As filed with the Securities and Exchange Commission on October 5, 2018
Registration No. 333-227614
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM S‑1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
ADVANCE HOLDINGS, LLC
to be converted as described herein into a corporation named
REVOLVE GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware |
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5961 |
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46-1640160 |
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(State or other Jurisdiction of Incorporation or Organization) |
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(Primary Standard Industrial Classification Code Number) |
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(I.R.S. Employer Identification Number) |
16800 Edwards Road
Cerritos, California 90703
(562) 677-9480
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Michael Karanikolas
Michael Mente
16800 Edwards Road
Cerritos, California 90703
(562) 677-9480
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
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Michael Nordtvedt Katherine H. Ku Wilson Sonsini Goodrich & Rosati Professional Corporation 633 West Fifth Street, Suite 1550 Los Angeles, California 90071 (323) 210-2900 |
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Jesse Timmermans Jodi Lumsdaine Chapin Revolve Group, Inc. 16800 Edwards Road Cerritos, California 90703 (562) 677-9480 |
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Thomas Holden Ropes & Gray LLP Three Embarcadero Center San Francisco, California 94111 (415) 315-6300 |
Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
☒ |
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Smaller reporting company |
☐ |
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Emerging growth company |
☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities to be Registered |
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Proposed Maximum Aggregate Offering Price (1)( 2) |
Amount of Registration Fee |
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Class A Common Stock, par value $0.001 |
$ |
100,000,000.00 |
$ |
12,450.00 (3) |
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(1) |
Includes offering price of any additional shares that the underwriters have the option to purchase. |
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(2) |
Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. |
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(3) |
The Registration previously paid $12,450 of this amount in connection with the prior filing of this registration statement. |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
Advance Holdings, LLC, the registrant whose name appears on the cover of this registration statement, is filing this Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-227614), or the Registration Statement, to file certain exhibits and restate the list of exhibits set forth in Item 16 of Part II of the Registration Statement. Accordingly, this Amendment consists only of the facing page, this explanatory note, Part II of the Registration Statement, the signature page to the Registration Statement and the filed exhibits. The prospectus is unchanged and has been omitted.
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Estimated expenses, other than underwriting discounts and commissions, payable by the registrant in connection with the sale of the Class A common stock being registered under this registration statement are as follows:
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Amount to Be Paid |
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SEC registration fee |
$ |
12,450 |
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FINRA filing fee |
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15,500 |
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Exchange listing fee |
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* |
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Printing and engraving expenses |
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* |
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Legal fees and expenses |
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* |
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Accounting fees and expenses |
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* |
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Transfer agent and registrar fees and expenses |
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* |
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Miscellaneous |
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* |
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Total |
$ |
* |
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* |
To be completed by amendment |
Item 14. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law empowers a corporation to indemnify its directors and officers and to purchase insurance with respect to liability arising out of their capacity or status as directors and officers, provided that the person acted in good faith and in a manner the person reasonably believed to be in its best interests, and, with respect to any criminal action, had no reasonable cause to believe the person’s actions were unlawful. The Delaware General Corporation Law further provides that the indemnification permitted thereunder shall not be deemed exclusive of any other rights to which the directors and officers may be entitled under the corporation’s bylaws, any agreement, a vote of stockholders or otherwise. The certificate of incorporation of the registrant provides for the indemnification of the registrant’s directors and officers to the fullest extent permitted under the Delaware General Corporation Law. In addition, the bylaws of the registrant require the registrant to fully indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) by reason of the fact that such person is or was a director, or officer of the registrant, or is or was a director or officer of the registrant serving at the registrant’s request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney’s fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, to the fullest extent permitted by applicable law.
Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except (1) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) for payments of unlawful dividends or unlawful stock repurchases or redemptions or (4) for any transaction from which the director derived an improper personal benefit. The registrant’s certificate of incorporation provides that the registrant’s directors shall not be personally liable to it or its stockholders for monetary damages for breach of fiduciary duty as a director and that if the Delaware General Corporation Law is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of the registrant’s directors shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended.
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Section 174 of the Delaware General Corporation Law provides, among other things, that a director who willfully or negligently approves of an unlawful payment of dividends or an unlawful stock purchase or redemption may be held liable for such actions. A director who was either absent when the unlawful actions were approve d, or dissented at the time, may avoid liability by causing his or her dissent to such actions to be entered in the books containing minutes of the meetings of the board of directors at the time such action occurred or immediately after such absent directo r receives notice of the unlawful acts.
As permitted by the Delaware General Corporation Law, the registrant has entered into separate indemnification agreements with each of the registrant’s directors and certain of the registrant’s officers which require the registrant, among other things, to indemnify them against certain liabilities which may arise by reason of their status as directors, officers or certain other employees.
The registrant expects to obtain and maintain insurance policies under which its directors and officers are insured, within the limits and subject to the limitations of those policies, against certain expenses in connection with the defense of, and certain liabilities which might be imposed as a result of, actions, suits or proceedings to which they are parties by reason of being or having been directors or officers. The coverage provided by these policies may apply whether or not the registrant would have the power to indemnify such person against such liability under the provisions of the Delaware General Corporation Law.
These indemnification provisions and the indemnification agreements entered into between the registrant and the registrant’s officers and directors may be sufficiently broad to permit indemnification of the registrant’s officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933.
The underwriting agreement between the registrant, the selling stockholders and the underwriters to be filed as Exhibit 1.1 to this registration statement provides for the indemnification by the underwriters of the registrant’s directors and officers and certain controlling persons against specified liabilities, including liabilities under the Securities Act with respect to information provided by the underwriters specifically for inclusion in the registration statement.
Item 15. Recent Sales of Unregistered Securities.
The following list sets forth information regarding all unregistered securities sold by us in the past three years.
No underwriters were involved in the sales, and the certificates representing the securities sold and issued contain legends restricting transfer of the securities without registration under the Securities Act or an applicable exemption from registration.
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(a) |
In March 2018, the registrant issued 483,832,601 Class T Units and 873,854,847 Class A Units of Advance Holdings, LLC in exchange for all of the outstanding Class T and Class A Units of Twist Holdings, LLC and a 15% interest of FORWARD by Elyse Walker, LLC. |
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(b) |
From January 2015 to October 5, 2018, the registrant granted options under its Advance Holdings, LLC 2013 Equity Incentive Plan to purchase an aggregate of 67,615,155 Class A Units to employees, consultants and directors, having exercise prices ranging from $0.24 to $1.01 per unit. Of the options, the registrant had cancelled options to purchase 17,922,124 Class A Units. |
The offers, sales and issuances of the securities described in Item 15(a) were exempt from registration under the Securities Act under Section 4(a)(2) of the Securities Act in that the sales did not involve a public offering. Item 15(b) were exempt from registration under the Securities Act under Section 4(a)(2) of the Securities Act in that such sales did not involve a public offering or under Rule 701 in that the transactions were under compensatory benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of such securities were the registrant’s employees, consultants or directors and received the securities under the registrant’s 2013 Plan. The recipients of securities in each of these transactions represented their intention to acquire the securities for investment only and not with view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions.
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Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits.
We have filed the exhibits listed on the accompanying Exhibit Index of this registration statement.
(b) Financial statement schedules.
Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements or notes thereto.
Item 17. Undertakings.
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned hereby undertakes that:
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(1) |
For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective. |
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(2) |
For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
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+ |
Indicates a management contract or compensatory plan. |
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* |
To be filed by amendment |
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** |
Previously filed |
Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cerritos, State of California, on October 5, 2018.
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REVOLVE GROUP, INC. |
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By: |
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/s/ Michael Karanikolas |
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Michael Karanikolas |
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Co-Chief Executive Officer |
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
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Signature |
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Title |
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Date |
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/s/ Michael Karanikolas |
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Co-Chief Executive Officer and Director |
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October 5, 2018 |
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Michael Karanikolas |
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(Principal Executive Officer) |
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* |
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Co-Chief Executive Officer and Director |
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October 5, 2018 |
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Michael Mente |
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/s/ Jesse Timmermans |
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Chief Financial Officer |
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October 5, 2018 |
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Jesse Timmermans |
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(Principal Accounting and Financial Officer) |
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* |
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Director |
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October 5, 2018 |
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Hadley Mullin |
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Director |
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October 5, 2018 |
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Jennifer Moser |
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* |
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Director |
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October 3, 2018 |
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Marc Stolzman |
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* By: |
/s/ Michael Karanikolas |
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Michael Karanikolas |
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Attorney-in-fact |
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Exhibit 1.1
[●] Shares
REVOLVE GROUP, INC.
CLASS A COMMON STOCK, PAR VALUE $0.001 PER SHARE
UNDERWRITING AGREEMENT
October [●], 2018
Morgan Stanley & Co. LLC
Credit Suisse Securities (USA) LLC
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c/o |
Morgan Stanley & Co. LLC
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c/o |
Credit Suisse Securities (USA) LLC |
Eleven Madison Avenue
New York, New York 10010
Ladies and Gentlemen:
Revolve Group, Inc., a Delaware corporation (together with its predecessor entity, Advance Holdings, LLC, the “ Company ”), proposes to issue and sell to the several Underwriters named in Schedule I hereto (the “ Underwriters ”), for whom Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC are acting as representatives (the “ Representatives ”), and certain stockholders of the Company (the “ Selling Stockholders ”) named in Schedule II hereto severally propose to sell to the several Underwriters, an aggregate of [●] shares of Class A Common Stock, par value $0.001 per share, of the Company (the “ Firm Shares ”), of which [●] shares are to be issued and sold by the Company and [●] shares are to be sold by the Selling Stockholders, each Selling Stockholder selling the amount set forth opposite such Selling Stockholder’s name in Schedule II hereto. The Selling Stockholders also propose to sell to the several Underwriters not more than an additional [●] shares of its Class A Common Stock, par value $0.001 per share (the “ Additional Shares ”), if and to the extent that the Representatives shall have determined to exercise, on behalf of the Underwriters, the right to purchase such shares of common stock granted to the Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares are hereinafter collectively referred to as the “ Shares. ” The shares of Class A Common Stock, par value $0.001 per share, of the Company to be outstanding after giving effect to the sales contemplated hereby are hereinafter referred to as the “ Common Stock .” The Company and the Selling Stockholders are hereinafter sometimes collectively referred to as the “ Sellers .”
The Company has filed with the Securities and Exchange Commission (the “ Commission ”) a registration statement on Form S-1 (File No. 333-227614), including a prospectus, relating to the Shares. The registration statement as amended at the time it becomes effective, including the information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended (the “ Securities Act ”), is hereinafter referred to as the “ Registration Statement. ” The prospectus in the form first used to confirm sales of Shares (or in the form first made available to the Underwriters by the Company to meet requests of
purchasers pursuant to Rule 173 under the Securities Act) is hereinafter referred to as the “ Prospectus . ” If the Company has filed an abbreviated registration statement to register the sale of additional shares of Common Stock pursuant to Rule 462(b) under the Securities Act (a “ Rule 462 Registration Statement ”), then any reference herein to the term “ Registration Statement ” shall be deemed to include such Rule 462 Registration Statement.
For purposes of this Agreement, “ free writing prospectus ” has the meaning set forth in Rule 405 under the Securities Act, “ Time of Sale Prospectus ” means the preliminary prospectus together with the documents and pricing information set forth in Schedule IV hereto, and “ broadly available road show ” means a “bona fide electronic road show” as defined in Rule 433(h)(5) under the Securities Act that has been made available without restriction to any person. As used herein, the terms “Registration Statement,” “preliminary prospectus,” “Time of Sale Prospectus” and “Prospectus” shall include the documents, if any, incorporated by reference therein as of the date hereof.
Morgan Stanley & Co. LLC (“ Morgan Stanley ”) has agreed to reserve a portion of the Shares to be purchased by it under this Agreement for sale to the Company’s directors, officers, employees, and business associates and other parties related to the Company (collectively, “ Participants ”), as set forth in the Prospectus under the heading “Underwriters” (the “ Directed Share Program ”). The Shares to be sold by Morgan Stanley and its affiliates pursuant to the Directed Share Program, at the direction of the Company, are referred to hereinafter as the “Directed Shares”. Any Directed Shares not orally confirmed for purchase by any Participant by the end of the business day on which this Agreement is executed will be offered to the public by the Underwriters as set forth in the Prospectus.
1. Representations and Warranties of the Company . The Company represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or, to the knowledge of the Company, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did not contain and, as amended or supplemented, if applicable, will not contain, as of the date of such amendment or supplement, 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, (ii) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will, as of the date of such amendment or supplement, comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder, (iii) the Time of Sale Prospectus does not, and at the time of each sale of the Shares in connection with the offering when the Prospectus is not yet available to prospective purchasers and at the Closing Date (as defined in Section 5), the Time of Sale Prospectus, as then amended or supplemented by the
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Company, if applicable, will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (iv) each broadly available road show, if any, when considered together with the Time of Sale Prospectus, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (v) as of its date and the Closing Date, the Prospectus does not contain and, as amended or supplemented, if applicable, as of the date of such amendment or supplement, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions in the Registration Statement, the Time of Sale Prospectus or the Prospectus based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein.
(c) The Company is not an “ineligible issuer” in connection with the offering pursuant to Rules 164 , 405 and 433 under the Securities Act. Any free writing prospectus that the Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with the Commission in accordance with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Each free writing prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared by or on behalf of or used or referred to by the Company complies or, if filed after the effective time of this Agreement, will comply as of the date of such filing, in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Except for the free writing prospectuses, if any, identified in Schedule IV hereto, and electronic road shows, if any, each furnished to each of the Representatives before first use, the Company has not prepared, used or referred to, and will not, without the prior consent of each of the Representatives, prepare, use or refer to, any free writing prospectus.
(d) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the State of Delaware, has the corporate power and authority to own its property and to conduct its business as described in the Time of Sale Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction (to the extent the concept of good standing is applicable in such jurisdiction) in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing (to the extent the concept of good standing is applicable in such jurisdiction) would not have a material adverse effect on the Company and its subsidiaries, taken as a whole (a “ Material Adverse Effect ”).
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(e) Each subsidiary of the Company has been duly incorporated or organized, is validly existing as a corporation or otherwise in good standing under the laws of the jurisdiction of its incorporation or organization, has the requisite power and authority to own its property and to conduct its business as described in the Time of Sale Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction (to the extent the concept of good standing is applicable in such jurisdiction) in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing (to the extent the concept of good standing is applicable in such jurisdiction) would not have a Material Adverse Effect on the Company and its subsidiaries, taken as a whole. All of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly by the Company, free and clear of all liens, encumbrances, equities or claims. Other than the subsidiaries listed in Exhibit 21.1 of the Registration Statement and FWRD UK Limited, the Company, directly or indirectly, owns no share capital or other equity or ownership or proprietary interest in any corporation, partnership, association, trust or other entity. As used in this Agreement with respect to the Company, “subsidiaries” shall mean direct and indirect subsidiaries of the Company.
(f) This Agreement has been duly authorized, executed and delivered by the Company.
(g) The authorized capital stock of the Company conforms as to legal matters in all material respects to the description thereof contained in each of the Time of Sale Prospectus and the Prospectus.
(h) The shares of Common Stock (including the Shares to be sold by the Selling Stockholders) outstanding prior to the issuance of the Shares to be sold by the Company have been duly authorized and are validly issued, fully paid and non‑assessable.
(i) The Shares to be sold by the Company have been duly authorized and, when paid for, issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non‑assessable, and the issuance of the Shares will not be subject to any preemptive or similar rights.
(j) Except as disclosed in the Time of Sale Prospectus, there are no contracts or understandings between the Company and any person other than the Underwriters that would give rise to a valid claim against the Company or any Underwriter for a brokerage commission, finder’s fee or other like payment in connection with the issuance and sale of the Shares.
(k) The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement, including the issuance and sales of the Shares, will not contravene any provision of (i)
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applicable law, (ii) the certificate of incorporation or by ‑laws of the Company, (iii) any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, or (iv) any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary, except, in the cases of clauses (i), (iii) and (iv), as would not reasonably be likely to have a Material Adverse Effect or adversely affect the ability of the Company to perform its obligations under this Agreement and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, except such as may have been previously obtained or may be required by the securities or Blue Sky laws of the various states or foreign jurisdictions or the rules and regulations of the Financial Industry Regulatory Authority (“ FINRA ”) in connection with the offer and sale of the Shares.
(l) There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Time of Sale Prospectus.
(m) There are no legal or governmental proceedings pending or, to the knowledge of the Company, threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject (i) other than proceedings accurately described in all material respects in the Time of Sale Prospectus and proceedings that would not, individually or in the aggregate, have a Material Adverse Effect, or on the power or ability of the Company to perform its obligations under this Agreement or to consummate the transactions contemplated by the Time of Sale Prospectus or (ii) that are required to be described in the Registration Statement or the Prospectus and are not so described in all material respects. There are no statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not described in all material respects or filed as required.
(n) Each preliminary prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities Act, complied when so filed in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder.
(o) The Company is not, and after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Prospectus will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
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(p) The Company and its subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“ Environmental Laws ”), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect.
(q) There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean‑up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect.
(r) Except with respect to the registration rights agreement by and among the Company and the holders listed therein in connection with the consummation of the offering, as disclosed in the Time of Sale Prospectus and the Prospectus, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company or to require the Company to include such securities with the Shares registered pursuant to the Registration Statement.
(s) Neither the Company nor any of its subsidiaries or their respective affiliates has any securities rated by any “nationally recognized statistical rating organization,” as such term is defined in Section 3(a)(62) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”).
(t) None of the Company or its subsidiaries or controlled affiliates, or any director, officer, or employee thereof, or, to the Company’s knowledge, any agent or representative of the Company or of any of its subsidiaries or controlled affiliates, has taken any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment, giving or receipt of money, property, gifts or anything else of value, directly or indirectly, to any government official (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) (“ Government Official ”) in order to improperly influence official action, or to any person in violation of any applicable anti-corruption laws. The Company and its subsidiaries and controlled affiliates have conducted their businesses in compliance with
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applicable anti-corruption laws and have instituted and maintained and will continue to maintain policies and procedures reasonably designed to promote and achieve compliance with such laws and with the representations and warranties contained herein. Neither the Company nor its subsidiaries will use, directly or indirectly, the proceeds of the offering 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 applicable anti-corruption laws.
(u) The operations of the Company and its subsidiaries are and have been conducted at all times in material compliance with all applicable financial recordkeeping and reporting requirements, including those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the applicable anti-money laundering statutes of jurisdictions where the Company and its subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “ Anti-Money Laundering Laws ”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(v) (i) None of the Company, any of its subsidiaries, or any director, officer, or employee thereof, or, to the Company’s knowledge, any agent, controlled affiliate or representative of the Company or any of its subsidiaries, is an individual or entity (“ Person ”) that is, or is owned or controlled by one or more Persons that are:
(A) the subject of any sanctions administered or enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“ OFAC ”) , the United Nations Security Council (“ UNSC ”), the European Union (“ EU ”), Her Majesty’s Treasury (“ HMT ”), or other relevant sanctions authority (collectively, “ Sanctions ”), or
(B) located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Crimea, Cuba, Iran, North Korea and Syria).
(ii) The Company will not, directly or indirectly, use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person:
(A) to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; or
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(B) in any other manner that will result in a violation of Sanctions by any Person (including any Person participating in the offering, whether as underwriter, advisor, investor or otherwise).
(iii) For the past five years, the Company and its subsidiaries have not knowingly engaged in, are not now knowingly engaged in, and will not knowingly engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.
(w) Subsequent to the respective dates as of which information is given in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus, (i) the Company and its subsidiaries have not incurred any material liability or obligation, direct or contingent, nor entered into any material transaction; (ii) the Company has not purchased any of its outstanding capital stock, nor declared, paid or otherwise made any dividend or distribution of any kind on its capital stock other than ordinary and customary dividends; and (iii) there has not been any material change in the capital stock, short‑term debt or long‑term debt of the Company and its subsidiaries, except in each case as described in all material respects in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus, respectively.
(x) The Company and/or its subsidiaries do not own any real property. The Company and its subsidiaries have good and marketable title in fee simple to all personal property (other than intellectual property, which is addressed exclusively in section (y)) owned by them which is material to the business of the Company and its subsidiaries, taken as a whole, in each case free and clear of all liens, encumbrances and defects except such as are described in the Time of Sale Prospectus or such as do not materially affect the value of such property and do not interfere in any material respect with the use made and proposed to be made of such property by the Company and its subsidiaries. Any real property and buildings held under lease by the Company and its subsidiaries are held by the Company or its subsidiaries, as applicable, under valid, subsisting and, to the knowledge of the Company, enforceable leases with such exceptions as are not material and do not materially interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries, in each case except as described in the Time of Sale Prospectus.
(y) Except as would not have a Material Adverse Effect on the Company, the Company and its subsidiaries own or have or can acquire on commercially reasonable terms sufficient rights to use all material patents, patent applications, patent rights, inventions, copyrights, know‑how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names, domain names, rights of publicity and other intellectual property used in the conduct of the business of the Company and its subsidiaries, in the manner
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described in the Registration Statement, the Time of Sale Prospectus and the Prospectus (collectively, the “ Intellectual Property ”), except as enforceability of any licenses may be limited by bankruptcy and other similar laws affecting the rights of creditors generally and general principles of equity; except as would not have a Material Adverse Effect, all registered Intellectual Property and applications therefor owned by the Company and its subsidiaries, including patents, trademarks, and copyrights, if any, included within the Intellectual Property, are valid, enforceable, and subsisting; other than as disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus or except as would not have a Material Adverse Effect; (i) neither the Company nor any of its subsidiaries is obligated to pay a material royalty, grant a license to, or provide other material consideration to any third party in connection with the Intellectual Property, (ii) neither the Company nor any of its subsidiaries has sent or received any written notice of any claim of infringement, dilution, misappropriation of or conflict with asserted rights of others with respect to any of the Intellectual Property, (iii) no action, suit, claim or other proceeding is pending or, to the knowledge of the Company, is threatened, challenging the Company’s or its subsidiaries’ rights in or to any Intellectual Property, or challenging the validity, enforceability or scope of any Intellectual Property owned by the Company or any of its subsidiaries, (iv) no third party has any ownership right in or to and, to the knowledge of the Company, no third party is infringing, diluting, misappropriating or conflicting with or has infringed, diluted, misappropriated or conflicted with any Intellectual Property that is owned by the Company or its subsidiaries, (v) to the knowledge of the Company, the conduct of the Company’s and its subsidiaries’ business as described in the Registration Statement, the Time of Sale Prospectus and the Prospectus does not infringe, dilute, misappropriate, or conflict with any asserted rights of others, (vi) none of the Intellectual Property owned by a third party or third party technology employed by the Company or its subsidiaries in the conduct of the business in the manner described in the Registration Statement, the Time of Sale Prospectus and the Prospectus has been obtained or is being used by the Company or its subsidiaries in material violation of any material contractual obligation binding on the Company or its subsidiaries, and (vii) the Company and its subsidiaries have taken reasonable measures to protect their confidential information and trade secrets and third party confidential information or trade secrets that are part of the Intellectual Property.
(z) Except as described in all material respects in the Registration Statement, the Time of Sale Prospectus and the Prospectus, and except as would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect, (i) there has been no failure, substandard performance, security breach of the Company’s or its subsidiaries’ information technology and computer systems, networks, hardware or software; (ii) the Company and its subsidiaries are in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to data privacy and security with respect to personally identifiable information; and (iii) there has been and is no material unauthorized or unlawful use, access, loss,
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handling, misappropriation or modification of any personally identifiable information, confidential information or trade secrets, in each case, used or held for use by or on behalf of the Company or its subsidiaries.
(aa) Except as described in the Time of Sale Prospectus and Prospectus, the Company and its subsidiaries, (i) are in compliance with any and all applicable laws, rules, regulations, and regulatory requirements or court decrees relating to consumer protection or purchase finance or other regulations applicable to the business of the Company as currently conducted or contemplated to be conducted, except to the extent that the failure to comply would not have a Material Adverse Effect (such laws, rules and regulations, the “ Regulatory Laws ”), (ii) have received all federal and state permits, licenses and other approvals required of them under applicable Regulatory Laws to conduct their respective businesses, except where the failure to receive such permits, licenses and other approvals would not have a Material Adverse Effect and (iii) are in compliance with all terms and conditions of any such permit, license or approval; except where such noncompliance with Regulatory Laws would not have a Material Adverse Effect; and except as described in the Time of Sale Prospectus, the Company is not aware of any material changes proposed or contemplated to be made to any of the Regulatory Laws that would reasonably be expected to have a Material Adverse Effect.
(bb) No material labor dispute with the employees of the Company or any of its subsidiaries exists, except as described in the Time of Sale Prospectus, or, to the knowledge of the Company, is imminent. The Company is not aware of any existing, threatened or imminent labor disturbance by the employees of any of its principal suppliers, manufacturers or contractors that would be reasonably likely to have a Material Adverse Effect.
(cc) Except (i) as described in the Time of Sale Prospectus or (ii) as would not, individually or in the aggregate, have, or reasonably be expected to have, a Material Adverse Effect, (A) each employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), whether or not subject to ERISA that the Company or any member of its “Controlled Group” (defined as any organization which is under common control or treated as a single employer with the Company under ERISA or Section 414 of the Internal Revenue Code of 1986, as amended (the “ Code ”)) sponsors, maintains or contributed to, or otherwise has liability (contingent or otherwise) in respect of any employee of the Company or any subsidiary of the Company (each, a “ Plan ”), has been maintained in compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to ERISA and the Code; (B) no non-exempt prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any Plan; (C) no Plan is subject to Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA; (D) neither the Company nor any member of the Controlled Group has incurred, nor reasonably expects to incur, any liability under Title IV of ERISA in respect of
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any Plan; (E) there is no pending audit or investigation by the Internal Revenue Service, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation or any other governmental agency or any foreign regulatory agency with respect to any Plan; and (F) none of the following events has occurred or is reasonably likely to occur: (x) a material increase in the aggregate amount of contributions required to be made to all Plans by the Company or its subsidiaries in the current fiscal year of the Company and its subsidiaries compared to the amount of such contributions made in the Company and its subsidiaries’ most recently completed fiscal year; or (y) a material increase in the Company and its subsidiaries’ “accumulated post-retirement benefit obligations” (within the meaning of Statement of Financial Accounting Standards 106) compared to the amount of such obligations in the Company and its subsidiaries’ most recently completed fiscal year.
(dd) The Company and each of its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as, in the Company’s reasonable judgment, are prudent and customary in the businesses in which they are engaged. Neither the Company nor any of its subsidiaries has been refused any insurance coverage sought or applied for. Neither the Company nor any of its subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
(ee) The Company and its subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses, except where the failure to obtain such certificates, authorizations or permits would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect, and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect, except as described in the Time of Sale Prospectus.
(ff) KPMG LLP, who has certified certain financial statements of the Company and its subsidiaries included in the Registration Statement, is an independent registered public accounting firm as required by the Securities Act and the rules and regulations of the Commission thereunder and the rules and regulations of the Public Company Accounting Oversight Board (United States).
(gg) The consolidated financial statements of the Company and its subsidiaries included in the Registration Statement, the Time of Sale Prospectus and the Prospectus, together with the related notes, present fairly in all material respects the financial position of the Company and its consolidated subsidiaries at the dates indicated and, in the case of the statements of operations, shareholders’
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equity and cash flows of the Company and its consolidated subsidiaries, for the periods specified. Each of the consolidated financial statements of the Company and its subsidiaries included in the Registration Statement, the Time of Sale Prospectus and the Prospectus comply in all material respects with the applicable requirements of the Securities Act and have been prepared in conformity with U.S. generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods involved except (i) the unaudited, interim financial statements, which are subject to normal year-end adjustments and do not contain certain footnotes as permitted by the applicable rules of the Commission and (ii) as otherwise disclosed therein. Except as included therein, no historical or pro forma financial statements or supporting schedules are required to be included or incorporated by reference in the Registration Statement, the Time of Sale Prospectus or the Prospectus under the Securities Act and the rules and regulations of the Commission thereunder. To the extent included in the Registration Statement, the Time of Sale Prospectus and the Prospectus have been prepared in accordance with the applicable requirements of the Securities Act, and the assumptions underlying any pro forma financial information are reasonable and are set forth in the Registration Statement, the Time of Sale Prospectus and the Prospectus in all material respects. All other information regarding the financial condition or results of operations of the Company or its subsidiaries included in the Registration Statement, the Time of Sale Prospectus and the Prospectus has been derived from the accounting records of the Company and its consolidated subsidiaries and presents fairly in all material respects the information shown thereby.
(hh) The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as described in the Time of Sale Prospectus, since the end of the Company’s most recent audited fiscal year , there has been (i) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (ii) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
(ii) The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that comply with the requirements of the Exchange Act. Such disclosure controls and procedures have been designed to ensure that material information relating to the Company is made known to the Company’s principal executive officer and principal financial officer by others within the Company.
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(jj) Except as described in all material respects in the Registration Statement or the Time of Sale Prospectus, the Company has not sold, issued or distributed any shares of Common Stock during the six ‑month period preceding the date hereof, including any sales pursuant to Rule 144A under, or Regulations D or S of, the Securities Act, other than shares issued pursuant to employee benefit plans, qualified stock option plans or other employee compensation plans or pursuant to outstanding options, rights or warrants.
(kk) Each of the Company and its subsidiaries has filed all federal, state, local and foreign tax returns required to be filed through the date of this Agreement or has requested extensions thereof (except where the failure to file would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect) and has paid all taxes required to be paid, whether or not shown on such returns (except for cases in which the failure to file or pay would not be reasonably likely to have a Material Adverse Effect, or except as currently being contested in good faith and for which reserves required by GAAP have been created in the financial statements of the Company), and no unpaid tax deficiency has been determined adversely to the Company or any of its subsidiaries which has had (nor does the Company nor any of its subsidiaries have any notice or knowledge of any tax deficiency which could reasonably be expected to be determined adversely to the Company or its subsidiaries and which could reasonably be expected to have) a Material Adverse Effect.
(ll) The statistical and market-related data included in the Registration Statement, the Time of Sale Prospectus and the Prospectus are based on or derived from sources that the Company reasonably believes are reliable and accurate.
(mm) From the time of initial confidential submission of the Registration Statement to the Commission (or, if earlier, the first date on which the Company engaged directly or through any person authorized to act on its behalf in any Testing-the-Waters Communication) through the date hereof, the Company has been and is an “emerging growth company,” as defined in Section 2(a) of the Securities Act (an “ Emerging Growth Company ”). “ Testing-the-Waters Communication ” means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Securities Act.
(nn) The Company (i) has not alone engaged in any Testing-the-Waters Communication other than Testing-the-Waters Communications with the consent of each of the Representatives with entities that are qualified institutional buyers within the meaning of Rule 144A under the Securities Act or institutions that are accredited investors within the meaning of Rule 501 under the Securities Act and (ii) has not authorized anyone other than the Representatives to engage in Testing-the-Waters Communications. The Company reconfirms that the Representatives have been authorized to act on its behalf in undertaking Testing-the-Waters Communications. The Company has not distributed any Written Testing-the-Waters Communications. “ Written Testing-the-Waters Communication ” means any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Securities Act.
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(oo) As of the time of each sale of the Shares in connection with the offering when the Prospectus is not yet available to prospective purchasers, none of (A) the Time of Sale Prospectus, (B) any free writing prospectus, when considered together with the Time of Sale Prospectus, and (C) any individual Written Testing-the-Waters Communication, when considered together with the Time of Sale Prospectus, included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(pp) The Registration Statement, the Prospectus, the Time of Sale Prospectus and any preliminary prospectus comply, and any amendments or supplements thereto will comply, with any applicable laws or regulations of foreign jurisdictions in which the Prospectus, the Time of Sale Prospectus or any preliminary prospectus, as amended or supplemented, if applicable, are distributed in connection with the Directed Share Program.
(qq) No consent, approval, authorization or order of, or qualification with, any governmental body or agency, other than those obtained, is required in connection with the offering of the Directed Shares in any jurisdiction where the Directed Shares are being offered.
(rr) The Company has not offered, or caused Morgan Stanley or any Morgan Stanley Entity as defined in Section 12 to offer, Shares to any person pursuant to the Directed Share Program with the specific intent to unlawfully influence (i) a customer or supplier of the Company to alter the customer’s or supplier’s level or type of business with the Company, or (ii) a trade journalist or publication to write or publish favorable information about the Company or its products.
2. Representations and Warranties of the Selling Stockholders . Each Selling Stockholder represents and warrants to and agrees with each of the Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered by or on behalf of such Selling Stockholder.
(b) The execution and delivery by such Selling Stockholder of, and the performance by such Selling Stockholder of its obligations under, this Agreement, the Custody Agreement signed by such Selling Stockholder and [●], as Custodian, relating to the deposit of the Shares to be sold by such Selling Stockholder (the “ Custody Agreement ”), and the Power of Attorney appointing certain individuals as such Selling Stockholder’s attorneys-in-fact to the extent set forth therein, relating to the transactions contemplated hereby and by the Registration Statement (the “ Power of Attorney ”), will not contravene any provision of applicable law, or the certificate of incorporation or by-laws of such Selling Stockholder (if such Selling Stockholder is a corporation), or any agreement or other instrument binding upon such Selling Stockholder or any judgment, order or decree of any governmental body, agency or court having jurisdiction over such
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Selling Stockholder, except for such contraventions as would not, individually or in the aggregate, have a material adverse effect on the ability of such Selling Stockholder to consummate the transactions contemplated by this Agreement, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by such Selling Stockholder of its obligations under this Agreement, or the Custody Agreement or Power of Attorney of such Selling Stockholder , except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares.
(c) Such Selling Stockholder has, and on the Closing Date will have, valid title to, or a valid “security entitlement” within the meaning of Section 8-501 of the New York Uniform Commercial Code in respect of, the Shares to be sold by such Selling Stockholder free and clear of all security interests, claims, liens, equities or other encumbrances and the legal right and power, and all authorization and approval required by law, to enter into this Agreement, the Custody Agreement and the Power of Attorney and to sell, transfer and deliver the Shares to be sold by such Selling Stockholder or a security entitlement in respect of such Shares.
(d) Each of the Custody Agreement and the Power of Attorney has been duly authorized, executed and delivered by such Selling Stockholder, and is a valid and binding agreement of such Selling Stockholder enforceable against such Selling Stockholder in accordance with its terms.
(e) Upon payment for the Shares to be sold by such Selling Stockholder pursuant to this Agreement, delivery of such Shares, as directed by the Underwriters, to Cede & Co. (“ Cede ”) or such other nominee as may be designated by the Depository Trust Company (“ DTC ”), registration of such Shares in the name of Cede or such other nominee and the crediting of such Shares on the books of DTC to securities accounts of the Underwriters (assuming that neither DTC nor any such Underwriter has notice of any adverse claim (within the meaning of Section 8-105 of the New York Uniform Commercial Code (the “ UCC ”)) to such Shares), (A) DTC shall be a “protected purchaser” of such Shares within the meaning of Section 8-303 of the UCC, (B) under Section 8-501 of the UCC, the Underwriters will acquire a valid security entitlement in respect of such Shares and (C) no action based on any “adverse claim,” within the meaning of Section 8-102 of the UCC, to such Shares may be asserted against the Underwriters with respect to such security entitlement; for purposes of this representation, such Selling Stockholder may assume that when such payment, delivery and crediting occur, (x) such Shares will have been registered in the name of Cede or another nominee designated by DTC, in each case on the Company’s share registry in accordance with its certificate of incorporation, bylaws and applicable law, (y) DTC will be registered as a “clearing corporation” within the meaning of Section 8-102 of the UCC and (z) appropriate entries to the accounts of the several Underwriters on the records of DTC will have been made pursuant to the UCC.
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(f) (i) The Registration Statement, when it became effective, did not contain and, as amended or supplemented, if applicable, will not 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, (ii) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder, (iii) the Time of Sale Prospectus does not, and at the time of each sale of the Shares in connection with the offering when the Prospectus is not yet available to prospective purchasers and at the Closing Date (as defined in Section 5), the Time of Sale Prospectus, as then amended or supplemented by the Company, if applicable, will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (iv) each broadly available road show, if any, when considered together with the Time of Sale Prospectus, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (v) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, provided that the representations and warranties set forth in this paragraph 2 (f) are limited to statements or omissions made in reliance upon information relating to such Selling Stockholder furnished to the Company in writing by such Selling Stockholder expressly for use in the Registration Statement, the Time of Sale Prospectus, the Prospectus or any amendments or supplements thereto, it being understood and agreed that the only information furnished in writing to the Company in writing by such Selling Stockholder consists of the name of such Selling Stockholder, the number of offered shares and the address and other information with respect to such Selling Stockholder (excluding percentages) which appear in the Registration Statement, the Time of Sale Prospectus and the Prospectus or any amendments or supplements thereto in the table (and corresponding footnotes) under the caption “Principal and Selling Stockholders.”
(g) (i) None of such Selling Stockholder or any of its subsidiaries, or, to the knowledge of such Selling Stockholder, any director, officer, employee, agent, representative, or controlled affiliate thereof, is a Person that is, or is owned or controlled by one or more Persons that are:
(A) the subject of any Sanctions, or
(B) located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Crimea, Cuba, Iran, North Korea and Syria).
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(ii) Such Selling Stockholder will not, directly or indirectly, use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person:
(A) to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; or
(B) in any other manner that will result in a violation of Sanctions by any Person (including any Person participating in the offering, whether as underwriter, advisor, investor or otherwise).
(iii) Such Selling Stockholder has not knowingly engaged in, is not now knowingly engaged in, and will not engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.
(iv) (a) None of such Selling Stockholder or its subsidiaries, or, to the knowledge of such Selling Stockholder, any director, officer, employee, agent, representative, or controlled affiliate thereof has taken or will take any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment giving or receipt of money, property, gifts or anything else of value, directly or indirectly, to any Government Official in order to influence official action, or to any person in violation of any applicable anti-corruption laws; (b) such Selling Stockholder and its subsidiaries have conducted their businesses in compliance in all material respects with applicable anti-corruption laws and have instituted and maintained and will continue to maintain policies and procedures reasonably designed to promote and achieve compliance with such laws and with the representations and warranties contained herein; and (c) neither the Selling Stockholder nor any of its subsidiaries will use, directly or indirectly, the proceeds of the offering 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 applicable anti-corruption laws.
(v) The operations of such Selling Stockholder and its subsidiaries are and have been conducted at all times in material compliance with all applicable Anti-Money Laundering Laws, and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving such Selling Stockholder or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the best knowledge of the Selling Stockholder, threatened.
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(h) Such Selling Stockholder represents and warrants that it is not (i) an employee benefit plan subject to Title I of ERISA, (ii) a plan or account subject to Section 4975 of the Internal Revenue Code of 1986, as amended or (iii) an entity deemed to hold “plan assets” of any such plan or account under Section 3(42) of ERISA, 29 C.F.R. 2510.3-101, or otherwise.
3. Agreements to Sell and Purchase. Each Seller, severally and not jointly, hereby agrees to sell to the several Underwriters, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to purchase from such Seller at $[●] a share (the “ Purchase Price ”) the number of Firm Shares (subject to adjustments to eliminate fractional shares as may be determined by the Representatives) that bears the same proportion to the number of Firm Shares to be sold by such Seller as the number of Firm Shares set forth in Schedule I hereto opposite the name of such Underwriter bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Underwriters shall have the right to purchase, severally and not jointly, up to [●] Additional Shares at the Purchase Price, and each Selling Stockholder agrees to sell to the Underwriters at the Purchase Price up to that number of Additional Shares (subject to adjustments to eliminate fractional shares as may be determined by the Representatives) as set forth in Schedule III hereto opposite the name of such Selling Stockholder, provided, however, that the amount paid by the Underwriters for any Additional Shares shall be reduced by an amount per share equal to any dividends declared by the Company and payable on the Firm Shares but not payable on such Additional Shares. Any such election to purchase Additional Shares shall be made in proportion to the maximum number of Additional Shares to be sold by each Selling Stockholder as set forth in Schedule III hereto. The Representatives may exercise this right on behalf of the Underwriters in whole or from time to time in part by giving written notice not later than 30 days after the date of this Agreement. Any exercise notice shall specify the number of Additional Shares to be purchased by the Underwriters and the date on which such shares are to be purchased. Each purchase date must be at least one business day after the written notice is given and may not be earlier than the closing date for the Firm Shares nor later than ten business days after the date of such notice. Additional Shares may be purchased as provided in Section 5 hereof solely for the purpose of covering over-allotments made in connection with the offering of the Firm Shares. On each day, if any, that Additional Shares are to be purchased (an “ Option Closing Date ”), each Underwriter agrees, severally and not jointly, to purchase the number of Additional Shares (subject to such adjustments to eliminate fractional shares as the Representatives may determine) that bears the same proportion to the total number of Additional Shares to be purchased on such Option Closing Date as the number of Firm Shares set forth in Schedule I hereto opposite the name of such Underwriter bears to the total number of Firm Shares.
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The Company hereby agrees that, without the prior written consent of the Representatives on behalf of the Underwriters, it will not, during the period ending 180 days after the date of the Prospectus (the “ Restricted Period ”), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of the Company’s common stock beneficially owned (as such term is used in Rule 13d-3 of the Exchange Act) or any other securities so owned convertible into or exercisable or exchangeable for the Company’s common stock or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Company’s common stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of the Company’s common stock or such other securities, in cash or otherwise or (3) file any registration statement with the Commission relating to the offering of any shares of the Company’s common stock or any securities convertible into or exercisable or exchangeable for the Company’s common stock.
The restrictions contained in the preceding paragraph shall not apply to (a) the Shares to be sold hereunder, (b) pursuant to equity incentive plans existing on, or upon the exercise, conversion or exchange of exercisable, convertible or exchangeable securities outstanding as of the date of this Agreement and in each case, described in the Time of Sale Prospectus, (c) the issuance by the Company of common stock or securities convertible into, exchangeable for or that represent the right to receive common stock in connection with (i) the acquisition by the Company or any of its subsidiaries of the securities, business, technology, property or other assets of another person or entity or pursuant to an employee benefit plan assumed by the Company in connection with such acquisition or (ii) the Company’s joint ventures, equipment leasing arrangements, debt financings and other strategic transactions, (d) the filing of any registration statement on Form S-8 relating to securities granted or to be granted pursuant to the Company’s equity incentive plans that are described in the Time of Sale Prospectus or any assumed employee benefit plan contemplated by clause (c), or (e) Shares issued in connection with the conversion of Advance Holdings, LLC into Revolve Group, Inc. as described in the Time of Sale Prospectus; provided that the aggregate number of shares of common stock that the Company may sell or issue or agree to sell or issue pursuant to clause (c) shall not exceed 5% of the total number of shares of common stock outstanding immediately following the completion of the transactions contemplated by this Agreement; and provided , further, that in the case of clauses (b), (c) and (e), each recipient of such securities shall execute and deliver to the Representatives, on or prior to the issuance of such securities, a lock-up agreement substantially to the effect set forth in Exhibit A hereto, in each case, without the prior written consent of the Representatives).
If each of the Representatives, in their sole discretion, agrees to release or waive the restrictions set forth in a lock-up letter described in Section 6(g) hereof for an officer or director of the Company and provides the Company with notice of the impending release or waiver at least three business days before the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release substantially in the form of Exhibit B hereto through a major news service at least two business days before the effective date of the release or waiver.
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4. Terms of Public Offering . Sellers are advised by the Representatives that the Underwriters propose to make a public offering of their respective portions of the Shares as soon after the Registration Statement and this Agreement have become effective as in the Representatives’ judgment is advisable. The Sellers are further advised by the Representatives that the Shares are to be offered to the public initially at $[●] a share (the “ Public Offering Price ”) and to certain dealers selected by the Representatives at a price that represents a concession not in excess of $[●] a share under the Public Offering Price.
5. Payment and Delivery. Payment for the Firm Shares to be sold by each Seller shall be made to such Seller in Federal or other funds immediately available in New York City against delivery of such Firm Shares for the respective accounts of the several Underwriters at 10:00 a.m., New York City time, on [●], 2018, or at such other time on the same or such other date, not later than [●], 2018, as shall be designated in writing by the Representatives. The time and date of such payment are hereinafter referred to as the “ Closing Date .”
Payment for any Additional Shares shall be made to the Selling Stockholders in Federal or other funds immediately available in New York City against delivery of such Additional Shares for the respective accounts of the several Underwriters at 10:00 a.m., New York City time, on the date specified in the corresponding notice described in Section 3 or at such other time on the same or on such other date, in any event not later than [●], 2018, as shall be designated in writing by the Representatives.
The Firm Shares and Additional Shares shall be registered in such names and in such denominations as the Representatives shall request in writing not later than one full business day prior to the Closing Date or the applicable Option Closing Date, as the case may be. The Firm Shares and Additional Shares shall be delivered to the Representatives on the Closing Date or an Option Closing Date, as the case may be, for the respective accounts of the several Underwriters, with any transfer taxes payable in connection with the transfer of the Shares to the Underwriters, if any, duly paid, against payment of the Purchase Price therefor.
