender shall not have made available to the Administrative Agent such Lender’s ratable portion of the initial Borrowing.
ARTICLE V

AFFIRMATIVE COVENANTS

Parent covenants and agrees with each Lender and L/C Issuer that so long as this Agreement shall remain in effect (other than in respect of contingent indemnification and expense reimbursement obligations for which no claim has been made) and until Payment in Full, unless the Required Lenders shall otherwise consent in writing, Parent will, and will cause each of the Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties

(a)     Do or cause to be done all things necessary to preserve, renew and keep in full force and effect the legal existence of Parent and the Borrower.

(b)     Do or cause to be done all things necessary to preserve, renew and keep in full force and effect the legal existence of each Subsidiary (other than the Borrower), where the failure to do so would not reasonably be expected to have a Material Adverse Effect, and except as otherwise permitted under Section 6.05.

(c)     Except where the failure to do so would not reasonably be expected to have a Material Adverse Effect, do or cause to be done all things necessary to (i) lawfully obtain, preserve, renew, extend and keep in full force and effect the permits, franchises, authorizations, patents, trademarks, service marks, trade names, copyrights, licenses and rights with respect thereto necessary to the normal conduct of its business, and (ii) at all times maintain and preserve all property necessary to the normal conduct of its business and keep such property in good repair, working order and condition and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith, if any, may be properly conducted at all times (in each case except as expressly permitted by this Agreement).

SECTION 5.02. Insurance

(a)     Maintain, with financially sound and reputable insurance companies, insurance (subject to customary deductibles and retentions) in such amounts and against such risks as are customarily maintained by similarly situated companies engaged in the same or similar businesses operating in the same or similar locations and cause Parent and the Subsidiaries to be listed as insured and the Collateral Agent to be listed as a co-loss payee on property and property casualty policies and as an additional insured on liability policies. Notwithstanding the foregoing, Parent and the Subsidiaries may self-insure with respect to such risks with respect to which companies of established reputation engaged in the same general line of business in the same general area usually self-insure.

(b)     If any portion of any Mortgaged Property is at any time located in an area specifically identified by the Federal Emergency Management Agency (or any successor agency) as a “special flood hazard area” with respect to which flood insurance has been made available under Flood Insurance Laws, then Parent shall, or shall cause each other applicable Loan Party to (i) maintain, or cause to be maintained, with a financially sound and reputable insurer, flood insurance in a reasonable total amount as the Administrative Agent may from time to time reasonably require, and otherwise sufficient to comply with all applicable rules and regulations promulgated pursuant to Flood Insurance Laws and (ii) deliver to the Administrative Agent evidence of such compliance in form and substance reasonably acceptable to the Administrative Agent, including evidence of annual renewals of such insurance.

(c)     In connection with the covenants set forth in this Section 5.02, it is understood and agreed that:
(x)none of the Administrative Agent, the Lenders, the L/C Issuer and their respective agents or employees shall be liable for any loss or damage insured by the insurance policies required to be maintained under this Section 5.02, it being understood that (A) the Loan Parties shall look solely to their insurance companies or any other parties other than the aforesaid parties for the recovery of such loss or damage and (B) such insurance companies shall have no rights of subrogation against the Administrative Agent, the Lenders, any L/C Issuer or their agents or employees. If, however, the insurance policies, as a matter of the internal policy of such insurer, do not provide waiver of subrogation rights against such parties, as required above, then Parent, on behalf of itself and behalf of each of its Subsidiaries, hereby agrees, to the extent permitted by law, to waive, and

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further agrees to cause each of their Subsidiaries to waive, its right of recovery, if any, against the Administrative Agent, the Lenders, any L/C Issuer and their agents and employees; and
(xi)the designation of any form, type or amount of insurance coverage by the Administrative Agent under this Section 5.02 shall in no event be deemed a representation, warranty or advice by the Administrative Agent, the Lenders or the L/C Issuers that such insurance is adequate for the purposes of the business of Parent and the Subsidiaries or the protection of their properties.

SECTION 5.03. Taxes

Pay and discharge promptly when due all Taxes imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default, as well as all lawful claims which, if unpaid, might give rise to a Lien (other than a Permitted Lien) upon such properties or any part thereof; provided, however, that such payment and discharge shall not be required with respect to any such Tax, assessment, charge, levy or claim so long as (a) the validity or amount thereof shall be contested in good faith by appropriate proceedings, (b) Parent or the affected Subsidiary, as applicable, shall have set aside on its books adequate reserves in accordance with GAAP with respect thereto, and (c) the failure to make such payment and discharge could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
SECTION 5.04. Financial Statements, Reports, etc.

Furnish to the Administrative Agent (which will promptly furnish such information to the Lenders and L/C Issuers):
(a)    Within 90 days (or such later day that Parent is permitted to file a Form 10-K pursuant to the Exchange Act after giving effect to Rule 12b-25 thereunder, but in any event within 105 days) following the end of each fiscal year (commencing with the fiscal year ending December 31, 2018), a consolidated balance sheet and related statements of operations, cash flows and stockholders’ equity showing the financial position of Parent and its subsidiaries as of the close of such fiscal year and the consolidated results of its operations during such year and setting forth in comparative form the corresponding figures for the prior fiscal year, which consolidated balance sheet and related statements of operations, cash flows and stockholders’ equity shall be audited by independent public accountants of recognized national standing and accompanied by an opinion of such accountants (which shall not be qualified as to scope of audit or as to the status of Parent, the Borrower or any Material Subsidiary as a going concern, but may contain a going concern or like qualification that is solely due to an upcoming maturity date of any Facility within one year from the time such opinion is delivered) to the effect that such consolidated financial statements fairly present, in all material respects, the financial position and results of operations of Parent and its subsidiaries on a consolidated basis in accordance with GAAP (it being understood that the delivery by Parent of annual reports on Form 10-K of Parent and its consolidated subsidiaries shall satisfy the requirements of this Section 5.04(a) to the extent such annual reports include the information specified herein);
(b)    Within 45 days following the end of each of the first three fiscal quarters of each fiscal year (commencing with the fiscal quarter ending March 31, 2019), a consolidated balance sheet and related statements of operations and cash flows showing the financial position of Parent and its subsidiaries as of the close of such fiscal quarter and the consolidated results of its operations during such fiscal quarter and the then-elapsed portion of the fiscal year and setting forth in comparative form the corresponding figures for the corresponding periods of the prior fiscal year, all of which shall be in reasonable detail and which consolidated balance sheet and related statements of operations and cash flows shall be certified by a Financial Officer of Parent as fairly presenting, in all material respects, the financial position and results of operations of Parent and its subsidiaries on a consolidated basis in accordance with GAAP (subject to normal year-end audit adjustments and the absence of footnotes) (it being understood that the delivery by Parent of quarterly reports on Form 10-Q of Parent and its consolidated subsidiaries shall satisfy the requirements of this Section 5.04(b) to the extent such quarterly reports include the information specified herein);
(c)    (x) concurrently with any delivery of financial statements under paragraph (a) or (b) above, a Compliance Certificate (i) certifying that no Default or Event of Default has occurred or, if such a Default or Event of Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto, (ii) commencing with the fiscal quarter ending December 31, 2018, setting forth computations in reasonable detail satisfactory to the Administrative Agent demonstrating compliance with the Financial Performance Covenant, (iii) in the case of the Compliance Certificate delivered with the financial statements under paragraph (a) above (commencing with the fiscal year ending December 31, 2019) setting forth the calculation of Excess Cash Flow for the Excess Cash Flow Period then ended and the Applicable ECF Percentage of such Excess Cash Flow and (iv) setting forth any changes in the Cumulative Credit since the last delivery of a certificate under this paragraph (c) or since the Closing Date in the case of the first such certificate and (y) concurrently with any delivery of financial statements under paragraph (a) or (b) above, a management’s discussion and analysis with respect to

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such financial statements, all of which shall be in form and detail reasonably satisfactory to the Administrative Agent (it being understood that the delivery by Parent of reports on Form 10-Q or Form 10-K of Parent and its consolidated Subsidiaries shall satisfy the requirements of this Section 5.04(c)(y) to the extent such reports include such management’s discussion and analysis);
(d)    promptly after the same become publicly available, copies of all periodic and other publicly available reports, proxy statements and, to the extent requested by the Administrative Agent, other materials filed by Parent with the SEC or distributed to its stockholders generally; provided, however, that such reports, proxy statements, filings and other materials required to be delivered pursuant to this paragraph (d) shall be deemed delivered for purposes of this Agreement when posted to the website of Parent;
(e)    within 75 days after the beginning of each fiscal year, a reasonably detailed consolidated annual budget for such fiscal year (including a projected consolidated balance sheet of Parent and its Subsidiaries, and the related consolidated statements of projected cash flow and projected income), including a description of underlying assumptions with respect thereto (collectively, the “Budget”), which Budget shall in each case be accompanied by the statement of a Financial Officer of Parent to the effect that, the Budget is based on assumptions believed by such Financial Officer to be reasonable as of the date of delivery thereof;
(f)    upon the reasonable request of the Administrative Agent, an updated Perfection Certificate (or, to the extent such request relates to specified information contained in the Perfection Certificate, such information) reflecting all changes since the date of the information most recently received pursuant to this paragraph (f) or Section 5.10(f);
(g)    promptly, from time to time, such other information regarding the operations, business affairs and financial condition of Parent or any of its subsidiaries (including with respect to compliance with the USA PATRIOT Act and the Beneficial Ownership Regulation), or compliance with the terms of any Loan Document, as in each case the Administrative Agent may reasonably request (for itself or on behalf of a Lender or L/C Issuer); provided that neither Parent or any of its subsidiaries will be required to provide any information (i) that constitutes non-financial trade secrets or non-financial proprietary information of Parent or any of its subsidiaries or any of their respective customers and suppliers, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or any of their respective representatives) is prohibited by applicable law or (iii) the revelation of which would violate any confidentiality obligations owed to any third party by Parent or any of its subsidiaries (provided such confidentiality obligations were not entered into in contemplation of this Section 5.04(g));
(h)    if there are Unrestricted Subsidiaries, consolidating information that explains in reasonable detail the differences between the information relating to Parent and its subsidiaries pursuant to Sections 5.04(a), (b) and (c) other than Unrestricted Subsidiaries, on the one hand, and Unrestricted Subsidiaries, on the other hand; and
(i)    within 25 days of the date financial statements are required to be delivered under paragraph (a) above, the amount of total revenue attributable to each jurisdiction in which Parent or any of the Subsidiaries operate during the fiscal year covered by such financial statements, and such other information that the Administrative Agent or the Collateral Agent reasonably requests from time to time in order to make determinations in respect of the Agreed Security Principles.
SECTION 5.05. Litigation and Other Notices

Furnish to the Administrative Agent (which will promptly thereafter furnish to the Lenders and L/C Issuers) written notice of the following promptly after any Responsible Officer of Parent or the Borrower obtains actual knowledge thereof:
(a)    any Default or Event of Default, specifying the nature and extent thereof and the corrective action (if any) proposed to be taken with respect thereto;
(b)    the filing or commencement of, or any written threat or notice of intention of any person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority or in arbitration, against Parent or any of the Subsidiaries as to which an adverse determination is reasonably probable and which, if adversely determined, would reasonably be expected to have a Material Adverse Effect;
(c)    any other development specific to Parent or any of the Subsidiaries that is not a matter of general public knowledge and that has had, or would reasonably be expected to have, a Material Adverse Effect; and
(d)    the development or occurrence of any ERISA Event that, together with all other ERISA Events that have developed or occurred, would reasonably be expected to have a Material Adverse Effect.

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SECTION 5.06. Compliance with Laws

Comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect; provided that this Section 5.06 shall not apply to Environmental Laws, which are the subject of Section 5.09, or to laws related to Taxes, which are the subject of Section 5.03. Parent will maintain in effect and enforce policies and procedures designed to ensure compliance by Parent, its subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.
SECTION 5.07. Maintaining Records; Access to Properties and Inspections

Maintain all financial records in accordance with GAAP and permit any persons designated by the Administrative Agent or, upon the occurrence and during the continuance of an Event of Default, any Lender or L/C Issuer to visit and inspect the financial records and the properties of Parent or any of the Subsidiaries at reasonable times, upon reasonable prior notice to Parent, and as often as reasonably requested and to make extracts from and copies of such financial records, and permit any persons designated by the Administrative Agent or, upon the occurrence and during the continuance of an Event of Default, any Lender or L/C Issuer upon reasonable prior notice to Parent to discuss the affairs, finances and condition of Parent or any of the Subsidiaries with the officers thereof and independent accountants therefor (subject to reasonable requirements of confidentiality, including requirements imposed by law or by contract).
SECTION 5.08. Use of Proceeds

Use the proceeds of the Loans in the manner set forth in Section 3.12. The Borrower will not request any Borrowing or Letter of Credit, and the Borrower shall not use, and shall procure that Parent, its subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Letter of Credit (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto.
SECTION 5.09. Compliance with Environmental Laws

Comply, and make reasonable efforts to cause all lessees and other persons occupying its properties to comply, with all Environmental Laws applicable to its operations and properties; and obtain and renew all material authorizations and permits required pursuant to Environmental Law for its operations and properties, in each case in accordance with Environmental Laws, except, in each case with respect to this Section 5.09, to the extent the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 5.10. Further Assurances; Additional Security

Subject to the Agreed Security Principles:
(a)    Execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, Mortgages and other documents and recordings of Liens in stock registries), that the Collateral Agent may reasonably request, to satisfy the Collateral Requirement and to cause the Collateral Requirement to be and remain satisfied, all at the expense of the Loan Parties and provide to the Collateral Agent, from time to time upon reasonable request, evidence reasonably satisfactory to the Collateral Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents, subject in each case to paragraph (g) below. If the Administrative Agent or the Collateral Agent reasonably determines (in consultation with Parent) that it is a requirement of applicable law to have appraisals prepared in respect of the Mortgaged Property of any Loan Party that is located in the United States, Parent shall provide to the Administrative Agent such appraisals to the extent required by, and in reasonably satisfactory compliance with, any applicable requirements of the Real Estate Appraisal Reform Amendments of FIRREA.
(b)    If any asset (other than Real Property which is covered by paragraph (c) below) that has an individual fair market value (as determined in good faith by Parent) in an amount greater than $5,000,000 is acquired (including pursuant to an Delaware LLC Division) by any Loan Party after the Closing Date (in each case other than (x) assets constituting Collateral under a Security Document that become subject to the Lien of such Security Document upon acquisition thereof, or (y) assets that are not required to become subject to Liens in favor of the Collateral Agent pursuant to Section 5.10(g) or the Security

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Documents) will (i) promptly as practicable (and in any event within 60 days of their acquisition) notify the Collateral Agent thereof and (ii) take or cause the applicable Loan Party to take such actions as shall be reasonably requested by the Collateral Agent to grant and perfect such Liens, including actions described in paragraph (a) of this Section 5.10, all at the expense of the Loan Parties, subject to paragraph (g) below.
(c)    Promptly notify the Administrative Agent of the acquisition (which for this clause (c) shall include the improvement of any Real Property that was not Owned Real Property that results in it qualifying as Owned Real Property) of and within 60 days after such acquisition will grant and cause each of the Loan Parties to grant to the Collateral Agent security interests and mortgages in such Owned Real Property of such Loan Parties as are not covered by any then-existing Mortgages (other than assets that (i) are subject to permitted secured financing arrangements containing restrictions permitted by Section 6.09(c), pursuant to which a Lien on such assets securing the Obligations is not permitted or (ii) are not required to become subject to the Liens of the Collateral Agent pursuant to Section 5.10(g) or the Security Documents), to the extent acquired after the Closing Date and having a value or purchase price at the time of acquisition in excess of $15,000,000, pursuant to a Mortgage constituting valid and enforceable Liens subject to no other Liens except Permitted Liens at the time of perfection thereof, record or file, and cause each such Loan Party to record or file, the Mortgage or instruments related thereto in such manner and in such places as is required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Mortgages and pay, and cause each such Loan Party to pay, in full, all Taxes, fees and other charges payable in connection therewith, in each case subject to paragraph (g) below. Unless otherwise waived by the Collateral Agent, with respect to each such Mortgage, Parent shall comply with the Collateral Requirements applicable to Mortgages and Mortgaged Property. With respect to each Mortgage for a Mortgaged Property located in the Commonwealth of Puerto Rico, the Loan Party owning such Mortgaged Property shall, if so requested by the Administrative Agent, execute and deliver in pledge to the Collateral Agent a demand bearer mortgage note in a principal amount equal to 110% of the fair market value of such Mortgaged Property (based on purchase price, appraisal or other valuation method reasonably satisfactory to the Collateral Agent), which mortgage note will be secured by such Mortgage and shall be pledged to the Collateral Agent pursuant to a supplement to the Collateral Agreement, and which mortgage note and supplement to the Collateral Agreement shall be in form and substance satisfactory to the Collateral Agent and accompanied by such other documentation as may be reasonably requested by the Collateral Agent in connection with the recording and filing thereof. Notwithstanding the foregoing, the Collateral Agent shall not enter into any Mortgage in respect of any Real Property acquired by any Loan Party after the Closing Date until (I) the date that occurs thirty (30) days after the Administrative Agent has made available to the Lenders and L/C Issuers (which may be made available electronically on the Platform) the following documents in respect of such Real Property: (A) a completed flood hazard determination from a third-party vendor; (B) if such Real Property is located in a “special flood hazard area”, (1) a notification to Parent of that fact and (if applicable) notification to Parent that flood insurance coverage is not available and (2) evidence of the receipt by Parent of such notice; and (C) if such notice is required to be provided to Parent and flood insurance is available in the community in which such real property is located, evidence of required flood insurance and (II) the Administrative Agent and each Lead Arranger confirms that its flood insurance due diligence and flood insurance compliance has been completed; provided, that if any Lead Arranger has not confirmed in writing that its flood insurance due diligence and flood insurance compliance has been completed within sixty (60) days after written notice to the Lead Arrangers of the acquisition of such Real Property, such Lead Arranger shall be deemed to have consented to such Mortgage and to have confirmed that its flood insurance due diligence and flood insurance compliance is complete. 
(d)    If any person becomes a Subsidiary after the Closing Date (other than an Excluded Subsidiary), within ten (10) Business Days after the date such person becomes a Subsidiary, notify the Administrative Agent thereof and, within sixty (60) days after the date such person becomes a Subsidiary or such longer period as the Administrative Agent shall agree, cause the Collateral Requirement to be satisfied with respect to such Subsidiary and with respect to any Equity Interest in or Indebtedness of such Subsidiary owned by any Loan Party, subject in each case to paragraph (g) below and Agreed Security Principles.
(e)    Deliver such additional guarantee or security agreements and/or take such other action in order to create and/or perfect a security interest in additional property of the Loan Parties or additional Loan Parties in any jurisdiction, as requested by the Administrative Agent or the Collateral Agent in accordance with the Agreed Security Principles, within 60 days of such request (or such later date as is agreed to by the Administrative Agent or the Collateral Agent, consistent with the Agreed Security Principles).
(f)    Furnish to the Collateral Agent promptly (and in any event within 30 days after such change) written notice of any change (i) in any Loan Party’s corporate or organization name, (ii) in any Loan Party’s identity or organizational structure, (iii) in any Loan Party’s jurisdiction of organization or (iv) with respect to any Loan Party organized under the laws of Puerto Rico or possessing collateral in Puerto Rico, any change in its location within the meaning of the Uniform Commercial Code as in effect in the Commonwealth of Puerto Rico; provided, that no Loan Party shall effect or permit any such change unless all filings have been made, or will have been made within any statutory period, under the Uniform Commercial Code or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and

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perfected security interest in all the Collateral for the benefit of the Secured Parties with the same priority as prior to such change.
(g)    The Collateral Requirement and the other provisions of this Section 5.10 and the other provisions of the Loan Documents with respect to Collateral need not be satisfied with respect to (i) any Real Property held by Parent or any of its Subsidiaries as a lessee under a lease or any Real Property owned in fee that is not Owned Real Property or (ii) any Excluded Property. Notwithstanding anything to the contrary in this Agreement, the Collateral Agreement, or any other Loan Document, (i) the Administrative Agent may grant extensions of time and/or waive the requirement for the creation or perfection of security interests in or the obtaining of insurance (including title insurance) or surveys with respect to particular assets (including extensions beyond the Closing Date for the perfection of security interests in the assets of the Loan Parties on such date) where it reasonably determines, in consultation with Parent, that perfection or obtaining of such items cannot be accomplished without undue effort or expense on the terms or by the time or times at which it would otherwise be required by this Agreement or the other Loan Documents, and (ii) Liens required to be granted from time to time pursuant to, or any other requirements of, the Collateral Requirement and the Security Documents shall be subject to exceptions and limitations set forth in the Security Documents and the Agreed Security Principles.
(h)    Parent shall or shall cause the applicable Loan Party to take such actions set forth on Schedule 5.10(h) within the timeframes set forth for the taking of such actions on Schedule 5.10(h) (or within such longer timeframes as the Administrative Agent shall permit in its reasonable discretion) (it being understood and agreed that all representations, warranties and covenants of the Loan Documents with respect to the taking of such actions are qualified by the non-completion of such actions until such time as they are completed or required to be completed in accordance with this Section 5.10(h)).
SECTION 5.11. Rating

Exercise commercially reasonable efforts to maintain ratings from each of Moody’s and S&P for the Term Loans.
SECTION 5.12. Designation of Unrestricted Subsidiaries

Parent shall be permitted to designate any Subsidiary (other than the Borrower) as an Unrestricted Subsidiary after the Closing Date by written notice to the Administrative Agent; provided that (a) no Default or Event of Default has occurred and is continuing or would result therefrom, (b) immediately after giving effect to such designation, Parent shall be in Pro Forma Compliance, (c) such Unrestricted Subsidiary shall be capitalized (to the extent capitalized by Parent or any of its Subsidiaries) through Investments as permitted by, and in compliance with, Section 6.04, (d) without duplication of clause (c), the designation shall be treated as an Investment, with the fair market value of such Unrestricted Subsidiary at the time of the initial designation thereof being treated as the amount of such Investment, and shall be permitted only if such Investment would be permitted pursuant to Section 6.04 and (e) such Subsidiary shall not have been previously designated an Unrestricted Subsidiary. Parent may designate any Unrestricted Subsidiary to be a Subsidiary for purposes of this Agreement (each, a “Subsidiary Redesignation”); provided, that (i) no Default or Event of Default has occurred and is continuing or would result therefrom, (ii) immediately after giving effect to such Subsidiary Redesignation, Parent shall be in Pro Forma Compliance and (iii) Parent shall have delivered to the Administrative Agent an Officer’s Certificate, certifying to the best of such Financial Officer’s knowledge, compliance with the requirements of preceding clauses (i) and (ii), and containing the calculations and information required by the preceding clause (ii).
ARTICLE VI

NEGATIVE COVENANTS

Parent and the Borrower covenant and agree with each Lender and L/C Issuer that, on and after the Closing Date, so long as this Agreement shall remain in effect (other than in respect of contingent indemnification and expense reimbursement obligations for which no claim has been made) and until Payment in Full, unless the Required Lenders shall otherwise consent in writing, each of Parent and the Borrower will not, and will not permit any of its Subsidiaries to:
SECTION 6.01. Indebtedness

Incur, create, assume or permit to exist any Indebtedness, except:
(a)    (i) Indebtedness existing on the Closing Date (other than any Indebtedness of Parent or any Subsidiary owed to Parent or any Subsidiary); provided that any Indebtedness that is in excess of $2,000,000 individually or $10,000,000 in the aggregate

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shall be permitted under this clause (a)(i) only if such Indebtedness is set forth on Schedule 6.01 and (ii) any Permitted Refinancing Indebtedness incurred to Refinance Indebtedness permitted by the foregoing subclause (i);
(b)    Indebtedness under the other Loan Documents;
(c)    Indebtedness (if any) deemed to exist with respect to Swap Agreements not entered into for speculative purposes and under Cash Management Agreements;
(d)    Indebtedness owed to (including obligations in respect of letters of credit or bank guarantees or similar instruments for the benefit of) any person providing workers’ compensation, health, disability or other employee benefits or property, casualty or liability insurance to Parent or any Subsidiary, pursuant to reimbursement or indemnification obligations to such person, in each case in the ordinary course of business; provided, that upon the incurrence of Indebtedness with respect to reimbursement obligations regarding workers’ compensation claims, such obligations are reimbursed not later than 30 days following such incurrence;
(e)    Indebtedness of Parent owed to any Subsidiary and of any Subsidiary owed to Parent or any other Subsidiary; provided, that other than in the case of intercompany current liabilities incurred in the ordinary course of business in connection with the cash management, tax and accounting operations of Parent and the Subsidiaries, (i) any Indebtedness owed by a Loan Party to a Subsidiary that is not a Loan Party shall be evidenced by (x) the Global Intercompany Note or (y) another promissory note containing substantially similar subordination provisions and (ii) any Indebtedness owed by a Subsidiary that is not a Loan Party to a Loan Party may be evidenced by the Global Intercompany Note;
(f)    Indebtedness in respect of performance bonds, bid bonds, appeal bonds, surety bonds and completion guarantees and similar obligations, in each case outstanding on the Closing Date or otherwise provided in the ordinary course of business (whether or not consistent with past practices) of Parent and the Subsidiaries, including those incurred to secure health, safety and environmental obligations in the ordinary course of business;
(g)    Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business or other cash management services in the ordinary course of business;
(h)    (A) Indebtedness of any Loan Party and Acquired Indebtedness of Parent or any Subsidiary; provided that (i) no Event of Default shall have occurred or be continuing or would result from the incurrence or existence of such additional Indebtedness or from the application of proceeds thereof, (ii)  the Total Net Leverage Ratio shall not exceed 5.00:1.00 calculated on a Pro Forma Basis as of the last day of the most recently ended Test Period, (iii) other than in the case of Acquired Indebtedness, the final maturity date of such Indebtedness shall be no earlier than six months following the then Latest Maturity Date (other than customary offers to repurchase upon a change of control, asset sale or event of loss (so long as, in the case of a change of control offer to purchase provision, a change of control would not be triggered thereunder unless a Change of Control is also triggered hereunder, and in the case of an asset sale or event of loss offer to purchase provision, the net proceeds of any asset sale are permitted to be applied to the prepayment of the Loans first or, in the case of Indebtedness secured by Other First Liens, on a not less than ratable basis than such Indebtedness) and customary acceleration rights after an event of default), (iv) other than in the case of Acquired Indebtedness, the Weighted Average Life to Maturity of such Indebtedness shall not be shorter than the remaining Weighted Average Life to Maturity of the existing Term B Loans and (v) other than in the case of Acquired Indebtedness, the covenants, events of default, guarantees and other terms of such Indebtedness (other than pricing and redemption premiums), taken as a whole, shall not be more restrictive to Parent and the Subsidiaries than those set forth in this Agreement; provided that a certificate of the Chief Financial Officer of Parent delivered to the Administrative Agent in good faith at least three Business Days (or such shorter period as the Administrative Agent may reasonably agree) prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that Parent has determined in good faith that such terms and conditions satisfy the requirement in this subclause (v) shall be conclusive evidence that such terms and conditions satisfy the requirement in this subclause (v) and (B) Permitted Refinancing Indebtedness in respect of Indebtedness permitted by the foregoing clause (A);
(i)    mortgage financings and other purchase money Indebtedness incurred by Parent or any Subsidiary prior to or within 270 days after the acquisition, lease, construction, repair, replacement or improvement of the respective property (real or personal, and whether through the direct purchase of property or the Equity Interests of any person owning such property) permitted under this Agreement in order to finance such acquisition, lease, construction, repair, replacement or improvement and Capital Lease Obligations of Parent or any Subsidiary, in each case, so long as (A) no Default or Event of Default shall have occurred and be continuing or would result therefrom and (B) the aggregate principal amount of such Indebtedness at any

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time outstanding does not exceed the greater of (X) $75,000,000 and (Y) at the time of any incurrence under this paragraph (i), 37.5% of the EBITDA on a Pro Forma Basis for the Test Period most recently ended;
(j)    other Indebtedness of Parent or any Subsidiary in an aggregate principal amount at any time outstanding that does not exceed the greater of (X) $100,000,000 and (Y) at the time of any incurrence under this paragraph (j), 50% of the EBITDA on a Pro Forma Basis for the Test Period most recently ended;
(k)    Guarantees (i) by any Loan Party of any Indebtedness of any other Loan Party permitted to be incurred under this Agreement, (ii) by any Loan Party of Indebtedness otherwise permitted hereunder of any Subsidiary that is not a Loan Party to the extent such Guarantees are permitted by Section 6.04(b)(iii), and (iii) by any Subsidiary that is not a Loan Party of Indebtedness of another Subsidiary that is not a Loan Party; provided, that Guarantees by any Loan Party under this paragraph (k) of any other Indebtedness of a person that is subordinated to other Indebtedness of such person shall be subordinated to the Obligations to at least the same extent such other Indebtedness is so subordinated;
(l)    Indebtedness arising from agreements of Parent or any Subsidiary providing for indemnification, adjustment of purchase or acquisition price, earnouts or similar obligations, in each case, incurred or assumed in connection with any Permitted Business Acquisition or the disposition of any business, assets or a Subsidiary not prohibited by this Agreement, other than Guarantees of Indebtedness incurred by any person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided, that in respect of the disposition of any business, assets or a Subsidiary, such Indebtedness shall not exceed the proceeds of such disposition;
(m)    Indebtedness in respect of letters of credit, bank guarantees, warehouse receipts or similar instruments issued to support performance obligations and trade letters of credit (other than obligations in respect of other Indebtedness) in the ordinary course of business or consistent with past practice or industry practice;
(n)    Indebtedness consisting of (i) the financing of insurance premiums or (ii) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;
(o)    Indebtedness of Subsidiaries that are not Loan Parties in an aggregate amount not to exceed at any time outstanding the greater of (X) $40,000,000 and (Y) at the time of any incurrence under this paragraph (o), 20% of EBITDA on a Pro Forma Basis for the Test Period most recently ended;
(p)    unsecured Indebtedness constituting obligations of Parent or any Subsidiary to pay the deferred purchase price of goods or services or progress payments in connection with such goods and services; provided, that such obligations are incurred in connection with open accounts extended by suppliers on customary trade terms (which require that all such payments be made within 90 days after the incurrence of the related obligations) in the ordinary course of business and not in connection with the borrowing of money or any Swap Agreements;
(q)    (i) secured Indebtedness of Subsidiary Loan Parties under local lines of credit in the ordinary course of business and consistent with past practices and (ii) Indebtedness of Parent and its Subsidiaries incurred in the ordinary course of business under overdraft facilities (including, but not limited to, intraday, ACH and purchasing card/T&E services), in each case, extended by one or more financial institutions reasonably acceptable to the Administrative Agent or by one or more of the Lenders or L/C Issuers or their Affiliates and (in each case) established for Parent’s and the Subsidiaries’ ordinary course of operations;
(r)    (i) Specified Prepayment Debt the Net Proceeds of which are applied solely to the prepayment of Loans in accordance with Section 2.12(b) and (ii) any Permitted Refinancing Indebtedness in respect thereof;
(s)    Indebtedness consisting of Indebtedness issued by Parent or any Subsidiary to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of Parent permitted by Section 6.06;
(t)    Indebtedness consisting of obligations of Parent or any Subsidiary to any of their employees under deferred compensation or other similar arrangements incurred by such person in connection with Permitted Business Acquisitions or any other Investment permitted hereunder or in the ordinary course of business;
(u)    Indebtedness of Parent or any Subsidiary to any joint venture (regardless of the form of legal entity) that is not a Subsidiary arising in the ordinary course of business in connection with the cash management operations (including with respect to intercompany self insurance arrangements) of Parent and the Subsidiaries;

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(v)    (i) Incremental Equivalent Debt in an aggregate principal amount at any time outstanding not to exceed, together with the aggregate amount of Incremental Commitments made after the Closing Date, the Incremental Amount and (ii) Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness incurred pursuant to subclause (i);
(w)    Indebtedness of joint ventures and/or, without duplication, Indebtedness incurred on behalf of, or representing Guarantees of Indebtedness of, joint ventures, of Parent or any Subsidiary not in excess, at any one time outstanding, of the greater of (X) $100,000,000 and (Y) at the time of any incurrence pursuant to this paragraph (w), 50% of the EBITDA on a Pro Forma Basis for the Test Period most recently ended;
(x)    Settlement Indebtedness;
(y)    Customer deposits and advance payments received in the ordinary course of business from customers for goods and services purchased in the ordinary course of business; and
(z)    all premium (if any, including tender premiums), expenses, defeasance costs, interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in paragraphs (a) through (y) above.
For purposes of determining compliance with this Section 6.01, the amount of any Indebtedness denominated in any currency other than Dollars shall be calculated based on customary currency exchange rates in effect, in the case of such Indebtedness incurred on or prior to the Closing Date, on the Closing Date and, in the case of such Indebtedness incurred after the Closing Date, on the date that such Indebtedness was incurred; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a currency other than Dollars (or in a different currency from the Indebtedness being refinanced), and such refinancing would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed (i) the outstanding principal amount of such Indebtedness being refinanced plus (ii) the aggregate amount of fees, underwriting discounts, premiums (including tender premiums), defeasance costs and other costs and expenses incurred in connection with such refinancing. For purposes of the foregoing, with respect to revolving Indebtedness, Parent may elect to treat the full committed amount to be incurred at the date the commitment becomes effective (or on the Closing Date if such effective date was prior to the Closing Date).
SECTION 6.02. Liens

Create, incur, assume or permit to exist any Lien on any property or assets (including stock or other securities of any person, including any Subsidiary) at the time owned by it or on any income or revenues or rights in respect of any thereof, except the following (collectively, “Permitted Liens”):
(a)    (i) Liens existing on the Closing Date; provided that any Liens securing Indebtedness in excess of $2,000,000 individually or $10,000,000 in the aggregate shall be permitted under this paragraph (a) only to the extent such Lien is set forth on Schedule 6.02, and (ii) any modifications, replacements, renewals or extensions thereof; provided, that such Liens shall secure only those obligations that they secure on the Closing Date (and any Permitted Refinancing Indebtedness in respect of such obligations permitted by Section 6.01(a)) and shall not subsequently apply to any other property or assets of Parent or any Subsidiary other than (A) after-acquired property that is affixed or incorporated into the property covered by such Lien, and (B) proceeds and products thereof;
(b)    Liens on Collateral securing (i) the Secured Obligations, (ii) Incremental Equivalent Debt; provided that such Liens shall be subject to the First Lien Intercreditor Agreement, and (iii) Indebtedness incurred pursuant to Section 6.01(q)(i); provided that (x) such Liens shall apply only to the property or assets of the applicable obligors under such facility and (y) such Liens shall be Junior Liens;
(c)    Liens existing on property at the time of its acquisition or existing on the property of any Person at the time such Person becomes a Subsidiary, in each case after the Closing Date (other than Liens on the Equity Interests of any Person that becomes a Subsidiary); provided that (i) such Lien was not created in contemplation of such acquisition or such Person becoming a Subsidiary, (ii) such Lien does not extend to or cover any other assets or property (other than the proceeds or products thereof and other than after-acquired property subject to a Lien securing Indebtedness and other obligations incurred prior to such time and which Indebtedness and other obligations are permitted hereunder that require or include, pursuant to their terms at such time, a pledge of after-acquired property, it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition), and (iii) the Indebtedness secured thereby is permitted under Section 6.01);

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(d)    Liens for Taxes, assessments or other governmental charges or levies not yet delinquent or that are being contested in compliance with Section 5.03;
(e)    Liens imposed by law, including landlord’s, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, construction or other like Liens, securing obligations that are not overdue by more than 30 days or that are being contested in good faith by appropriate proceedings and in respect of which, if applicable, Parent or any Subsidiary shall have set aside on its books reserves in accordance with GAAP;
(f)    (i) pledges and deposits and other Liens made in the ordinary course of business in compliance with the Federal Employers Liability Act or any other workers’ compensation, unemployment insurance and other social security laws or regulations and deposits securing liability to insurance carriers under insurance or self-insurance arrangements in respect of such obligations and (ii) pledges and deposits and other Liens securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of) insurance carriers providing property, casualty or liability insurance to Parent or any Subsidiary;
(g)    deposits and other Liens to secure the performance of bids, trade contracts (other than for Indebtedness), leases (other than Capital Lease Obligations), statutory obligations, surety and appeal bonds, performance and return of money bonds, bids, leases, government contracts, trade contracts, agreements with utilities, and other obligations of a like nature (including letters of credit in lieu of any such bonds or to support the issuance thereof) outstanding on the Closing Date or incurred in the ordinary course of business (whether or not consistent with past practices), including those incurred to secure health, safety and environmental obligations in the ordinary course of business;
(h)    zoning restrictions, survey exceptions and such matters as an accurate survey would disclose, easements, trackage rights, leases (other than Capital Lease Obligations), licenses, special assessments, rights-of-way, covenants, conditions, restrictions and declarations on or with respect to the use of Real Property, servicing agreements, development agreements, site plan agreements and other similar encumbrances incurred in the ordinary course of business and title defects or irregularities that are of a minor nature and that, in the aggregate, do not interfere in any material respect with the ordinary conduct of the business of Parent or any Subsidiary;
(i)    Liens securing Indebtedness and Permitted Refinancing Indebtedness permitted by Section 6.01(i) (in each case limited to the assets financed with such Indebtedness and any accessions thereto and the proceeds and products thereof and related property; provided that individual financings provided by one lender may be cross-collateralized to other financings provided by such lender and incurred under Section 6.01(i));
(j)    Liens securing Indebtedness permitted under Section 6.01(i); provided that (i) such Liens attach concurrently with or within 270 days after the acquisition, construction, repair, replacement or improvement (as applicable) of the property subject to such Liens, (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness except for accessions to such property and the proceeds and the products thereof and (iii) with respect to Capital Lease Obligations, such Liens do not at any time extend to or cover any assets (except for accessions to or proceeds of such assets) other than the assets subject to such Capital Lease Obligations; provided, further, that individual financings of equipment provided by one lender may be cross-collateralized to other financings of equipment provided by such lender;
(k)    Liens securing judgments that do not constitute an Event of Default under Section 7.01(j) and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings;
(l)    any interest or title of a lessor or sublessor under any leases or subleases entered into by Parent or any Subsidiary in the ordinary course of business;
(m)    Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks and other financial institutions not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposits, sweep accounts, reserve accounts or similar accounts of Parent or any Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of Parent or any Subsidiary, including with respect to credit card chargebacks and similar obligations or (iii) relating to purchase orders and other agreements entered into with customers, suppliers or service providers of Parent or any Subsidiary in the ordinary course of business;
(n)    Liens (i) arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights, (ii) of a collection bank arising under Section 4-210 of the Uniform Commercial Code in effect in the State of New York or similar provisions in similar codes, statutes or laws in other jurisdictions on items in the course of collection, (iii) attaching to commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business,

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(iv) in favor of banking institutions arising as a matter of law encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking industry, and (v) encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purpose;
(o)    Liens securing obligations in respect of trade-related letters of credit, bank guarantees or similar obligations permitted under Section 6.01(g) or (m) and covering the property (or the documents of title in respect of such property) financed by such letters of credit, bank guarantees or similar obligations and the proceeds and products thereof;
(p)    leases or subleases, licenses or sublicenses (including with respect to intellectual property and software) granted to others in the ordinary course of business not interfering in any material respect with the business of Parent and its Subsidiaries, taken as a whole;
(q)    Liens solely on any cash earnest money deposits made by Parent or any Subsidiary in connection with any letter of intent or purchase agreement in respect of any Investment permitted hereunder;
(r)    Liens with respect to property or assets of any Subsidiary that is not a Loan Party securing Indebtedness of a Subsidiary that is not a Loan Party permitted under Section 6.01;
(s)    other Liens; provided that (i) at the time of the incurrence of such Lien and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom and Parent shall be in Pro Forma Compliance, (ii) the Indebtedness or other obligations secured by such Lien are otherwise permitted by this Agreement, and (iii) if such Liens extend to all or any portion of the Collateral, such Liens shall be Junior Liens;
(t)    Liens arising from precautionary Uniform Commercial Code financing statements or consignments entered into in connection with any transaction otherwise permitted under this Agreement;
(u)    Liens on Equity Interests in (i) joint ventures securing obligations of such joint ventures or pursuant to the relevant joint venture agreement or arrangement or (ii) Unrestricted Subsidiaries securing obligations of such Unrestricted Subsidiaries;
(v)    Liens on securities that are the subject of repurchase agreements constituting Permitted Investments under clause (c) of the definition thereof;
(w)    Liens securing insurance premiums financing arrangements; provided, that such Liens are limited to the applicable unearned insurance premiums;
(x)    Liens in favor of any Loan Party; provided, that if any such Lien shall cover any Collateral, the holder of such Lien shall execute and deliver to the Administrative Agent a subordination agreement in the form and substance reasonably satisfactory to the Administrative Agent;
(y)    Liens securing Specified Prepayment Debt permitted by Section 6.01(r) and any Permitted Refinancing Indebtedness in respect thereof; provided that, (i) if such Liens are (or are intended to be) junior to the Liens securing the Obligations, such Liens shall be Junior Liens and (ii) if such Liens are (or are intended to be) pari passu with the Liens securing the Obligations, such Liens shall be Other First Liens;
(z)    other Liens with respect to property or assets of Parent or any Subsidiary securing obligations in an aggregate principal amount outstanding at any time not to exceed $90,000,000; provided that if such Liens extend to all or any portion of the Collateral, such Liens shall be Junior Liens;
(aa)    any amounts held by a trustee in the funds and accounts under an indenture securing any revenue bonds issued for the benefit of Parent or any Subsidiary;
(bb)    Settlement Liens;
(cc)    non-consensual Liens (not incurred in connection with borrowed money) on equipment of Parent or any Subsidiary granted in the ordinary course of business to the client of Parent or such Subsidiary at which such equipment is located; and
(dd)    Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods.

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Notwithstanding anything to the contrary, no Loan Party shall create, incur, assume or permit to exist any Lien pursuant to clauses (b)(iii), (s), (u) (to the extent securing borrowed money), (y) or (z) of this Section 6.02 (other than Liens securing Indebtedness not in excess of $30,000,000 in the aggregate) on any property or assets of such Loan Party a security interest in which is not granted to secure the Obligations or a security interest therein to secure the Obligations is not perfected or not first priority due to operation of the Agreed Security Principles.
SECTION 6.03. [Reserved]

SECTION 6.04. Investments, Loans and Advances

Purchase, hold or acquire (including pursuant to any merger, consolidation or amalgamation with a person that is not a Wholly-Owned Subsidiary immediately prior to such merger, consolidation or amalgamation) any Equity Interests, evidences of Indebtedness or other securities of, make or permit to exist any loans or advances to or Guarantees of the obligations of, or make or permit to exist any investment or any other interest in (each, an “Investment”), any other person, except:
(a)     (i) Investments existing on, or contractually committed as of, the Closing Date, provided that any Investments in excess of $2,000,000 individually or $10,000,000 in the aggregate shall be permitted under this paragraph (a) only to the extent such Investment is set forth on Schedule 6.04 and (ii) any extensions, renewals or reinvestments thereof, so long as the aggregate amount of all Investments pursuant to this paragraph (a) is not increased at any time above the amount of such Investment existing or committed on the Closing Date (other than pursuant to an increase as required by the terms of any such Investment as in existence on the Closing Date as described on Schedule 6.04);
(b)    (i) Investments in any Loan Party, (ii) Investments by any Subsidiary that is not a Loan Party in any other Subsidiary that is not a Loan Party and (iii) Investments by any Loan Party in any Subsidiary that is not a Loan Party; provided that the aggregate amount of Investments outstanding at any time pursuant to this clause (iii) shall not exceed the greater of (X) $80,000,000 and (Y) at the time of any Investment under this clause (iii), 40% of EBITDA on a Pro Forma Basis for the most recently ended Test Period;
(c)    Permitted Investments and Investments that were Permitted Investments when made;
(d)    Investments arising out of the receipt by Parent or any Subsidiary of noncash consideration for the sale of assets permitted under Section 6.05 (other than Section 6.05(f));
(e)    loans and advances to officers, directors, employees or consultants of Parent or any Subsidiary (i) in the ordinary course of business not to exceed $25,000,000 in the aggregate at any time outstanding (calculated without regard to write downs or write offs thereof), (ii) in respect of payroll payments and expenses in the ordinary course of business and (iii) in connection with such person’s purchase of Equity Interests of Parent;
(f)    accounts receivable, security deposits and prepayments arising and trade credit granted in the ordinary course of business and any assets or securities received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss and any prepayments and other credits to suppliers made in the ordinary course of business;
(g)    Swap Agreements that are not entered into for speculative purposes;
(h)    [reserved];
(i)    Investments resulting from pledges and deposits under Sections 6.02(f), (g), (j) and (p);
(j)    other Investments in an aggregate amount (valued at the time of the making thereof, and without giving effect to any write-downs or write-offs thereof) not to exceed (i) the greater of (X) $100,000,000 and (Y) at the time of any Investment pursuant to this paragraph (j), 50% of the EBITDA on a Pro Forma Basis for the Test Period most recently ended (plus any returns actually received by the respective investor in respect of investments theretofore made by it pursuant to this paragraph (j)) plus (ii) the portion, if any, of the Cumulative Credit on the date of such election that Parent elects to apply to this Section 6.04(j)(ii), such election to be specified in a written notice of a Responsible Officer of Parent calculating in reasonable detail the amount of Cumulative Credit immediately prior to such election and the amount thereof elected to be so applied; provided that if any Investment pursuant to this paragraph (j) is made in any person that is not a Loan Party at the date of the making of such Investment and such person becomes a Loan Party after such date, such Investment shall thereafter be deemed to have

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been made pursuant to paragraph (b)(i) above and shall cease to have been made pursuant to this paragraph (j) for so long as such person continues to be a Loan Party;
(k)    Investments constituting Permitted Business Acquisitions;
(l)    Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with or judgments against, customers and suppliers, in each case in the ordinary course of business or Investments acquired by Parent or a Subsidiary as a result of a foreclosure by Parent or any of the Subsidiaries with respect to any secured Investments or other transfer of title with respect to any secured Investment in default;
(m)    Investments of a Subsidiary acquired after the Closing Date or of an entity merged into Parent or merged into or consolidated with a Subsidiary after the Closing Date, in each case, (i) to the extent such acquisition, merger or consolidation was or is permitted under this Section 6.04 or 6.05 and (ii) to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger, consolidation or amalgamation and were in existence on the date of such acquisition, merger, consolidation or amalgamation;
(n)    Guarantees of operating leases (other than Capital Lease Obligations) or of other obligations of Subsidiaries that do not constitute Indebtedness, in each case entered into by Parent or any Subsidiary in the ordinary course of business;
(o)    Investments in the ordinary course of business consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and Uniform Commercial Code Article 4 customary trade arrangements with customers consistent with past practices;
(p)    advances in the form of a prepayment of expenses, so long as such expenses are being paid in accordance with customary trade terms of Parent or such Subsidiary;
(q)    Investments consisting of the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other persons;
(r)    purchases and acquisitions of inventory, supplies, materials and equipment or purchases of contract rights or licenses or leases of intellectual property in each case in the ordinary course of business, to the extent such purchases and acquisitions constitute Investments;
(s)    Investments received substantially contemporaneously in exchange for, or the payment for which is made with, Qualified Equity Interests of Parent; provided that neither such Investments nor such issuance of Qualified Equity Interests shall be included in any determination of the Cumulative Credit;
(t)    any Investment (i) deemed to exist as a result of a Subsidiary that is not a Loan Party distributing a note or other intercompany debt to a parent of such Subsidiary that is a Loan Party (to the extent there is no cash consideration or services rendered for such note), and (ii) consisting of intercompany current liabilities in connection with the cash management, tax and accounting operations of Parent and the Subsidiaries;
(u)    Investments in joint ventures and Similar Businesses in an aggregate amount (valued at the time of the making thereof, and without giving effect to any write downs or write offs thereof) not to exceed the greater of (X) $150,000,000 and (Y) at the time of any Investment pursuant to this paragraph (u), 75.0% of EBITDA on a Pro Forma Basis for the most recently ended Test Period (plus any returns actually received by the respective investor in respect of investments theretofore made by it pursuant to this paragraph (u)); provided that if any Investment pursuant to this paragraph (u) is made in any person that is not a Loan Party at the date of the making of such Investment and such person becomes a Loan Party after such date, such Investment shall thereafter be deemed to have been made pursuant to paragraph (b)(i) above and shall cease to have been made pursuant to this paragraph (u) for so long as such person continues to be a Loan Party; and
(v)    Investments arising in the ordinary course of business as a result of any Settlement, including Investments in and of Settlement Assets.
Any Investment in any person other than a Loan Party that is otherwise permitted by this Section 6.04 may be made through intermediate Investments in Subsidiaries that are not Loan Parties and such intermediate Investments shall be disregarded for purposes of determining the outstanding amount of Investments pursuant to any clause set forth above (i.e., such Investment shall not be counted twice).

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SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions

Merge into, or consolidate or amalgamate with any other person, or permit any other person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or any part of its assets (whether now owned or hereafter acquired), and including any disposition of property to a Delaware Divided LLC pursuant to a Delaware LLC Division, or issue, sell, transfer or otherwise dispose of any Equity Interests of any Subsidiary, or purchase, lease or otherwise acquire (in one transaction or a series of transactions) all or any substantial part of the assets of any other person, except that this Section shall not prohibit:
(a)    (i) the purchase and sale of inventory, or the sale of receivables in connection with the settlement or compromise thereof, in each case, in the ordinary course of business by Parent or any Subsidiary, (ii) the acquisition or lease (pursuant to an operating lease) of any other asset in the ordinary course of business by Parent or any Subsidiary or, with respect to operating leases, otherwise for fair market value on market terms (as determined in good faith by Parent), (iii) the sale of surplus, obsolete, damaged or worn out equipment or other property in the ordinary course of business by Parent or any Subsidiary or (iv) the sale or disposition of Permitted Investments in the ordinary course of business;
(b)    if at the time thereof and immediately after giving effect thereto no Event of Default shall have occurred and be continuing or would result therefrom, (i) the merger, consolidation or amalgamation of any Subsidiary into or with the Borrower in a transaction in which the Borrower is the survivor, (ii) the merger, consolidation or amalgamation of any Subsidiary into or with any Subsidiary Loan Party in a transaction in which the surviving or resulting entity is or becomes a Subsidiary Loan Party and, in the case of each of clauses (i) and (ii), no person other than Parent or a Subsidiary Loan Party receives any consideration, (iii) the merger, consolidation or amalgamation of any Subsidiary that is not a Loan Party into or with any other Subsidiary that is not a Loan Party, (iv) the liquidation or dissolution or change in form of entity of any Subsidiary if Parent determines in good faith that such liquidation, dissolution or change in form is in the best interests of Parent and is not materially disadvantageous to the Lenders and L/C Issuers or (v) any Subsidiary may merge, consolidate or amalgamate into or with any other person in order to effect an Investment permitted pursuant to Section 6.04 so long as the continuing or surviving person shall be a Subsidiary, which shall be a Loan Party if the merging, consolidating or amalgamating Subsidiary was a Loan Party and which together with each of its Subsidiaries shall have complied with the requirements of Section 5.10;
(c)    Investments permitted by Section 6.04, Permitted Liens, and Restricted Payments permitted by Section 6.06;
(d)    the sale of defaulted receivables in the ordinary course of business and not as part of an accounts receivables financing transaction;
(e)    sales, transfers, leases, licenses or other dispositions of assets not otherwise permitted by this Section 6.05; provided, that (i) no Default or Event of Default exists or would result therefrom, (ii) immediately after giving effect thereto, Parent shall be in Pro Forma Compliance, (iii) the Net Proceeds thereof are applied in accordance with Section 2.12(b), and (iv) in the case of a sale, transfer or other disposition of assets in excess of $10,000,000, at least 75% of the consideration therefor shall be received in cash at the time of consummation of such transaction; provided, that for purposes of subclause (iv), the following shall be deemed to be cash: (1) the amount of any liabilities (as shown on Parent’s or any Subsidiary’s most recent balance sheet or in the notes thereto) Parent or any Subsidiary (other than liabilities that are by their terms subordinated to the Obligations) that are assumed by the transferee of any such assets, (2) any notes or other obligations or other securities or assets received by Parent or such Subsidiary from such transferee that are converted by Parent or such Subsidiary into cash within 180 days of the receipt thereof (to the extent of the cash received), (3) any Designated Non-Cash Consideration received by Parent or any of its Subsidiaries in such Asset Sale having an aggregate fair market value (as determined in good faith by Parent), taken together with all other Designated Non-Cash Consideration received pursuant to this subclause (3) that is at that time outstanding, not to exceed, at the time of receipt of such consideration, the greater of (X) $30,000,000 and (Y) 15.0% of EBITDA on a Pro Forma Basis for the most recently ended Test Period (with the fair market value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value) and (4) with respect to any lease of assets by Parent or a Subsidiary that constitutes a disposition, receipt of lease payments over time on market terms (as determined in good faith by Parent) where the payment consideration is at least 75% cash consideration;
(f)    Permitted Business Acquisitions (including any merger, consolidation or amalgamation in order to effect a Permitted Business Acquisition); provided, that (i) following any such merger, consolidation or amalgamation involving the Borrower, the Borrower is the surviving entity, as applicable and (ii) following any such merger, consolidation or amalgamation involving Parent, Parent is the surviving entity, as applicable;
(g)    leases, licenses, or subleases or sublicenses of any real or personal property in the ordinary course of business;

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(h)    any exchange of assets for services and/or other assets of comparable or greater value; provided, that (i) at least 90% of the consideration received by the transferor consists of assets that will be used in a business or business activity permitted hereunder, (ii) in the event of a swap with a fair market value (as determined in good faith by Parent) in excess of $20,000,000, the Administrative Agent shall have received a certificate from a Responsible Officer of Parent with respect to such fair market value and (iii) in the event of a swap with a fair market value (as determined in good faith by Parent) in excess of $50,000,000, such exchange shall have been approved by at least a majority of the Board of Directors of Parent; provided, further, that (A) no Default or Event of Default exists or would result therefrom, (B) immediately after giving effect thereto, Parent shall be in Pro Forma Compliance, and (C) the Net Proceeds, if any, thereof are applied in accordance with Section 2.12(b);
(i)    any disposition of Equity Interests of a Subsidiary pursuant to an agreement or other obligation with or to a person (other than the Borrower and its Subsidiaries) from whom such Subsidiary was acquired or from whom such Subsidiary acquired its business and assets (having been newly formed in connection with such acquisition), made as part of such acquisition and in each case comprising all or a portion of the consideration in respect of such sale or acquisition;
(j)    any disposition in the ordinary course of business, including disposition in connection with any Settlement, dispositions of Settlement Assets, Merchant Agreements and dispositions of Investments in joint ventures to the extent required by, or made pursuant to buy/sell arrangements between the joint venture parties set forth in joint venture arrangements and similar binding arrangements; and
(k)    if at the time thereof and immediately after giving effect thereto no Event of Default shall have occurred and be continuing or would result therefrom, the merger, consolidation or amalgamation of Parent with or into any other Person; provided that (i) Parent shall be the continuing or surviving Person or (ii) if the Person formed by or surviving any such merger, consolidation or amalgamation is not Parent (any such Person, a “Successor Parent”), (1) the Successor Parent shall be a corporation organized or existing under the laws of the United States, any State thereof or Puerto Rico, (2) the Successor Parent shall expressly assume all the obligations of Parent under this Agreement and the other Loan Documents to which Parent is a party pursuant to a supplement, amendment or restatement hereto or thereto in form reasonably satisfactory to the Administrative Agent, (3) Parent shall have given notice to the Lenders of the proposed transaction at least ten (10) Business Days (or such shorter period agreed to by the Administrative Agent) prior to the consummation thereof, (4) the Administrative Agent shall have received all documentation and other information (including the Beneficial Ownership Certification) required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act and the Beneficial Ownership Regulation, that has been requested at least five (5) Business Days prior to the consummation of the proposed transaction, (5) the Borrower shall have delivered to the Administrative Agent an officer’s certificate stating that such merger or consolidation and such supplement, amendment or restatement to this Agreement or any Loan Document comply with this Agreement and (6) if requested by the Administrative Agent, the Borrower shall have delivered to the Administrative Agent an opinion of counsel in form and substance reasonably satisfactory to the Administrative Agent covering such matters reasonably requested by the Administrative Agent; provided, further, that if the foregoing are satisfied, the Successor Parent, will succeed to, and be substituted for, Parent under this Agreement.
Notwithstanding anything to the contrary contained above in this Section 6.05, no sale, transfer or other disposition of assets shall be permitted by this Section 6.05 (other than sales, transfers, leases, licenses or other dispositions to Loan Parties or pursuant to Section 6.05(c)) unless such disposition is for fair market value (as determined in good faith by Parent).
SECTION 6.06. Restricted Payments

Declare or pay any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any of its Equity Interests (other than dividends and distributions on Equity Interests payable solely by the issuance of additional Equity Interests (other than Disqualified Stock) of the person paying such dividends or distributions) or directly or indirectly redeem, purchase, retire or otherwise acquire for value (or permit any Subsidiary to purchase or acquire) any of its Equity Interests or set aside any amount for any such purpose (other than through the issuance of additional Equity Interests (other than Disqualified Stock) of the person redeeming, purchasing, retiring or acquiring such shares) (the foregoing, “Restricted Payments”); provided, however, that:
(a)    any Subsidiary may make Restricted Payments to Parent or to any Wholly-Owned Subsidiary of Parent;
(b)    any Subsidiary that is not a Wholly-Owned Subsidiary of Parent may make Restricted Payments to Parent, any Subsidiary that is a direct or indirect parent of such Subsidiary and to each other owner of Equity Interests of such Subsidiary on a pro rata basis (or more favorable basis from the perspective of Parent or such Subsidiary) based on their relative ownership interests;

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(c)    Parent may purchase or redeem its Equity Interests (including related stock appreciation rights or similar securities) held by then present or former directors, consultants, officers or employees of Parent or any Subsidiary or by any Plan upon such person’s death, disability, retirement or termination of employment or under the terms of any such Plan or any other agreement under which such Equity Interests or related rights were issued; provided, that the aggregate amount of such purchases or redemptions under this paragraph (c) shall not exceed in any fiscal year (1) $15,000,000, plus (2) (x) the amount of net proceeds contributed to or received by Parent during such calendar year from sales of Equity Interests of Parent to directors, consultants, officers or employees of Parent or any Subsidiary in connection with customary employee compensation and incentive arrangements, to the extent such net proceeds are not included in the calculation of Cumulative Credit, and (y) the amount of net proceeds of any key-man life insurance policies received during such calendar year which, if not used in any year, may be carried forward to any subsequent calendar year, subject, with respect to unused amounts from clause (1) of this proviso that are carried forward, to an overall limit in any fiscal year of $25,000,000; and provided, further, that cancellation of Indebtedness owing to Parent or any Subsidiary from members of management of Parent or any Subsidiary in connection with a repurchase of Equity Interests of Parent will not be deemed to constitute a Restricted Payment for purposes of this Section 6.06;
(d)    (i) noncash repurchases of Equity Interests deemed to occur upon exercise of stock options if such Equity Interests represent a portion of the exercise price of such options and (ii) payments in cash, in lieu of the issuance of fractional shares, upon the exercise of warrants or upon the conversion or exchange of Equity Interests of any such person;
(e)    Restricted Payments may be made in an aggregate amount equal to the portion, if any, of the Cumulative Credit on such date that Parent elects to apply to this Section 6.06(e), such election to be specified in a written notice of a Responsible Officer of Parent calculating in reasonable detail the amount of Cumulative Credit immediately prior to such election and the amount thereof elected to be so applied;
(f)    dividends on the common stock of Parent not to exceed, in any fiscal quarter, $0.10 per share (as adjusted for stock splits, reserve stock splits or share recapitalizations after the Closing Date); it being understood that unused amounts shall not carry over to any future quarters;
(g)    Restricted Payments in an aggregate amount not to exceed $70,000,000;
(h)    the payment of dividends by Parent within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of this Section 6.06; and
(i)    the declaration and payment of dividends or distributions to holders of any class or series of Disqualified Stock of Parent or any of its Subsidiaries issued or incurred in accordance with Section 6.01;
provided that, in the case of paragraphs (e), (f) and (g), no Default or Event of Default shall have occurred and be continuing or would result therefrom.
SECTION 6.07. Transactions with Affiliates

(a)     Sell or transfer any property or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other transaction with, any of its Affiliates or any known direct or indirect holder of 10% or more of any class of Equity Interests of Parent in a transaction involving aggregate consideration in excess of $20,000,000 or make payment of, monitoring, consulting, management, transaction, advisory or similar fees to the Sponsor, unless such transaction is (i) otherwise required under this Agreement or (ii) upon terms no less favorable to Parent or such Subsidiary, as applicable, than would be obtained in a comparable arm’s-length transaction with a person that is not an Affiliate. For purposes of this Section 6.07, any transaction with any Affiliate or any such 10% holder shall be deemed to have satisfied the standard set forth in clause (ii) of the immediately preceding sentence if such transaction is so determined and approved by a majority of the Disinterested Directors of the Board of Directors of Parent.

(b)     The foregoing paragraph (a) shall not prohibit, to the extent otherwise permitted under this Agreement:
(xii)any issuance of Qualified Equity Interests of Parent;
(xiii)any payments, awards or grants in cash or otherwise pursuant to, or the funding of, employment arrangements, equity purchase agreements, stock options and stock ownership plans approved by the Board of Directors of Parent;
(xiv)(x) loans or advances to employees or consultants of Parent or any Subsidiary in accordance with Section 6.04(e) or (y) cancellation of such loans or advance that are (1) approved by a majority of the Disinterested Directors of the Board of Directors of Parent in good faith and (2) made in compliance with applicable law;

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(xv)transactions between or among Parent and/or one or more Subsidiaries or any person that becomes a Subsidiary as a result of such transaction (including via merger, consolidation or amalgamation in which a Subsidiary is the surviving entity);
(xvi)the payment of fees, reasonable out-of-pocket costs and indemnities to directors, officers, consultants and employees of Parent and the Subsidiaries in the ordinary course of business;
(xvii)(i) transactions pursuant to agreements and arrangements in existence on the Closing Date; provided that any transactions involving aggregate consideration in excess of $5,000,000 shall be permitted under this clause (vi) only to the extent such transaction is described on Schedule 6.07, and (ii) any amendment thereto or replacement thereto to the extent such amendment or replacement is not adverse to the Lenders and L/C Issuers when taken as a whole in any material respect (as determined in good faith by Parent);
(xviii)(A) any employment agreements entered into by Parent or any Subsidiary in the ordinary course of business, (B) any subscription agreement or similar agreement pertaining to the repurchase of Equity Interests pursuant to put/call rights or similar rights with employees, officers or directors, and (C) any employee compensation, benefit plan or arrangement, any health, disability or similar insurance plan which covers employees, and any reasonable employment contract and transactions pursuant thereto;
(xix)Restricted Payments permitted under Section 6.06;
(xx)payments by Parent or any Subsidiary to the Sponsor made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including in connection with acquisitions or divestitures, which payments are approved by the majority of the Board of Directors of Parent, or a majority of the Disinterested Directors of Parent, in good faith;
(xxi)any transaction in respect of which Parent delivers to the Administrative Agent (for delivery to the Lenders and L/C Issuers) a letter addressed to the Board of Directors of Parent from an accounting, appraisal or investment banking firm, in each case of nationally recognized standing that is (A) in the good faith determination of Parent qualified to render such letter and (B) reasonably satisfactory to the Administrative Agent, which letter states that (i) such transaction is on terms that are no less favorable to Parent or such Subsidiary, as applicable, than would be obtained in a comparable arm’s-length transaction with a person that is not an Affiliate or (ii) such transaction is fair to Parent or such Subsidiary, as applicable, from a financial point of view;
(xxii)transactions with any person (other than an Unrestricted Subsidiary) that is an Affiliate solely by reason of the ownership of the Equity Interests in such person by Parent or any Subsidiary;
(xxiii) commercial transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case, in the ordinary course of business and otherwise in compliance with the terms of this Agreement that are fair to Parent and the Subsidiaries;
(xxiv)transactions between Parent or any Subsidiary and any person, a director of which is also a director of Parent; provided that (A) such director abstains from voting as a director of Parent on any matter involving such other person and (B) such person is not an Affiliate of Parent for any reason other than such director’s acting in such capacity;
(xxv)transactions permitted by, and complying with, the provisions of Section 6.04(b), 6.04(n), 6.05(b) or Section 6.06;
(xxvi)investments by the Sponsor in securities of Parent or any Subsidiary so long as (A) the investment is being offered generally to other investors on the same or more favorable terms and (B) the investment constitutes less than 5.0% of the outstanding issue amount of such class of securities; and
(xxvii)transactions with Popular, Inc. and its Affiliates contemplated under any contract or agreement as in effect as of the Closing Date and described on Schedule 6.07, any service addendum, statement of work or any written instructions entered into from time to time to provide services pursuant to the MSA and any service riders entered into from time to time to provide optional services pursuant to the Amended and Restated ATH Network Participation Agreement dated as of September 30, 2010 between Parent and Popular, and any amendment thereto or similar agreements which may be entered into from time to time thereafter; provided, however, any future amendment to any such existing agreement or under any similar agreement entered into after the Closing Date shall only be permitted by this clause (xvi) to the extent that (x) such amendment or similar agreements are entered into in the ordinary course of business, (y) the terms of any such amendment or similar agreements are on terms that are no less favorable to Parent or such Subsidiary, as applicable, than would be obtained in a comparable arm’s-length transaction with a person that is not an Affiliate or (z) the terms of any such existing agreement together with all amendments thereto, taken as a whole, or new agreements are not otherwise more disadvantageous to the Lenders and L/C Issuers in any material respect than the original agreement as in effect on the Closing Date.

SECTION 6.08. Line of Business

Notwithstanding any other provisions hereof, engage at any time in any business or business activity other than any business or business activity conducted by Parent and the Subsidiaries on the Closing Date and any business or business activities incidental or related thereto, or any business or activity that is reasonably similar or complementary thereto or a reasonable extension, development or expansion thereof or ancillary thereto.

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SECTION 6.09. Limitation on Payments and Modifications of Certain Indebtedness; Modifications of Organization Documents.

(a)     Amend or modify in any manner materially adverse to the Lenders and L/C Issuers taken as a whole (as determined in good faith by Parent), or grant any waiver or release under or terminate in any manner (if such granting or termination shall be materially adverse to the Lenders and L/C Issuers taken as a whole (as determined in good faith by Parent)), the Organization Documents of any Loan Party.

(b)     Make, or agree or offer to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on the loans under any Indebtedness of Parent or any Subsidiary that is expressly subordinate to the Obligations, or is secured by Junior Liens on the Collateral, or any Indebtedness that Refinances the foregoing pursuant to clause (i) below (“Junior Financing”), or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination in respect of any Junior Financing, except for (i) Refinancings with Permitted Refinancing Indebtedness, (ii) payments of regularly scheduled interest and fees due thereunder, other non-accelerated and non-principal payments thereunder, scheduled payments thereon necessary to avoid the Junior Financing to constitute “applicable high yield discount obligations” within the meaning of Section 163(i)(1) of the Code, and payment of principal on the scheduled maturity date of any Junior Financing, (iii) the conversion or exchange of any Junior Financing to Equity Interests (other than Disqualified Stock) of Parent, and (iv) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, payments or distributions in respect of Junior Financings prior to their scheduled maturity made, in an aggregate amount, not to exceed (x) $55,000,000 plus (y) the portion, if any, of the Cumulative Credit on the date of such election that Parent elects to apply to this Section 6.09(b)(iv), such election to be specified in a written notice of a Responsible Officer of Parent calculating in reasonable detail the amount of Cumulative Credit immediately prior to such election and the amount thereof elected to be applied.

(c)     Amend or modify, or permit the amendment or modification of, any provision of Junior Financing that constitutes Material Indebtedness or any agreement, document or instrument evidencing or relating thereto, other than amendments or modifications that (i) are not materially adverse to Lenders and L/C Issuers taken as a whole (as determined in good faith by Parent) and that do not affect the subordination or payment provisions thereof (if any) in a manner adverse to the Lenders and L/C Issuers taken as a whole (as determined in good faith by Parent) or (ii) otherwise comply with the definition of “Permitted Refinancing Indebtedness.”

SECTION 6.10. Financial Performance Covenant

With respect to Term A Loans and Revolving Facility Loans only, permit the Total Secured Net Leverage Ratio on the last day of any fiscal quarter to exceed (i) in the case of any fiscal quarter ending on or prior to September 30, 2020, 4.25 to 1.00 and (ii) in the case of any fiscal quarter ending thereafter, 4.00 to 1.00; provided, that, at the option of Parent, for each of the four fiscal quarters immediately following a Material Acquisition, commencing with the fiscal quarter in which such Material Acquisition was consummated (such period of increase, the “Leverage Increase Period”), the ratio set forth above shall be increased by 0.50; provided, further that there shall only be one (1) Leverage Increase Period.
SECTION 6.11. Limitation on Dividend Blockers and Other Negative Pledges.

Permit (i) any Material Subsidiary to enter into any agreement or instrument that by its terms restricts the payment of dividends or distributions or the making of cash advances to Parent or any Subsidiary that is a direct or indirect parent of such Subsidiary or (ii) any Loan Party to enter into any agreement or instrument that by its terms restricts the granting of Liens by such Loan Party pursuant to the Security Documents, in each case other than those arising under any Loan Document, except, in each case, restrictions existing by reason of:
(a)     restrictions imposed by applicable law;
(b)     contractual encumbrances or restrictions in effect on the Closing Date under Indebtedness existing on the Closing Date and set forth on Schedule 6.01, or any agreements related to any Permitted Refinancing Indebtedness in respect of any such Indebtedness that does not materially expand the scope of any such encumbrance or restriction;
(c)     customary provisions in joint venture agreements and other similar agreements entered into in the ordinary course of business;
(d)     any restrictions imposed by any agreement relating to secured Indebtedness permitted by this Agreement to the extent that such restrictions apply only to the property or assets securing such Indebtedness;

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(e)any restrictions imposed by any agreement relating to Indebtedness incurred pursuant to Section 6.01(h), (i) or (q)) or Permitted Refinancing Indebtedness in respect thereof, in each case, to the extent such restrictions are not more restrictive, taken as a whole, than the restrictions contained in the Loan Documents;
(f)customary provisions contained in leases or licenses of intellectual property and other similar agreements entered into in the ordinary course of business;
(g)customary provisions restricting subletting or assignment of any lease governing a leasehold interest;
(h)customary provisions restricting assignment of any agreement entered into in the ordinary course of business;
(i)customary restrictions and conditions contained in any agreement relating to the sale, transfer, lease or other disposition of any asset permitted under Section 6.05 pending the consummation of such sale, transfer, lease or other disposition;
(j)customary restrictions and conditions contained in the document relating to any Lien, so long as (1) such Lien is a Permitted Lien and such restrictions or conditions relate only to the specific asset subject to such Lien and (2) such restrictions and conditions are not created for the purpose of avoiding the restrictions imposed by this Section 6.09;
(k)customary net worth provisions contained in Real Property leases entered into by Parent or any Subsidiary so long as Parent has determined in good faith that such net worth provisions would not reasonably be expected to impair the ability of Parent and its Subsidiaries to meet their ongoing obligations;
(l)any agreement in effect at the time such subsidiary becomes a Subsidiary, so long as such agreement was not entered into in contemplation of such person becoming a Subsidiary;
(m)restrictions in agreements representing Indebtedness permitted under Section 6.01 of a Subsidiary that is not a Loan Party;
(n)customary restrictions on leases, subleases, licenses or Equity Interests or asset sale agreements otherwise permitted hereby as long as such restrictions relate to the Equity Interests and assets subject thereto;
(o)restrictions on cash or other deposits imposed by customers under contracts entered into in the ordinary course of business;
(p)any encumbrances or restrictions of the type referred to in Sections 6.09(c)(i) and 6.09(c)(ii) above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (o) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of Parent, no more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

SECTION 6.12. No Other “Designated Senior Debt”

Designate, or permit the designation of, any Indebtedness as “Designated Senior Debt” or any other similar term for the purpose of the definition of the same or the subordination provisions contained in any indenture governing any senior subordinated notes permitted to be incurred hereunder that constitute Material Indebtedness other than (a) the Obligations under this Agreement and the other Loan Documents, (b) any Permitted Refinancing Indebtedness thereof and (c) any series of Other First Lien Debt.
SECTION 6.13. Changes in Fiscal Year

Permit the fiscal year of Parent to end on a day other than December 31; provided, however, that Parent may, upon written notice to the Administrative Agent, change its fiscal year to end on any other day reasonably acceptable to the Administrative Agent, in which either case, Parent and the Administrative Agent will, and are hereby authorized by the Lenders and L/C Issuers to, make any adjustments to this Agreement that are necessary to reflect such change in fiscal year.

ARTICLE VII

EVENTS OF DEFAULT

SECTION 7.01. Events of Default

In case of the happening of any of the following events (each, an “Event of Default”):
(a)    any representation or warranty made or deemed made by any Loan Party herein or in any other Loan Document or any certificate or document delivered pursuant hereto or thereto shall prove to have been false or misleading in any material respect when so made or deemed made;

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(b)    default shall be made in the payment of any principal of any Loan or any L/C Obligation or deposit any funds as Cash Collateral in respect of L/C Obligations when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise;
(c)    default shall be made in the payment of any interest on any Loan or on any L/C Obligation or in the payment of any Fee or any other amount (other than an amount referred to in paragraph (b) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of five Business Days;
(d)    default shall be made in the due observance or performance by Parent or the Borrower of any covenant, condition or agreement contained in Section 5.01(a), 5.05(a) or 5.08 or in Article VI; provided that any Event of Default under Section 6.10 shall not constitute an Event of Default with respect to the Term B Loans (unless Term A Loans and Revolving Facility Loans have been accelerated and the Revolving Facility Commitments have been terminated);
(e)    default shall be made in the due observance or performance by the any Loan Party of any covenant, condition or agreement contained in any Loan Document (other than those specified in paragraphs (b), (c) and (d) above) and such default shall continue unremedied for a period of 30 days after (i) a Responsible Officer of Parent becomes aware thereof of (ii) notice thereof from the Administrative Agent to Parent (which notice will be given at the request of any Lender);
(f)    (i) any event or condition occurs that (A) results in any Material Indebtedness becoming due prior to its scheduled maturity or (B) enables or permits (with all applicable grace periods having expired) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; or (ii) Parent or any Material Subsidiary shall fail to pay the principal of any Material Indebtedness at the stated final maturity thereof; provided that this clause (f) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness if such sale or transfer is permitted hereunder and under the documents providing for such Indebtedness;
(g)    there shall have occurred a Change of Control;
(h)    an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of Parent or any Material Subsidiary, or of a substantial part of the property or assets of Parent or any Material Subsidiary, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Parent or any Material Subsidiary or for a substantial part of the property or assets of Parent or any Material Subsidiary or (iii) the winding-up or liquidation of Parent or any Material Subsidiary (other than as permitted hereunder); and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;
(i)    Parent or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in paragraph (h) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Parent or any Material Subsidiary or for a substantial part of the property or assets of Parent or any Material Subsidiary, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) become unable or admit in writing its inability or fail generally to pay its debts as they become due;
(j)    the failure by Parent or any Material Subsidiary to pay one or more final judgments aggregating in excess of $50,000,000 (to the extent not covered by insurance), which judgments are not discharged or effectively waived or stayed for a period of 60 consecutive days, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of Parent or any Material Subsidiary to enforce any such judgment;
(k)    (i) a trustee shall be appointed by a United States district court to administer any Plan, (ii) an ERISA Event or ERISA Events shall have occurred with respect to any Plan or Multiemployer Plan, (iii) the PBGC shall institute proceedings (including giving notice of intent thereof) to terminate any Plan or Plans, (iv) Parent or any of its Subsidiaries or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA or (v) Parent or any of its Subsidiaries shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan that would

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subject Parent or any of its Subsidiaries to tax; and in each case in clauses (i) through (v) above, such event or condition, together with all other such events or conditions, if any, would reasonably be expected to have a Material Adverse Effect;
(l)    (i) any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any provision of any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or (ii) any Security Document, at any time after its execution and delivery, shall for any reason (other than pursuant to the terms thereof) cease to create a valid Lien on any material portion of the Collateral purported to be covered thereby (perfected as or having the priority required by this Agreement or the relevant Security Document and subject to such limitations and restrictions as are set forth herein and therein), except to the extent that any such loss of perfection or priority results from the limitations of foreign laws, rules and regulations as they apply to pledges of Equity Interests in Subsidiaries or the application thereof, or except from the failure of the Collateral Agent to maintain possession of certificates actually delivered to it representing securities pledged under the Collateral Agreement; or
(m)    there shall have occurred an “EVERTEC Change of Control” (as defined in the MSA) that results in the termination of the MSA by Popular and Banco Popular de Puerto Rico in accordance with the terms of Section 1.31 thereof;
then, and in every such event (other than an event with respect to Parent or the Borrower described in paragraph (h) or (i) above), and at any time thereafter during the continuance of such event, the Administrative Agent, at the request of the Required Lenders (provided, that in the case of an Event of Default under Section 6.10, only the Required Covenant Lenders may so request), shall, by notice to Parent, take any or all of the following actions, at the same or different times: (i) terminate forthwith the Commitments, (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding and (iii) demand cash collateral pursuant to Section 2.26; and in any event with respect to Parent or the Borrower described in paragraph (h) or (i) above, the Commitments shall automatically terminate, the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder and under any other Loan Document, shall automatically become due and payable and the Administrative Agent shall be deemed to have made a demand for Cash Collateral to the full extent permitted under Section 2.26, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding.
SECTION 7.02. Application of Funds

After the exercise of remedies provided for in Section 7.01 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in Section 7.01), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.16 and 2.17, be applied by the Administrative Agent in the following order:
First, to payment of that portion of the Secured Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Section 2.18) payable to the Administrative Agent in its capacity as such;
Second, to payment of that portion of the Secured Obligations constituting fees, indemnities and other amounts (other than principal, interest and L/C Participation Fees) payable to the Lenders and the L/C Issuer (including fees, charges and disbursements of counsel to the respective Lenders and the L/C Issuer (including fees and time charges for attorneys who may be employees of any Lender or the L/C Issuer) arising under the Loan Documents and amounts payable under Sections 2.16, 2.17 and 2.18, ratably among them in proportion to the respective amounts described in this clause Second payable to them;
Third, to payment of that portion of the Secured Obligations constituting accrued and unpaid L/C Participation Fees and interest on the Loans, Unreimbursed L/C Disbursements and other Secured Obligations arising under the Loan Documents, ratably among the Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Third payable to them;

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Fourth, to payment of that portion of the Secured Obligations constituting unpaid principal of the Loans, Unreimbursed L/C Disbursements and Secured Obligations then owing under Swap Agreements and Cash Management Agreements, ratably among the Lenders, the L/C Issuer and the Secured Parties in respect of the Secured Cash Management Agreements and Secured Swap Agreements in proportion to the respective amounts described in this clause Fourth held by them;
Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Borrower pursuant to Sections 2.26 and 2.27; and
Last, the balance, if any, after all of the Obligations have been indefeasibly Paid in Full, to the Borrower or as otherwise required by Law.
Subject to Sections 2.26 and 2.27, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Secured Obligations, if any, in the order set forth above.
Notwithstanding the foregoing, (a) amounts received from any Subsidiary Loan Party that is not a Qualified Eligible Contract Participant Guarantor shall not be applied to the Secured Obligations that are Excluded Swap Obligations (it being understood, that in the event that any amount is applied to Secured Obligations other than Excluded Swap Obligations as a result of this this clause (a), the Administrative Agent shall make such adjustments as it determines are appropriate to distributions pursuant to the above from amounts received from Qualified Eligible Contract Participant Guarantors to ensure, as nearly as possible, that the proportional aggregate recoveries with respect to Secured Obligations described in the above by the holders of any Excluded Swap Obligations are the same as the proportional aggregate recoveries with respect to other Secured Obligations pursuant to the above) and (b) Secured Obligations arising under Secured Cash Management Agreements and Secured Swap Agreements shall be excluded from the application described above if the Administrative Agent has not received written notice thereof, together with such supporting documentation as the Administrative Agent may reasonably request, from the applicable Cash Management Bank or Hedge Bank, as the case may be. Each Cash Management Bank or Hedge Bank not a party to this Agreement that has given the notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Article VIII hereof for itself and its Affiliates as if a “Lender” party hereto.
ARTICLE VIII

THE AGENTS
SECTION 8.01. Appointment

(a)     Each Lender and each L/C Issuer hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents and irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. In addition, to the extent required under the laws of any jurisdiction other than the United States, each of the Lenders and the L/C Issuers hereby grants to the Collateral Agent any powers of attorney required to execute any Security Document governed by the laws of such jurisdiction on such Lender’s or L/C Issuer’s behalf. Notwithstanding any provision to the contrary elsewhere in this Agreement or any other Loan Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.
For Mexican law purposes, each Lender and each L/C Issuer hereby grants to the Administrative Agent a comisión mercantil con representación in accordance with Articles 273, 274, and other applicable Articles of the Commerce Code (Código de Comercio) of the United Mexican States to act on its behalf as its agent in connection with this Agreement or any other Loan Document in the terms and for the purposes set forth in this Section 8.01.
(b)     The Administrative Agent, each Lender, the Swingline Lender and each L/C Issuer hereby irrevocably designate and appoint the Collateral Agent as the agent with respect to the Collateral, and each of the Administrative Agent, each Lender, the Swingline Lender and each L/C Issuer irrevocably authorizes the Collateral Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such

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duties as are expressly delegated to the Collateral Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement or any other Loan Document, the Collateral Agent shall not have any duties or responsibilities except those expressly set forth herein, or any fiduciary relationship with any of the Administrative Agent, the Lenders, the Swingline Lender or any L/C Issuers, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Collateral Agent.