6. Conditions to the Underwriters’ Obligations . The obligations of the Sellers to sell the Shares to the Underwriters and the several obligations of the Underwriters to purchase and pay for the Shares on the Closing Date are subject to the condition that the Registration Statement shall have become effective not later than [●] [a.m.] [p.m.] (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date there shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Time of Sale Prospectus
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that, in the Representatives’ judgment, is material and adverse and that makes it, in the Representatives’ judgment, impracticable to market the Shares on the terms and in the manner contemplated in the Time of Sale Prospectus.
(b) The Underwriters shall have received on the Closing Date:
(i) a certificate, dated the Closing Date and signed by an executive officer of the Company, to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date and that the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date; and
(ii) a certificate from each of the Selling Stockholders, dated the Closing Date and signed by the respective Selling Stockholder, to the effect that the representations and warranties of such Selling Stockholder contained in this Agreement are true and correct as of the Closing Date and that such Selling Stockholder has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date.
With respect to clause (i) above, the officer signing and delivering such certificate may rely upon the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an opinion and negative assurance letter of Wilson Sonsini Goodrich & Rosati, Professional Corporation, outside counsel for the Company, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives.
(d) The Underwriters shall have received on the Closing Date an opinion and negative assurance letter of Ropes & Gray LLP, counsel for the Underwriters, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives.
(e) The Underwriters shall have received on the Closing Date an opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for the Selling Stockholders, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives.
With respect to Sections 6(c) and 6(d) above, Wilson Sonsini Goodrich & Rosati, Professional Corporation and Ropes & Gray LLP may state that their opinions and beliefs are based upon their participation in the preparation of the Registration Statement, the Time of Sale Prospectus and the Prospectus and any amendments or supplements thereto and review and discussion of the contents thereof, but are without independent check or verification, except as specified. With respect to Section 6(e) above, Wilson Sonsini Goodrich & Rosati, Professional Corporation may rely upon an opinion or opinions of counsel for any Selling Stockholders and, with respect to factual matters and to the extent such counsel deems appropriate, upon the representations of each Selling Stockholder
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contained herein and in the Custody Agreement and Power of Attorney of such Selling Stockholder and in other documents and instruments; provided that (A) each such counsel for the Selling Stockholders is satisfactory to counsel to the Underwriters, (B) a copy of each opinion so relied upon is delivered to the Underwriters and is in form and substance satisfactory to the Underwriters’ counsel, (C) copies of such Custody Agreements and Powers of Attorney and of any such other documents and instruments shall be delivered to the Underwriters and shall be in form and substance satisfactory to the Underwriters’ counsel and (D) Wilson Sonsini Goodrich & Rosati, Professional Corporation shall state in their opinion that they are justified in relying on each such other opinion.
The opinions of Wilson Sonsini Goodrich & Rosati, Professional Corporation and Ropes & Gray LLP described in Sections 6(c) and 6(d) above (and any opinions of counsel for any Selling Stockholder referred to in the immediately preceding paragraph) shall be rendered to the Underwriters at the request of the Company or one or more of the Selling Stockholders, as the case may be, and shall so state therein.
(f) The Underwriters shall have received, on each of the date hereof and the Closing Date, a letter dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to the Underwriters, from KPMG LLP, independent public accountants, containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, the Time of Sale Prospectus and the Prospectus; provided that the letter delivered on the Closing Date shall use a “cut‑off date” not earlier than the date hereof.
(g) The lock‑up agreements, each substantially in the form of Exhibit A hereto, among the Representatives and the Selling Stockholders, certain other stockholders, officers and directors of the Company, relating to sales and certain other dispositions of shares of Common Stock or certain other securities, delivered to the Representatives on or before the date hereof (the “ Lock-Up Agreements ”), shall be in full force and effect on the Closing Date.
(h) The Underwriters shall have received, on each of the date hereof and the Closing Date, a certificate of the chief financial officer of the Company certifying as to the accuracy of certain financial information included in the Registration Statement, the Time of Sale Prospectus and the Prospectus, in form and substance satisfactory to the Underwriters.
(i) The several obligations of the Underwriters to purchase Additional Shares hereunder are subject to the delivery to the Representatives on the applicable Option Closing Date of the following:
(i) a certificate, dated the Option Closing Date and signed by an executive officer of the Company, confirming that the certificate delivered by the Company on the Closing Date pursuant to Section 6(b)(i) hereof remains true and correct as of such Option Closing Date;
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(ii) a certificate, dated the Option Closing Date and signed by each Selling Stockholder, confirming that the certificate delivered by the Selling Stockholder on the Closing Date pursuant to Section 6(b)(ii) hereof remains true and correct as of such Option Closing Date;
(iii) an opinion of Wilson Sonsini Goodrich & Rosati, outside counsel for the Company, dated the Option Closing Date, relating to the Additional Shares to be purchased on such Option Closing Date and otherwise to the same effect as the opinion required by Section 6(c) hereof;
(iv) an opinion of Ropes & Gray LLP, counsel for the Underwriters, dated the Option Closing Date, relating to the Additional Shares to be purchased on such Option Closing Date and otherwise to the same effect as the opinion required by Section 6(d) hereof;
(v) an opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for the Selling Stockholders, dated the Option Closing Date, relating to the Additional Shares to be purchased on such Option Closing Date and otherwise to the same effect as the opinion required by Section 6(e) hereof;
(vi) a letter dated the Option Closing Date, in form and substance satisfactory to the Underwriters, from KPMG LLP, independent public accountants, substantially in the same form and substance as the letter furnished to the Underwriters pursuant to Section 6(e) hereof; provided that the letter delivered on the Option Closing Date shall use a “cut-off date” not earlier than three business days prior to such Option Closing Date;
(vii) a certificate dated the Option Closing Date and signed by the chief financial officer of the Company certifying as to the accuracy of certain financial information included in the Registration Statement, the Time of Sale Prospectus and the Prospectus as of such Option Closing Date; and
(viii) such other documents as the Representatives may reasonably request with respect to the good standing of the Company, the due authorization and issuance of the Additional Shares to be sold on such Option Closing Date and other matters related to the sale of such Additional Shares.
7. Covenants of the Company . The Company covenants with each Underwriter as follows:
(a) To furnish to the Representatives, without charge, [●] conformed copies of the Registration Statement (including exhibits thereto) and for delivery to each other Underwriter a conformed copy of the Registration Statement (without exhibits thereto) and to furnish to the Representatives in New York City,
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without charge, prior to 10:00 a.m. New York City time on the second business day succeeding the date of this Agreement and during the period mentioned in Section 7(e) or 7(f) below, as many copies of the Time of Sale Prospectus, the Prospectus and any supplements and amendments thereto or to the Registration Statement as the Representatives may reasonably request.
(b) Before amending or supplementing the Registration Statement, the Time of Sale Prospectus or the Prospectus, to furnish to the Representatives a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which the Representatives reasonably object, and to file with the Commission within the applicable period specified in Rule 424(b) under the Securities Act any prospectus required to be filed pursuant to such rule.
(c) To furnish to the Representatives a copy of each proposed free writing prospectus to be prepared by or on behalf of, used by, or referred to by the Company and not to use or refer to any proposed free writing prospectus to which the Representatives reasonably object.
(d) Not to take any action that would result in an Underwriter or the Company being required to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of the Underwriter that the Underwriter otherwise would not have been required to file thereunder.
(e) If the Time of Sale Prospectus is being used to solicit offers to buy the Shares at a time when the Prospectus is not yet available to prospective purchasers and any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Time of Sale Prospectus in order to make the statements therein, in the light of the circumstances, not misleading, or if any event shall occur or condition exist as a result of which the Time of Sale Prospectus conflicts with the information contained in the Registration Statement then on file, or if, in the reasonable opinion of counsel for the Underwriters, it is necessary to amend or supplement the Time of Sale Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to any dealer upon request, either amendments or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale Prospectus as so amended or supplemented will not, in the light of the circumstances when the Time of Sale Prospectus is delivered to a prospective purchaser, be misleading or so that the Time of Sale Prospectus, as amended or supplemented, will no longer conflict with the Registration Statement, or so that the Time of Sale Prospectus, as amended or supplemented, will comply with applicable law.
(f) If, during such period after the first date of the public offering of the Shares as in the reasonable opinion of counsel for the Underwriters the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities
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Act) is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is delivered to a purchaser, not misleading, or if, in the reasonable opinion of counsel for the Underwriters, it is necessary to amend or supplement the Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses the Representatives will furnish to the Company) to which Shares may have been sold by the Representatives on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with applicable law.
(g) To endeavor to qualify the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Representatives shall reasonably request, provided , however , that nothing contained herein shall require the Company to qualify to do business in any jurisdiction, execute a general consent to service of process in any jurisdiction or to subject itself to taxation in any jurisdiction in which it is not otherwise subject.
(h) To make generally available to the Company’s security holders and to the Representatives as soon as practicable an earnings statement covering a period of at least twelve months beginning with the first fiscal quarter of the Company occurring after the date of this Agreement which shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder.
(i) To comply with all applicable securities and other laws, rules and regulations in each jurisdiction in which the Directed Shares are offered in connection with the Directed Share Program.
(j) If any Seller is not a U.S. person for U.S. federal income tax purposes, the Company will deliver to each Underwriter (or its agent), on or before the Closing Date, (i) a certificate with respect to the Company’s status as a “United States real property holding corporation,” dated not more than thirty (30) days prior to the Closing Date, as described in Treasury Regulations Sections 1.897 -2(h) and 1.1445-2(c)(3), and (ii) proof of delivery to the IRS of the required notice, as described in Treasury Regulations 1.897-2(h)(2).
(k) The Company will promptly notify the Representatives if the Company ceases to be an Emerging Growth Company at any time prior to the later of (a) completion of the distribution of the Shares within the meaning of the Securities Act and (b) completion of the R estricted Period (as defined in this Section 3).
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(l) If at any time following the distribution of any Written Testing-the-Waters Communication there occurred or occurs an event or development as a result of which such Written Testing-the-Waters Communication included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Company will promptly notify the Representatives and will promptly amend or supplement, at its own expense, such Written Testing-the-Waters Communication to eliminate or correct such untrue statement or omission.
8. Covenants of the Sellers . Each Seller, severally and not jointly, covenants with each Underwriter as follows:
(a) Each Seller will deliver to each Underwriter (or its agent), prior to or at the Closing Date, a properly completed and executed Internal Revenue Service (“ IRS ”) Form W-9 or an IRS Form W-8, as appropriate, together with all required attachments to such form.
(b) Each Seller will deliver to each Underwriter (or its agent), on the date of this Agreement, a properly completed and executed Certification Regarding Beneficial Owners of Legal Entity Customers, together with copies of any additional documentation necessary to comply with 31 CFR § 1010.230, and each Seller undertakes to provide such additional supporting documentation as each Underwriter may reasonably request in connection with the verification of the foregoing Certification.
9. Covenants of the Underwriters . Each Underwriter severally covenants with the Company not to take any action that would result in the Company being required to file with the Commission under Rule 433(d) a free writing prospectus prepared by or on behalf of such Underwriter that otherwise would not be required to be filed by the Company thereunder, but for the action of the Underwriter.
10. Expenses. Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, the Company agrees to pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including: (i) the fees, disbursements and expenses of the Company’s counsel, the Company’s accountants and counsel for the Selling Stockholders in connection with the registration and delivery of the Shares under the Securities Act and all other fees or expenses in connection with the preparation and filing of the Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, the Prospectus, any free writing prospectus prepared by or on behalf of, used by, or referred to by the Company and amendments and supplements to any of the foregoing, including all printing costs associated therewith, and the mailing and delivering of copies thereof to the Underwriters and dealers, in the quantities hereinabove specified, (ii) all costs and expenses related to the transfer and delivery of the Shares to the Underwriters, including any transfer or other taxes payable thereon, (iii) the cost of printing or producing any Blue Sky or Legal Investment memorandum in connection with the offer and sale of the Shares under state
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securities laws and all expenses in connection with the qualification of the Shares for offer and sale under state securities laws as provided in Section 7(g) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky or Legal Investment memorandum, (iv) all filing fees and the reasonable fees and disbursements of counsel to the Underwriters incurred in connection with the review and qualification of the offering of the Shares by FINRA, (v) all fees and expenses in connection with the preparation and filing of the registration statement on Form 8 ‑A relating to the Common Stock and all costs and expenses incident to listing the Shares on the NYSE, (vi) the cost of printing certificates representing the Shares, (vii) the costs and charges of any transfer agent, registrar or depositary, (viii) the costs and expenses of the Company relating to investor presentations on any “road show” undertaken in connection with the marketing of the offering of the Shares, including, without limitation, expenses associated with the preparation or dissemination of any electronic road show, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company and any such consultants, and one half of the cost of any aircraft chartered in connection with the road show (the remaining half of the cost of such aircraft to be paid by the Underwriters), (ix) the document production charges and expenses associated with printing this Agreement, (x) all fees and disbursements of counsel incurred by the Underwriters in connection with the Directed Share Program, up to a maximum of $25,000, and stamp duties, similar taxes or duties or other taxes, if any, incurred by the Underwriters in connection with the Directed Share Program and (xi) all other costs and expenses incident to the performance of the obligations of the Company hereunder for which provision is not otherwise made in this Section. It is understood, however, that except as provided in this Section, Section 11 entitled “Indemnity and Contribution,” Section 12 entitled “Directed Share Program Indemnification” and the last paragraph of Section 14 below, the Underwriters will pay all of their costs and expenses, including fees and disbursements of their counsel, share transfer taxes payable on resale of any of the Shares by them and any advertising expenses connected with any offers they may make. The provisions of this Section shall not supersede or otherwise affect any agreement that the Sellers may otherwise have for the allocation of such expenses among themselves.
11. Indemnity and Contribution. (a) The Company agrees to indemnify and hold harmless each Underwriter, each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and each affiliate of any Underwriter within the meaning of Rule 405 under the Securities Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus, the Time of Sale Prospectus or any amendment or supplement thereto, any issuer free writing prospectus as defined in Rule 433(h) under the Securities Act, any Company information that the Company has filed, or is required to file, pursuant to Rule 433(d) under the
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Securities Act, any road show as defined in Rule 433(h) under the Securities Act (a “road show”), or the Prospectus or any amendment or supplement thereto, or any Written Testing-the-Waters Communication caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein.
(b) Each Selling Stockholder agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus, the Time of Sale Prospectus or any amendment or supplement thereto, any issuer free writing prospectus as defined in Rule 433(h) under the Securities Act, any Company information that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act, any road show as defined in Rule 433(h) under the Securities Act, or the Prospectus or any amendment or supplement thereto, or any Written Testing-the-Waters Communication or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only with reference to information relating to such Selling Stockholder furnished in writing by or on behalf of such Selling Stockholder expressly for use in the Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, any issuer free writing prospectus, road show or the Prospectus or any amendment or supplement thereto.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, the Selling Stockholders, the directors of the Company, the officers of the Company who sign the Registration Statement and each person, if any, who controls the Company or any Selling Stockholder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus, the Time of Sale Prospectus or any amendment or supplement thereto, any issuer free writing prospectus as defined in Rule 433(h) under the Securities Act, any Company information that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act, any road show or the Prospectus or any amendment or supplement thereto, or caused by any omission or alleged
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omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only with reference to information relating to such Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in the Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, any issuer free writing prospectus, road show or the Prospectus or any amendment or supplement thereto.
(d) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to Section 11(a), 11(b) or 11(c), such person (the “ indemnified party ”) shall promptly notify the person against whom such indemnity may be sought (the “ indemnifying party ”) in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the reasonably incurred fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed in writing to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Underwriters and all persons, if any, who control any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act or who are affiliates of any Underwriter within the meaning of Rule 405 under the Securities Act and (b) the fees and expenses of more than one separate firm (in addition to any local counsel) for all such other indemnified parties, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Underwriters and such control persons and affiliates of any Underwriters, such firm shall be designated in writing by the Representatives. In the case of any such separate firm for the Company, and such directors, officers and control persons of the Company, such firm shall be designated in writing by the Company. In the case of any such separate firm for the Selling Stockholders and such control persons of any Selling Stockholders, such firm shall be designated in writing by the Selling Stockholders. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party, effect any
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settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless (x) such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding and (y) does not include a statement admitting fault, culpability or a failure to act, by or on behalf of any indemnified party.
(e) To the extent the indemnification provided for in Sections 11(a) , 11(b) or 11(c) is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party or parties on the other hand from the offering of the Shares or (ii) if the allocation provided by clause 11(e)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 11(e)(i) above but also the relative fault of the indemnifying party or parties on the one hand and of the indemnified party or parties on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Sellers on the one hand and the Underwriters on the other hand in connection with the offering of the Shares shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Shares (before deducting expenses) received by each Seller and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate Public Offering Price of the Shares. The relative fault of the Sellers on the one hand and the Underwriters on the other hand 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 Sellers or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Underwriters’ respective obligations to contribute pursuant to this Section 11 are several in proportion to the respective number of Shares they have purchased hereunder, and not joint.
(f) The Sellers and the Underwriters agree that it would not be just or equitable if contribution pursuant to this Section 11 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 11(e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in Section 11(e) shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party
30
in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 11, no Underwriter shall be required to contribute any amount in excess of the amount by which the total underwriting discounts and commissions received by such Underwriter with respect to the Shares underwritten by it and distributed to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 11 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this Section 11 and the representations, warranties and other statements of the Company and the Selling Stockholders contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter, any person controlling any Underwriter or any affiliate of any Underwriter or by or on behalf of any Selling Stockholder or any person controlling any Selling Stockholder, or the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Shares.
12. Directed Share Program Indemnification. (a) The Company agrees to indemnify and hold harmless Morgan Stanley, each person, if any, who controls Morgan Stanley within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and each affiliate of Morgan Stanley within the meaning of Rule 405 of the Securities Act (“ Morgan Stanley Entities ”) from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) (i) caused by any untrue statement or alleged untrue statement of a material fact contained in any material prepared by or with the consent of the Company for distribution to Participants in connection with the Directed Share Program or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) caused by the failure of any Participant to pay for and accept delivery of Directed Shares that the Participant agreed to purchase; or (iii) related to, arising out of, or in connection with the Directed Share Program, other than losses, claims, damages or liabilities (or expenses relating thereto) that are finally judicially determined to have resulted from the bad faith or gross negligence of Morgan Stanley Entities.
(b) In case any proceeding (including any governmental investigation) shall be instituted involving any Morgan Stanley Entity in respect of which indemnity may be sought pursuant to Section 12(a), the Morgan Stanley Entity seeking indemnity, shall promptly notify the Company in writing and the Company, upon request of the Morgan Stanley Entity, shall retain counsel reasonably satisfactory to the Morgan Stanley Entity to represent the Morgan
31
Stanley Entity and any others the Company may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any Morgan Stanley Entity shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Morgan Stanley Entity unless (i) the Company shall have agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the Company and the Morgan Stanley Entity and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Company shall not, in respect of the legal expenses of the Morgan Stanley Entities in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Morgan Stanley Entities. Any such separate firm for the Morgan Stanley Entities shall be designated in writing by Morgan Stanley. The Company shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Company agrees to indemnify the Morgan Stanley Entities from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time a Morgan Stanley Entity shall have requested the Company to reimburse it for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the Company agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Company of the aforesaid request and (ii) the Company shall not have reimbursed the Morgan Stanley Entity in accordance with such request prior to the date of such settlement. The Company shall not, without the prior written consent of Morgan Stanley, effect any settlement of any pending or threatened proceeding in respect of which any Morgan Stanley Entity is or could have been a party and indemnity could have been sought hereunder by such Morgan Stanley Entity, unless such settlement includes an unconditional release of the Morgan Stanley Entities from all liability on claims that are the subject matter of such proceeding.
(c) To the extent the indemnification provided for in Section 12(a) is unavailable to a Morgan Stanley Entity or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then the Company in lieu of indemnifying the Morgan Stanley Entity thereunder, shall contribute to the amount paid or payable by the Morgan Stanley Entity as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Morgan Stanley Entities on the other hand from the offering of the Directed Shares or (ii) if the allocation provided by clause 12(c)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 12(c)(i) above but also the relative fault of the Company on the one hand and of the Morgan Stanley Entities on the other hand in connection with any statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative
32
benefits received by the Company on the one hand and the Morgan Stanley Entities on the other hand in connection with the offering of the Directed Shares shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Directed Shares (before deducting expenses) and the total underwriting discounts and commissions received by the Morgan Stanley Entities for the Directed Shares, bear to the aggregate Public Offering Price of the Directed Shares. If the loss, claim, damage or liability is caused by an untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact, the relative fault of the Company on the one hand and the Morgan Stanley Entities on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement or the omission or alleged omission relates to information supplied by the Company or by the Morgan Stanley Entities and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
(d) The Company and the Morgan Stanley Entities agree that it would not be just or equitable if contribution pursuant to this Section 12 were determined by pro rata allocation (even if the Morgan Stanley Entities were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 12(c). The amount paid or payable by the Morgan Stanley Entities as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by the Morgan Stanley Entities in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 12, no Morgan Stanley Entity shall be required to contribute any amount in excess of the amount by which the total price at which the Directed Shares distributed to the public were offered to the public exceeds the amount of any damages that such Morgan Stanley Entity has otherwise been required to pay. The remedies provided for in this Section 12 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.
(e) The indemnity and contribution provisions contained in this Section 12 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Morgan Stanley Entity or the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Directed Shares.
13. Termination . The Underwriters may terminate this Agreement by notice given by the Representatives to the Company, if after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on, or by, as the case may be, any of the New York Stock Exchange or the the NASDAQ Global Market, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over‑the‑counter market, (iii) a material disruption in securities settlement, payment or clearance services in the United States
33
shall have occurred, (iv) any moratorium on commercial banking activities shall have been declared by Federal or New York State authorities or (v) there shall have occurred any outbreak or escalation of hostilities, or any change in financial markets or any calamity or crisis that, in the Representatives’ judgment, is material and adverse and which, individually or together with any other event specified in this clause (v), makes it, in the Representatives’ judgment, impracticable or inadvisable to proceed with the offer, sale or delivery of the Shares on the terms and in the manner contemplated in the Time of Sale Prospectus or the Prospectus.
14. Effectiveness; Defaulting Underwriters . This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase Shares that it has or they have agreed to purchase hereunder on such date, and the aggregate number of Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one ‑tenth of the aggregate number of the Shares to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the number of Firm Shares set forth opposite their respective names in Schedule I bears to the aggregate number of Firm Shares set forth opposite the names of all such non‑defaulting Underwriters, or in such other proportions as the Representatives may specify, to purchase the Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the number of Shares that any Underwriter has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 14 by an amount in excess of one‑ninth of such number of Shares without the written consent of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares with respect to which such default occurs is more than one‑tenth of the aggregate number of Firm Shares to be purchased on such date, and arrangements satisfactory to the Representatives, the Company and the Selling Stockholders for the purchase of such Firm Shares are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non‑defaulting Underwriter, the Company or the Selling Stockholders. In any such case either the Representatives or the relevant Sellers shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement, in the Time of Sale Prospectus, in the Prospectus or in any other documents or arrangements may be effected. If, on an Option Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Additional Shares and the aggregate number of Additional Shares with respect to which such default occurs is more than one ‑tenth of the aggregate number of Additional Shares to be purchased on such Option Closing Date, the non-defaulting Underwriters shall have the option to (i) terminate their obligation hereunder to purchase the Additional Shares to be sold on such Option Closing Date or (ii) purchase not less than the number of Additional Shares that such non-defaulting Underwriters would have been obligated to purchase in the absence of such default. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.
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If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of any Seller to comply with the terms or to fulfill any of the conditions of this Agreement, or if any Seller shall be unable to perform its obligations under this Agreement as a result of the circumstances described in Sections 13(i) or 13(ii), the Company will reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves, severally, for all out ‑of ‑pocket expenses (including the reasonable fees and disbursements of their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the offering contemplated hereunder.
15. Entire Agreement . (a) This Agreement, together with any contemporaneous written agreements and any prior written agreements (to the extent not superseded by this Agreement) that relate to the offering of the Shares, represents the entire agreement between the Company and the Selling Stockholders, on the one hand, and the Underwriters, on the other, with respect to the preparation of any preliminary prospectus, the Time of Sale Prospectus, the Prospectus, the conduct of the offering, and the purchase and sale of the Shares.
(b) The Company and the Selling Stockholders acknowledge that in connection with the offering of the Shares: (i) the Underwriters have acted at arms length, are not agents of, and owe no fiduciary duties to, the Company, the Selling Stockholders, or any other person, (ii) the Underwriters owe the Company and the Selling Stockholders only those duties and obligations set forth in this Agreement and prior written agreements (to the extent not superseded by this Agreement), if any, and (iii) the Underwriters may have interests that differ from those of the Company and the Selling Stockholders. The Company and the Selling Stockholders waive to the full extent permitted by applicable law any claims it may have against the Underwriters arising from an alleged breach of fiduciary duty in connection with the offering of the Shares.
16. Counterparts . This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
17. Applicable Law . This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.
18. Headings . The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement.
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19. Notices . All communications hereunder shall be in writing and effective only upon receipt and if to the Underwriters shall be delivered, mailed or sent to the Representatives at c/o Morgan Stanley & Co. LLC, 1585 Broadway, New York, New York 10036, Attention: Equity Syndicate Desk, with a copy to the Legal Department, and c/o Credit Suisse Securities (USA) LLC, Eleven Madison Avenue, New York, New York 10010, Attention: IBCM-Legal; if to the Company shall be delivered, mailed or sent to Revolve Group, Inc., 16800 Edwards Road, Cerritos, California 90703, Attention: Chief Financial Officer; and if to the Selling Stockholders at [●].
[Signature page follows.]
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Very truly yours, |
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REVOLVE GROUP, INC. |
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By: |
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Name: |
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Title: |
[Signature Page to Underwriting Agreement]
69718302_11
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[SELLING STOCKHOLDERS] |
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By: |
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Name: |
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Title: As Attorney-in-Fact on behalf of each of the Selling Stockholders listed on Schedule II hereto |
[Signature Page to Underwriting Agreement]
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By: |
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Name: |
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Title: |
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By: |
CREDIT SUISSE SECURITIES (USA) LLC |
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By: |
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Name: |
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Title: |
[Signature Page to Underwriting Agreement]
69718302_11
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Underwriter |
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Number of Firm Shares To Be Purchased |
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Morgan Stanley & Co. LLC |
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Credit Suisse Securities (USA) LLC |
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Merrill Lynch, Pierce, Fenner & Smith Incorporated |
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Barclays Capital Inc. |
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Jefferies LLC |
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Cowen and Company, LLC |
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Guggenheim Securities, LLC |
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Raymond James & Associates, Inc. |
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William Blair & Company, L.L.C. |
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Total: |
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I-1
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Selling Stockholder |
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Number of Firm Shares To Be Sold |
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Total: |
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II-1
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[Selling Stockholder] |
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Number of Additional Shares To Be Sold |
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Total: |
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III-1
SCHEDULE IV
Time of Sale Prospectus
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1. |
Preliminary Prospectus issued [●] |
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2. |
[Identify all free writing prospectuses filed by the Company under Rule 433(d) of the Securities Act] |
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3. |
[Free writing prospectus containing a description of terms that does not reflect final terms, if the Time of Sale Prospectus does not include a final term sheet] |
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4. |
[Orally communicated pricing information such as price per share and size of offering if a Rule 134 pricing term sheet is used at the time of sale instead of a pricing term sheet filed by the Company under Rule 433(d) as a free writing prospectus] |
IV-1
EXHIBIT A
FORM OF LOCK-UP LETTER
, 2018
Morgan Stanley & Co. LLC
Credit Suisse Securities (USA) LLC
c/o Morgan Stanley & Co. LLC
1585 Broadway
New York, NY 10036
c/o Credit Suisse Securities (USA) LLC
Eleven Madison Avenue
New York, New York 10010
Re: Revolve Group, Inc. - Lock-Up Agreement
Ladies and Gentlemen:
The undersigned understands that you, as representatives (the “ Representatives ”), propose to enter into an Underwriting Agreement (the “ Underwriting Agreement ”) on behalf of the several Underwriters named in Schedule I to such agreement (collectively, the “ Underwriters ”), with Revolve Group, Inc., a Delaware corporation (the “ Company ”) into which Advance Holdings, LLC, a Delaware limited liability company, will convert in connection with a public offering (the “ Public Offering ”), as contemplated by the Underwriting Agreement, of the Class A Common Stock (together with the Class B Common Stock of the Company, the “ Common Stock ”) of the Company (the “ Shares ”) pursuant to a Registration Statement on Form S-1 to be filed with the Securities and Exchange Commission (the “ SEC ”).
In consideration of the agreement by the Underwriters to offer and sell the Shares, and of other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the undersigned agrees that, during the period specified in the following paragraph (the “ Lock-Up Period ”), the undersigned will not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares of Common Stock of the Company, or any options or warrants to purchase any shares of Common Stock of the Company, or any securities convertible into, exchangeable for or that represent the right to receive shares of Common Stock of the Company, whether now owned or hereinafter acquired, owned directly by the undersigned (including holding as a custodian) or with respect to which the undersigned has beneficial ownership within the rules and regulations of the SEC (collectively the " Undersigned's Shares "). The foregoing restriction is expressly agreed to preclude the undersigned from engaging in any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the Undersigned’s Shares even if such Shares would be disposed of by someone other than the
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undersigned. Such prohibited hedging or other transactions would include without limitation any short sale or any purchase, sale or grant of any right (including without limitation any put or call option) with respect to any of the Undersigned’s Shares or with respect to any security that includes, relates to, or derives any significant part of its value from such Shares. If the undersigned is an officer or director of the Company (or its predecessor), the undersigned further agrees that the foregoing provisions shall be equally applicable to any Company-directed Shares the undersigned may purchase in the offering. In addition, the undersigned agrees that, without the prior written consent of each of Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC on behalf of the Underwriters, it will not, during the Lock-Up Period, make any demand for or exercise any right with respect to, the registration of any of the Undersigned’s Shares.
The initial Lock-Up Period will commence on the date of this letter agreement (this “ Lock-Up Agreement ”) and continue until, and including, the date that is 180 days after the public offering date set forth on the final prospectus (the “ Prospectus ”) used to sell the Shares (the “ Public Offering Date ”) pursuant to the Underwriting Agreement.
Notwithstanding the foregoing, the undersigned may (a) transfer any of the Undersigned’s Shares:
i. to the Underwriters pursuant to the Underwriting Agreement;
ii. acquired in open market transactions after the completion of the Public Offering;
iii. as a bona fide gift or charitable contribution;
iv. to an immediate family member or a trust for the direct or indirect benefit of the undersigned or such immediate family member of the undersigned;
v. by will or intestacy; provided , however that, if required, any public report or filing under Section 16 of the Exchange Act of 1934, as amended (the “ Exchange Act ”), shall clearly indicate in the footnotes thereto that the filing relates to the transfer of shares by will or intestacy;
vi. pursuant to a domestic relations order, divorce decree or court order; provided , however that, if required, any public report or filing under Section 16 of the Exchange Act shall clearly indicate in the footnotes thereto that the filing relates to the transfer of shares pursuant to a domestic relations order, divorce decree or court order;
vii. to limited partners, general partners, members, stockholders or holders of similar equity interests, or other business entity that controls, is controlled by or managed by or is under common control with the undersigned;
viii. if the undersigned is a trust, to a trustor or beneficiary of the trust or to the estate of a beneficiary of such trust;
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ix. to the Company in connection with the repurchase of the Undersigned’s Shares in connection with the termination of the undersigned’s employment with the Company pursuant to contractual agreements with the Company; provided , however , that, if required, any public report or filing under Section 16 of the Exchange Act shall clearly indicate in the footnotes thereto that the filing relates to the transfer of shares in connection with the repurchase of the Undersigned’s Shares in connection with the termination of the undersigned’s employment with the Company pursuant to contractual agreements with the Company ;
x. through the disposition or forfeiture of the Undersigned’s Shares to the Company to satisfy any income, employment or tax withholding and remittance obligations of the undersigned or the employer of the undersigned in connection with the vesting of restricted stock, restricted stock units or other incentive awards settled in Shares held by the undersigned, provided that such restricted stock, restricted stock units or other incentive awards were granted under a stock incentive plan, stock purchase plan or pursuant to a contractual employment arrangement described in the Prospectus and were outstanding as of the date of the Prospectus; provided , however , that, if required, any public report or filing under Section 16 of the Exchange Act shall clearly indicate in the footnotes thereto that the filing relates to the transfer of shares through the disposition or forfeiture of the Undersigned’s Shares to the Company to satisfy any income, employment or tax withholding and remittance obligations of the undersigned or the employer of the undersigned in connection with the vesting of restricted stock, restricted stock units or other incentive awards settled in Shares held by the undersigned ;
xi. to the Company through the exercise of a stock option granted under a stock incentive plan or stock purchase plan described in the Prospectus by the undersigned, and the receipt by the undersigned from the Company of shares of the Company’s Common Stock upon such exercise, insofar as such option is outstanding as of the date of the Prospectus and the exercise period for such option expires during the Lock-Up Period, provided that the underlying Shares shall continue to be subject to the restrictions on transfer set forth in this Lock-Up Agreement and, provided , further , that, if required, any public report or filing under Section 16 of the Exchange Act shall clearly indicate in the footnotes thereto that the filing relates to the exercise of a stock option, that no shares were sold by the reporting person and that the shares received upon exercise of the stock option are subject to a lock-up agreement with the Underwriters;
xii. pursuant to a merger, consolidation or other similar transaction involving a Change of Control of the Company and approved by the Company’s board of directors, provided that, in the event that such Change of Control transaction is not completed, this clause (a)(xii) shall not be applicable and the Undersigned’s Shares shall remain subject to the restrictions contained in this Lock-Up Agreement; or
xiii. with the prior written consent of each of Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC on behalf of the Underwriters. or (b) establish a trading plan pursuant to Rule 10b5‑1 under the Exchange Act for the transfer of the Undersigned’s Shares, provided that (i) such plan does not provide for the transfer of Shares during the Lock-Up Period and (ii) to the extent a public announcement or filing under the Exchange Act, if any, is required of or voluntarily made by or on behalf of the undersigned or the Company regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of the Undersigned’s Shares may be made under such plan during the Lock-Up Period.
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In addition, in the case of clauses (a)(iii) - (viii) above, it shall be a condition to such transfer that each transferee, donee or distributee sign and deliver a lock up letter substantially in the form of this letter; and, provided, further that (A) in the case of clauses (a)(ii), (iii), (iv), (vii) and (viii) above, no filing under Section 16(a) of the Exchange Act (other than a required Form 5 filing that includes a statement indicating the reason for such transfer and is filed no earlier than 40 days following the Company’s first fiscal year-end following the Public Offering Date) or other public announcement, reporting a reduction in beneficial ownership of the Undersigned’s Shares, shall be required or shall be voluntarily made during the Lock-Up Period and (B) in the case of clauses (a)(v), (vi), (ix) and (x) above, (1) no filing under Section 16(a) of the Exchange Act or other public announcement, reporting a reduction in beneficial ownership of the Undersigned’s Shares, shall be required or shall be voluntarily made during the period commencing on the Public Offering Date and ending on the 60 th day after the Public Offering Date, and (2) no filing under Section 16(a) of the Exchange Act or other public announcement, reporting a reduction in beneficial ownership of the Undersigned’s Shares, shall be voluntarily made during the Lock-Up Period.
For purposes of this Lock-Up Agreement, “ immediate family ” shall mean any relationship by blood, marriage, domestic partnership or adoption, not more remote than first cousin. “ Change of Control ” shall mean the transfer (whether by tender offer, merger, consolidation or other similar transaction), in one transaction or a series of related transactions, to a person or group of affiliated persons (other than an Underwriter pursuant to the Public Offering), of the Company’s voting securities if, after such transfer, such person or group of affiliated persons would hold at least 50% of the voting power represented by the outstanding securities of the Company (or the surviving entity). For the avoidance of doubt, the Public Offering is not a Change of Control.
The undersigned now has, and, except as contemplated by clauses (a) and (b) above, for the duration of this Lock-Up Agreement will have, good and marketable title to the Undersigned’s Shares, free and clear of all liens, encumbrances, and claims whatsoever, other than such liens, encumbrances or other claims as are imposed by federal and state securities laws and by the organizational documents of the Company. The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of the Undersigned’s Shares except in compliance with the foregoing restrictions.
If the undersigned is an officer or director of the Company, (i) Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC agree that, at least three business days before the effective date of any release or waiver of the foregoing restrictions in connection with a transfer of shares of Common Stock, Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC will notify the Company of the impending release or waiver, and (ii) the Company has agreed in the Underwriting Agreement to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver. Any release or waiver granted by Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC hereunder to any such officer or director shall only be effective two business days after the publication date of such press release. The provisions of this paragraph will not apply if (a) the release or waiver is effected solely to permit a transfer not for consideration and (b) the transferee has agreed in writing to be bound by the same terms described in this letter to the extent and for the duration that such terms remain in effect at the time of the transfer.
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Notwithstanding anything to the contrary contained herein, this Lock-Up Agreement will automatically terminate and the undersigned will be released from all of his, her or its obligations hereunder upon the earliest to occur, if any, of (i) prior to the execution of the Underwriting Agreement, the Company advises the Representatives in writing that it has determined not to proceed with the Public Offering, (ii) the Company files an application to withdraw the registration statement related to the Public Offering, (iii) the Underwriting Agreement is executed but is terminated (other than the provisions thereof which survive termination) prior to payment for and delivery of the Shares to be sold thereunder, or (iv) December 31, 2018, in the event that the Underwriting Agreement has not been executed by such date, provided , however , that the Representatives or the Company may, by written notice to you prior to such date in clause (iv), extend such date for a period of up to three additional months.
The undersigned and the Representatives hereby consent to receipt of this Lock-Up Agreement in electronic form and understand and agree that this Lock-Up Agreement may be signed electronically. In the event that any signature is delivered by facsimile transmission, electronic mail, or otherwise by electronic transmission evidencing an intent to sign this Lock-Up Agreement (including any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g. , www.docusign.com) , such facsimile transmission, electronic mail or other electronic transmission shall create a valid and binding obligation of the undersigned with the same force and effect as if such signature were an original. Execution and delivery of this Lock-Up Agreement by facsimile transmission, electronic mail or other electronic transmission is legal, valid and binding for all purposes.
The undersigned understands that the Company and the Underwriters are relying upon this Lock-Up Agreement in proceeding toward consummation of the offering. The undersigned further understands that this Lock-Up Agreement is irrevocable and shall be binding upon the undersigned’s heirs, legal representatives, successors, and assigns. This Lock-Up Agreement and any claim, controversy or dispute arising under or related to this Lock-Up Agreement shall be governed by and construed in accordance with the laws of the State of New York.
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A-1
FORM OF WAIVER OF LOCK-UP
_____________, 20__
[Name and Address of
Officer or Director
Requesting Waiver]
Dear Mr./Ms. [Name]:
This letter is being delivered to you in connection with the offering by Revolve Group, Inc., a Delaware corporation (the “ Company ”), of _____ shares of Class A Common Stock, $[●] par value (the “ Common Stock ”), of the Company and the lock-up letter dated _____, 2018 (the “Lock-up Letter”), executed by you in connection with such offering, and your request for a [waiver] [release] dated _____, 20__, with respect to _____ shares of Common Stock (the “ Shares ”).
Each of Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC hereby agrees to [waive] [release] the transfer restrictions set forth in the Lock-up Letter, but only with respect to the Shares, effective _____, 20__; provided, however, that such [waiver] [release] is conditioned on the Company announcing the impending [waiver] [release] by press release through a major news service at least two business days before effectiveness of such [waiver] [release]. This letter will serve as notice to the Company of the impending [waiver] [release].
Except as expressly [waived] [released] hereby, the Lock-up Letter shall remain in full force and effect.
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Credit Suisse Securities (USA) LLC
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Revolve Group, Inc.
[Date]
Revolve Group, Inc. (the “ Company ”) announced today that Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC, the lead book-running managers in the Company’s recent public sale of [●] shares of common stock is [waiving][releasing] a lock-up restriction with respect to [●] shares of the Company’s common stock held by [certain officers or directors] [an officer or director] of the Company. The [waiver][release] will take effect on ____, 20__ , and the shares may be sold on or after such date.
This press release is not an offer for sale of the securities in the United States or in any other jurisdiction where such offer is prohibited, and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the United States Securities Act of 1933, as amended.
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Exhibit 3.1
REVOLVE GROUP, INC.
CERTIFICATE OF INCORPORATION
The undersigned incorporator, in order to form a corporation under the General Corporation Law of the State of Delaware (the “ DGCL ”), certifies as follows:
ARTICLE I
The name of the Corporation is Revolve Group, Inc. (the “ Corporation ”)
ARTICLE II
The address of the Corporation’s registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.
ARTICLE IV
A. Classes of Stock . The total number of shares of capital stock that the Corporation shall have authority to issue is , consisting of the following: shares of Class A Common Stock, par value $0.001 per share (“ Class A Common Stock ”), shares of Class B Common Stock, par value $0.001 per share (“ Class B Common Stock ”), and 10,000,000 shares of undesignated Preferred Stock, par value $0.001 per share (“ Preferred Stock ”).
B. Rights of Preferred Stock . The Board of Directors of the Corporation (the “ Board of Directors ”) is authorized, subject to any limitations prescribed by law, but to the fullest extent permitted by law, to provide by resolution for the issuance of shares of Preferred Stock in series, and by filing a certificate pursuant to the applicable law of the State of Delaware (such certificate being hereinafter referred to as a “ Preferred Stock Designation ”), to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers (which may include, without limitation, full, limited or no voting powers), preferences, and relative, participating, optional or other rights of the shares of each such series and any qualifications, limitations or restrictions thereof.
C. Vote to Increase or Decrease Authorized Shares of Preferred Stock . The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the outstanding shares of capital stock of the Corporation entitled to vote thereon, without a separate class vote of the holders of Preferred Stock, or any separate series votes of any series thereof, unless a vote of any such holders is required pursuant to the terms of any Preferred Stock Designation.
D. Rights of Class A Common Stock and Class B Common Stock . The relative powers, rights, qualifications, limitations and restrictions granted to or imposed on the shares of Class A Common Stock and Class B Common Stock are as follows:
1. Voting Rights .
(a) General Right to Vote Together; Exception . Except as otherwise expressly provided herein or required by applicable law, the holders of Class A Common Stock and Class B Common Stock shall vote together as one class on all matters submitted to a vote of the stockholders; provided , however , that subject to the terms of any Preferred Stock Designation, the number of authorized shares of Class A Common Stock or Class B Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the capital stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of DGCL.
(b) Votes Per Share . Except as otherwise expressly provided herein or required by applicable law, on any matter that is submitted to a vote of the stockholders, each holder of Class A Common Stock shall be entitled to one (1) vote for each such share held as of the applicable record date, and each holder of Class B Common Stock shall be entitled to ten (10) votes for each such share held as of the applicable record date.
2. Identical Rights . Except as otherwise expressly provided herein or required by applicable law, shares of Class A Common Stock and Class B Common Stock shall have the same rights and privileges and rank equally, share ratably and be identical in all respects as to all matters, including, without limitation:
(a) Dividends and Distributions . Subject to the preferences applicable to any series of Preferred Stock, if any, outstanding at any time, shares of Class A Common Stock and Class B Common Stock shall be treated equally, identically and ratably, on a per share basis, with respect to any Distribution paid or distributed by the Corporation, unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock and by the affirmative vote of the holders of a majority of the outstanding shares of Class B Common Stock, each voting separately as a class; provided , however , that if a Distribution is paid in the form of Class A Common Stock or Class B Common Stock (or Rights to acquire such stock), then holders of Class A Common Stock shall receive Class A Common Stock (or Rights to acquire such stock, as the case may be) and holders of Class B Common Stock shall receive Class B Common Stock (or Rights to acquire such stock, as the case may be).
(b) Subdivision or Combination . If the Corporation in any manner subdivides or combines the outstanding shares of Class A Common Stock or Class B Common Stock, the outstanding shares of the other such class will be subdivided or combined in the same proportion and manner, unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock and by the affirmative vote of the holders of a majority of the outstanding shares of Class B Common Stock, each voting separately as a class.
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(c) Equal Treatment in a Change of Control or any Merger Transaction . In connection with any Change of Control Transaction, shares of Class A Common Stock and Class B Common Stock shall be treated equally, identically and ratably, on a per share basis, with respect to any consideration into which such shares are converted or any consideration paid or otherwise distributed to stockholders of the Corporation by virtue of their ownership of such shares , unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock and by the affirmative vote of the holders of a majority of the outstanding shares of Class B Common Stock, each voting separately as a class . Any merger or consolidation of the Corporation with or into any other entity that does not constitute a Change of Control Transaction shall require approval by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock and by the affirmative vote of the holders of a majority of the outstanding shares of Class B Common Stock, each voting separately as a class, unless (i) the shares of Class A Common Stock and Class B Common Stock remain outstanding and no other consideration is received in respect thereof or (ii) such shares are converted on a pro rata basis into shares of the surviving or parent entity in such transaction having identical rights to the shares of Class A Common Stock and Class B Common Stock, respectively.