SECTION 8.02. Delegation of Duties

Each Agent may each execute any of its duties under this Agreement and the other Loan Documents by or through agents, sub-agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Agent shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.
SECTION 8.03. Exculpatory Provisions

No Agent shall have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, no Agent:
(i)shall be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(ii)shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that such Agent is required to exercise as directed in writing by the Required Lenders (or such other number of percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents, or as such Agent shall believe in good faith shall be necessary under the circumstances as provided in Sections 7.01 and 9.08), provided that such Agent shall not be required to take any action that, in its judgment or the judgment of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and
(iii)shall, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Parent or any of its Affiliates that is communicated to or obtained by the Person serving as such Agent or any of its Affiliates in any capacity.
No Agent shall be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as such Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 7.01 and 9.08), (ii) in connection with making or not making Puerto Rico Filings on behalf of each Lender as authorized by such Lender under Section 8.01(a) hereof or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and non-appealable judgment. No Agent shall be deemed to have knowledge of any Default unless and until notice describing such Default is given to such Agent by Parent, a Lender or an L/C Issuer.
No Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to such Agent.
Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement with reference to any Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom and is intended to create or reflect only an administrative relationship between independent contracting parties.


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SECTION 8.04. Reliance by Agents

Each Agent shall be entitled to rely, and shall be fully protected in, and shall not incur any liability for, relying upon, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, facsimile, telex or teletype message, statement, order or other document or instruction believed by it to be genuine and correct and to have been signed, sent or made by the proper person or persons and upon advice and statements of legal counsel (including counsel to Parent), independent accountants and other experts selected by such Agent. Each Agent may also rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper person or persons, and shall not incur any liability for relying thereon. Each Agent may deem and treat the Lender specified in the Register with respect to any amount owing hereunder as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. Each Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Each Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or L/C Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit.
SECTION 8.05. Notice of Default

No Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless such Agent has received notice from a Lender or Parent referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default.” In the event that the Administrative Agent receives such a notice, it shall give notice thereof to the Lenders and the Collateral Agent. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders, provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders except to the extent that this Agreement requires that such action be taken only with the approval of the Required Lenders or each of the Lenders, as applicable.
SECTION 8.06. Non-Reliance on Administrative Agent, Collateral Agent and Other Lenders

Each Lender expressly acknowledges that no Agent or Additional Agent or any of their officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by any Agent or Additional Agent hereinafter taken, including any review of the affairs of Parent or any other Loan Party, shall be deemed to constitute any representation or warranty by such Agent or Additional Agent to any Lender, the Swingline Lender or any L/C Issuer. Each Lender, the Swingline Lender and each L/C Issuer represents to each Agent and Additional Agent that it has, independently and without reliance upon any Agent, Additional Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower and other Loan Parties and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent, Additional Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower and the other Loan Parties. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, no Agent or Additional Agent shall have any duty or responsibility to provide any Lender with any credit or other information concerning the business, assets, operations, properties, financial condition, prospects or creditworthiness of the Borrower or any other Loan Party that may come into the possession of any Agent or Additional Agent or any of their officers, directors, employees, agents, attorneys-in-fact or Affiliates.



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SECTION 8.07. Indemnification

The Lenders agree to indemnify each Agent, each in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective portions of the total Term Loans and Revolving Facility Commitments (or, if the Revolving Facility Commitments shall have terminated, in accordance the Revolving Facility Credit Exposures) held on the date on which indemnification is sought, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (including at any time following the payment of the Loans) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of the Commitments, this Agreement, any of the other Loan Documents, or any documents (including any intercreditor agreement) contemplated by or referred to herein or therein, the transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or in connection with any of the foregoing, including any action or inaction taken by the Administrative Agent in making or not making the Puerto Rico Filings; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction. The agreements in this Section 8.07 shall survive the payment of the Loans and all other amounts payable hereunder.
SECTION 8.08. Agents in their Individual Capacity

Each Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower and any other Loan Party as though such persons were not an Agent hereunder and under the other Loan Documents. With respect to the Loans made by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include the Administrative Agent and the Collateral Agent in their individual capacities.
SECTION 8.09. Successor Agents

Each Agent may at any time give notice of its resignation to the Lenders, the L/C Issuer and Parent. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, subject to the reasonable consent of Parent so long as no Event of Default under Section 7.01(h) or (i) is continuing, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation (or such earlier date as shall be agreed by the Required Lenders, the “Resignation Effective Date”), then the retiring Agent may, on behalf of the Lenders and the L/C Issuer, appoint a successor Agent meeting the qualifications set forth above; provided that (a) in no event shall such successor Agent be a Defaulting Lender or Ineligible Institution and (b) whether or not a successor has been appointed such resignation shall become effective in accordance with such notice on the Resignation Effective Date and (1) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except in the case of the Collateral Agent holding collateral security on behalf of any Secured Parties, the retiring Collateral Agent shall continue to hold such collateral security as nominee until such time as a successor Collateral Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through such Agent shall instead be made by or to each Lender and the L/C Issuer directly, until such time as the Required Lenders appoint a successor Agent as provided for above in this Section. Upon the acceptance of a successor’s appointment as an Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent (other than any rights to indemnity payments or other amounts owed to the retiring Administrative Agent as of the Resignation Effective Date), and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower (following the effectiveness of such appointment) to such Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article VIII and Section 9.05 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them (i) while the retiring Agent was acting as an Agent and (ii) in respect of any actions taken in connection with transferring the agency to any successor Administrative Agent.
Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as L/C Issuer and Swingline Lender. The retiring L/C Issuer and Swingline Lender shall be discharged from all of their respective duties and obligations under the Loan Documents. Upon such resignation, Bank of America shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to fund risk participations in Unreimbursed L/C Disbursements pursuant to Section 2.05(e)). Upon the acceptance of a successor’s

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appointment as Administrative Agent hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer and Swingline Lender and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit.
SECTION 8.10. Payments Set Aside

To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent, the L/C Issuer or any Lender, or the Administrative Agent, the L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect, in the applicable currency of such recovery or payment. The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive Payment in Full and the termination of this Agreement.
SECTION 8.11. Administrative Agent May File Proofs of Claim

In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise
(iv)to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuer and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuer and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the L/C Issuer and the Administrative Agent under Article II or Section 9.05) allowed in such judicial proceeding; and
(v)to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuer, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Article II and Section 9.05.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or the L/C Issuer or in any such proceeding.
The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction of the Required Lenders, to credit bid all or any portion of the Obligations (including accepting some or all of the Collateral in satisfaction of some or all of the Secured Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code of the United States, including under Sections 363, 1123 or 1129 of the Bankruptcy Code of the United States, or any similar laws in any other jurisdictions to which a Loan Party is subject, (b) at any other sale or foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable law.  In connection with any such credit bid and purchase, the Obligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid on a ratable basis (with Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that would vest upon the liquidation of such claims in an amount proportional to the liquidated portion

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of the contingent claim amount used in allocating the contingent interests) in the asset or assets so purchased (or in the Equity Interests or debt instruments of the acquisition vehicle or vehicles that are used to consummate such purchase).  In connection with any such bid (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles to make a bid, (ii) to adopt documents providing for the governance of the acquisition vehicle or vehicles (provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or Equity Interests thereof shall be governed, directly or indirectly, by the vote of the Required Lenders, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in Section 9.08(b) of this Agreement, (iii) the Administrative Agent shall be authorized to assign the relevant Obligations to any such acquisition vehicle pro rata by the Lenders, as a result of which each of the Lenders shall be deemed to have received a pro rata portion of any Equity Interests and/or debt instruments issued by such an acquisition vehicle on account of the assignment of the Obligations to be credit bid, all without the need for any Secured Party or acquisition vehicle to take any further action, and (iv) to the extent that Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason (as a result of another bid being higher or better, because the amount of Obligations assigned to the acquisition vehicle exceeds the amount of debt credit bid by the acquisition vehicle or otherwise), such Obligations shall automatically be reassigned to the Lenders pro rata and the Equity Interests and/or debt instruments issued by any acquisition vehicle on account of the Obligations that had been assigned to the acquisition vehicle shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action.
SECTION 8.12. Collateral and Guaranty Matters

Without limiting the provisions of Section 8.11, the Lenders and the L/C Issuer irrevocably authorize the Administrative Agent or the Collateral Agent, as applicable, at its option and in its discretion, (a) to release (i) any Guarantor from its obligations under the Guarantee Agreement and (ii) any Lien on any property granted to or held by the Collateral Agent under any Loan Document if approved, authorized or ratified in writing in accordance with Section 9.08, or pursuant to Section 9.18, and (b) to subordinate any Lien on any property granted to or held by the Collateral Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 6.02(i). Upon request by the Administrative Agent or the Collateral Agent, as applicable, at any time, the Required Lenders will confirm in writing the Collateral Agent’s authority to release a Guarantor from the Guarantee Agreement or its interest in particular types or items of property in accordance with this Section. The Lenders and the L/C Issuer irrevocably agree that (x) the Collateral Agent may, without any further consent of any Lender, enter into or amend (i) the First Lien Intercreditor Agreement and/or (ii) any intercreditor agreement with the collateral agent or other representatives of the holders of Indebtedness that is permitted to be secured by a Junior Lien on the Collateral that is permitted under this Agreement, (y) the Collateral Agent may rely exclusively on a certificate of a Responsible Officer of Parent as to whether any such other Liens are permitted and (z) any such intercreditor agreement referred to in clause (x) above, entered into by the Collateral Agent, shall be binding on the Secured Parties.
No Agent shall have any responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Collateral Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall any Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.
SECTION 8.13. Additional Agents

None of the Additional Agents shall have any duties or responsibilities hereunder in its capacity as such, but shall be entitled to the indemnities and exculpatory provisions of the Administrative Agent set forth in Sections 8.03, 8.06, 8.07 and 8.08 as if such provisions referred to the Additional Agents mutatis mutandis. The Additional Agents are express third-party beneficiaries of such provisions of the Loan Documents.
SECTION 8.14. Intercreditor Agreements and Collateral Matters

The Lenders hereby agree that Bank of America (and any successor Collateral Agent under the Security Documents) shall be permitted to serve as Collateral Agent for both the Secured Parties and the Other First Lien Secured Parties under the Security Documents and the First Lien Intercreditor Agreement. Each Lender hereby consents to Bank of America and any successor serving in such capacity and agrees not to assert any claim (including as a result of any conflict of interest) against Bank of America, or any such successor, arising from the role of the Collateral Agent under the Security Documents or the First Lien Intercreditor Agreement so long as the Collateral Agent is either acting in accordance with the express terms of such documents or otherwise has not engaged in gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction.

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SECTION 8.15. Withholding Taxes

To the extent required by any applicable law, the Administrative Agent may withhold from any payment to any Lender, Swingline Lender or L/C Issuer an amount equivalent to any applicable withholding Tax. Without limiting or expanding the provisions of Section 2.18(a) or (c), each Lender, Swingline Lender and L/C Issuer shall indemnify the Administrative Agent against, and shall make payable in respect thereof within 15 days after demand therefor, any and all Taxes and any and all related losses, claims, liabilities and expenses (including fees, charges and disbursements of any counsel for the Administrative Agent) incurred by or asserted against the Administrative Agent by the Internal Revenue Service or any other Governmental Authority as a result of the failure of the Administrative Agent to properly withhold Tax from amounts paid to or for the account of any Lender, Swingline Lender or L/C Issuer for any reason (including because the appropriate form was not delivered or not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstance that rendered the exemption from, or reduction of withholding Tax ineffective). A certificate as to the amount of such payment or liability delivered to any Lender, Swingline Lender or L/C Issuer by the Administrative Agent shall be conclusive absent manifest error. Each Lender, Swingline Lender and L/C Issuer hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender, Swingline Lender or L/C Issuer under this Agreement or any other Loan Document against any amount due the Administrative Agent under this Section 8.15. The agreements in this Section 8.15 shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, Swingline Lender or L/C Issuer, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.
SECTION 8.16. Certain ERISA Matters

(a)     Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:
(vi)such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments or this Agreement,
(vii)the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,
(viii)(A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or
(ix)such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

(b)     In addition, unless either (1) sub-clause (i) in the immediately preceding paragraph (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding paragraph (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that the Administrative Agent is not a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).


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SECTION 8.17. Puerto Rico Filings

Each Lender hereby acknowledges that, under Puerto Rico law, it may be required to file with the Puerto Rico Treasury Department periodic filings relating to the Facilities as and to the extent required by or advisable to comply with Section 1063.07 of the Internal Revenue Code of 2011 of Puerto Rico (the “Puerto Rico Filings”).
ARTICLE IX

MISCELLANEOUS
SECTION 9.01. Notices; Communications

(a)     Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in Section 9.01(b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or electronic mail as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(x)if to any Loan Party, the Administrative Agent, the L/C Issuer or the Swingline Lender, to the address, facsimile number, electronic mail address or telephone number specified for such person on Schedule 9.01; and
(xi)if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire.

(b)     Notices and other communications to the Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail, FpML Messaging and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or Parent may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

(c)     Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received. Notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii), if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

(d)     Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, facsimile number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.

(e)     Documents required to be delivered pursuant to Section 5.04 may be delivered electronically (including as set forth in Section 9.17) and if so delivered, shall be deemed to have been delivered on the date (i) on which Parent posts such documents, or provides a link thereto on Parent’s website on the Internet at the website address listed on Schedule 9.01, or (ii) on which such documents are posted on Parent’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided, that (A) Parent shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests Parent to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender, and (B) Parent shall notify the Administrative Agent (by facsimile or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Except for certificates required by Section 5.04(c), the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no

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responsibility to monitor compliance by Parent with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it and maintaining its copies of such documents.

(f)     The Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon any notices (including telephonic notices, Borrowing Requests, Letter of Credit Applications and Swingline Borrowing Requests) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify the Administrative Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

SECTION 9.02. Survival of Agreement

All covenants, agreements, representations and warranties made by the Loan Parties herein, in the other Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Administrative Agent, the Lenders and each L/C Issuer and shall survive the making by the Lenders of the Loans, the execution and delivery of the Loan Documents and the issuance of the Letters of Credit, regardless of any investigation made by such persons or on their behalf, and notwithstanding that the Administrative Agent, the L/C Issuer or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or L/C Obligation or any Fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not been terminated. Without prejudice to the survival of any other agreements contained herein, indemnification and reimbursement obligations contained herein (including pursuant to Sections 2.16, 2.18, 8.07 and 9.05) shall survive the Payment in Full, any assignment of rights by, or the replacement of, a Lender, the expiration of the Letters of Credit and the termination of the Commitments or this Agreement.
SECTION 9.03. Effectiveness

This Agreement shall become effective when it shall have been executed by the parties hereto and when the Administrative Agent shall have received copies hereof which, when taken together, bear the signatures of each of the other parties hereto.
SECTION 9.04. Successors and Assigns

(a)     The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto, the Indemnitees and their respective successors and assigns permitted hereby (including any Affiliate of the L/C Issuer that issues any Letter of Credit), except that (i) neither Parent nor the Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent, each L/C Issuer and each Lender (and any attempted assignment or transfer by Parent or the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 9.04. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the L/C Issuer that issues any Letter of Credit), Participants (to the extent provided in clause (c) of this Section 9.04), and, to the extent expressly contemplated hereby, the Additional Agents and the Related Parties of each of the Agents, the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement or the other Loan Documents.

(b)     (i) Subject to the conditions set forth in clause (b)(ii) below, any Lender may assign to one or more Eligible Persons (each, an “Assignee”) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:
(A)    the Borrower; provided, that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund (as defined below) or, if an Event of Default under Section 7.01(b), (c), (h) or (i) has occurred and is continuing, any other person; provided, further that notwithstanding anything in this Section 9.04 to the contrary, (x) if the Borrower has not given the Administrative Agent written notice of its objection to an assignment of Term Loans within five (5) Business Days after written notice to the Borrower, the Borrower shall be deemed to have consented to such assignment and (y) if the Borrower has not given the Administrative Agent written notice of its objection to an assignment of Revolving

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Facility Commitments and Revolving Facility Loans within ten (10) Business Days after written notice to the Borrower, the Borrower shall be deemed to have consented to such assignment;
(B)    the Administrative Agent; provided, that no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Term Loan to a Lender, an Affiliate of a Lender or an Approved Fund; and
(C)    the Primary L/C Issuer and the Swingline Lender; provided, that no consent of the Primary L/C Issuer and the Swingline Lender shall be required for an assignment of all or any portion of a Term Loan.
(ii)    Assignments shall be subject to the following additional conditions:
(A)    except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitments or Loans under any Facility, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than (x) $1,000,000 in the case of Term Loans (and shall be in an amount of an integral multiple thereof) and (y) $5,000,000 in the case of Revolving Facility Loans or Revolving Facility Commitments, unless each of the Borrower and the Administrative Agent otherwise consent; provided, that (1) no such consent of the Borrower shall be required if an Event of Default under Section 7.01(b), (c), (h) or (i) has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its Affiliates or Approved Funds (with simultaneous assignments to or by two or more Related Funds being treated as one assignment), if any;
(B)    the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance via an electronic settlement system acceptable to the Administrative Agent (or, if required by the Administrative Agent, manually), and shall pay to the Administrative Agent a processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Administrative Agent);
(C)    the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and any tax forms required to be delivered pursuant to Section 2.18;
(D)    each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not apply to the Swingline Lender’s rights and obligations in respect of Swingline Loans; and
(E)    if the assignment is to any Affiliated Lender or a person that upon effectiveness of such assignment would be an Affiliated Lender, such assignment shall comply with Section 9.04(j).
For the purposes of this Section 9.04, “Approved Fund” means any person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
(iii)    Subject to acceptance and recording thereof pursuant to paragraph (b)(v) below, from and after the effective date specified in each Assignment and Acceptance the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.16, 2.17, 2.18 and 9.05 (subject to the limitations and requirements of those Sections). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with clause (c) of this Section 9.04.
(iv)    The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount (and related interest amounts) of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Loan Parties, the Administrative Agent, the L/C Issuer and the Lenders shall treat each person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by any Lender (with respect

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to such Lender’s own interests only), the Borrower and the L/C Issuer at any reasonable time and from time to time upon reasonable prior notice.
(v)    Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an Assignee, the Assignee’s completed Administrative Questionnaire (unless the Assignee shall already be a Lender hereunder), all applicable tax forms, the processing and recordation fee referred to in clause (b)(ii)(B) of this Section and any written consent to such assignment required by clause (b)(i) of this Section, the Administrative Agent promptly shall accept such Assignment and Acceptance and record the information contained therein in the Register. No assignment, whether or not evidenced by a promissory note, shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this clause (b)(v).
(c)     (i) Any Lender, the L/C Issuer or the Swingline Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more Eligible Persons (a “Participant”) in all or a portion of such Lender’s, L/C Issuer’s or Swingline Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Loan Parties, the Administrative Agent, the L/C Issuer and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and the other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement and the other Loan Documents; provided, that (x) such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (1) requires the consent of each Lender directly affected thereby pursuant to clause (i), (ii) or (iii) of the first proviso to Section 9.08(b) and (2) directly affects such Participant (but, for the avoidance of doubt, not any waiver of any Default or Event of Default other than any payment Default or Event of Default) and (y) no other agreement with respect to amendment, modification or waiver may exist between such Lender and such Participant. Subject to paragraph (c)(ii) of this Section 9.04, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.16, 2.17 and 2.18 (subject to the limitations and requirements of those Sections) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 9.04(b). To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.06 as though it were a Lender; provided such Participant shall be subject to Section 2.19(c) as though it were a Lender.
(ii)    A Participant shall not be entitled to receive any greater payment under Section 2.16, 2.17 or 2.18 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with Borrower’s prior written consent (not to be unreasonably withheld or delayed).
(iii)    If the Lender shall sell a participation, it shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and related interest) of each Participant’s interest in the Loans or other obligations under this Agreement or any other Loan Document (the “Participant Register”); provided that the Lender shall have no 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 Commitment, Loans, Letters of Credit or its other obligations under this Agreement or any other Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the U.S. Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and the Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.
(d)     Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank and in the case of any Lender that is an Approved Fund, any pledge or assignment to any holders of obligations owed, or securities issued, by such Lender, including to any trustee for, or any other representative of, such holders, and this Section 9.04 shall not apply to any such pledge or assignment of a security interest; provided, that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee for such Lender as a party hereto.

(e)     The Borrower, at its expense and upon receipt of written notice from the relevant Lender, agrees to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in paragraph (d) above.

(f)     Notwithstanding the foregoing, any Conduit Lender may assign any or all of the Loans it may have funded hereunder to its designating Lender without the consent of the Borrower or the Administrative Agent. Each Loan Party, each Lender and the Administrative Agent hereby confirms that it will not institute against a Conduit Lender or join any other person in

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instituting against a Conduit Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any state bankruptcy or similar law, for one year and one day after the payment in full of the latest maturing commercial paper note issued by such Conduit Lender; provided, however, that each Lender designating any Conduit Lender hereby agrees to indemnify, save and hold harmless each other party hereto and each Loan Party for any loss, cost, damage or expense arising out of its inability to institute such a proceeding against such Conduit Lender during such period of forbearance.

(g)     If the Borrower wishes to replace the Loans or Commitments under any Facility with ones having different terms, it shall have the option, with the consent of the Administrative Agent and subject to at least three Business Days’ advance notice to the Lenders under such Facility, instead of prepaying the Loans or reducing or terminating the Commitments to be replaced, to (i) require the Lenders under such Facility to assign such Loans or Commitments to the Administrative Agent or its designees and (ii) amend the terms thereof in accordance with Section 9.08 (with such replacement, if applicable, being deemed to have been made pursuant to Section 9.08(d)). Pursuant to any such assignment, all Loans and Commitments to be replaced shall be purchased at par (allocated among the Lenders under such Facility in the same manner as would be required if such Loans were being optionally prepaid or such Commitments were being optionally reduced or terminated by the Borrower), accompanied by payment of any accrued interest and fees thereon and any amounts owing pursuant to Section 9.05(a). By receiving such purchase price, the Lenders under such Facility shall automatically be deemed to have assigned the Loans or Commitments under such Facility pursuant to the terms of the form of Assignment and Acceptance attached hereto as Exhibit B, and accordingly no other action by such Lenders shall be required in connection therewith. The provisions of this paragraph (g) are intended to facilitate the maintenance of the perfection and priority of existing security interests in the Collateral during any such replacement.

(h)     The Borrower hereby authorizes the Administrative Agent to post the list of Ineligible Institutions on the Platform for all Lenders and any Lender may provide the list to any potential assignee or participant on a confidential basis in accordance with Section 9.16 hereof for the purpose of verifying whether such Person is an Ineligible Institution. Notwithstanding anything in the Loan Documents to the contrary, the Administrative Agent shall not be responsible (or have any liability) for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to Ineligible Institutions. Without limiting the generality of the foregoing, the Administrative Agent shall not (1) be obligated to ascertain, monitor or inquire as to whether any Lender or participant or prospective Lender or participant is an Ineligible Institution or (2) have any liability with respect to or arising out of any assignment or participation of Loans or Commitments, or disclosure of confidential information, to any Ineligible Institution.

(i)     Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Revolving Facility Commitment and Revolving Facility Loans pursuant to Section 9.04(b), Bank of America may, (i) upon 30 days’ notice to the Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to the Borrower, resign as Swingline Lender. In the event of any such resignation as L/C Issuer or Swingline Lender, the Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swingline Lender hereunder; provided, however, that no failure by the Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer or Swingline Lender, as the case may be. If Bank of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make ABR Revolving Loans or purchase L/C Disbursement Participations pursuant to Section 2.05(e)). If Bank of America resigns as Swingline Lender, it shall retain all the rights of the Swingline Lender provided for hereunder with respect to Swingline Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make ABR Revolving Loans or fund risk participations in outstanding Swingline Loans pursuant to Section 2.04(c). Upon the appointment of a successor L/C Issuer and/or Swingline Lender, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swingline Lender, as the case may be, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.

(j)     Notwithstanding anything to the contrary contained herein, any Lender may assign all or any portion of its Term Loans hereunder to any Affiliated Lender; provided that:
(A)    no Default or Event of Default has occurred or is continuing or would result therefrom;
(B)    the assigning Lender and Affiliated Lender purchasing such Lender’s Term Loans shall execute and deliver to the Administrative Agent an assignment agreement substantially in the form of Exhibit F in lieu of an Assignment and Acceptance;
(C)    for the avoidance of doubt, Lenders shall not be permitted to assign Revolving Facility Commitments or Revolving Facility Loans to any Affiliated Lender;

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(D)    no Term Loan may be assigned to a Affiliated Lender pursuant to this Section 9.04(j) if, after giving effect to such assignment, Affiliated Lenders in the aggregate would own Term Loans with a principal amount in excess of 15% of the principal amount of all Term Loans then outstanding; and
(E)    the Affiliated Lender purchasing such Term Loans represents and covenants as of the date of any assignment to such Affiliated Lender that it does not have any material non-public information with respect to Parent that (a) has not been disclosed to the Lenders (other than Lenders that do not wish to receive material non-public information with respect to Parent, any of its Subsidiaries or Affiliates) prior to such time and (b) could reasonably be expected to have a material effect upon, or otherwise be material, (i) to a Lender’s decision to participate in any assignment pursuant to this Section 9.04(j) or (ii) to the market price of the Term Loans.
Affiliated Lenders will be subject to the restrictions specified in Section 9.22.
SECTION 9.05. Expenses; Indemnity

(a)     The Borrower agrees to pay (i) all reasonable documented out-of-pocket expenses (including Other Taxes) incurred by the Administrative Agent, the Collateral Agent, the Joint Lead Arrangers and the Joint Bookrunners in connection with the preparation of this Agreement and the other Loan Documents, or, with respect to the Administrative Agent and the Collateral Agent, in connection with the syndication of commitments or administration of this Agreement and any amendments, modifications, supplements or waivers (or proposed amendments, modifications, supplements or waivers) of the provisions hereof or thereof, including expenses incurred in connection with due diligence, the reasonable fees, charges and disbursements of counsel for the Administrative Agent, the Collateral Agent, the Joint Lead Arrangers and the Joint Bookrunners, and the reasonable fees, charges and disbursements of one local counsel per jurisdiction, (ii) all reasonable out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses (including Other Taxes) incurred by the Agents or any Lender in connection with the enforcement of this Agreement and the other Loan Documents in connection with the Loans made or Letters of Credit issued hereunder, including the reasonable fees, charges and disbursements of counsel for the Agents and the Lenders (including the reasonable fees, charges and disbursements of counsel for the Agents, the Joint Lead Arrangers and the Joint Bookrunners, and, if necessary, the reasonable fees, charges and disbursements of one local counsel per jurisdiction and one additional counsel for the affected persons, taken as a whole, to the extent of any actual or perceived conflict of interest).

(b)     The Borrower agrees to indemnify the Agents, the Additional Agents, each L/C Issuer, each Lender, each of their respective Affiliates and each of their respective directors, partners, officers, employees, agents, trustees and advisors (each such person being called an “Indemnitee”) against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, charges and disbursements (limited to one counsel to the Agents and their Related Parties and one local counsel to the Agents and their Related Parties in each applicable jurisdiction and, solely in the event of an actual or perceived conflict of interest, one additional counsel in each applicable material jurisdiction to the other Indemnitees) (except the allocated costs of in-house counsel) (collectively, “Damages”), incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document, or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto and thereto of their respective obligations thereunder or the consummation of or otherwise relating to the Transactions and the other transactions contemplated hereby and the administration of the Loan Documents, including any required filings with the Puerto Rico Treasury Department, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto and regardless of whether such matter is initiated by a third-party or by Parent or any of its subsidiaries or Affiliates; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee (for purposes of this proviso only, each Agent, each Additional Agent, any L/C Issuer or any Lender shall be treated as several and separate Indemnitees, but each of them together with its respective Related Parties (other than advisors), shall be treated as a single Indemnitee). Subject to and without limiting the generality of the foregoing sentence, the Borrower agrees to indemnify each Indemnitee against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel or consultant fees, charges and disbursements (limited to one counsel to the Agents and their Related Parties and one local counsel to the Agents and their Related Parties in each applicable jurisdiction and, solely in the event of an actual or perceived conflict of interest, one additional counsel in each applicable material jurisdiction to the other Indemnitees) (except the allocated costs of in-house

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counsel), incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (A) any claim related in any way to Environmental Laws and Parent or any of its subsidiaries, or (B) any actual or alleged presence, Release or threatened Release of Hazardous Materials at, under, on, from or to any property currently or formerly owned, operated or leased by any of them; provided, that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or any of its Related Parties (for purposes of this proviso only, each Agent, each Additional Agent, any L/C Issuer or any Lender shall be treated as several and separate Indemnitees, but each of them together with its respective Related Parties (other than advisors), shall be treated as a single Indemnitee). None of the Indemnitees (or any of their respective affiliates) shall be responsible or liable to the Sponsor, Parent, the Borrower or any of their respective subsidiaries, Affiliates or stockholders or any other person or entity for any special, indirect, consequential or punitive damages, which may be alleged as a result of the Facilities or the Transactions. The provisions of this Section 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of any Agent, any Additional Agent, any L/C Issuer or any Lender. All amounts due under this Section 9.05 shall be payable on written demand therefor accompanied by reasonable documentation with respect to any reimbursement, indemnification or other amount requested.

(c)     Except as expressly provided in Section 9.05(a) with respect to Other Taxes, which shall not be duplicative of any amounts paid pursuant to Section 2.18, this Section 9.05 shall not apply to Taxes, except Taxes that represent Damages arising from a non-Tax claim (i.e., for the avoidance of doubt, indemnification under this Section 9.05 in respect of a non-Tax claim shall be made to the extent necessary to place the indemnitee in the same after-Tax position that the indemnitee would have been in absent the occurrence of the events giving rise to such indemnification).

(d)     To the fullest extent permitted by applicable law, Parent and the Borrower shall not assert, and hereby waive, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby, except to the extent determined by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee.

(e)     The agreements in this Section 9.05 shall survive the resignation of the Administrative Agent, any L/C Issuer, the replacement of any Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all the other Obligations and the termination of this Agreement.

(f)     All amounts due under this Section shall be payable as promptly as practicable.

SECTION 9.06. Right of Set-off

If an Event of Default shall have occurred and be continuing, each Lender and each L/C Issuer is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or such L/C Issuer to or for the credit or the account of Parent or any Subsidiary against any of and all the obligations of Parent or the Borrower now or hereafter existing under this Agreement or any other Loan Document held by such Lender or such L/C Issuer, irrespective of whether or not such Lender or such L/C Issuer shall have made any demand under this Agreement or such other Loan Document and although the obligations may be unmatured. The rights of each Lender and each L/C Issuer under this Section 9.06 are in addition to other rights and remedies (including other rights of set-off) that such Lender or such L/C Issuer may have.
SECTION 9.07. Applicable Law

THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) AND ANY DISPUTES ARISING HEREUNDER OR THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

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SECTION 9.08. Waivers; Amendment

(a)     No failure or delay of any Agent, any L/C Issuer or any Lender in exercising any right or power hereunder or under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of each Agent, each L/C Issuer and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by Parent, the Borrower or any other Loan Party therefrom shall in any event be effective unless the same shall be permitted by clause (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on Parent, the Borrower or any other Loan Party in any case shall entitle such person to any other or further notice or demand in similar or other circumstances. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or the L/C Issuer may have had notice or knowledge of such Default at the time.
(b)     Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except (x) as provided in Sections 2.22, 2.23, 2.25, 2.28 and 6.13, (y) in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by Parent, the Borrower and the Administrative Agent (and consented to by the Required Lenders or, in the case of a waiver of the Financial Performance Covenant, the Required Covenant Lenders or, in the case of an amendment or modification of the Financial Performance Covenant as it applies to any Facility, the Required Class Lenders of such Facility) and (z) in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by each party thereto and consented to by the Required Lenders; provided, however, that no such agreement shall:
(xii)decrease or forgive the principal amount of, or extend the final maturity of, or decrease the rate of interest on, any Loan or any L/C Obligation, extend the stated expiration of any Letter of Credit beyond the Revolving Facility Maturity Date or reduce the premium payable in the event of a Repricing Transaction, without the prior written consent of each Lender directly adversely affected thereby; provided, that any amendment to the financial covenant definitions in this Agreement shall not constitute a reduction in the rate of interest for purposes of this clause (i),
(xiii)(x) increase the amount of or extend the maturity date of the Commitment of any Lender or (y) decrease the Commitment Fees or L/C Participation Fees or other fees of any Lender without the prior written consent of such Lender (which, notwithstanding the foregoing, in the case of clause (y), such consent of such Lender shall be the only consent required hereunder to make such modification) (it being understood that waivers or modifications of conditions precedent, covenants, Defaults or Events of Default shall not constitute an increase of the Commitments of any Lender),
(xiv)extend or waive any Term Loan Installment Date, reduce the amount due on any Term Loan Installment Date, or extend any date on which payment of interest on any Loan or any L/C Obligation or any Fees is due, without the prior written consent of each Lender adversely affected thereby (which, notwithstanding the foregoing, such consent of such Lender directly adversely affected thereby shall be the only consent required hereunder to make such modification),
(xv)amend Section 7.02, Section 2.09(b) (to the extent requiring any reduction of the Revolving Facility Commitments to be applied ratably among the Lenders) or Section 2.19(b) or (c) without the prior written consent of each Lender adversely affected thereby,
(xvi)reduce the voting rights of any Lender under this Section 9.08 or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the prior written consent of such Lender (it being understood that, with the consent of the Required Lenders, additional extensions of credit pursuant to this Agreement may be included in the determination of the Required Lenders on substantially the same basis as the Loans and Commitments are included on the Closing Date),
(xvii)release all or substantially all the Collateral or release all or substantially all of the value of the guarantees by the Subsidiary Loan Parties under the Guarantee Agreements, unless, in each case, to the extent sold or otherwise disposed of in a transaction permitted by this Agreement or the other Loan Documents, without the prior written consent of each Lender;
(xviii)amend Section 1.05 without the prior written consent of each Revolving Facility Lender and each L/C Issuer; or
(xix)effect any waiver, amendment or modification that by its terms adversely affects the rights in respect of payments or collateral of Lenders participating in any Facility differently from those of Lenders participating in another Facility, without the consent of the Required Class Lenders participating in the adversely affected Facility (it being agreed that the Required Lenders may waive, in whole or in part, any prepayment required by Section 2.12 so long as the application of any prepayment still required to be made is not changed);
provided, further, that (A) no such amendment shall amend, modify or otherwise affect the rights or duties of any Agent, Swingline Lender or an L/C Issuer hereunder without the prior written consent of such Agent, Swingline Lender or such L/C Issuer acting as such at the effective date of such amendment, as applicable and (B) no amendment, waiver or consent shall amend, modify or waive any condition precedent to any extension of credit under the Revolving Facility set forth in Section 4.01 without the written consent of the Required Class Lenders under such Revolving Facility (it being understood that (i) amendments of any other provision of any Loan Document, including any representation or warranty, any covenant or any Default or Event of Default, shall be deemed to be effective for purposes of determining whether the conditions precedent set

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forth in Section 4.01 have been satisfied regardless of whether the Required Class Lenders under the Revolving Facility shall have consented to such amendment, modification or waiver and (ii) such consent of the Required Class Lenders under the applicable Revolving Facility shall be the only consent required hereunder to make such modifications to the conditions precedent set forth in Section 4.01 for extensions of credit under the Revolving Facility). Notwithstanding the foregoing, no consent of any Defaulting Lender shall be required for any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender unless such waiver, amendment or modification by its terms would affect such Defaulting Lender differently than other affected Lenders; provided that the Commitment of any Defaulting Lender may not be increased in amount or the maturity thereof extended without the consent of such Lender, and no principal or interest owing to any Defaulting Lender may be reduced, or the date on which payment of such principal or interest is due extended, without the consent of such Lender. Each Lender shall be bound by any waiver, amendment or modification authorized by this Section 9.08 and any consent by any Lender pursuant to this Section 9.08 shall bind any successor or assignee of such Lender.
(c)     Without the consent of any Lender or L/C Issuer, the Loan Parties and the Administrative Agent or Collateral Agent may (in their respective sole discretion, or shall, to the extent required by any Loan Document) enter into any amendment, modification or waiver of any Loan Document, or enter into any new agreement or instrument, to effect the granting, perfection, protection, expansion or enhancement of any security interest in any Collateral or additional property to become Collateral for the benefit of the Secured Parties, to include the Other First Lien Secured Parties in the benefit of the Security Documents in connection with the incurrence of any Other First Lien Debt, or as required by local law to give effect to, or protect any security interest for the benefit of the Secured Parties, in any property or so that the security interests therein comply with applicable law or this Agreement, in all cases subject to the Agreed Security Principles or in each case to otherwise enhance the rights or benefits of any Lender under any Loan Document.

(d)     Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent, Parent and the Borrower (i) to add one or more additional credit or debt facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Term Loans and the Revolving Facility Loans and the accrued interest and fees in respect thereof and (ii) to include appropriately the Lenders holding such credit or debt facilities in any determination of the Required Lenders or Required Class Lenders.

(e)     Notwithstanding the foregoing, technical and conforming modifications to the Loan Documents may be made with the consent of Parent, the Borrower and the Administrative Agent to the extent necessary (A) to integrate any Incremental Term Loan Loans, any Refinancing Term Loans or any Replacement Revolving Commitments on substantially the same basis as the Term Loans or Revolving Facility Loans, as applicable, (B) to integrate any Other First Lien Debt or (C) to cure any ambiguity, omission, defect or inconsistency; provided, with respect to this clause (C), that (i) such modifications do not adversely affect the rights of any Lender or other holder of Obligations in any material respect and (ii) the Lenders shall have received at least five Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five Business Days of the date of such notice to the Lenders, a written notice from the Required Lenders stating that the Required Lenders object to such amendment.

(f)     Notwithstanding the foregoing, this Agreement may be amended, (i) with the written consent of each Revolving Facility Lender, the Administrative Agent, Parent and the Borrower to the extent necessary to integrate any Alternative Currency and (ii) with the written consent of the Administrative Agent, L/C Issuer, Parent and the Borrower to the extent necessary to integrate any L/C Alternative Currency.

SECTION 9.09. Interest Rate Limitation

Notwithstanding anything herein to the contrary, if at any time the applicable interest rate, together with all fees and charges that are treated as interest under applicable law (collectively, the “Charges”), as provided for herein or in any other document executed in connection herewith, or otherwise contracted for, charged, received, taken or reserved by any Lender or any L/C Issuer, shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by such Lender in accordance with applicable law, the rate of interest payable hereunder, together with all Charges payable to such Lender or such L/C Issuer, shall be limited to the Maximum Rate; provided, that such excess amount shall be paid to such Lender or such L/C Issuer on subsequent payment dates to the extent not exceeding the legal limitation.
SECTION 9.10. Entire Agreement

This Agreement, the other Loan Documents and the agreements regarding certain Fees referred to herein constitute the entire contract between the parties relative to the subject matter hereof. Any previous agreement among or representations from the

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parties or their Affiliates with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents. Notwithstanding the foregoing, the Fee Letter shall survive the execution and delivery of this Agreement and remain in full force and effect. Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any party other than the parties hereto and thereto and the Indemnitees any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL

EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. Severability

In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9.13. Counterparts

This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which, when taken together, shall constitute but one contract, and shall become effective as provided in Section 9.03. Delivery of an executed counterpart of a signature page of any Loan Document by facsimile, emailed pdf. or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart of such Loan Document. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to any document to be signed in connection with any Loan Document and the transactions contemplated hereby shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that nothing herein shall require the Administrative Agent to accept electronic signatures in any form or format without its prior written consent.
SECTION 9.14. Headings

Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process

(a)     Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the jurisdiction of any New York State court or federal court of the United States of America sitting in New York City in the borough of Manhattan, and any appellate court from any thereof (collectively, “New York Courts”), in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents (other than as expressly set forth in other Loan Documents), or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Loan Documents in the courts of any jurisdiction, except that each of

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the Loan Parties agrees that (a) it will not bring any such action or proceeding in any court other than New York Courts (it being acknowledged and agreed by the Loan Parties that any other forum would be inconvenient and inappropriate in view of the fact that more of the Lenders who would be affected by any such action or proceeding have contacts with the State of New York than any other jurisdiction), and (b) in any such action or proceeding brought against any Loan Party in any other court, it will not assert any cross-claim, counterclaim or set-off, or seek any other affirmative relief, except to the extent that the failure to assert the same will preclude such Loan Party from asserting or seeking the same in the New York Courts.

(b)     Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York Court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c)     By the execution and delivery of this Agreement, each Loan Party (i) acknowledges that it has, by separate written instrument, designated and appointed CT Corporation System, with an office at 111 Eighth Avenue, New York, New York 10011 (“CT”) (and any successor entity), as its authorized agent upon which process may be served in any suit or proceeding arising out of or relating to this Agreement that may be instituted in New York Courts, and acknowledges that CT has accepted such designation, (ii) submits to the jurisdiction of any such court in any such suit or proceeding and (iii) agrees that service of process upon CT and written notice of said service to any Loan Party in accordance with the manner provided for notices in Section 9.01 shall be deemed in every respect effective service of process upon such Loan Party, in any such suit or proceeding. Each Loan Party further agrees to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of CT in full force and effect so long as this Agreement is in effect; provided that each Loan Party, with respect to such Loan Party, may and to the extent CT ceases to be able to be served on the basis contemplated herein shall, by written notice to the Administrative Agent, designate such additional or alternative agent for service of process under this paragraph (c) that (i) maintains an office located in the Borough of Manhattan, City of New York, State of New York and (ii) is either (x) counsel for Parent or (y) a corporate service company which acts as agent for service of process for other persons in the ordinary course of its business. Such written notice shall identify the name of such agent for service of process and the address of the office of such agent for service of process in the Borough of Manhattan, City of New York, State of New York. To the extent that any Loan Party has or hereafter may acquire any immunity from jurisdiction of any court of (i) any jurisdiction in which it owns or leases property or assets, (ii) the United States or the State of New York or (iii) the Commonwealth of Puerto Rico or any political subdivision thereof or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property and assets or this Agreement or any of the other Loan Documents or actions to enforce judgments in respect of any thereof, such Loan Party hereby irrevocably waives such immunity in respect of its obligations under the above‑referenced documents, to the extent permitted by law. Nothing in this Agreement, any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 9.16. Confidentiality

Each of the Lenders, each L/C Issuer and each of the Agents agrees that it shall maintain in confidence any information relating to Parent and any Subsidiary furnished to it by or on behalf of any Parent or any Subsidiary (other than information that (a) has become available to the public other than as a result of a disclosure by such party in breach of this Section 9.16, (b) has been independently developed by such Lender, such L/C Issuer or such Agent without violating this Section 9.16 or (c) was or becomes available to such Lender, such L/C Issuer or such Agent from a third party which, to such person’s knowledge, had not breached an obligation of confidentiality to Parent, the Borrower or any other Loan Party) and shall not reveal the same other than to its affiliates, directors, trustees, officers, employees and advisors with a need to know or to any person that approves or administers the Loans on behalf of such Lender (so long as each such person shall have been instructed to keep the same confidential), except: (A) to the extent necessary to comply with law or any legal process or the requirements of any Governmental Authority, the National Association of Insurance Commissioners or of any securities exchange on which securities of the disclosing party or any Affiliate of the disclosing party are listed or traded, (B) as part of normal reporting or review procedures to, or examinations by, Governmental Authorities or self regulatory authorities, including the National Association of Insurance Commissioners or the Financial Industry Regulatory Authority, (C) in order to enforce its rights under any Loan Document in a legal proceeding, (D) to any pledgee under Section 9.04(d) or any other prospective assignee of, or prospective Participant in, any of its rights under this Agreement (so long as such person shall have been instructed to keep the same confidential in accordance with this Section 9.16 or terms substantially similar to this Section), (E) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such information and instructed to keep such information confidential), (F) to any direct or indirect contractual counterparty in Swap Agreements or such contractual counterparty’s professional advisor (so long as such contractual counterparty or professional advisor to such contractual

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counterparty agrees to be bound by the provisions of this Section 9.16 or terms substantially similar to this Section), (G) if required by any rating agency; provided that prior to any such disclosure, such rating agency shall have agreed to maintain the confidentiality of such Information and (H) to the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the Loans on a confidential basis. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Agents and the Lenders in connection with the administration of this Agreement, the other Loan Documents, and the Commitments.
SECTION 9.17. Platform; Borrower Materials

The Borrower hereby acknowledges that (a) the Administrative Agent, the Joint Lead Arrangers and/or the Joint Bookrunners will make available to the Lenders and the L/C Issuer materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks®, SyndTrak® or another similar electronic system (the “Platform”), and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to Parent, any of its subsidiaries or any of their respective securities) (each, a “Public Lender”). The Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (i) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof, (ii) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Joint Lead Arrangers, the Joint Bookrunners the L/C Issuer and the Lenders to treat such Borrower Materials as either publicly available information or not material information (although it may be sensitive and proprietary) with respect to the Borrower, any of its subsidiaries or any of their respective securities for purposes of United States Federal and state securities laws, (iii) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor” and (iv) the Administrative Agent, the Joint Lead Arrangers and the Joint Bookrunners shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Investor.”
THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to Parent, any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of Parent’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to Parent, any Lender, the L/C Issuer or any other person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).
SECTION 9.18. Release of Liens, Guarantees and Pledges

(a)     A Subsidiary Loan Party shall automatically be released from its obligations under the Loan Documents, and all security interests created by the Security Documents in Collateral owned by such Subsidiary Loan Party shall be automatically released, upon the consummation of any transaction permitted by this Agreement or any designation in accordance with Section 5.12, as a result of which such Subsidiary Loan Party ceases to be a Subsidiary; provided that, if so required by this Agreement, the Required Lenders shall have consented to such transaction and the terms of such consent shall not have provided otherwise. Upon any sale or other transfer by any Loan Party (other than to any other Loan Party) of any Collateral in a transaction permitted under this Agreement, or upon the effectiveness of any written consent to the release of the security interest created under any Security Document in any Collateral or the release of any Subsidiary Loan Party from its Guarantee under the Guarantee Agreement pursuant to Section 9.08, the security interests in such Collateral created by the Security Documents or such Guarantee shall be automatically released; provided that, for the avoidance of doubt, with respect to any disposal consisting of an operating lease or license, the underlying property retained by such Loan Party will not be so released. Upon Payment in Full, all obligations under the Loan Documents and all security interests created by the Security Documents shall be automatically released. Any such release of Secured Obligations shall be deemed subject to the provision that such Secured Obligations shall be reinstated if after such release any portion of any payment in respect of the Secured Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or

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reorganization of the Borrower or any other Loan Party, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any other Loan Party or any substantial part of its property, or otherwise, all as though such payment had not been made. In connection with any termination or release pursuant to this Section, the Administrative Agent shall execute and deliver, without recourse or warranty, to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence such termination or release so long as the Borrower or applicable Loan Party shall have provided the Administrative Agent such certifications or documents as the Administrative Agent shall reasonably request in order to demonstrate compliance with this Agreement and the other Loan Documents.

(b)     The Administrative Agent will, at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to subordinate the Administrative Agent’s Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 6.02(j).

(c)     Each of the Lenders and the L/C Issuer irrevocably authorizes the Administrative Agent to provide any release or evidence of release, termination or subordination contemplated by this Section. Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Loan Party from its obligations under any Loan Document, in each case in accordance with the terms of the Loan Document and this Section, and, in such case (other than upon Payment In Full), the Administrative Agent shall not be obligated to provide such release or evidence of release, termination or subordination until the Administrative Agent has received such confirmation.

SECTION 9.19. Judgment Currency

If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Borrower in respect of any such sum due from it to the Administrative Agent or the Lenders hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent from the Borrower in the Agreement Currency, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or the person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent in such currency, the Administrative Agent agrees to return the amount of any excess to such Borrower (or to any other person who may be entitled thereto under applicable law).
SECTION 9.20. USA PATRIOT Act Notice

Each Lender that is subject to the USA PATRIOT Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies Parent and the Borrower that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party, a Beneficial Ownership Certification and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the USA PATRIOT Act.
SECTION 9.21. No Advisory or Fiduciary Responsibility

In connection with all aspects of each transaction contemplated hereby, Parent and the Borrower acknowledge and agree that: (i) the credit facilities provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between the Borrower, the other Loan Parties and their respective Affiliates, on the one hand, and the Agents, the Additional Agents and the Lenders, on the other hand, and the Borrower and the other Loan Parties are capable of evaluating and understanding and understand and accept the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver or other modification hereof or thereof); (ii) in connection with the process leading to such transaction, each Agent, each Additional Agent and each Lender is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary, for the Borrower, any Loan Party or any of their

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respective Affiliates, stockholders, creditors or employees or any other person; (iii) none of the Agents, any Additional Agent or any Lender has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower or any other Loan Party with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Loan Document (irrespective of whether any Agent, any Additional Agent or any Lender has advised or is currently advising the Borrower or any other Loan Party or their respective Affiliates on other matters) and none of the Agents, any Additional Agent or any Lender has any obligation to the Borrower, the other Loan Parties or their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; (iv) the Agents, the Additional Agents, the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and the other Loan Parties and their respective Affiliates, and none of the Agents, any Additional Agent or any Lender has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (v) the Agents, the Additional Agents and the Lenders have not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Loan Document) and the Borrower and the other Loan Parties have consulted their own legal, accounting, regulatory and tax advisors to the extent they deemed appropriate. Parent and the Borrower each hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against the Agents, the Additional Agents and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty.
SECTION 9.22. Affiliated Lenders

(a)     Subject to clause (b) below, each Affiliated Lender, in connection with any (i) consent (or decision not to consent) to any amendment, modification, waiver, consent or other action with respect to any of the terms of any Loan Document or any departure by an Loan Party therefrom, (ii) other action on any matter related to any Loan Document or (iii) direction to any Agent or any Lender to undertake any action (or refrain from taking any action) with respect to or under any Loan Document, agrees that, except with respect to any amendment, modification, waiver, consent or other action described in clause (i), (ii) or (iii) of the first proviso of Section 9.08(b) or that adversely affects such Affiliated Lender (in its capacity as a Lender) in any material respect as compared to other Lenders, shall be deemed to have voted its interest as a Lender without discretion in such proportion as the allocation of voting with respect to such matter by Lenders who are not Affiliated Lenders. Subject to clause (b) below, the Borrower and each Affiliated Lender hereby agrees that if a case under Title 11 of the United States Code is commenced against any Loan Party, the Parent and the Borrower, with respect to any plan of reorganization that does not adversely affect any Affiliated Lender (in its capacity as a Lender) in any material respect as compared to other Lenders, shall seek (and each Affiliated Lender shall consent) to designate the vote of any Affiliated Lender and the vote of any Affiliated Lender with respect to any such plan of reorganization of the Borrower or any Affiliate of the Borrower shall not be counted. Subject to clause (b) below, each Affiliated Lender hereby irrevocably appoints the Administrative Agent (such appointment being coupled with an interest) as such Affiliated Lender’s attorney-in-fact, with full authority in the place and stead of such Affiliated Lender and in the name of such Affiliated Lender, from time to time in the Administrative Agent’s discretion to take any action and to execute any instrument that the Administrative Agent may deem reasonably necessary to carry out the provisions of this clause (a).

(b)     Notwithstanding anything to the contrary in this Agreement, no Affiliated Lender shall have any right to (i) attend (including by telephone) any meeting or discussions (or portion thereof) among the Administrative Agent or any Lender to which representatives of the Borrower are not then present, (ii) receive any information or material prepared by Administrative Agent or any Lender or any communication by or among Administrative Agent and/or one or more Lenders, except to the extent such information or materials have been made available to the Borrower or its representatives, or (iii) make or bring (or participate in, other than as a passive participant in or recipient of its pro rata benefits of) any claim, in its capacity as a Lender, against any Agent, the L/C Issuer or any other Lender with respect to any duties or obligations or alleged duties or obligations of such Agent or any other such Lender under the Loan Documents.

SECTION 9.23. Acknowledgement and Consent to Bail-In of EEA Financial Institutions

Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a)     the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
(q)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;

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(ii)a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent 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 Loan Document; or
(iii)the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

SECTION 9.24. Flood Matters

Each of the parties hereto acknowledges and agrees that, if there are any Mortgaged Properties, any increase, extension or renewal of any of the Loans or Facilities (including any Refinancing Term Loans and Replacement Revolving Commitments, but not including (i) any continuation or conversion of Borrowings under Section 2.08, (ii) the making of any Revolving Facility Loans or Swingline Loans or (iii) the issuance, renewal or extension of Letters of Credit) shall be subject to (and conditioned upon) the prior delivery of all flood hazard determination certifications, acknowledgements and evidence of flood insurance and other flood-related documentation with respect to such Mortgaged Properties as required by Law and as reasonably required by the Administrative Agent.
[SIGNATURE PAGES FOLLOW]


    

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above.


EVERTEC, INC.,
as Parent


By:________________________
Name:
Title:


EVERTEC GROUP, LLC,
as the Borrower


By:________________________
Name:
Title:






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Exhibit A
AGREED SECURITY PRINCIPLES
The Principles.
The guarantees and security to be provided by subsidiaries of Parent that are organized outside of the United States For the avoidance of doubt, as used in this Exhibit A, United States includes Puerto Rico. (the “Non-U.S. Subsidiaries”) in support of the Facilities will be given in accordance with the agreed security principles set out below.
Potential Restrictions on Credit
The Agreed Security Principles recognize there may be
Support.
legal and practical difficulties in obtaining security from Non-U.S. Subsidiaries in jurisdictions outside the United States. In particular:
(a)
general statutory limitations, financial assistance, corporate benefit, fraudulent preference, thin capitalization rules, retention of title claims and similar principles may limit the ability of Non-U.S. Subsidiaries to provide a guarantee or grant security or may require that its guarantee be limited in amount or scope. Parent will use commercially reasonable efforts to assist in demonstrating that adequate corporate benefit accrues to the applicable Non-U.S. Subsidiaries that are Loan Parties;
(b)
the guarantees and collateral (and extent of its perfection) shall exclude such guarantees and collateral as to which Parent shall reasonably determine (and the Administrative Agent shall agree in writing) that the costs of obtaining such guarantees and collateral are excessive in relation to the value of the guarantee and collateral to be afforded thereby); and
(c)
Non-U.S. Subsidiaries will not be required to give guarantees or enter into security documents if doing so would conflict with the fiduciary duties of their directors or contravene any legal prohibition or result in a material risk of personal or criminal liability on the part of any officer; provided that Parent shall use, and shall cause its applicable subsidiaries to use, commercially reasonable efforts to overcome any such obstacle.
Guarantees.
To the extent legally permitted and subject to paragraphs (a), (b) and (c) above, each guarantee and security will be an upstream, cross-stream and downstream guarantee and each guarantee and security will be for all liabilities of all Loan Parties under the Loan Documents. A Subsidiary Loan Party formed or acquired by Parent after the Closing Date and organized outside the United States in a jurisdiction other than any jurisdiction in which a Subsidiary Loan Party on the Closing Date is organized, shall execute and deliver a guarantee agreement governed by the laws of its jurisdiction of organization, in form and substance substantially similar to the Guarantee Agreement and otherwise reasonably satisfactory to the Administrative Agent, to the extent the Administrative Agent determines that such guarantee agreement is more likely to be enforced against such Subsidiary Loan Party in such jurisdiction than the Guarantee Agreement entered into on the Closing Date.
Security Perfection.
Perfection of security (when required) and other legal formalities will be completed as soon as practicable and, in any event, within the time periods specified by applicable law in order to ensure due perfection and priority. Perfection of security will not be required if it would have a material adverse effect on the ability of the relevant Non-U.S. Subsidiary to conduct its operations and business in the ordinary course as permitted by the Loan Documents. No notice of receivables security may be given to third party debtors unless an Event of Default has occurred and is continuing. The Collateral Agent may register security interests in intellectual property rights only in respect of material intellectual property and in jurisdictions to be agreed upon.

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Security Enforcement.
The Loan Documents will allow the Collateral Agent to enforce the security without any restriction from (i) the constitutional documents of Parent or any of its subsidiaries or (ii) any Loan Party which is or whose assets are the subject of such Loan Document (but subject to any inalienable statutory rights which the Borrower may have to challenge such enforcement) or (iii) any shareholders of the foregoing not party to the relevant Loan Document.
Term of Security Documents.
The following principles will be reflected in the terms of any security taken as part of this transaction:
(a)
the security will be first ranking, if commercially feasible;
(b)
no remedies may be taken in respect of the security unless an Event of Default has occurred and is continuing;
(c)
in respect of the share pledges, customary limitations on the exercise of voting rights by the pledgor to protect the validity and enforceability of the security over shares shall apply;
(d)
unless an Event of Default has occurred and is continuing, (i) the pledgor shall retain and exercise voting rights to any shares pledged in a manner that does not adversely affect the validity or enforceability of the security or cause an Event of Default to occur, (ii) the pledgor will be permitted to pay dividends upstream to the extent permitted under the Loan Documents with the proceeds to be available to Parent and its Subsidiaries, and (iii) notice will not be given to banks where bank accounts have been charged or otherwise secured or to any other counterparty in respect of creation of a security interest; and
(e)
the Collateral Agent shall be able to exercise a power of attorney only if an Event of Default has occurred and is continuing or if the relevant Loan Party has failed to comply with a further assurance or perfection obligation.











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Exhibit B
ASSIGNMENT AND ACCEPTANCE
This Assignment and Acceptance (this “Assignment and Acceptance”) is dated as of the Effective Date set forth below and is entered into by and between [the][each]     For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language. Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each]     For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language. Assignee identified in item 2 below ([the][each, an] “Assignee”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees]     Select as appropriate. hereunder are several and not joint.]     Include bracketed language if there are either multiple Assignors or multiple Assignees. Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Acceptance as if set forth herein in full.
For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below (including, without limitation, the Letters of Credit and the Swingline Loans included in such facilities     Include all applicable subfacilities.) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “Assigned Interest”). Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Acceptance, without representation or warranty by [the][any] Assignor. In the event of any conflict or inconsistency between this Assignment and Acceptance and the Credit Agreement, the provisions of the Credit Agreement shall control.
1.    Assignor[s]:    ______________________________
______________________________
2.    Assignee[s]:    ______________________________
[and is an Affiliate/Approved Fund of [Identify Lender]]
______________________________
[and is an Affiliate/Approved Fund of [Identify Lender]]

3.    Borrower(s):    EVERTEC Group, LLC
4.
Administrative Agent: Bank of America, N.A., as the administrative agent under the Credit Agreement.
5.
Credit Agreement:    Credit Agreement, dated as of November 27, 2018, among EVERTEC, Inc., EVERTEC Group, LLC, the Lenders party thereto from time to time, and Bank of America, N.A., as Administrative Agent, Collateral Agent Swingline Lender and L/C Issuer.




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6.     Assigned Interest:



Assignor[s] List each Assignor, as appropriate.



Assignee[s] List each Assignee, as appropriate.


Facility
Assigned Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g. “Revolving Facility Commitment”, “Term A Loan Commitment”, “Term B Loan Commitment”, etc.).
Aggregate
Amount of
Commitment/Loans
for all Lenders Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
Amount of
Commitment/Loans
Assigned
Percentage
Assigned of
Commitment/
Loans Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.


CUSIP
 Number
 
 
 
 
 
 
 
 
 
____________
$________________
$_________
____________%
 
 
 
____________
$________________
$_________
____________%
 
 
 
____________
$________________
$_________
____________%
 

[7.    Trade Date:    __________________]     To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.
Effective Date: __________________, 20__ [TO BE INSERTED BY THE ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
The terms set forth in this Assignment and Acceptance are hereby agreed to:
ASSIGNOR
[NAME OF ASSIGNOR]

By: _____________________________
Name:    
Title:

ASSIGNEE
[NAME OF ASSIGNEE]

By: _____________________________
Name:    
Title:






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[Consented to and]     To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement. Accepted:
BANK OF AMERICA, N.A., as
Administrative Agent
By:
_________________________________
Name:
Title:

[Consented to]     To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.:
EVERTEC GROUP, LLC


By:    _________________________________
Name:
Title:



[Consented to:]     To be added only if the consent of other parties (e.g. Swingline Lender or Primary L/C Issuer) is required by the terms of the Credit Agreement.
By:    _________________________________
Name:
Title:


128


ANNEX 1 TO ASSIGNMENT AND ACCEPTANCE
EVERTEC GROUP, LLC CREDIT AGREEMENT
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ACCEPTANCE
1.    Representations and Warranties.
1.1.    Assignor. [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][[the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.
1.2.    Assignee. [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 9.04(b) of the Credit Agreement (subject to such consents, if any, as may be required under Section 9.04(b) of the Credit Agreement), (iii) from and after the Effective Date referred to in this Assignment and Acceptance, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.04 of the Credit Agreement and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon any Agent, the L/C Issuer or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such] Assigned Interest, and (vii) attached hereto is the documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance upon any Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
2.    Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.
3.    General Provisions. This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Acceptance may be executed in any number of counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Acceptance by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. This Assignment and Acceptance shall be governed by, and construed in accordance with, the law of the State of New York.


129


Exhibit C
FORM OF
LOAN AUCTION PROCEDURES

This Exhibit C is intended to summarize certain basic terms of the modified Dutch auction procedures pursuant to and in accordance with the terms and conditions of Section 2.12(g) of the Credit Agreement (as defined below), of which this Exhibit C is a part. It is not intended to be a definitive statement of all of the terms and conditions of a modified Dutch auction, the definitive terms and conditions for which shall be set forth in the Auction Notice (as defined below). None of the Administrative Agent, the Auction Manager, or any of their respective Affiliates makes any recommendation pursuant to any Auction Notice as to whether or not any Lender should participate in an Auction Prepayment Offer, nor shall the decision by the Administrative Agent or the Auction Manager (or any of their respective Affiliates) in its capacity as a Lender to participate in an Auction Prepayment Offer be deemed to constitute such a recommendation. Each Lender should make its own decision as to whether to participate in an Auction Prepayment Offer and as to the price to be sought for its Term Loans. In addition, each Lender should consult its own attorney, business advisor and/or tax advisor as to legal, business, tax and related matters concerning each Auction Prepayment Offer and the Auction Notice. Capitalized terms not otherwise defined in this Exhibit C have the meanings assigned to them in the Credit Agreement, dated as of November 27, 2018, among EVERTEC, Inc. (“Parent”), EVERTEC Group, LLC (the “Borrower”), the lenders party thereto from time to time and Bank of America, N.A., as administrative agent, collateral agent, swingline lender and L/C issuer (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).
(a)    Notice Procedures. In connection with each Auction Prepayment Offer, the Borrower will provide notification to the Auction Manager for distribution to the Lenders of the Term Loans (each, an “Auction Notice”). Each Auction Notice shall contain (i) the aggregate amount of the Term Loans that the Borrower offers to prepay in such Auction Prepayment Offer (the “Auction Amount”), which may be expressed at the election of the Borrower as either (A) the total par principal amount of the Class or Classes of Term Loans offered to be prepaid or (B) the total cash amount offered to be paid pursuant to the Auction; (ii) the range of discounts to par (the “Discount Range”), expressed as a range of prices per $1,000, at which the Borrower would be willing to prepay Term Loans in such Auction Prepayment Offer; provided that the par principal amount of the Term Loans offered to be prepaid in each Auction shall be in a minimum aggregate amount of $1,000,000 and with minimum increments of $100,000 (it being understood that the par principal amount of Term Loans actually prepaid may be less than the minimum amount in the event that the aggregate par principal amount of Term Loans actually offered to be available for prepayment by Lenders in such Auction is less than the minimum amount); (iii) the date and time by which Return Bids (as defined below) will be due (as such date and time may be extended by the Auction Manager, the “Expiration Time”); and (iv) any other conditions specified by the Borrower that must be satisfied for the Borrower to be obligated to consummate such Auction Prepayment Offer. Such Expiration Time may be extended upon notice by the Borrower to the Auction Manager received not less than 24 hours before the original Expiration Time. The terms of the Auction Notice may be amended upon notice by the Borrower to the Auction Manager received not less than 24 hours before the original Expiration Time. An Auction Prepayment Offer shall be regarded as a “failed Auction Prepayment Offer” in the event that either (x) the Borrower withdraws such Auction Prepayment Offer in accordance with the terms hereof or as set forth in Section 2.12(g)(iii) of the Credit Agreement or (y) the Expiration Time occurs with no Qualifying Bids having been received. In the event of a failed Auction Prepayment Offer, the Borrower shall not be permitted to deliver a new Auction Notice prior to the date occurring three Business Days after such withdrawal or Expiration Time, as the case may be. Notwithstanding anything to the contrary contained herein, the Borrower shall not initiate any Auction Prepayment Offer by delivering an Auction Notice to the Auction Manager until three Business Days after the conclusion (whether successful or failed) of the previous Auction Prepayment Offer (if any), whether such conclusion occurs by withdrawal of such previous Auction Prepayment Offer or the occurrence of the Expiration Time of such previous Auction Prepayment Offer.
(b)    Reply Procedures. In connection with any Auction Prepayment Offer, each Lender wishing to participate in such Auction Prepayment Offer shall, prior to the Expiration Time, provide the Auction Manager with a notice of participation, in the form included in the Auction Notice (each, a “Return Bid”) which shall specify (i) a discount to par that must be expressed as a price per $1,000 in principal amount of Term Loans (the “Reply Price”) of each Class within the applicable Discount Range and (ii) the par principal amount of Term Loans of each Class that such Lender accepts for prepayment at its Reply Price, which must be in increments of $100,000 (the “Reply Amount”). The minimum incremental amount requirements described above shall not apply if Lender submits a Reply Amount equal to such Lender’s entire remaining amount of its applicable Class or Classes of Term Loans. Lenders may only submit one Return Bid per Class per Auction Prepayment Offer, but each Return Bid may contain up to three component bids (or such larger number of component

130


bids as may be specified in the Auction Notice), each of which may result in a separate Qualifying Bid and each of which will not be contingent on any other component bid submitted by such Lender resulting in a Qualifying Bid. In addition to the Return Bid, the participating Lender must execute and deliver, to be held in escrow by the Auction Manager, an assignment and acceptance in the form included in the Auction Notice (each, an “Auction Assignment and Assumption”). The Borrower will not prepay any Term Loans at a price that is outside of the applicable Discount Range, nor will any Return Bids (including any component bids specified therein) submitted at a price that is outside such applicable Discount Range be considered in any calculation of the Applicable Threshold Price (as defined below). Any Lender with outstanding Term Loans whose Return Bid is not received by the Auction Manager by the Expiration Time shall be deemed to have declined to accept any Auction Prepayment of any of its Term Loans at any discount to their par value within the Discount Range.
(c)    Acceptance Procedures. Based on the Reply Prices and Reply Amounts received by the Auction Manager, the Auction Manager, in consultation with the Borrower, will calculate the lowest purchase price (the “Applicable Threshold Price”) for such Auction Prepayment Offer within the Discount Range for such Auction Prepayment Offer that will allow the Borrower to complete the Auction Prepayment Offer by prepaying the full Auction Amount (or such lesser amount of Term Loans for which the Borrower has received Qualifying Bids). The Borrower shall prepay Term Loans of each Lender whose Return Bid is within the Discount Range and contains a Reply Price that is equal to or less than the Applicable Threshold Price (each, a “Qualifying Bid”). All Term Loans included in Qualifying Bids (including multiple component Qualifying Bids contained in a single Return Bid) received at a Reply Price lower than the Applicable Threshold Price will be prepaid at the Applicable Threshold Price, subject to proration as set forth in paragraph (d) below. Each participating Lender will receive notice of a Qualifying Bid as soon as reasonably practicable but in no case later than five business days from the date of the Expiration Time.
(d)    Proration Procedures. If the aggregate principal amount of all Term Loans for which Qualifying Bids have been submitted in any given Auction Prepayment Offer at or below the Applicable Threshold Price would exceed the remaining portion of the Auction Amount, the Borrower shall prepay such Loans ratably based on the relative principal amounts offered by each Lender in an aggregate amount equal to the amount necessary to complete the prepayment of the Auction Amount. No Return Bids or any component thereof will be accepted above the Applicable Threshold Price.
(e)    Notification Procedures. The Auction Manager will calculate the Applicable Threshold Price and post the Applicable Threshold Price and proration factor onto an internet or intranet site (including an IntraLinks®, SyndTrak® or other electronic workspace) in accordance with the Auction Manager’s standard dissemination practices by 4:00 p.m., on the Business Day after which the Expiration Time occurs; provided that the failure to post such Applicable Threshold Price and proration factor by such time shall not affect the validity of such Auction Prepayment Offer. The Auction Manager will insert the principal amount of Term Loans of the applicable Class to be prepaid and the applicable settlement date.
(f)    Prepayment Notice. Each Auction Notice shall contain the following representations and warranties by the Borrower:
“No Default or Event of Default has occurred and is continuing on the date of the delivery of this Auction Notice and at the time of prepayment of any Term Loans pursuant hereto or would result from this Auction Prepayment Offer or from the application of the proceeds thereof.
The Borrower is not in possession of any material non-public information with respect to Parent or any of its subsidiaries that (x) has not been disclosed to the Lenders (other than Lenders that do not wish to receive material non-public information with respect to Parent or any of its subsidiaries) prior to the date of the Auction Notice and (y) if not disclosed to the Lenders, could reasonably be expected to have a material effect (whether negative or positive) upon, or otherwise be material to, (1) a Lender’s decision to participate in any Auction Prepayment Offer or (2) the market price of the Term Loans subject to such Auction Prepayment Offer.”
(g)    Additional Procedures. Once initiated by an Auction Notice, the Borrower must, in accordance with Section 2.12(g)(iii) of the Credit Agreement, terminate any Auction Prepayment Offer if it reasonably believes that it will fail to satisfy one or more of the conditions set forth in Section 2.12(g)(ii) of the Credit Agreement which are required to be met at the time which otherwise would have been the time of prepayment of Term Loans pursuant to such Auction Prepayment Offer. Any Return Bid (including any component bid thereof) delivered to the Auction Manager may not be withdrawn, modified, revoked, terminated or cancelled by a Lender. However, an Auction Prepayment Offer may become void if the conditions to the prepayment set forth in Section 2.12 of the Credit Agreement are not met. The Borrower shall pay the aggregate purchase price in respect of all Qualifying Bids for which prepayment by the Borrower is required in accordance with the foregoing provisions to the Administrative Agent for the account of the applicable Lenders not later than 2:00 p.m. on a settlement date as determined jointly by the Borrower and the Auction Manager (which shall be not later than ten Business Days after the date

131


Return Bids are due). All questions as to the form of documents and eligibility of Term Loans that are the subject of an Auction Prepayment Offer will be determined by the Auction Manager, in consultation with the Borrower, and their determination will be final and binding so long as such determination is not inconsistent with the terms of Section 2.12(g) of the Credit Agreement or this Exhibit C, as determined by the Auction Manager in good faith. The Auction Manager’s interpretation of the terms and conditions of the Auction Notice, in consultation with the Borrower, will be final and binding so long as such interpretation is not inconsistent with the terms of Section 2.12(g) of the Credit Agreement or this Exhibit C, as determined by the Auction Manager in good faith. None of the Administrative Agent, the Auction Manager or any of their respective Affiliates assumes any responsibility for the accuracy or completeness of the information concerning Parent or any of its Affiliates (whether contained in an Auction Notice or otherwise) or for any failure to disclose events that may have occurred and may affect the significance or accuracy of such information. This Exhibit C shall not require the Borrower to initiate any Auction Prepayment Offer.D - 2



132


Exhibit D
FORM OF BORROWING REQUEST/ INTEREST RATE REQUEST
Date: ___________, _____
To:    Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of November 27, 2018 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement;” the terms defined therein being used herein as therein defined), among EVERTEC, Inc., a Puerto Rican corporation (“Parent”), EVERTEC Group, LLC, a Puerto Rican limited liability company (the “Borrower”), the Lenders party thereto from time to time, and Bank of America, N.A., as Administrative Agent, Collateral Agent, Swingline Lender and L/C Issuer.
The undersigned hereby requests (select one):
A Borrowing of [Revolving Facility][Term A][Term B] Loans
A conversion or continuation of [Revolving Facility][Term A][Term B] Loans
1.    On                          (a Business Day).
2.    In the amount of [$]                
3.    Comprised of                         
[Type of Loan requested (ABR or Eurocurency)]
4.    For Eurocurrency Loans: with an Interest Period of     ___ months.
[The Revolving Facility Borrowing requested herein complies with Section 2.01(c) of the Credit Agreement.]     Include this sentence in the case of a Revolving Facility Borrowing.
The Borrower hereby represents and warrants that the conditions specified in Sections 4.01(a), (b) and (c) shall be satisfied on and as of the date of the applicable Credit Event.
EVERTEC GROUP, LLC

By:                     
Name:                 
Title:                     









133


EXHIBIT E
FORM OF SWINGLINE BORROWING REQUEST
Date: ___________, _____
To:    Bank of America, N.A., as Swingline Lender
Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of November 27, 2018 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement;” the terms defined therein being used herein as therein defined), among EVERTEC, Inc., a Puerto Rican corporation (“Parent”), EVERTEC Group, LLC, a Puerto Rican limited liability company (the “Borrower”), the Lenders party thereto from time to time, and Bank of America, N.A., as Administrative Agent, Collateral Agent, Swingline Lender and L/C Issuer.
The undersigned hereby requests a Swingline Loan:
1.    On                          (a Business Day).
2.    In the amount of $                .
The Swingline Borrowing requested herein complies with the requirements of the provisos to the first sentence of Section 2.04(a) of the Agreement.
The Borrower hereby represents and warrants that the conditions specified in Sections 4.01(a), (b) and (c) shall be satisfied on and as of the date of the applicable Credit Event.
EVERTEC GROUP, LLC

By:                     
Name:                 
Title:                     



134


EXHIBIT F
[FORM OF]
AFFILIATED LENDER ASSIGNMENT AND ACCEPTANCE
1.    This Affiliated Lender Assignment and Acceptance (this “Assignment and Acceptance”) is dated as of the Effective Date set forth below and is entered into by and between [the][each]     For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language. Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each]     For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language. Assignee identified in item 2 below ([the][each, an] “Assignee”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees]     Select as appropriate. hereunder are several and not joint.]     Include bracketed language if there are either multiple Assignors or multiple Assignees. Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Acceptance as if set forth herein in full.
2.    For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “Assigned Interest”). Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Acceptance, without representation or warranty by [the][any] Assignor. In the event of any conflict or inconsistency between this Assignment and Acceptance and the Credit Agreement, the provisions of the Credit Agreement shall control.

a.
Assignor[s]: ___________________________________________________________________
b.
Assignee[s]:    Assignee must be an Affiliated Lender. __________________________________________________________________
c.
Borrower: EVERTEC Group, LLC
d.
Administrative Agent: Bank of America, N.A., as the administrative agent under the Credit Agreement
e.
Credit Agreement: Credit Agreement, dated as of November 27, 2018, among EVERTEC, Inc., EVERTEC Group, LLC, the Lenders party thereto from time to time, and Bank of America, N.A., as Administrative Agent, Collateral Agent, Swingline Lender and L/C Issuer.