3. Conversion of Class B Common Stock .
(a) Voluntary Conversion . Each one (1) share of Class B Common Stock shall be convertible into one (1) share of Class A Common Stock at the option of the holder thereof at any time upon written notice to the transfer agent of the Corporation; provided that such notice may specify a future time or future event upon which such conversion shall be effective.
(b) Automatic Conversion . Shares of Class B Common Stock shall automatically, without any further action, convert into an equal number of shares of Class A Common Stock upon the earlier of:
(i) a Transfer of such share; provided that no such automatic conversion shall occur in the case of a Transfer (1) from MMMK to a Key Holder or a Key Holder’s Permitted Transferee, (2) a Key Holder or a Key Holder’s Permitted Transferee to MMMK, another Key Holder or such Key Holder’s or such other Key Holder’s Permitted Transferee, or (3) by a Class B Stockholder, for tax or estate planning purposes, to any of the persons or entities listed in clauses (A) through (D) below (each, a “ Permitted Transferee ”) and from any such Permitted Transferee back to such Class B Stockholder and/or any other Permitted Transferee established by or for such Class B Stockholder:
(A) a trust for the benefit of such Class B Stockholder or persons other than the Class B Stockholder so long as the Class B Stockholder has sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such trust; provided such Transfer does not involve any payment of cash, securities, property or other consideration (other than an interest in such trust) to the Class B Stockholder and, provided , further , that if such Class B Stockholder no longer has sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such trust, each such share of Class B Common Stock then held by such trust shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock;
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(B) a trust under the terms of which such Class B Stockholder has retained a “qualified interest” within the meaning of §2702(b) of the Internal Revenue Code of 1986, as amended (the “ Internal Revenue Code ”) and/or a reversionary interest so long as the Class B Stockholder has sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such trust; provided , however , that if the Class B Stockholder no longer has sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such trust, each such share of Class B Common Stock then held by such trust shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock;
(C) an Individual Retirement Account, as defined in Section 408(a) of the Internal Revenue Code, or a pension, profit sharing, stock bonus or other type of plan or trust of which such Class B Stockholder is a participant or beneficiary and which satisfies the requirements for qualification under Section 401 of the Internal Revenue Code; provided that in each case such Class B Stockholder has sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held in such account, plan or trust, and provided , further , that if the Class B Stockholder no longer has sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such account, plan or trust, each such share of Class B Common Stock then held by such account, plan or trust shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock;
(D) a corporation, partnership or limited liability company in which such Class B Stockholder directly, or indirectly through one or more Permitted Transferees, owns shares, partnership interests or membership interests, as applicable, with sufficient Voting Control in the corporation, partnership or limited liability company, as applicable, or otherwise has legally enforceable rights, such that the Class B Stockholder retains sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such corporation, partnership or limited liability company; provided that if the Class B Stockholder no longer owns sufficient shares, partnership interests or membership interests, as applicable, or no longer has sufficient legally enforceable rights to ensure the Class B Stockholder retains sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such corporation, partnership or limited liability company, as applicable, each such share of Class B Common Stock then held by such corporation, partnership or limited liability company, as applicable, shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock; and
(ii) the date specified by a written notice and certification request of the Corporation to the holder of such share of Class B Common Stock requesting a certification, in a form satisfactory to the Corporation, verifying such holder’s ownership of Class B Common Stock and confirming that a conversion to Class A Common Stock has not occurred; provided that no such automatic conversion pursuant to this subsection (ii) shall occur in the case of a Class B Stockholder or its Permitted Transferees that furnishes a certification satisfactory to the Corporation prior to the specified date.
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For the avoidance of doubt, to the extent any shares are deemed to be held by a trustee of a trust described in (i)(A), (i)(B) or (i)(C) above, the trustee shall be deemed a Permitted Transferee so long as the other requirements of (i)(A), (i)(B) or (i)(C) are otherwise satisfied.
(c) Conversion Upon Death or Incapacity of a Class B Stockholder .
(i) Each share of Class B Common Stock held of record by a Class B Stockholder, other than MMMK or a Key Holder, who is a natural person, or by such Class B Stockholder’s Permitted Transferees, shall automatically, without any further action, convert into one (1) fully paid and nonassessable share of Class A Common Stock upon the death or Incapacity of such Class B Stockholder.
(ii) Upon the death or Incapacity of a Key Holder, each share of Class B Common Stock held of record by such Key Holder or by such Key Holder’s Permitted Transferees shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock upon the that date that is the earlier of: (a) nine (9) months after the date of death or Incapacity of such Key Holder and (b) the date upon which the Designated Proxy Holder ceases to hold exclusive Voting Control over such shares of Class B Common Stock.
(iii) Upon the death or Incapacity of both Key Holders, each share of Class B Common Stock held of record by MMMK or by MMMK’s Permitted Transferees shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock upon the date that is the earlier of: (a) nine (9) months after the date of death or Incapacity of both Key Holders and (b) the date upon which the Designated Proxy Holder ceases to hold exclusive Voting Control over such shares of Class B Common Stock.
(d) Automatic Conversion of all Outstanding Class B Common Stock . Each one (1) share of Class B Common Stock shall automatically, without any further action, convert into one (1) share of Class A Common Stock upon the date (including a date determined by the happening of a future event) specified by affirmative vote or written election of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of Class B Common Stock, voting as a single class (which election may be revoked by such holders prior to the date on which the automatic conversion would otherwise occur unless otherwise specified by such holders).
(e) Final Conversion of Class B Common Stock . At the Final Conversion Time, each one (1) issued share of Class B Common Stock shall automatically, without any further action, convert into one (1) share of Class A Common Stock. Following such conversion, the reissuance of all shares of Class B Common Stock shall be prohibited, and such shares shall be retired and cancelled in accordance with Section 243 of the DGCL and the filing with the Secretary of State of the State of Delaware required thereby, and upon such retirement and cancellation, all references to Class B Common Stock in this Certificate of Incorporation shall be eliminated to the fullest extent permitted by Delaware law.
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(f) Procedures . The Corporation may, from time to time, establish such policies and procedures relating to the conversion of Class B Common Stock to Class A Common Stock and the general administration of this multi- class stock structure, including the issuance of stock certificates with respect thereto, as it may deem reasonably necessary or advisable, and may from time to time request that holders of shares of Class B Common Stock furnish certifications, affidavits or other proof to the Corporation as it deems necessary to verify the ownership of Class B Common Stock and to confirm that a conversion to Class A Common Stock has not occurred . A determination by the Secretary of the Corporation or the Board of Directors or a duly authorized committee thereof as to whether or not a Transfer has occurred and results in a conversion to Class A Common Stock shall be conclusive and binding.
(g) Immediate Effect . In the event of a conversion of shares of Class B Common Stock to shares of Class A Common Stock pursuant to this Section D.3, including at the Final Conversion Time, such conversion(s) shall be deemed to have been made at the time that the Transfer of shares occurred, at the conversion time or event otherwise provided herein, or immediately at the Final Conversion Time, as applicable. Upon any conversion of Class B Common Stock to Class A Common Stock, all rights of the holder or holders of shares of Class B Common Stock shall cease and the person or persons in whose name or names the certificate or certificates representing the shares of Class A Common Stock are to be issued shall be treated for all purposes as having become the record holder or holders of such shares of Class A Common Stock. Shares of Class B Common Stock that are converted into shares of Class A Common Stock as provided in this Section D.3 shall be retired and may not be reissued.
(h) Reservation of Stock . The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the conversion of the shares of Class B Common Stock, such number of its shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class B Common Stock into shares of Class A Common Stock.
E. No Further Issuances . Except for the issuance of Class B Common Stock issuable upon exercise of Rights outstanding as of the first date that the Corporation’s equity securities have been listed for trading on a Securities Exchange or a dividend payable in accordance with Article IV, Section D.2(a), and without limiting Article IV, Section D.2(b), the Corporation shall not at any time from and after the first date that the Corporation’s equity securities have been listed for trading on a Securities Exchange issue any additional shares of Class B Common Stock, unless such issuance is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock and the holders of a majority of the outstanding shares of Class B Common Stock, each voting separately as a class. After the Final Conversion Time, the Corporation shall not issue any additional shares of Class B Common Stock.
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The following terms, where capitalized in this Certificate of Incorporation, shall have the meanings ascribed to them in this Article V:
“ Change of Control Share Issuance ” means the issuance by the Corporation, in a transaction or series of related transactions, of voting securities representing more than two percent (2%) of the total voting power (assuming Class A Common Stock and Class B Common Stock each have one (1) vote per share) of the Corporation before such issuance to any person or persons acting as a group as contemplated in Rule 13d-5(b) under the Exchange Act (or any successor provision) that immediately prior to such transaction or series of related transactions held fifty percent (50%) or less of the total voting power of the Corporation (assuming Class A Common Stock and Class B Common Stock each have one (1) vote per share), such that, immediately following such transaction or series of related transactions, such person or group of persons would hold more than fifty percent (50%) of the total voting power of the Corporation (assuming Class A Common Stock and Class B Common Stock each have one (1) vote per share).
“ Change of Control Transaction ” means (i) the sale, lease, exchange, or other disposition (other than liens and encumbrances created in the ordinary course of business, including liens or encumbrances to secure indebtedness for borrowed money that are approved by the Corporation’s Board of Directors, so long as no foreclosure occurs in respect of any such lien or encumbrance) of all or substantially all of the Corporation’s property and assets (which shall for such purpose include the property and assets of any direct or indirect subsidiary of the Corporation), provided that any sale, lease, exchange or other disposition of property or assets exclusively between or among the Corporation and any direct or indirect subsidiary or subsidiaries of the Corporation shall not be deemed a “ Change of Control Transaction ”; (ii) the merger, consolidation, business combination, or other similar transaction of the Corporation with any other entity, other than a merger, consolidation, business combination, or other similar transaction that would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) more than fifty percent (50%) of the total voting power represented by the voting securities of the Corporation and more than fifty percent (50%) of the total number of outstanding shares of the Corporation’s capital stock, in each case as outstanding immediately after such merger, consolidation, business combination, or other similar transaction, and the stockholders of the Corporation immediately prior to the merger, consolidation, business combination, or other similar transaction own voting securities of the Corporation, the surviving entity or its parent immediately following the merger, consolidation, business combination, or other similar transaction in substantially the same proportions (vis-a-vis each other) as such stockholders owned the voting securities of the Corporation immediately prior to the transaction; (iii) a recapitalization, liquidation, dissolution, or other similar transaction involving the Corporation, other than a recapitalization, liquidation, dissolution, or other similar transaction that would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity or its parent) more than fifty percent (50%) of the total voting power represented by the voting securities of the Corporation and more than fifty percent (50%) of the total number of outstanding shares of the Corporation’s capital
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stock, in each case as outstanding immediately after such recapitalization, liquidation, dissolution or other similar transaction, and the stockholders of the Corporation immediately prior to the recapitalization, liquidation, dissolution or other similar transaction own voting securities of the Corporation, the surviving entity or its parent immediately following the recapitalization, liquidation, dissolution or other similar transaction in substantially the same proportions ( vis - a - vis each other) as such stockholders owned the voting securities of the Corporation immediately prior to the transaction; and (iv) any Change of Control Share Issuance.
“ Class B Stockholder ” means (i) the registered holder of a share of Class B Common Stock at the Effective Time and (ii) the initial registered holder of any shares of Class B Common Stock that are originally issued by the Corporation after the Effective Time.
“ Designated Proxy Holder ” means, (i) with respect to a Key Holder or any trust or trustee receiving or holding a Key Holder’s shares, any natural person designated or approved by such Key Holder and not less than sixty-six and two-thirds percent (66-2/3%) of the directors then constituting the entire Board of Directors, to act as such Key Holder’s proxy and attorney-in-fact or, if there is no such designee, a person chosen by the members of the entire Board of Directors acting by affirmative majority vote and (ii) with respect to MMMK or any trust or trustee receiving or holding shares owned by MMMK, any natural person designated or approved by the Key Holders and not less than sixty-six and two-thirds percent (66-2/3%) of the directors then constituting the entire Board of Directors, to act as MMMK’s proxy and attorney-in-fact, or, if there is no such designee, a person chosen by the members of the entire Board of Directors acting by affirmative majority vote.
“ Distribution ” means (i) any dividend or distribution of cash, property, shares of the Corporation’s capital stock, or Rights in respect of shares of the Corporation’s capital stock; and (ii) any distribution following or in connection with any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary.
“ Effective Time ” means immediately upon the filing and effectiveness of this Certificate of Incorporation with the Secretary of State of the State of Delaware.
“ Exchange Act ” means the U.S. Securities Exchange Act of 1934, as amended.
“ Final Conversion Time ” means 5:00 p.m. in New York City, New York on the first Trading Day falling on or after the date on which the outstanding shares of Class B Common Stock represent less than five percent (5%) of the aggregate number of the then outstanding shares of Class A Common Stock and Class B Common Stock.
“ Incapacity ” shall mean that such holder is incapable of managing his or her financial affairs under the criteria set forth in the applicable probate code that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months as determined by a licensed practitioner. In the event of a dispute regarding whether a Class B Stockholder has suffered an Incapacity, no Incapacity of such holder will be deemed to have occurred unless and until an affirmative ruling regarding such Incapacity has been made by the Board of Directors.
“ Key Holder ” means either Michael Karanikolas or Michael Mente.
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“ MMMK ” means MMMK Development, Inc.
“ Rights ” means any option, warrant, conversion right or contractual right of any kind to acquire shares of the Corporation’s authorized but unissued capital stock.
“ Securities Act ” means the U.S. Securities Act of 1933, as amended.
“ Securities Exchange ” means, at any time, the registered national securities exchange on which the Corporation’s equity securities are then principally listed or traded, which shall be the New York Stock Exchange or Nasdaq Global Select Market (or similar national quotation system of the Nasdaq Stock Market) (“ Nasdaq ”) or any successor exchange of either the New York Stock Exchange or Nasdaq.
“ Trading Day ” means any day on which the Securities Exchange is open for trading.
“ Transfer ” of a share of Class B Common Stock shall mean any sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition of such share or any legal or beneficial interest in such share, whether or not for value and whether voluntary or involuntary or by operation of law. A “ Transfer ” shall also include, without limitation and for the avoidance of doubt, (i) a Transfer of a share of Class B Common Stock to a broker or other nominee (regardless of whether or not there is a corresponding change in beneficial ownership) or (ii) the Transfer of, or entering into a binding agreement with respect to, Voting Control over a share of Class B Common Stock by proxy or otherwise; provided , however , that the following shall not be considered a “ Transfer ”: (a) the grant of a proxy by MMMK or a Key Holder to a Designated Proxy Holder; (b) entering into a support, voting, tender or similar agreement, arrangement or understanding (with or without granting a proxy), and taking any action contemplated thereunder, in connection with a Change of Control Transaction that has been approved by the Board of Directors of the Corporation; (c) the grant of a proxy to officers or directors of the Corporation at the request of the Board of Directors of the Corporation in connection with actions to be taken at an annual or special meeting of stockholders or the grant of a revocable proxy given to any other person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations promulgated under the Exchange Act; (d) the pledge of shares of Class B Common Stock by a Class B Stockholder that creates a mere security interest in such shares pursuant to a bona fide loan or indebtedness transaction so long as the Class B Stockholder continues to exercise Voting Control over such pledged shares; provided , however , that a foreclosure on such shares of Class B Common Stock or other similar action by the pledgee shall constitute a “ Transfer ”; or (e) the fact that, as of the Effective Time or at any time after the Effective Time, the spouse of any Class B Stockholder possesses or obtains an interest in such holder’s shares of Class B Common Stock arising solely by reason of the application of the community property laws of any jurisdiction, so long as no other event or circumstance shall exist or have occurred that constitutes a “ Transfer ” of such shares of Class B Common Stock.
“ Voting Control ” with respect to a share of capital stock or other security means the power (whether exclusive or shared, and whether directly or indirectly) to vote or direct the voting of such share of security by proxy, voting agreement, or otherwise.
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A. General Powers . The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
B. Number of Directors; Election . Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, the number of directors that constitutes the entire Board of Directors of the Corporation shall be fixed solely by resolution of the Board of Directors. Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, each director of the Corporation shall hold office until the expiration of the term for which he or she is elected and until his or her successor has been duly elected and qualified or until his or her earlier resignation, death or removal.
C. Removal; Vacancies . Any director may be removed from office by the stockholders of the Corporation as provided in Section 141(k) of the DGCL. Subject to the rights of holders of Preferred Stock and except as otherwise provided in the DGCL or as permitted in the specific case by resolution of the Board of Directors, vacancies occurring on the Board of Directors for any reason and newly created directorships resulting from an increase in the authorized number of directors may be filled only by vote of a majority of the remaining members of the Board of Directors, although less than a quorum, or by a sole remaining director, and not by stockholders. A person so elected by the Board of Directors to fill a vacancy or newly created directorship shall hold office until the next election of directors.
ARTICLE VII
A. Written Ballot . Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.
B. Amendment of Bylaws . In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or repeal the Bylaws of the Corporation.
C. Special Meetings . Special meetings of the stockholders may be called only by (i) the Board of Directors pursuant to a resolution adopted by a majority of the entire Board of Directors; (ii) the chairman of the Board of Directors; (iii) a co-chief executive officer of the Corporation; or (iv) the president of the Corporation (in the absence of a co-chief executive officer).
D. No Stockholder Action by Written Consent . Subject to the rights of the holders of any series of Preferred Stock, and except for any election to convert shares of Class B Common Stock to Class A Common Stock as contemplated in this Certificate of Incorporation, from and after the first date that the Corporation’s equity securities have been listed for trading on a Securities Exchange, no action shall be taken by the stockholders of the Corporation except at an annual or special meeting of the stockholders called in accordance with the Bylaws, and no action shall be taken by the stockholders by written consent.
E. No Cumulative Voting . No stockholder will be permitted to cumulate votes at any election of directors.
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To the fullest extent permitted by the DGCL, as it presently exists or may hereafter be amended from time to time, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.
Neither any amendment nor repeal of this Article VIII, nor the adoption of any provision of the Corporation’s Certificate of Incorporation inconsistent with this Article VIII, shall eliminate or reduce the effect of this Article VIII in respect of any matter occurring, or any cause of action, suit or proceeding accruing or arising or that, but for this Article VIII, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.
ARTICLE IX
Subject to any provisions in the Bylaws of the Corporation related to indemnification of directors or officers of the Corporation, the Corporation shall indemnify, to the fullest extent permitted by applicable law, any director or officer of the Corporation who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”) by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any such Proceeding; provided , however , that the Corporation shall be required to indemnify a person in connection with a Proceeding (or part thereof) initiated by such person only if such Proceeding (or part thereof) was authorized by the Board of Directors.
The Corporation shall have the power to indemnify, to the extent permitted by the DGCL, as it presently exists or may hereafter be amended from time to time, any employee or agent of the Corporation who was or is a party or is threatened to be made a party to any Proceeding by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any such Proceeding.
A right to indemnification or to advancement of expenses arising under a provision of this Certificate of Incorporation or the Bylaws of the Corporation shall not be eliminated or impaired by an amendment to this Certificate of Incorporation or the Bylaws of the Corporation after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.
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A. Scope . The provisions of this Article X are set forth to define, to the extent permitted by applicable law, the duties of Exempted Persons (as defined below) to the Corporation with respect to certain classes or categories of business opportunities. “ Exempted Persons ” means each of TSG Eminent Holdings, L.P., its affiliates, and all of their respective partners, principals, directors, officers, employees, and consultants (other than in each case the Corporation and its subsidiaries), including any of the foregoing who serve as officers or directors of the Corporation.
B. Competition and Allocation of Corporate Opportunities . The Exempted Persons shall not have any fiduciary duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Corporation or any of its subsidiaries. To the fullest extent permitted by applicable law, the Corporation, on behalf of itself and its subsidiaries, renounces any interest or expectancy of the Corporation and its subsidiaries in, or in being offered an opportunity to participate in, business opportunities that are from time to time available to the Exempted Persons, even if the opportunity is one that the Corporation or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and each such Exempted Person shall have no duty to communicate or offer such business opportunity to the Corporation and, to the fullest extent permitted by applicable law, shall not be liable to the Corporation or any of its subsidiaries or stockholders for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such Exempted Person pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the Corporation or its subsidiaries.
C. Certain Matters Deemed Not Corporate Opportunities . In addition to and notwithstanding the foregoing provisions of this Article X, a corporate opportunity shall not be deemed to belong to the Corporation if it is a business opportunity that the Corporation is not financially able or contractually permitted or legally able to undertake, or that is, from its nature, not in the line of the Corporation’s business or is of no practical advantage to it or that is one in which the Corporation has no interest or reasonable expectancy.
D. Amendment of this Article . No amendment or repeal of this Article X in accordance with the provisions of Article XI shall apply to or have any effect on the liability or alleged liability of any Exempted Person for or with respect to any activities or opportunities of which such Exempted Person becomes aware prior to such amendment or repeal. This Article X shall not limit any protections or defenses available to, or indemnification or advancement rights of, any director or officer of the Corporation under this Certificate of Incorporation, the Corporation’s bylaws or applicable law.
ARTICLE XI
If any provision of this Certificate of Incorporation becomes or is declared on any ground by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Certificate of Incorporation, and the court will replace such illegal, void or unenforceable
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provision of this Certificate of Incorporation with a valid and enforceable provision that most accurately reflects the Corporation’s intent, in order to achieve, to the maximum extent possible, the same economic, business and other purposes of the illegal, void or unenforceable provision . The balance of this Certificate of Incorporation shall be enforceable in accordance with its terms.
Except as provided in ARTICLE VIII and ARTICLE IX above, the Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation; provided , however , that, notwithstanding any other provision of this Certificate of Incorporation or any provision of law that might otherwise permit a lesser vote, but in addition to any vote of the holders of any class or series of the stock of this Corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of the outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class, shall be required to amend or repeal, or adopt any provision of this Certificate of Incorporation inconsistent with, ARTICLE VI, ARTICLE VII, ARTICLE VIII, ARTICLE IX or this ARTICLE XI; provided , further , that, notwithstanding any other provision of this Certificate of Incorporation or any provision of law that might otherwise permit a lesser vote, any amendment of this proviso, Section D of ARTICLE IV or any of the defined terms set forth in ARTICLE V, but only to the extent such defined terms are used in Section D of ARTICLE IV, shall require the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock and the holders of a majority of the outstanding shares of Class B Common Stock, each voting separately as a class.
* * *
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I, the undersigned, as the sole incorporator of the Corporation, have signed this Certificate of Incorporation on , 2018 .
REVOLVE GROUP, INC.
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By: |
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Michael Karanikolas |
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Incorporator and Co-Chief Executive Officer |
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Exhibit 3.2
BYLAWS OF
REVOLVE GROUP, INC.
(initially adopted on , 2018,
and effective as of , 2018)
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Page |
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ARTICLE I CORPORATE OFFICES |
1 |
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1.1 |
REGISTERED OFFICE |
1 |
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1.2 |
OTHER OFFICES |
1 |
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ARTICLE II MEETINGS OF STOCKHOLDERS |
1 |
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2.1 |
PLACE OF MEETINGS |
1 |
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2.2 |
ANNUAL MEETING |
1 |
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2.3 |
SPECIAL MEETING |
1 |
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2.4 |
ADVANCE NOTICE PROCEDURES |
2 |
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2.5 |
NOTICE OF STOCKHOLDERS’ MEETINGS |
8 |
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2.6 |
QUORUM |
9 |
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2.7 |
ADJOURNED MEETING; NOTICE |
9 |
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2.8 |
CONDUCT OF BUSINESS |
9 |
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2.9 |
VOTING |
10 |
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2.10 |
STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING |
10 |
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2.11 |
RECORD DATES |
10 |
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2.12 |
PROXIES |
11 |
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2.13 |
LIST OF STOCKHOLDERS ENTITLED TO VOTE |
11 |
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2.14 |
INSPECTORS OF ELECTION |
12 |
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ARTICLE III - DIRECTORS |
12 |
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3.1 |
POWERS |
12 |
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3.2 |
NUMBER OF DIRECTORS |
12 |
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3.3 |
ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS |
12 |
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3.4 |
RESIGNATION AND VACANCIES |
13 |
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3.5 |
PLACE OF MEETINGS; MEETINGS BY TELEPHONE |
13 |
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3.6 |
REGULAR MEETINGS |
14 |
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3.7 |
SPECIAL MEETINGS; NOTICE |
14 |
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3.8 |
QUORUM; VOTING |
14 |
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3.9 |
BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING |
15 |
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3.10 |
FEES AND COMPENSATION OF DIRECTORS |
15 |
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3.11 |
REMOVAL OF DIRECTORS |
15 |
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ARTICLE IV - COMMITTEES |
15 |
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4.1 |
COMMITTEES OF DIRECTORS |
15 |
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4.2 |
COMMITTEE MINUTES |
16 |
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4.3 |
MEETINGS AND ACTION OF COMMITTEES |
16 |
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4.4 |
SUBCOMMITTEES |
17 |
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TABLE OF CONTENTS
(Continued)
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Page |
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17 |
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5.1 |
OFFICERS |
17 |
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5.2 |
APPOINTMENT OF OFFICERS |
17 |
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5.3 |
SUBORDINATE OFFICERS |
17 |
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5.4 |
REMOVAL AND RESIGNATION OF OFFICERS |
17 |
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5.5 |
VACANCIES IN OFFICES |
18 |
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5.6 |
REPRESENTATION OF SECURITIES OF OTHER ENTITIES |
18 |
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5.7 |
AUTHORITY AND DUTIES OF OFFICERS |
18 |
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ARTICLE VI - STOCK |
18 |
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6.1 |
STOCK CERTIFICATES; PARTLY PAID SHARES |
18 |
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6.2 |
SPECIAL DESIGNATION ON CERTIFICATES |
19 |
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6.3 |
LOST CERTIFICATES |
19 |
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6.4 |
DIVIDENDS |
20 |
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6.5 |
TRANSFER OF STOCK |
20 |
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6.6 |
STOCK TRANSFER AGREEMENTS |
20 |
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6.7 |
REGISTERED STOCKHOLDERS |
20 |
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ARTICLE VII - MANNER OF GIVING NOTICE AND WAIVER |
20 |
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7.1 |
NOTICE OF STOCKHOLDERS’ MEETINGS |
20 |
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7.2 |
NOTICE BY ELECTRONIC TRANSMISSION |
21 |
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7.3 |
NOTICE TO STOCKHOLDERS SHARING AN ADDRESS |
22 |
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7.4 |
NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL |
22 |
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7.5 |
WAIVER OF NOTICE |
22 |
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ARTICLE VIII - INDEMNIFICATION |
23 |
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8.1 |
INDEMNIFICATION OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS |
23 |
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8.2 |
INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE CORPORATION |
23 |
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8.3 |
SUCCESSFUL DEFENSE |
24 |
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8.4 |
INDEMNIFICATION OF OTHERS |
24 |
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8.5 |
ADVANCE PAYMENT OF EXPENSES |
24 |
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8.6 |
LIMITATION ON INDEMNIFICATION |
24 |
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8.7 |
DETERMINATION; CLAIM |
25 |
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8.8 |
NON-EXCLUSIVITY OF RIGHTS |
26 |
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8.9 |
INSURANCE |
26 |
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8.10 |
SURVIVAL |
26 |
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8.11 |
EFFECT OF REPEAL OR MODIFICATION |
26 |
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TABLE OF CONTENTS
(Continued)
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Page |
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8.12 |
CERTAIN DEFINITIONS |
26 |
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ARTICLE IX - GENERAL MATTERS |
27 |
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9.1 |
EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS |
27 |
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9.2 |
FISCAL YEAR |
27 |
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9.3 |
SEAL |
27 |
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9.4 |
CONSTRUCTION; DEFINITIONS |
27 |
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ARTICLE X – EXCLUSIVE FORUM |
28 |
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ARTICLE XI - AMENDMENTS |
28 |
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BYLAWS OF REVOLVE GROUP , INC.
The registered office of Revolve Group, Inc. shall be fixed in the corporation’s certificate of incorporation, as the same may be amended from time to time.
The corporation may at any time establish other offices at any place or places.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the board of directors. The board of directors may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the Delaware General Corporation Law (the “ DGCL ”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the corporation’s principal executive office.
The annual meeting of stockholders shall be held on such date, at such time, and at such place (if any) within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the corporation’s notice of the meeting. At the annual meeting, directors shall be elected and any other proper business, brought in accordance with Section 2.4 of these bylaws, may be transacted. The board of directors may cancel, postpone or reschedule any previously scheduled annual meeting at any time, before or after the notice for such meeting has been sent to the stockholders.
(i) A special meeting of the stockholders, other than those required by statute, may be called at any time by (A) the board of directors pursuant to a resolution adopted by the majority of the entire board of directors, (B) the chairperson of the board of directors, (C) a co-chief executive officer of the Corporation or (D) the president (in the absence of a co-chief executive officer), but a special meeting may not be called by any other person or persons. The board of directors may cancel, postpone or reschedule any previously scheduled special meeting at any time, before or after the notice for such meeting has been sent to the stockholders.
(ii) The notice of a special meeting shall include the purpose for which the meeting is called . Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting by or at the direction of the board of directors, chairperson of the board of directors, co- chief executive officer or president (in the absence of a co- chief executive officer) . Nothing contained in this Section 2.3(ii) shall be construed as limiting, fixing or affecting the time when a meeting of stockholders called by action of the board of directors may be held.
(i) Advance Notice of Stockholder Business. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be brought: (A) pursuant to the corporation’s proxy materials with respect to such meeting, (B) by or at the direction of the board of directors, or (C) by a stockholder of the corporation who (1) is a stockholder of record at the time of the giving of the notice required by this Section 2.4(i) and on the record date for the determination of stockholders entitled to vote at the annual meeting and (2) has timely complied in proper written form with the notice procedures set forth in this Section 2.4(i). In addition, for business to be properly brought before an annual meeting by a stockholder, such business must be a proper matter for stockholder action pursuant to these bylaws and applicable law. For the avoidance of doubt, except for proposals properly made in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, or any successor thereto (the “ 1934 Act ”), and the regulations thereunder (or any successor rule and in any case as so amended), clause (C) above shall be the exclusive means for a stockholder to bring business before an annual meeting of stockholders.
(a) To comply with clause (C) of Section 2.4(i) above, a stockholder’s notice must set forth all information required under this Section 2.4(i) and must be timely received by the secretary of the corporation. To be timely, a stockholder’s notice must be received by the secretary at the principal executive offices of the corporation not later than the 45th day nor earlier than the 75th day before the one-year anniversary of the date on which the corporation first mailed its proxy materials or a notice of availability of proxy materials (whichever is earlier) for the preceding year’s annual meeting; provided , however , that if no annual meeting was held in the previous year or if the date of the annual meeting is advanced by more than 30 days prior to or delayed by more than 60 days after the one-year anniversary of the date of the previous year’s annual meeting, then, for notice by the stockholder to be timely, it must be so received by the secretary not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of (i) the 90th day prior to such annual meeting, or (ii) the tenth day following the day on which Public Announcement (as defined below) of the date of such annual meeting is first made. In no event shall any adjournment, rescheduling or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described in this Section 2.4(i)(a). “ Public Announcement ” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the 1934 Act.
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(b) To be in proper written form, a stockholder’s notice to the secretary must set forth as to each matter of business the stockholder intends to bring before the annual meeting:
(1) a brief description of the business intended to be brought before the annual meeting and the reasons for conducting such business at the annual meeting,
(2) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the bylaws of the corporation, the language of the proposed amendment),
(3) a reasonably detailed description of all agreements, arrangements and understandings between or among the stockholder and any Stockholder Associated Persons or between or among the stockholder or any Stockholder Associated Person and any other person or entity (including their names) in connection with the proposal of such business by such stockholder,
(4) the name and address, as they appear on the corporation’s books, of the stockholder proposing such business and any Stockholder Associated Person (as defined below),
(5) the class and number of shares of the corporation that are held of record or are beneficially owned (within the meaning of Rule 13d-3 under the 1934 Act) by the stockholder or any Stockholder Associated Person, except that the stockholder or any Stockholder Associated Person shall in all events be deemed to beneficially own any shares of any class or series of the corporation as to which such stockholder or Stockholder Associated Person has a right to acquire beneficial ownership at any time in the future,
(6) the full notional amount of any securities that, directly or indirectly, underlie any “derivative security” (as such term is defined in Rule 16a-1(c) under the 1934 Act) that constitutes a “call equivalent position” (as such term is defined in Rule 16a-1(b) under the 1934 Act) (“ Synthetic Equity Position ”) and that is, directly or indirectly, held or maintained by such stockholder or any Stockholder Associated Person with respect to any shares of any class or series of shares of the corporation; provided that, for the purposes of the definition of “ Synthetic Equity Position ,” the term “derivative security” shall also include any security or instrument that would not otherwise constitute a “derivative security” as a result of any feature that would make any conversion, exercise or similar right or privilege of such security or instrument becoming determinable only at some future date or upon the happening of a future occurrence, in which case the determination of the amount of securities into which such security or instrument would be convertible or exercisable shall be made assuming that such security or instrument is immediately convertible or exercisable at the time of such determination; and, provided, further, that a stockholder or Stockholder Associated Person satisfying the requirements of Rule 13d-1(b)(1) under the 1934 Act (other than a stockholder or Stockholder Associated Person that so satisfies Rule 13d-1(b)(1) under the 1934 Act solely by reason of Rule 13d-1(b)(1)(ii)(E)) shall not be deemed to hold or maintain the notional amount of any securities that underlie a Synthetic Equity Position held
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by such stockholder or Stockholder Associated Person as a hedge with respect to a bona fide derivatives trade or position of such stockholder or Stockholder Associated Person arising in the ordinary course of such stockholder’s or Stockholder Associated Person’s business as a derivatives dealer,
(7) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of such stockholder or any Stockholder Associated Person with respect to any securities of the corporation, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit from share price changes for, or to increase or decrease the voting power of, such stockholder or any Stockholder Associated Person with respect to any securities of the corporation,
(8) any rights to dividends on the shares of any class or series of shares of the corporation owned beneficially by such stockholder or any Stockholder Associated Person that are separated or separable from the underlying shares of the corporation,
(9) any material shares or any Synthetic Equity Position in any principal competitor of the corporation in any principal industry of the corporation held by such stockholder or any Stockholder Associated Person,
(10) any material interest of the stockholder or a Stockholder Associated Person in such business to be brought before the meeting,
(11) any material pending or threatened legal proceeding in which such stockholder or any Stockholder Associated Person is a party or material participant involving the corporation or any of its officers or directors, or any affiliate of the corporation,
(12) any other material relationship between such stockholder or any Stockholder Associated Person, on the one hand, and the corporation, any affiliate of the corporation or any principal competitor of the corporation, on the other hand,
(13) any direct or indirect material interest in any material contract or agreement of such stockholder or any Stockholder Associated Person with the corporation, any affiliate of the corporation or any principal competitor of the corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement),
(14) a statement whether either such stockholder or any Stockholder Associated Person will deliver a proxy statement and form of proxy to holders of at least the percentage of the voting power of the corporation’s voting shares required under applicable law to carry the proposal, and
(15) any other information relating to such stockholder or any Stockholder Associated Person, or relating to the proposal or item of business, that would be required to be disclosed in a proxy statement or other filing required to be made in connection with
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solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the 1934 Act.
Such information provided and statements made as required by clauses (1) through (15), a “ Business Solicitation Statement ”); provided, however, that Business Solicitation Statement shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is Stockholder Associated Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner. In addition, to be in proper written form, a stockholder’s notice to the secretary must be supplemented (the “ Supplement ”) not later than ten days following the record date for the determination of stockholders entitled to notice of the meeting to disclose the information contained in clauses (5) through (8) above as of the record date for notice of the meeting. For purposes of this Section 2.4, a “ Stockholder Associated Person ” of any stockholder shall mean (i) any person controlling, directly or indirectly, or acting in concert with, such stockholder, (ii) any beneficial owner of shares of stock of the corporation owned of record or beneficially by such stockholder and on whose behalf the proposal or nomination, as the case may be, is being made, (iii) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A) with such stockholder in such solicitation, or (iv) any associate (within the meaning of Rule 12b-2 under the Exchange Act for the purposes of these bylaws) of or person controlling, controlled by or under common control with such person referred to in the preceding clauses (i), (ii) and (iii).
(c) Without exception, no business proposed by a stockholder shall be conducted at any annual meeting except in accordance with the provisions set forth in this Section 2.4(i) and, if applicable, Section 2.4(ii). In addition, business proposed to be brought by a stockholder may not be brought before the annual meeting if such stockholder or a Stockholder Associated Person, as applicable, takes action contrary to the representations made in the Business Solicitation Statement applicable to such business or if the Business Solicitation Statement applicable to such business contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading. The chairperson of the annual meeting shall, if the facts warrant, determine and declare at the annual meeting that business was not properly brought before the annual meeting and in accordance with the provisions of this Section 2.4(i), and, if the chairperson should so determine, he or she shall so declare at the annual meeting that any such business not properly brought before the annual meeting shall not be conducted.
(ii) Advance Notice of Director Nominations at Annual Meetings. Notwithstanding anything in these bylaws to the contrary, only persons who are nominated in accordance with the procedures set forth in this Section 2.4(ii) shall be eligible for election or re-election as directors at an annual meeting of stockholders. Nominations of persons for election to the board of directors of the corporation shall be made at an annual meeting of stockholders only (A) by or at the direction of the board of directors or (B) by a stockholder of the corporation who (1) is a stockholder of record at the time of the giving of the notice required by this Section 2.4(ii) and on the record date for the determination of stockholders entitled to vote at the annual meeting and (2) has complied with the notice procedures set forth in this Section 2.4(ii). In addition to any
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other applicable requirements, for a nomination to be made by a stockholder, the stockholder must have given timely notice thereof in proper written form to the secretary of the corporation.
(a) To comply with clause (B) of Section 2.4(ii) above, a nomination to be made by a stockholder must set forth all information required under this Section 2.4(ii) and must be received by the secretary of the corporation at the principal executive offices of the corporation at the time set forth in, and in accordance with, the second sentence of Section 2.4(i)(a) above; provided additionally, however, that if the number of directors to be elected to the board of directors is increased and there is no Public Announcement naming all of the nominees for director or specifying the size of the increased board made by the corporation at least ten days before the last day a stockholder may deliver a notice of nomination pursuant to the foregoing provisions, a stockholder’s notice required by this Section 2.4(ii) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be received by the secretary of the corporation at the principal executive offices of the corporation not later than the close of business on the tenth day following the day on which such Public Announcement is first made by the corporation.
(b) To be in proper written form, such stockholder’s notice to the secretary must set forth:
(1) as to each person (a “ nominee ”) whom the stockholder proposes to nominate for election or re-election as a director: (A) the name, age, business address and residence address of the nominee, (B) the principal occupation or employment of the nominee, (C) the class and number of shares of the corporation that are held of record or are beneficially owned by the nominee and any derivative positions held or beneficially held by the nominee, (D) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of the nominee with respect to any securities of the corporation, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit of share price changes for, or to increase or decrease the voting power of the nominee, (E) a description of all arrangements or understandings between or among any of the stockholder, each nominee and/or any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder or relating to the nominee’s potential service on the board of directors, including a description of any compensatory, payment or other financial agreement, arrangement or understanding involving the nominee and of any compensation or other payment received by or on behalf of the nominee, in each case in connection with candidacy or service as a director of the corporation, (F) a written statement executed by the nominee agreeing to serve as a director if elected, and (G) any other information relating to the nominee that would be required to be disclosed about such nominee if proxies were being solicited for the election of the nominee as a director, or that is otherwise required, in each case pursuant to Regulation 14A under the 1934 Act (including without limitation the nominee’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected); and
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(2) as to such stockholder giving notice, (A) the information required to be provided pursuant to clauses ( 3 ) through ( 15 ) of Section 2.4(i)(b) above, and the S upplement referenced in Section 2.4(i)(b) above (except that the references to “business” in such clauses shall instead refer to nominations of directors for purposes of this paragraph), and (B) a statement whether either such stockholder or Stockholder Associated Person will deliver a proxy statement and form of proxy to holders of at least the percentage of the voting power of the corporation’s voting shares reasonably believed by such stockholder or Stockholder Associated Person to be necessary to elect such nominee(s) (such information provided and statements made as required by clauses (A) and (B) above, a “ Nominee Solicitation Statement ”).
(c) At the request of the board of directors, any person nominated by a stockholder for election as a director must furnish to the secretary of the corporation (1) that information required to be set forth in the stockholder’s notice of nomination of such person as a director as of a date subsequent to the date on which the notice of such person’s nomination was given, (2) such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as an independent director or audit committee financial expert of the corporation under applicable law, securities exchange rule or regulation, or any publicly-disclosed corporate governance guideline or committee charter of the corporation and (3) such other information that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee; in the absence of the furnishing of such information if requested, such stockholder’s nomination shall not be considered in proper form pursuant to this Section 2.4(ii).
(d) Without exception, no person shall be eligible for election or re-election as a director of the corporation at an annual meeting of stockholders unless nominated in accordance with the provisions set forth in this Section 2.4(ii). In addition, a nominee shall not be eligible for election or re-election if a stockholder or Stockholder Associated Person, as applicable, takes action contrary to the representations made in the Nominee Solicitation Statement applicable to such nominee or if the Nominee Solicitation Statement applicable to such nominee contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading. The chairperson of the annual meeting shall, if the facts warrant, determine and declare at the annual meeting that a nomination was not made in accordance with the provisions prescribed by these bylaws, and if the chairperson should so determine, he or she shall so declare at the annual meeting, and the defective nomination shall be disregarded.
(iii) Advance Notice of Director Nominations for Special Meetings .
(a) For a special meeting of stockholders at which directors are to be elected pursuant to Section 2.3, nominations of persons for election to the board of directors shall be made only (1) by or at the direction of the board of directors or (2) by any stockholder of the corporation who (A) is a stockholder of record at the time of the giving of the notice required by this Section 2.4(iii) and on the record date for the determination of stockholders entitled to vote at the special meeting and (B) delivers a timely written notice of the nomination to the secretary of the corporation that includes the information set forth in Sections 2.4(ii)(b) and (ii)(c) above. To be
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timely, such notice must be received by the secretary at the principal executive offices of the corporation not later than the close of business on the later of the 90th day prior to such special meeting or the tenth day following the day on which Public Announcement is first made of the date of the special meeting and of the nominees proposed by the board of directors to be elected at such meeting . In no event shall any adjournment, rescheduling or postponement of a special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice . A person shall not be eligible for election or re-election as a director at a special meeting unless the person is nominated (i) by or at the direction of the board of directors or (ii) by a stockholder in accordance with the notice procedures set forth in this Section 2.4(iii) . In addition, a nominee shall not be eligible for election or re-election if a stockholder or Stockholder Associated Person, as applicable, takes action contrary to the representations made in the Nominee Solicitation Statement applicable to such nominee or if the Nominee Solicitation Statement applicable to such nominee contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading.
(b) The chairperson of the special meeting shall, if the facts warrant, determine and declare at the meeting that a nomination or business was not made in accordance with the procedures prescribed by these bylaws, and if the chairperson should so determine, he or she shall so declare at the meeting, and the defective nomination or business shall be disregarded.
(iv) Other Requirements and Rights . In addition to the foregoing provisions of this Section 2.4, a stockholder must also comply with all applicable requirements of state law and of the 1934 Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.4, including, with respect to business such stockholder intends to bring before the annual meeting that involves a proposal that such stockholder requests to be included in the corporation’s proxy statement, the requirements of Rule 14a-8 (or any successor provision) under the 1934 Act. Nothing in this Section 2.4 shall be deemed to affect any right of the corporation to omit a proposal from the corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision) under the 1934 Act.
2.5 NOTICE OF STOCKHOLDERS’ MEETINGS
Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Except as otherwise provided in the DGCL, the certificate of incorporation or these bylaws, the written notice of any meeting of stockholders shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting.
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The holders of a majority of the voting power of the stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders, unless otherwise required by law, the certificate of incorporation, these bylaws or the rules of any applicable stock exchange. Where a separate vote by a class or series or classes or series is required, a majority of the voting power of the issued and outstanding shares of such class or series or classes or series, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter, except as otherwise required by law, the certificate of incorporation, these bylaws or the rules of any applicable stock exchange.
Whether or not a quorum is present at a meeting of stockholders, the chairperson of the meeting shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the original meeting.
When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the board of directors shall fix a new record date for notice of such adjourned meeting in accordance with Section 213(a) of the DGCL and Section 2.11 of these bylaws, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.