135


f.
Assigned Interest:



Assignor[s] List each Assignor, as appropriate.



Assignee[s] List each Assignee, as appropriate.


Facility
Assigned Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment, which shall not include Revolving Facility Commitments or Revolving Facility Loans.
Aggregate
Amount of
Commitment/Loans
for all Lenders Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
Amount of
Commitment/Loans
Assigned
Percentage
Assigned of
Commitment/
Loans Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.


CUSIP
 Number
 
 
 
 
 
 
 
 
 
____________
$________________
$_________
____________%
 
 
 
____________
$________________
$_________
____________%
 
 
 
____________
$________________
$_________
____________%
 

Effective Date: __________, ____, 20____. [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
The terms set forth in this Assignment and Acceptance are hereby agreed to:
ASSIGNOR [NAME OF ASSIGNOR]
By:        
Name:    
Title:    

ASSIGNEE [NAME OF ASSIGNEE]
By:        
Name:    
Title:    

Consented to and Accepted:
BANK OF AMERICA, N.A., as
Administrative Agent
By: ______________________________
Name:
Title:

136


ANNEX 1
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ACCEPTANCE
1.    Representations and Warranties
1.1    Assignor. [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][[the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.
1.2    Assignee. [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 9.04(b) of the Credit Agreement (subject to such consents, if any, as may be required under Section 9.04(b) of the Credit Agreement), (iii) it is an Affiliated Lender and acknowledges that it is bound by and agrees to be subject to Section 9.22 of the Credit Agreement, (iv) no Default or Event of Default has occurred or is continuing or would result from the consummation of the transactions contemplated by this Assignment and Acceptance, (v) after giving effect to this Assignment and Acceptance, the aggregate principal amount of all Term Loans held by all Affiliated Lenders constitutes less than 15% of the aggregate principal amount of all Term Loans then outstanding, (vi)  from and after the Effective Date referred to in this Assignment and Acceptance, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the] [the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (vii) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type, (viii) does not have any material non-public information with respect to Parent that (A) has not been disclosed to the Lenders (other than Lenders that do not wish to receive material non-public information with respect to Parent, any of its Subsidiaries or Affiliates) prior to the date hereof and (B) could reasonably be expected to have a material effect upon, or otherwise be material, (1) to a Lender’s decision to participate in any assignment pursuant to Section 9.04(j) of the Credit Agreement or (2) to the market price of the Term Loans and (ix) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.04 of the Credit Agreement and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such] Assigned Interest, (x) it has, independently and without reliance upon any Agent, the L/C Issuer or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such] Assigned Interest, and (xi) attached hereto is the documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance upon any Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender. For the avoidance of doubt, Lenders shall not be permitted to assign Revolving Facility Commitments or Revolving Facility Loans to any Affiliated Lender.
2.    Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.
3.    General Provisions. This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Acceptance may be executed in any number of

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counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Acceptance by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. This Assignment and Acceptance shall be governed by, and construed in accordance with, the law of the State of New York.G-1
Form of Guaranty Agreement




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EXHIBIT G
[FORM OF]
Guarantee Agreement
[PROVIDED SEPARATELY]



139


EXHIBIT H
[FORM OF]
COLLATERAL Agreement
[PROVIDED SEPARATELY]










140


EXHIBIT I
[FORM OF]
Perfection Certificate
[PROVIDED SEPARATELY]


141


EXHIBIT J
[FORM OF]
First Lien INTERCREDITOR AGREEMENT
[ATTACHED]













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EXHIBIT K
[Form of Global Intercompany Note]
______, 20__
FOR VALUE RECEIVED, each of the undersigned, to the extent a borrower (each, in such capacity, a “Payor”) from time to time from any other entity listed on Schedule A (each, in such capacity, a “Payee” and together with each Payor, a “Note Party”), hereby promises to pay on demand to the applicable Payee, in lawful money of the United States of America or in such other currency as agreed to by such Payor or Payee, in immediately available funds at such location as the applicable Payee shall from time to time designate, the unpaid principal amount of all loans and advances or other credit extensions (including trade payables) made by such Payee to such Payor, other than any loans or advances (including trade payables) identified in Schedule B hereto, as such Schedule may be amended, restated and supplemented from time to time by the applicable Payors and Payees. Each Payor promises also to pay interest on the unpaid principal amount of all such loans and advances or other credit extensions in like money at said location from the date of such loans and advances until paid at such rate per annum as shall be agreed upon from time to time by such Payor and such Payee.
This note (“Note”) is an intercompany note referred to in Section 6.01(e) of the Credit Agreement, dated as of November 27, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among EVERTEC, Inc., a Puerto Rican corporation (“Parent”), EVERTEC Group, LLC, a Puerto Rican limited liability company (the “Borrower”), the lenders party thereto from time to time (collectively, the “Lenders” and individually, a “Lender”) and Bank of America, N.A., as Administrative Agent, Collateral Agent, Swingline Lender and L/C Issuer (the “Administrative Agent”) and is subject to the terms thereof, and shall be pledged by each Payee that is a Loan Party pursuant to the Collateral Agreement, to the extent required pursuant to the terms thereof. Capitalized terms used without definition herein have the meanings given to them in the Credit Agreement. For purposes hereof, “Applicable Representative” shall mean the Administrative Agent or the analogous agent, representative or trustee who is established as the controlling representative as provided in any applicable intercreditor agreement under the Credit Agreement and any Future Senior Debt Facility (as defined below). Each Payee hereby acknowledges and agrees that the Applicable Representative may exercise any and all rights of any Loan Party provided in the Credit Agreement and the Collateral Agreement with respect to this Note subject to the terms of the applicable Intercreditor Agreement. This note shall also serve as a global intercompany note under any Future Senior Debt Facility (as defined below), and, to the extent pledged as collateral to secure such Future Senior Debt Facility, the foregoing sentence shall apply, mutatis mutandis to such Future Senior Debt Facility and related documents thereunder.
Anything in this Note to the contrary notwithstanding, the indebtedness evidenced by this Note owed by any Payor that is a Loan Party or analogous party under any future debt facility the terms of which require such debt to be senior in right of payment to the indebtedness evidenced by this Note (such future debt facility, a “Future Senior Debt Facility” and such Loan Party or analogous party, an “Obligor”) to any Payee that is not an Obligor shall be subordinate and junior in right of payment, to the extent and in the manner hereinafter set forth, to Secured Obligations, Guaranteed Obligations (as defined in the Guarantee Agreement) and all analogous senior secured obligations under any Future Senior Debt Facility of such Payor (such Secured Obligations, Guaranteed Obligations, analogous senior secured obligations under any Future Senior Debt Facility, other indebtedness and obligations under any Future Senior Debt Facility and other indebtedness and obligations in connection with any renewal, refunding, restructuring or refinancing thereof pursuant to the Credit Agreement, including interest thereon accruing after the commencement of any proceedings referred to in clause (i) below, whether or not such interest is an allowed claim in such proceeding, being hereinafter collectively referred to as “Senior Indebtedness”):
(i)    in the event of any insolvency or bankruptcy proceedings, and any receivership, liquidation, reorganization or other similar proceedings in connection therewith, relative to any Payor or to its creditors, as such, or to its property, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of such Payor, whether or not involving insolvency or bankruptcy, then, (x) the holders of Senior Indebtedness shall be paid in full in cash in respect of all amounts constituting Senior Indebtedness before any Payee that is not a Loan Party is entitled to receive (whether directly or indirectly), or make any demands for, any payment on account of this Note and (y) until the holders of Senior Indebtedness are paid in full in cash in respect of all amounts constituting Senior Indebtedness, any payment or distribution to which such Payee would otherwise be entitled (other than debt securities of such Payor that are subordinated, to at least the same extent as this Note, to the payment of all Senior Indebtedness then outstanding (such securities being hereinafter referred to as “Restructured Debt Securities”)) shall be made to the holders of Senior Indebtedness;

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(ii)    if any Event of Default has occurred and is continuing and after notice from the Administrative Agent (provided that no such notice shall be required to be given in the case of any Event of Default arising under Section 7.01 (h) or (i) of the Credit Agreement), then no payment or distribution of any kind or character shall be made by or on behalf of any Payor that is a Loan Party or any other Person on its behalf with respect to this Note owed to any Payee that is not a Loan Party; and
(iii)    if any payment or distribution of any character, whether in cash, securities or other property (other than Restructured Debt Securities), in respect of this Note shall (despite these subordination provisions) be received by any Payee in violation of clause (i) or (ii) before all Senior Indebtedness shall have been paid in full in cash, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness (or their representatives), ratably according to the respective aggregate amounts remaining unpaid thereon, to the extent necessary to pay all Senior Indebtedness in full in cash.
The foregoing clauses (i), (ii) and (iii) shall apply, mutatis mutandis, with respect to any Future Senior Debt Facility and the analogous provisions of the applicable documentation therefor. Upon the cure of clauses (i), (ii) and (iii) above, all such payments or distributions that are prohibited or modified by such items shall be automatically permitted to be made as if such items had no effect.
To the fullest extent permitted by law, no present or future holder of Senior Indebtedness shall be prejudiced in its right to enforce the subordination of this Note by any act or failure to act on the part of any Payor or by any act or failure to act on the part of such holder or any trustee or agent for such holder. Each Payee and each Payor hereby agree that the subordination of this Note is for the benefit of the Administrative Agent, on behalf of itself and the Lenders, and the Administrative Agent may, on behalf of itself and the Lenders, proceed to enforce the subordination provisions herein.
The indebtedness evidenced by this Note owed by any Payor that is not a Loan Party or any Payor that is a Loan Party, in each case, to any Payee that is a Loan Party shall not be subordinated to, and shall rank pari passu in right of payment with, any other obligation of such Payor.
Nothing contained in the subordination provisions set forth above is intended to or will impair, as between each Payor and each Payee, the obligations of such Payor, which are absolute and unconditional, to pay to such Payee the principal of and interest on this Note as and when due and payable in accordance with its terms, or is intended to or will affect the relative rights of such Payee and other creditors of such Payor other than the holders of Senior Indebtedness.
Each Payee is hereby authorized to record all loans and advances or other credit extensions made by it to any Payor (all of which shall be evidenced by this Note), and all repayments or prepayments thereof, in its books and records, such books and records constituting prima facie evidence of the accuracy of the information contained therein.
Each Payor hereby waives (to the extent permitted by applicable law) presentment, demand, protest or notice of any kind in connection with this Note. Except to the extent of any taxes required by law to be withheld, all payments under this Note shall be made without offset, counterclaim or deduction of any kind, and each Payee and Payor is authorized to enter into separate loan documentation (other than in the form of a promissory note or negotiable instrument, unless such note or instrument and the debt represented thereunder is subsequently excluded from this Note pursuant to the following paragraph by addition of such note or instrument onto Schedule B hereof) establishing the terms of such loans or advances (all of which shall be evidenced by this Note).
This Note shall be binding upon each Payor and its successors and assigns, and the terms and provisions of this Note shall inure to the benefit of each Payee and its successors and assigns, including subsequent holders hereof. The terms of this Note replace and supersede the terms and provisions of all other promissory notes or other instruments evidencing intercompany obligations (other than any obligations represented by promissory notes or instruments listed on Schedule B hereto as such Schedule may be amended, restated and supplemented from time to time by the applicable Payors and Payees) that create or evidence any loans or advances made on, before or after the date hereof by any Payee to any Payor, to the extent any such terms and provisions conflict with the terms of this Note, and in each case to the extent required to be pledged to the Collateral Agent pursuant to the Collateral Agreement, or to the collateral agent pursuant to the equivalent Future Senior Debt Facility security document; provided however that, to the extent not inconsistent with the terms of this Note, this Note may be supplemented by separate loan documentation to the extent any Payor or Payee determines it is or would be required by regulations issued under Section 385 of the Code (assuming, for these purposes, that until final regulations are issued, any regulations currently in proposed form are finalized and currently effective in their present form) to maintain such separate loan documentation, and, to the extent the terms of such separate loan documentation are not inconsistent with the terms of this Note, the terms of this Note

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do not alter the economic terms contained in any separate loan documentation entered into by relevant Payees and Payors to govern such loans or advances.
Notwithstanding anything to the contrary contained herein, each promissory note listed in Schedule B shall continue in full force and effect in accordance with its terms thereunder, and shall be excluded from, and not be affected or modified by, the terms of this Note, provided that the indebtedness set forth on Schedule B, to the extent payable by an Obligor to a Payee that is not an Obligor, shall be subject to the subordination provisions set forth herein, or if necessary, at the Payor’s option or at the Authorized Representative’s reasonable request, a separately executed subordination agreement with subordination provisions no less favorable to the Secured Parties than those set forth herein. Any Payor and any Payee may amend, supplement or modify Schedule B from time to time through a written notice by such Payor and such Payee acknowledged by the Applicable Representative, in the event such Payor issues a separate promissory note to such Payee.
For the avoidance of doubt, this Note shall not in any way replace, or affect the principal amount of, any intercompany loan outstanding between any Payor and any Payee prior to the execution hereof, and to the extent permitted by applicable law, from and after the date hereof, each such intercompany loan shall be deemed to incorporate the terms set forth in this Note to the extent applicable and shall be deemed to be evidenced by this Note together with any documents executed prior to the date hereof in connection with such intercompany indebtedness.
From time to time after the date hereof, additional subsidiaries of the Parent may become parties hereto (as Payor and/or Payee, as the case may be) by executing a counterpart signature page to this Note (each additional subsidiary, an “Additional Party”). Upon delivery of such counterpart signature page to the Payees, notice of which is hereby waived by the other Payors, and updating or supplementing Schedule A hereto by adding the name of each Additional Party, each Additional Party shall be a Payor and/or a Payee, as the case may be, and shall be as fully a party hereto as if such Additional Party were an original signatory hereof. Each Payor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Payor or Payee hereunder. This Note shall be fully effective as to any Payor or Payee that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Payor or Payee hereunder.
After the date hereof, any Person that is a Note Party that ceases to be a Restricted Subsidiary of the Parent shall be released from the provisions of this Note at the times and in the manner set forth in Section 9.18 of the Credit Agreement.
To ensure that the obligations evidenced by this Note are treated as in “registered form” within the meaning of Section 163(f) of the Internal Revenue Code of 1986, as amended, Borrower or its successor (acting solely for this purpose as an agent of each Payor) shall maintain, at its address for receipt of notices pursuant to Section 9.01 of the Credit Agreement, a register (the “Register”) for the recordation of the name and address of each endorsee, assignee or other transferee of interests, rights, and obligations hereunder and the commitment of, and principal amount (and interest amount) of the loan owing to, each such Payee. Notwithstanding any notice to the contrary, no endorsement, assignment, or other transfer of interests, rights, and obligations hereunder shall be effective unless and until such transfer is recorded in the Register and Borrower or its successor shall have received timely notice of the information required to be recorded in the Register pertaining to such transfer.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[Remainder of page intentionally left blank]

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[_____________________],
as Payee and Payor
By:            
Name:
Title:
[_____________________],
as Payee and Payor
By:            
Name:
Title:

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SCHEDULE A
PAYOR/PAYEE
JURISDICTION OF ORGANIZATION
EVERTEC, Inc.
Commonwealth of Puerto Rico
EVERTEC Intermediate Holdings, LLC
Commonwealth of Puerto Rico
EVERTEC Group, LLC
Commonwealth of Puerto Rico
EVERTEC Costa Rica, S.A.
Republic of Costa Rica
EVERTEC Panamá, S.A.
Republic of Panama
EVERTEC Dominicana, SAS
Dominican Republic
EVERTEC México Servicios de Procesamiento S.A. de C.V.
México, Federal District
EVERTEC Guatemala, Sociedad Anonima
Republic of Guatemala
Processa S.A.S.
Republic of Colombia
EVERTEC USA, LLC
United States
Tecnopago SpA
Republic of Chile
EFT Group SpA
Republic of Chile
PayTrue S.A.
Republic of Uruguay
EFT Servicios Profesionales SpA
Republic of Chile
EFT Global Services SpA
Republic of Chile
Caleidón S.A.
Republic of Uruguay
Paytrue Solutions Informática Ltda.
Brazil
EFT Group S.A.
Republic of Panama
Tecnopago España SL
Spain


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SCHEDULE B
(as of [•], 20[•])

Excluded Promissory Notes
[•]




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[FORM OF NOTE POWER]

For value received, each of the undersigned entities hereby sells, assigns and transfers all of its right, title and interest in the Global Intercompany Note, dated as of [___________], 2018, by and among EVERTEC Group, LLC, EVERTEC, Inc. and certain of EVERTEC, Inc.’s Subsidiaries, and payable to the undersigned, pursuant to the following endorsement with the same force and effect as if such endorsement were set forth at the end or on the reverse of such Note.

Pay to the order of ___________________________________________.
Dated: ____________________

[Loan Parties],
By:            
Name:
Title:



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EXHIBIT L
[FORM OF] COMPLIANCE CERTIFICATE     In the event of any inconsistency between this Form of Compliance Certificate and the Credit Agreement, the Credit Agreement shall control.
For Period Ended [ ] (the “Report Date”)
Reference is made to the Credit Agreement, dated as of November 27, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among EVERTEC, INC., a Puerto Rico corporation (“Parent”), EVERTEC GROUP, LLC, a Puerto Rico limited liability company (the “Borrower”), the Lenders party thereto from time to time and BANK OF AMERICA, N.A., as Administrative Agent, Collateral Agent, Swingline Lender and L/C Issuer. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
Pursuant to Section 5.04(c) of the Credit Agreement, the undersigned, solely in his/her capacity as a Financial Officer of Parent, certifies as follows:
1.    [[Attached hereto as Exhibit A is] [We have filed with the U.S. Securities and Exchange Commission] (a) the consolidated balance sheet as of the Report Date and related statements of operations, cash flows and stockholders’ equity for the fiscal year then ended and setting forth in comparative form the corresponding figures for the prior fiscal year, meeting the requirements of Section 5.04(a) of the Credit Agreement and (b) a management’s discussion and analysis meeting the requirements of Section 5.04(c)(y) of the Credit Agreement.]    To be included if accompanying annual financial statements only.
2.    [[Attached hereto as Exhibit A is] [We have filed with the U.S. Securities and Exchange Commission] (a) the consolidated balance sheet as of the Report Date and related statements of operations and cash flows for the fiscal quarter then ended and the then-elapsed portion of the fiscal year and setting forth in comparative form the corresponding figures for the corresponding periods of the prior fiscal year, meeting the requirements of Section 5.04(b) of the Credit Agreement and (b) a management’s discussion and analysis meeting the requirements of Section 5.04(c)(y) of the Credit Agreement. Such financial statements fairly present, in all material respects, the financial position and results of operations of Parent and its subsidiaries on a consolidated basis in accordance with GAAP (subject to normal year-end audit adjustments and the absence of footnotes).]    To be included if accompanying quarterly financial statements only.
3.    [No Default or Event of Default has occurred at any time since the beginning of the fiscal [year] [quarter] ended with the Report Date and on or prior to the date hereof.] [If unable to provide the foregoing certification, specify the nature and extent of any Default or Event of Default and any corrective action taken or proposed to be taken with respect thereto on Annex A attached hereto.]
4.    The following represents a true and accurate calculation of the Financial Performance Covenant as of the Report Date:
Total Secured Net Leverage Ratio:
 
 
 
 
 
Total Secured Net Debt as of the Report Date
=
[ ]
EBITDA for the Test Period ending on the Report Date
=
[ ]
Total Secured Net Leverage Ratio
=
[ ] to 1.00
Total Secured Net Leverage Ration required under the Credit Agreement for such Test Period
=
[ ] to 1.00
 
 
 


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Supporting detail showing the calculations of Total Secured Net Leverage Ratio is attached hereto as Schedule 1.
5.    [Attached hereto as Schedule 2 is a detailed calculation of Excess Cash Flow for the fiscal year ending on the Report Date.]    To be included only in annual compliance certificate.
6.    Attached as Schedule 3 hereto is a detailed calculation of any changes in the Cumulative Credit since [the Closing Date][the date of the last Compliance Certificate].     To be provided since the Closing Date only in the case of the first Compliance Certificate.

SCHEDULE 1 to
COMPLIANCE CERTIFICATE
Total Secured Net Leverage Ratio Calculation
Total Secured Net Debt to EBITDA
(1)Consolidated Net Income:
 
(A)the aggregate of the Net Income of such person and its subsidiaries for such period, on a consolidated basis:
 
minus the sum of the following, without duplication:
 
(B)any net after tax extraordinary, nonrecurring or unusual gains or losses or income or expense or charge (less all fees and expenses relating thereto), including, without limitation, any severance, relocation or other restructuring expenses, any expenses related to any reconstruction, decommissioning, recommissioning or reconfiguration of fixed assets for alternative uses, fees, expenses or charges relating to facilities closing costs, curtailments or modifications to pension and post-retirement employee benefit plans, excess pension charges, acquisition integration costs, facilities opening costs, project start-up costs, business optimization costs
 
(C)any net after-tax income or loss from disposed, abandoned, transferred, closed or discontinued operations and any net after-tax gain or loss on disposal of disposed, abandoned, transferred, closed or discontinued operations
 
(D)any net after-tax gain or loss (less all fees and expenses or charges relating thereto) attributable to business dispositions or asset dispositions other than in the ordinary course of business (as determined in good faith by Parent)
 
(E)any net after-tax income or loss (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of indebtedness, Swap Agreements or other derivative instruments
 
(F)the cumulative effect of a change in accounting principles during such period
 
(G)effects of purchase accounting adjustments (including the effects of such adjustments pushed down to such person and its Subsidiaries) in component amounts required or permitted by GAAP, resulting from the application of purchase accounting in relation to any consummated acquisition or the amortization or write-off of any amounts thereof, net of taxes
 
(H)any impairment charges or asset write-offs (other than write-offs of inventory and accounts receivable), in each case pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP
 
(I)any (a) non-cash compensation charges or expenses or (b) costs or expenses realized in connection with or resulting from stock appreciation or similar rights, stock options or other rights
 
(J)non-cash gains, losses, income and expenses resulting from fair value accounting required by the applicable standard under GAAP and related interpretations
 
(K)any currency translation gains and losses related to currency remeasurements, including but not limited to, Indebtedness, and any net loss or gain resulting from Swap Agreements for currency exchange risk
 

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(L)to the extent covered by insurance and actually reimbursed, or, so long as such person has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within 365 days), expenses with respect to liability or casualty events or business interruption
 
(M)non-cash charges for deferred tax asset valuation allowances, and
 
(N)the Net Income for such period of any subsidiary of such person to the extent that the declaration or payment of dividends or similar distributions by such subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such subsidiary or its equityholders, unless such restrictions with respect to the payment of dividends or similar distributions have been legally waived
 
plus the sum of the following, without duplication:
 
(O)(A) the Net Income for such period of any person that is not a Subsidiary of such person, or is an Unrestricted Subsidiary or that is accounted for by the equity method of accounting, only to the extent of the amount of dividends or distributions or other payments paid in cash (or to the extent converted into cash) to the referent person or a Subsidiary thereof (other than an Unrestricted Subsidiary of such referent person) in respect of such period and (B) the Net Income for such period shall include any ordinary course dividend, distribution or other payment in cash received from any person in excess of the amounts included in clause (A) which is distributed within six months of the end of the fiscal year in which it is earned
 
(P)the non-cash portion of “straight-line” rent expense shall be excluded, and the cash portion of “straight-line” rent expense which exceeds the amount expensed in respect of such rent expense
 
Consolidated Net Income equals (1)(A) above reduced by the sum of (1)(B) through (1)(N) above plus the sum of (1)(O) through (1)(P) above:
 
 
 
(2)EBITDA:
 
(A)Consolidated Net Income as calculated in (1) above:
 
(B)plus the sum of (in each case without duplication and to the extent the respective amounts described in subclauses (i) through (viii) of this clause (B) otherwise reduced such Consolidated Net Income for the respective period for which EBITDA is being determined):
 
(i)provision for Taxes based on income, profits or capital of Parent and the Subsidiaries for such period, including, without limitation, state franchise and similar Taxes and foreign withholding Taxes
 
(ii)Interest Expense (and to the extent not included in Interest Expense, (x) all cash dividend payments (excluding items eliminated in consolidation) on any series of preferred stock or Disqualified Stock and (y) costs of surety bonds in connection with financing activities) of Parent and the Subsidiaries for such period (net of interest income of Parent and its Subsidiaries for such period)
 
(iii)depreciation and amortization expenses of Parent and the Subsidiaries for such period including, without limitation, the amortization of intangible assets, deferred financing fees and Capitalized Software Expenditures and amortization of unrecognized prior service costs and actuarial gains and losses related to pensions and other post-employment benefits
 
(iv)any expenses or charges (other than depreciation or amortization expense as described in the preceding clause (iii)) related to any issuance of Equity Interests, Investment, acquisition, disposition, recapitalization or the incurrence, modification or repayment of Indebtedness permitted to be incurred by the Existing Credit Agreement and the Credit Agreement (including a refinancing thereof) (whether or not successful), including (x) such fees, expenses or charges related to the incurrence of the obligations under the Existing Credit Agreement and the Obligations and (y) any amendment or other modification of the Obligations or other Indebtedness
 

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(v)business optimization expenses and other restructuring charges or reserves (which, for the avoidance of doubt, shall include those related to facility closure, facility consolidations, retention, severance, systems establishment costs, contract termination costs, future lease commitments and excess pension charges)
 
(vi)any other non-cash charges (excluding the write off of any receivables or inventory); provided, that, for purposes of this subclause (vi) of this clause (B), any non-cash charges or losses shall be treated as cash charges or losses in any subsequent period during which cash disbursements attributable thereto are made (but excluding, for the avoidance of doubt, amortization of a prepaid cash item that was paid in a prior period)
 
(vii)any costs or expense incurred pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, to the extent that such cost or expenses are funded with cash proceeds contributed to the capital of Parent or net cash proceeds of an issuance of Equity Interests of Parent (other than Disqualified Stock) solely to the extent that such net cash proceeds are excluded from the calculation of the Cumulative Credit, and
 
(viii)any deductions (less any additions) attributable to minority interests except, in each case, to the extent of cash paid (or received)
 
(C)minus the sum of (without duplication and to the extent the amounts described in this clause (C) increased such Consolidated Net Income for the respective period for which EBITDA is being determined) non-cash items increasing Consolidated Net Income of Parent and the Subsidiaries for such period (but excluding the recognition of deferred revenue or any such items (x) in respect of which cash was received in a prior period or will be received in a future period or (y) which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges that reduced EBITDA in any prior period)
 
For purposes of determining EBITDA under the Credit Agreement, before giving effect, on a Pro Forma Basis, to any relevant transaction (within the meaning of the definition of “Pro Forma Basis”) occurring after the Closing Date, EBITDA for the fiscal quarter ended December 31, 2017 shall be deemed to be $37,028,706, EBITDA for the fiscal quarter ended March 31, 2018 shall be deemed to be $53,968,502, EBITDA for the fiscal quarter ended June 30, 2018 shall be deemed to be $53,767,377 and EBITDA for the fiscal quarter ended September 30, 2018 shall be deemed to be $52,103,224.
 
EBITDA equals the sum of (2)(A) and (2)(B)(i)-(viii) above minus (2)(C) above:
 
 
 
(3)Consolidated Debt as of the Report Date:
 
(A)The sum of, without duplication:
 
(i)All Indebtedness on the Report Date, other than letters of credit or bank guarantees (to the extent undrawn) consisting of Capital Lease Obligations:
 
(ii)Indebtedness on the Report Date for borrowed money and Disqualified Stock of Parent and the Subsidiaries determined on a consolidated basis on the Report Date:
 
Consolidated Debt equals the sum of (3)(A)(i) and (ii) above:
 
 
 
(4)Total Secured Net Debt as of the Report Date:
 
(A)On the Report Date, the aggregate principal amount of Consolidated Debt of Parent and the Subsidiaries outstanding at such date as calculated in (3) above (after giving effect to all incurrences and repayment of all Indebtedness on such date) that consists of, without duplication:
 
(i)Capital Lease Obligations
 
(ii)other Indebtedness that in each case is then secured by Liens on property or assets of Parent or any Subsidiary (other than property or assets held in a defeasance or similar trust or arrangement for the benefit of the Indebtedness secured thereby)
 
minus:
 

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(B)lesser of (x) $60,000,000 and (y) unrestricted cash and cash equivalents (determined in accordance with GAAP) of Parent and the Subsidiaries at such date (after giving effect to all transactions to occur on such date)
 
Total Secured Net Debt as of the Report Date equals the sum of (4)(A)(i) and (ii) above reduced by (4)(B):
 
 
 
Total Secured Net Leverage Ratio (Total Secured Net Debt / EBITDA) =
[ ]:1.00



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SCHEDULE 2 to
COMPLIANCE CERTIFICATE
Excess Cash Flow Calculation
(a)EBITDA of Parent and the Subsidiaries on a consolidated basis for such Excess Cash Flow Period (calculated as set forth on Schedule 1 hereto):
 
(b)minus, without duplication (sum of (i) through (ix) below):
 
(i)Cash Interest Expense of Parent and the Subsidiaries for such Excess Cash Flow Period
 
(ii)permanent repayments or prepayments of any Indebtedness (other than repayments of revolving loans unless accompanied by a corresponding permanent reduction in revolving commitments) made in cash by Parent or any Subsidiary during such Excess Cash Flow Period (other than any mandatory or voluntary prepayment or Auction Prepayments of the Loans), but only to the extent that the Indebtedness so prepaid cannot be reborrowed or redrawn and such prepayments do not occur in connection with a refinancing of all or any portion of such Indebtedness
 
(iii)(i) Capital Expenditures by Parent and the Subsidiaries on a consolidated basis during such Excess Cash Flow Period that are paid in cash, (ii) Capitalized Software Expenditures, and (iii) the aggregate consideration paid in cash during the Excess Cash Flow Period in respect of Permitted Business Acquisitions and other Investments permitted hereunder less any amounts received in respect thereof as a return of capital
 
(iv)Taxes paid in cash by Parent and the Subsidiaries on a consolidated basis during such Excess Cash Flow Period
 
(v)an amount equal to any increase in Working Capital of Parent and the Subsidiaries for such Excess Cash Flow Period
 
(vi)amounts paid in cash during such Excess Cash Flow Period on account of (A) items that were accounted for as non-cash reductions of Net Income in determining Consolidated Net Income or as non-cash reductions of Consolidated Net Income in determining EBITDA of Parent and the Subsidiaries in a prior Excess Cash Flow Period and (B) reserves or accruals established in purchase accounting
 
(vii)to the extent not deducted in the computation of Net Proceeds in respect of any asset disposition or condemnation giving rise thereto, the amount of any mandatory prepayment of Indebtedness (other than Indebtedness created hereunder or under any other Loan Document), together with any interest, premium or penalties required to be paid (and actually paid) in connection therewith
 
(viii)Restricted Payments made in cash pursuant to Sections 6.06(c), (f), (g), (h) and (i) of the Credit Agreement during such Excess Cash Flow Period
 
(ix)the amount related to items that were added to or not deducted from Net Income in calculating Consolidated Net Income or were added to or not deducted from Consolidated Net Income in calculating EBITDA to the extent such items represented a cash payment (which had not reduced Excess Cash Flow upon the accrual thereof in a prior Excess Cash Flow Period), or an accrual for a cash payment, by Parent and the Subsidiaries or did not represent cash received by Parent and the Subsidiaries, in each case on a consolidated basis during such Excess Cash Flow Period
 
(c)plus, without duplication (sum of (i) through (v) below):
 
(i)an amount equal to any decrease in Working Capital for such Excess Cash Flow Period
 

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(ii)all amounts referred to in clauses (b)(ii) and (b)(iii) above to the extent funded with the proceeds of the issuance or the incurrence of Indebtedness (including Capital Lease Obligations and purchase money Indebtedness, but excluding, solely as relating to Capital Expenditures, proceeds of Revolving Facility Loans), the sale or issuance of any Equity Interests (including any capital contributions) and any loss, damage, destruction or condemnation of, or any sale, transfer or other disposition (including any sale and leaseback of assets and any mortgage or lease of Real Property) to any person of any asset or assets, in each case to the extent there is a corresponding deduction from Excess Cash Flow above
 
(iii)any extraordinary or nonrecurring gain realized in cash during such Excess Cash Flow Period (except to the extent such gain consists of Net Proceeds subject to Section 2.12(b) of the Credit Agreement)
 
(iv)to the extent deducted in the computation of EBITDA, cash interest income
 
(v)the amount related to items that were deducted from or not added to Net Income in connection with calculating Consolidated Net Income or were deducted from or not added to Consolidated Net Income in calculating EBITDA to the extent either (i) such items represented cash received by Parent or any Subsidiary or (ii) such items do not represent cash paid by Parent or any Subsidiary, in each case on a consolidated basis during such Excess Cash Flow Period
 
For the avoidance of doubt, Excess Cash Flow shall not be calculated on a Pro Forma Basis.
 
Excess Cash Flow ((a) - (b) + (c)) =
 




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SCHEDULE 3 to
COMPLIANCE CERTIFICATE
Cumulative Credit Calculation
On the Report Date, an amount, not less than zero in the aggregate, determined on a cumulative basis equal to, without duplication (and without duplication of amounts that otherwise increased the amount available for Investments pursuant to Section 6.04 of the Credit Agreement):
 
(a)$154,000,000, plus
 
(b)the Cumulative Excess Cash Flow Amount on such date of determination, not less than zero in the aggregate, determined on a cumulative basis equal to the sum, for each Excess Cash Flow Period:
 
(i)Excess Cash Flow for such Excess Cash Flow Period (calculated as set forth on Schedule 2 hereto), minus
 
(ii)the Applicable ECF Percentage of Excess Cash Flow for such Excess Cash Flow Period The Applicable ECF Percentage shall mean, with respect to any Excess Cash Flow Period, (a) if the Total Secured Net Leverage Ratio at the end of the Excess Cash Flow Period is greater than or equal to 2.25:1.00, 50%, (b) if the Total Secured Net Leverage Ratio at the end of the Excess Cash Flow Period is less than 2.25:1.00 but greater than or equal to 1.75:1.00, 25% and (c) if the Total Secured Net Leverage Ratio as the end of the Excess Cash Flow Period is less than 1.75:1.00, 0%., plus
 
(c)the cumulative amount of net cash proceeds received after the Closing Date and on or prior to such time from the sale of Equity Interests (other than Disqualified Stock) of Parent; provided, that this clause (c) shall exclude any proceeds of sales of Equity Interests financed as contemplated by Section 6.04(e)(iii) of the Credit Agreement, proceeds of Equity Interests used to make Investments pursuant to Section 6.04(s) of the Credit Agreement, proceeds of Equity Interests used to make a Restricted Payment in reliance on clause (x) of the first proviso to Section 6.06(c) of the Credit Agreement and any amounts used to finance the payments or distributions in respect of any Junior Financing pursuant to Section 6.09(b)(iii) of the Credit Agreement; plus
 
(d)100% of the aggregate principal amount of any Indebtedness (including the liquidation preference or maximum fixed repurchase price, as the case may be, of any Disqualified Stock) of Parent or any Subsidiary issued after the Closing Date (other than Indebtedness issued to a Subsidiary), which has been converted into or exchanged for Equity Interests (other than Disqualified Stock) in Parent; provided that this clause (d) shall exclude the conversion or exchange of any Junior Financing to Equity Interest pursuant to Section 6.09(b)(iii) of the Credit Agreement, plus
 
(e)100% of the aggregate amount received by Parent or any Subsidiary in cash (and the fair market value (as determined in good faith by Parent) of property other than cash received by Parent or any Subsidiary) after the Closing Date from: (i) the sale (other than to Parent or any Subsidiary) of the Equity Interests of an Unrestricted Subsidiary, or (ii) any dividend or other distribution by an Unrestricted Subsidiary, plus
 
(f)in the event any Unrestricted Subsidiary has been redesignated as a Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, Parent or any Subsidiary, the fair market value (as determined in good faith by the Parent) of the Investments of Parent or any Subsidiary in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable), plus
 

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(g)an amount equal to any returns (including dividends, interest, distributions, returns of principal, profits on sale, repayments, income and similar amounts) actually received by Parent or any Subsidiary in respect of any Investments made pursuant to Section 6.04(j) of the Credit Agreement, minus
 
(h)any amounts thereof used to make Investments pursuant to Section 6.04(j)(ii) of the Credit Agreement after the Closing Date and prior to such time, minus
 
(i)any amounts thereof used to make Restricted Payments pursuant to Section 6.06(e) of the Credit Agreement after the Closing Date and prior to such time, minus
 
(j)any amounts thereof used to make payments or distributions in respect of Junior Financings pursuant to Section 6.09(b)(iv)(y) of the Credit Agreement.
 
Cumulative Credit =
 


IN WITNESS WHEREOF, the undersigned, solely in his/her capacity as a Financial Officer of Parent, has executed this certificate for and on behalf of Parent and has caused this certificate to be delivered this ____ day of _____________, 20[__].
EVERTEC, INC.
By:            
Name:    
Title:    













158


BANK OF AMERICA, N.A.,
as Administrative Agent, Collateral Agent, Swingline Lender and L/C Issuer


By:________________________
Name:
Title:


159


_______________________________________________,
As Lender


By:____________________________________________
Name:
Title:





160


EXHIBIT 10.14







COLLATERAL AGREEMENT
Dated and effective as of November 27, 2018
among

EVERTEC, INC.,
as Parent,

EVERTEC GROUP, LLC,
as Borrower,
each Subsidiary Loan Party party hereto,
and

BANK OF AMERICA, N.A.,
as Collateral Agent






TABLE OF CONTENTS

ARTICLE I
 
 
DEFINITIONS
 
 
SECTION 1.1 Credit Agreement
1
SECTION 1.2 Other Defined Terms
1
 
 
ARTICLE II
 
 
PLEDGE OF SECURITIES
 
 
SECTION 2.1 Pledge
5
SECTION 2.2 Delivery of the Pledged Collateral
6
SECTION 2.3 Representations, Warranties and Covenants
6
SECTION 2.4 Certification of Limited Liability Company and Limited Partnership Interests
8
SECTION 2.5 Registration in Nominee Name; Denominations
8
SECTION 2.6 Voting Rights; Dividends and Interest, etc
8
 
 
ARTICLE III
 
 
SECURITY INTERESTS IN PERSONAL PROPERTY
 
 
SECTION 3.1 Security Interest
10
SECTION 3.2 Representations and Warranties
12
SECTION 3.3 Covenants
14
SECTION 3.4 Other Actions
16
SECTION 3.5 Covenants Regarding Patent, Trademark and Copyright Collateral
16
 
 
ARTICLE IV
 
 
REMEDIES
 
 
SECTION 4.1 Remedies upon Default
18
SECTION 4.2 Application of Proceeds
19
SECTION 4.3 Grant of License to Use Intellectual Property
19
SECTION 4.4 Securities Act, etc
19
SECTION 4.5 Registration, etc
20
 
 
ARTICLE V
 
 
MISCELLANEOUS
 
 
SECTION 5.1 Notices
21

i


SECTION 5.2 Security Interest Absolute
21
SECTION 5.3 Limitation by Law
21
SECTION 5.4 Binding Effect; Several Agreement
21
SECTION 5.5 Successors and Assigns
22
SECTION 5.6 Agent’s Fees and Expenses; Indemnification
22
SECTION 5.7 Agent Appointed Attorney-in-Fact
22
SECTION 5.8 GOVERNING LAW
23
SECTION 5.9 Waivers; Amendment
23
SECTION 5.10 WAIVER OF JURY TRIAL
23
SECTION 5.11 Severability
24
SECTION 5.12 Counterparts
24
SECTION 5.13 Headings
24
SECTION 5.14 Jurisdiction; Consent to Service of Process
24
SECTION 5.15 Termination or Release
25
SECTION 5.16 Additional Subsidiaries
25
SECTION 5.17 Right of Set-off
25
SECTION 5.18 Subject to First Lien Intercreditor Agreement
26
SECTION 5.19 Other First Lien Obligations
26
 
 
Exhibits
Exhibit I Form of Securities Pledge Supplement
 
Exhibit II Form of Supplement to the Collateral Agreement
 


ii


COLLATERAL AGREEMENT dated as of November 27, 2018 (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), among EVERTEC, Inc., a Commonwealth of Puerto Rico corporation (“Parent”), EVERTEC GROUP, LLC, a Commonwealth of Puerto Rico limited liability company (the “Borrower”), each Subsidiary of Parent that becomes a party hereto (each, a “Subsidiary Party”) and BANK OF AMERICA, N.A., as Collateral Agent (in such capacity, the “Agent”) for the Secured Parties (as defined below).
WITNESSETH:
Reference is made to the Credit Agreement dated as of the date hereof (as amended, restated, supplemented, waived or otherwise modified from time to time, the “Credit Agreement”), among Parent, the Borrower, the Lenders party thereto from time to time, the Agent and the other parties named therein.
The Lenders have agreed to extend credit to the Borrower subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. Parent directly or indirectly owns all of the Equity Interests of the Borrower, and the Subsidiary Parties are subsidiaries of Parent, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Credit Agreement and, thus, are willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions

SECTION1.1 Credit Agreement.

(a)Capitalized terms used in this Agreement and not otherwise defined herein have the respective meanings assigned thereto in the Credit Agreement. All terms defined in the New York UCC (as defined herein) and not defined in this Agreement have the meanings specified therein. The term “instrument” shall have the meaning specified in Article 9 of the New York UCC.

(b)The rules of construction specified in Section 1.02 of the Credit Agreement also apply to this Agreement.

SECTION1.2 Other Defined Terms
. As used in this Agreement, the following terms have the meanings specified below:
“Account Debtor” shall mean any person who is or who may become obligated to any Pledgor under, with respect to or on account of an Account.
“Agent” shall have the meaning assigned to such term in the preliminary statement of this Agreement.
“Agreement” shall have the meaning assigned to such term in the preliminary statement of this Agreement.
“Anti-Non-Assignment Clauses” shall have the meaning assigned to such term in the definition of “Excluded Equity Interests”.
“Article 9 Collateral” shall have the meaning assigned to such term in Section 3.01.
“Authorized Representative” shall mean (i) the Administrative Agent with respect to the Credit Agreement and (ii) any duly authorized representative of the secured parties under any Other First Lien Agreement designated as “Authorized Representative” for such secured parties for purposes of the First Lien Intercreditor Agreement.
“Borrower” shall have the meaning assigned to such term in the preliminary statement of this Agreement.
“Collateral” shall mean Article 9 Collateral and Pledged Collateral.
“Collateral Agreement Supplement” shall mean an agreement substantially in the form of Exhibit II hereto.

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“Commercial Transactions Act” shall mean Act No. 208 of August 17, 1995, as amended, known as the “Commercial Transactions Act of the Commonwealth of Puerto Rico.”
“Copyright License” shall mean any written agreement, now or hereafter in effect, granting any right to any Pledgor under any Copyright now or hereafter owned by any third party, and all rights of any Pledgor under any such agreement (including any such rights that such Pledgor has the right to license).
“Copyrights” shall mean all of the following now owned or hereafter acquired by any Pledgor (or, as required in the context of the definition of “Copyright License,” any third-party licensor):  (a) all copyright rights in any work subject to the copyright laws of the United States, the Commonwealth of Puerto Rico or any other country, whether as author, assignee, transferee or otherwise; and (b) all registrations and applications for registration of any such Copyright in the United States, the Commonwealth of Puerto Rico or any other country, including registrations, supplemental registrations and pending applications for registration in the United States Copyright Office, including those listed on Schedule 9(c) to the Perfection Certificate.
“Costa Rican Subsidiary” shall mean EVERTEC Costa Rica S.A., a Costa Rican corporation.
“Credit Agreement” shall have the meaning assigned to such term in the preliminary statement of this Agreement.
“Excluded Equity Interests” shall mean (i) any Equity Interests owned on or acquired after the Closing Date (other than, in the case of shareholder agreements or other contractual obligations, (x) Equity Interests in the Borrower or (y) in the case of any person which is a Wholly-Owned Subsidiary, Equity Interests in such person) in accordance with this Agreement if, and to the extent that, and for so long as doing so would violate applicable law or regulation or a shareholder agreement or other contractual obligation (in each case, after giving effect to Section 9-406(d), 9-407(a), 9-408 or 9-409 of the New York UCC and other applicable law or similar provisions in similar codes, statutes or laws in other jurisdictions (the “Anti-Non-Assignment Clauses”)) binding on such Equity Interests and (ii) any Equity Interests as to which the Agent and the Borrower shall reasonably determine in writing that such Equity Interests shall be excluded from Collateral hereunder pursuant to the Agreed Security Principles.
“Excluded Property” shall have the meaning assigned to such term in Section 3.01.
“Federal Securities Laws” shall have the meaning assigned to such term in Section 4.04.
“General Intangibles” shall mean all “General Intangibles” as defined in the New York UCC, including all choses in action and causes of action and all other intangible personal property of any Pledgor of every kind and nature (other than Accounts) now owned or hereafter acquired by any Pledgor, including corporate or other business records, indemnification claims, contract rights (including rights under leases, whether entered into as lessor or lessee, Swap Agreements and other agreements), Intellectual Property, goodwill, registrations, franchises, tax refund claims and any letter of credit, guarantee, claim, security interest or other security held by or granted to any Pledgor to secure payment by an Account Debtor of any of the Accounts.
“Governmental Authority” shall mean any federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory or legislative body in the United States, any other country or the Commonwealth of Puerto Rico.
“Intellectual Property” shall mean all intellectual and similar property of every kind and nature now owned or hereafter acquired by any Pledgor, including inventions, designs, Patents, Copyrights, Trademarks, Patent Licenses, Copyright Licenses, Trademark Licenses, trade secrets, domain names, confidential or proprietary technical and business information, know-how, show-how or other data or information and all related documentation.
“Instruments” shall mean, collectively, with respect to each Pledgor, all “instruments,” as such term is defined in Article 9 of the New York UCC, and shall include all promissory notes, drafts, bills of exchange or acceptances, including those first mortgage notes described on Schedule 8 to the Perfection Certificate.
“New York Courts” shall have the meaning assigned to such term in Section 5.14.
“New York UCC” shall mean the Uniform Commercial Code as from time to time in effect in the State of New York; provided, however, that, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Agent’s and the Secured Parties’ security interest in any item or portion of the Article 9 Collateral is governed by the Uniform Commercial Code or similar law as in effect in a jurisdiction other than the State of New York, the term “New York UCC” shall

2


mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions. However, in the event that a court of competent jurisdiction determines that the Commercial Transactions Act or the Uniform Commercial Code then in effect in the Commonwealth of Puerto Rico, as amended, governs the attachment, constitution, perfection, priority and enforcement of the security interest granted to the Agent, and a type of Collateral defined in this Agreement is not covered by the provisions of Chapter 9 of the Commercial Transactions Act or the then Uniform Commercial Code in effect in the Commonwealth of Puerto Rico, as amended, then the provisions of the Uniform Commercial Code in effect in the State of New York shall supplement the laws of the Commonwealth of Puerto Rico concerning the attachment, constitution, perfection, priority and enforcement of such property of a type that is outside of the scope of Chapter 9 of the Commercial Transactions Act or the then Uniform Commercial Code in effect in the Commonwealth of Puerto Rico, as amended.
“Other First Lien Agreement” shall mean any indenture, credit agreement (excluding the Credit Agreement) or other agreement, document or instrument, pursuant to which any Pledgor has or will incur Indebtedness permitted by the Credit Agreement that is expressly permitted by the Credit Agreement to be secured on a pari passu basis with the Secured Obligations; provided that, in each case, the Indebtedness thereunder has been designated as Other First Lien Obligations pursuant to and in accordance with Section 5.19.
“Patent License” shall mean any written agreement, now or hereafter in effect, granting to any Pledgor any right to make, use or sell any invention covered by a Patent, now or hereafter owned by any third party (including any such rights that such Pledgor has the right to license).
“Patents” shall mean all of the following now owned or hereafter acquired by any Pledgor (or, as required in the context of the definition of “Patent License,” any third-party licensor):  (a) all letters patent of the United States or the equivalent thereof in any other country, and all applications for letters patent of the United States or the equivalent thereof in any other country, including those listed on Schedule 9(b) to the Perfection Certificate, and (b) all reissues, continuations, divisions, continuations-in-part or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.
“Payment in Full” shall mean that (i) all Obligations have been paid in full in cash (other than (x) contingent or unliquidated obligations to the extent no claim therefor has been made and (y) obligations under Secured Cash Management Agreements and Secured Swap Agreements as to which arrangements satisfactory to the applicable Secured Party shall have been made), whether or not as a result of enforcement, (ii) all Commitments have been terminated, (iii) the Secured Parties are not otherwise under any obligation to provide financial accommodation to any of the Loan Parties under any Loan Document and (iv) all Letters of Credit have expired or have been cancelled or terminated (other than Letters of Credit as to which arrangements satisfactory to the Administrative Agent and the L/C Issuer shall have been made). The term “Paid in Full” shall have a corresponding meaning.
“Perfection Certificate” shall mean a certificate substantially in the form of Exhibit I to the Credit Agreement, delivered on the date hereof, completed and supplemented with the schedules and attachments contemplated thereby, and duly executed by an officer of Parent and the Borrower, and each other Perfection Certificate, substantially in the form of Exhibit I to the Credit Agreement, executed and delivered by the applicable Guarantor contemporaneously with the execution and delivery of each Collateral Agreement Supplement executed in accordance with Section 2.02(c) hereof, in each case, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Permitted Liens” shall mean Liens that are permitted by Section 6.02 of the Credit Agreement.
“Pledged Collateral” shall have the meaning assigned to such term in Section 2.01.
“Pledged Debt Securities” shall have the meaning assigned to such term in Section 2.01.
“Pledged Securities” shall mean any promissory notes, shares, stock certificates, share certificates or other certificated securities now or hereafter included in the Pledged Collateral, including all certificates, instruments or other documents representing or evidencing any Pledged Collateral.
“Pledged Stock” shall have the meaning assigned to such term in Section 2.01.
“Pledgor” shall mean Parent, the Borrower and each Subsidiary Party.

3


“Requirement of Law” shall mean, as to any Person, the Certificate of Incorporation and By Laws or other organizational or governing documents of such Person, and any law, treaty, rule, regulation, official administrative pronouncement or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Secured Parties” shall mean (a) the Lenders, (b) the Agent, (c) the Administrative Agent, (d) each L/C Issuer, (e) each counterparty to any Secured Swap Agreement or Secured Cash Management Agreement the obligations under which constitute Secured Obligations, (f) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (g) the successors and permitted assigns of each of the foregoing.
“Securities Pledge Supplement” shall mean an agreement substantially in the form of Exhibit I hereto.
“Security Interest” shall have the meaning assigned to such term in Section 3.01.
“Subsidiary Party” shall have the meaning assigned to such term in the preliminary statement of this Agreement.
“Trademark License” shall mean any written agreement, now or hereafter in effect, granting to any Pledgor any right to use any Trademark now or hereafter owned by any third party (including any such rights that such Pledgor has the right to license).
“Trademarks” shall mean all of the following now owned or hereafter acquired by any Pledgor (or, as required in the context of the definition of “Trademark License,” any third party licensor):  (a) all trademarks, service marks, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations thereof (if any), and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office, the Puerto Rico Trademark Office or any similar offices in any State of the United States or the Commonwealth of Puerto Rico or any other country or any political subdivision thereof (except for “intent to use” applications for trademark or service mark registrations filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, unless and until an accepted filing of an “Amendment to Allege Use” whereby such intent-to-use application is converted to a “use in commerce” application pursuant to Section 1(c) of the Lanham Act or an accepted filing of a “Statement of Use” and issuance of a “Certificate of Registration” pursuant to Section 1(d) of Lanham Act), and all renewals thereof, including those listed on Schedule 9(a) to the Perfection Certificate and (b) all goodwill associated therewith or symbolized thereby.
ARTICLE II

Pledge of Securities

SECTION 2.1 Pledge. As security for the payment or performance, as the case may be, in full of the Secured Obligations, each Pledgor hereby assigns and pledges to the Agent, its successors and permitted assigns, for the benefit of the Secured Parties, and hereby grants to the Agent, its successors and permitted assigns, for the benefit of the Secured Parties, a security interest in all of such Pledgor’s right, title and interest in, to and under (a) the Equity Interests directly owned by it (which such Equity Interests constituting Pledged Stock shall be listed on Schedules 7(a) and 7(b) to the Perfection Certificate) and any other Equity Interests obtained in the future by such Pledgor and any certificates representing all such Equity Interests (the “Pledged Stock”); provided that the Pledged Stock shall not include any Excluded Equity Interests, (b)(i) the debt securities currently issued to any Pledgor (which such debt securities constituting Pledged Debt Securities shall be listed on Schedules 7(a) and 7(b) to the Perfection Certificate), (ii) any debt securities in the future issued to such Pledgor and (iii) the promissory notes and any other instruments, if any, evidencing such debt securities (the “Pledged Debt Securities”); (c) subject to Section 2.06, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other proceeds received in respect of, the securities referred to in clauses (a) and (b) above; (d) subject to Section 2.06, all rights and privileges of such Pledgor with respect to the securities and other property referred to in clauses (a), (b) and (c) above and (e) all proceeds of any of the foregoing (the items referred to in clauses (a) through (e) above being collectively referred to as the “Pledged Collateral”); provided that with respect to the Costa Rican Subsidiary, the Pledged Collateral shall not include any Equity Interests that are pledged pursuant to a separate pledge agreement in favor of the Agent for the benefit of the Secured Parties.






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SECTION 2.2 Delivery of the Pledged Collateral.

(a)Each Pledgor agrees promptly (and in any event within 60 days after the acquisition (or such longer time as the Agent shall permit in its reasonable discretion)) to deliver or cause to be delivered to the Agent, for the benefit of the Secured Parties, any and all Pledged Securities to the extent such Pledged Securities, in the case of promissory notes or other instruments evidencing Indebtedness, are required to be delivered pursuant to paragraph (b) of this Section 2.02.

(b)Each Pledgor will cause any Indebtedness (i) having, in each case, an aggregate principal amount in excess of $5,000,000 or (ii) payable by Parent or any of its Subsidiaries (other than (x) intercompany current liabilities incurred in the ordinary course of business in connection with the cash management, tax and accounting operations of Parent, the Borrower and the Subsidiaries or (y) to the extent that a pledge of such promissory note or instrument would violate applicable law) owed to such Pledgor by any person to be evidenced by a duly executed promissory note that is pledged and delivered to the Agent, for the benefit of the Secured Parties, pursuant to the terms hereof. To the extent any such promissory note is a demand note, each Pledgor party thereto agrees, if requested by the Agent, to immediately demand payment thereunder upon an Event of Default specified under Section 7.01(b), (c), (f), (h) or (i) of the Credit Agreement unless such demand would not be commercially reasonable or would otherwise expose Pledgor to liability to maker.

(c)Upon delivery to the Agent, (i) any Pledged Securities required to be delivered pursuant to the foregoing paragraphs (a) and (b) of this Section 2.02 shall be accompanied by stock powers or note powers, as applicable and/or required, duly executed in blank or other instruments of transfer reasonably satisfactory to the Agent and by such other instruments and documents as the Agent may reasonably request and (ii) all other property comprising part of the Pledged Collateral delivered pursuant to the terms of this Agreement shall be accompanied to the extent necessary to perfect the security interest in or allow realization on the Pledged Collateral by proper instruments of assignment duly executed by the applicable Pledgor and such other instruments or documents as the Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied by a Securities Pledge Supplement, which supplement shall include any supplements to Schedules 7(a), 7(b) and 8 to the Perfection Certificate, as applicable, and made a part hereof; provided that failure to attach any such Securities Pledge Supplement shall not affect the validity of such pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.

SECTION 2.3 Representations, Warranties and Covenants. The Pledgors, jointly and severally, represent, warrant and covenant to and with the Agent, for the benefit of the Secured Parties, that:

(a)Schedules 7(a) and 7(b) to the Perfection Certificate correctly set forth the percentage of the issued and outstanding shares of each class of the Equity Interests of the issuer thereof represented by such Pledged Stock and includes all Equity Interests, debt securities and promissory notes or instruments evidencing Indebtedness required to be (i) pledged in order to satisfy the Collateral Requirement or (ii) delivered pursuant to Section 2.02(b);

(b)the Pledged Stock (with respect to Pledged Stock issued by an issuer other than a Subsidiary of Parent organized under the laws of any jurisdiction of the United States, Puerto Rico or the British Virgin Islands, to the best of each Pledgor’s knowledge) have been duly and validly authorized and issued by the issuers thereof and are fully paid and nonassessable;

(c)except for the security interests granted hereunder, each Pledgor (i) is and, subject to any transfers made in compliance with the Credit Agreement, will continue to be the direct owner, beneficially and of record, of the Pledged Securities indicated on Schedules 7(a) and 7(b) to the Perfection Certificate as owned by such Pledgor, (ii) holds the same free and clear of all Liens (other than Permitted Liens), (iii) will make no assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than pursuant to a transaction permitted by the Credit Agreement and other than Permitted Liens and (iv) subject to the rights of such Pledgor under the Loan Documents to dispose of Pledged Collateral, will use commercially reasonable efforts to defend its title or interest thereto or therein against any and all Liens (other than Permitted Liens), however arising, of all persons;

(d)other than as set forth in the Credit Agreement or the schedules thereto and except for restrictions and limitations imposed by the Loan Documents or securities laws generally, the Pledged Collateral is and will continue to be freely transferable and assignable, and none of the Pledged Collateral is or will be subject to any option, right of first refusal, shareholders agreement, charter, by-law, memorandum of association or articles of association provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Agent of rights and remedies hereunder;


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(e)each Pledgor has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated;

(f)other than as set forth in the Credit Agreement or the schedules thereto, no consent or approval of any Governmental Authority, any securities exchange or any other person was or is necessary to the validity of the pledge effected hereby (other than such as have been obtained and are in full force and effect);

(g)by virtue of the execution and delivery by the Pledgors of this Agreement and any foreign pledge agreements, when any Pledged Securities (excluding any foreign stock not covered by a foreign pledge agreement) are delivered to the Agent, for the benefit of the Secured Parties, in accordance with this Agreement, the Agent will obtain, for the benefit of the Secured Parties, a legal, valid and perfected lien upon and security interest in such Pledged Securities, subject only to Permitted Liens, as security for the payment and performance of the Secured Obligations;

(h)the pledge effected hereby is effective to vest in the Agent, for the benefit of the Secured Parties, the rights of the Agent in the Pledged Collateral as set forth herein; and

(i)subject to the terms of this Agreement and to the extent permitted by applicable law, each Pledgor that is an issuer of Pledged Stock hereby agrees (i) to be bound by the terms of this Agreement relating to the Equity Interests issued by it and to comply with such terms insofar as such terms are applicable to it, (ii) to the extent required under the laws of the applicable jurisdiction or reasonably requested by the Collateral Agent, to promptly note on its books the security interests granted to the Collateral Agent, on behalf of the Secured Parties, under this Agreement and (iii) that upon the occurrence and during the continuance of an Event of Default, it will comply with instructions of the Collateral Agent with respect to the Equity Interests in such Pledgor that constitute Pledged Stock hereunder without further consent by the applicable owner or holder of such Pledged Stock.

SECTION 2.4 Certification of Limited Liability Company and Limited Partnership Interests.

(a)Each interest in any limited liability company or limited partnership Controlled by any Pledgor, pledged hereunder and represented by a certificate, shall be a “security” within the meaning of Article 8 of the New York UCC and such Pledgor shall elect, in its operating agreement, to treat such interest as a “security” within the meaning of Article 8 of the New York UCC, and such security shall be governed by Article 8 of the New York UCC, and each such interest shall at all times hereafter be represented by a certificate.

(b)Each interest in any limited liability company or limited partnership Controlled by a Pledgor that is pledged hereunder and not represented by a certificate shall not be a “security” within the meaning of Article 8 of the New York UCC and shall not be governed by Article 8 of the New York UCC (or other applicable Uniform Commercial Code in effect in another jurisdiction), and the Pledgors shall at no time elect to treat any such interest as a “security” within the meaning of Article 8 of the New York UCC or its equivalent in other jurisdictions or issue any certificate representing such interest, unless the applicable Pledgor provides prior notification to the Agent of such election and promptly delivers any such certificate to the Agent pursuant to the terms hereof.

SECTION 2.5 Registration in Nominee Name; Denominations. The Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to hold the Pledged Securities in the name of the applicable Pledgor, endorsed or assigned in blank or in favor of the Agent or, if an Event of Default shall have occurred and be continuing, in its own name as pledgee or the name of its nominee (as pledgee or as sub-agent). Upon the occurrence and during the continuance of an Event of Default, each Pledgor will promptly give to the Agent copies of any notices or other communications received by it with respect to Pledged Securities registered in the name of such Pledgor. If an Event of Default shall have occurred and be continuing, the Agent shall have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement. Each Pledgor shall use its commercially reasonable efforts to cause each issuer of Pledged Securities that is not a party to this Agreement to comply with a request by the Agent, pursuant to this Section 2.05, to exchange certificates representing Pledged Securities of such Subsidiary for certificates of smaller or larger denominations.

SECTION 2.6 Voting Rights; Dividends and Interest, etc.

(a)Unless and until an Event of Default shall have occurred and be continuing and the Agent shall have given notice to the relevant Pledgors of the Agent’s intention to exercise its rights hereunder:


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(i)    Each Pledgor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Collateral or any part thereof for any purpose consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents; provided that such rights and powers shall not be exercised in any manner that could materially and adversely affect the rights and remedies of any of the Agent or the other Secured Parties under this Agreement, the Credit Agreement or any other Loan Document or the ability of the Secured Parties to exercise the same.
(ii)    The Agent shall promptly execute and deliver to each Pledgor, or cause to be executed and delivered to such Pledgor, all such proxies, powers of attorney and other instruments as such Pledgor may reasonably request for the purpose of enabling such Pledgor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to subparagraph (i) above.
(iii)    Each Pledgor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Collateral to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents, and applicable laws; provided that any noncash dividends, interest, principal or other distributions that would constitute Pledged Securities, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by any Pledgor, shall be promptly (and in any event within 45 days of their receipt (or such longer time as the Agent shall permit in its reasonable discretion)) delivered to the Agent, for the benefit of the Secured Parties, in the same form as so received (endorsed in a manner reasonably satisfactory to the Agent).
(b)Upon the occurrence and during the continuance of an Event of Default and after notice by the Agent to the relevant Pledgors of the Agent’s intention to exercise its rights hereunder, all rights of any Pledgor to dividends, interest, principal or other distributions that such Pledgor is authorized to receive pursuant to paragraph (a)(iii) of this Section 2.06 shall cease, and all such rights shall thereupon become vested, for the benefit of the Secured Parties, in the Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions. All dividends, interest, principal or other distributions received by any Pledgor contrary to the provisions of this Section 2.06 shall not be commingled by such Pledgor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Agent, for the benefit of the Secured Parties, and shall be forthwith delivered to the Agent, for the benefit of the Secured Parties, in the same form as so received (endorsed in a manner reasonably satisfactory to the Agent). Any and all money and other property paid over to or received by the Agent pursuant to the provisions of this paragraph (b) shall be retained by the Agent in an account to be established by the Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 4.02. After all Events of Default have been cured or waived and the Borrower has delivered to the Agent a certificate to that effect, the Agent shall promptly repay to each Pledgor (without interest) all dividends, interest, principal or other distributions that such Pledgor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section 2.06 and that remain in such account.

(c)Upon the occurrence and during the continuance of an Event of Default and after notice by the Agent to the relevant Pledgors of the Agent’s intention to exercise its rights hereunder, all rights of any Pledgor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 2.06, and the obligations of the Agent under paragraph (a)(ii) of this Section 2.06, shall cease, and all such rights shall thereupon become vested in the Agent, for the benefit of the Secured Parties, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers; provided that the Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Pledgors to exercise such rights. After all Events of Default have been cured or waived and the Borrower has delivered to the Agent a certificate to that effect, all rights of any Pledgor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 2.06, and the obligations of the Agent under paragraph (a)(ii) of this Section 2.06, shall in each case be reinstated.

(d)Any notice given by the Agent to the Pledgors suspending their rights under paragraph (a) of this Section 2.06 (i) may be given by telephone if promptly confirmed in writing, (ii) may be given to one or more of the Pledgors at the same or different times and (iii) may suspend the rights of the Pledgors under paragraph (a)(i) or paragraph (a)(iii) in part without suspending all such rights (as specified by the Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.


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ARTICLE III

Security Interests in Personal Property

SECTION 3.1 Security Interest.

(a)As security for the payment or performance, as the case may be, in full of the Secured Obligations, each Pledgor hereby assigns and pledges to the Agent, its successors and assigns, for the benefit of the Secured Parties, and hereby grants to the Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest (the “Security Interest”) in all right, title and interest in or to any and all of the following assets and properties now owned or at any time hereafter acquired by such Pledgor or in which such Pledgor now has or at any time in the future may acquire any right, title or interest (collectively, the “Article 9 Collateral”):

(i)    all Accounts;
(ii)    all Chattel Paper;
(iii)    all cash and Deposit Accounts;
(iv)    all Documents;
(v)    all Equipment;
(vi)    all General Intangibles;
(vii)    all Instruments;
(viii)    all Intellectual Property;
(ix)    all Goods and Inventory;
(x)    all Investment Property including the Pledged Collateral;
(xi)    all Letters of Credit and Letter of Credit Rights;
(xii)    all Commercial Tort Claims as described on Schedule 10 to any Perfection Certificate;
(xiii)    all books and records pertaining to the Article 9 Collateral; and
(xiv)    to the extent not otherwise included, all proceeds, Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any person with respect to any of the foregoing.
Notwithstanding anything to the contrary in this Agreement, this Agreement shall not constitute a grant of a security interest in (and the Article 9 Collateral shall not include) any of the following (collectively, “Excluded Property”): (a) any vehicle covered by a certificate of title or ownership, whether now owned or hereafter acquired to the extent the filing of a financing statement cannot perfect a security interest therein, (b) any Excluded Equity Interests, (c) any assets to the extent that, and for so long as, such grant of a security interest therein would violate applicable law or regulation or, in the case of assets acquired after the Closing Date, such grant of a security interest therein would violate an enforceable contractual obligation binding on such assets that existed at the time of the acquisition thereof and was not created or made binding on such assets in contemplation or in connection with the acquisition of such assets (except in the case of assets acquired after the Closing Date with Indebtedness of the type permitted pursuant to Section 6.01(i) of the Credit Agreement that is secured by a Permitted Lien) permitted by this Agreement, in each case, after giving effect to the Anti-Non-Assignment Clauses, (d) (1) any “intent to use” applications for trademark or service mark registrations filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, unless and until an accepted filing of an “Amendment to Allege Use” whereby such intent-to-use application is converted to a “use in commerce” application pursuant to Section 1(c) of the Lanham Act or an accepted filing of a “Statement of Use” and issuance of a “Certificate of Registration” pursuant to Section 1(d) of Lanham Act and (2) any other Intellectual Property in any jurisdiction where the grant of a security interest thereon would cause the invalidation or abandonment of such Intellectual Property under applicable law (e) any Pledgor’s right, title or interest in any license, contract or agreement to which such Pledgor is a party or any of its right, title or interest thereunder to the extent, but only to the extent, that such a grant would

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violate the terms of such license, contract or agreement, or result in a breach of the terms of, or constitute a default under, any such license, contract or agreement to which such Pledgor is a party (other than to the extent that any such term would be rendered ineffective pursuant to the Anti-Non-Assignment Clauses or any other applicable law or regulation (including Title 11 of the United States Code) or principles of equity); provided that, immediately upon the ineffectiveness, lapse or termination of any such provision, the Collateral shall include, and such Pledgor shall be deemed to have granted a security interest in, all such rights and interests as if such provision had never been in effect, (f) any Equipment or other asset owned by any Pledgor that is subject to a purchase money lien or a Capital Lease Obligation, in each case, as permitted by the Credit Agreement, if the contract or other agreement in which such Lien is granted (or the documentation providing for such Capital Lease Obligation) prohibits or requires the consent of any person other than a Pledgor or a Subsidiary of a Pledgor as a condition to the creation of any other security interest on such Equipment or asset and, in each case, such prohibition or requirement is permitted by the Credit Agreement, (g) any Letter of Credit Rights to the extent any Pledgor is required by applicable law to apply the proceeds of a drawing of such Letter of Credit for a specified purpose, and (h) those assets as to which the Borrower shall reasonably determine (and the Administrative Agent shall agree in writing) that such assets shall be excluded from Collateral hereunder pursuant to the Agreed Security Principles.
(b)Each Pledgor hereby irrevocably authorizes the Agent at any time and from time to time to file in any relevant jurisdiction any initial financing statements (including fixture filings) with respect to the Article 9 Collateral or any part thereof and amendments or continuations thereto that contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment, including (i) whether such Pledgor is an organization, the type of organization and any organizational identification number issued to such Pledgor, (ii) in the case of a financing statement filed as a fixture filing, a sufficient description of the real property to which such Article 9 Collateral relates and (iii) a description of collateral that describes such property in any other manner as the Agent may reasonably determine is necessary or advisable to ensure the perfection of the security interest in the Article 9 Collateral granted under this Agreement, including describing such property as “all assets” or “all property” or words of similar effect. Each Pledgor agrees to provide such information to the Agent and to execute such financing statements promptly upon request. Each Pledgor agrees that at the sole cost and expense of the Pledgors, such Pledgor will maintain the security interest created by this Agreement in the Collateral as a perfected (to the extent required to be perfected under the Loan Documents) first priority security interest subject only to Permitted Liens and will file all UCC-3 continuation statements necessary to continue the perfection of the security interest created by this Agreement.

The Agent is further authorized to file with the United States Patent and Trademark Office, the Puerto Rico Trademark Office and the United States Copyright Office (and any successor office or any similar office in any other country) such documents as may be necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing, protecting or providing notices of the Security Interest granted by each Pledgor, without the signature of any Pledgor, and naming any Pledgor or the Pledgors as debtors and the Agent as secured party.
(c)The Security Interest is granted as security only and shall not subject the Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Pledgor with respect to or arising out of the Article 9 Collateral.

(d)Notwithstanding anything to the contrary in this Agreement or the Loan Documents, in no event shall control agreements or other control or similar arrangements be required with respect to cash, Deposit Accounts, Securities Accounts and Commodities Accounts (including securities entitlements and related assets) or Letter-of-Credit Rights.

SECTION 3.2 Representations and Warranties. The Pledgors jointly and severally represent and warrant to the Agent and the Secured Parties that:

(a)    Each Pledgor has good and valid rights in and title to the Article 9 Collateral with respect to which it has purported to grant a Security Interest hereunder and has full power and authority to grant to the Agent the Security Interest in such Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other person other than any consent or approval that has been obtained and is in full force and effect or has otherwise been disclosed herein or in the Credit Agreement and the Schedules thereto.

(b)    The Perfection Certificate has been duly prepared, completed and executed, and the exact legal name of each Pledgor set forth therein is correct and complete as of the Closing Date, and the other information therein is correct and complete in all material respects as of the Closing Date. Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations containing a description of the Article 9 Collateral have been prepared by the Agent based upon the information provided to the Agent in the Perfection Certificate for filing in each governmental, municipal or other office specified in Schedule 5 to the Perfection Certificate (or specified by notice from the Borrower to the Agent after the Closing Date in the case of filings, recordings or registrations required by Section 5.10 of

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the Credit Agreement), and constitute all the filings, recordings and registrations (other than the filings described in the last sentence of this paragraph) that are necessary to publish notice of and protect the validity of and to establish a legal, valid and perfected security interest in favor of the Agent (for the benefit of the Secured Parties) in respect of all Article 9 Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions and the Commonwealth of Puerto Rico, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under applicable law with respect to the filing of continuation statements or amendments. Each Pledgor represents and warrants that a fully executed agreement in the form hereof (or a short form hereof which form shall be reasonably acceptable to the Agent) containing a description of all Article 9 Collateral consisting of Intellectual Property with respect to registered United States Patents (and Patents for which registration applications are pending), registered United States or Commonwealth of Puerto Rico Trademarks (and Trademarks for which registration applications are pending) and registered United States Copyrights (and Copyrights for which registration applications are pending) has been delivered to the Agent for recording with the United States Patent and Trademark Office and the United States Copyright Office pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205 and the regulations thereunder and the Puerto Rico Trademark Office Department pursuant to Article 11 of Act 169 of December 16, 2009, as applicable, to protect the validity of and to establish a legal, valid and perfected security interest in favor of the Agent (or in the case of filings with the Puerto Rico Trademark Office to provide notice of the Agent’s previously perfected security interest), for the benefit of the Secured Parties, in respect of all Article 9 Collateral consisting of such Intellectual Property in which a security interest may be perfected by recording with the United States Patent and Trademark Office, the Puerto Rico Trademark Office and the United States Copyright Office, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary (other than such actions as are necessary to perfect the Security Interest with respect to any Article 9 Collateral consisting of Patents, Trademarks and Copyrights (or registration or application for registration thereof) acquired or developed after the Closing Date).
(c)    The Security Interest constitutes (i) a legal and valid security interest in all the Article 9 Collateral securing the payment and performance of the Secured Obligations, (ii) subject to the filings described in Section 3.02(b), a perfected security interest in all Article 9 Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) and its territories and possessions and the Commonwealth of Puerto Rico pursuant to the Uniform Commercial Code or other applicable law in such jurisdictions and (iii) subject to Section 3.02(b), a security interest that shall be perfected in all Article 9 Collateral in which a security interest may be perfected upon the receipt and recording of this Agreement (or a short form hereof) with the United States Patent and Trademark Office, the Puerto Rico Trademark Office and the United States Copyright Office, as applicable. The Security Interest is and shall be prior to any other Lien on any of the Article 9 Collateral other than Permitted Liens.
(d)    The Article 9 Collateral is owned by the Pledgors free and clear of any Lien, other than Permitted Liens. None of the Pledgors has filed or consented to the filing of (i) any financing statement or analogous document under the Uniform Commercial Code or any other applicable laws covering any Article 9 Collateral, (ii) any assignment in which any Pledgor assigns any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with the United States Patent and Trademark Office, the Puerto Rico Trademark Office or the United States Copyright Office or (iii) any assignment in which any Pledgor assigns any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Permitted Liens.
(e)    None of the Pledgors holds any Commercial Tort Claim in excess of $2,500,000 with respect to any Commercial Tort Claim for any Pledgor or $5,000,000 in the aggregate for all Commercial Tort Claims of all Pledgors as of the Closing Date except as indicated on Schedule 10 to the Perfection Certificate.
(f)    Except as set forth in the Perfection Certificate, as of the Closing Date, all Accounts owned by the Pledgors have been originated by the Pledgors, and all Inventory owned by the Pledgors has been acquired by the Pledgors, in the ordinary course of business.
SECTION 3.3 Covenants.

(a)Each Pledgor agrees to comply with Section 5.10(f) of the Credit Agreement. Each Pledgor agrees promptly to provide the Agent with certified organizational documents reflecting any of the changes described in Section 5.10(f) of the Credit Agreement. Each Pledgor agrees promptly to notify the Agent if any material portion of the Article 9 Collateral owned or held by such Pledgor is damaged or destroyed.


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(b)Subject to the rights of such Pledgor under the Loan Documents to dispose of Collateral, each Pledgor shall, at its own expense, use commercially reasonable efforts to defend title to the Article 9 Collateral against all persons and to defend the Security Interest of the Agent, for the benefit of the Secured Parties, in the Article 9 Collateral and the priority thereof against any Lien that is not a Permitted Lien.

(c)Each Pledgor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement and the granting of the Security Interest and the filing of any financing statements (including fixture filings) or other documents in connection herewith or therewith.
Without limiting the generality of the foregoing, each Pledgor hereby authorizes the Agent, with prompt notice thereof to the Pledgors, to supplement this Agreement by supplementing Schedules 9(a), 9(b), 9(c) or 9(d) to the Perfection Certificate or adding additional schedules thereto to specifically identify any asset or item that may constitute Copyrights, Patents, Trademarks, Copyright Licenses, Patent Licenses or Trademark Licenses; provided that any Pledgor shall have the right, exercisable within 90 days after it has been notified by the Agent of the specific identification of such Collateral, to advise the Agent in writing of any inaccuracy of the representations and warranties made by such Pledgor hereunder with respect to such Collateral. Each Pledgor agrees that it will use its commercially reasonable efforts to take such action as shall be necessary in order that all representations and warranties hereunder shall be true and correct with respect to such Collateral within 90 days after the date it has been notified by the Agent of the specific identification of such Collateral.

(d)After the occurrence of an Event of Default and during the continuance thereof, the Agent shall have the right to verify under reasonable procedures the validity, amount, quality, quantity, value, condition and status of, or any other matter relating to, the Article 9 Collateral, including, in the case of Accounts or Article 9 Collateral in the possession of any third person, by contacting Account Debtors or the third person possessing such Article 9 Collateral for the purpose of making such a verification. The Agent shall have the right to share any information it gains from such inspection or verification with any Secured Party.

(e)At its option, the Agent may discharge any past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Article 9 Collateral and that is not a Permitted Lien, and may pay for the maintenance and preservation of the Article 9 Collateral to the extent any Pledgor fails to do so as required by the Credit Agreement or this Agreement, and each Pledgor jointly and severally agrees to reimburse the Agent on demand for any reasonable payment made or any reasonable expense incurred by the Agent pursuant to the foregoing authorization; provided, however, that nothing in this Section 3.03(e) shall be interpreted as excusing any Pledgor from the performance of, or imposing any obligation on the Agent or any Secured Party to cure or perform, any covenants or other promises of any Pledgor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents.

(f)Each Pledgor (rather than the Agent or any Secured Party) shall remain liable for the observance and performance of all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Article 9 Collateral and each Pledgor jointly and severally agrees to indemnify and hold harmless the Agent and the Secured Parties from and against any and all liability for such performance.