The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business. The chairperson of any meeting of stockholders shall be designated by the board of directors; in the absence of such designation, the chairperson of the board, if any, a co-chief executive officer (in the absence of the chairperson of the board) or the president (in the absence of the chairperson of the board and a co-chief executive officer), or in their absence any other executive officer of the corporation, shall serve as chairperson of the stockholder meeting. The chairperson of any stockholder meeting shall have the power to adjourn the meeting to another place, if any, date or time.
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The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.11 of these bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.
Except as may be otherwise provided in the certificate of incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder.
Except as otherwise provided by law, the certificate of incorporation, these bylaws or the rules of any applicable stock exchange, in all matters other than the election of directors, the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Except as otherwise required by law, the certificate of incorporation, these bylaws or the rules of any applicable stock exchange, directors shall be elected by a plurality of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Where a separate vote by a class or series or classes or series is required, in all matters other than the election of directors, the affirmative vote of the majority of the voting power of shares of such class or series or classes or series present in person or represented by proxy at the meeting shall be the act of such class or series or classes or series, except as otherwise provided by law, the certificate of incorporation, these bylaws or the rules of any applicable stock exchange.
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Subject to the rights of the holders of the shares of any series of preferred stock or any other class of stock or series thereof that have been expressly granted the right to take action by written consent, any action required or permitted to be taken by the stockholders of the corporation must be effected at a duly called annual or special meeting of stockholders of the corporation and may not be effected by any consent in writing by such stockholders.
In order that the corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If the board of directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the board of directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination.
If no record date is fixed by the board of directors, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of
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business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however , that the board of directors may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with the provisions of Section 213 of the DGCL and this Section 2.11 at the adjourned meeting.
In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.
Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A written proxy may be given by electronic transmission which sets forth or is submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder.
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The corporation shall prepare, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting; provided, however, if the record date for determining the stockholders entitled to vote is less than 10 days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the corporation’s principal place of business. If the corporation determines to make the list available on an electronic network, the corporation may take
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reasonable steps to ensure that such information is available only to stockholders of the corporation . If the meeting is to be held at a place, then a list of stockholders entitled to vote at the meeting shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be examined by any stockholder who is present . If the meeting is to be held solely by means of remote communication, then such list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.
Before any meeting of stockholders, the corporation shall appoint an inspector or inspectors of election to act at the meeting or its adjournment. The corporation may designate one (1) or more persons as alternate inspectors to replace any inspector who fails to appear or fails or refuses to act.
Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. Such inspectors shall take all actions as contemplated under Section 231 of the DGCL.
The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are multiple inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.
The business and affairs of the corporation shall be managed by or under the direction of the board of directors, except as may be otherwise provided in the DGCL or the certificate of incorporation.
The board of directors shall consist of one or more members, each of whom shall be a natural person. Unless the certificate of incorporation fixes the number of directors, the number of directors shall be determined from time to time by resolution of the board of directors. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, each director, including a director elected to fill a vacancy or newly created directorship, shall hold office until the expiration of the term for
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which elected and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal . Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws . The certificate of incorporation or these bylaws may prescribe other qualifications for directors.
Any director may resign at any time upon notice given in writing or by electronic transmission to the corporation; provided, however, that if such notice is given by electronic transmission, such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the director. A resignation is effective when the resignation is delivered unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events. Unless otherwise specified in the notice of resignation, acceptance of such resignation shall not be necessary to make it effective. A resignation which is conditioned upon the director failing to receive a specified vote for reelection as a director may provide that it is irrevocable. Unless otherwise provided in the certificate of incorporation or these bylaws, when one or more directors resign from the board of directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective.
Unless otherwise provided in the certificate of incorporation or these bylaws or permitted in the specific case by resolution of the board of directors, and subject to the rights (if any) of holders of preferred stock, vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class shall be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director, and not by stockholders. If the directors are divided into classes, a person so chosen to fill a vacancy or newly created directorship shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall have been duly elected and qualified.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors may hold meetings, both regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
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Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board of directors.
Special meetings of the board of directors for any purpose or purposes may be called at any time by the chairperson of the board of directors, the co-chief executive officers, the president, the secretary or a majority of the authorized number of directors, at such times and places as he or she or they shall designate.
Notice of the time and place of special meetings shall be:
(i) delivered personally by hand, by courier or by telephone;
(ii) sent by United States first-class mail, postage prepaid;
(iii) sent by facsimile;
(iv) sent by electronic mail, or
(v) otherwise given by electronic transmission (as defined in Section 7.2),
directed to each director at that director’s address, telephone number, facsimile number, electronic mail address, or other contact for notice by electronic submission as the case may be, as shown on the corporation’s records.
If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile, (iii) sent by electronic mail or (iv) otherwise given by electronic submission, it shall be delivered, sent or otherwise directed to each director, as applicable, at least 24 hours before the time of the holding of the meeting. If the notice is sent by United States mail, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting. Any oral notice may be communicated to the director. The notice need not specify the place of the meeting (if the meeting is to be held at the corporation’s principal executive office) nor the purpose of the meeting.
At all meetings of the board of directors, a majority of the total authorized number of directors shall constitute a quorum for the transaction of business. If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.
The affirmative vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors, except as may be otherwise specifically provided by statute, the certificate of incorporation or these bylaws.
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If the certificate of incorporation provides that one or more directors shall have more or less than one vote per director on any matter, every reference in these bylaws to a majority or other proportion of the directors shall refer to a majority or other proportion of the votes of the directors.
3.9 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board of directors or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the board of directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. Any person (whether or not then a director) may provide, whether through instruction to an agent or otherwise, that a consent to action will be effective at a future time (including a time determined upon the happening of an event), no later than 60 days after such instruction is given or such provision is made and such consent shall be deemed to have been given for purposes of this Section 3.9 at such effective time so long as such person is then a director and did not revoke the consent prior to such time. Any such consent shall be revocable prior to its becoming effective.
3.10 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these bylaws, the board of directors shall have the authority to fix the compensation of directors.
Directors may be removed in accordance with Section 141(k) of the DGCL.
No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.
The board of directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board of directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors or in these bylaws, shall have and may exercise all the powers and authority of the board of directors in
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the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the corporation.
Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:
(i) Section 3.5 (place of meetings and meetings by telephone);
(ii) Section 3.6 (regular meetings);
(iii) Section 3.7 (special meetings and notice);
(iv) Section 3.8 (quorum; voting);
(v) Section 7.5 (waiver of notice); and
(vi) Section 3.9 (action without a meeting)
with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors and its members. However :
(i) the time and place of regular meetings of committees may be determined either by resolution of the board of directors or by resolution of the committee;
(ii) special meetings of committees may also be called by resolution of the board of directors; and
(iii) notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors or a committee may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.
Any provision in the certificate of incorporation providing that one or more directors shall have more or less than one vote per director on any matter shall apply to voting in any committee or subcommittee, unless otherwise provided in the certificate of incorporation or these bylaws.
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Unless otherwise provided in the certificate of incorporation, these bylaws or the resolutions of the board of directors designating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.
The officers of the corporation shall be a president and a secretary. The corporation may also have, at the discretion of the board of directors, a chairperson of the board of directors, a vice chairperson of the board of directors, a chief executive officer or co-chief executive officers, a chief financial officer or treasurer, one or more vice presidents, one or more assistant vice presidents, one or more assistant treasurers, one or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws or otherwise determined by the board of directors. Any number of offices may be held by the same person.
The board of directors shall appoint the officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.3 of these bylaws, subject to the rights, if any, of an officer under any contract of employment.
The board of directors may appoint, or empower the co-chief executive officers or, in the absence of a co-chief executive officer, the president, to appoint, such other officers as the business of the corporation may require. Each of such officers shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the board of directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the board of directors or, except in the case of an officer chosen by the board of directors unless otherwise provided by resolution of the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors.
Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation
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shall not be necessary to make it effective . Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.
Any vacancy occurring in any office of the corporation shall be filled by the board of directors or as provided in Section 5.3.
5.6 REPRESENTATION OF SECURITIES OF OTHER ENTITIES
The chairperson of the board of directors, the co-chief executive officers, the president, any vice president, the treasurer, the secretary or assistant secretary of this corporation, or any other person authorized by the board of directors or the co-chief executive officers, the president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares or other securities or equity interests of any other corporation or corporations or entity or entities standing in the name of this corporation, including the right to act by written consent. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.
5.7 AUTHORITY AND DUTIES OF OFFICERS
All officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the board of directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the board of directors.
6.1 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of the corporation shall be represented by certificates, provided that the board of directors may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of, the corporation by any two authorized officers of the corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. The corporation shall not have power to issue a certificate in bearer form.
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The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor . Upon the face or back of each stock certificate issued to represent any such partly-paid shares, or upon the books and records of the corporation in the case of uncertificated partly-paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated . Upon the declaration of any dividend on fully-paid shares, the corporation shall declare a dividend upon partly-paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
6.2 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however , that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a notice, in writing or by electronic submission, containing the information required to be set forth or stated on certificates pursuant to this section 6.2 or Sections 151, 156, 202(a) or 218(a) of the DGCL or with respect to this section 6.2 a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated stock and the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.
Except as provided in this Section 6.3, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and cancelled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the corporation a bond, in such sum as the corporation may direct, sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
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The board of directors, subject to any restrictions contained in the certificate of incorporation or applicable law, may declare and pay dividends upon the shares of the corporation’s capital stock. Dividends may be paid in cash, in property, or in shares of the corporation’s capital stock, subject to the provisions of the certificate of incorporation.
The board of directors may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies.
Transfers of record of shares of stock of the corporation shall be made only upon its books by the holders thereof, in person or by an attorney duly authorized, and, subject to Section 6.3 of these bylaws, if such stock is certificated, upon the surrender of a certificate or certificates for a like number of shares, properly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer.
The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.
The corporation:
(i) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner; and
(ii) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VII- MANNER OF GIVING NOTICE AND WAIVER
7.1 NOTICE OF STOCKHOLDERS’ MEETINGS
Notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the corporation’s records. An affidavit of the secretary or an assistant secretary of the corporation
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or of the transfer agent or other agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
7.2 NOTICE BY ELECTRONIC TRANSMISSION
Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any notice to stockholders given by the corporation under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any such consent shall be deemed revoked if:
(i) the corporation is unable to deliver by electronic transmission two consecutive notices given by the corporation in accordance with such consent; and
(ii) such inability becomes known to the secretary or an assistant secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice.
However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
Any notice given pursuant to the preceding paragraph shall be deemed given:
(i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;
(ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;
(iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and
(iv) if by any other form of electronic transmission, when directed to the stockholder.
An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
An “ electronic transmission ” means any form of communication, not directly involving the physical transmission of paper, including the use of, or participation in, one or more electronic networks or databases (including one or more distributed electronic networks or databases), that
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creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
Notice by a form of electronic transmission shall not apply to Sections 164, 296, 311, 312 or 324 of the DGCL.
7.3 NOTICE TO STOCKHOLDERS SHARING AN ADDRESS
Except as otherwise prohibited under the DGCL, without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the corporation under the provisions of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any stockholder who fails to object in writing to the corporation, within 60 days of having been given written notice by the corporation of its intention to send the single notice, shall be deemed to have consented to receiving such single written notice.
7.4 NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL
Whenever notice is required to be given, under the DGCL, the certificate of incorporation or these bylaws, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. If the action taken by the corporation is such as to require the filing of a certificate under the DGCL, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.
Whenever notice is required to be given under any provision of the DGCL, the certificate of incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.
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ARTICLE VIII - INDEMNIFICATION
8.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS
Subject to the other provisions of this Article VIII, the corporation shall indemnify, to the fullest extent permitted by the DGCL, as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”) (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director or officer of the corporation, or is or was a director or officer of the corporation serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such Proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.
8.2 INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
Subject to the other provisions of this Article VIII, the corporation shall indemnify, to the fullest extent permitted by the DGCL, as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the corporation, or is or was a director or officer of the corporation serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
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To the extent that a present or former director or officer of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described in Section 8.1 or Section 8.2, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
Subject to the other provisions of this Article VIII, the corporation shall have power to indemnify its employees and agents to the extent not prohibited by the DGCL or other applicable law. The board of directors shall have the power to delegate to such person or persons as the board shall in its discretion determine the determination of whether employees or agents shall be indemnified.
8.5 ADVANCE PAYMENT OF EXPENSES
Expenses (including attorneys’ fees) actually and reasonably incurred by an officer or director of the corporation in defending any Proceeding shall be paid by the corporation in advance of the final disposition of such Proceeding upon receipt of a written request therefor (together with documentation reasonably evidencing such expenses) and an undertaking by or on behalf of the person to repay such amounts if it shall ultimately be determined that the person is not entitled to be indemnified under this Article VIII or the DGCL. Such expenses (including attorneys’ fees) actually and reasonably incurred by former directors and officers or other employees and agents of the corporation or by persons serving at the request of the corporation as directors, officers, employees or agents of another corporation, partnership, joint venture, trust or other enterprise may be so paid upon such terms and conditions, if any, as the corporation deems appropriate. The right to advancement of expenses shall not apply to any Proceeding (or any part of any Proceeding) or claim for which indemnity is excluded pursuant to these bylaws, but shall apply to any Proceeding (or any part of any Proceeding) referenced in Section 8.6(ii) or 8.6(iii) prior to a determination that the person is not entitled to be indemnified by the corporation.
8.6 LIMITATION ON INDEMNIFICATION
Subject to the requirements in Section 8.3 and the DGCL, the corporation shall not be obligated to indemnify any person pursuant to this Article VIII in connection with any Proceeding (or any part of any Proceeding):
(i) for which payment has actually been made to or on behalf of such person under any statute, insurance policy, indemnity provision, vote or otherwise, except with respect to any excess beyond the amount paid or to the extent that the corporation is primarily responsible for, and the person who made the payment holds valid subrogation rights with respect to, such amount;
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(ii) for an accounting or disgorgement of profits pursuant to Section 16(b) of the 1934 Act, or similar provisions of federal, state or local statutory law or common law, if such person is held liable therefor (including pursuant to any settlement arrangements);
(iii) for any reimbursement of the corporation by such person of any bonus or other incentive-based or equity-based compensation or of any profits realized by such person from the sale of securities of the corporation, as required in each case under the 1934 Act (including any such reimbursements that arise from an accounting restatement of the corporation pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”), or the payment to the corporation of profits arising from the purchase and sale by such person of securities in violation of Section 306 of the Sarbanes-Oxley Act), if such person is held liable therefor (including pursuant to any settlement arrangements);
(iv) initiated by such person, including any Proceeding (or any part of any Proceeding) initiated by such person against the corporation or its directors, officers, employees, agents or other indemnitees, unless (a) the board of directors authorized the Proceeding (or the relevant part of the Proceeding) prior to its initiation, (b) the corporation provides the indemnification, in its sole discretion, pursuant to the powers vested in the corporation under applicable law, (c) otherwise required to be made under Section 8.7 or (d) otherwise required by applicable law; or
(v) if prohibited by applicable law; provided, however, that if any provision or provisions of this Article VIII shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (1) the validity, legality and enforceability of the remaining provisions of this Article VIII (including, without limitation, each portion of any paragraph or clause containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of this Article VIII (including, without limitation, each such portion of any paragraph or clause containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.
If a claim for indemnification or advancement of expenses under this Article VIII is not paid in full within 90 days after receipt by the corporation of the written request therefor, the claimant shall be entitled to an adjudication by a court of competent jurisdiction of his or her entitlement to such indemnification or advancement of expenses. The corporation shall indemnify such person against any and all expenses that are actually and reasonably incurred by such person in connection with any action for indemnification or advancement of expenses from the corporation under this Article VIII, to the extent such person is successful in such action, and to the extent not prohibited by law. In any such suit, the corporation shall, to the fullest extent not prohibited by law, have the burden of proving that the claimant is not entitled to the requested indemnification or advancement of expenses.
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The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the certificate of incorporation or any statute, bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. The corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advancement of expenses, to the fullest extent not prohibited by the DGCL or other applicable law.
The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under the provisions of the DGCL.
The rights to indemnification and advancement of expenses conferred by this Article VIII shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
8.11 EFFECT OF REPEAL OR MODIFICATION
A right to indemnification or to advancement of expenses arising under a provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an amendment to the certificate of incorporation or these bylaws after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.
For purposes of this Article VIII, references to the “ corporation ” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another
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corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued . For purposes of this Article VIII, references to “ other enterprises ” shall include employee benefit plans; references to “ fines ” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “ serving at the request of the corporation ” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “ not opposed to the best interests of the corporation ” as referred to in this Article VIII.
9.1 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
Except as otherwise provided by law, the certificate of incorporation or these bylaws, the board of directors may authorize any officer or officers, or agent or agents, to enter into any contract or execute any document or instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.
The fiscal year of the corporation shall be fixed by resolution of the board of directors and may be changed by the board of directors.
The corporation may adopt a corporate seal, which shall be adopted and which may be altered by the board of directors. The corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “ person ” includes both a corporation and a natural person.
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Unless the corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the corporation to the corporation or the corporation’s stockholders, (iii) any action arising pursuant to any provision of the DGCL or the certificate of incorporation or these bylaws (as either may be amended from time to time), or (iv) any action asserting a claim governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten (10) days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court, or for which such court does not have subject matter jurisdiction.
Unless the corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.
Any person or entity purchasing or otherwise acquiring any interest in any security of the corporation shall be deemed to have notice of and consented to the provisions of this Article X.
These bylaws may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the total voting power of outstanding voting securities, voting together as a single class, shall be required for the stockholders of the corporation to alter, amend or repeal, or adopt any provision of these bylaws. The board of directors shall also have the power to adopt, amend or repeal bylaws.
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Exhibit 10.1
REVOLVE GROUP, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this “ Agreement ”) is dated as of [ insert date ], and is between Revolve Group, Inc., a Delaware corporation (the “ Company ”), and [ insert name of indemnitee ] (“ Indemnitee ”).
RECITALS
A. Indemnitee’s service to the Company substantially benefits the Company.
B. Individuals are reluctant to serve as directors or officers of corporations or in certain other capacities unless they are provided with adequate protection through insurance and indemnification against the risks of claims and actions against them arising out of such service.
C. Indemnitee does not regard the protection currently provided by applicable law, the Company’s governing documents and any insurance as adequate under the present circumstances, and Indemnitee may not be willing to serve as a director or officer without additional protection.
D. In order to induce Indemnitee to continue to provide services to the Company, it is reasonable, prudent and necessary for the Company to contractually obligate itself to indemnify, and to advance expenses on behalf of, Indemnitee as permitted by applicable law.
E. This Agreement is a supplement to and in furtherance of the indemnification provided in the Company’s certificate of incorporation and bylaws, and any resolutions adopted pursuant thereto, and this Agreement shall not be deemed a substitute therefor, nor shall this Agreement be deemed to limit, diminish or abrogate any rights of Indemnitee thereunder.
The parties therefore agree as follows:
(a) “ Affiliate ” means, with respect to a specified person (a) any person that directly or indirectly through one or more intermediaries controls, or is controlled by or is under common control with, such specified Person or (b) in the event such specified person is a natural person, a member of the immediate family of such person or (c) any investment fund advised or managed by, or under common control or management with, such person, provided , that the Company and each of its subsidiaries shall be deemed not to be Affiliates of any Indemnitee. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or otherwise.
(b) A “ Change in Control ” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:
(i) Acquisition of Stock by Third Party. Any Person (as defined below) becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company’s then outstanding securities;
(ii) Change in Board Composition. During any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Company’s board of directors, and any new directors (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 1(a)(i) , 1(a)(iii) or 1(a)(iv) ) whose election by the board of directors or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Company’s board of directors;
(iii) Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;
(iv) Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and
(v) Other Events. Any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended, whether or not the Company is then subject to such reporting requirement, except the completion of the Company’s initial public offering shall not be considered a Change in Control.
(c) “ Beneficial Owner ” shall have the meaning given to such term in Rule 13d-3 under the Securities Exchange Act of 1934, as amended; provided, however, that “ Beneficial Owner ” shall exclude any Person otherwise becoming a Beneficial Owner by reason of (i) the stockholders of the Company approving a merger of the Company with another entity or (ii) the Company’s board of directors approving a sale of securities by the Company to such Person.
(d) “ Corporate Status ” describes the status of a person who is or was a director, trustee, general partner, managing member, member, officer, employee, agent or fiduciary of the Company or any other Enterprise.
(e) “ DGCL ” means the General Corporation Law of the State of Delaware.
(f) “ Disinterested Director ” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
(g) “ Enterprise ” means the Company and any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, trustee, general partner, managing member, manager, officer, employee, agent or fiduciary.
(h) “ Expenses ” include all reasonable and actually incurred attorneys’ fees, retainers, court costs, transcript costs, fees and costs of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend,
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investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond or other appeal bond or their equivalent, and (ii) for purposes of Section 12(d) , Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company. Expenses shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee, except to the extent such amounts are paid consistent with the terms of this Agreement, the Certificate of Incorporation of the Company and applicable law.
(i) “ Independent Counsel ” means a law firm, or a partner or member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent (i) the Company or Indemnitee in any matter material to either such party (other than as Independent Counsel with respect to matters concerning Indemnitee under this Agreement, or other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “ Independent Counsel ” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
(j) “ Person ” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended; provided, however, that “ Person ” shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.
(k) “ Proceeding ” means any threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature (whether formal or informal), including any appeal therefrom, in which Indemnitee was, is or will be involved as a party, a potential party, a non-party witness or otherwise by reason of (i) the fact that Indemnitee is or was a director or officer of the Company, (ii) any action taken by Indemnitee or any action or inaction on Indemnitee’s part while acting as a director or officer of the Company, or (iii) the fact that he or she is or was serving at the request of the Company as a director, trustee, general partner, managing member, manager, officer, employee, agent or fiduciary of the Company or any other Enterprise, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification or advancement of expenses can be provided under this Agreement.
(l) Reference to “ other Enterprises ” shall include employee benefit plans; references to “ fines ” shall include any excise taxes assessed on a person with respect to any employee benefit plan; references to “ serving at the request of the Company ” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries, including as a deemed fiduciary thereto; and a person who acted in good faith and in a manner he or she reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “ not opposed to the best interests of the Company ” as referred to in this Agreement.
2. Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 2 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 2, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably
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incurred by Indemnitee or on his or her behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful.
3. Indemnity in Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company. No indemnification for Expenses shall be made under this Section 3 in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged by a court of competent jurisdiction in a final adjudication not subject to further appeal to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such expenses as the Delaware Court of Chancery or such other court shall deem proper.
4. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. To the extent that Indemnitee is a party to or a participant in and is successful (on the merits or otherwise) in defense of any Proceeding or any claim, issue or matter therein, the Company shall indemnify Indemnitee against Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. For purposes of this section, the termination of any claim, issue or matter in such a Proceeding, by dismissal, with or without prejudice, or motion for summary judgment, shall be deemed to be a successful result as to such claim, issue or matter.
5. Indemnification for Expenses of a Witness. To the extent that Indemnitee is, by reason of his or her Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.
6. Additional Indemnification.
(a) Notwithstanding any limitation in Sections 2, 3 or 4, the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on his or her behalf in connection with the Proceeding or any claim, issue or matter therein.
(b) For purposes of Section 6(a), the meaning of the phrase “ to the fullest extent permitted by applicable law ” shall include, but not be limited to:
(i) the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL; and
(ii) the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.
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7. Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any Proceeding (or any part of any Proceeding):
(a) for which payment has actually been made to or on behalf of Indemnitee under any statute, insurance policy, indemnity provision, vote or otherwise, except with respect to any excess beyond the amount paid (and excluding any Secondary Indemnitor); provided , however , that payment made to Indemnitee pursuant to an insurance policy purchased and maintained by Indemnitee at his or her own expense, or by any Affiliate of Indemnitee, of any amounts otherwise indemnifiable or obligated to be made pursuant to this Agreement shall not reduce the Company’s obligations to Indemnitee pursuant to this Agreement to the extent that the person who made such payment holds valid subrogation rights with respect to such amount;
(b) for an accounting or disgorgement of profits pursuant to Section 17(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of federal, state or local statutory law or common law, if Indemnitee is held liable therefor (including pursuant to any settlement arrangements);
(c) for any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Securities Exchange Act of 1934, as amended (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act), if Indemnitee is held liable therefor (including pursuant to any settlement arrangements);
(d) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees, agents or other indemnitees, unless (i) the Company’s board of directors authorized the Proceeding (or the relevant part of the Proceeding) prior to its initiation, (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law, (iii) otherwise authorized in Section 12(d) or (iv) otherwise required by applicable law; or
(e) if prohibited by applicable law as determined by a court of competent jurisdiction in a final adjudication not subject to further appeal.
8. Advances of Expenses. The Company shall advance the Expenses incurred by Indemnitee in connection with any Proceeding prior to its final disposition, and such advancement shall be made as soon as reasonably practicable after the receipt by the Company of a written statement or statements requesting such advances from time to time (which shall include invoices received by Indemnitee in connection with such Expenses but, in the case of invoices in connection with legal services, any references to legal work performed or to expenditure made that would cause Indemnitee to waive any privilege accorded by applicable law shall not be included with the invoice). Advances shall be unsecured and interest free and made without regard to Indemnitee’s ability to repay such advances. Without limiting the generality or effect of the foregoing, the Company shall, in accordance with such request (but without duplication), (a) pay such Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse Indemnitee for such Expenses. Indemnitee hereby undertakes to repay any advance to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified for such Expenses by the Company. This Section 8 shall not apply to the extent advancement is prohibited by law and shall not apply to any Proceeding (or any part of any Proceeding) for which indemnity is not permitted under this Agreement, but shall apply to any Proceeding (or any part of any Proceeding) referenced in Section 7(b) or 7(c) prior to a determination that Indemnitee is not entitled to be indemnified by the Company.
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9. Procedures for Notification and Defense of Claim.
(a) Indemnitee shall notify the Company in writing of any matter with respect to which Indemnitee intends to seek indemnification or advancement of Expenses as soon as reasonably practicable following the receipt by Indemnitee of notice thereof. The failure by Indemnitee to notify the Company will not relieve the Company from any liability which it may have to Indemnitee hereunder or otherwise than under this Agreement, and any delay in so notifying the Company shall not constitute a waiver by Indemnitee of any rights, except to the extent that such failure or delay materially prejudices the Company.
(b) If, at the time of the receipt of a notice of a Proceeding pursuant to the terms hereof, the Company has directors’ and officers’ liability insurance in effect that may be applicable to the Proceeding, the Company shall give prompt notice of the commencement of the Proceeding to the insurers in accordance with the procedures set forth in the applicable policies. The Company shall thereafter take all commercially-reasonable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.
(c) In the event the Company may be obligated to make any indemnity in connection with a Proceeding, the Company shall be entitled to assume the defense of such Proceeding with counsel approved by Indemnitee, which approval shall not be unreasonably withheld, conditioned or delayed, upon the delivery to Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee for any fees or expenses of counsel subsequently incurred by Indemnitee with respect to the same Proceeding. Notwithstanding the Company’s assumption of the defense of any such Proceeding, the Company shall be obligated to pay the fees and expenses of Indemnitee’s separate counsel to the extent (i) the employment of separate counsel by Indemnitee is authorized by the Company, (ii) counsel for the Company or Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense such that Indemnitee needs to be separately represented, (iii) the Company is not financially or legally able to perform its indemnification obligations; (iv) the fees and expenses are non-duplicative and reasonably incurred in connection with Indemnitee’s role in the Proceeding despite the Company’s assumption of the defense, (v) after a Change in Control, the employment of counsel by Indemnitee has been approved by the Independent Counsel in accordance with the procedures set forth in Section 10; or (vi) the Company shall not have retained, or shall not continue to retain, counsel to defend such Proceeding. Indemnitee agrees that any such separate counsel will be a member of any approved list of panel counsel under the Company’s applicable directors’ and officers’ insurance policy, should the applicable policy provide for a panel of approved counsel and should such approved panel list comprise law firms with well-established reputations in the type of litigation at issue. (For clarity, the fact of a firm’s being part of a panel shall not be evidence of a firm’s having a well-established national reputation for the type of litigation at issue). Regardless of any provision in this Agreement, Indemnitee shall have the right to employ counsel in any Proceeding at Indemnitee’s personal expense. The Company shall not be entitled, without the consent of Indemnitee, to assume the defense of any claim brought by or in the right of the Company.
(d) Indemnitee shall give the Company such information and cooperation in connection with the Proceeding as may be reasonably appropriate and vice versa, but in no case shall Indemnitee or the Company be required to convey any information that would cause Indemnitee or the Company, as applicable, to waive any privilege accorded by applicable law.
(e) The Company shall not be liable to indemnify Indemnitee for any settlement of any claim or Proceeding (or any part thereof), any release of any claim, or any admission of any fact, law, liability or damages with respect to any losses for which indemnification is sought hereunder, without the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed.
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(f) The Company shall not settle any claim or Proceeding (or any part thereof) in a manner that imposes any penalty, liability or material obligation on Indemnitee without Indemnitee’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed.
(g) The Company shall not, on its own behalf, settle any part of any Proceeding to which Indemnitee is party with respect to other parties (including the Company) without the written consent of Indemnitee if any portion of such settlement is to be funded from corporate insurance proceeds unless approved by (1) the written consent of Indemnitee or (2) a majority of the independent directors of the Company’s board of directors; provided, however, that the right to constrain the Company’s use of corporate insurance as described in this section shall terminate at the time the Company concludes (per the terms of this Agreement) that (i) Indemnitee is not entitled to indemnification pursuant to this Agreement, or (ii) such indemnification obligation to Indemnitee has been fully discharged by the Company.
10. Procedures upon Application for Indemnification.
(a) To obtain indemnification, Indemnitee shall submit to the Company a written request for indemnification. Indemnitee shall provide such documentation and information as is reasonably available to Indemnitee and as is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of the Proceeding, provided, however, that in no case shall Indemnitee be required to convey any information that would cause Indemnitee to waive any privilege accorded by applicable law. The Company shall, as soon as reasonably practicable after the receipt of such request for indemnification, advise the board of directors that the Indemnitee has requested indemnification. Any delay in providing the request will not relieve the Company from its obligations under this Agreement, except to the extent such failure is prejudicial.
(b) Upon written request by Indemnitee for indemnification pursuant to Section 10(a), a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case (i) if a Change in Control shall have occurred, at Indemnitee’s written request by Independent Counsel in a written opinion to the Company’s board of directors, a copy of which shall be delivered to Indemnitee or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Company’s board of directors, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Company’s board of directors, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Company’s board of directors, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Company’s board of directors, by the stockholders of the Company. If it is determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten days after such determination. Indemnitee shall cooperate with the person, persons or entity making the determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees and disbursements) actually and reasonably incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company, to the extent permitted by applicable law.
(c) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 10(b), the Independent Counsel shall be selected as provided in this Section 10(c). If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Company’s board of directors, and the Company shall give written notice to Indemnitee advising him or her of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Company’s board of directors, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In
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either event, Indemnitee or the Company, as the case may be, may, within ten days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided , however , that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 1 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within 20 days after the later of (i) submission by Indemnitee of a written request for indemnification pursuant to Section 10(a) hereof and (ii) the final disposition of the Proceeding, the parties have not agreed upon an Independent Counsel, either the Company or Indemnitee may petition the Delaware Court of Chancery for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 10(b) hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 12(a) of this Agreement, the Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
(d) The Company agrees to pay the reasonable fees and expenses of any Independent Counsel.
11. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall, to the fullest extent not prohibited by law, presume that Indemnitee is entitled to indemnification under this Agreement, and the Company shall, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption by clear and convincing evidence.
(b) If the person, persons or entity empowered or selected under Section 10 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) an intentional misstatement by Indemnitee of a material fact, or an intentional omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided , however , that such sixty (60) day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto.
(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.
(d) For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith to the extent Indemnitee relied in good faith on (i) the records or books of account of the Enterprise, including financial statements, (ii) information supplied to Indemnitee by the officers of the
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Enterprise in the course of their duties, (iii) the advice of legal counsel for the Enterprise or its board of directors or counsel selected by any committee of the board of directors or (iv) information or records given or reports made to the Enterprise by an independent certified public accountant, an appraiser, investment banker or other expert selected with reasonable care by the Enterprise or its board of directors or any committee of the board of directors. The provisions of this Section 11(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met any applicable standard of conduct.
(e) Neither the knowledge, actions nor failure to act of any other director, officer, agent or employee of the Enterprise shall be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
(a) Subject to Section 12(e), in the event that (i) a determination is made pursuant to Section 10 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 8 or 12(d) of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 10 of this Agreement within 90 days after the later of the receipt by the Company of the request for indemnification or the final disposition of the Proceeding, (iv) payment of indemnification pursuant to this Agreement is not made (A) within 30 days after a determination has been made that Indemnitee is entitled to indemnification or (B) with respect to indemnification pursuant to Sections 4, 5 and 12(d) of this Agreement, within 30 days after receipt by the Company of a written request therefor, or (v) the Company or any other person or entity takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, Indemnitee the benefits provided or intended to be provided to Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by the Delaware Court of Chancery of his or her entitlement to such indemnification or advancement of Expenses. Indemnitee shall commence such proceeding seeking an adjudication within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 12(a) ; provided, however, that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce his or her rights under Section 4 of this Agreement. The Company shall not oppose Indemnitee’s right to seek any such adjudication in accordance with this Agreement.
(b) Neither (i) the failure of the Company, its board of directors, any committee or subgroup of the board of directors, Independent Counsel or stockholders to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor (ii) an actual determination by the Company, its board of directors, any committee or subgroup of the board of directors, Independent Counsel or stockholders that Indemnitee has not met the applicable standard of conduct, shall create a presumption that Indemnitee has or has not met the applicable standard of conduct. In the event that a determination shall have been made pursuant to Section 10 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 12 shall be conducted in all respects as a de novo trial, on the merits, and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding commenced pursuant to this Section 12, the Company shall, to the fullest extent not prohibited by law, have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be, by clear and convincing evidence.
(c) To the fullest extent not prohibited by law as determined in a final adjudication not subject to further appeal, the Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement. If a determination shall have been made pursuant to Section 10 of this Agreement that
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Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 12 , absent (i) an intentional misstatement by Indemnitee of a material fact, or an intentional omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.
(d) To the extent not prohibited by law as determined in a final adjudication not subject to further appeal, the Company shall indemnify Indemnitee against all Expenses that are incurred by Indemnitee in connection with any action for indemnification or advancement of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company to the extent Indemnitee is successful in such action, and, if requested by Indemnitee, shall (as soon as reasonably practicable, but in any event no later than 90 days, after receipt by the Company of a written request therefor) advance such Expenses to Indemnitee, subject to the provisions of Section 8 .
(e) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification shall be required to be made prior to the final disposition of the Proceeding.
13. Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amounts incurred by Indemnitee, whether for Expenses, judgments, fines or amounts paid or to be paid in settlement, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the events and transactions giving rise to such Proceeding; and (ii) the relative fault of Indemnitee and the Company (and its other directors, officers, employees and agents) in connection with such events and transactions. The Company shall not enter into any settlement of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.
14. Non-exclusivity. The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Company’s certificate of incorporation or bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded under the Company’s certificate of incorporation and bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change, subject to the restrictions expressly set forth herein or therein. Except as expressly set forth herein, no right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. Except as expressly set forth herein, the assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
15. Primary Responsibility. The Company acknowledges that Indemnitee may have rights to indemnification and advancement of expenses provided by [ name of fund ] and certain affiliates thereof and/or insurance providers to such Person (collectively, the “ Secondary Indemnitor ”). The Company agrees that, as between the Company and the Secondary Indemnitor, the Company is primarily responsible for amounts required to be indemnified or advanced under the Company’s certificate of incorporation or bylaws or this Agreement and any obligation of the Secondary Indemnitor to provide indemnification or advancement for the same amounts is secondary to those Company obligations. The Company waives any right of contribution or subrogation against the Secondary Indemnitor with respect to the liabilities for which the Company is responsible under this Agreement. In the event of any payment by the Secondary Indemnitor of amounts otherwise required to be indemnified or advanced by the Company under the Company’s certificate of incorporation or bylaws or this Agreement, the Secondary Indemnitor shall be subrogated to the extent of such
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payment to all of the rights of recovery of Indemnitee for indemnification or advancement of expenses under the Company’s certificate of incorporation or bylaws or this Agreement or, to the extent such subrogation is unavailable and contribution is found to be the applicable remedy, shall have a right of contribution with respect to the amounts paid. The Secondary Indemnitor is an express third-party beneficiary of the terms of this Section 15 .
16. No Duplication of Payments. Except as may be required by the provisions of Section 15, the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder (or for which advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually received payment for such amounts under any insurance policy, contract, agreement or otherwise; provided , however , that payment made to Indemnitee pursuant to an insurance policy purchased and maintained by Indemnitee at his or her own expense of any amounts otherwise indemnifiable or obligated to be made pursuant to this Agreement shall not reduce the Company’s obligations to Indemnitee pursuant to this Agreement to the extent that such insurer holds valid subrogation rights.
17. Insurance.
(a) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, trustees, general partners, managing members, managers, officers, employees, agents or fiduciaries of the Company or any other Enterprise, Indemnitee shall be covered by such policy or policies to the same extent as the most favorably-insured persons under such policy or policies in a comparable position.
(b) In the event of a Change in Control, the Company shall purchase a “tail” insurance policy providing for an extended reporting period under the Company’s directors and officers insurance policy then maintained by the Company in providing insurance--directors’ and officers’ liability, fiduciary, employment practices or otherwise--in respect of the Indemnitee, for a fixed period of six years thereafter (a “Tail Policy”). Such coverage shall be non-cancellable and shall be placed and paid for in full at or prior to the consummation of such Change in Control. Such broker shall place the Tail Policy with the incumbent insurance carriers using the policies that were in place at the time of the Change in Control (unless the incumbent carriers will not offer such policies, in which case the Tail Policy placed by the Company’s insurance broker shall be substantially comparable in scope and amount as the expiring policies, and the insurance carriers for the Tail Policy shall have an AM Best rating that is the same or better than the AM Best ratings of the expiring policies).
18. Subrogation. In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights. Notwithstanding the foregoing, the provisions of this Section 18 are subject in their entirety to the acknowledgements and agreements of the Company made in Section 15.
19. Services to the Company. Indemnitee agrees to serve as a director or officer of the Company or, at the request of the Company, as a director, trustee, general partner, managing member, manager, officer, employee, agent or fiduciary of another Enterprise, for so long as Indemnitee is duly elected or appointed or until Indemnitee tenders his or her resignation or is removed from such position. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in such position. This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee. Indemnitee specifically acknowledges that any employment with the Company (or any of its subsidiaries or any Enterprise) is at will, and Indemnitee may be discharged at any time for any reason, with or without cause, with or without notice, except as may be otherwise expressly provided in any executed, written employment contract between
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Indemnitee and the Company (or any of its subsidiaries or any Enterprise), any existing formal severance policies adopted by the Company’s board of directors or, with respect to service as a director or officer of the Company, the Company’s certificate of incorporation or bylaws or the DGCL. No such document shall be subject to any oral modification thereof.
20. Duration. This Agreement shall continue until and terminate upon the later of (a) ten years after the date that Indemnitee shall have ceased to serve as a director or officer of the Company or as a director, trustee, general partner, managing member, manager, officer, employee, agent or fiduciary of any other Enterprise, as applicable; or (b) one year after the final termination of any Proceeding, including any appeal, then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement relating thereto.
21. Successors. This Agreement shall be binding upon the Company and its successors and assigns, including any direct or indirect successor, by purchase, merger, consolidation or otherwise, to all or substantially all of the business or assets of the Company, and shall inure to the benefit of Indemnitee and Indemnitee’s heirs, executors and administrators. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, by written agreement, expressly to assume and agree to perform this Agreement to the fullest extent permitted by law.
22. Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company’s inability, pursuant to court order or other applicable law, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (ii) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (iii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
23. Enforcement. The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director or officer of the Company.
24. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided , however , that this Agreement is a supplement to and in furtherance of the Company’s certificate of incorporation and bylaws and applicable law.
25. Modification and Waiver. No supplement, modification or amendment to this Agreement shall be binding unless executed in writing by the parties hereto. No amendment, alteration or repeal of this Agreement shall adversely affect any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal. No waiver of any of the provisions of this Agreement shall constitute or be deemed a waiver of any other provision of this Agreement nor shall any waiver constitute a continuing waiver.
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26. Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by electronic mail or otherwise delivered by hand, messenger or courier service addressed:
(a) if to Indemnitee, to Indemnitee’s address or electronic mail address as shown on the signature page of this Agreement or in the Company’s records, as may be updated in accordance with the provisions hereof; or
(b) if to the Company, to the attention of the Chief Financial Officer of the Company at 16800 Edwards Road, Cerritos, California 90703, or at such other current address as the Company shall have furnished to Indemnitee, with a copy (which shall not constitute notice) to Michael Nordtvedt, Wilson Sonsini Goodrich & Rosati, P.C., 701 Fifth Avenue, Suite 5100, Seattle, Washington 98104.
Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day.
27. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court of Chancery, and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court of Chancery for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, Corporation Service Company, Wilmington, Delaware as its agent in the State of Delaware as such party’s agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court of Chancery, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court of Chancery has been brought in an improper or inconvenient forum.
28. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
29. Captions. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
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The parties are signing this Indemnification Agreement as of the date stated in the introductory sentence.
REVOLVE GROUP, INC.
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Exhibit 10.2
REVOLVE GROUP, INC.
REGISTRATION RIGHTS AGREEMENT
, 2018
TABLE OF CONTENTS
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Page |
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Section 1 Definitions |
1 |
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1.1 |
Certain Definitions |
1 |
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Section 2 Registration Rights |
3 |
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2.1 |
Demand Registration Rights. |
3 |
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2.2 |
Piggyback Registration Rights. |
6 |
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2.3 |
Certain Other Provisions. |
6 |
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2.4 |
Indemnification and Contribution. |
10 |
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2.5 |
Termination of Registration Rights |
12 |
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2.6 |
Expenses of Registration |
12 |
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2.7 |
Information by Holder |
13 |
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2.8 |
Restrictions on Transfer. |
13 |
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2.9 |
Rule 144 Reporting |
14 |
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2.10 |
Delay of Registration |
15 |
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Section 3 Miscellaneous |
15 |
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3.1 |
Amendment |
15 |
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3.2 |
Notices |
15 |
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3.3 |
Governing Law |
16 |
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3.4 |
Successors and Assigns |
16 |
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3.5 |
Entire Agreement |
16 |
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3.6 |
Delays or Omissions |
16 |
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3.7 |
Severability |
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3.8 |
Titles and Subtitles |
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3.9 |
Counterparts |
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3.10 |
Telecopy Execution and Delivery |
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3.11 |
Jurisdiction; Venue |
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3.12 |
Further Assurances |
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3.13 |
Conflict |
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3.14 |
Aggregation of Stock |
18 |
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “ Agreement ”) is dated as of , 2018, and is by and among:
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Revolve Group, Inc., a Delaware corporation (the “ Company ”); |
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TSG Eminent Holdings, L.P., a Delaware limited partnership (along with its permitted successors and assigns, “ TSG ”); |
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3. |
MMMK Development, Inc. (f/k/a Eminent Incorporated), a Delaware S-Corporation (the “ S Corp ”); |
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4. |
Raissa Gerona, Candace Lee, Michael Mente, Mitch Moseley and Son Nguyen (the “ L+F Stockholders ”); |
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Capretto LLC, a California limited liability company (“ Capretto ”); and |
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6. |
such other Persons who from time to time become party hereto by executing a counterpart signature page hereof (collectively with TSG, S Corp, the L+F Stockholders and Capretto, the “ Investors ”). |
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Recitals
WHEREAS, upon the terms and subject to the conditions set forth herein, the parties desire to enter into this Agreement to facilitate the underwritten initial public offering of the Company’s common stock, par value $0.001 per share (the “ Common Stock ”), pursuant to a registration statement on Form S-1 filed with the Securities and Exchange Commission;
NOW, THEREFORE, the parties agree as follows:
As used in this Agreement, the following terms shall have the meanings set forth below:
(a) “ Affiliate ” means, with respect to a specified person (a) any person that directly or indirectly through one or more intermediaries controls, or is controlled by or is under common control with, such specified Person or (b) in the event such specified person is a natural person, a member of the immediate family of such person or (c) any investment fund advised or managed by, or under common control or management with, such person, provided , that the Company and each of its subsidiaries shall be deemed not to be Affiliates of any Investor. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or otherwise.
(b) “ Class A Holders ” shall have the meaning ascribed thereto in Section 2.1(a) of this Agreement.
(c) “ Class T Holders ” shall have the meaning ascribed thereto in Section 2.1(a) of this Agreement.
(d) “ Commission ” shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.
(e) “ Covered Person ” shall have the meaning ascribed thereto in Section 2.4(a) of this Agreement.