(g)None of the Pledgors shall make or permit to be made an assignment, pledge or hypothecation of the Article 9 Collateral or shall grant any other Lien in respect of the Article 9 Collateral, except as expressly permitted by the Credit Agreement. None of the Pledgors shall make or permit to be made any transfer of the Article 9 Collateral and each Pledgor shall remain at all times in possession of the Article 9 Collateral owned by it, except as permitted by the Credit Agreement. Notwithstanding the foregoing, if the Agent shall have notified the Pledgors that an Event of Default under clause (b), (c), (h) or (i) of Section 7.01 of the Credit Agreement shall have occurred and be continuing, and during the continuance thereof, the Pledgors shall not sell, convey, lease, assign, transfer or otherwise dispose of any Article 9 Collateral to the extent requested by the Agent (which notice may be given by telephone if promptly confirmed in writing).

(h)None of the Pledgors will, without the Agent’s prior written consent (which consent shall not be unreasonably withheld), grant any extension of the time of payment of any Accounts included in the Article 9 Collateral, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partly, any person liable for the payment thereof or allow any credit or discount whatsoever thereon, other than extensions, credits, discounts, compromises or settlements granted or made in the ordinary course of business and consistent with prudent business practices, except as permitted by the Credit Agreement.

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(i)Each Pledgor irrevocably makes, constitutes and appoints the Agent (and all officers, employees or agents designated by the Agent) as such Pledgor’s true and lawful agent (and attorney-in-fact) for the purpose, during the continuance of an Event of Default, of making, settling and adjusting claims in respect of Article 9 Collateral under policies of insurance, endorsing the name of such Pledgor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto. In the event that any Pledgor at any time or times shall fail to obtain or maintain any of the policies of insurance required by the Loan Documents or to pay any premium in whole or part relating thereto, the Agent may, without waiving or releasing any obligation or liability of the Pledgors hereunder or any Event of Default, in its sole discretion, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as the Agent reasonably deems advisable. All sums disbursed by the Agent in connection with this Section 3.03(i), including reasonable attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by the Pledgors to the Agent and shall be additional Secured Obligations secured hereby.

SECTION 3.4 Other Actions. In order to further ensure the attachment, perfection and priority of, and the ability of the Agent to enforce, for the benefit of the Secured Parties, the Agent’s security interest in the Article 9 Collateral, each Pledgor agrees, in each case at such Pledgor’s own expense, to take the following actions with respect to the following Article 9 Collateral:

(a)    Instruments and Tangible Chattel Paper. If any Pledgor shall at any time own or acquire any Instruments (other than checks received and processed in the ordinary course of business) or Tangible Chattel Paper evidencing an amount in excess of $2,500,000 with respect to any Instruments or Tangible Chattel Paper for any Pledgor or $5,000,000 in the aggregate for all Instruments or Tangible Chattel Paper for all Pledgors, such Pledgor shall forthwith endorse, assign and deliver the same to the Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Agent may from time to time reasonably request.
(b)    Commercial Tort Claims. If any Pledgor shall at any time hold or acquire Commercial Tort Claims in an amount reasonably estimated to exceed $2,500,000 with respect to any Commercial Tort Claim for any Pledgor or $5,000,000 in the aggregate for all Commercial Tort Claims of all Pledgors, such Pledgor shall promptly notify the Agent thereof in a writing signed by such Pledgor, including a summary description of such claim, and grant to the Agent in writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Agent.
(c)    Delivery of First Mortgage Notes. If any Pledgor shall at any time execute a Mortgage with respect to any real estate located in Puerto Rico, it shall, within 5 Business Days of the delivery of such Mortgage, deliver to the Agent the original of the corresponding mortgage note secured by such Mortgage in form and substance reasonably satisfactory to the Agent and, if applicable, accompanied by such instruments of transfer or assignment duly executed in blank as the Agent may from time to time reasonably request, and Schedule 6 to the Perfection Certificate (or an update to Schedule 6 to the Perfection Certificate) listing such mortgage note and the principal amount thereof.
SECTION 3.5 Covenants Regarding Patent, Trademark and Copyright Collateral. Except as permitted by the Credit Agreement:

(a)    Each Pledgor agrees that it will not knowingly do any act or omit to do any act (and will exercise commercially reasonable efforts to prevent its licensees from doing any act or omitting to do any act) whereby any Patent material to the normal conduct of such Pledgor’s business may become prematurely invalidated or dedicated to the public, and agrees that it shall take commercially reasonable steps with respect to any material products covered by any such Patent as necessary and sufficient to establish and preserve its rights under applicable patent laws.
(b)    Each Pledgor will, and will use its commercially reasonable efforts to cause its licensees or its sublicensees to, for each Trademark material to the normal conduct of such Pledgor’s business, (i) maintain such Trademark in full force, free from any adjudication of abandonment or invalidity for non-use, (ii) maintain the quality of products and services offered under such Trademark, (iii) display such Trademark with notice of federal or foreign registration, or claim of trademark or service mark as required under applicable law and (iv) not knowingly use or knowingly permit its licensees’ use of such Trademark in violation of any third-party rights.
(c)    Each Pledgor will, and will use its commercially reasonable efforts to cause its licensees or its sublicensees to, for each work covered by a material Copyright necessary to the normal conduct of such Pledgor’s business that it publishes, displays and distributes, use copyright notice as required under applicable copyright laws.

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(d)    Each Pledgor shall notify the Agent promptly if it knows that any Patent, Trademark or Copyright material to the normal conduct of such Pledgor’s business may imminently become abandoned, lost or dedicated to the public, or of any materially adverse determination or development, excluding office actions and similar determinations or developments, in the United States Patent and Trademark Office, the Puerto Rico Trademark Office, United States Copyright Office, any court or any similar office of any country, regarding such Pledgor’s ownership of any such material Patent, Trademark or Copyright or its right to register or to maintain the same.
(e)    Each Pledgor, either itself or through any agent, employee, licensee or designee, shall (i) give notice to the Agent concurrently with the delivery of financial statements pursuant to Section 5.04(a) of the Credit Agreement of each application by itself, or through any agent, employee, licensee or designee, for any Patent with the United States Patent and Trademark Office or the Puerto Rico Trademark Office and each registration of any Trademark or Copyright with the United States Patent and Trademark Office, the Puerto Rico Trademark Office, the United States Copyright Office or any comparable office or agency in any other country filed during the period since the last notice to the Agent pursuant to this clause, and (ii) upon the reasonable request of the Agent, execute and deliver any and all agreements, instruments, documents and papers as the Agent may reasonably request to evidence the Agent’s security interest in such Patent, Trademark or Copyright; provided that the provisions hereof shall automatically apply to any thereto and any such Patent, Trademark or Copyright shall automatically constitute Collateral as if such would have constituted Collateral at the time of execution hereof and be subject to the Lien and security interest created by this Agreement without further action by any party.
(f)    Each Pledgor shall exercise its reasonable business judgment consistent with the practice in any proceeding before the United States Patent and Trademark Office, the Puerto Rico Trademark Office, the United States Copyright Office or any comparable office or agency in any other country with respect to maintaining and pursuing each material application relating to any Patent, Trademark and/or Copyright (and obtaining the relevant grant or registration) material to the normal conduct of such Pledgor’s business and to maintain (i) each issued Patent and (ii) the registrations of each Trademark and each Copyright that is material to the normal conduct of such Pledgor’s business, including, when applicable and necessary in such Pledgor’s reasonable business judgment, timely filings of applications for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if any Pledgor believes necessary in its reasonable business judgment, to initiate opposition, interference and cancellation proceedings against third parties.
(g)    In the event that any Pledgor knows or has reason to know that any Article 9 Collateral consisting of a Patent, Trademark or Copyright material to the normal conduct of its business has been or is about to be materially infringed, misappropriated or diluted by a third party, such Pledgor shall promptly notify the Agent and shall, if such Pledgor deems it necessary in its reasonable business judgment, promptly sue and recover any and all damages, and take such other actions as are reasonably appropriate under the circumstances.
(h)    Upon and during the continuance of an Event of Default, at the request of the Agent, each Pledgor shall use commercially reasonable efforts to obtain all requisite consents or approvals from the licensor under each Copyright License, Patent License or Trademark License to effect the assignment of all such Pledgor’s right, title and interest thereunder to (in the Agent’s sole discretion) the designee of the Agent or the Agent.
ARTICLE IV

Remedies

SECTION 4.1 Remedies upon Default. Upon the occurrence and during the continuance of an Event of Default, each Pledgor agrees to deliver each item of Collateral to the Agent on demand, and it is agreed that the Agent shall have the right to take any or all of the following actions at the same or different times:  (a) with respect to any Article 9 Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Article 9 Collateral by the applicable Pledgors to the Agent or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or a nonexclusive basis, any such Article 9 Collateral throughout the world on such terms and conditions and in such manner as the Agent shall determine (other than in violation of any then-existing licensing arrangements to the extent that waivers thereunder cannot be obtained), (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Article 9 Collateral and without liability for trespass to the applicable Pledgor to enter any premises where the Article 9 Collateral may be located for the purpose of taking possession of or removing the Article 9 Collateral and, generally, to exercise any and all rights afforded to a secured party under the applicable Uniform Commercial Code or other applicable law, (c) foreclose any Mortgage without first foreclosing the security interest herein created over the mortgage note secured by such Mortgage and (d) instead of exercising the power of sale herein conferred upon it, proceed by suits at law or in equity to foreclose the lien granted by any of the Mortgages and sell the Mortgaged Property or any portion thereof under one or more judgments or decrees of a court or courts of competent

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jurisdiction. Without limiting the generality of the foregoing, each Pledgor agrees that the Agent shall have the right, subject to the requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Agent shall deem appropriate. The Agent shall be authorized in connection with any sale of a security (if it deems it advisable to do so) pursuant to the foregoing to restrict the prospective bidders or purchasers to persons who represent and agree that they are purchasing such security for their own account, for investment, and not with a view to the distribution or sale thereof. Upon consummation of any such sale of Collateral pursuant to this Section 4.01 the Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of any Pledgor, and each Pledgor hereby waives and releases (to the extent permitted by law) all rights of redemption, stay, valuation and appraisal that such Pledgor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

The Agent shall give the applicable Pledgors 10 days’ written notice (which each Pledgor agrees is reasonable notice within the meaning of Section 9‑611 of the New York UCC or its equivalent in other jurisdictions) of the Agent’s intention to make any sale of Collateral. At any such sale, the Collateral, or the portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Agent may (in its sole and absolute discretion) determine. The Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In the case of any sale of all or any part of the Collateral made on credit or for future delivery, the Collateral so sold may be retained by the Agent until the sale price is paid by the purchaser or purchasers thereof, but the Agent shall not incur any liability in the event that any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in the case of any such failure, such Collateral may be sold again upon notice given in accordance with provisions above. At any public (or, to the extent permitted by law, private) sale made pursuant to this Section 4.01, any Secured Party may credit bid for or purchase for cash, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Pledgor (all such rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Pledgor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Agent shall be free to carry out such sale pursuant to such agreement and no Pledgor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Secured Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 4.01 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions.
Upon any sale of Collateral by the Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the purchase money by the Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Agent or such officer or be answerable in any way for the misapplication thereof.
SECTION 4.2 Application of Proceeds. Subject to the terms of the First Lien Intercreditor Agreement, the Agent shall promptly apply the proceeds, moneys or balances of any collection or sale of Collateral, as well as any Collateral consisting of cash, as set forth in Section 7.02 of the Credit Agreement, subject to the last paragraph of Section 7.02 of the Credit Agreement. If, despite the provisions of this Agreement, any Secured Party shall receive any payment or other recovery in excess of its portion of payments on account of the Secured Obligations to which it is then entitled in accordance with this Agreement, such Secured Party shall hold such payment or other recovery in trust for the benefit of all Secured Parties hereunder for distribution in accordance with the Credit Agreement.

SECTION 4.3 Grant of License to Use Intellectual Property. For the purpose of enabling the Agent to exercise rights and remedies under this Agreement at such time as the Agent shall be lawfully entitled to exercise such rights and remedies, each Pledgor hereby grants to (in the Agent’s sole discretion) a designee of the Agent or the Agent, for the benefit of the Secured Parties, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to any Pledgor) to use, license or sublicense any of the Article 9 Collateral consisting of Intellectual Property now owned or hereafter acquired by such Pledgor, wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation

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or printout thereof, the right to prosecute and maintain all Intellectual Property and the right to sue for past infringement of the Intellectual Property. The use of such license by the Agent may be exercised, at the option of the Agent, upon the occurrence and during the continuation of an Event of Default; provided that any license, sublicense or other transaction entered into by the Agent in accordance herewith shall be binding upon the Pledgors notwithstanding any subsequent cure of an Event of Default.

SECTION 4.4 Securities Act, etc. In view of the position of the Pledgors in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar federal statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being called the “Federal Securities Laws”) with respect to any disposition of the Pledged Collateral permitted hereunder. Each Pledgor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Agent if the Agent were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Agent in any attempt to dispose of all or part of the Pledged Collateral under applicable Blue Sky or other state securities laws or similar laws analogous in purpose or effect. Each Pledgor acknowledges and agrees that in light of such restrictions and limitations, the Agent, in its sole and absolute discretion, (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed under the Federal Securities Laws or, to the extent applicable, Blue Sky or other state securities laws and (b) may approach and negotiate with a single potential purchaser or a limited number of potential purchasers (as determined by the Agent in its sole and absolute discretion) to effect such sale. Each Pledgor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, the Agent shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that the Agent, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more purchasers were approached. The provisions of this Section 4.04 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Agent sells.

SECTION 4.5 Registration, etc. Each Pledgor agrees that, upon the occurrence and during the continuance of an Event of Default, if for any reason the Agent desires to sell any of the Pledged Collateral at a public sale, it will, at any time and from time to time, upon the written request of the Agent, use its commercially reasonable efforts to take or to cause the issuer of such Pledged Collateral to take such action and prepare, distribute and/or file such documents, as are required or advisable in the reasonable opinion of counsel for the Agent to permit the public sale of such Pledged Collateral. Each Pledgor further agrees to indemnify, defend and hold harmless the Agent, each other Secured Party, any underwriter and their respective officers, directors, affiliates and controlling persons from and against all loss, liability, expenses, costs of counsel (including reasonable fees and expenses to the Agent of legal counsel), and claims (including the costs of investigation) that they may incur insofar as such loss, liability, expense or claim arises out of or is based upon any alleged untrue statement of a material fact contained in any prospectus (or any amendment or supplement thereto) or in any notification or offering circular, or arises out of or is based upon any alleged omission to state a material fact required to be stated therein or necessary to make the statements in any thereof not misleading, except insofar as the same may have been caused by any untrue statement or omission based upon information furnished in writing to such Pledgor or the issuer of such Pledged Collateral by the Agent or any other Secured Party expressly for use therein. Each Pledgor further agrees, upon such written request referred to above, to use its commercially reasonable efforts to qualify, file or register, or cause the issuer of such Pledged Collateral to qualify, file or register, any of the Pledged Collateral under the Blue Sky or other securities laws of such states as may be reasonably requested by the Agent and keep effective, or cause to be kept effective, all such qualifications, filings or registrations. Each Pledgor will bear all costs and expenses of carrying out its obligations under this Section 4.05. Each Pledgor acknowledges that there is no adequate remedy at law for failure by it to comply with the provisions of this Section 4.05 only and that such failure would not be adequately compensable in damages and, therefore, agrees that its agreements contained in this Section 4.05 may be specifically enforced.

ARTICLE V

Miscellaneous
SECTION 5.1 Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to any Loan Party other than the Borrower shall be given to it in care of the Borrower, with such notice to be given as provided in Section 9.01 of the Credit Agreement.

SECTION 5.2 Security Interest Absolute. All rights of the Agent hereunder, the Security Interest, the security interest in the Pledged Collateral and all obligations of each Pledgor hereunder shall be absolute and unconditional irrespective of

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(a) any lack of validity or enforceability of the Credit Agreement, any other Loan Document, any agreement with respect to any of the Secured Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any other Loan Document, or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Secured Obligations or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Pledgor in respect of the Secured Obligations or this Agreement (other than a defense of payment or performance).

SECTION 5.3Limitation by Law. All rights, remedies and powers provided in this Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law or regulation, and all the provisions of this Agreement are intended to be subject to all applicable mandatory provisions of law or regulation that may be controlling and to be limited to the extent necessary so that they shall not render this Agreement invalid, unenforceable, in whole or in part, or not entitled to be recorded, registered or filed under the provisions of any applicable law or regulation. Each Pledgor and the Agent, for itself and on behalf of each Secured Party, hereby confirms that it is the intention of all such persons that this Agreement and the pledge and security interest in the Collateral granted under this Agreement not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to the extent applicable to this Agreement and the Security Interest and the security interest in the Pledged Collateral granted hereunder. To effectuate the foregoing intention, the Agent, for itself and on behalf of each Secured Party, and the Pledgors hereby irrevocably agree that the Security Interest and the security interest in the Pledged Collateral granted hereunder at any time shall be limited to the maximum extent as will result in the Security Interest and the security interest in the Pledged Collateral granted under this Agreement not constituting a fraudulent transfer or conveyance.

SECTION 5.4 Binding Effect; Several Agreement. This Agreement shall become effective as to any party to this Agreement when a counterpart hereof executed on behalf of such party shall have been delivered to the Agent and a counterpart hereof shall have been executed on behalf of the Agent, and thereafter shall be binding upon such party and the Agent and their respective permitted successors and assigns, and shall inure to the benefit of such party, the Agent and the other Secured Parties and their respective permitted successors and assigns, except that no party shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly contemplated by this Agreement or the Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each Loan Party and may be amended, modified, supplemented, waived or released by the Agent with respect to any Loan Party without the approval of any other Loan Party and without affecting the obligations of any other Loan Party hereunder.

SECTION 5.5 Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Pledgor or the Agent that are contained in this Agreement shall bind and inure to the benefit of their respective permitted successors and assigns.

SECTION 5.6 Agent’s Fees and Expenses; Indemnification.

(a)The parties hereto agree that the Agent shall be entitled to reimbursement of its expenses incurred hereunder as provided in Section 9.05 of the Credit Agreement.

(b)Sections 8.07 and 9.05 of the Credit Agreement are incorporated herein, mutatis mutandis, as if a part hereof.

(c)Any such amounts payable as provided hereunder shall be additional Secured Obligations secured hereby and by the other Security Documents. The provisions of this Section 5.06 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Agent or any other Secured Party. All amounts due under this Section 5.06 shall be payable on written demand therefor.

SECTION 5.7 Agent Appointed Attorney-in-Fact. Each Pledgor hereby appoints the Agent as the attorney-in-fact of such Pledgor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Agent’s name or

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in the name of such Pledgor, (a) to receive, endorse, assign or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof, (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to ask for, demand, sue for, collect, receive and give acquittance for any and all moneys due or to become due under and by virtue of any Collateral; (d) to sign the name of any Pledgor on any invoice or bill of lading relating to any of the Collateral; (e) to send verifications of Accounts to any Account Debtor; (f) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (g) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (h) to notify, or to require any Pledgor to notify, Account Debtors to make payment directly to the Agent; and (i) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Agent were the absolute owner of the Collateral for all purposes; provided that nothing herein contained shall be construed as requiring or obligating the Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor any of their respective officers, directors, employees or agents shall be responsible to any Pledgor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct.

SECTION 5.8 GOVERNING LAW. THIS AGREEMENT, THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND ALL DISPUTES ARISING HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. NOTWITHSTANDING THE ABOVE, EACH OF THE PLEDGORS AGREES THAT IN THE EVENT THAT A COURT OF COMPETENT JURISDICTION DETERMINES THAT THE COMMERCIAL TRANSACTIONS ACT GOVERNS THE ATTACHMENT, CONSTITUTION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE SECURITY INTEREST GRANTED TO THE AGENT, THEN THE LAWS OF THE STATE OF NEW YORK SHALL SUPPLEMENT THE LAWS OF THE COMMONWEALTH OF PUERTO RICO CONCERNING THE ATTACHMENT, CONSTITUTION, PERFECTION, PRIORITY AND ENFORCEMENT OF SUCH PROPERTY OF A TYPE THAT IS OUTSIDE THE SCOPE OF CHAPTER 9 OF THE COMMERCIAL TRANSACTIONS ACT BUT WHICH IS DEEMED COLLATERAL UNDER THIS AGREEMENT. NOTWITHSTANDING THE FOREGOING, IT IS THE INTENT OF THE PARTIES HERETO THAT THE TERMS OF THIS AGREEMENT SHALL BE GOVERNED BY AND THAT THE AGREEMENT SHALL APPLY THE LAWS OF THE STATE OF NEW YORK WITH RESPECT TO THE ATTACHMENT OF THE SECURITY INTEREST GRANTED HEREUNDER.

SECTION 5.9 Waivers; Amendment

(a)No failure or delay by the Agent, any L/C Issuer, any Lender or any other Secured Party in exercising any right, power or remedy hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy, or any abandonment or discontinuance of steps to enforce such a right, power or remedy, preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The rights, powers and remedies of the Agent, any L/C Issuer, the Lenders or any other Secured Party hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights, powers or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 5.09, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan, or the issuance of a Letter of Credit shall not be construed as a waiver of any Default or Event of Default, regardless of whether the Agent, any Lender, any L/C Issuer or any other Secured Party may have had notice or knowledge of such Default or Event of Default at the time. No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances.

Neither this Agreement nor any provision hereof or of any other Security Document may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Agent and the Loan Party or Loan Parties with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.08 of the Credit Agreement.
SECTION 5.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO

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REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.10.

SECTION 5.11 Severability. In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 5.12 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract, and shall become effective as provided in Section 5.04. Delivery of an executed counterpart to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed original.

SECTION 5.13 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 5.14 Jurisdiction; Consent to Service of Process.
  
(a)Each party to this Agreement hereby irrevocably and unconditionally submits, for itself and its property, to the jurisdiction of any New York State court or federal court of the United States of America sitting in New York City in the Borough of Manhattan, and any appellate court from any thereof (collectively, “New York Courts”), in any action or proceeding arising out of or relating to this Agreement or any other Loan Documents to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Loan Documents in the courts of any jurisdiction, except that each of the Loan Parties agrees that (a) it will not bring any such action or proceeding in any court other than New York Courts (it being acknowledged and agreed by the Loan Parties that any other forum would be inconvenient and inappropriate in view of the fact that more of the Lenders who would be affected by any such action or proceeding have contacts with the State of New York than any other jurisdiction), and (b) in any such action or proceeding brought against any Loan Party in any other court, it will not assert any cross-claim, counterclaim or setoff, or seek any other affirmative relief, except to the extent that the failure to assert the same will preclude such Loan Party from asserting or seeking the same in the New York Courts.

(b)Each party to this Agreement hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any New York Court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c)Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 5.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 5.15 Termination or Release.

(a)This Agreement, the pledges made herein, the Security Interest and all other security interests granted hereby, and all other Security Documents securing the Secured Obligations (including without limitation foreign security documents), shall automatically terminate and/or be released all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the applicable Pledgors, upon Payment in Full.

(b)A Subsidiary Party shall be automatically released from its obligations hereunder and the security interests in the Collateral of such Subsidiary Party shall be automatically released as set forth in Section 9.18 of the Credit Agreement.

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(c)The security interests in the Collateral of any Pledgor shall be automatically released as set forth in Section 9.18 of the Credit Agreement.

(d)Upon the effectiveness of any written consent to the release of the security interest granted hereby in any Collateral pursuant to Section 9.08 of the Credit Agreement, the security interest in such Collateral shall be automatically released, all without delivery of any instrument or performance of any act by any party.

(e)In connection with any termination or release pursuant to paragraph (a), (b) or (c) of this Section 5.15 or any subordination pursuant to Section 8.12 of the Credit Agreement, the Agent shall execute and deliver to any Pledgor, at such Pledgor’s expense, all documents that such Pledgor shall reasonably request to evidence such termination, release, or subordination (including, without limitation, UCC termination statements), and, if applicable, will duly assign and transfer to such Pledgor, such of the Pledged Collateral that may be in the possession of the Agent and has not theretofore been sold or otherwise applied or released pursuant to this Agreement. Any execution and delivery of documents pursuant to this Section 5.15 shall be without recourse to or warranty by the Agent or any other Secured Party and subject to the Agent’s receipt, upon request, of a certification by the Borrower and applicable Pledgor, in form and substance reasonably satisfactory to the Agent, stating that such transaction and release are in compliance with the Credit Agreement and the other Loan Documents and as to such other matters as the Agent may reasonably request.

SECTION 5.16 Additional Subsidiaries. Upon execution and delivery by the Agent and any Subsidiary that is required to become a party hereto by Section 5.10 of the Credit Agreement of a Collateral Agreement Supplement, with such changes as are reasonably agreed by the Borrower and the Agent to reflect the Agreed Security Principles or provisions of applicable law, such Subsidiary shall become a Subsidiary Party hereunder with the same force and effect as if originally named as a Subsidiary Party herein. The execution and delivery of a Collateral Agreement Supplement shall not require the consent of any other Loan Party. The rights and obligations of each party to this Agreement shall remain in full force and effect notwithstanding the addition of any new party to this Agreement.

SECTION 5.17 Right of Set-off. If an Event of Default shall have occurred and be continuing, each Lender, the Administrative Agent and each L/C Issuer is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender, the Administrative Agent or such L/C Issuer to or for the credit or the account of any party to this Agreement against any and all of the obligations of such party now or hereafter existing under this Agreement owed to such Lender, the Administrative Agent or such L/C Issuer, irrespective of whether or not such Lender, the Administrative Agent or such L/C Issuer shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender, the Administrative Agent and L/C Issuer under this Section 5.17 are in addition to other rights and remedies (including other rights of set-off) that such Lender, the Administrative Agent and such L/C Issuer may have.

SECTION 5.18 Subject to First Lien Intercreditor Agreement. Notwithstanding anything herein to the contrary, from and after the execution and delivery of the First Lien Intercreditor Agreement, (i) the liens and security interests granted to the Agent pursuant to this Agreement will be subject to such First Lien Intercreditor Agreement and (ii) the exercise of any right or remedy by the Agent hereunder will be subject to the limitations and provisions of such First Lien Intercreditor Agreement. In the event of any conflict between the terms of such First Lien Intercreditor Agreement and the terms of this Agreement, the terms of such First Lien Intercreditor Agreement shall govern.

SECTION 5.19 Other First Lien Obligations. On or after the date hereof Parent and/or the Borrower may from time to time designate obligations in respect of Indebtedness expressly permitted by the Credit Agreement to be secured on a pari passu basis with the Secured Obligations as Other First Lien Obligations (as such term is defined in the First Lien Intercreditor Agreement) by delivering to the Agent (a) a certificate signed by a Responsible Officer of Parent and/or the Borrower (i) identifying the obligations so designated and the initial aggregate principal amount or face amount thereof, (ii) stating that such obligations are designated as Other First Lien Obligations for purposes of the First Lien Intercreditor Agreement, (iii) representing that such designation of such obligations as Other First Lien Obligations complies with the terms of the Credit Agreement and (iv) specifying the name and address of the Authorized Representative for such obligations and (b) a fully executed First Lien Intercreditor Agreement or a joinder to the First Lien Intercreditor Agreement (in the form specified in the First Lien Intercreditor Agreement).
[Signature Pages Follow]




19


IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
EVERTEC, INC.
By:    ________________________________________
Name:
Title:


EVERTEC Group, LLC
By:    ________________________________________
Name:
Title:


EVERTEC Intermediate Holdings, LLC
By:    ________________________________________
Name:
Title:

ACKNOWLEDGMENT
STATE OF __________________
COUNTY OF ________________
I, _____________________________, a Notary Public for said County and State, do hereby certify that ____________________ personally appeared before me this day and stated that (s)he is _________________ of _____________________________ and acknowledged, on behalf of _____________________________ the due execution of the foregoing instrument.
Witness my hand and official seal, this _____ day of __________, 2018.

____________________________________
Notary Public
My commission expires:
______________________



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ACKNOWLEDGMENT
STATE OF __________________
COUNTY OF ________________
I, _____________________________, a Notary Public for said County and State, do hereby certify that ____________________ personally appeared before me this day and stated that (s)he is _________________ of _____________________________ and acknowledged, on behalf of _____________________________ the due execution of the foregoing instrument.
Witness my hand and official seal, this _____ day of __________, 2018.

____________________________________
Notary Public
My commission expires:
______________________






































21


BANK OF AMERICA, N.A., as Collateral Agent


By:        
Name:
Title:


ACKNOWLEDGMENT
STATE OF __________________

COUNTY OF ________________


I, _____________________________, a Notary Public for said County and State, do hereby certify that ____________________ personally appeared before me this day and stated that (s)he is _________________ of _____________________________ and acknowledged, on behalf of _____________________________ the due execution of the foregoing instrument.
Witness my hand and official seal, this _____ day of __________, 2018.

____________________________________
Notary Public
My commission expires:
______________________





























22


Exhibit I
to the Collateral Agreement


[Form of]

SECURITIES PLEDGE SUPPLEMENT


This Securities Pledge Supplement, dated as of [                    ], is delivered pursuant to Section 2.02(c) of the Collateral Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Collateral Agreement;” capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Collateral Agreement), dated as of November 27, 2018, made by [EVERTEC, INC., a Commonwealth of Puerto Rico corporation] (“Parent”), evertec group, llc, a Commonwealth of Puerto Rico limited liability company (the “Borrower”), each Subsidiary of Parent that becomes a party hereto (each, a “Subsidiary Party”) and BANK OF AMERICA, N.A., as Collateral Agent (in such capacity, the “Agent”) for the Secured Parties. The undersigned hereby agrees that this Securities Pledge Supplement may be attached to the Collateral Agreement and that the Pledged Securities and/or Promissory Notes listed on this Securities Pledge Supplement shall be deemed to be and shall become part of the Pledged Collateral and shall secure all Secured Obligations.
(a)    Equity Interests of Companies and Subsidiaries
Legal Entities Owned
Record Owner
Certificate No(s).
No. Shares/Interest
 
 
 
 

(b)    Other Equity Interests
Legal Entities Owned
Record Owner
Certificate No(s).
No. Shares/Interest
 
 
 
 

(c)    Instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 








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[                                                  ],
as Pledgor
By:    ________________________________________
Name:
Title:
AGREED TO AND ACCEPTED:
Bank of America, N.A.,
as Collateral Agent


By:            
Name:
Title:








































24


Exhibit II
to the Collateral Agreement
SUPPLEMENT NO. ______ dated as of                     (this “Supplement”), to the Collateral Agreement dated as of November 27, 2018 (as heretofore amended and/or supplemented, the “Collateral Agreement”), among [EVERTEC, INC., a Puerto Rico corporation] (“Parent”), EVERTEC GROUP, LLC, a Puerto Rico limited liability company (“Borrower”), each Subsidiary Party party thereto and BANK OF AMERICA, N.A., as Collateral Agent (in such capacity, the “Agent”) for the Secured Parties (as defined therein).
A.    Reference is made to the Credit Agreement dated as of November 27, 2018 (as amended, restated, supplemented, waived or otherwise modified from time to time, the “Credit Agreement”), among Parent, the Borrower, the Lenders party thereto from time to time, the Agent and the other parties named therein.
B.    Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement and the Collateral Agreement referred to therein.
C.    The Pledgors have entered into the Collateral Agreement in order to induce the Lenders to make Loans and each L/C Issuer to issue Letters of Credit. Section 5.16 of the Collateral Agreement provides that additional Subsidiaries may become Subsidiary Parties under the Collateral Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the “New Subsidiary”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Subsidiary Party under the Collateral Agreement in order to induce the Lenders to make additional Loans and each L/C Issuer to issue additional Letters of Credit and as consideration for Loans previously made and Letters of Credit previously issued.
Accordingly, the Agent and the New Subsidiary agree as follows:
SECTION 1.    In accordance with Section 5.16 of the Collateral Agreement, the New Subsidiary by its signature below becomes a Subsidiary Party and a Pledgor under the Collateral Agreement with the same force and effect as if originally named therein as a Subsidiary Party and a Pledgor, and the New Subsidiary hereby (a) agrees to all the terms and provisions of the Collateral Agreement applicable to it as a Subsidiary Party and Pledgor thereunder and (b) represents and warrants that the representations and warranties made by it as a Pledgor thereunder are true and correct in all material respects on and as of the date hereof. In furtherance of the foregoing, the New Subsidiary, as security for the payment and performance in full of the Secured Obligations, does hereby create and grant to the Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns, a security interest in and Lien on all the New Subsidiary’s right, title and interest in and to the Collateral (as defined in the Collateral Agreement) of the New Subsidiary. Each reference to a “Subsidiary Party” or a “Pledgor” in the Collateral Agreement shall be deemed to include the New Subsidiary. The Collateral Agreement is hereby incorporated herein by reference.
SECTION 2.    The New Subsidiary represents and warrants to the Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or other similar laws affecting creditors’ rights generally, (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (iii) implied covenants of good faith and fair dealing.
SECTION 3.    This Supplement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract. This Supplement shall become effective when (a) the Agent shall have received a counterpart of this Supplement that bears the signature of the New Subsidiary and (b) the Agent has executed a counterpart hereof. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.
SECTION 4.    The New Subsidiary hereby represents and warrants that (a) set forth on Schedule I attached hereto is a true and correct schedule of all the Pledged Stock and Pledged Debt Securities of the New Subsidiary, (b) set forth on Schedule II attached hereto is a true and correct schedule of all Intellectual Property constituting United States or Puerto Rico registered Trademarks, Patents and Copyrights, (c) set forth on Schedule III attached hereto is a true and correct schedule of all Commercial Tort Claims in excess of $2,500,000 with respect to any Commercial Tort Claim for such New Subsidiary or $5,000,000 in the aggregate for all Commercial Tort Claims of all Pledgors and (d) set forth under its signature hereto, is the true and correct legal name of the New Subsidiary, its jurisdiction of formation and organizational ID number.

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SECTION 5.    Except as expressly supplemented hereby, the Collateral Agreement shall remain in full force and effect.
SECTION 6.    SUBJECT TO THE PROVISIONS OF SECTION 5.08 OF THE COLLATERAL AGREEMENT, THIS SUPPLEMENT, THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SUPPLEMENT AND ANY DISPUTES ARISING HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.    In the event any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Collateral Agreement shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 8.    All communications and notices hereunder shall be in writing and given as provided in Section 5.01 of the Collateral Agreement.
SECTION 9.    The New Subsidiary agrees to reimburse the Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, disbursements and other charges of counsel for the Agent.
[Signature Pages Follow]






































26


IN WITNESS WHEREOF, the New Subsidiary and the Agent have duly executed this Supplement to the Collateral Agreement as of the day and year first above written.
[Name of New Subsidiary]
By:    ________________________________________
Name:
Title:
Legal Name:
Jurisdiction of Formation:


ACKNOWLEDGMENT
STATE OF __________________
COUNTY OF ________________
I, _____________________________, a Notary Public for said County and State, do hereby certify that ____________________ personally appeared before me this day and stated that (s)he is _________________ of _____________________________ and acknowledged, on behalf of _____________________________ the due execution of the foregoing instrument.
Witness my hand and official seal, this _____ day of __________, 20__.

____________________________________
Notary Public
My commission expires:
______________________
























27


BANK OF AMERICA, N.A., as Collateral Agent,
By:    ________________________________________
Name:
Title:




















































28


Schedule I
to Supplement No. __ to the
Collateral Agreement
Pledged Collateral of the New Subsidiary
EQUITY INTERESTS
Number of Issuer Certificate
Registered Owner
Number and Class of Equity Interests
Percentage of
Equity Interests
 
 
 
 
 
 
 
 

DEBT SECURITIES
Issuer
Principal Amount
Date of Note
Maturity Date
 
 
 
 
 
 
 
 

OTHER PROPERTY


























29


Schedule II
to Supplement No. __ to the
Collateral Agreement
Intellectual Property of the New Subsidiary





















































30


Schedule III
to Supplement No. __ to the
Collateral Agreement
Commercial Tort Claims of the New Subsidiary


31


EXHIBIT 10.15

GUARANTEE AGREEMENT

This GUARANTEE AGREEMENT (this “Guarantee”), dated as of November 27, 2018, by and among the Loan Parties identified on the signature pages hereof and BANK OF AMERICA, N.A., as administrative agent and collateral agent (in such capacities, the “Agent”).
W I T N E S S E T H :
WHEREAS, EVERTEC, Inc., a Puerto Rico corporation (“Parent”), EVERTEC Group, LLC, a Puerto Rico limited liability company (the “Borrower”), the Lenders party thereto from time to time, Bank of America, N.A., as administrative agent and collateral agent for the Lenders, Swingline Lender and L/C Issuer, have entered into a Credit Agreement, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”);
WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective Loans to, and the L/C Issuers to issue certain Letters of Credit for the account of, the Borrower under the Credit Agreement that the Guarantors shall have executed and delivered this Guarantee to the Agent for the ratable benefit of the Secured Parties (as hereinafter defined); and
WHEREAS, each Guarantor will obtain benefits from the incurrence of Loans by, and the issuance of Letters of Credit for the account of, the Borrower, and accordingly desires to execute this Guarantee in order to satisfy the condition described in the preceding paragraph and to induce the Lenders to make Loans to, and the L/C Issuers to issue Letters of Credit for the account of, the Borrower.
NOW, THEREFORE, in consideration of the premises, covenants and mutual agreements set forth herein, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1.
DEFINITIONS.

Terms defined in the Credit Agreement shall have the meanings assigned to them in the Credit Agreement, unless otherwise defined herein. Section 1.02 of the Credit Agreement shall apply herein. References to this “Guarantee” shall mean this Guarantee, including all amendments, modifications and supplements and any annexes, exhibits and schedules to any of the foregoing, and shall refer to this Guarantee as the same may be in effect at the time such reference becomes operative. The following terms shall have the following meanings:
“Guaranteed Obligations” has the meaning assigned to such term in Section 2.
“Guarantors” means (i) with respect to the Guaranteed Obligations of the Borrower, each other Loan Party and (ii) with respect to the Guaranteed Obligations of each Loan Party other than the Borrower, the Borrower.
“Specified Loan Party” has the meaning assigned to such term in Section 3.
2.
THE GUARANTEE.

(a)Guarantee of Guaranteed Obligations. Each Guarantor unconditionally guarantees, jointly and severally (“solidariamente”) with the other Guarantors, the due and punctual payment and performance of the Secured Obligations (subject to the proviso in this sentence, the “Guaranteed Obligations”); provided that the Guaranteed Obligations of such Guarantor shall exclude any Excluded Swap Obligations. Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Guaranteed Obligation. Each Guarantor waives presentment to, demand of payment from and protest to the Borrower or any other Guarantor of any of the Guaranteed Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment.

(b)Guarantee of Payment. Each Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due and not of collection, and waives any right to require that any resort be had by the Agent or any other Secured Party to any security held for the payment of the Guaranteed Obligations or to any balance of any deposit account or credit on the books of the Agent or any other Secured Party in favor of any Loan Party or any other person, or any other asset of any Loan Party.