(f) “ Deemed Liquidity Event ” shall mean (i) the sale of all or substantially all of the Company’s and its Subsidiaries’ assets, taken as a whole, to any Person (other than one of the Members or any Affiliate or Member of the Immediate Family of any Member), (ii) any other transaction, whether by sale of Equity Interests, sale of assets, merger, recapitalization, reorganization or otherwise, pursuant to which one or more Persons (other than one of the Members or any Affiliate or Member of the Immediate Family of any Member) shall directly or indirectly own 50% or more of the voting Units, in each case in a single transaction or series of related transactions or (iii) liquidation of the Company.
(g) “ Equity Interests ” means (a) any share, depositary receipt or other certificate representing any share, membership or other percentage interest, unit of participation or other equivalent (however designated) of an equity interest in any person, and (b) any options, warrants, purchase rights, subscription rights, conversion rights, exchange rights or other contractual obligations that would entitle the holder thereof to any share in the equity, profit, earnings, gains, losses, revenues or cash flows of such person or any stock appreciation, phantom stock, profit participation or similar rights and other contractual obligations similar to such Equity Interests.
(h) “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time.
(i) “ Holder ” shall mean any Investor who holds Registrable Securities and any holder of Registrable Securities to whom the registration rights conferred by this Agreement have been duly and validly transferred in accordance with Section 2.11 of this Agreement.
(j) “ Indemnitee ” shall have the meaning ascribed thereto in Section 2.4(c) of this Agreement.
(k) “ Initial Public Offering ” shall mean a public offering and sale of equity securities of the Company for cash pursuant to an effective Registration Statement under the Securities Act, as amended, registered on Form S-1 (or any successor form under said Securities Act).
(l) “ Initiating Holders ” shall have the meaning ascribed thereto in Section 2.1(a) of this Agreement.
(m) “ Long Form Registrations ” shall have the meaning ascribed thereto in Section 2.1(a)(iii) of this Agreement.
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(n) “ Parity Shares ” shall have the meaning ascribed thereto in Section 2.3(a) of this Agreement.
(o) “ Permitted Transferee ” means any Affiliate of an Investor.
(p) “ Public Offering ” means a public offering and sale of the common equity of the Company for cash registered under the Securities Act.
(q) “ Registrable Securities ” shall mean the common stock of the Company; provided , however , that shares of common stock which are Registrable Securities shall cease to be Registrable Securities (i) upon any sale pursuant to a Registration Statement, Section 4(a)(1) of the Securities Act or Rule 144 under the Securities Act or any successor rule under the Securities Act or (ii) for which registration rights for such Registrable Securities have terminated pursuant to Section 2.5 hereof.
(r) The terms “ register ,” “ registered ” and “ registration ” shall refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement.
(s) “ Restricted Securities ” shall mean any Registrable Securities required to be notated with the first legend set forth in Section 2.8(c).
(t) “ Rule 144 ” shall mean Rule 144 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission.
(u) “ Rule 145 ” shall mean Rule 145 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission
(v) “ Securities Act ” shall mean the Securities Act of 1933, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time.
(w) “ Shelf Takedown Holder ” shall have the meaning ascribed thereto in Section 2.1(b) of this Agreement.
(x) “ Underwritten Shelf Takedown ” shall have the meaning ascribed thereto in Section 2.1(b) of this Agreement.
2.1 Demand Registration Rights.
(a) Demand Registration Rights . Beginning 180 days following an Initial Public Offering, (x) the persons set forth on Schedule A hereto (the “ Class A Holders ”) may request on an unlimited basis and (y) the persons set forth on Schedule B hereto that held a majority of majority of Registrable Securities immediately prior to the Initial Public Offering (the “ Class T Holders ”) may request on three (3)
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occasions (in each case, the “ Initiating Holders ”), by notice to the Company specifying the intended method or methods of disposition, that the Company effect the registration under the Securities Act for a Public Offering of all or a specified part of the Registrable Securities held by such Initiating Holders; provided , however , that the value of the Registrable Securities that such Initiating Holders propose to sell in such Public Offering is equal to or greater than Twenty Five Million ($25,000,000). The Company will then use its reasonable best efforts to effect the registration under the Securities Act (including by means of a shelf registration pursuant to Rule 415 under the Securities Act if so requested by the Initiating Holders holding a majority of the Registrable Securities being proposed for registration and if the Company is then eligible to use such registration) of the Registrable Securities that the Company has been requested to register by such Initiating Holders together with all other Registrable Securities that the Company has been requested to register pursuant to Section 2.2 by other stockholders, all to the extent required to permit the disposition of the Registrable Securities that the Company has been so requested to register; provided , however , that the Company will not be obligated to take any action to effect any such registration pursuant to this Section 2.1(a) :
(i) during the effectiveness of any lock-up agreement entered into in connection with any registration statement pertaining to an underwritten public offering of securities of the Company for its own account (other than a Rule 145 Transaction, or a registration relating solely to employee benefit plans); or
(ii) if a registration statement requested under this Section 2.1(a) became effective within the preceding 90 days (unless otherwise consented to by the Board);
(iii) on a Form S-1 (or any successor or similar long-form registration statement) (“ Long-Form Registrations ”) at the request of the Initiating Holder(s) after the Company has effected two (2) Long-Form Registrations pursuant to this Section 2.1(a) at the request of such Initiating Holder(s), and such registrations have been declared effective.
(iv) In the event that an Initiating Holder exercises the demand registration rights under Section 2.1(a)(y) and the registration statement for such offering is withdrawn prior to its effectiveness or greater than fifty percent (50%) of the Registrable Securities proposed to be registered by such Initiating Holder(s) are removed from such registration pursuant to the Underwriter’s Cutback provisions set forth in Section 2.3(a), such Initiating Holder(s) shall not be deemed to have exercised one of its demand registration rights under Section 2.1(a)(y).
(b) Shelf Takedowns . At any time during which the Company has effective a shelf registration pursuant to Rule 415 under the Securities Act with respect to such stockholder’s shares, any Class A Holder or Class T Holder (the “ Shelf Takedown Holder ”), by notice to the Company specifying the intended method or methods of disposition, may request that the Company effect an underwritten offering of such Shelf Takedown Holders’ Shares that are subject to such registration statement (an “ Underwritten Shelf Takedown ”) of all or a specified part of the Registrable Securities held by such Shelf Takedown Holders; provided , however , that the value of Registrable Securities that such Shelf Takedown Holders propose to sell in an underwritten Shelf Takedown is at least Fifty Million Dollars ($50,000,000). The Company will not be obligated to take any action to effect any such Underwritten Shelf Takedown pursuant to this Section 2.1(b) if an Underwritten Shelf Takedown requested under this Section 2.1(b) was consummated within the preceding 90 days (unless otherwise consented to by the Board).
(c) Form . Except as otherwise provided above or required by law, so long as the Company is eligible and qualified to register Registrable Securities on Form S-3 (or any successor or similar short-form registration statement), each registration requested pursuant to Section 2.1(a) will be effected by
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the filing of a registration statement on Form S-3 (or any other form which includes substantially the same information as would be required to be included in a registration statement on such form as currently constituted) and (i) the Initiating Holders will have the right pursuant to Section 2.1(a) to require the Company to effect an unlimited number of registrations on Form S-3 (or any successor or similar short-form registration statement); provided that if any registration requested pursuant to this Section 2.1 is proposed to be effected on Form S-3 (or any successor or similar short-form registration statement) and is in connection with an underwritten offering, and if the managing underwriter will advise the Company in writing that, in its opinion, it is of material importance to the success of such proposed offering to file a Long Form Registration, then, subject to Section 2.1(a)(ii), the Company will file a Long Form Registration as reasonably requested by such managing underwriter.
(d) Additional Procedures . In the case of a registration pursuant to Section 2.1 hereof, whenever the or Initiating Holders are entitled to request and so requests that such registration be effected pursuant to an underwritten offering, the Company will include such information in any written notice to stockholders required by Section 2.1(a). In such event, the right of any stockholder to have securities owned by such stockholder included in such registration will be conditioned upon the inclusion of such stockholder’s Registrable Securities in the underwriting (unless otherwise mutually agreed upon by the Initiating Holders and such stockholder). If requested by the Initiating Holders or Shelf Takedown Holders, the Company together with the stockholders proposing to distribute their securities through the underwriting will enter into an underwriting agreement with the underwriters for such offering containing such representations and warranties by the Company and such stockholders, a customary lock up covenant and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions, including customary indemnity and contribution provisions (subject, in each case, to the limitations on such liabilities set forth in this Agreement).
(e) Suspension of Registration . If the filing, initial effectiveness or continued use of a registration statement, including a shelf registration statement pursuant to Rule 415 under the Securities Act, in respect of a registration pursuant to this Section 2.1 at any time would require the Company to make a public disclosure of material nonpublic information, which disclosure in the good faith judgment of the Board (after consultation with external legal counsel) (i) would be required to be made in any registration statement so that such registration statement would not be materially misleading, (ii) would not be required to be made at such time but for the filing, effectiveness or continued use of such registration statement and (iii) would have a material adverse effect on the Company or its business or on the Company’s ability to effect a material proposed acquisition, disposition, financing, reorganization, recapitalization or similar transaction, then the Company may, upon giving prompt written notice of such action to the stockholders participating in such registration, delay the filing or initial effectiveness of, or suspend use of, such registration statement; provided , that the Company will not be permitted to do so (i) for a period exceeding 30 days on any one occasion or (ii) for an aggregate period exceeding 90 days in any 12 month period. In the event the Company exercises its rights under the preceding sentence, such stockholders agree to suspend, promptly upon their receipt of the notice referred to above, their use of any prospectus relating to such registration in connection with any sale or offer to sell Registrable Securities. The Company will promptly notify such stockholders of the expiration of any period during which it exercised its rights under this Section 2.1(e). The Company agrees that, in the event it exercises its rights under this Section 2.1(e), it will, within 30 days following such stockholders’ receipt of the notice of suspension, update the suspended registration statement as may be necessary to permit the stockholders to resume use thereof in connection with the offer and sale of their Registrable Securities in accordance with applicable law.
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2.2 Piggyback Registration Rights .
(a) Piggyback Registration .
(i) General . Each time the Company proposes to register any Equity Interests under the Securities Act on a form which would permit registration of Registrable Securities for sale to the public, for its own account or for the account of any other Person (pursuant to Section 2.1 or otherwise) for sale in a Public Offering, the Company will give notice to all holders of Registrable Securities of its intention to do so. Any such holder may, by written response delivered to the Company within five (5) days after the effectiveness of such notice, request that all or a specified part of the Registrable Securities held by such holder be included in such registration. The Company thereupon will use its best efforts to cause to be included in such registration under the Securities Act all Registrable Securities which the Company has been so requested to register by such holders, to the extent required to permit the disposition (in accordance with the methods to be used by the Company or other holders of Equity Interests in such Public Offering) of the Registrable Securities to be so registered. No registration of Registrable Securities effected under this Section 2.2 shall relieve the Company of any of its obligations to effect registrations of Registrable Securities pursuant to Section 2.1 hereof.
(ii) Excluded Transactions . The Company shall not be obligated to effect any registration of Registrable Securities under this Section 2.2 incidental to the registration of any of its securities in connection with (A) any Public Offering relating to employee benefit plans or dividend reinvestment plans; or (B) any Public Offering relating to the acquisition or merger after December 31, 2012 by the Company or any of its subsidiaries of or with any other businesses.
(b) Additional Procedures . Stockholders participating in any Public Offering pursuant to this Section 2.2 shall take all such actions and execute all such documents and instruments that are reasonably requested by the Company to effect the sale of their Registrable Securities in such Public Offering, including, without limitation, being parties to the underwriting agreement entered into by the Company and any other selling stockholders in connection therewith including without limitation customary selling stockholder representations, warranties, indemnifications and “lock-up” agreements, and other agreements for the benefit of the underwriters; provided, however, that (a) with respect to individual representations, warranties, indemnities and agreements of sellers of Equity Interests in such Public Offering, the aggregate amount of such liability shall not exceed such holder’s net proceeds from such offering and (b) with respect to all other representations, warranties and indemnities of sellers of Equity Interests in such Public Offering, the aggregate amount of such liability shall not exceed the lesser of (i) such holder’s pro rata portion of any such liability, in accordance with such holder’s portion of the total number of Equity Interests included in the offering and (ii) such holder’s net proceeds from such offering.
(a) Underwriter’s Cutback . In connection with any registration of Equity Interests, the underwriter may determine that marketing factors (including an adverse effect on the per Equity Interest offering price) require a limitation of the number of Equity Interests to be underwritten. Notwithstanding any contrary provision of this Section 2 and subject to the terms of this Section 2.3(a), the underwriter may limit the number of Equity Interests which would otherwise be included in such registration by excluding any or all Registrable Securities from such registration, it being understood that, if the registration in question involves a registration for sale of securities for the Company’s own account and is not also a registration effected pursuant to Section 2.1 hereof, then the number of shares which the Company seeks to have registered in such registration will not be subject to exclusion, in whole or in part, under this Section 2.3(a). Upon receipt of notice from the underwriter of the need to reduce the number of Equity Interests to be included in the
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registration, the Company will advise all holders of the Company’s securities that would otherwise be registered and underwritten pursuant hereto, and the number of Equity Interests of such securities, including Registrable Securities, that may be included in the registration will be allocated in the following manner, unless the underwriter, with the consent of the Investor, will determine that marketing factors require a different allocation: Equity Interests, other than Registrable Securities, requested to be included in such registration by other stockholders will be excluded unless the Company, with the consent of the parties required to approve any amendment or waiver of this Agreement pursuant to Section 3.1 hereof, has granted registration rights which are to be treated on an equal basis with Registrable Securities for the purpose of the exercise of the underwriter cutback (such Equity Interests afforded such equal treatment being “ Parity Shares ”); and, if a limitation on the number of Equity Interests is still required, the number of Registrable Securities, Parity Shares and other Equity Interests that may be included in such registration will be allocated among the holders thereof in proportion, as nearly as practicable, as follows :
(b) there will be first allocated to each such holder requesting that its Registrable Securities or Parity Shares be registered in such registration a number of such Equity Interests to be included in such registration equal to the lesser of (A) the number of such Equity Interests requested to be registered by such holder, and (B) a number of such Equity Interests equal to such holder’s pro rata portion;
(i) the balance, if any, not allocated pursuant to clause (i) above will be allocated to those holders requesting that their Registrable Securities or Parity Shares be registered in such registration that requested to register a number of such Equity Interests in excess of such holder’s Pro Rata Portion pro rata to each such holder based upon the number of Registrable Securities and Parity Shares held by such holder, or in such other manner as the holders requesting that their Registrable Securities or Parity Shares be registered in such registration may otherwise agree; and
(ii) the balance, if any, not allocated pursuant to clause (ii) above will be allocated to Equity Interests, other than Registrable Securities and Parity Shares, requested to be included in such registration by other equityholders.
For purposes of any underwriter cutback, all Registrable Securities held by any stockholder will also include any Registrable Securities held by the partners, retired partners, shareholders or Affiliates of such stockholder, or the estates and family members of any such stockholder or such partners and retired partners, any trusts for the benefit of any of the foregoing Persons and, at the election of such stockholder or such partners, retired partners, trusts or Affiliates, any charitable organization to which any of the foregoing shall have contributed Equity Interests prior to the execution of the underwriting agreement in connection with such underwritten offering, and such stockholder and other Persons will be deemed to be a single selling stockholder, and any pro rata reduction with respect to such selling stockholder will be based upon the aggregate amount of Equity Interests owned by all entities and individuals included with such selling stockholder, as defined in this sentence. No securities excluded from the underwriting by reason of the underwriter’s marketing limitation will be included in such registration. Upon delivery of a written request pursuant to Section 2.2(a) that Registrable Securities be sold in an underwritten offering, the stockholder thereof may not thereafter elect to entirely withdraw therefrom without the written consent of the Initiating Holders or the Shelf Takedown Holders, as applicable. Notwithstanding the foregoing, if the managing underwriter of any underwritten offering will advise the stockholders participating in the offering that the Registrable Securities covered by the registration statement cannot be sold in such offering within a price range acceptable to the Initiating Holders or Shelf Takedown Holders, then the Initiating Holders or Shelf Takedown Holders will have the right to withdraw from such underwritten offering and, upon any such withdrawal, such Initiating Holders or Shelf Takedown Holders, as the case may be, may elect to terminate any such offering at any time.
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(c) Registration Procedures . If, and in each case when, the Company is required to effect a registration of any Registrable Securities as provided in this Section 2, the Company will promptly :
(i) prepare and, in any event within 45 days (30 days in the case of a Form S-3 registration) after a request received pursuant to Section 2.1(a), or the end of the period under Section 2.2(a)(i) within which a piggyback request for registration may be given to the Company, file with the Commission a registration statement with respect to such Registrable Securities and use its reasonable best efforts to cause such registration statement to become effective within 90 days of the initial filing;
(ii) 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 not in excess of 270 days (or such shorter period which will terminate when all Registrable Securities covered by such registration statement have been sold) and to comply with the provisions of the Securities Act and the Exchange 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 seller or sellers thereof set forth in such registration statement; provided that before filing a registration statement or prospectus, or any amendments or supplements thereto in accordance with Sections 2.1 or 2.2, the Company will furnish to counsel selected pursuant to Section 2.3(c) hereof copies of all documents proposed to be filed, which documents will be subject to the review of such counsel;
(iii) furnish to each seller of such Registrable Securities such number of copies of such registration statement and of each amendment and supplement thereto (in each case including all exhibits filed therewith), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and summary prospectus), in conformity with the requirements of the Securities Act, and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities by such seller;
(iv) use its reasonable best efforts to register or qualify such Registrable Securities covered by such registration in such jurisdictions as each seller will reasonably request, and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller, except that the Company will not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this clause (iv), it would not be obligated to be so qualified or to consent to general service of process in any such jurisdiction;
(v) notify each seller of any such Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the Company’s becoming aware that the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the request of any such seller, prepare and furnish to such seller a reasonable number of copies of an amended or supplemental prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an 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 in the light of the circumstances then existing;
(vi) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable (but not more than 12 months) after the effective date of the registration statement, an earnings statement which will satisfy the provisions of Section 11(a) of the Securities Act;
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(vii) if such Registrable Securities are common stock (including common stock issuable upon conversion, exchange or exercise of another security), use its reasonable best efforts to list such Registrable Securities on any securities exchange on which the Equity Interest is then listed if such Registrable Securities are not already so listed; and (y) use its reasonable best efforts to provide a transfer agent and registrar for such Registrable Securities covered by such registration statement not later than the effective date of such registration statement;
(viii) enter into such customary agreements (including an underwriting agreement in customary form), which may include indemnification provisions in favor of underwriters and other Persons in addition to the provisions of Section 2.4 hereof, and take such other actions as the Initiating Holders or Shelf Takedown Holders, as the case may be, or the underwriters, if any, reasonably requested in order to expedite or facilitate the disposition of such Registrable Securities;
(ix) obtain a “cold comfort” letter or letters from the Company’s independent public accountants in customary form and covering matters of the type customarily covered by “cold comfort” letters as the Initiating Holders or Shelf Takedown Holders, as the case may be, shall reasonably request;
(x) make available for inspection by any seller of such Registrable Securities covered by such registration statement, by any managing underwriter or underwriters participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by any such seller or any such managing underwriter(s), all pertinent financial and other records, pertinent corporate documents and properties of the Company, and cause all of the Company’s officers, directors and employees to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement (subject to each party referred to in this clause (x) entering into customary confidentiality agreements in a form reasonably acceptable to the Company);
(xi) notify counsel for the stockholders of Registrable Securities included in such registration statement and the managing underwriter or agent, immediately, and confirm the notice in writing (w) when the registration statement, or any post-effective amendment to the registration statement, will have become effective, or any supplement to the prospectus or any amendment to the prospectus will have been filed, (x) of the receipt of any comments from the Commission, (y) of any request of the Commission to amend the registration statement or amend or supplement the prospectus or for additional information, and (z) of the issuance by the Commission of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the registration statement for offering or sale in any jurisdiction, or of the institution or threatening of any proceedings for any of such purposes;
(xii) use its reasonable best efforts to prevent the issuance of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus and, if any such order is issued, to obtain the withdrawal of any such order as soon as practicable;
(xiii) if requested by the managing underwriter or agent or any Holder of Registrable Securities covered by the registration statement, incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or agent or such stockholder reasonably requests to be included therein, including, with respect to the number of Registrable Securities being sold by such stockholder to such underwriter or agent, the purchase price being paid therefor by such underwriter or agent and with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such offering; and make all required filings of such prospectus supplement or post-effective amendment as soon as practicable after being notified of the matters incorporated in such prospectus supplement or post-effective amendment;
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(xiv) cooperate with the Holders of Registrable Securities covered by the registration statement and the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing securities to be sold under the registration statement, and enable such securities to be in such denominations and registered in such names as the managing underwriter or agent, if any, or such stockholders may request;
(xv) obtain for delivery to the Holders of Registrable Securities being registered and to the underwriter or agent an opinion or opinions from counsel for the Company in customary form and in form, substance and scope reasonably satisfactory to the Initiating Holders or Shelf Takedown Holders, as the case may be, underwriters or agents and their counsel;
(xvi) cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the FINRA; and
(xvii) use its reasonable best efforts to make available the executive officers of the Company to participate with the Holders of Registrable Securities and any underwriters in any “road shows” that may be reasonably requested by the stockholders in connection with distribution of the Registrable Securities.
(d) Selection of Underwriters and Counsel . The underwriters and legal counsel to be retained in connection with any Public Offering shall be selected by the Board.
(e) Lock-Up . In connection with each sale of Registrable Securities pursuant to Section 2.1 or 2.2 conducted as an underwritten Public Offering, each Holder agrees, if requested, to become bound by and to execute and deliver a lock-up agreement with the underwriter(s) of such underwritten Public Offering restricting such Holder’s right to (a) transfer, directly or indirectly, any equity securities of the Company held by such Holder or (b) enter into any swap or other arrangement that transfers to another any of the economic consequences of ownership of such securities during the period commencing on the date set forth on the cover of the final prospectus relating to the underwritten Public Offering and ending on the date specified by the underwriters (such period not to exceed ninety (90) days in the case of any registration or sale other than the Initial Public Offering.
2.4 Indemnification and Contribution.
(a) Indemnities of the Company . In the event of any registration of any Registrable Securities or other debt or equity securities of the Company or any of its subsidiaries under the Securities Act pursuant to this Section 2 or otherwise, and in connection with any registration statement or any other disclosure document produced by or on behalf of the Company or any of its subsidiaries including, without limitation, reports required and other documents filed under the Exchange Act, and other documents pursuant to which any debt or equity securities of the Company or any of its subsidiaries are sold (whether or not for the account of the Company or its subsidiaries), the Company will, and hereby does, and will cause each of its subsidiaries, jointly and severally, to indemnify and hold harmless each seller of Registrable Securities, any Person who is or might be deemed to be a controlling Person of the Company or any of its subsidiaries within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, their respective direct and indirect partners, advisory board members, directors, officers, trustees, members and shareholders, and each other Person, if any, who controls any such seller or any such holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each such person being referred to herein as a “ Covered Person ”), against any losses, claims, damages or liabilities (or actions or proceedings in respect thereof), joint or several, to which such Covered Person may be or become subject under the Securities Act, the Exchange
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Act, any other securities or other law of any jurisdiction, the common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained or incorporated by reference in any registration statement under the Securities Act, any preliminary prospectus or final prospectus included therein, or any related summary prospectus, or any amendment or supplement thereto, or any document incorporated by reference therein, any “test-the-waters” communication or other marketing materials, or any other such disclosure document (including without limitation reports and other documents filed under the Exchange Act and any document incorporated by reference therein) or other document or report, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any violation or alleged violation by the Company or any of its subsidiaries of any federal, state, foreign or common law rule or regulation applicable to the Company or any of its subsidiaries and relating to action or inaction in connection with any such registration, disclosure document or other document or report, and will reimburse such Covered Person for any legal or any other expenses incurred by it (as such expenses are incurred) in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided, however, that neither the Company nor any of its subsidiaries shall be liable to any Covered Person in any such case to the extent that any such loss, claim, damage, liability, action or proceeding arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement, incorporated document or other such disclosure document or other document or report, in reliance upon and in conformity with written information furnished to the Company or to any of its subsidiaries through an instrument duly executed by such Covered Person specifically stating that it is for use in the preparation thereof. The indemnities of the Company and of its subsidiaries contained in this Section 2.4(a) shall remain in full force and effect regardless of any investigation made by or on behalf of such Covered Person and shall survive any transfer of securities.
(b) Indemnities to the Company . The Company and any of its subsidiaries may require, as a condition to including any securities in any registration statement filed pursuant to this Section 2, that the Company and any of its subsidiaries shall have received an undertaking satisfactory to it from the prospective seller of such securities (provided, that, under no circumstance shall the request for delivery of such undertaking toll or otherwise extend the period of time which the Company has to comply with requests pursuant to Sections 2.1 or 2.2 of this Agreement) , to indemnify and hold harmless the Company and any of its subsidiaries, each director of the Company or any of its subsidiaries, each officer of the Company or any of its subsidiaries who shall sign such registration statement and each other Person (other than such seller), if any, who controls the Company and any of its subsidiaries within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each other prospective seller of such securities with respect to any statement in or omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus included therein, or any amendment or supplement thereto, or any other disclosure document (including, without limitation, reports and other documents filed under the Exchange Act or any document incorporated therein) or other document or report, if such statement or omission was made in reliance upon and in conformity with written information furnished by such seller to the Company or any of its subsidiaries through an instrument executed by such seller specifically stating that it is for use in the preparation of such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement, incorporated document or other document or report. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company, any of its subsidiaries or any such director, officer or controlling Person and shall survive any transfer of securities.
(c) Contribution . If the indemnification provided for in Sections 2.4(a) or 2.4(b) hereof is unavailable to a party that would have been entitled to indemnification pursuant to the foregoing provisions of this Section 2.4 (an “ Indemnitee ”) in respect of any losses, claims, damages or liabilities (or actions or
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proceedings in respect thereof) referred to therein other than for a reason set forth therein, then each party that would have been an indemnifying party thereunder shall, in lieu of indemnifying such Indemnitee, contribute to the amount paid or payable by such Indemnitee as a result of such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative fault of such indemnifying party on the one hand and such Indemnitee on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions or proceedings in respect thereof). 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 such indemnifying party or such Indemnitee and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just or equitable if contribution pursuant to this Section 2.4(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the preceding sentence. The amount paid or payable by a contributing party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this Section 2.4(c) shall include any legal or other expenses reasonably incurred by such Indemnitee in connection with investigating or defending any such action or claim. 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.
(d) Limitation on Liability of Holders of Registrable Securities . The liability of each holder of Registrable Securities in respect of any indemnification or contribution obligation of such holder arising under this Section 2.4 shall not in any event exceed an amount equal to the net proceeds to such holder (after deduction of all underwriters’ discounts and commissions) from the disposition of the Registrable Securities disposed of by such holder pursuant to such registration.
2.5 Termination of Registration Rights .
The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Section 2 shall terminate upon the earliest to occur of: (a) the closing of a Deemed Liquidity Event; (b) such time as Rule 144 or another similar exemption under the Securities Act is available for the sale of all of such Holder’s shares without limitation during a three-month period without registration; and (c) the third anniversary of the Initial Public Offering.
2.6 Expenses of Registration .
All expenses incident to the Company’s performance of or compliance with this Agreement, including without limitation all registration and filing fees, fees and expenses relating to filings with any exchange, fees and expenses of compliance with securities or “blue sky” laws (including reasonable fees and disbursements of counsel in connection with “blue sky” qualifications of the Registrable Securities), all word processing, duplicating and printing expenses, messenger and delivery expenses, fees and disbursements of counsel for the Company and the Investor, one counsel for the other stockholders (up to a maximum of fifty thousand dollars ($50,000) per Public Offering), independent public accountants (including the expenses of any special audit or “cold comfort” letters required by or incident to such performance) and underwriters (excluding discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals attributable to the securities being registered, which discounts, commissions or fees with respect to any stockholder’s respective shares shall be paid by such stockholder), all of the Company’s internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, the expense of any liability insurance (if the Company determines to obtain such insurance) and the fees and expenses incurred in connection with the listing of the securities to be registered on any exchange on which such securities issued
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by the Company are then listed, the reasonable fees and expenses of any special experts (including attorneys) retained by the Company (if it so desires) in connection with such registration and fees and expenses of other persons retained by the Company, shall be borne by the Company.
Each Holder of Registrable Securities shall furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification, or compliance referred to in this Section 2.
(a) The rights of a Holder hereunder may be assigned (but only with all related obligations as set forth below) in connection a transfer of Registrable Securities to a Permitted Transferee of that Holder. Without prejudice to any other or similar conditions imposed hereunder with respect to any such transfer, no assignment permitted under the terms of this Section 2.8 will be effective unless the Permitted Transferee to which the assignment is being made, if not a Holder, has delivered to the Company a written acknowledgement and agreement in form and substance reasonably satisfactory to the Company that the Permitted Transferee will be bound by, and will be a party to, this Agreement. A Permitted Transferee to whom rights are transferred pursuant to this Section 2.8 may not again transfer those rights to any other Permitted Transferee, other than as provided in this Section 2.8.
(b) The holder of Registrable Securities, by acceptance of ownership thereof, agrees to comply in all respects with the provisions of this Section 2.8. Each Holder agrees not to make any sale, assignment, transfer, pledge or other disposition of all or any portion of the Restricted Securities, or any beneficial interest therein, unless and until:
(i) There is then in effect a registration statement under the Securities Act covering such proposed disposition and the disposition is made in accordance with the registration statement; or
(ii) The Holder shall have given prior written notice to the Company of the Holder’s intention to make such disposition and shall have furnished the Company with a detailed description of the manner and circumstances of the proposed disposition, and the Holder shall have furnished the Company, at the Holder’s expense, with (i) an opinion of counsel reasonably satisfactory to the Company to the effect that such disposition will not require registration of such Restricted Securities under the Securities Act or (ii) a “no action” letter from the Commission to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the holder of such Restricted Securities shall be entitled to transfer such Restricted Securities in accordance with the terms of the notice delivered by the Holder to the Company.
(c) Notwithstanding the provisions of Section 2.9(a), no such registration statement, opinion of counsel or “no action” letter shall be necessary for (i) a transfer not involving a change in beneficial ownership, or (ii) transactions involving the distribution without consideration of Restricted Securities by any Holder to (x) an affiliate of the Holder, if the Holder is a corporation or (y) any of the Holder’s partners, members or other equity owners, or retired partners, retired members or other equity owners, or to the estate of any of the Holder’s partners, members or other equity owners or retired partners, retired members or other equity owners; provided , in each case, that the Holder shall give written notice to the Company of the Holder’s intention to effect such disposition and shall have furnished the Company with a detailed description of the manner and circumstances of the proposed disposition.
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(d) Each certificate, instrument or book entry representing Registrable Securities shall (unless otherwise permitted by the provisions of this Agreement) be notated with a legend substantially similar to the following (in addition to any legend required under applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE, INCLUDING A LOCK-UP PERIOD IN THE EVENT OF A PUBLIC OFFERING, AS SET FORTH IN A REGISTRATION RIGHTS AGREEMENT, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY.
(e) The first legend referring to federal and state securities laws identified in Section 2.8(c) notated on any certificate evidencing the Restricted Securities and the stock transfer instructions and record notations with respect to the Restricted Securities shall be removed, and the Company shall issue a certificate without such legend to the holder of Restricted Securities (to the extent the securities are certificated), if (i) those securities are registered under the Securities Act, or (ii) the holder provides the Company with an opinion of counsel reasonably acceptable to the Company to the effect that a sale or transfer of those securities may be made without registration, qualification or legend.
(f) The Company shall not be obligated to recognize any attempted sale, assignment, transfer, pledge or other disposition of all or any portion of the Restricted Securities, or any beneficial interest therein, made other than in compliance with the terms and conditions of this Agreement. The Holders consent to the Company making a notation on its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer established in this Agreement.
2.9 Rule 144 Reporting .
With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Restricted Securities to the public without registration, the Company agrees to use its commercially reasonable efforts to:
(a) Make and keep adequate current public information with respect to the Company available in accordance with Rule 144 under the Securities Act, at all times from and after ninety (90) days following the effective date of the first registration under the Securities Act filed by the Company for an offering of its securities to the general public;
(b) File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act at any time after it has become subject to such reporting requirements; and
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(c) So long as a Holder owns any Restricted Securities, furnish to the Holder forthwith upon written request a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time from and after ninety (90) days following the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration.
No Holder shall have any right to take any action to restrain, enjoin, or otherwise delay any registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.
Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Agreement and signed by (a) the Company, (b) the Class A Holders holding a majority of the Registrable Securities held by all Class A Holders, and (c) the Class T Holders holding a majority of the Registrable Securities held by all Class A Holders. Any such amendment, waiver, discharge or termination effected in accordance with this paragraph shall be binding upon each Holder and each future holder of all such securities of Holder.
All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand, messenger or courier service addressed:
(a) if to an Investor, to the Investor’s address, facsimile number or electronic mail address as shown in the Company’s records, as may be updated in accordance with the provisions hereof;
(b) if to any Holder, to such address, facsimile number or electronic mail address as shown in the Company’s records, or, until any such Holder so furnishes an address, facsimile number or electronic mail address to the Company, then to the address of the last holder of such shares for which the Company has contact information in its records; or
(c) if to the Company, to the attention of the Chief Executive Officer or Chief Financial Officer of the Company at 16800 Edwards Road, Cerritos, California 90703, or at such other current address as the Company shall have furnished to the Investors or Holders, with a copy (which shall not constitute notice) to Michael Nordtvedt, Wilson Sonsini Goodrich & Rosati, P.C., 701 Fifth Avenue, Suite 5100, Seattle, Washington 98104.
Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day
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delivery, one business day after deposit with the courier) , or (ii) if sent via mail, at the earlier of its receipt or five days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via facsimile, upon confirmation of facsimile transfer or, if sent via electronic mail, when directed to the relevant electronic mail address , if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day .
Subject to the limitations set forth in Delaware General Corporation Law §232(e), each Investor and Holder consents to the delivery of any notice to stockholders given by the Company under the Delaware General Corporation Law or the Company’s certificate of incorporation or bylaws by (i) facsimile telecommunication to any facsimile number for the Investor or Holder in the Company’s records), (ii) electronic mail to the electronic mail address for the Investor or Holder in the Company’s records), (iii) posting on an electronic network together with separate notice to the Investor or Holder of such specific posting or (iv) any other form of electronic transmission (as defined in the Delaware General Corporation Law) directed to the Investor or Holder. This consent may be revoked by an Investor or Holder by written notice to the Company and may be deemed revoked in the circumstances specified in Delaware General Corporation Law §232.
This Agreement shall be governed in all respects by the internal laws of the State of Delaware as applied to agreements entered into among Delaware residents to be performed entirely within Delaware, without regard to principles of conflicts of law.
Except as set forth in section 2.8, this Agreement, and any and all rights, duties and obligations hereunder, shall not otherwise be assigned, transferred, delegated or sublicensed by any Investor without the prior written consent of the Company. Any attempt by an Investor without such permission to assign, transfer, delegate or sublicense any rights, duties or obligations that arise under this Agreement shall be void. Subject to the foregoing and except as otherwise provided herein, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
This Agreement and the exhibits hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof. No party hereto shall be liable or bound to any other party in any manner with regard to the subjects hereof or thereof by any warranties, representations or covenants except as specifically set forth herein.
Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party to this Agreement upon any breach or default of any other party under this Agreement shall impair any such right, power or remedy of such non-defaulting party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of
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any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party to this Agreement, shall be cumulative and not alternative.
If any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Agreement, and such court will replace such illegal, void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, void or unenforceable provision. The balance of this Agreement shall be enforceable in accordance with its terms.
The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. All references in this Agreement to sections, paragraphs and exhibits shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits attached hereto.
This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties that execute such counterparts, and all of which together shall constitute one instrument.
3.10 Telecopy Execution and Delivery .
A facsimile, telecopy or other reproduction of this Agreement may be executed by one or more parties hereto and delivered by such party by facsimile or any similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen. Such execution and delivery shall be considered valid, binding and effective for all purposes. At the request of any party hereto, all parties hereto agree to execute and deliver an original of this Agreement as well as any facsimile, telecopy or other reproduction hereof.
Each of the parties hereto hereby submits and consents irrevocably to the exclusive jurisdiction of the courts of the State of Delaware and the United States District Court for the District of Delaware for the interpretation and enforcement of the provisions of this Agreement. Each of the parties hereto also agrees that the jurisdiction over the person of such parties and the subject matter of such dispute shall be effected by the mailing of process or other papers in connection with any such action in the manner provided for in Section 3.2 or in such other manner as may be lawful, and that service in such manner shall constitute valid and sufficient service of process.
Each party hereto agrees to execute and deliver, by the proper exercise of its corporate, limited liability company, partnership or other powers, all such other and additional instruments and documents and do all such other acts and things as may be necessary to more fully effectuate this Agreement.
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In the event of any conflict between the terms of this Agreement and the Company’s certificate of incorporation or its bylaws, the terms of the Company’s certificate of incorporation or its bylaws, as the case may be, will control.
All securities held or acquired by Affiliates shall be aggregated together for purposes of determining the availability of any rights under this Agreement.
( signature page follows )
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The parties are signing this Investors’ Rights Agreement as of the date stated in the introductory clause.
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REVOLVE GROUP, INC. a Delaware corporation |
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( Signature page to the Registration Rights Agreement )
The parties are signing this Registration Rights Agreement as of the date stated in the introductory clause.
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INVESTOR : |
TSG Eminent Holdings, L.P. |
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By: |
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Name: |
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( Signature page to the Registration Rights Agreement )
The parties are signing this Registration Rights Agreement as of the date stated in the introductory clause.
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MMMK DEVELOPMENT, INC. |
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By: |
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Name: Nancy Herrman |
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Title: President |
( Signature page to the Registration Rights Agreement )
The parties are signing this Registration Rights Agreement as of the date stated in the introductory clause.
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CAPRETTO : |
CAPRETTO LLC |
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By: |
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Name: Elyse Walker |
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Title: Member |
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By: |
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Name: David Walker |
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Title: Member |
( Signature page to the Registration Rights Agreement )
The parties are signing this Registration Rights Agreement as of the date stated in the introductory clause.
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L+F STOCKHOLDERS : |
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Raissa Gerona |
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Candace Lee |
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Michael Mente |
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Mitch Moseley |
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Son Nguyen |
( Signature page to the Registration Rights Agreement )
SCHEDULE A
MMMK Development, Inc.
Raissa Gerona
Candace Lee
Michael Mente
Mitch Moseley
Son Nguyen
SCHEDULE B
Capretto LLC
TSG Eminent Holdings, L.P.
Exhibit 10.3
ADVANCE HOLDINGS, LLC
2013 EQUITY INCENTIVE PLAN
1. DEFINED TERMS
Exhibit A , which is incorporated by reference, defines the terms used in the Plan and sets forth certain operational rules related to those terms.
2. PURPOSE
The Plan has been established to advance the interests of the Company by providing for the grant to Participants of Unit-based and other incentive Awards.
3. ADMINISTRATION
The Administrator has discretionary authority, subject only to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions of any Award; prescribe forms, rules and procedures; and otherwise do all things necessary to carry out the purposes of the Plan. Determinations of the Administrator made under the Plan will be conclusive and will bind all parties.
4. LIMITS ON AWARDS UNDER THE PLAN
(a) Number of Units . A maximum number of 138,500,000 Class A Units of the Company (“Units”) may be delivered in satisfaction of Awards under the Plan. The number of Units delivered in satisfaction of Awards, for purposes of the preceding sentence, will be determined net of Units withheld by the Company in payment of the exercise price of the Award or in satisfaction of tax withholding requirements with respect to the Award and, for the avoidance of doubt, without including any Units underlying Awards that are settled in cash, that otherwise expire or become unexercisable without having been exercised, or that are forfeited to or repurchased by the Company for cash due to the failure to vest.
5. ELIGIBILITY AND PARTICIPATION
The Administrator will select Participants from among those key Employees and directors, and consultants and advisors to the Company and its subsidiaries who, in the opinion of the Administrator, are in a position to make a significant contribution to the success of the Company and its subsidiaries. Eligibility for Options is limited to individuals described in the first sentence of this Section 5 who are providing direct services on the date of grant of the Option to the Company or to a subsidiary of the Company that would be described in the first sentence of Treas. Regs. §1.409A-1(b)(5)(iii)(E).
(a) All Awards.
(1) Award Provisions . The Administrator will determine the terms of all Awards, subject to the limitations provided herein. By accepting (or, under such rules as the Administrator may prescribe, being deemed to have accepted) an Award, the Participant shall be deemed to have agreed to the terms of the Award, the Plan, and the Advance Holdings, LLC Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”). Notwithstanding any provision of this Plan to the contrary, awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition may contain terms and conditions that are inconsistent with the terms and conditions specified herein, as determined by the Administrator.
(2) Term of Plan . No Awards may be made after December 31, 2022, but previously granted Awards may continue beyond that date in accordance with their terms.
(3) Transferability . Awards, except as the Administrator otherwise expressly provides, may not be transferred other than by will or by the laws of descent and distribution, and in no event may the Participant pledge, create a security interest in or lien on, or in any way encumber any Award.
(4) Vesting; Repurchase Rights.
(A) Vesting
i) The Administrator may determine the time or times at which an Award will vest or become exercisable and the terms on which an Award requiring exercise will remain exercisable. Without limiting the foregoing, the Administrator may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax or other consequences resulting from such acceleration. Unless the Administrator expressly provides otherwise, however, the following rules will apply if a Participant’s Employment or other service relationship ceases:
ii) Immediately upon the cessation of the Participant’s Employment or services relationship, each Award requiring exercise that is then held by the Participant will cease to be exercisable and will terminate, except to the extent otherwise provided in (iii) or (iv) below, and all other Awards that are then held by the Participant, to the extent not already vested will be forfeited.
iii) All Options and IARs held by a Participant immediately prior to termination of the Participant’s Employment or other service relationship by the Company other than for Cause or for death or Disability, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of 60 days, or (ii) the period ending on the latest date on which such Option or IAR could have been exercised without regard to this Section 6(a)(4), and will thereupon automatically and immediately terminate without any consideration due to the Participant.
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iv) All Options and IARs held by a Participant immediately prior to termination of the Participant’s Employment or other service relationship as a result of Participant’s death or Disability and other than for Cause, to the extent then exercisable, will remain exercisable for 6 months, or such longer period of time as is specified in the Award agreement (but in no event later than the expiration of the term of such Option as set forth in the Award agreement) , and will thereupon automatically and immediately terminate without any consideration due to the Participant.
v) All Options and IARs held by a Participant immediately prior to the cessation of the Participant’s Employment or other service relationship will automatically and immediately terminate upon such cessation without any consideration due to the Participant if the Participant’s Employment or other service relationship is terminated in connection with an act or failure to act constituting Cause (or such Participant’s Employment or other service relationship could have been terminated for Cause (without regard to the lapsing of any required notice or cure periods in connection therewith) at the time such Participant terminated Employment or other service relationship).
(B) Repurchase Rights
i) Upon the cessation of the Participant’s Employment or other services relationship for any reason, any then outstanding vested Award (and any Units issued upon exercise of any Awards) will be subject to repurchase by the Company pursuant to the terms and conditions set forth in this Section 6(a)(4)(B). The Company’s opportunity to repurchase an Award or Units pursuant to this Section 6(a)(4)(B) is referred to herein as the “ Repurchase Option ” and all or any portion of any such outstanding and vested Award (or Units issued upon exercise of any Awards) that the Company elects to repurchase hereunder, as applicable, is referred to herein individually as the “ Repurchase Award ” and collectively the “ Repurchase Awards .”
ii) Upon the cessation of the Participant’s Employment or other service relationship for any reason, the Company may elect, until the later of 60 days from the date of termination or 60 days following the date that is 6 months and 1 day after the Participant exercised the applicable Option or IAR, to purchase the Repurchase Awards. If the Participant’s Employment or other service relationship is voluntarily terminated by the Participant, or terminated by the Company without Cause, the Repurchase Awards will be purchased at a price equal to the aggregate fair market value of the Units subject to such Repurchase Award (as determined in good faith by the Administrator) minus the aggregate exercise price of such Units in the event of the repurchase of an unexercised Award (such amount, the “ Repurchase Amount ”). If the Participant’s Employment or other service relationship is involuntarily terminated for Cause the
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Repurchase Amount will be the lesser of fair market value at the time of termination or the exercise price paid by the Participant. In the event that a repurchase of Awards or Units pursuant to this Section 6(a)(4)(B) would result in no consideration paid to the Participant, the Participant’s Awards or Units, as applicable, will be automatically forfeited with no further action on the part of the Company.
iii) The Company shall elect to exercise the Repurchase Option by delivering written notice during the period specified above (the “ Repurchase Notice ”) to the Participant of the applicable Repurchase Awards (or its permitted transferee). The Repurchase Notice will include (a) the Administrator’s determination of fair market value, (b) the resulting calculation of the Repurchase Amount and (c) if applicable, a check for the Repurchase Amount, or at the option of the Company, the issuance to the Participant of a promissory note in the aggregate principal amount of the Repurchase Amount, the principal amount of which note will be due and payable upon a Company Sale and prepayable in whole or in part from time to time without premium or penalty at the option of the Company, and interest will accrue thereon at a rate equal to the applicable federal rate and be payable annually in arrears, in each case subject to the provisions of this Section 6(a)(4)(B). Following such payment hereunder, the Participant will have no further rights under the Plan.
iv) In the event that the Company has exercised the Repurchase Option pursuant to this Section 6(a)(4)(B) and has paid the Repurchase Amount and thereafter the Participant breaches any agreement with the Company or its Affiliates with respect to non-competition, non-solicitation or confidentiality, the Participant will be obligated to deliver to the Company, within 5 days following notice from the Company that such amount is due, the Repurchase Amount paid by the Company for the Repurchase Awards, in the case of an Award requiring exercise, to the extent the Repurchase Amount exceeded the Exercise Price.