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(c)Furthermore, Evertec México Servicios de Procesamiento, S.A.de C.V. (the “Mexican Guarantor”), as Guarantor hereby expressly and irrevocably waives the benefits of orden, excusión and división contemplated by Articles 2814, 2815, 2817, 2818, 2820, 2821, 2822, 2823, 2839, 2840, 2841 and other applicable provisions of the Federal Civil Code of Mexico (Código Civil Federal) and similar articles in the Civil Codes of the States of Mexico, which are not reproduced herein since the Mexican Guarantor hereby expressly acknowledges that it knows the contents of each such legal provisions. In addition to the above, the Mexican Guarantor agrees that the Agent or any Secured Party may grant extensions, releases or reductions to the Guarantors (other than the Mexican Guarantor) without the need of its consent, and that such extensions, releases or reductions shall in no way affect the guarantee contained herein. Furthermore, until the Guaranteed Obligations have been paid in full, the Mexican Guarantor expressly waives the benefits established in Articles 2828, 2836, 2846, 2848 and 2849 of the Federal Civil Code of Mexico (Código Civil Federal) and similar articles in the Civil Codes of the States of Mexico and Mexico City.

(d)No Limitations. Except for termination of a Guarantor’s obligations hereunder as expressly provided for in Section 6(f) or, with respect to any Subsidiary that becomes a party hereto pursuant to Section 13 or otherwise, in any supplement to this Guarantee, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise (other than upon Payment in Full). Without limiting the generality of the foregoing, the obligations of each Guarantor hereunder shall not, to the extent permitted by applicable law, be discharged or impaired or otherwise affected by:

(i)the failure of the Agent or any other Secured Party to assert any claim or demand or to exercise or enforce any right or remedy under the provisions of any Loan Document or otherwise;

(ii)any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, any Loan Document or any other agreement, including with respect to any other Guarantor under this Guarantee;

(iii)the release of, or the failure to perfect any security interest in, or the exchange, substitution, release or any impairment of, any security held by the Agent or any other Secured Party for the Guaranteed Obligations;

(iv)any default, failure or delay, willful or otherwise, in the performance of the Guaranteed Obligations;

(v)any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the payment in full in cash or immediately available funds of all the Guaranteed Obligations);

(vi)any illegality, lack of validity or unenforceability of any Guaranteed Obligation;

(vii)any change in the corporate existence, structure or ownership of any Loan Party, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Loan Party or its assets or any resulting release or discharge of any Guaranteed Obligation (other than upon Payment in Full);

(viii)the existence of any claim, set-off or other rights that the Guarantor may have at any time against any other Loan Party, the Agent, any other Secured Party or any other person, whether in connection herewith or any unrelated transactions; provided that nothing herein will prevent the assertion of any such claim by separate suit or compulsory counterclaim for an unrelated transaction; and

(ix)any other circumstance (including any statute of limitations) or any existence of or reliance on any representation by the Agent or any other Secured Party that might otherwise constitute a defense to, or a legal or equitable discharge of, any Loan Party or any other guarantor or surety.

Each Guarantor expressly authorizes the Secured Parties to take and hold security for the payment and performance of the Guaranteed Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in their sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Guaranteed Obligations, all without affecting the obligations of any Guarantor hereunder. To the fullest extent permitted by applicable law, each Guarantor waives (A) any defense based on or arising out of any defense of any other Loan Party or the unenforceability of the Guaranteed Obligations or any part thereof

2


from any cause, or the cessation from any cause of the liability (including any act or omission of any Secured Party) of any other Loan Party, other than upon Payment in Full; (B) any defense arising by reason of any disability or other defense of any Loan Party; (C) any defense based on any claim that the Guarantor’s obligations exceed or are more burdensome than those of any other Loan Party; (D) any right to proceed against any Loan Party, proceed against or exhaust any security for the Guaranteed Obligations, or pursue any other remedy in the power of any Secured Party whatsoever and any defense based upon the doctrine of marshalling of assets or of election of remedies; (E) any benefit of and any right to participate in any security now or hereafter held by any Secured Party; and (F) any and all other defenses or benefits that may be derived from or afforded by applicable law limiting the liability of or exonerating guarantors or sureties. The Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Guaranteed Obligations, make any other accommodation with the Borrower or any other Guarantor or exercise any other right or remedy available to them against the Borrower or any other Guarantor, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Guaranteed Obligations (other than contingent or unliquidated obligations or liabilities to the extent no claim therefor has been made) have been paid in full in cash or immediately available funds. To the fullest extent permitted by applicable law, each Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against any other Loan Party, as the case may be, or any security.
(e)Reinstatement. Each Guarantor agrees that its guarantee hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Guaranteed Obligation is rescinded or must otherwise be restored by the Agent or any other Secured Party upon the bankruptcy or reorganization of the Borrower, any Guarantor or otherwise.

(f)Agreement To Pay; Subrogation. In furtherance of the foregoing and not in limitation of any other right that the Agent or any other Secured Party has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Borrower or any Guarantor to pay any Guaranteed Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Agent for distribution to the applicable Secured Party in cash the amount of such unpaid Guaranteed Obligation. Upon payment by any Guarantor of any sums to the Agent as provided above, all rights of such Guarantor against the Borrower or applicable Guarantor arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subject to Section 7(c) hereof.

(g)Information. Each Guarantor assumes all responsibility for being and keeping itself informed of the financial condition and assets of the Borrower and each other Guarantor, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that neither the Agent nor any other Secured Party will have any duty to advise such Guarantor of information known to it or any of them regarding such circumstances or risks.

(h)Maximum Liability. Each Guarantor, and by its acceptance of this Guarantee, the Agent for itself and on behalf of each Secured Party hereby confirms that it is the intention of all such persons that this Guarantee and the Guaranteed Obligations of each Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of the U.S. Bankruptcy Code or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to the extent applicable to this Guarantee and the Guaranteed Obligations of each Guarantor hereunder. To effectuate the foregoing intention, the Agent, for itself and on behalf of each Lender, and the Guarantors hereby irrevocably agree that the Guaranteed Obligations of each Guarantor under this Guarantee at any time shall be limited to the maximum amount as will result in the Guaranteed Obligations of such Guarantor under this Guarantee not constituting a fraudulent transfer or conveyance.

(i)Obligations Independent. The obligations of each Guarantor hereunder are those of primary obligor, and not merely as surety, and are independent of the Guaranteed Obligations and the obligations of any other guarantor, and a separate action may be brought against the Guarantor to enforce this Guarantee whether or not any other Loan Party or any other person is joined as a party.

(j)Representations and Covenants in the Credit Agreement. Each Guarantor hereby represents and warrants that the representations and warranties contained in Sections 3.01, 3.02 and 3.03 of the Credit Agreement as applied to such Guarantor are true and correct as of the date hereof.

3.KEEPWELL.

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Each Qualified Eligible Contract Participant Guarantor at the time the guarantee under this Guarantee by any Specified Loan Party (as defined below), or the grant by such Specified Loan Party of a security interest to secure such guarantee, becomes effective with respect to any Swap Obligation, hereby jointly and severally, absolutely, unconditionally and irrevocably undertakes to provide such funds or other support to each Specified Loan Party with respect to such Swap Obligation as may be needed by such Specified Loan Party from time to time to honor all of its obligations under this Guarantee and the other Loan Documents in respect of such Swap Obligation (but, in each case, only up to the maximum amount of such liability that can be hereby incurred without rendering such Qualified Eligible Contract Participant Guarantor’s obligations and undertakings under this Guarantee voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations and undertakings of each Qualified Eligible Contract Participant Guarantor under this Section 3 shall remain in full force and effect until the Secured Obligations have been indefeasibly paid and performed in full. Each Qualified Eligible Contract Participant Guarantor intends this Section to constitute, and this Section 3 shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support, or other agreement” for the benefit of, each Specified Loan Party for all purposes of the Commodity Exchange Act. For purposes hereof, “Specified Loan Party” shall mean any Loan Party that is not an “eligible contract participant” under the Commodity Exchange Act (determined prior to giving effect to this Section 3).
4.
FURTHER ASSURANCES.

Each Guarantor agrees, upon the written request of the Agent, to execute and deliver to the Agent, from time to time, any additional instruments or documents reasonably considered necessary by the Agent to cause this Guarantee to be, become or remain valid and effective in accordance with its terms.
5.
PAYMENTS FREE AND CLEAR OF TAXES.

Each Guarantor agrees that such Guarantor will perform or observe all of the terms, covenants and agreements that Section 2.18 of the Credit Agreement requires such Guarantor to perform or observe, subject to the qualifications set forth therein.
6.
OTHER TERMS.

(a)Headings. The headings in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

(b)Severability. Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(c)Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be given in the manner as set forth in Section 9.01 of the Credit Agreement.

(d)Successors and Assigns. Whenever in this Guarantee any Guarantor is referred to, such reference shall be deemed to include the permitted successors and assigns of such party (in accordance with the terms of the Credit Agreement); and all covenants, promises and agreements by any Guarantor that are contained in this Guarantee shall bind and inure to the benefit of its respective permitted successors and assigns.

(e)No Waiver; Cumulative Remedies; Amendments. Neither the Agent nor any Secured Party shall by any act (except by a written instrument permitted by this Section 6(e)) be deemed to have waived any right or remedy hereunder. No failure to exercise, nor any delay in exercising, on the part of the Agent or any Secured Party any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Agent or any Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Agent or such Secured Party would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. Neither this Guarantee nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Agent and the Guarantor or Guarantors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.08 of the Credit Agreement.

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(f)Termination. This Guarantee and the guarantees made herein shall terminate when all the Guaranteed Obligations have been Paid in Full.

A Guarantor shall automatically be released from its guarantee and its obligations hereunder, without delivery of any instrument or performance of any act by any party, upon (i) the consummation of any transaction permitted by the Credit Agreement, as a result of which such Guarantor ceases to be a Subsidiary and (ii) the effectiveness of any written consent to the release of a Guarantor pursuant to Section 9.08 of the Credit Agreement.
In connection with any termination or release pursuant to this Section 6(f), the Agent shall execute and deliver to the Borrower, at the Borrower’s expense, evidence of such release and all documents to evidence such termination or release as reasonably requested by the Borrower in form and substance reasonably satisfactory to the Agent, subject to receipt by the Agent of such certifications of the Borrower or Parent as it may reasonably request regarding compliance of such release with this Section 6(f). Any execution and delivery of documents pursuant to this Section 6(f) shall be without recourse to or warranty by the Agent.
(g)Counterparts. This Guarantee may be executed in any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Guarantee by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

(h)Stay of Acceleration. In the event that acceleration of the time for payment of any of the Guaranteed Obligations is stayed, in connection with any case commenced by or against any Guarantor or the Borrower under any Debtor Relief Laws, or otherwise, all such amounts shall nonetheless be payable by each Guarantor immediately upon demand by the Secured Parties.

(i)Expenses. The parties hereto shall pay all out-of-pocket expenses incurred by the Agent or any Lender in connection with the enforcement of this Guarantee and the other Loan Documents in connection with the enforcement or protection of its rights under this Guarantee, including the reasonable fees, charges and disbursements of counsel for the Agent and the Lenders (including the reasonable fees, charges and disbursements of counsel for the Agent and the Joint Lead Arrangers, and, if necessary, the reasonable fees, charges and disbursements of one local counsel per jurisdiction and one additional counsel for the affected persons, taken as a whole, to the extent of any actual or perceived conflict of interest). The agreements in this paragraph shall survive the resignation of the Agent, the replacement of any Lender, the termination of the Guarantee and the repayment, satisfaction or discharge of all the other Guaranteed Obligations.

(j)Recitals. Each Grantor represents that it will obtain benefits from the incurrence of Loans by, and the issuance of Letters of Credit for the account of, the Borrower.

7.INDEMNITY, SUBROGATION AND SUBORDINATION.

(a)Indemnity and Subrogation. In addition to all such rights of indemnity and subrogation as the Guarantors may have under applicable law (but subject to Section 7(c)), the Borrower and Parent agree that (i) in the event a payment shall be made by any Guarantor under this Guarantee in respect of any Guaranteed Obligation of the Borrower, the Borrower shall indemnify such Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the person to whom such payment shall have been made to the extent of such payment and (ii) in the event any assets of any Guarantor shall be sold pursuant to this Guarantee or any other Security Document to satisfy in whole or in part a Guaranteed Obligation of the Borrower, the Borrower shall indemnify such Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold.

(b)Contribution and Subrogation. Each Guarantor (a “Contributing Guarantor”) agrees (subject to Section 7(c)) that, in the event a payment shall be made by any other Guarantor hereunder in respect of any Guaranteed Obligation or assets of any other Guarantor shall be sold pursuant to any Security Document to satisfy any Guaranteed Obligation owed to any Secured Party and such other Guarantor (the “Claiming Guarantor”) shall not have been fully indemnified by the Borrower as provided in Section 7(a), the Contributing Guarantor shall indemnify the Claiming Guarantor in an amount equal to the amount of such payment or the greater of the book value or the fair market value of such assets, as applicable, in each case multiplied by a fraction of which the numerator shall be the net worth of such Contributing Guarantor on the date hereof and the denominator shall be the aggregate net worth of all the Guarantors on the date hereof (or, in the case of any Guarantor becoming a party hereto pursuant to Section 5.10(d) of the Credit Agreement, the date of the supplement hereto executed and delivered by such Guarantor). Any Contributing Guarantor making any payment to a Claiming Guarantor

5


pursuant to this Section 7(b) shall be subrogated to the rights of such Claiming Guarantor under Section 7(a) to the extent of such payment.

(c)Subordination.

Notwithstanding any provision of this Guarantee to the contrary, all rights of the Guarantors under Sections 7(a) and 7(b) and all other rights of indemnity, contribution or subrogation of any Guarantor under applicable law or otherwise shall be fully subordinated to the payment in full in cash or immediately available funds of the Guaranteed Obligations (other than contingent or unliquidated obligations or liabilities to the extent no claim therefor has been made). If the Secured Parties so request, any such obligation or indebtedness of the Borrower to the Guarantors shall be enforced and performance received by the Guarantors as trustee for the Secured Parties and the proceeds thereof shall be paid over to the Secured Parties on account of the Guaranteed Obligations, but without reducing or affecting in any manner the liability of the Guarantor under this Guarantee. No failure on the part of the Borrower or any Guarantor to make the payments required by Sections 7(a) and 7(b) (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of any Guarantor with respect to its obligations hereunder, and each Guarantor shall remain liable for the full amount of the obligations of such Guarantor hereunder.
Each Guarantor hereby agrees that all Indebtedness and other monetary obligations owed by it to any other Guarantor or any Subsidiary shall be fully subordinated to the payment in full in cash or immediately available funds of the Guaranteed Obligations (other than contingent or unliquidated obligations or liabilities).
8.
SECURITY.

To secure payment of each Guarantor’s obligations under this Guarantee, concurrently with the execution of this Guarantee, certain Guarantors have entered into certain Security Documents or may enter into certain other Security Documents pursuant to which each such Guarantor has granted to the Agent for the benefit of the Lenders and the other Secured Parties, a security interest in the Collateral described therein.
9.
APPLICABLE LAW.

THIS GUARANTEE AND ANY DISPUTES ARISING HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
10.
CONSENT TO JURISDICTION.

(a)Each party to this Guarantee hereby irrevocably and unconditionally submits, for itself and its property, to the jurisdiction of any New York State court or federal court of the United States of America sitting in New York City in the borough of Manhattan, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Guarantee or any other Loan Documents to which it is a party (unless, in the case of any other Loan Document, otherwise expressly provided in such other Loan Document), or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Guarantee shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Guarantee or any of the other Loan Documents in the courts of any jurisdiction, except that each of the Guarantors agrees that (a) it will not bring any such action or proceeding in any court other than New York Courts (it being acknowledged and agreed by the Loan Parties that any other forum would be inconvenient and inappropriate in view of the fact that more of the Lenders who would be affected by any such action or proceeding have contacts with the State of New York than any other jurisdiction), and (b) in any such action or proceeding brought against any Guarantor in any other court, it will not assert any cross-claim, counterclaim or setoff, or seek any other affirmative relief, except to the extent that the failure to assert the same will preclude such Guarantor from asserting or seeking the same in the New York Courts.

(b)Each party to this Guarantee hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Guarantee or any other Loan Document in any New York Courts. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.


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(c)By the execution and delivery of this Guarantee, each party to this Guarantee (i) acknowledges that it has, by separate written instrument, designated and appointed CT Corporation System, with an office at 111 Eighth Avenue, New York, New York 10011 (the “Service Agent”) (and any successor entity), as its authorized agent upon which process may be served in any suit or proceeding arising out of or relating to this Guarantee that may be instituted in any New York Court, and acknowledges that the Service Agent has accepted such designation, (ii) submits to the jurisdiction of any such court in any such suit or proceeding and (iii) agrees that service of process upon the Service Agent and written notice of said service to any party to this Guarantee in accordance with the manner provided for notices in Section 6(c) above shall be deemed in every respect effective service of process upon such party to this Guarantee, in any such suit or proceeding. Each party to this Guarantee further agrees to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of the Service Agent in full force and effect so long as this Guarantee is in effect; provided that each party to the Guarantee, with respect to such party, may and to the extent the Service Agent ceases to be able to be served on the basis contemplated herein shall, by written notice to the Agent, designate such additional or alternative agent for service of process under this paragraph (c) that (i) maintains an office located in the Borough of Manhattan, City of New York, State of New York and (ii) is either (x) counsel for the Borrower or (y) a corporate service company which acts as agent for service of process for other persons in the ordinary course of its business. Such written notice shall identify the name of such agent for service of process and the address of the office of such agent for service of process in the Borough of Manhattan, City of New York, State of New York. To the extent that any party to the Guarantee has or hereafter may acquire any immunity from jurisdiction of any court of (i) any jurisdiction in which it owns or leases property or assets, (ii) the United States or the State of New York or (iii) the Commonwealth of Puerto Rico or any political subdivision thereof or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property and assets or this Guarantee or any of the other Loan Documents or actions to enforce judgments in respect of any thereof, such party to the Guarantee hereby irrevocably waives such immunity in respect of its obligations under the above-referenced documents, to the extent permitted by law. Nothing in this Guarantee, any other Loan Document will affect the right of any party to this Guarantee to serve process in any other manner permitted by law.

11.WAIVER OF JURY TRIAL.

EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTEE OR ANY OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTEE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.
12.
RIGHT OF SET OFF.

If an Event of Default shall have occurred and be continuing, each Lender, the Agent and each L/C Issuer is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender, the Agent or such L/C Issuer to or for the credit or the account of any Guarantor against any and all of the obligations of such Guarantor now or hereafter existing under this Guarantee owed to such Lender, the Agent or such L/C Issuer irrespective of whether or not such Lender, the Agent or such L/C Issuer shall have made any demand under this Guarantee and although such obligations may be unmatured. The rights of each Lender, the Agent and L/C Issuer under this Section 12 are in addition to other rights and remedies (including other rights of set-off) that such Lender, the Agent and such L/C Issuer may have.
13.
ADDITIONAL SUBSIDIARIES.

Upon execution and delivery by the Agent and any Subsidiary that is required to become a party hereto by Section 5.10 of the Credit Agreement (or otherwise elects to become a party hereto) of an instrument in the form of Exhibit I hereto, such Subsidiary shall become a Guarantor hereunder with the same force and effect as if originally named as a Guarantor herein. The execution and delivery of any such instrument shall not require the consent of any other party to this Guarantee. The rights and obligations of each party to this Guarantee shall remain in full force and effect notwithstanding the addition of any new party to this Guarantee.
14.
JUDGMENT CURRENCY.

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If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of each Guarantor and the Borrower in respect of any such sum due from it to the Agent or the Lenders hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of the Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Agent of any sum adjudged to be so due in the Judgment Currency, the Agent may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Agent from the applicable Guarantor or the Borrower in the Agreement Currency, such party to this Guarantee agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Agent or the person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Agent in such currency, the Agent agrees to return the amount of any excess to such party to this Guarantee (or to any other person who may be entitled thereto under applicable law).
15.
MISCELLANEOUS.

No provision of this Guarantee may be waived, amended, supplemented or modified, except by a written instrument executed by the Secured Parties and the Guarantors (at the Secured Parties’ discretion, either by manual execution on paper or through an electronic record that has been electronically signed by such party and has been rendered tamper-evident as part of the signing process). The rights and remedies herein provided are cumulative and not exclusive of any other rights, powers, privileges or remedies provided by law or in equity or under any other instrument, document or agreement now existing or hereafter arising.



































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IN WITNESS WHEREOF, each Guarantor has caused this Guarantee to be executed and delivered as of the date first above written.
EVERTEC, INC., as Parent and Guarantor
By:    ______________________________________
Name:
Title:
EVERTEC GROUP, LLC, as Borrower and Guarantor
By:    ______________________________________    
Name:
Title:
EVERTEC INTERMEDIATE HOLDINGS, LLC, as Guarantor
By:    ______________________________________    
Name:
Title:
EVERTEC COSTA RICA, S.A., as Guarantor
By:    ______________________________________    
Name:
Title:
EVERTEC PANAMÁ, S.A., as Guarantor
By:    ______________________________________
Name:
Title:
EVERTEC DOMINICANA, SAS, as Guarantor
By:    ______________________________________
Name:
Title:
EVERTEC MÉXICO SERVICIOS DE PROCESAMIENTO, S.A. DE C.V., as Guarantor
By:    ______________________________________
Name:
Title:
EVERTEC GUATEMALA, S.A., as Guarantor
By:    ______________________________________    
Name:
Title:

9


Accepted and Agreed to:
BANK OF AMERICA, N.A., as Agent
By:    ______________________________________    
Name:
Title:



















































10



Exhibit I
to Guarantee


SUPPLEMENT NO. ___ dated as of ____________ (this “Supplement”), to the Guarantee Agreement dated as of November 27, 2018 (the “Guarantee”), by and among Parent (as defined herein), the Borrower (as defined herein), the other Loan Parties identified as such on the signature pages hereof (together with Parent, each, a “Guarantor” and collectively, the “Guarantors”), and BANK OF AMERICA, N.A., as administrative agent and collateral agent (in such capacities, the “Agent”).
A.    Reference is made to the Credit Agreement dated as of November 27, 2018 (as amended, restated, supplemented, waived or otherwise modified from time to time, the “Credit Agreement”), among EVERTEC, Inc., a Puerto Rico corporation (“Parent”), EVERTEC Group, LLC, a Puerto Rico limited liability company (the “Borrower”), the Lenders party thereto from time to time, Bank of America, N.A., as administrative agent and collateral agent for the Lenders, Swingline Lender and L/C Issuer.
B.    Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement or the Guarantee referred to therein, as applicable.
C.    The Guarantors have entered into the Guarantee in order to induce the Lenders to extend credit to the Borrower subject to the terms and conditions set forth in the Credit Agreement. Section 13 of the Guarantee provides that additional Subsidiaries may become Guarantors under the Guarantee by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the “New Subsidiary”) will obtain benefits from the incurrence of Loans by, and the issuance of Letters of Credit for the account of, the Borrower and, thus, is executing this Supplement to become a Guarantor under the Guarantee in order to induce the Lenders to make additional Loans and each L/C Issuer to issue additional Letters of Credit and as consideration for Loans previously made and Letters of Credit previously issued.
Accordingly, in consideration of the premises, covenants and mutual agreements set forth herein, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the Agent and the New Subsidiary agree as follows:
SECTION 1.    In accordance with Section 13 of the Guarantee, the New Subsidiary by its signature below becomes a Guarantor under the Guarantee with the same force and effect as if originally named therein as a Guarantor and the New Subsidiary hereby agrees to all the terms and provisions of the Guarantee applicable to it as a Guarantor thereunder. In furtherance of the foregoing, the New Subsidiary does hereby guarantee to the Agent the due and punctual payment of the Guaranteed Obligations as set forth in the Guarantee. Each reference to a “Guarantor” in the Guarantee shall be deemed to include the New Subsidiary. The Guarantee is hereby incorporated herein by reference.
SECTION 2.    The New Subsidiary represents and warrants to the Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or other similar laws affecting creditors’ rights generally, (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (iii) implied covenants of good faith and fair dealing.
SECTION 3.    The New Subsidiary is a company duly incorporated under the laws of [name of relevant jurisdiction]. [The guarantee of the New Subsidiary giving a guarantee other than in respect of its Subsidiary is subject to the limitations that are agreed in respect of the New Subsidiary [insert guarantee limitation wording for relevant jurisdiction]].1  

_______________________________
1     Subject to Agreed Security Principles.


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SECTION 4.    This Supplement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract. This Supplement shall become effective when (a) the Agent shall have received a counterpart of this Supplement that bears the signature of the New Subsidiary and (b) the Agent has executed a counterpart hereof. Delivery of an executed signature page to this Supplement by facsimile or electronic transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.
SECTION 5.    Except as expressly supplemented hereby, the Guarantee shall remain in full force and effect.
SECTION 6.    THIS SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.    This Supplement may be executed in two or more counterparts, each of which shall constitute an original but all of which, when taken together, shall constitute but one and the same instrument. Delivery of an executed counterpart to this Supplement by facsimile transmission (or other electronic transmission pursuant to procedures approved by the Administrative Agent) shall be as effective as delivery of a manually signed original.
SECTION 7.    In the event any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Guarantee shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 8.    All communications and notices hereunder shall be in writing and given as provided in Section 6(c) and 10(c) of the Guarantee.
SECTION 9.    The New Subsidiary agrees to reimburse the Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, disbursements and other charges of counsel for the Agent.
SECTION 10.     The New Subsidiary represents that it will obtain benefits from the incurrence of Loans by, and the issuance of Letters of Credit for the account of, the Borrower.

























12


IN WITNESS WHEREOF, the New Subsidiary and the Agent have duly executed this Supplement to the Guarantee as of the day and year first above written.
[Name of New Subsidiary]
By:    ______________________________________    
Name:
Title:
Legal Name:
Jurisdiction of Formation:
Location of Chief Executive Office:





BANK OF AMERICA, N.A., as Agent
By:    ______________________________________    
Name:
Title:
        
    


13

EXHIBIT 10.21

EVERTEC, INC.
2013 EQUITY INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (together with the Vesting Schedule (defined below), this “Agreement”) is made as of this 28th day of February, 2018 (the “Date of Grant”), by and between EVERTEC, Inc. (the “Company”) and you (the “Participant”). Defined terms used but not otherwise defined herein will have the meanings attributed to them in the Plan (defined below).

W I T N E S S E T H

WHEREAS, the Company maintains the EVERTEC, Inc. 2013 Equity Incentive Plan (the “Plan”);

WHEREAS, in connection with the Participant’s service as an employee of the Company or any of its Affiliates and Subsidiaries (the “Employment”), the Company desires to grant Restricted Stock Units (“RSUs”) to the Participant (the “Award”), subject to the terms and conditions of the Plan and this Agreement; and

WHEREAS, such RSUs will be time-based RSUs (“Time-Based RSUs”), which vest on a future specified date or dates, as specified in Exhibit A.

NOW, THEREFORE, in consideration of the covenants and agreements contained herein and for other good and valuable consideration, the parties agree as follows:

1.
Grant of RSUs. In consideration of the Employment, the Company will grant to the Participant the number of RSUs set forth in the vesting schedule attached hereto as Exhibit A (the “Vesting Schedule”). Each RSU represents the unfunded and unsecured promise of the Company to deliver to the Participant one share of common stock, par value $.01 per share, of the Company (the “Common Stock”) on the Settlement Date (as defined in Section 6 hereof).

2.
Purchase Price. The purchase price of the RSUs shall be deemed to be zero U.S. Dollars ($0) per share.

3.
Vesting. The RSUs shall vest and become non-forfeitable on the dates established in the Vesting Schedule (each such date, a “Vesting Date”), provided that the Participant is actively carrying out his or her duties in connection with the Employment at all times from the Date of Grant through each respective Vesting Date.

4.
RSUs Vesting Acceleration.

(a)
In the event of the Employment’s termination due to Participant’s death or Disability (defined below), then all of the Time-Based RSUs that have not become vested as of the date of the death or the Termination Date (defined below) due to Participant’s Disability, as applicable, shall automatically vest, conditioned on the Participant executing a general release of claims related to or arising from Participant’s Employment, in a form acceptable to the Company.
(b)
In the event the Employment is terminated for any other reason, including without limitation by the Company with or without cause or due to the Participant’s resignation, then all RSUs that have not become vested as of the Termination Date shall automatically be forfeited.

(c)
For purposes of this Section 4:

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“Disability” has the following meaning: the Participant’s inability to perform the Employment by reason of any medically determinable physical or mental impairment for a period of 6 months or more in any 12 month period.

“Termination Date” is the date the Participant’s Employment is terminated under the circumstances set forth in (a) or (b) above.

5.
Dividend Equivalents. If the Company pays an ordinary cash dividend on its outstanding Common Stock at any time between the Date of Grant and the Settlement Date (as defined in Section 6 below) -- provided that the date on which stockholders of record are determined for purposes of paying a cash dividend on issued and outstanding shares of the Common Stock falls after the Date of Grant -- the Participant shall receive on the Settlement Date or at the next payroll payment either: (a) a number of Shares (as defined in Section 6 below) having a Fair Market Value (defined herein) on the Vesting Date equal to the aggregate amount of the cash dividends paid by the Company on a single share of the Common Stock, multiplied by the number of RSUs that are settled on the Settlement Date; or (b) a lump sum cash payment equal to the aggregate amount of the cash dividends paid by the Company on a single share of the Common Stock, multiplied by the number of RSUs that are settled on the Settlement Date ((a) or (b) as applicable, the “Dividend Payment”); provided, however, that in the case of (a), any partial Share resulting from the calculation will be paid in cash.

For purposes of this Agreement, “Fair Market Value” means the closing price of the Company’s Common Stock at the close of business of the applicable date.

6.
Settlement. Within 75 days following the day any RSUs are vested in accordance with the terms and conditions of this Agreement (the “Settlement Date”), the Company shall (a) issue and deliver to the Participant one share of Common Stock for each vested RSU (the “Shares”) and enter the Participant’s name as a shareholder of record or beneficial owner with respect to the Shares on the books of the Company; and (b) calculate the Dividend Payment. The Participant agrees that the Company may deduct from the Dividend Payment any amounts owed by the Participant to the Company with respect to any whole Share issued by the Company to the Participant to cover any partial Share resulting from the settlement process.

7.
Restrictive Covenants.

(a)
The Participant hereby acknowledges that he or she is familiar with the Confidential Information (defined below) of the Company and its Affiliates and Subsidiaries. The Participant acknowledges and agrees that the Company would be irreparably damaged if the Participant were to provide services to any person competing with the Company or any of its Affiliates or Subsidiaries or engaged in a Similar Business (defined below) and that such competition by the Participant would result in a significant loss of goodwill by the Company. Therefore, the Participant agrees that the following are reasonable restrictions:

a.
Similar Business: In consideration of the Award, during the Employment and for a term of 12 months after the Termination Date, the Participant shall not, directly or indirectly, engage in Similar Business services or activities within Puerto Rico or the country(ies) in which the Participant is involved with as part of his Employment; provided, that nothing herein shall prohibit the Participant from being a passive owner of not more than 5% of the outstanding stock of any class of a corporation which is publicly traded so long as the Participant has no active participation in the business of such corporation.

b.
Clients: In consideration of the Award, for a period of 12 months after the Termination Date, the Participant shall not, directly or indirectly, solicit or provide, without the express written consent from the Company, any service for any Client (defined below), such as those Similar Business services or activities provided by the Participant during the Employment.

2


(b)
In consideration of the Award, during the Employment and ending 12 months after the Termination Date, the Participant shall not directly, or indirectly through another person, (i) induce or attempt to induce any employee, representative, agent or consultant of the Company or any of its Affiliates or Subsidiaries to leave the employ or services of the Company or any of its Affiliates or Subsidiaries, or in any way interfere with the relationship between the Company or any of its Affiliates or Subsidiaries and any employee, representative, agent or consultant thereof; or (ii) hire any person who was an employee, representative, agent or consultant of the Company or any of its Affiliates or Subsidiaries at any time during the 12 month period immediately prior to the date on which such hiring would take place. No action by another person or entity shall be deemed to be a breach of this provision unless the Participant directly or indirectly assisted, encouraged or otherwise counseled such person or entity to engage in such activity.

(c)
For purposes of this Section 7:

a.
“Client” shall mean any person or entity that was a client or customer of the Company as of the Termination Date and for whom the Participant provided any services on behalf of the Company or any of its Affiliates or Subsidiaries at any time, during the term of 5 years prior to the Termination Date.

b.
“Similar Business” shall mean the same or substantially the same business activity or activities performed or engaged by the Participant for, or on behalf, of the Company.
c.
“Confidential Information” means information that is not generally known to the public (but for purposes of clarity, Confidential Information shall never exclude any such information that becomes known to the public because of Participant’s unauthorized disclosure) and that is used, developed or obtained by the Company in connection with its business, including, but not limited to, information, observations and data obtained by the Participant during the Employment concerning (A) the business or affairs of the Company, its Affiliates or Subsidiaries; (B) products or services; (C) fees, costs and pricing structures; (D) designs; (E) analyses; (F) drawings, photographs and reports; (G) computer software, including operating systems, applications and program listings; (H) flow charts, manuals and documentation; (I) databases; (J) accounting and business methods; (K) inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice; (L) customers and Clients and customer or Client lists; (M) other copyrightable works; (N) all production methods, processes, technology and trade secrets; and (O) all similar and related information in whatever form. Confidential Information will not include any information that has been published in a form generally available to the public (except as a result of Participant’s unauthorized disclosure or any third party’s unauthorized disclosure resulting from any direct or indirect influence by Participant) prior to the date Participant proposes to disclose or use such information. Confidential Information will not be deemed to have been published or otherwise disclosed merely because individual portions of the information have been separately published, but only if all material features comprising such information have been published in combination.

8.
Taxes. Unless otherwise required by applicable law, on the Settlement Date, (a) the Shares and the Dividend Payment will be considered ordinary income for tax purposes and subject to all applicable payroll taxes; (b) the Company shall report such income to the appropriate taxing authorities as it determines to be necessary and appropriate; (c) the Participant shall be responsible for payment of any taxes due in respect of the Shares and the Dividend Payment; and (d) the Company shall withhold taxes in respect of the Shares and the Dividend Payment (a “Tax Payment”). In order to satisfy the Participant’s obligation to pay the Tax Payment, the Company will withhold from any Shares otherwise to be delivered to the Participant, a number of whole shares of Common Stock having a Fair Market Value equal to the Tax Payment (i.e., a “cashless exercise”); provided, however, that the Participant may elect to satisfy his or her obligation to pay the Tax Payment through a non-

3

cashless exercise, by notifying the Company within at least 5 business days before the Settlement Date. If the Participant does not provide such notification within the established timeframe, the Company will proceed with the default method of the cashless exercise. If the Participant fails to pay any required Tax Payment, the Company may, in its discretion, deduct any Tax Payments from any amount then or thereafter payable by the Company to the Participant and take such other action as deemed necessary to satisfy all obligations for the Tax Payment (including reducing the number of Shares delivered on the Settlement Date). The Participant agrees to pay the Company in the form of a check or cashier’s check any overage of the Tax Payment paid by the Company as a result of making whole any partial Share issued through a cashless exercise. Furthermore, the Participant acknowledges and agrees that the Participant will be solely responsible for making any Tax Payment directly to the appropriate taxing authorities should the Participant opt not to satisfy his or her Tax Payment through a cashless exercise.

9.
Rights as Stockholder. Upon and following the Settlement Date (but not before), the Participant shall be the record or beneficial owner of the Shares unless and until such Shares are sold or otherwise disposed of, and, if a record owner, shall be entitled to all rights of a stockholder of the Company (including voting rights).

10.
Governing Law. This Agreement shall be construed and interpreted in accordance with the laws of the Commonwealth of Puerto Rico applicable to contracts to be performed therein.

11.
Notice. Every notice or other communication relating to this Agreement shall be made in writing and the notice, request or other communication shall be deemed to be received upon receipt by the party entitled thereto. Any notice, request or other communication by the Participant should be delivered to the Company’s General Counsel.

12.
Miscellaneous. This Agreement and the Plan contain the entire agreement between the parties hereto with respect to the subject matter contained herein and supersede all prior communications, representations and negotiations in respect thereto. No change, modification or waiver of any provision of this Agreement shall be valid unless in writing and signed by the parties hereto. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Participant, acquire any rights hereunder in accordance with this Agreement or the Plan. The terms and provisions of the Plan and the Vesting Schedule are incorporated herein by reference, and the Participant hereby acknowledges receiving a copy of the Plan. In the event of a conflict or inconsistency between the terms and provisions of the Plan and the provisions of this Agreement, the Plan shall govern and control.

By clicking “I Accept” in the checkbox below, the Participant is hereby agreeing to the terms and conditions of this Agreement as of the Date of Grant set forth above, and that he or she has read the same, including the Vesting Schedule.


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EXHIBIT 21.1
Subsidiaries of EVERTEC, Inc.
 
Name
  
Jurisdiction of Incorporation
EVERTEC Intermediate Holdings, LLC
 
Puerto Rico
EVERTEC Group, LLC
  
Puerto Rico
EVERTEC USA, LLC
 
Delaware
EVERTEC Costa Rica, S.A.
  
Costa Rica
EVERTEC Dominicana, SAS
  
Dominican Republic
EVERTEC Panama, S.A.
  
Panama
EVERTEC Guatemala, S.A.
 
Guatemala
EVERTEC Mexico Servicios de Procesamiento, S.A. de C.V.
 
Mexico
Evertec Colombia, SAS
 
Colombia
EGM Ingenieria Sin Fronteras, S.A.S.
 
Colombia
Evertec Chile Holdings SpA
 
Chile
Evertec Chile SpA
 
Chile
Evertec Chile Servicios Profesionales SpA
 
Chile
Evertec Chile Global SpA
 
Chile
Paytrue S.A.
 
Uruguay
Caleidón S.A.
 
Uruguay
Evertec Brasil Solutions Informática Ltda.
 
Brazil
Tecnopago España SL
 
Spain




Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-190381 on Form S-8 of our reports dated February 27, 2020 relating to the consolidated financial statements of EVERTEC, Inc. and the effectiveness of EVERTEC, Inc.’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of EVERTEC, Inc. for the year ended December 31, 2019.

/s/ Deloitte & Touche LLP
San Juan, Puerto Rico
February 27, 2020




EXHIBIT 31.1
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a)
I, Morgan M. Schuessler, Jr., certify that:
1.
I have reviewed this report on Form 10-K of EVERTEC. 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(s) 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(s) 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: February 27, 2020
 
/s/ Morgan M. Schuessler, Jr.
 
 
Morgan M. Schuessler, Jr.
 
 
Chief Executive Officer




EXHIBIT 31.2
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a)
I, Joaquin A. Castrillo-Salgado, certify that:
1.
I have reviewed this report on Form 10-K of EVERTEC, 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(s) 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(s) 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: February 27, 2020
 
/s/ Joaquin A. Castrillo-Salgado
 
 
Joaquin A. Castrillo-Salgado
 
 
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
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 , the undersigned officer of EVERTEC, Inc. (the “Company”), does hereby certify, to such officer’s knowledge, that :
The Annual Report on Form 10-K for the year ended December 31, 2019 (the “Form 10-K”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Date: February 27, 2020
 
/s/ Morgan M. Schuessler, Jr.
 
 
Morgan M. Schuessler, Jr.
 
 
Chief Executive Officer




EXHIBIT 32.2
Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of EVERTEC, Inc. (the “Company”), does hereby certify, to such officer’s knowledge, that :
The Annual Report on Form 10-K for the year ended December 31, 2019 (the “Form 10-K”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Date: February 27, 2020
 
/s/ Joaquin A. Castrillo-Salgado
 
 
Joaquin A. Castrillo-Salgado
 
 
Chief Financial Officer