(5) Competing Activity . The Administrator may cancel, rescind, withhold or otherwise limit or restrict any Award at any time if the Participant is not in compliance with all applicable provisions of the Award agreement, the Plan, and such Participant’s employment agreement or if the Participant breaches any agreement with the Company or its Affiliates with respect to non-competition, non-solicitation or confidentiality, including without limitation, such Participant’s employment agreement with the Company or its Affiliates.
(6) Taxes . The delivery, vesting and retention of under an Award are conditioned upon full satisfaction by the Participant of all tax withholding requirements with respect to the Award. The Administrator will prescribe such rules for the withholding of taxes as it deems necessary. The Administrator may, but need not, hold back Units from an Award or permit a Participant to tender previously owned Units in satisfaction of tax withholding requirements (but not in excess of the amount required to be withheld by law or such greater amount as the Administrator may determine if such amount would not have adverse accounting consequences, as the Administrator determines in its sole discretion).
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(7) Rights Limited . Nothing in the Plan will be construed as giving any person the right to continued employment or service with the Company or its Affiliates, or any rights as an equity holder except as to Units actually issued under the Plan. The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of Employment other service relationship for any reason, even if the termination is in violation of an obligation of the Company or any Affiliate to the Participant.
(8) Coordination with Other Plans . Awards under the Plan may be granted in tandem with, or in satisfaction of or substitution for, other Awards under the Plan or awards made under other compensatory plans or programs. For example, but without limiting the generality of the foregoing, awards under other compensatory plans or programs of the Company or its subsidiaries may be settled in Units (including, without limitation, Unrestricted Units) if the Administrator so determines, in which case the Units delivered will be treated as awarded under the Plan (and will reduce the number of Units thereafter available under the Plan in accordance with the rules set forth in Section 4).
(9) Section 409A . Each Award may contain such terms as the Administrator determines, and shall be construed and administered, such that the Award either (i) qualifies for an exemption from the requirements of Section 409A, or (ii) satisfies such requirements.
(10) Certain Requirements of Corporate Law . Awards shall be granted and administered consistent with the requirements of applicable Delaware law relating to the issuance of Units and the consideration to be received therefor, and with the applicable requirements of the stock exchanges or other trading systems on which the Units is listed or entered for trading, in each case as determined by the Administrator.
(b) Awards Requiring Exercise.
(1) Time And Manner Of Exercise . Unless the Administrator expressly provides otherwise, an Award requiring exercise by the holder will not be deemed to have been exercised until the Administrator receives a notice of exercise (in form acceptable to the Administrator), which may be an electronic notice, signed (including electronic signature in form acceptable to the Administrator) by the appropriate person and accompanied by any payment required under the Award. If the Award is exercised by any person other than the Participant, the Administrator may require satisfactory evidence that the person exercising the Award has the right to do so.
(2) Exercise Price . The exercise price (or the base value from which appreciation is to be measured) of each Award requiring exercise will be 100% of the fair market value of the Units subject to the Award, determined as of the date of grant, or such higher amount as the Administrator may determine in connection with the grant. Awards, once granted, may be repriced only in accordance with the applicable requirements of this Plan.
(3) Payment Of Exercise Price . Where the exercise of an Award is to be accompanied by payment, payment of the exercise price shall be by cash or check acceptable to the Administrator, or, if so permitted by the Administrator and if legally permissible, (i) through the delivery of unrestricted Units that have a fair market value equal to the exercise price, subject
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to such minimum holding period requirements, if any, as the Administrator may prescribe, (ii) by other means acceptable to the Administrator, or (iii) by any combination of the foregoing permissible forms of payment. No Award requiring exercise or portion thereof may be exercised unless, at the time of exercise, the fair market value of the Units subject to such Award or portion thereof exceeds the exercise price for the Award or such portion. The delivery of Units in payment of the exercise price under clause (i) above may be accomplished either by actual delivery or by constructive delivery through attestation of ownership, subject to such rules as the Administrator may prescribe.
(4) Maximum Term . Awards requiring exercise will have a maximum term not to exceed 10 years from the date of grant.
(5) Conditions Of Exercise . It shall be a condition to the delivery of Units under any Award that the Participant execute and be bound by all terms and conditions of the LLC Agreement.
7. EFFECT OF CERTAIN TRANSACTIONS
(a) Mergers, etc . Except as otherwise provided in an Award, the Administrator shall, in its sole discretion, determine the effect of a Covered Transaction on Awards, which determination may include, but is not limited to, taking the following actions:
(1) Assumption or Substitution . If the Covered Transaction is one in which there is an acquiring or surviving entity, the Administrator may provide for the assumption or continuation of some or all outstanding Awards or for the grant of new awards in substitution therefor by the acquiror or survivor or an affiliate of the acquiror or survivor.
(2) Cash-Out of Awards . If the Covered Transaction is one in which holders of Units will receive upon consummation a payment (whether cash, non-cash or a combination of the foregoing), then subject to Section 7(a)(5) below the Administrator may provide for payment (a “cash-out”), with respect to some or all Awards or any portion thereof, equal in the case of each affected Award or portion thereof to the excess, if any, of (A) the fair market value of one Unit (as determined by the Administrator in its reasonable discretion) times the number of Units subject to the Award or such portion, over (B) the aggregate exercise or purchase price, if any, under the Award or such portion (in the case of an IAR, the aggregate base value above which appreciation is measured), in each case on such payment terms (which need not be the same as the terms of payment to holders of Units) and other terms, and subject to such conditions, as the Administrator determines; provided, that the Administrator may not exercise its discretion under this Section 7(a)(2) with respect to an Award or portion thereof providing for “nonqualified deferred compensation” subject to Section 409A in a manner that would constitute an extension or acceleration of, or other change in, payment terms if such change would be inconsistent with the applicable requirements of Section 409A.
(3) Acceleration of Certain Awards . The Administrator may provide that each Award requiring exercise will become fully exercisable, and the delivery of any Units remaining deliverable under each outstanding Award of Units (including Restricted Incentive Units and Performance Awards to the extent consisting of Units) will be accelerated and such
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Units will be delivered, prior to the Covered Transaction, in each case on a basis that gives the holder of the Award a reasonable opportunity, as determined by the Administrator, following exercise of the Award or the delivery of the Units, as the case may be, to participate as an equity holder in the Covered Transaction; provided, that to the extent acceleration pursuant to this Section 7(a)(3) of an Award subject to Section 409A would cause the Award to fail to satisfy the requirements of Section 409A, the Award may not be accelerated and the Administrator in lieu thereof may take such steps as are necessary to ensure that payment of the Award is made in a medium other than Units and on terms that as nearly as possible, but taking into account adjustments required or permitted by this Section 7, replicate the prior terms of the Award.
(4) Termination of Awards Upon Consummation of Covered Transaction . Each Award will terminate upon consummation of the Covered Transaction, other than the following: (i) Awards assumed pursuant to Section 7(a)(1) above; (ii) Awards converted pursuant to the proviso in Section 7(a)(3) above into an ongoing right to receive payment other than in Units (but only to the extent of such right); and (iii) outstanding Restricted Incentive Units (which will be treated in the same manner as other Units, subject to Section 7(a)(5) below).
(5) Additional Limitations . Any Unit and any cash or other property delivered pursuant to Section 7(a)(2) or Section 7(a)(3) above with respect to an Award may, in the discretion of the Administrator, contain such restrictions, if any, as the Administrator deems appropriate to reflect any performance or other vesting conditions to which the Award was subject and that did not lapse (and were not satisfied) in connection with the Covered Transaction. For purposes of the immediately preceding sentence, a cash-out under Section 7(a)(2) above or the acceleration of exercisability of an Award under Section 7(a)(3) above shall not, in and of itself, be treated as the lapsing (or satisfaction) of a performance or other vesting condition. In the case of Restricted Units that do not vest in connection with the Covered Transaction, the Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of such Units in connection with the Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Administrator deems appropriate to carry out the intent of the Plan.
(b) Changes in and Distributions With Respect to Units.
(1) Basic Adjustment Provisions . In the event of a dividend, split or combination of Units (including a reverse split), recapitalization or other change in the Company’s capital structure that constitutes an equity restructuring within the meaning of ASC Topic 718, the Administrator shall make appropriate adjustments to the maximum number of Units specified in Section 4(a) that may be delivered under the Plan and shall also make appropriate adjustments to the number and kind of Units or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by such change.
(2) Certain Other Adjustments . The Administrator may also make adjustments of the type described in Section 7(b)(1) above to take into account distributions to equity holders other than those provided for in Section 7(a) and 7(b)(1), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan and to preserve the value of Awards made hereunder, where applicable.
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(3) Continuing Application of Plan Terms . References in the Plan to Units will be construed to include any equity interests or securities resulting from an adjustment pursuant to this Section 7.
8. LEGAL CONDITIONS ON DELIVERY OF UNITS
The Company will not be obligated to deliver any Units pursuant to the Plan or remove any restriction from Units previously delivered under the Plan until: (i) the Company is satisfied that all legal matters in connection with the issuance and delivery of such Units have been addressed and resolved; (ii) if the outstanding Units are at the time of delivery listed on any stock exchange or national market system, the Units to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance; and (iii) all conditions of the Award have been satisfied or waived. If the sale of Units has not been registered under the Securities Act, the Company may require, as a condition to exercise of the Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of the Securities Act or any applicable state or foreign securities laws. The Company may require that certificates evidencing Units issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Units, and the Company may hold the certificates pending lapse of the applicable restrictions.
9. AMENDMENT AND TERMINATION
The Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, and may at any time terminate the Plan as to any future grants of Awards; provided, that except as otherwise expressly provided in the Plan the Administrator may not, without the Participant’s consent, alter the terms of an Award so as to affect materially and adversely the Participant’s rights under the Award, unless the Administrator expressly reserved the right to do so at the time the Award was granted. Any amendments to the Plan will be conditioned upon equity holder approval only to the extent, if any, such approval is required by law (including the Code), as determined by the Administrator.
10. OTHER COMPENSATION ARRANGEMENTS
The existence of the Plan or the grant of any Award will not in any way affect the Company’s right to Award a person bonuses or other compensation in addition to Awards under the Plan.
11. MISCELLANEOUS
(a) Arbitration . Any dispute, controversy or claim arising out of or relating to the Plan or any Award, the breach, termination, enforcement, interpretation, or validity thereof (including the determination of the scope or applicability of this arbitration agreement), or its subject matter shall be settled by binding arbitration administered by a single arbitrator from the American Arbitration Association selected by the Company and to which the Participant has no reasonable objection. Such arbitration shall be conducted in accordance with the commercial rules and regulations promulgated by the American Arbitration Association applying the Laws of the State of Delaware. The arbitration shall be conducted in Los Angeles, California. The decision of the arbitrator shall be final and unappealable, and judgment on the arbitration award may be entered in any court having jurisdiction thereof.
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(b) Limitation of Liability . Notwithstanding anything to the contrary in the Plan, neither the Company, nor any Affiliate, nor the Administrator, nor any person acting on behalf of the Company, any Affiliate, or the Administrator, will be liable to any Participant or to the estate or beneficiary of any Participant or to any other holder of an Award by reason of any acceleration of income, or any additional tax (including any interest and penalties), asserted by reason of the failure of an Award to satisfy the requirements of Section 409A or by reason of Section 4999 of the Code, or otherwise asserted with respect to the Award; provided, that nothing in this Section 11(b) will limit the ability of the Administrator or the Company, in its discretion, to provide by separate express written agreement with a Participant for a gross-up payment or other payment in connection with any such acceleration of income or additional tax.
12. ESTABLISHMENT OF SUB-PLANS
The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable blue sky, securities or tax laws of various jurisdictions. The Board will establish such sub-plans by adopting supplements to the Plan setting forth (i) such limitations on the Administrator’s discretion under the Plan as the Board deems necessary or desirable and (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board deems necessary or desirable. All supplements adopted by the Board will be deemed to be part of the Plan, but each supplement will apply only to Participants within the affected jurisdiction and the Company will not be required to provide copies of any supplement to Participants in any jurisdiction that is not affected.
13. GOVERNING LAW
Except as otherwise provided by the express terms of an Award agreement or under a sub-plan described in Section 12, the provisions of the Plan and of Awards under the Plan and all claims or disputes arising out of our based upon the Plan or any Award under the Plan or relating to the subject matter hereof or thereof will be governed by and construed in accordance with the domestic substantive laws of the State of Delaware without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction.
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Definition of Terms
The following terms, when used in the Plan, will have the meanings and be subject to the provisions set forth below:
“Administrator”: The Board, except that the Board may delegate its authority under the Plan to a committee of the Board (or one or more members of the Board), in which case references herein to the Board will refer to such committee (or members of the Board). The Board may delegate (i) to one or more of its members such of its duties, powers and responsibilities as it may determine; (ii) to one or more officers of the Company the power to grant rights or options; and (iii) to such Employees or other persons as it determines such ministerial tasks as it deems appropriate. In the event of any delegation described in the preceding sentence, the term “Administrator” will include the person or persons so delegated to the extent of such delegation.
“Affiliate” : With respect to any other Person, means any Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, the Company (for the purposes of this definition, “control,” including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the Company, whether through the ownership of voting securities, by agreement or otherwise).
“Award”: Any or a combination of the following:
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(i) |
Options. |
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(ii) |
IARs. |
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(iii) |
Restricted Units. |
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(iv) |
Unrestricted Units. |
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(v) |
Units, including Restricted Incentive Units. |
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(vi) |
Performance Awards. |
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(vii) |
Awards (other than Awards described in (i) through (vi) above) that are convertible into or otherwise based on Units. |
“Board”: The Board of Managers of the Company.
“Cause”: In the case of any Participant who is party to an employment or severance-benefit agreement that contains a definition of “Cause,” the definition set forth in such agreement will apply with respect to such Participant under the Plan for so long as such agreement is in effect. In the case of any other Participant, “Cause” will mean (i) a material breach by the
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Participant of the Participant’s duties and responsibilities, or (ii) breach by the Participant of any restrictive covenant in favor of the Company or any Affiliate, or (iii) the commission by the Participant of a felony or any other crime involving moral turpitude, or (iv) the commission by the Participant of theft, fraud, embezzlement, material breach of trust or any material act of dishonesty involving the Company or any of its subsidiaries, or (iii) a significant violation by the Participant of the code of conduct of the Company or its subsidiaries or of any statutory or common law duty of loyalty to the Company or its subsidiaries.
“Code”: The U.S. Internal Revenue Code of 1986 as from time to time amended and in effect, or any successor statute as from time to time in effect.
“Company”: Advance Holdings, LLC, a Delaware limited liability company.
“Covered Transaction”: Any of (i) a sale of all or substantially all of the Company’s and its subsidiaries’ assets, taken as a whole, to any Person (other than one of the equity holders of the Company or any Affiliate of any equity holder of the Company) or (ii) any other transaction, whether by sale of equity interests, sale of assets, merger, recapitalization, reorganization or otherwise, pursuant to which one or more Persons (other than one of the equity holders of the Company or any Affiliate of any equity holder of the Company) shall directly or indirectly own 50% or more of the voting Units, in each case in a single transaction or series of related transactions, or (iii) a dissolution or liquidation of the Company, in each case, except as otherwise determined by the Administrator. Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (i) (as determined by the Administrator), the Covered Transaction will be deemed to have occurred upon consummation of the tender offer.
“Disability”: Total and permanent disability as defined in Code Section 22(e)(3), provided that the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.
“Employee”: Any person who is employed by the Company or by a subsidiary of the Company.
“Employment”: A Participant’s employment or other service relationship with the Company and its subsidiaries. Employment will be deemed to continue, unless the Administrator expressly provides otherwise, so long as the Participant is employed by to the Company or one of its subsidiaries or a Separation from Services occurs. If a Participant’s employment or other service relationship is with a subsidiary and that entity ceases to be a subsidiary of the Company, the Participant’s Employment will be deemed to have terminated when the entity ceases to be a subsidiary of the Company unless the Participant transfers Employment to the Company or one of its remaining subsidiaries. Notwithstanding the foregoing, in construing the provisions of any Award constituting “nonqualified deferred compensation” upon a termination or cessation of Employment or other service relationship, references to termination or cessation of employment, separation from service, retirement or similar or correlative terms shall be construed to require a “separation from service” (as that term is defined in Section 1.409A-1(h) of the Treasury Regulations) from the Company and from all other corporations and trades or businesses, if any,
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that would be treated as a single “service recipient” with the Company under Section 1.409A-1(h)(3) of the Treasury Regulations. The Company may, but need not, elect in writing, subject to the applicable limitations under Section 409A, any of the special elective rules prescribed in Section 1.409A-1(h) of the Treasury Regulations for purposes of determining whether a “separation from service” has occurred. Any such written election shall be deemed a part of the Plan.
“IAR”: A right entitling the holder upon exercise to receive an amount (payable in cash or in Units of equivalent value) equal to the excess of the fair market value of the Units subject to the right over the base value from which appreciation under the IAR is to be measured.
“Incentive Unit” : An unfunded and unsecured promise, denominated in Units, to deliver Units or cash measured by the value of Units in the future.
“Option”: An option entitling the holder to acquire Units upon payment of the exercise price.
“Participant”: A person who is granted an Award under the Plan.
“Performance Award” : An Award subject to specified criteria, other than the mere continuation of Employment or the mere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of the Award.
“Plan”: The Advance Holdings, LLC 2013 Equity Incentive Plan as from time to time amended and in effect.
“Restricted Incentive Units”: A Unit that is, or as to which the delivery of Units or cash in lieu of Units is, subject to the satisfaction of specified performance or other vesting conditions.
“Restricted Units”: Units subject to restrictions requiring that it be redelivered or offered for sale to the Company if specified conditions are not satisfied.
“Section 409A”: Section 409A of the Code.
“Securities Act”: Securities Act of 1933, as amended.
“Separation from Service”: Occurs as of the date on which (a) a Participant (other than an Employee of the Company or its subsidiaries) ceases to provide substantial service to the Company and its Affiliates, or (b) a Company Sale, as determined by the Administrator in its sole discretion.
“Units”: Class A Common Units of the Company.
“Unrestricted Units”: Units not subject to any restrictions under the terms of the Award .
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Exhibit 10.4
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Advance Holdings, LLC
2013 Equity Incentive Plan
THIS OPTION AND ANY SECURITIES ISSUED UPON EXERCISE OF THIS OPTION ARE SUBJECT TO RESTRICTIONS ON VOTING AND TRANSFER AND REQUIREMENTS OF SALE AND OTHER PROVISIONS AS SET FORTH IN THE PLAN, the LLC Agreement AND HEREIN.
Non-statutory Time-Based Option Agreement
This agreement (the “ Agreement ”) evidences an option granted by Advance Holdings, LLC (the “ Company ”) to the undersigned (the “ Optionee ”), pursuant to and subject to the terms of the 2013 Advance Holdings, LLC Equity Incentive Plan (the “ Plan ”), which is incorporated herein by reference.
1. Grant of Option . The Company grants to the Optionee on the date set forth above (the “ Date of Grant ”) an option (the “ Option ”) to purchase, on the terms provided herein and in the Plan (including, without limitation, the exercise provisions in Section 6(b) of the Plan), the number of Class A Units of the Company set forth above (the “ Units ”) with an exercise price per Unit as set forth above, in each case subject to adjustment pursuant to Section 7 of the Plan in respect of transactions occurring after the date hereof.
The Option evidenced by this Agreement is granted to the Optionee in connection with the Optionee’s provision of services to the Company and its subsidiaries.
2. Meaning of Certain Terms . Except as otherwise defined herein, all capitalized terms used herein have the same meaning as in the Plan. The following terms have the following meanings:
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“ Company Sale ” means either (i) the sale of all or substantially all of the Company and its Subsidiaries’ assets, taken as a whole, or (ii) any other transaction, whether by sale of Class A Units, sale of assets, merger, recapitalization, reorganization or otherwise, pursuant to which one or more persons shall directly or indirectly own 50% or more of the voting Class A Units, in each case in a single transaction or series of related transactions. |
3. Vesting; Method of Exercise; Treatment of the Option Upon Cessation of Employment; Repurchase Rights .
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Generally . The term “vest” means to become exercisable and the term “vested” as applied to any outstanding Option means that that portion of the Option is then exercisable, subject in each case to the terms of the Plan. Unless earlier terminated, relinquished or expired, the Option will vest 20% annually on the anniversary of the Vesting Commencement Date so that the Option shall be 100% vested on the fifth anniversary of the Vesting Commencement Date; provided , that , the Option will cease to vest upon cessation of the Optionee’s Employment or services relationship. |
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Company Sale . Notwithstanding anything to the contrary set forth in clause (a) above, 100% of any Option granted hereby shall be vested, regardless of the degree to which such Option was otherwise then vested (i.e. if an Option is otherwise vested 20%, it shall become vested 100%) upon consummation of a Company Sale. |
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Exercise of the Option . No portion of the Option may be exercised until such portion vests. Each election to exercise any vested portion of the Option will be subject to the terms and conditions of the Plan. The latest date on which the Option or any portion of the Option may be exercised will be the 10th anniversary of the Date of Grant (the “ Final Exercise Date ”) and if not exercised by such date the Option or any remaining portion of the Option will thereupon automatically and immediately terminate. |
4. Plan; LLC Agreement . This Option is granted subject to all of the terms and conditions of the Plan, and the Company’s limited liability company agreement, including the repurchase rights in favor of the Company set forth in Section 6(a)(4)(B) of the Plan, copies of which have been provided to the Optionee.
5. Conditions Of Exercise . It is a condition to the exercise of the Option that the Participant execute and be bound by all terms and conditions of the LLC Agreement.
6. Legends, Etc. Units issued upon exercise of the Option may bear such legends as may be required by the Company.
7. Transfer of Option . The Option may not be transferred except as expressly permitted under Section 6(a)(3) of the Plan.
8. Withholding . The exercise of the Option will give rise to “wages” subject to withholding. The Optionee expressly acknowledges and agrees that the Optionee’s rights hereunder, including the right to be issued Units upon exercise, are subject to the Optionee promptly paying to the Company in cash (or by such other means as may be acceptable to the Administrator in its discretion) all taxes required to be withheld. No Units may be transferred pursuant to the exercise of this Option unless and until the person exercising this Option has remitted to the Company an amount sufficient to satisfy
any federal, state, or local withholding tax requirements, or has made other arrangements satisfactory to the Company with respect to such taxes. The Optionee also authorizes the Company and its subsidiaries to withhold such amount from any amounts otherwise owed to the Optionee.
9. Effect on Employment . Neither the grant of the Option, nor the issuance of Units upon exercise of the Option, give the Optionee any right to be retained in the employ of the Company or any of its Affiliates.
By acceptance of the Option, the undersigned agrees hereby to become a party to this Option agreement, and be bound by the terms of this Option Agreement and the Plan.
Executed as of the _____ day of _______________, 20___.
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Exhibit 10.5
Revolve Group, Inc.
2018 EQUITY INCENTIVE PLAN
1. Purposes of the Plan . The purposes of this Plan are:
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to attract and retain the best available personnel for positions of substantial responsibility, |
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to provide additional incentive to Employees, Directors and Consultants, and |
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to promote the success of the Company’s business. |
The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Shares.
2. Definitions . As used herein, the following definitions will apply:
(a) “ Administrator ” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan.
(b) “ Applicable Laws ” means the legal and regulatory requirements relating to the administration of equity-based awards and the related issuance of Shares thereunder, including but not limited to U.S. federal and state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any non-U.S. country or jurisdiction where Awards are, or will be, granted under the Plan.
(c) “ Award ” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares.
(d) “ Award Agreement ” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.
(e) “ Board ” means the Board of Directors of the Company.
(f) “ Change in Control ” means the occurrence of any of the following events:
(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“ Person ”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent ( 50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection, (A) the acquisition of additional stock by any one Person, who is considered to own more than fifty percent ( 50%) of the total voting power of the stock of the
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Company will not be considered a Change in Control , and (B) if the stockholders of the Company immediately before such change in ownership continue to retain immediately after the change in ownership, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately prior to the change in ownership, the direct or indirect beneficial ownership of fifty percent (50%) or more of the total voting power of the stock of the Company or of the ultimate parent entity of the Company, such event will not be considered a Change in Control under this subsection (i). For this purpose, indirect beneficial ownership will include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company, as the case may be, either directly or through one or more subsidiary corporations or other business entities; or
(ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12)-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this subsection (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or
(iii) A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12)‑month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than fifty percent ( 50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty percent ( 50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent ( 50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent ( 50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Section 409A.
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Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
(g) “ Code ” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder will include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation .
(h) “ Committee ” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board, or a duly authorized committee of the Board, in accordance with Section 4 hereof.
(i) “ Common Stock ” means the Class A common stock of the Company.
(j) “ Company ” means Revolve Group, Inc., a Delaware corporation, or any successor thereto.
(k) “ Consultant ” means any natural person, including an advisor, engaged by the Company or a Parent or Subsidiary to render bona fide services to such entity, provided the services (i) are not in connection with the offer or sale of securities in a capital‑raising transaction, and (ii) do not directly promote or maintain a market for the Company’s securities, in each case, within the meaning of Form S-8 promulgated under the Securities Act, and provided, further, that a Consultant will include only those persons to whom the issuance of Shares may be registered under Form S-8 promulgated under the Securities Act.
(l) “ Director ” means a member of the Board.
(m) “ Disability ” means total and permanent disability as defined in Section 22(e)(3) of the Code , provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time .
(n) “ Employee ” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.
(o) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
(p) “ Exchange Program ” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for awards of the same type (which may have higher or lower exercise prices and different terms), awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer any outstanding Awards to a financial institution or other person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Award is increased or reduced. The Administrator will determine the terms and conditions of any Exchange Program in its sole discretion.
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(q) “ Fair Market Value ” means, as of any date, the value of Common Stock determined as follows:
(i) For purposes of any Awards granted on the Registration Date, the Fair Market Value will be the initial price to the public as set forth in the final prospectus included within the registration statement in Form S-1 filed with the Securities and Exchange Commission for the initial public offering of the Company’s Common Stock.
(ii) For purposes of any Awards granted on any other date, the Fair Market Value will be t he closing sales price for Common Stock as quoted on any established stock exchange or national market system (including without limitation the New York Stock Exchange, NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market of The NASDAQ Stock Market) on which the Common Stock is listed on the date of determination (or the closing bid, if no sales were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable. If the determination date for the Fair Market Value occurs on a non-trading day (i.e., a weekend or holiday), the Fair Market Value will be such price on the immediately preceding trading day, unless otherwise determined by the Administrator. In the absence of an established market for the Common Stock, the Fair Market Value thereof will be determined in good faith by the Administrator.
The determination of fair market value for purposes of tax withholding may be made in the Administrator’s discretion subject to Applicable Laws and is not required to be consistent with the determination of Fair Market Value for other purposes.
(r) “ Fiscal Year ” means the fiscal year of the Company.
(s) “ Incentive Stock Option ” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
(t) “ Inside Director ” means a Director who is an Employee.
(u) “ Nonstatutory Stock Option ” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.
(v) “ Officer ” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(w) “ Option ” means a stock option granted pursuant to the Plan.
(x) “ Outside Director ” means a Director who is not an Employee.
(y) “ Parent ” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.
(z) “ Participant ” means the holder of an outstanding Award.
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(aa) “ Performance Share ” means an Award denominated in Shares which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine pursuant to Section 10.
(bb) “ Performance Unit ” means an Award which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 10.
(cc) “ Period of Restriction ” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator.
(dd) “ Plan ” means this 2018 Equity Incentive Plan.
(ee) “ Registration Date ” means the effective date of the first registration statement that is filed by the Company and declared effective pursuant to Section 12(b) of the Exchange Act, with respect to any class of the Company’s securities.
(ff) “ Restricted Stock ” means Shares issued pursuant to a Restricted Stock award under Section 7 of the Plan, or issued pursuant to the early exercise of an Option.
(gg) “ Restricted Stock Unit ” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 8. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.
(hh) “ Rule 16b-3 ” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.
(ii) “ Section 16(b) ” means Section 16(b) of the Exchange Act.
(jj) “ Section 409A ” means Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time.
(kk) “ Securities Act ” means the Securities Act of 1933, as amended.
(ll) “ Service Provider ” means an Employee, Director or Consultant.
(mm) “ Share ” means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan.
(nn) “ Stock Appreciation Right ” means an Award, granted alone or in connection with an Option, that pursuant to Section 9 is designated as a Stock Appreciation Right.
(oo) “ Subsidiary ” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.
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3. Stock Subject to the Plan .
(a) Stock Subject to the Plan . Subject to the provisions of Section 14 of the Plan and the automatic increase set forth in Section 3(b) of the Plan, the maximum aggregate number of Shares that may be issued under the Plan is Shares, plus a number of Shares equal to the shares of the Company’s Class B common stock subject to stock options, restricted stock units, or similar awards granted under the Company’s 2013 Equity Incentive Plan (the “Existing Plan”) that, on or after the Registration Date, expire or otherwise terminate without having been exercised in full, are tendered to or withheld by the Company for payment of an exercise price or for tax withholding obligations, or are forfeited to or repurchased by the Company due to failure to vest, with the maximum number of Shares to be added to the Plan from the Existing Plan equal to Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.
(b) Automatic Share Reserve Increase . Subject to the provisions of Section 14 of the Plan, the number of Shares available for issuance under the Plan will be increased on the first day of each Fiscal Year beginning with the 2019 Fiscal Year, in an amount equal to the least of (i) Shares, (ii) 5% of the outstanding shares of all classes of the Company’s common stock on the last day of the immediately preceding Fiscal Year or (iii) such number of Shares determined by the Board.
(c) Lapsed Awards . If an Award expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an Exchange Program, or, with respect to Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares, is forfeited to or repurchased by the Company due to failure to vest, the unpurchased Shares (or for Awards other than Options or Stock Appreciation Rights the forfeited or repurchased Shares), which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to Stock Appreciation Rights, only Shares actually issued (i.e., the net Shares issued) pursuant to a Stock Appreciation Right will cease to be available under the Plan; all remaining Shares under Stock Appreciation Rights will remain available for future grant or sale under the Plan (unless the Plan has terminated). Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are repurchased by the Company or are forfeited to the Company, such Shares will become available for future grant under the Plan. Shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Notwithstanding the foregoing and, subject to adjustment as provided in Section 14 , the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable under Section 422 of the Code and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to Sections 3(b) and 3(c).
(d) Share Reserve . The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan.
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4. Administration of the Plan .
(a) Procedure .
(i) Multiple Administrative Bodies . Different Committees with respect to different groups of Service Providers may administer the Plan.
(ii) Rule 16b-3 . To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.
(iii) Other Administration . Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator . Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Awards may be granted hereunder;
(iii) to determine the number of Shares to be covered by each Award granted hereunder;
(iv) to approve forms of Award Agreements for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine;
(vi) to institute and determine the terms and conditions of an Exchange Program;
(vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;
(viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable non-U.S. laws or for qualifying for favorable tax treatment under applicable non-U.S. laws;
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(ix) to modify or amend each Award (subject to Section 19 of the Plan), including but not limited to the discretionary authority to extend the post-termination exercisability period of Awards and to extend the maximum term of an Option (subject to Section 6(b) of the Plan regarding Incentive Stock Options);
(x) to allow Participants to satisfy tax withholding obligations in such manner as prescribed in Section 15 of the Plan;
(xi) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;
(xii) to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award; and
(xiii) to make all other determinations deemed necessary or advisable for administering the Plan.
(c) Effect of Administrator’s Decision . The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards.
5. Eligibility . Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.
6. Stock Options .
(a) Limitations . Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate fair market value of the shares with respect to which incentive stock options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such options will be treated as nonstatutory stock options. For purposes of this Section 6(a), incentive stock options will be taken into account in the order in which they were granted. The fair market value of the shares will be determined as of the time the option with respect to such shares is granted.
(b) Term of Option . The term of each Option will be stated in the Award Agreement. In the case of an Incentive Stock Option, the term will be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.
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(c) Option Exercise Price and Consideration .
(i) Exercise Price . The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following:
(1) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(3) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.
(ii) Waiting Period and Exercise Dates . At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.
(iii) Form of Consideration . The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of: (1) cash; (2) check; (3) promissory note, to the extent permitted by Applicable Laws, (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided that accepting such Shares will not result in any adverse accounting consequences to the Company, as the Administrator determines in its sole discretion; (5) consideration received by the Company under a broker-assisted (or other) cashless exercise program (whether through a broker or otherwise) implemented by the Company in connection with the Plan; (6) by net exercise; (7) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (8) any combination of the foregoing methods of payment.
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(i) Procedure for Exercise; Rights as a Stockholder . Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.
An Option will be deemed exercised when the Company receives: (i) a notice of exercise (in such form as the Administrator may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan.
Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.
(ii) Termination of Relationship as a Service Provider . If a Participant ceases to be a Service Provider, other than upon the Participant’s termination as the result of the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan.
(iii) Disability of Participant . If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.
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(iv) Death of Participant . If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following Participant’s death. Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.
(v) Tolling Expiration . A Participant’s Award Agreement may also provide that:
(1) if the exercise of the Option following the termination of Participant’s status as a Service Provider (other than upon the Participant’s death or Disability) would result in liability under Section 16(b), then the Option will terminate on the earlier of (A) the expiration of the term of the Option set forth in the Award Agreement, or (B) the tenth (10 th ) day after the last date on which such exercise would result in liability under Section 16(b); or
(2) if the exercise of the Option following the termination of the Participant’s status as a Service Provider (other than upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance of Shares would violate the registration requirements under the Securities Act, then the Option will terminate on the earlier of (A) the expiration of the term of the Option or (B) the expiration of a period of thirty (30)-day period after the termination of the Participant’s status as a Service Provider during which the exercise of the Option would not be in violation of such registration requirements.
(a) Grant of Restricted Stock . Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.
(b) Restricted Stock Agreement . Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions on such Shares have lapsed.
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(c) Transferability . Except as provided in this Section 7 or the Award Agreement, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.
(d) Other Restrictions . The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.
(e) Removal of Restrictions . Except as otherwise provided in this Section 7, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction or at such other time as the Administrator may determine. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed.
(f) Voting Rights . During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise.
(g) Dividends and Other Distributions . During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares, unless the Administrator provides otherwise. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.
(h) Return of Restricted Stock to Company . On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan.
(a) Grant . Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. After the Administrator determines that it will grant Restricted Stock Units under the Plan, it will advise the Participant in an Award Agreement of the terms, conditions, and restrictions related to the grant, including the number of Restricted Stock Units.
(b) Vesting Criteria and Other Terms . The Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, divisional, business unit, or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws or any other basis determined by the Administrator in its discretion.
(c) Earning Restricted Stock Units . Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as determined by the Administrator. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.
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(d) Form and Timing of Payment . Payment of earned Restricted Stock Units will be made as soon as practicable after the date(s) determined by the Administrator and set forth in the Award Agreement. The Administrator, in its sole discretion, may only settle earned Restricted Stock Units in cash, Shares, or a combination of both.
(e) Cancellation . On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company.
9. Stock Appreciation Rights .
(a) Grant of Stock Appreciation Rights . Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.
(b) Number of Shares . The Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to any Service Provider.
(c) Exercise Price and Other Terms . The per share exercise price for the Shares to be issued pursuant to exercise of a Stock Appreciation Right will be determined by the Administrator and will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. Otherwise, the Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan.
(d) Stock Appreciation Right Agreement . Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.
(e) Expiration of Stock Appreciation Rights . A Stock Appreciation Right granted under the Plan will expire ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement, as determined by the Administrator, in its sole discretion. Notwithstanding the foregoing, the rules of Section 6(d) relating to exercise also will apply to Stock Appreciation Rights.
(f) Payment of Stock Appreciation Right Amount . Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:
(i) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times
(ii) The number of Shares with respect to which the Stock Appreciation Right is exercised.
At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof.
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10. Performance Units and Performance Shares .
(a) Grant of Performance Units/Shares . Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant.
(b) Value of Performance Units/Shares . Each Performance Unit will have an initial value that is established by the Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.
(c) Performance Objectives and Other Terms . The Administrator will set performance objectives or other vesting provisions (including, without limitation, continued status as a Service Provider) in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Service Providers. The time period during which the performance objectives or other vesting provisions must be met will be called the “Performance Period.” Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, business unit or individual goals (including, but not limited to, continued employment or service) , applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion.
(d) Earning of Performance Units/Shares . After the applicable Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such Performance Unit/Share.
(e) Form and Timing of Payment of Performance Units/Shares . Payment of earned Performance Units/Shares will be made as soon as practicable after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof.
(f) Cancellation of Performance Units/Shares . On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan.
11. Outside Director Limitations . No Outside Director may be paid, issued or granted, in any Fiscal Year, cash compensation and equity awards (including any Awards issued under this Plan) with an aggregate value greater than $500,000 (with the value of each equity award based on its grant date fair value (determined in accordance with U.S. generally accepted accounting
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principles)). Any cash compensation paid or Awards granted to an individual for his or her services as an Employee, or for his or her services as a Consultant (other than as an Outside Director), will not count for purposes of the limitation under this Section 11.
12. Leaves of Absence/Transfer Between Locations . Unless the Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6) months following the first (1st) day of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.
13. Transferability of Awards . Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate.
14. Adjustments; Dissolution or Liquidation; Merger or Change in Control .
(a) Adjustments . In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award, and the numerical Share limits in Section 3 of the Plan.
(b) Dissolution or Liquidation . In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action.
(c) Change in Control . In the event of a merger of the Company with or into another corporation or other entity or a Change in Control, each outstanding Award will be treated as the Administrator determines subject to the restriction in the following paragraph, including, without limitation, that each Award be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. The Administrator will not be required to treat all Awards or Participants similarly in the transaction.
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In the event that the successor corporation does not assume or substitute for the Award, the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, unless specifically provided otherwise under the applicable Award Agreement, a Company policy applicable to the Participant, or other written agreement between the Participant and the Company, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right is not assumed or substituted in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period.
For the purposes of this subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, Performance Unit or Performance Share, for each Share subject to such Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control.
Notwithstanding anything in this Section 14 (c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.
(d) Outside Director Awards . With respect to Awards granted to an Outside Director, in the event of a Change in Control, then the Outside Director will fully vest in and have the right to exercise Options and/or Stock Appreciation Rights as to all of the Shares underlying such Award, including those Shares which would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting , unless specifically provided otherwise under the applicable Award Agreement, a Company policy applicable to the Outside Director, or other written agreement between the Outside Director and the Company, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met.
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(a) Withholding Requirements . Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or such earlier time as any tax withholding obligations are due, the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy U.S. federal, state, or local taxes, non-U.S. taxes, or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof).
(b) Withholding Arrangements . The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable cash or Shares having a fair market value not in excess of the maximum statutory amount required to be withheld, or (iii) delivering to the Company already-owned Shares having a fair market value not in excess of the maximum statutory amount required to be withheld. The fair market value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.
(c) Compliance With Section 409A . Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A, except as otherwise determined in the sole discretion of the Administrator. The Plan and each Award Agreement under the Plan is intended to meet the requirements of Section 409A and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Section 409A the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A, such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A. In no event will the Company (or any Parent or Subsidiary of the Company, as applicable) reimburse a Participant for any taxes imposed or other costs incurred as a result of Section 409A.
16. No Effect on Employment or Service . Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider, nor will they interfere in any way with the Participant’s right or the right of the Company (or any Parent or Subsidiary of the Company) to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.
17. Date of Grant . The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.
18. Term of Plan . Subject to Section 23 of the Plan, the Plan will become effective upon the later to occur of (i) its adoption by the Board or (ii) the business day immediately prior to the Registration Date. It will continue in effect for a term of ten (10) years from the date adopted by the Board, unless terminated earlier under Section 19 of the Plan.
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19. Amendment and Termination of the Plan .
(a) Amendment and Termination . The Administrator may at any time amend, alter, suspend or terminate the Plan.
(b) Stockholder Approval . The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.
(c) Effect of Amendment or Termination . No amendment, alteration, suspension or termination of the Plan will materially impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.
20. Conditions Upon Issuance of Shares .
(a) Legal Compliance . Shares will not be issued pursuant to an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.
(b) Investment Representations . As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.
21. Inability to Obtain Authority . The inability of the Company to obtain authority from any regulatory body having jurisdiction or to complete or comply with the requirements of any registration or other qualification of the Shares under any U.S. federal or state law, any non-U.S. law, or the rules and regulations of the Securities and Exchange Commission, the stock exchange on which Shares of the same class are then listed, or any other governmental or regulatory body, which authority, registration, qualification or rule compliance is deemed by the Company’s counsel to be necessary or advisable for the issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority, registration, qualification or rule compliance will not have been obtained.
(a) All Awards granted under the Plan will be subject to recoupment under any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other Applicable Laws. In addition, the Administrator may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Administrator determines necessary or appropriate, including but not limited to a reacquisition right regarding previously acquired Shares or other cash or property. Unless this Section 22 is specifically mentioned and waived in an Award
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Agreement or other document, no recovery of compensation under a clawback policy or otherwise will be an event that triggers or contributes to any right of a Participant to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company or any Subsidiary .
(b) The Administrator may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award will be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but will not be limited to, termination of such Participant’s status as a Service Provider for cause or any specified action or inaction by a Participant, whether before or after the date Participant is no longer a Service Provider, that would constitute cause for termination of such Participant’s status as a Service Provider.
(c) If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under securities laws, any Participant who (1) knowingly or through gross negligence engaged in the misconduct or who knowingly or through gross negligence failed to prevent the misconduct or (2) is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, must reimburse the Company the amount of any payment in settlement of an Award earned or accrued during the 12-month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of the financial document embodying such financial reporting requirement.
23. Stockholder Approval . The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
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e xhibit 10.6
Revolve Group, Inc.
2018 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Revolve Group, Inc. 2018 Equity Incentive Plan (the “Plan”) will have the same defined meanings in this Stock Option Agreement, which includes the Notice of Stock Option Grant (the “Notice of Grant”), the Terms and Conditions of Stock Option Grant attached hereto as Exhibit A , and all appendices and exhibits attached thereto (all together, the “Option Agreement”).
NOTICE OF STOCK OPTION GRANT
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The undersigned Participant has been granted an Option to purchase Common Stock of Revolve Group, Inc. (the “Company”), subject to the terms and conditions of the Plan and this Option Agreement, as follows:
Vesting Schedule :
Subject to accelerated vesting as set forth below or in the Plan, this Option will be exercisable, in whole or in part, in accordance with the following schedule:
[Twenty-five percent (25%) of the Shares subject to the Option shall vest on the one (1) year anniversary of the Vesting Commencement Date, and one forty-eighth (1/48 th ) of the Shares subject to the Option shall vest each month thereafter on the same day of the month as the Vesting Commencement Date (and if there is no corresponding day, on the last day of the month), subject to Participant continuing to be a Service Provider through each such date.]
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This Option will be exercisable for three (3) months after Participant ceases to be a Service Provider, unless such termination is due to Participant’s death or Disability, in which case this Option will be exercisable for twelve (12) months after Participant ceases to be a Service Provider. Notwithstanding the foregoing sentence, in no event may this Option be exercised after the Term/Expiration Date as provided above and may be subject to earlier termination as provided in Section 14 of the Plan.
By Participant’s signature and the signature of the representative of the Company below, Participant and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan and this Option Agreement, including the Terms and Conditions of Stock Option Grant, attached hereto as Exhibit A , all of which are made a part of this document. Participant acknowledges receipt of a copy of the Plan. Participant has reviewed the Plan and this Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement, and fully understands all provisions of the Plan and this Option Agreement. Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Administrator upon any questions relating to the Plan and the Option Agreement. Participant further agrees to notify the Company upon any change in the residence address indicated below.
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Revolve Group, Inc. |
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TERMS AND CONDITIONS OF STOCK OPTION GRANT
1. Grant of Option . The Company hereby grants to the individual (the “Participant”) named in the Notice of Stock Option Grant of this Option Agreement (the “Notice of Grant”) an option (the “Option”) to purchase the number of Shares, as set forth in the Notice of Grant, at the exercise price per Share set forth in the Notice of Grant (the “Exercise Price”), subject to all of the terms and conditions in this Option Agreement and the Plan, which is incorporated herein by reference. Subject to Section 19(c) of the Plan, in the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Option Agreement, the terms and conditions of the Plan will prevail.
(a) For U.S. taxpayers, the Option will be designated as either an Incentive Stock Option (“ISO”) or a Nonstatutory Stock Option (“NSO”). If designated in the Notice of Grant as an ISO, this Option is intended to qualify as an ISO under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). However, if this Option is intended to be an ISO, to the extent that it exceeds the $100,000 rule of Code Section 422(d) it will be treated as an NSO. Further, if for any reason this Option (or portion thereof) will not qualify as an ISO, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a NSO granted under the Plan. In no event will the Administrator, the Company or any Parent or Subsidiary or any of their respective employees or directors have any liability to Participant (or any other person) due to the failure of the Option to qualify for any reason as an ISO.
(b) For non-U.S. taxpayers, the Option will be designated as an NSO.
2. Vesting Schedule . Except as provided in Section 3, the Option awarded by this Option Agreement will vest in accordance with the vesting provisions set forth in the Notice of Grant. Shares scheduled to vest on a certain date or upon the occurrence of a certain condition will not vest in Participant in accordance with any of the provisions of this Option Agreement, unless Participant will have been continuously a Service Provider from the Date of Grant until the date such vesting occurs.
3. Administrator Discretion . The Administrator, in its discretion, may accelerate the vesting of the balance, or some lesser portion of the balance, of the unvested Option at any time, subject to the terms of the Plan. If so accelerated, such Option will be considered as having vested as of the date specified by the Administrator.
4. Exercise of Option .
(a) Right to Exercise . This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option Agreement.
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(b) Method of Exercise . This Option is exercisable by delivery of an exercise notice (the “Exercise Notice”) in the form attached as Exhibit A or in a manner and pursuant to such procedures as the Administrator may determine, which will state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice will be completed by Participant and delivered to the Company. The Exercise Notice will be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares together and of any Tax Obligations (as defined in Section 6(a)). This Option will be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price.
5. Method of Payment . Payment of the aggregate Exercise Price will be by any of the following, or a combination thereof, at the election of Participant:
(a) cash;
(b) check;
(c) consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan; or
(d) if Participant is a U.S. employee, surrender of other Shares which have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Exercised Shares and that are owned free and clear of any liens, claims, encumbrances, or security interests , provided that accepting such Shares, in the sole discretion of the Administrator, will not result in any adverse accounting consequences to the Company.
6. Tax Obligations .
(a) Participant acknowledges that, regardless of any action taken by the Company or, if different, Participant’s employer (the “Employer”) or Parent or Subsidiary to which Participant is providing services (together, the Company, Employer and/or Parent or Subsidiary to which the Participant is providing services, the “Service Recipient”), the ultimate liability for any tax and/or social insurance liability obligations and requirements in connection with the Option, including, without limitation, (i) all federal, state, and local taxes (including the Participant’s Federal Insurance Contributions Act (FICA) obligation) that are required to be withheld by the Company or the Service Recipient or other payment of tax-related items related to Participant’s participation in the Plan and legally applicable to Participant, (ii) the Participant’s and, to the extent required by the Company (or Service Recipient), the Company’s (or Service Recipient’s) fringe benefit tax liability, if any, associated with the grant, vesting, or exercise of the Option or sale of Shares, and (iii) any other Company (or Service Recipient) taxes the responsibility for which the Participant has, or has agreed to bear, with respect to the Option (or exercise thereof or issuance of Shares thereunder) (collectively, the “Tax Obligations”), is and remains Participant’s responsibility and may exceed the amount actually withheld by the Company or the Service Recipient. Participant further acknowledges that the Company and/or the Service Recipient (A) make no representations or
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undertakings regarding the treatment of any Tax Obligations in connection with any aspect of the Option, including, but not limited to, the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends or other distributions, and ( B ) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate Participant’s liability for Tax Obligations or achieve any particular tax result. Further, if Participant is subject to Tax Obligations in more than one jurisdiction between the Date of Grant and the date of any relevant taxable or tax withholding event, as applicable, Participant acknowledges that the Company and/or the Service Recipient (or former employer, as applicable) may be required to withhold or account for Tax Obligations in more than one jurisdiction. If Participant fails to make satisfactory arrangements for the payment of any required Tax Obligations hereunder at the time of the applicable taxable event, Participant acknowledges and agrees that the Company may refuse to issue or deliver the Shares.
(b) Tax Withholding . When the Option is exercised, Participant generally will recognize immediate U.S. taxable income if Participant is a U.S. taxpayer. If Participant is a non-U.S. taxpayer, Participant will be subject to applicable taxes in his or her jurisdiction. Pursuant to such procedures as the Administrator may specify from time to time, the Company and/or Service Recipient shall withhold the amount required to be withheld for the payment of Tax Obligations. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit Participant to satisfy such Tax Obligations, in whole or in part (without limitation), if permissible by applicable local law, by (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable Shares having a fair market value equal to the minimum amount that is necessary to meet the withholding requirement for such Tax Obligations (or such greater amount as Participant may elect if permitted by the Administrator, if such greater amount would not result in adverse financial accounting consequences), (iii) withholding the amount of such Tax Obligations from Participant’s wages or other cash compensation paid to Participant by the Company and/or the Service Recipient, (iv) delivering to the Company already vested and owned Shares having a fair market value equal to such Tax Obligations, or (v) selling a sufficient number of such Shares otherwise deliverable to Participant through such means as the Company may determine in its sole discretion (whether through a broker or otherwise) equal to the minimum amount that is necessary to meet the withholding requirement for such Tax Obligations (or such greater amount as Participant may elect if permitted by the Administrator, if such greater amount would not result in adverse financial accounting consequences). To the extent determined appropriate by the Company in its discretion, it will have the right (but not the obligation) to satisfy any Tax Obligations by reducing the number of Shares otherwise deliverable to Participant. Further, if Participant is subject to tax in more than one jurisdiction between the Date of Grant and a date of any relevant taxable or tax withholding event, as applicable, Participant acknowledges and agrees that the Company and/or the Service Recipient (and/or former employer, as applicable) may be required to withhold or account for tax in more than one jurisdiction. If Participant fails to make satisfactory arrangements for the payment of any required Tax Obligations hereunder at the time of the Option exercise, Participant acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver the Shares if such amounts are not delivered at the time of exercise.
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(c) Notice of Disqualifying Disposition of ISO Shares . If the Option granted to Participant herein is an ISO, and if Participant sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (i) the date two (2) years after the Date of Grant, or (ii) the date one (1) year after the date of exercise, Participant will immediately notify the Company in writing of such disposition. Participant agrees that Participant may be subject to income tax withholding by the Company on the compensation income recognized by Participant.
(d) Code Section 409A . Under Code Section 409A, a stock right (such as the Option) that vests after December 31, 2004 (or that vested on or prior to such date but which was materially modified after October 3, 2004) that was granted with a per share exercise price that is determined by the Internal Revenue Service (the “IRS”) to be less than the fair market value of an underlying share on the date of grant (a “discount option”) may be considered “deferred compensation.” A stock right that is a “discount option” may result in (i) income recognition by the recipient of the stock right prior to the exercise of the stock right, (ii) an additional twenty percent (20%) federal income tax, and (iii) potential penalty and interest charges. The “discount option” may also result in additional state income, penalty and interest tax to the recipient of the stock right. Participant acknowledges that the Company cannot and has not guaranteed that the IRS will agree that the per Share exercise price of this Option equals or exceeds the fair market value of a Share on the date of grant in a later examination. Participant agrees that if the IRS determines that the Option was granted with a per Share exercise price that was less than the fair market value of a Share on the date of grant, Participant shall be solely responsible for Participant’s costs related to such a determination.
7. Rights as Stockholder . Neither Participant nor any person claiming under or through Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representing such Shares (which may be in book entry form) will have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to Participant (including through electronic delivery to a brokerage account). After such issuance, recordation, and delivery, Participant will have all the rights of a stockholder of the Company with respect to voting such Shares and receipt of dividends and distributions on such Shares.
8. No Guarantee of Continued Service . PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER, WHICH UNLESS PROVIDED OTHERWISE UNDER APPLICABLE LAW IS AT THE WILL OF THE COMPANY (OR THE SERVICE RECIPIENT) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS OPTION AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE SERVICE
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RECIPIENT) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER , SUBJECT TO APPLICABLE LAW, WHICH TERMINATION, UNLESS PROVIDED OTHERWISE UNDER APPLICABLE LAW, MAY BE AT ANY TIME, WITH OR WITHOUT CAUSE.
9. Nature of Grant . In accepting the Option, Participant acknowledges, understands and agrees that:
(a) the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted in the past;
(b) all decisions with respect to future option or other grants, if any, will be at the sole discretion of the Company;
(c) Participant is voluntarily participating in the Plan;
(d) the Option and any Shares acquired under the Plan are not intended to replace any pension rights or compensation;
(e) the Option and Shares acquired under the Plan and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
(f) the future value of the Shares underlying the Option is unknown, indeterminable, and cannot be predicted with certainty;
(g) if the underlying Shares do not increase in value, the Option will have no value;
(h) if Participant exercises the Option and acquires Shares, the value of such Shares may increase or decrease in value, even below the Exercise Price;
(i) for purposes of the Option, Participant’s engagement as a Service Provider will be considered terminated as of the date Participant is no longer actively providing services to the Company or any Parent or Subsidiary (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is a Service Provider or the terms of Participant’s employment or service agreement, if any), and unless otherwise expressly provided in this Option Agreement (including by reference in the Notice of Grant to other arrangements or contracts) or determined by the Administrator, (i) Participant’s right to vest in the Option under the Plan, if any, will terminate as of such date and will not be extended by any notice period ( e.g ., Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where Participant is a Service Provider or Participant’s employment or service
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agreement, if any, unless Participant is providing bona fide services during such time); and (ii) the period (if any) during which Participant may exercise the Option after such termination of Participant ’s engagement as a Service Provider will commence on the date Participant ceases to actively provide services and will not be extended by any notice period mandated under employment laws in the jurisdiction where Participant is employed or terms of Participant’s engagement agreement, if any; the Administrator shall have the exclusive discretion to determine when Participant is no longer actively providing services for purposes of his or her Option grant (including whether Participant may still be considered to be providing services while on a leave of absence and consistent with local law );
(j) unless otherwise provided in the Plan or by the Company in its discretion, the Option and the benefits evidenced by this Option Agreement do not create any entitlement to have the Option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares; and
(k) the following provisions apply only if Participant is providing services outside the United States:
the Option and the Shares subject to the Option are not part of normal or expected compensation or salary for any purpose;
Participant acknowledges and agrees that none of the Company, the Service Recipient, or any Parent or Subsidiary shall be liable for any foreign exchange rate fluctuation between Participant’s local currency and the United States Dollar that may affect the value of the Option or of any amounts due to Participant pursuant to the exercise of the Option or the subsequent sale of any Shares acquired upon exercise; and
no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting from the termination of Participant’s engagement as a Service Provider (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is a Service Provider or the terms of Participant’s employment or service agreement, if any), and in consideration of the grant of the Option to which Participant is otherwise not entitled, Participant irrevocably agrees never to institute any claim against the Company, any Parent, any Subsidiary or the Service Recipient, waives his or her ability, if any, to bring any such claim, and releases the Company, any Parent or Subsidiary and the Service Recipient from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim.
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10. No Advice Regarding Grant . The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Participant’s participation in the Plan, or Participant’s acquisition or sale of the underlying Shares. Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
11. Data Privacy . Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s personal data as described in this Option Agreement and any other Option grant materials by and among, as applicable, the Employer or other Service Recipient, the Company and any Parent or Subsidiary for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan.
Participant understands that the Company and the Employer may hold certain personal information about Participant, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all Options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
Participant understands that Data will be transferred to a stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration, and management of the Plan. Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipient’s country of operation (e.g., the United States) may have different data privacy laws and protections than Participant’s country. Participant understands that if he or she resides outside the United States, he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. Participant authorizes the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing Participant’s participation in the Plan. Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. Participant understands that if he or she resides outside the United States, he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, Participant understands that he or she is providing the consents herein on a purely voluntary basis. If Participant does not consent, or if Participant later seeks to revoke his or her consent, his or her engagement as a Service Provider and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing Participant’s consent is that the Company would not be able to grant Participant Options or other equity awards or administer or maintain such awards. Therefore, Participant
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understands that refusing or withdrawing his or her consent may affect Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that he or she may contact his or her local human resources representative.
12. Address for Notices . Any notice to be given to the Company under the terms of this Option Agreement will be addressed to the Company at Revolve Group, Inc., 16800 Edwards Road, Cerritos, CA 90703, or at such other address as the Company may hereafter designate in writing.
13. Non-Transferability of Option . This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Participant only by Participant.
14. Successors and Assigns . The Company may assign any of its rights under this Option Agreement to single or multiple assignees, and this Option Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Option Agreement shall be binding upon Participant and his or her heirs, executors, administrators, successors and assigns. The rights and obligations of Participant under this Option Agreement may only be assigned with the prior written consent of the Company.
15. Additional Conditions to Issuance of Stock . If at any time the Company will determine, in its discretion, that the listing, registration, qualification or rule compliance of the Shares upon any securities exchange or under any state, federal or non-U.S. law, the tax code and related regulations or under the rulings or regulations of the United States Securities and Exchange Commission or any other governmental regulatory body or the clearance, consent or approval of the United States Securities and Exchange Commission or any other governmental regulatory authority is necessary or desirable as a condition to the purchase by, or issuance of Shares, to Participant (or his or her estate) hereunder, such purchase or issuance will not occur unless and until such listing, registration, qualification, rule compliance, clearance, consent or approval will have been completed, effected or obtained free of any conditions not acceptable to the Company. Subject to the terms of the Option Agreement and the Plan, the Company shall not be required to issue any certificate or certificates for Shares hereunder prior to the lapse of such reasonable period of time following the date of exercise of the Option as the Administrator may establish from time to time for reasons of administrative convenience.
16. Language . If Participant has received this Option Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
17. Interpretation . The Administrator will have the power to interpret the Plan and this Option Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any Shares subject to the Option have vested). All actions taken and all interpretations and determinations made by the Administrator in good faith will be final and binding upon Participant, the Company and all other interested persons. Neither the
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Administrator nor any person acting on behalf of the Administrator will be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or this Option Agreement.
18. Electronic Delivery and Acceptance . The Company may, in its sole discretion, decide to deliver any documents related to the Option awarded under the Plan or future options that may be awarded under the Plan by electronic means or request Participant’s consent to participate in the Plan by electronic means. Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through any on-line or electronic system established and maintained by the Company or a third party designated by the Company.
19. Captions . Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Option Agreement.
20. Agreement Severable . In the event that any provision in this Option Agreement will be held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Option Agreement.
21. Amendment, Suspension or Termination of the Plan . By accepting this Option, Participant expressly warrants that he or she has received an Option under the Plan, and has received, read, and understood a description of the Plan. Participant understands that the Plan is discretionary in nature and may be amended, suspended or terminated by the Company at any time.
22. Governing Law and Venue . This Option Agreement will be governed by the laws of Delaware, without giving effect to the conflict of law principles thereof. For purposes of litigating any dispute that arises under this Option or this Option Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California, and agree that such litigation will be conducted in the courts of Los Angeles County, California, or the federal courts for the United States for the Central District of California, and no other courts, where this Option is made and/or to be performed.
23. Country Addendum . Notwithstanding any provisions in this Option Agreement, this Option shall be subject to any special terms and conditions set forth in the appendix (if any) to this Option Agreement for Participant’s country (the “Country Addendum”). Moreover, if Participant relocates to one of the countries included in the Country Addendum (if any), the special terms and conditions for such country will apply to Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Country Addendum constitutes part of this Option Agreement.
24. Modifications to the Agreement . This Option Agreement constitutes the entire understanding of the parties on the subjects covered. Participant expressly warrants that he or she is not accepting this Option Agreement in reliance on any promises, representations, or inducements other than those contained herein. Modifications to this Option Agreement or the Plan can be made only in an express written contract executed by a duly authorized officer of the Company. Notwithstanding anything to the contrary in the Plan or this Option Agreement, the Company
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reserves the right to revise this Option Agreement as it deems necessary or advisable, in its sole discretion and without the consent of Participant, to comply with Code Section 409A or to otherwise avoid imposition of any additional tax or income recognition under Section 409A of the Code in connection with the Option.
25. No Waiver . Either party’s failure to enforce any provision or provisions of this Option Agreement shall not in any way be construed as a waiver of any such provision or provisions, nor prevent that party from thereafter enforcing each and every other provision of this Option Agreement. The rights granted both parties herein are cumulative and shall not constitute a waiver of either party’s right to assert all other legal remedies available to it under the circumstances.
26. Tax Consequences . Participant has reviewed with its own tax advisors the U.S. federal, state, local and non-U.S. tax consequences of this investment and the transactions contemplated by this Option Agreement. With respect to such matters, Participant relies solely on such advisors and not on any statements or representations of the Company or any of its agents, written or oral. Participant understands that Participant (and not the Company) shall be responsible for Participant’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Option Agreement.
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Revolve Group , Inc.
2018 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
COUNTRY ADDENDUM
TERMS AND CONDITIONS
This Country Addendum includes additional terms and conditions that govern the Option granted to Participant under the Plan if Participant works in one of the countries listed below. If Participant is a citizen or resident of a country (or is considered as such for local law purposes) other than the one in which he or she is currently working or if Participant relocates to another country after receiving the Option, the Company will, in its discretion, determine the extent to which the terms and conditions contained herein will be applicable to Participant.
Certain capitalized terms used but not defined in this Country Addendum shall have the meanings set forth in the Plan, and/or the Stock Option Agreement to which this Country Addendum is attached.
NOTIFICATIONS
This Country Addendum also includes notifications relating to exchange control and other issues of which Participant should be aware with respect to his or her participation in the Plan. The information is based on the exchange control, securities and other laws in effect in the countries listed in this Country Addendum, as of _____________ (except as otherwise noted below). Such laws are often complex and change frequently. As a result, the Company strongly recommends that Participant not rely on the notifications herein as the only source of information relating to the consequences of his or her participation in the Plan because the information may be outdated when Participant exercises the Option or sells Shares acquired under the Plan.
In addition, the notifications are general in nature and may not apply to Participant’s particular situation, and the Company is not in a position to assure Participant of any particular result. Accordingly, Participant is advised to seek appropriate professional advice as to how the relevant laws in Participant’s country may apply to Participant’s situation.
Finally, if Participant is a citizen or resident of a country other than the one in which Participant is currently working (or is considered as such for local law purposes) or if Participant moves to another country after the Option is granted, the information contained herein may not be applicable to Participant.
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EXHIBIT B
Revolve Group, Inc.
2018 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
Revolve Group, Inc.
Cerritos, CA 90703
Attention: Stock Administration
1. Exercise of Option . Effective as of today, ________________, _____, the undersigned (“Purchaser”) hereby elects to purchase ______________ shares (the “Shares”) of the Common Stock of Revolve Group, Inc. (the “Company”) under and pursuant to the 2018 Equity Incentive Plan (the “Plan”) and the Stock Option Agreement, dated ________ and including the Notice of Grant, the Terms and Conditions of Stock Option Grant, and exhibits attached thereto (the “Option Agreement”). The purchase price for the Shares will be $_____________, as required by the Option Agreement.
2. Delivery of Payment . Purchaser herewith delivers to the Company the full purchase price of the Shares and any Tax Obligations (as defined in Section 6(a) of the Option Agreement) to be paid in connection with the exercise of the Option.
3. Representations of Purchaser . Purchaser acknowledges that Purchaser has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions.
4. Rights as Stockholder . Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the Shares, no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares subject to the Option, notwithstanding the exercise of the Option. The Shares so acquired will be issued to Purchaser as soon as practicable after exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date of issuance, except as provided in Section 14 of the Plan.
5. Tax Consultation . Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser represents that Purchaser has consulted with any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and that Purchaser is not relying on the Company for any tax advice.
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6. Entire Agreement; Governing Law . The Plan and Option Agreement are incorporated herein by reference. This Exercise Notice, the Plan and the Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Purchaser with respect to the subject matter hereof, and may not be modified adversely to the Purchaser’s interest except by means of a writing signed by the Company and Purchaser. This Option Agreement is governed by the internal substantive laws, but not the choice of law rules, of Delaware .
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Revolve Group, Inc. |
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Exhibit 10.7
Revolve Group, Inc.
2018 EQUITY INCENTIVE PLAN
RESTRICTED STOCK UNIT AGREEMENT
NOTICE OF RESTRICTED STOCK UNIT GRANT
Unless otherwise defined herein, the terms defined in the Revolve Group, Inc. 2018 Equity Incentive Plan (the “Plan”) will have the same defined meanings in this Restricted Stock Unit Agreement, which includes the Notice of Restricted Stock Unit Grant (the “Notice of Grant”), Terms and Conditions of Restricted Stock Unit Grant attached hereto as Exhibit A , and all appendices and exhibits attached thereto (all together, the “Award Agreement”).
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The undersigned Participant has been granted the right to receive an Award of Restricted Stock Units, subject to the terms and conditions of the Plan and this Award Agreement, as follows:
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Vesting Schedule :
Subject to any acceleration provisions contained in the Plan or set forth below, the Restricted Stock Units will vest in accordance with the following schedule:
[ Twenty-five percent (25%) of the Restricted Stock Units will vest on the one (1)-year anniversary of the Vesting Commencement Date, and one sixteenth (1/16 th ) of the Restricted Stock Units will vest on each Quarterly Vesting Date (as defined below) thereafter, subject to Participant continuing to be a Service Provider through each such date. ]
A “Quarterly Vesting Date” is the first trading day on or after each of [February 15], [May 15], [August 15], and [November 15].
In the event Participant ceases to be a Service Provider for any or no reason before Participant vests in the Restricted Stock Units, the Restricted Stock Units and Participant’s right to acquire any Shares hereunder will immediately terminate.
By Participant’s signature and the signature of the representative of Revolve Group , Inc. (the “Company”) below, Participant and the Company agree that this Award of Restricted Stock Units is granted under and governed by the terms and conditions of the Plan and this Award Agreement, including the Terms and Conditions of Restricted Stock Unit Grant, attached hereto as Exhibit A , all of which are made a part of this document. Participant acknowledges receipt of a copy of the Plan . Participant has reviewed the Plan and this Award Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Award Agreement, and fully understands all provisions of the Plan and this Award Agreement. Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Administrator upon any questions relating to the Plan and the Award Agreement. Participant further agrees to notify the Company upon any change in the residence address indicated below.
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TERMS AND CONDITIONS OF RESTRICTED STOCK UNIT GRANT
1. Grant of Restricted Stock Units . The Company hereby grants to the individual (the “Participant”) named in the Notice of Grant of Restricted Stock Units of this Award Agreement (the “Notice of Grant”) under the Plan an Award of Restricted Stock Units, subject to all of the terms and conditions in this Award Agreement and the Plan, which is incorporated herein by reference. Subject to Section 19(c) of the Plan, in the event of a conflict between the terms and conditions of the Plan and this Award Agreement, the terms and conditions of the Plan shall prevail.
2. Company’s Obligation to Pay . Each Restricted Stock Unit represents the right to receive a Share on the date it vests. Unless and until the Restricted Stock Units will have vested in the manner set forth in Section 3 or 4, Participant will have no right to payment of any such Restricted Stock Units. Prior to actual payment of any vested Restricted Stock Units, such Restricted Stock Unit will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.
3. Vesting Schedule . Except as provided in Section 4, and subject to Section 5, the Restricted Stock Units awarded by this Award Agreement will vest in accordance with the vesting schedule set forth in the Notice of Grant, subject to Participant continuing to be a Service Provider through each applicable vesting date.
(a) General Rule . Subject to Section 8, any Restricted Stock Units that vest will be paid to Participant (or in the event of Participant’s death, to his or her properly designated beneficiary or estate) in whole Shares. Subject to the provisions of Section 4(b), such vested Restricted Stock Units shall be paid in whole Shares as soon as practicable after vesting, but in each such case within sixty (60) days following the vesting date. In no event will Participant be permitted, directly or indirectly, to specify the taxable year of payment of any Restricted Stock Units payable under this Award Agreement.
(b) Acceleration .
(i) Discretionary Acceleration . The Administrator, in its discretion, may accelerate the vesting of the balance, or some lesser portion of the balance, of the unvested Restricted Stock Units at any time, subject to the terms of the Plan. If so accelerated, such Restricted Stock Units will be considered as having vested as of the date specified by the Administrator. If Participant is a U.S. taxpayer, the payment of Shares vesting pursuant to this Section 4(b) shall in all cases be paid at a time or in a manner that is exempt from, or complies with, Section 409A. The prior sentence may be superseded in a future agreement or amendment to this Award Agreement only by direct and specific reference to such sentence.
(ii) Notwithstanding anything in the Plan or this Award Agreement or any other agreement (whether entered into before, on or after the Date of Grant), if the vesting of the balance, or some lesser portion of the balance, of the Restricted Stock Units is accelerated in
connection with Participant’s termination as a Service Provider (provided that such termination is a “separation from service” within the meaning of Section 409A, as determined by the Company), other than due to Participant’s death , and i f (x) Participant is a U.S. taxpayer and a “specified employee” within the meaning of Section 409A at the time of such termination as a Service Provider and (y) the payment of such accelerated Restricted Stock Units will result in the imposition of additional tax under Section 409A if paid to Participant on or within the six (6) month period following Participant’s termination as a Service Provider, then the payment of such accelerated Restricted Stock Units will not be made until the date six (6) months and one (1) day following the date of Participant’s termination as a Service Provider , unless Participant dies following his or her termination as a Service Provider, in which case, the Restricted Stock Units will be paid in Shares to Participant’s estate as soon as practicable following his or her death .
(c) Section 409A . It is the intent of this Award Agreement that it and all payments and benefits to U.S. taxpayers hereunder be exempt from, or comply with, the requirements of Section 409A so that none of the Restricted Stock Units provided under this Award Agreement or Shares issuable thereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to be so exempt or so comply. Each payment payable under this Award Agreement is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2). However, in no event will the Company reimburse Participant, or be otherwise responsible for, any taxes or costs that may be imposed on Participant as a result of Section 409A. For purposes of this Award Agreement, “Section 409A” means Section 409A of the Code, and any final Treasury Regulations and Internal Revenue Service guidance thereunder, as each may be amended from time to time.
5. Forfeiture Upon Termination as a Service Provider . Notwithstanding any contrary provision of this Award Agreement, if Participant ceases to be a Service Provider for any or no reason, the then-unvested Restricted Stock Units awarded by this Award Agreement will thereupon be forfeited at no cost to the Company and Participant will have no further rights thereunder.
6. Tax Consequences . Participant has reviewed with his or her own tax advisors the U.S. federal, state, local and non-U.S. tax consequences of this investment and the transactions contemplated by this Award Agreement. With respect to such matters, Participant relies solely on such advisors and not on any statements or representations of the Company or any of its agents, written or oral. Participant understands that Participant (and not the Company) shall be responsible for Participant’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Award Agreement.
7. Death of Participant . Any distribution or delivery to be made to Participant under this Award Agreement will, if Participant is then deceased, be made to Participant’s designated beneficiary, or if no beneficiary survives Participant, the administrator or executor of Participant’s estate. Any such transferee must furnish the Company with (a) written notice of his or her status as transferee, and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.
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8. Tax Obligations
(a) Responsibility for Taxes . Participant acknowledges that, regardless of any action taken by the Company or, if different, Participant’s employer (the “Employer”) or Parent or Subsidiary to which Participant is providing services (together, the Company, Employer and/or Parent or Subsidiary to which the Participant is providing services, the “Service Recipient”), the ultimate liability for any tax and/or social insurance liability obligations and requirements in connection with the Restricted Stock Units, including, without limitation, (i) all federal, state, and local taxes (including the Participant’s Federal Insurance Contributions Act (FICA) obligation) that are required to be withheld by the Company or the Employer or other payment of tax-related items related to Participant’s participation in the Plan and legally applicable to Participant, (ii) the Participant’s and, to the extent required by the Company (or Service Recipient), the Company’s (or Service Recipient’s) fringe benefit tax liability, if any, associated with the grant, vesting, or settlement of the Restricted Stock Units or sale of Shares, and (iii) any other Company (or Service Recipient) taxes the responsibility for which the Participant has, or has agreed to bear, with respect to the Restricted Stock Units (or settlement thereof or issuance of Shares thereunder) (collectively, the “Tax Obligations”), is and remains Participant’s responsibility and may exceed the amount actually withheld by the Company or the Service Recipient. Participant further acknowledges that the Company and/or the Service Recipient (A) make no representations or undertakings regarding the treatment of any Tax Obligations in connection with any aspect of the Restricted Stock Units, including, but not limited to, the grant, vesting or settlement of the Restricted Stock Units, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends or other distributions, and (B) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Restricted Stock Units to reduce or eliminate Participant’s liability for Tax Obligations or achieve any particular tax result. Further, if Participant is subject to Tax Obligations in more than one jurisdiction between the Date of Grant and the date of any relevant taxable or tax withholding event, as applicable, Participant acknowledges that the Company and/or the Service Recipient (or former employer, as applicable) may be required to withhold or account for Tax Obligations in more than one jurisdiction. If Participant fails to make satisfactory arrangements for the payment of any required Tax Obligations hereunder at the time of the applicable taxable event, Participant acknowledges and agrees that the Company may refuse to issue or deliver the Shares.
(b) Tax Withholding . When Shares are issued as payment for vested Restricted Stock Units, Participant generally will recognize immediate U.S. taxable income if Participant is a U.S. taxpayer. If Participant is a non-U.S. taxpayer, Participant will be subject to applicable taxes in his or her jurisdiction. Pursuant to such procedures as the Administrator may specify from time to time, the Company and/or Service Recipient shall withhold the amount required to be withheld for the payment of Tax Obligations. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit Participant to satisfy such Tax Obligations, in whole or in part (without limitation), if permissible by applicable local law, by (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable Shares having a fair market value equal to the minimum amount that is necessary to meet the withholding requirement for such Tax Obligations (or such greater amount as Participant may elect if permitted by the Administrator, if such greater amount would not result in adverse financial accounting consequences), (iii) withholding the amount of such Tax Obligations from Participant’s wages or other cash compensation paid to Participant by the Company and/or the Service Recipient, (iv) delivering to the Company already vested and owned Shares having a fair market value equal to
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such Tax Obligations, or ( v ) selling a sufficient number of such Shares otherwise deliverable to Participant through such means as the Company may determine in its sole discretion (whether through a broker or otherwise) equal to the minimum amount that is necessary to meet the withholding requirement for such Tax Obligations (or such greater amount as Participant may elect if permitted by the Administrator, if such greater amount would not result in adverse financial accounting consequences) . To the extent determined appropriate by the Company in its discretion, it will have the right (but not the obligation) to satisfy any Tax Obligations by reducing the number of Shares otherwise deliverable to Participant and, until determined otherwise by the Company, this will be the method by which such Tax Obligations are satisfied . F urther, if Participant is subject to tax in more than one jurisdiction between the Date of Grant and a date of any relevant taxable or tax withholding event, as applicable, Participant acknowledges and agrees that the Company and/or the Service Recipient (and/or former employer, as applicable) may be required to withhold or account for tax in more than one jurisdiction . If Participant fails to make satisfactory arrangements for the payment of such Tax Obligations hereunder at the time any applicable Restricted Stock Units otherwise are scheduled to vest pursuant to Sections 3 or 4, Participant will permanently forfeit such Restricted Stock Units and any right to receive Shares thereunder and such Restricted Stock Units will be returned to the Company at no cost to the Company. Participant acknowledges and agrees that the Company may refuse to deliver the Shares if such Tax Obligations are not delivered at the time they are due.
9. Rights as Stockholder . Neither Participant nor any person claiming under or through Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representing such Shares (which may be in book entry form) will have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to Participant (including through electronic delivery to a brokerage account). After such issuance, recordation, and delivery, Participant will have all the rights of a stockholder of the Company with respect to voting such Shares and receipt of dividends and distributions on such Shares.
10. No Guarantee of Continued Service . PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF THE RESTRICTED STOCK UNITS PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER, WHICH UNLESS PROVIDED OTHERWISE UNDER APPLICABLE LAW IS AT THE WILL OF THE COMPANY (OR THE SERVICE RECIPIENT) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS RESTRICTED STOCK UNIT AWARD OR ACQUIRING SHARES HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AWARD AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE SERVICE RECIPIENT) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER, SUBJECT TO APPLICABLE LAW, WHICH TERMINATION, UNLESS PROVIDED OTHERWISE UNDER APPLICABLE LAW, MAY BE AT ANY TIME, WITH OR WITHOUT CAUSE.
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11. Grant is Not Transferable . Except to the limited extent provided in Section 7, this grant and the rights and privileges conferred hereby will not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this grant and the rights and privileges conferred hereby immediately will become null and void.
12. Nature of Grant . In accepting the grant, Participant acknowledges, understands, and agrees that:
(a) the grant of the Restricted Stock Units is voluntary and occasional and does not create any contractual or other right to receive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units have been granted in the past;
(b) all decisions with respect to future Restricted Stock Units or other grants, if any, will be at the sole discretion of the Company;
(c) Participant is voluntarily participating in the Plan;
(d) the Restricted Stock Units and the Shares subject to the Restricted Stock Units are not intended to replace any pension rights or compensation;
(e) the Restricted Stock Units and the Shares subject to the Restricted Stock Units, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
(f) the future value of the underlying Shares is unknown, indeterminable and cannot be predicted;
(g) for purposes of the Restricted Stock Units, Participant’s status as a Service Provider will be considered terminated as of the date Participant is no longer actively providing services to the Company or any Parent or Subsidiary (regardless of the reason for such termination and whether or not later to be found invalid or in breach of employment laws in the jurisdiction where Participant is a Service Provider or the terms of Participant’s employment or service agreement, if any), and unless otherwise expressly provided in this Award Agreement (including by reference in the Notice of Grant to other arrangements or contracts) or determined by the Administrator, Participant’s right to vest in the Restricted Stock Units under the Plan, if any, will terminate as of such date and will not be extended by any notice period (e.g., Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where Participant is a Service Provider or the terms of Participant’s employment or service agreement, if any, unless Participant is providing bona fide services during such time); the Administrator shall have the exclusive discretion to determine when Participant is no longer actively providing services for purposes of the Restricted Stock Units grant (including whether Participant may still be considered to be providing services while on a leave of absence and consistent with local law);
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(h) unless otherwise provided in the Plan or by the Company in its discretion, the Restricted Stock Units and the benefits evidenced by this Award Agreement do not create any entitlement to have the Restricted Stock Units or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares; and
(i) the following provisions apply only if Participant is providing services outside the United States:
(i) the Restricted Stock Units and the Shares subject to the Restricted Stock Units are not part of normal or expected compensation or salary for any purpose;
(ii) Participant acknowledges and agrees that none of the Company, the Employer or any Parent or Subsidiary shall be liable for any foreign exchange rate fluctuation between Participant’s local currency and the United States Dollar that may affect the value of the Restricted Stock Units or of any amounts due to Participant pursuant to the settlement of the Restricted Stock Units or the subsequent sale of any Shares acquired upon settlement; and
(iii) no claim or entitlement to compensation or damages shall arise from forfeiture of the Restricted Stock Units resulting from the termination of Participant’s status as a Service Provider (for any reason whatsoever whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is a Service Provider or the terms of Participant’s employment or service agreement, if any), and in consideration of the grant of the Restricted Stock Units to which Participant is otherwise not entitled, Participant irrevocably agrees never to institute any claim against the Company, any Parent or Subsidiary or the Service Recipient, waives his or her ability, if any, to bring any such claim, and releases the Company, any Parent or Subsidiary and the Service Recipient from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim.
13. No Advice Regarding Grant . The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Participant’s participation in the Plan, or Participant’s acquisition or sale of the underlying Shares. Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
14. Data Privacy . Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s personal data as described in this Award Agreement and any other Restricted Stock Unit grant materials by and among, as applicable, the Employer, or other Service Recipient the Company and any Parent or Subsidiary for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan.
Participant understands that the Company and the Service Recipient may hold certain personal information about Participant, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance number or other identification
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number, salary, nationality, job title, any Shares or directorships held in the Company, details of all Restricted Stock Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
Participant understands that Data will be transferred to a stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration, and management of the Plan. Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country of operation (e.g., the United States) may have different data privacy laws and protections than Participant’s country. Participant understands that if he or she resides outside the United States, he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. Participant authorizes the Company, any stock plan service provider selected by the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan. Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. Participant understands if he or she resides outside the United States, he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, Participant understands that he or she is providing the consents herein on a purely voluntary basis. If Participant does not consent, or if Participant later seeks to revoke his or her consent, his or her status as a Service Provider and career with the Service Recipient will not be adversely affected; the only adverse consequence of refusing or withdrawing Participant’s consent is that the Company would not be able to grant Participant Restricted Stock Units or other equity awards or administer or maintain such awards. Therefore, Participant understands that refusing or withdrawing his or her consent may affect Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that he or she may contact his or her local human resources representative.
15. Address for Notices . Any notice to be given to the Company under the terms of this Award Agreement will be addressed to the Company at Revolve Group, Inc., 16800 Edwards Road, Cerritos, CA 90703, or at such other address as the Company may hereafter designate in writing.
16. Electronic Delivery and Acceptance . The Company may, in its sole discretion, decide to deliver any documents related to the Restricted Stock Units awarded under the Plan or future Restricted Stock Units that may be awarded under the Plan by electronic means or request Participant’s consent to participate in the Plan by electronic means. Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through any on-line or electronic system established and maintained by the Company or a third party designated by the Company.
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17. No Waiver . Either party’s failure to enforce any provision or provisions of this Award Agreement shall not in any way be construed as a waiver of any such provision or provisions, nor prevent that party from thereafter enforcing each and every other provision of this Award Agreement. The rights granted both parties herein are cumulative and shall not constitute a waiver of either party’s right to assert all other legal remedies available to it under the circumstances.
18. Successors and Assigns . The Company may assign any of its rights under this Award Agreement to single or multiple assignees, and this Award Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Award Agreement shall be binding upon Participant and his or her heirs, executors, administrators, successors and assigns. The rights and obligations of Participant under this Award Agreement may only be assigned with the prior written consent of the Company.
19. Additional Conditions to Issuance of Stock . If at any time the Company will determine, in its discretion, that the listing, registration, qualification or rule compliance of the Shares upon any securities exchange or under any state, federal or non-U.S. law, the tax code and related regulations or under the rulings or regulations of the United States Securities and Exchange Commission or any other governmental regulatory body or the clearance, consent or approval of the United States Securities and Exchange Commission or any other governmental regulatory authority is necessary or desirable as a condition to the issuance of Shares to Participant (or his or her estate) hereunder, such issuance will not occur unless and until such listing, registration, qualification, rule compliance, clearance, consent or approval will have been completed, effected or obtained free of any conditions not acceptable to the Company. Subject to the terms of the Award Agreement and the Plan, the Company shall not be required to issue any certificate or certificates for Shares hereunder prior to the lapse of such reasonable period of time following the date of vesting of the Restricted Stock Units as the Administrator may establish from time to time for reasons of administrative convenience.
20. Language . If Participant has received this Award Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
21. Interpretation . The Administrator will have the power to interpret the Plan and this Award Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any Restricted Stock Units have vested). All actions taken and all interpretations and determinations made by the Administrator in good faith will be final and binding upon Participant, the Company and all other interested persons. Neither the Administrator nor any person acting on behalf of the Administrator will be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or this Award Agreement.
22. Captions . Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Award Agreement.
23. Amendment, Suspension or Termination of the Plan . By accepting this Award, Participant expressly warrants that he or she has received an Award of Restricted Stock Units under
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the Plan, and has received, read, and understood a description of the Plan. Participant understands that the Plan is discretionary in nature and may be amended, suspended or terminated by the Company at any time.
24. Modifications to the Award Agreement . This Award Agreement constitutes the entire understanding of the parties on the subjects covered. Participant expressly warrants that he or she is not accepting this Award Agreement in reliance on any promises, representations, or inducements other than those contained herein. Modifications to this Award Agreement or the Plan can be made only in an express written contract executed by a duly authorized officer of the Company. Notwithstanding anything to the contrary in the Plan or this Award Agreement, the Company reserves the right to revise this Award Agreement as it deems necessary or advisable, in its sole discretion and without the consent of Participant, to comply with Section 409A or to otherwise avoid imposition of any additional tax or income recognition under Section 409A in connection to this Award of Restricted Stock Units.
25. Governing Law; Venue; Severability . This Award Agreement and the Restricted Stock Units are governed by the internal substantive laws, but not the choice of law rules, of Delaware. For purposes of litigating any dispute that arises under these Restricted Stock Units or this Award Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California, and agree that such litigation will be conducted in the courts of Los Angeles County, California, or the federal courts for the United States for the Central District of California, and no other courts, where this Award Agreement is made and/or to be performed. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Award Agreement shall continue in full force and effect.
26. Entire Agreement . The Plan is incorporated herein by reference. The Plan and this Award Agreement (including the appendices and exhibits referenced herein) constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Company and Participant.
27. Country Addendum . Notwithstanding any provisions in this Award Agreement, the Restricted Stock Unit grant shall be subject to any special terms and conditions set forth in the appendix (if any) to this Award Agreement for Participant’s country. Moreover, if Participant relocates to one of the countries included in the Country Addendum (if any), the special terms and conditions for such country will apply to Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Country Addendum constitutes part of this Award Agreement.
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Revolve Group , Inc.
2018 EQUITY INCENTIVE PLAN
RESTRICTED STOCK UNIT AGREEMENT
COUNTRY ADDENDUM
TERMS AND CONDITIONS
This Country Addendum includes additional terms and conditions that govern the Award of Restricted Stock Units granted to Participant under the Plan if Participant works in one of the countries listed below. If Participant is a citizen or resident of a country (or is considered as such for local law purposes) other than the one in which he or she is currently working or if Participant relocates to another country after receiving the Award of Restricted Stock Units, the Company will, in its discretion, determine the extent to which the terms and conditions contained herein will be applicable to Participant.
Certain capitalized terms used but not defined in this Country Addendum shall have the meanings set forth in the Plan, and/or the Restricted Stock Unit Agreement to which this Country Addendum is attached.
NOTIFICATIONS
This Country Addendum also includes notifications relating to exchange control and other issues of which Participant should be aware with respect to his or her participation in the Plan. The information is based on the exchange control, securities and other laws in effect in the countries listed in this Country Addendum, as of ________ (except as otherwise noted below). Such laws are often complex and change frequently. As a result, the Company strongly recommends that Participant not rely on the notifications herein as the only source of information relating to the consequences of his or her participation in the Plan because the information may be outdated when Participant vests in the Restricted Stock Units and acquires Shares, or when Participant subsequently sell Shares acquired under the Plan.
In addition, the notifications are general in nature and may not apply to Participant’s particular situation, and the Company is not in a position to assure Participant of any particular result. Accordingly, Participant is advised to seek appropriate professional advice as to how the relevant laws in Participant’s country may apply to Participant’s situation.
Finally, if Participant is a citizen or resident of a country other than the one in which Participant is currently working (or is considered as such for local law purposes) or if Participant moves to another country after receiving the Award of Restricted Stock Units, the information contained herein may not be applicable to Participant.
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Exhibit 10.8
Revolve Group, Inc.
2018 EMPLOYEE STOCK PURCHASE PLAN
(Adopted on September 28, 2018 and effective immediately prior to the Company’s initial public offering)
1. Purpose . The purpose of the Plan is to provide employees of the Company and its Designated Companies with an opportunity to purchase Common Stock through accumulated Contributions. The Company intends for the Plan to have two components: a component that is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code (the “423 Component”) and a component that is not intended to qualify as an “employee stock purchase plan” under Section 423 of the Code (the “Non-423 Component”). The provisions of the 423 Component, accordingly, will be construed so as to extend and limit Plan participation in a uniform and nondiscriminatory basis consistent with the requirements of Section 423 of the Code. An option to purchase shares of Common Stock under the Non-423 Component will be granted pursuant to rules, procedures, or sub-plans adopted by the Administrator designed to achieve tax, securities laws, or other objectives for Eligible Employees and the Company. Except as otherwise provided herein, the Non-423 Component will operate and be administered in the same manner as the 423 Component.
2. Definitions .
(a) “ Administrator ” means the Board or any Committee designated by the Board to administer the Plan pursuant to Section 14.
(b) “ Affiliate ” means any entity, other than a Subsidiary, in which the Company has an equity or other ownership interest.
(c) “ Applicable Laws ” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where options are, or will be, granted under the Plan.
(d) “ Board ” means the Board of Directors of the Company.
(e) “ Change in Control ” means the occurrence of any of the following events:
(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“ Person ”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent (50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection, the acquisition of additional stock by any one Person, who is considered to own more than fifty percent (50%) of the total voting power of the stock of the Company will not
be considered a Change in Control . Further, if the stockholders of the Company immediately before such change in ownership continue to retain immediately after the change in ownership, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately prior to the change in ownership, direct or indirect beneficial ownership of fifty percent (50%) or more of the total voting power of the stock of the Company or of the ultimate parent entity of the Company, such event shall not be considered a Change in Control under this subsection (i). For this purpose, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company, as the case may be, either directly or through one or more subsidiary corporations or other business entities ; or
(ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12)-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this subsection (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or
(iii) A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12)‑month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection, the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase, or acquisition of stock, or similar business transaction with the Company.
Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final U.S. Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time.
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Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
(f) “ Code ” means the U.S. Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code will include such section, any valid regulation or other official applicable guidance promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
(g) “ Committee ” means a committee of the Board appointed in accordance with Section 14 hereof.
(h) “ Common Stock ” means the Class A common stock of the Company.
(i) “ Company ” means Revolve Group, Inc., a Delaware corporation, or any successor thereto.
(j) “ Compensation ” includes an Eligible Employee’s base straight time gross earnings but excludes payments for incentive compensation, bonuses, payments for overtime and shift premium, equity compensation income and other similar compensation. The Administrator, in its discretion, may, on a uniform and nondiscriminatory basis, establish a different definition of Compensation for a subsequent Offering Period.
(k) “ Contributions ” means the payroll deductions and other additional payments that the Company may permit to be made by a Participant to fund the exercise of options granted pursuant to the Plan.
(l) “ Designated Company ” means any Subsidiary or Affiliate of the Company that has been designated by the Administrator from time to time in its sole discretion as eligible to participate in the Plan. For purposes of the 423 Component, only the Company and its Subsidiaries may be Designated Companies, provided, however that at any given time, a Subsidiary that is a Designated Company under the 423 Component will not be a Designated Company under the Non‑423 Component.
(m) “ Director ” means a member of the Board.
(n) “ Eligible Employee ” means any individual who is a common law employee providing services to the Company or a Designated Company and is customarily employed for at least twenty (20) hours per week and more than five (5) months in any calendar year by the Employer, or any lesser number of hours per week and/or number of months in any calendar year established by the Administrator (if required under applicable local law) for purposes of any separate Offering or the Non-423 Component. For purposes of the Plan, the employment relationship will be treated as continuing intact while the individual is on sick leave or other leave of absence that the Employer approves or is legally protected under Applicable Laws. Where the period of leave exceeds three (3) months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated three (3)
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months and one (1) day following the commencement of such leave. The Administrator, in its discretion, from time to time may, prior to an Enrollment Date for all options to be granted on such Enrollment Date in an Offering, determine (on a uniform and nondiscriminatory basis or as otherwise permitted by Treasury Regulation Section 1.423 ‑2) that the definition of Eligible Employee will or will not include an individual if he or she: (i) has not completed at least two (2) years of service since his or her last hire date (or such lesser period of time as may be determined by the Administrator in its discretion), (ii) customarily works not more than twenty (20) hours per week (or such lesser period of time as may be determined by the Administrator in its discretion), (iii) customarily works not more than five (5) months per calendar year (or such lesser period of time as may be determined by the Administrator in its discretion), (iv) is a highly compensated employee within the meaning of Section 414(q) of the Code, or (v) is a highly compensated employee within the meaning of Section 414(q) of the Code with compensation above a certain level or is an officer or subject to the disclosure requirements of Section 16(a) of the Exchange Act, provided the exclusion is applied with respect to each Offering in an identical manner to all highly compensated individuals of the Employer whose Eligible Employees are participating in that Offering . Each exclusion will be applied with respect to an Offering in a manner complying with U.S. Treasury Regulation Section 1.423 ‑2(e)(2)(ii).
(o) “ Employer ” means the employer of the applicable Eligible Employee(s).
(p) “ Enrollment Date ” means the first Trading Day of an Offering Period.
(q) “ Exchange Act ” means the U.S. Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder.
(r) “ Exercise Date ” means a date on which each outstanding option granted under the Plan will be exercised (except if the Plan has been terminated), as may be determined by the Administrator, in its discretion and on a uniform and nondiscriminatory basis from time to time prior to an Enrollment Date for all options to be granted on such Enrollment Date. For purposes of clarification, there may be multiple Exercise Dates during an Offering Period.
(s) “ Fair Market Value ” means, as of any date, the value of a share of Common Stock determined as follows:
(i) the Fair Market Value will be t he closing sales price for Common Stock as quoted on any established stock exchange or national market system (including without limitation the New York Stock Exchange, NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market of The NASDAQ Stock Market) on which the Common Stock is listed on the date of determination (or the closing bid, if no sales were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable. If the determination date for the Fair Market Value occurs on a non-trading day (i.e., a weekend or holiday), the Fair Market Value will be such price on the immediately preceding trading day, unless otherwise determined by the Administrator. In the absence of an established market for the Common Stock, the Fair Market Value thereof will be determined in good faith by the Administrator.
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The determination of fair market value for purposes of tax withholding may be made in the Administrator’s discretion subject to Applicable Laws and is not required to be consistent with the determination of Fair Market Value for other purposes.
(ii) In the absence of an established market for the Common Stock, the Fair Market Value thereof will be determined in good faith by the Administrator.
(t) “ Fiscal Year ” means a fiscal year of the Company.
(u) “ New Exercise Date ” means a new Exercise Date if the Administrator shortens any Offering Period then in progress.
(v) “ Offering ” means an offer under the Plan of an option that may be exercised during an Offering Period as further described in Section 4. For purposes of the Plan, the Administrator may designate separate Offerings under the Plan (the terms of which need not be identical) in which Eligible Employees of one or more Employers will participate, even if the dates of the applicable Offering Periods of each such Offering are identical and the provisions of the Plan will separately apply to each Offering. To the extent permitted by U.S. Treasury Regulation Section 1.423‑2(a)(1), the terms of each Offering need not be identical provided that the terms of the Plan and an Offering together satisfy U.S. Treasury Regulation Section 1.423‑2(a)(2) and (a)(3).
(w) “ Offering Period ” means a period beginning on such date as may be determined by the Administrator in its discretion and ending on such Exercise Date as may be determined by the Administrator in its discretion, in each case on a uniform and nondiscriminatory basis. The duration and timing of Offering Periods may be changed pursuant to Sections 4, 20, and 30 .
(x) “ Parent ” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.
(y) “ Participant ” means an Eligible Employee that participates in the Plan.
(z) “ Plan ” means this Revolve Group, Inc. 2018 Employee Stock Purchase Plan.
(aa) “ Purchase Period ” means the period, as determined by the Administrator in its discretion on a uniform and nondiscriminatory basis, during an Offering Period that commences on the Offering Period’s Enrollment Date and ends on the next Exercise Date, except that if the Administrator determines that more than one Purchase Period should occur within an Offering Period, subsequent Purchase Periods within such Offering Period commence after one Exercise Date and end with the next Exercise Date at such time or times as the Administrator determines prior to the commencement of the Offering Period.
(bb) “ Purchase Price ” means the price per Share of the Shares purchased under any option granted under the Plan as determined by the Administrator from time to time, in its discretion and on a uniform and nondiscriminatory basis for all options to be granted on an Enrollment Date. However, in no event will the Purchase Price be less than eighty-five percent (85%) of the lower of the Fair Market Value of a share of Common Stock on the Enrollment Date or the Fair Market Value of a share of Common Stock on the Exercise Date and at all times in compliance with Section 423 of the Code (or any successor rule or provision or any other Applicable Law, regulation or stock exchange rule).
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(cc) “ Registration Date ” means the effective date of the Registration Statement.
(dd) “ Registration Statement ” means the registration statement on Form S-1 filed with the Securities and Exchange Commission for the initial public offering of the Common Stock.
(ee) “ Subsidiary ” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.
(ff) “ Trading Day ” means a day on which the national stock exchange upon which the Common Stock is listed is open for trading.
(gg) “ U.S. Treasury Regulations ” means the Treasury regulations of the Code. Reference to a specific Treasury Regulation will include such Treasury Regulation, the section of the Code under which such regulation was promulgated, and any comparable provision of any future legislation or regulation amending, supplementing, or superseding such Section or regulation.
3. Eligibility .
(a) Offering Periods . Any Eligible Employee on a given Enrollment Date will be eligible to participate in the Plan, subject to the requirements of Section 5.
(b) Non-U.S. Employees . Eligible Employees who are citizens or residents of a non-U.S. jurisdiction (without regard to whether they also are citizens or residents of the United States or resident aliens (within the meaning of Section 7701(b)(1)(A) of the Code)) may be excluded from participation in the Plan or an Offering if the participation of such Eligible Employees is prohibited under the laws of the applicable jurisdiction or if complying with the laws of the applicable jurisdiction would cause the Plan or an Offering to violate Section 423 of the Code. In the case of the Non-423 Component, Eligible Employees may be excluded from participation in the Plan or an Offering if the Administrator determines that participation of such Eligible Employees is not advisable or practicable.
(c) Limitations . Any provisions of the Plan to the contrary notwithstanding, no Eligible Employee will be granted an option under the Plan (i) to the extent that, immediately after the grant, such Eligible Employee (or any other person whose stock would be attributed to such Eligible Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company or any Parent or Subsidiary of the Company and/or hold outstanding options to purchase such stock possessing five percent (5%) or more of the total combined voting power or value of all classes of the capital stock of the Company or of any Parent or Subsidiary of the Company, or (ii) to the extent that his or her rights to purchase stock under all employee stock purchase plans (as defined in Section 423 of the Code) of the Company or any Parent or Subsidiary of the Company accrues at a rate, which exceeds twenty-five thousand dollars ($25,000) worth of stock (determined at the Fair Market Value of the stock at the time such option is granted) for each calendar year in which such option is outstanding at any time, as determined in accordance with Section 423 of the Code and the regulations thereunder.
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4. Offering Periods . Offering Periods will expir e on the earliest to occur of (i ) the completion of the purchase of Shares on the last Exercise Date occurring within twenty-seven (27) months of the applicable Enrollment Date on which the option to pu rchase Shares was granted, or (ii ) such shorter period as may be established by the Administrator from time to time, in its discretion and on a uniform and nondiscriminatory basis, prior to an Enrollment Date for all options to be granted on such Enrollment Date .
5. Participation . An Eligible Employee may participate in the Plan by (i) submitting to the Company’s stock administration office (or its designee) a properly completed subscription agreement authorizing Contributions in the form provided by the Administrator for such purpose or (ii) following an electronic or other enrollment procedure determined by the Administrator, in either case on or before a date determined by the Administrator prior to an applicable Enrollment Date.
6. Contributions .
(a) At the time a Participant enrolls in the Plan pursuant to Section 5, he or she will elect to have Contributions (in the form of payroll deductions or otherwise, to the extent permitted by the Administrator) made on each pay day during the Offering Period in an amount that the Administrator may establish from time to time, in its discretion and on a uniform and nondiscriminatory basis, for all options to be granted on any Enrollment Date. The Administrator, in its sole discretion, may permit all Participants in a specified Offering to contribute amounts to the Plan through payment by cash, check or other means set forth in the subscription agreement prior to each Exercise Date of each Purchase Period. A Participant’s subscription agreement will remain in effect for successive Offering Periods unless terminated as provided in Section 10 hereof.
(b) In the event Contributions are made in the form of payroll deductions, such payroll deductions for a Participant will commence on the first pay day following the Enrollment Date and will end on the last pay day on or prior to the last Exercise Date of such Offering Period to which such authorization is applicable, unless sooner terminated by the Participant as provided in Section 10 hereof.
(c) All Contributions made for a Participant will be credited to his or her account under the Plan and Contributions will be made in whole percentages of his or her Compensation only. A Participant may not make any additional payments into such account.
(d) A Participant may discontinue his or her participation in the Plan as provided under Section 10. Except as may be permitted by the Administrator, as determined in its sole discretion, a Participant may not change the rate of his or her Contributions during an Offering Period.
(e) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(d), a Participant’s Contributions may be decreased to zero percent (0%) at any time during a Purchase Period. Subject to Section 423(b)(8) of the Code and Section 3(d) hereof, Contributions will recommence at the rate originally elected by the Participant effective as of the beginning of the first Purchase Period scheduled to end in the following calendar year, unless terminated by the Participant as provided in Section 10.
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(f) Notwithstanding any provisions to the contrary in the Plan, the Administrator may allow Participants to participate in the Plan via cash contributions instead of payroll deductions if (i) payroll deductions are not permitted under applicable local law, (ii) the Administrator determines that cash contributions are permissible under Section 423 of the Code; or (iii) the Participants are participating in the Non-423 Component.
(g) At the time the option is exercised, in whole or in part, or at the time some or all of the Common Stock issued under the Plan is disposed of (or any other time that a taxable event related to the Plan occurs), the Participant must make adequate provision for the Company’s or Employer’s federal, state, local or any other tax liability payable to any authority including taxes imposed by jurisdictions outside of the U.S., national insurance, social security or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of the Common Stock (or any other time that a taxable event related to the Plan occurs). At any time, the Company or the Employer may, but will not be obligated to, withhold from the Participant’s compensation the amount necessary for the Company or the Employer to meet applicable withholding obligations, including any withholding required to make available to the Company or the Employer any tax deductions or benefits attributable to sale or early disposition of Common Stock by the Eligible Employee. In addition, the Company or the Employer may, but will not be obligated to, withhold from the proceeds of the sale of Common Stock or any other method of withholding the Company or the Employer deems appropriate to the extent permitted by U.S. Treasury Regulation Section 1.423‑2(f).
7. Grant of Option . On the Enrollment Date of each Offering Period, each Eligible Employee participating in such Offering Period will be granted an option to purchase on each Exercise Date during such Offering Period (at the applicable Purchase Price) up to a number of shares of Common Stock determined by dividing such Eligible Employee’s Contributions accumulated prior to such Exercise Date and retained in the Eligible Employee’s account as of the Exercise Date by the applicable Purchase Price; provided that in no event will an Eligible Employee be permitted to purchase during each Purchase Period more than that number of shares of Common Stock determined by the Administrator prior to the applicable Purchase Period (subject to any adjustment pursuant to Section 19) and provided further that such purchase will be subject to the limitations set forth in Sections 3(d) and 13. The Eligible Employee may accept the grant of such option by electing to participate in the Plan in accordance with the requirements of Section 5. The Administrator may, for future Offering Periods, increase or decrease, in its absolute discretion, the maximum number of shares of Common Stock that an Eligible Employee may purchase during each Purchase Period. Exercise of the option will occur as provided in Section 8, unless the Participant has withdrawn pursuant to Section 10. The option will expire on the last day of the Offering Period.
8. Exercise of Option .
(a) Unless a Participant withdraws from the Plan as provided in Section 10, his or her option for the purchase of shares of Common Stock will be exercised automatically on each Exercise Date, and the maximum number of full shares subject to the option will be purchased for such Participant at the applicable Purchase Price with the accumulated Contributions from his or her account. No fractional shares of Common Stock will be purchased; any Contributions accumulated in a Participant’s account, which are not sufficient to purchase a full share will be retained in the
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Participant’s account for the subsequent Purchase Period or Offering Period, subject to earlier withdrawal by the Participant as provided in Section 10 . Any other funds left over in a Participant’s account after the Exercise Date will be returned to the Participant. During a Participant’s lifetime, a Participant’s option to purchase shares hereunder is exercisable only by him or her.
(b) If the Administrator determines that, on a given Exercise Date, the number of shares of Common Stock with respect to which options are to be exercised may exceed (i) the number of shares of Common Stock that were available for sale under the Plan on the Enrollment Date of the applicable Offering Period, or (ii) the number of shares of Common Stock available for sale under the Plan on such Exercise Date, the Administrator may in its sole discretion (x) provide that the Company will make a pro rata allocation of the shares of Common Stock available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as will be practicable and as it will determine in its sole discretion to be equitable among all Participants exercising options to purchase Common Stock on such Exercise Date, and continue all Offering Periods then in effect or (y) provide that the Company will make a pro rata allocation of the shares of Common Stock available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as will be practicable and as it will determine in its sole discretion to be equitable among all participants exercising options to purchase Common Stock on such Exercise Date, and terminate any or all Offering Periods then in effect pursuant to Section 20. The Company may make a pro rata allocation of the shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional shares for issuance under the Plan by the Company’s stockholders subsequent to such Enrollment Date.
9. Delivery . As soon as reasonably practicable after each Exercise Date on which a purchase of shares of Common Stock occurs, the Company will arrange the delivery to each Participant of the shares purchased upon exercise of his or her option in a form determined by the Administrator (in its sole discretion) and pursuant to rules established by the Administrator. The Company may permit or require that shares be deposited directly with a broker designated by the Company or to a designated agent of the Company, and the Company may utilize electronic or automated methods of share transfer. The Company may require that shares be retained with such broker or agent for a designated period of time and/or may establish other procedures to permit tracking of disqualifying dispositions of such shares. No Participant will have any voting, dividend, or other stockholder rights with respect to shares of Common Stock subject to any option granted under the Plan until such shares have been purchased and delivered to the Participant as provided in this Section 9.
(a) A Participant may withdraw all but not less than all the Contributions credited to his or her account and not yet used to exercise his or her option under the Plan at any time by (i) submitting to the Company’s stock administration office (or its designee) a written notice of withdrawal in the form determined by the Administrator for such purpose (which may be similar to the form attached hereto as Exhibit B ), or (ii) following an electronic or other withdrawal procedure determined by the Administrator. All of the Participant’s Contributions credited to his or her account will be paid to such Participant promptly after receipt of notice of withdrawal and such
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Participant’s option for the Offering Period will be automatically terminated, and no further Contributions for the purchase of shares will be made for such Offering Period. If a Participant withdraws from an Offering Period, Contributions will not resume at the beginning of the succeeding Offering Period, unless the Participant re-enrolls in the Plan in accordance with the provisions of Section 5.
(b) A Participant’s withdrawal from an Offering Period will not have any effect on his or her eligibility to participate in any similar plan that may hereafter be adopted by the Company or in succeeding Offering Periods that commence after the termination of the Offering Period from which the Participant withdraws.
11. Termination of Employment . Upon a Participant’s ceasing to be an Eligible Employee, for any reason, he or she will be deemed to have elected to withdraw from the Plan and the Contributions credited to such Participant’s account during the Offering Period but not yet used to purchase shares of Common Stock under the Plan will be returned to such Participant or, in the case of his or her death, to the person or persons entitled thereto under Section 15, and such Participant’s option will be automatically terminated. Unless otherwise provided by the Administrator, a Participant whose employment transfers between entities through a termination with an immediate rehire (with no break in service) by the Company or a Designated Company will not be treated as terminated under the Plan; however, if a Participant transfers from an Offering under the 423 Component to the Non-423 Component, the exercise of the option will be qualified under the 423 Component only to the extent it complies with Section 423 of the Code, unless otherwise provided by the Administrator.
12. Interest . No interest will accrue on the Contributions of a participant in the Plan, except as may be required by Applicable Law, as determined by the Company, and if so required by the laws of a particular jurisdiction, will apply to all Participants in the relevant Offering under the 423 Component, except to the extent otherwise permitted by U.S. Treasury Regulation Section 1.423‑2(f).
13. Stock .
(a) Subject to adjustment upon changes in capitalization of the Company as provided in Section 19 hereof, the maximum number of shares of Common Stock that will be made available for sale under the Plan will be shares of Common Stock. The number of shares of Common Stock available for issuance under the Plan will be increased on the first day of each Fiscal Year beginning for the Fiscal Year following the Fiscal Year in which the first Enrollment Date (if any) occurs equal to the least of (i) shares of Common Stock, (ii) 1% of the outstanding shares of all classes of the Company’s common stock on the last day of the immediately preceding Fiscal Year , or (iii) an amount determined by the Administrator.
(b) Until the shares of Common Stock are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), a Participant will have only the rights of an unsecured creditor with respect to such shares, and no right to vote or receive dividends or any other rights as a stockholder will exist with respect to such shares.
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(c) Shares of Common Stock to be delivered to a Participant under the Plan will be registered in the name of the Participant or in the name of the Participant and his or her spouse.
14. Administration . The Plan will be administered by the Board or a Committee appointed by the Board, which Committee will be constituted to comply with Applicable Laws. The Administrator will have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to delegate ministerial duties to any of the Company’s employees, to designate separate Offerings under the Plan, to designate Subsidiaries and Affiliates of the Company as participating in the 423 Component or Non-423 Component, to determine eligibility, to adjudicate all disputed claims filed under the Plan and to establish such procedures that it deems necessary for the administration of the Plan (including, without limitation, to adopt such procedures and sub-plans as are necessary or appropriate to permit the participation in the Plan by employees who are foreign nationals or employed outside the U.S., the terms of which sub-plans may take precedence over other provisions of this Plan, with the exception of Section 13(a) hereof, but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan will govern the operation of such sub-plan). Unless otherwise determined by the Administrator, the Eligible Employees eligible to participate in each sub-plan will participate in a separate Offering or in the Non-423 Component. Without limiting the generality of the foregoing, the Administrator is specifically authorized to adopt rules and procedures regarding eligibility to participate, the definition of Compensation, handling of Contributions, making of Contributions to the Plan (including, without limitation, in forms other than payroll deductions), establishment of bank or trust accounts to hold Contributions, payment of interest, conversion of local currency, obligations to pay payroll tax, determination of beneficiary designation requirements, withholding procedures and handling of stock certificates that vary with applicable local requirements. The Administrator also is authorized to determine that, to the extent permitted by U.S. Treasury Regulation Section 1.423‑2(f), the terms of an option granted under the Plan or an Offering to citizens or residents of a non-U.S. jurisdiction will be less favorable than the terms of options granted under the Plan or the same Offering to employees resident solely in the U.S. Every finding, decision, and determination made by the Administrator will, to the full extent permitted by law, be final and binding upon all parties.
15. Designation of Beneficiary .
(a) If permitted by the Administrator, a Participant may file a designation of a beneficiary who is to receive any shares of Common Stock and cash, if any, from the Participant’s account under the Plan in the event of such Participant’s death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such Participant of such shares and cash. In addition, if permitted by the Administrator, a Participant may file a designation of a beneficiary who is to receive any cash from the Participant’s account under the Plan in the event of such Participant’s death prior to exercise of the option. If a Participant is married and the designated beneficiary is not the spouse, spousal consent will be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the Participant at any time by notice in a form determined by the Administrator. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant’s death, the Company will deliver such shares and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been
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appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.
(c) All beneficiary designations will be in such form and manner as the Administrator may designate from time to time. Notwithstanding Sections 15(a) and (b) above, the Company and/or the Administrator may decide not to permit such designations by Participants in non-U.S. jurisdictions to the extent permitted by U.S. Treasury Regulation Section 1.423‑2(f).
16. Transferability . Neither Contributions credited to a Participant’s account nor any rights with regard to the exercise of an option or to receive shares of Common Stock under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 15 hereof) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition will be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10 hereof.
17. Use of Funds . The Company may use all Contributions received or held by it under the Plan for any corporate purpose, and the Company will not be obligated to segregate such Contributions except under Offerings or for Participants in the Non-423 Component for which Applicable Laws require that Contributions to the Plan by Participants be segregated from the Company’s general corporate funds and/or deposited with an independent third party. Until shares of Common Stock are issued, Participants will have only the rights of an unsecured creditor with respect to such shares.
18. Reports . Individual accounts will be maintained for each Participant in the Plan. Statements of account will be given to participating Eligible Employees at least annually, which statements will set forth the amounts of Contributions, the Purchase Price, the number of shares of Common Stock purchased and the remaining cash balance, if any.
19. Adjustments, Dissolution, Liquidation, Merger, or Change in Control .
(a) Adjustments . In the event that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Common Stock or other securities of the Company, or other change in the corporate structure of the Company affecting the Common Stock occurs, the Administrator, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will, in such manner as it may deem equitable, adjust the number and class of Common Stock that may be delivered under the Plan, the Purchase Price per share and the number of shares of Common Stock covered by each option under the Plan that has not yet been exercised, and the numerical limits of Sections 7 and 13 .
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(b) Dissolution or Liquidation . In the event of the proposed dissolution or liquidation of the Company, any Offering Period then in progress will be shortened by setting a New Exercise Date, and will terminate immediately prior to the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Administrator. The New Exercise Date will be before the date of the Company’s proposed dissolution or liquidation. The Administrator will notify each Participant in writing or electronically, prior to the New Exercise Date, that the Exercise Date for the Participant’s option has been changed to the New Exercise Date and that the Participant’s option will be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 10 hereof.
(c) Merger or Change in Control . In the event of a merger or Change in Control, each outstanding option will be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the option, the Offering Period with respect to which such option relates will be shortened by setting a New Exercise Date on which such Offering Period will end. The New Exercise Date will occur before the date of the Company’s proposed merger or Change in Control. The Administrator will notify each Participant in writing or electronically prior to the New Exercise Date, that the Exercise Date for the Participant’s option has been changed to the New Exercise Date and that the Participant’s option will be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 10 hereof.
20. Amendment or Termination .
(a) The Administrator, in its sole discretion, may amend, suspend, or terminate the Plan, or any part thereof, at any time and for any reason. If the Plan is terminated, the Administrator, in its discretion, may elect to terminate all outstanding Offering Periods either immediately or upon completion of the purchase of shares of Common Stock on the next Exercise Date (which may be sooner than originally scheduled, if determined by the Administrator in its discretion), or may elect to permit Offering Periods to expire in accordance with their terms (and subject to any adjustment pursuant to Section 19). If the Offering Periods are terminated prior to expiration, all amounts then credited to Participants’ accounts that have not been used to purchase shares of Common Stock will be returned to the Participants (without interest thereon, except as otherwise required under Applicable Laws, as further set forth in Section 12 hereof) as soon as administratively practicable.
(b) Without stockholder consent and without limiting Section 20(a), the Administrator will be entitled to change the Offering Periods or Purchase Periods, designate separate Offerings, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit Contributions in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of properly completed Contribution elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with Contribution amounts, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable that are consistent with the Plan.
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(c) In the event the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Administrator may, in its discretion and, to the extent necessary or desirable, modify, amend or terminate the Plan to reduce or eliminate such accounting consequence including, but not limited to:
(i) amending the Plan to conform with the safe harbor definition under the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto), including with respect to an Offering Period underway at the time;
(ii) altering the Purchase Price for any Offering Period or Purchase Period including an Offering Period or Purchase Period underway at the time of the change in Purchase Price;
(iii) shortening any Offering Period or Purchase Period by setting a New Exercise Date, including an Offering Period or Purchase Period underway at the time of the Administrator action;
(iv) reducing the maximum percentage of Compensation a Participant may elect to set aside as Contributions; and
(v) reducing the maximum number of shares of Common Stock a Participant may purchase during any Offering Period or Purchase Period.
Such modifications or amendments will not require stockholder approval or the consent of any Participants.
21. Notices . All notices or other communications by a Participant to the Company under or in connection with the Plan will be deemed to have been duly given when received in the form and manner specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares . Shares of Common Stock will not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto will comply with all applicable provisions of law, domestic or foreign, including, without limitation, the U.S. Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the shares may then be listed, and will be further subject to the approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.
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23. Code Section 409A. The 423 Component of the Plan is exempt from the application of Code Section 409A and any ambiguities herein will be interpreted to so be exempt from Code Section 409A. In furtherance of the foregoing and notwithstanding any provision in the Plan to the contrary, if the Administrator determines that an option granted under the Plan may be subject to Code Section 409A or that any provision in the Plan would cause an option under the Plan to be subject to Code Section 409A, the Administrator may amend the terms of the Plan and/or of an outstanding option granted under the Plan, or take such other action the Administrator determines is necessary or appropriate, in each case, without the Participant’s consent, to exempt any outstanding option or future option that may be granted under the Plan from or to allow any such options to comply with Code Section 409A, but only to the extent any such amendments or action by the Administrator would not violate Code Section 409A. Notwithstanding the foregoing, the Company will have no liability to a Participant or any other party if the option to purchase Common Stock under the Plan that is intended to be exempt from or compliant with Code Section 409A is not so exempt or compliant or for any action taken by the Administrator with respect thereto. The Company makes no representation that the option to purchase Common Stock under the Plan is compliant with Code Section 409A.
24. Term of Plan . The Plan will become effective upon the later to occur of (i) its adoption by the Board or (ii) the business day immediately prior to the Registration Date. It will continue in effect for a term of ten (10) years, unless sooner terminated under Section 20.
25. Stockholder Approval . The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
26. Governing Law . The Plan will be governed by, and construed in accordance with, the laws of the State of Delaware (except its choice-of-law provisions).
27. No Right to Employment . Participation in the Plan by a Participant will not be construed as giving a Participant the right to be retained as an employee of the Company or a Subsidiary or Affiliate of the Company, as applicable. Further, the Company or a Subsidiary or Affiliate of the Company may dismiss a Participant from employment at any time, free from any liability or any claim under the Plan.
28. Severability . If any provision of the Plan is or becomes or is deemed to be invalid, illegal, or unenforceable for any reason in any jurisdiction or as to any Participant, such invalidity, illegality or unenforceability will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as to such jurisdiction or Participant as if the invalid, illegal or unenforceable provision had not been included.
29. Compliance with Applicable Laws . The terms of this Plan are intended to comply with all Applicable Laws and will be construed accordingly.
30. Automatic Transfer to Low Price Offering Period . To the extent permitted by Applicable Laws, if the Fair Market Value on any Exercise Date in an Offering Period is lower than the Fair Market Value on the Enrollment Date of such Offering Period, then all Participants in such Offering Period automatically will be withdrawn from such Offering Period immediately after the exercise of their option on such Exercise Date and automatically re-enrolled in the immediately following Offering Period as of the first day thereof.
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Revolve Group, Inc.
2018 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
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Original Application |
Offering Date: |
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Change in Payroll Deduction Rate |
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1. ____________________ (“Employee”) hereby elects to participate in the Revolve Group, Inc. 2018 Employee Stock Purchase Plan (the “Plan”) and subscribes to purchase shares of the Company’s Common Stock in accordance with this Subscription Agreement and the Plan. Unless otherwise defined herein, the terms defined in the 2018 Employee Stock Purchase Plan (the “Plan”) shall have the same defined meanings in this Subscription Agreement.
2. Employee hereby authorizes payroll deductions from each paycheck in the amount of ____% (from 1% to %) of his or her Compensation on each payday during the Offering Period in accordance with the Plan. (Please note that no fractional percentages are permitted.)
3. Employee understands that said payroll deductions will be accumulated for the purchase of shares of Common Stock at the applicable Purchase Price determined in accordance with the Plan. Employee understands that if he or she does not withdraw from an Offering Period, any accumulated payroll deductions will be used to automatically exercise his or her option and purchase Common Stock under the Plan.
4. Employee has received a copy of the complete Plan and its accompanying prospectus. Employee understands that his or her participation in the Plan is in all respects subject to the terms of the Plan.
5. Shares of Common Stock purchased by Employee under the Plan should be issued in the name(s) of _____________ (Employee or Employee and Spouse only).
6. Employee understands that if he or she disposes of any shares that he or she purchased under the Plan within two (2) years after the Enrollment Date (the first day of the Offering Period during which he or she purchased such shares) or one (1) year after the applicable Exercise Date, he or she will be treated for federal income tax purposes as having received ordinary income at the time of such disposition in an amount equal to the excess of the fair market value of the shares at the time such shares were purchased over the price paid for the shares. Employee hereby agrees to notify the Company in writing within thirty (30) days after the date of any disposition of such shares and to make adequate provision for federal, state or other tax withholding obligations, if any, that arise upon the disposition of such shares . The Company may, but will not be obligated to, withhold from Employee’s compensation the amount necessary to meet any applicable withholding obligation including any withholding necessary to make available to the Company any tax deductions or benefits attributable to Employee’s sale or early disposition of such shares. Employee understands that if he or she disposes of such shares at any time after the expiration of the two (2)-year and
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one ‑ (1) year holding periods, he or she will be treated for federal income tax purposes as having received income only at the time of such disposition, and that such income will be taxed as ordinary income only to the extent of an amount equal to the lesser of (i ) the excess of the fair market value of the shares at the time of such disposition over the purchase price paid for the shares, or (ii ) fifteen percent ( 15% ) of the fair market value of the shares on the first day of the Offering Period. The remainder of the gain, if any, recognized on such disposition will be taxed as capital gain.
7. Employee hereby agrees to be bound by the terms of the Plan. The effectiveness of this Subscription Agreement is dependent upon Employee’s eligibility to participate in the Plan.
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Employee’s Social |
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Security Number: |
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Employee’s Address: |
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EMPLOYEE UNDERSTANDS THAT THIS SUBSCRIPTION AGREEMENT WILL REMAIN IN EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY EMPLOYEE.
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Dated: |
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Signature of Employee |
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Revolve Group, Inc.
2018 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
Unless otherwise defined herein, the terms defined in the 2018 Employee Stock Purchase Plan (the “Plan”) shall have the same defined meanings in this Notice of Withdrawal.
The undersigned Participant in the Offering Period of the Revolve Group, Inc. 2018 Employee Stock Purchase Plan that began on ____________, ______ (the “Offering Date”) hereby notifies the Company that he or she hereby withdraws from the Offering Period. He or she hereby directs the Company to pay to the undersigned as promptly as practicable all the payroll deductions credited to his or her account with respect to such Offering Period. The undersigned understands and agrees that his or her option for such Offering Period will be terminated automatically. The undersigned understands further that no further payroll deductions will be made for the purchase of shares in the current Offering Period and the undersigned will be eligible to participate in succeeding Offering Periods only by delivering to the Company a new Subscription Agreement.
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Name and Address of Participant: |
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Signature: |
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Date: |
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Exhibit 10.9
REVOLVE GROUP, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
1. Purposes of the Plan . The Plan is intended to increase stockholder value and the success of the Company by motivating Employees to (i) perform to the best of their abilities and (ii) achieve the Company’s objectives.
2. Definitions .
(a) “ Actual Award ” means as to any Performance Period, the actual award (if any) payable to a Participant for the Performance Period, subject to the Committee’s authority under Section 3(d) to modify the award.
(b) “ Affiliate ” means any corporation or other entity (including, but not limited to, partnerships and joint ventures) controlled by the Company.
(c) “ Board ” means the Board of Directors of the Company.
(d) “ Bonus Pool ” means the pool of funds available for distribution to Participants. Subject to the terms of the Plan, the Committee establishes the Bonus Pool (if any) for each Performance Period.
(e) “ Code ” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder will include such section or regulation, any valid regulation promulgated thereunder, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
(f) “ Committee ” means the committee appointed by the Board (pursuant to Section 5) to administer the Plan. Unless and until the Board otherwise determines, the Board’s Compensation Committee will administer the Plan and be considered the Committee for purposes of the Plan.
(g) “ Company ” means Revolve Group, Inc., a Delaware corporation, or any successor thereto.
(h) “ Disability ” means a permanent and total disability determined in accordance with uniform and nondiscriminatory standards adopted by the Committee from time to time.
(i) “ Employee ” means any executive, officer, or key employee of the Company or of an Affiliate, whether such individual is so employed at the time the Plan is adopted or becomes so employed subsequent to the adoption of the Plan.
(j) “ Fiscal Year ” means the fiscal year of the Company.
(k) “ Participant ” means as to any Performance Period, an Employee who has been selected by the Committee for participation in the Plan for that Performance Period.
(l) “ Performance Period ” means the period of time for the measurement of the performance criteria that must be met to receive an Actual Award, as determined by the Committee in its sole discretion. A Performance Period may be divided into one or more shorter periods if, for example, but not by way of limitation, the Committee desires to measure some performance criteria over 12 months and other criteria over 3 months.
(m) “ Plan ” means this Executive Incentive Compensation Plan, as set forth in this instrument (including any appendix attached hereto) and as hereafter amended from time to time.
(n) “ Target Award ” means the target award, at 100% of target level performance achievement, payable under the Plan to a Participant for the Performance Period, as determined by the Committee in accordance with Section 3(b).
3. Selection of Participants and Determination of Awards .
(a) Selection of Participants . The Committee, in its sole discretion, will select the Employees who will be Participants for any Performance Period. Participation in the Plan is in the sole discretion of the Committee, on a Performance Period by Performance Period basis. Accordingly, an Employee who is a Participant for a given Performance Period in no way is guaranteed or assured of being selected for participation in any subsequent Performance Period or Performance Periods.
(b) Determination of Target Awards . The Committee, in its sole discretion, will establish a Target Award for each Participant (which may be expressed as a percentage of a Participant’s average annual base salary for the Performance Period or a fixed dollar amount or such other amount or based on such other formula as the Committee determines).
(c) Bonus Pool . Each Performance Period, the Committee, in its sole discretion, may establish a Bonus Pool, which pool may be established before, during or after the applicable Performance Period. Actual Awards will be paid from the Bonus Pool.
(d) Discretion to Modify Awards . Notwithstanding any contrary provision of the Plan, the Committee may, in its sole discretion and at any time, (i) increase, reduce or eliminate a Participant’s Actual Award, and/or (ii) increase, reduce or eliminate the amount allocated to the Bonus Pool. The Actual Award may be below, at or above the Target Award, in the Committee’s discretion. The Committee may determine the amount of any increase, reduction or elimination on the basis of such factors as it deems relevant, and will not be required to establish any allocation or weighting with respect to the factors it considers.
(e) Discretion to Determine Criteria . Notwithstanding any contrary provision of the Plan, the Committee, in its sole discretion, will determine the performance goals (if any) applicable to any Target Award (or portion thereof) which may include, without limitation: (i) revenue, (ii) operating income, (iii) earnings (including, but not limited to, earnings before interest, taxes, depreciation, and amortization ) , (iv) marketing efficiency, (v) segment and/or
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division revenue, (vi) Company brand penetration, (vii) individual performance, (viii) gross margin, (ix) return on investment capital, (x) budget management, (xi) earnings per share, (xii) cash flow, (xiii) net income, (xiv) conversion , (xv) units per transaction, (xvi) average dollar sale, (xvii) customer service metrics, (xviii) shrinkage and/or inventory control , (xix) management of expenses (including, but not limited to, labor or payroll expenses) , (xx) operational efficiency, (xxi) safety, (xxii) return on invested capital, (xxiii) inventory turn, (xxiv) total shareholder return, (xxv) cash flow growth , and (xx vi ) other subjective or objective criteria . As determined by the Committee, the performance goals may be based on generally accepted accounting principles (“GAAP”) or non-GAAP results and any actual results may be adjusted by the Committee for one-time items or unbudgeted or unexpected items and/or payments of Actual Awards under the Plan when determining whether the performance goals have been met. The goals may be on the basis o f any factors the Committee determines relevant, and may be on an individual, divisional, business unit, segment or Company-wide basis. Any criteria used may be measured on such basis as the Committee determines, including but not limited to, as applicable, (A) in absolute terms, (B) in combination with another performance goal or goals (for example, but not by way of limitation, as a ratio or matrix), (C) in relative terms (including, but not limited to, results for other periods, passage of time and/or against another company or companies or an index or indices), (D) on a per-share basis, (E) against the performance of the Company as a whole or a segment of the Company and/or (F) on a pre-tax or after-tax basis. The performance goals may differ from Participant to Participant and from award to award. Failure to meet the goals will result in a failure to earn the Target Award, except as provided in Section 3(d). The Committee also may determine that a Target Award (or portion thereof) will not have a performance goal associated with it but instead will be granted (if at all) in the sole discretion of the Committee.
4. Payment of Awards .
(a) Right to Receive Payment . Each Actual Award will be paid solely from the general assets of the Company. Nothing in this Plan will be construed to create a trust or to establish or evidence any Participant’s claim of any right other than as an unsecured general creditor with respect to any payment to which he or she may be entitled.
(b) Timing of Payment . Payment of each Actual Award shall be made as soon as practicable after the end of the Performance Period to which the Actual Award relates and after the Actual Award is approved by the Committee , but in no event later than the later of (i) the 15th day of the third month of the Fiscal Year immediately following the Fiscal Year in which the Participant’s Actual Award is first no longer subject to a substantial risk of forfeiture, and (ii) March 15 of the calendar year immediately following the calendar year in which the Participant’s Actual Award is first no longer subject to a substantial risk of forfeiture . Unless otherwise determined by the Committee, to earn an Actual Award a Participant must be employed by the Company or any Affiliate on the date the Actual Award is paid .
It is the intent that this Plan be exempt from or comply with the requirements of Code Section 409A so that none of the payments to be provided hereunder will be subject to the additional tax imposed under Code Section 409A, and any ambiguities herein will be interpreted to be so exempt or so comply. Each payment under this Plan is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2).
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(c) Form of Payment . Each Actual Award generally will be paid in cash (or its equivalent) in a single lump sum. The Committee reserves the right, in its sole discretion, to settle an Actual Award with a grant of an equity award under the Company’s then-current equity compensation plan , which equity award may have such terms and conditions, including vesting, as the Committee determines in its sole discretion .
(d) Payment in the Event of Death or Disability . If a Participant dies or is terminated due to his or her Disability prior to the payment of an Actual Award the Committee has determined will be paid for a prior Performance Period, the Actual Award will be paid to his or her estate or to the Participant, as the case may be, subject to the Committee’s discretion to reduce or eliminate any Actual Award otherwise payable.
5. Plan Administration .
(a) Committee is the Administrator . The Plan will be administered by the Committee. The Committee will consist of not less than 2 members of the Board. The members of the Committee will be appointed from time to time by, and serve at the pleasure of, the Board.
(b) Committee Authority . It will be the duty of the Committee to administer the Plan in accordance with the Plan’s provisions. The Committee will have all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (i) determine which Employees will be granted awards, (ii) prescribe the terms and conditions of awards, (iii) interpret the Plan and the awards, (iv) adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees who are foreign nationals or employed outside of the United States, (v) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and (vi) interpret, amend or revoke any such rules.
(c) Decisions Binding . All determinations and decisions made by the Committee, the Board, and/or any delegate of the Committee pursuant to the provisions of the Plan will be final, conclusive, and binding on all persons, and will be given the maximum deference permitted by law.
(d) Delegation by Committee . The Committee, in its sole discretion and on such terms and conditions as it may provide, may delegate all or part of its authority and powers under the Plan to one or more directors and/or officers of the Company.
(e) Indemnification . Each person who is or will have been a member of the Committee will be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any award, and (ii) from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she will give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification will not be exclusive of any other rights of indemnification to which such
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persons may be entitled under the Company’s Certificate of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.
6. General Provisions .
(a) Tax Withholding . The Company (or the Affiliate employing the applicable Employee) will withhold all applicable taxes from any Actual Award, including any federal, state and local taxes (including, but not limited to, the Participant’s FICA and SDI obligations).
(b) No Effect on Employment or Service . Nothing in the Plan will interfere with or limit in any way the right of the Company (or the Affiliate employing the applicable Employee) to terminate any Participant’s employment or service at any time, with or without cause. For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Affiliates (or between Affiliates) will not be deemed a termination of employment. Employment with the Company and its Affiliates is on an at-will basis only. The Company expressly reserves the right, which may be exercised at any time and without regard to when during a Performance Period such exercise occurs, to terminate any individual’s employment with or without cause, and to treat him or her without regard to the effect that such treatment might have upon him or her as a Participant.
(c) Participation . No Employee will have the right to be selected to receive an award under this Plan, or, having been so selected, to be selected to receive a future award.
(d) Successors . All obligations of the Company under the Plan, with respect to awards granted hereunder, will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company.
(e) Nontransferability of Awards . No award granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution. All rights with respect to an award granted to a Participant will be available during his or her lifetime only to the Participant.
7. Amendment, Termination, and Duration .
(a) Amendment, Suspension, or Termination . The Board or the Committee, in its sole discretion, may amend or terminate the Plan, or any part thereof, at any time and for any reason. The amendment, suspension or termination of the Plan will not, without the consent of the Participant, alter or impair any rights or obligations under any Actual Award theretofore earned by such Participant. No award may be granted during any period of suspension or after termination of the Plan.
(b) Duration of Plan . The Plan will commence on the date first adopted by the Board or the Committee, and subject to Section 7(a) (regarding the Board’s and/or the Committee’s right to amend or terminate the Plan), will remain in effect thereafter until terminated.
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(a) Gender and Number . Except where otherwise indicated by the context, any masculine term used herein also will include the feminine and any feminine term used herein also will include the masculine; the plural will include the singular and the singular will include the plural.
(b) Severability . In the event any provision of the Plan will be held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provision had not been included.
(c) Requirements of Law . The granting of awards under the Plan will be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
(d) Governing Law . The Plan and all awards will be construed in accordance with and governed by the laws of the State of Delaware, but without regard to its conflict of law provisions.
(e) Bonus Plan . The Plan is intended to be a “bonus program” as defined under U.S. Department of Labor regulation 2510.3-2(c) and will be construed and administered in accordance with such intention.
(f) Captions . Captions are provided herein for convenience only, and will not serve as a basis for interpretation or construction of the Plan.
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Exhibit 10.10
CREDIT AGREEMENT
dated as of
March 23, 2016,
among
TWIST HOLDINGS, LLC
and
ADVANCE HOLDINGS, LLC.,
as co-Parents and Guarantors,
ALLIANCE APPAREL GROUP, INC.,
EMINENT, INC.
and
ADVANCE DEVELOPMENT, INC.
as co-Borrowers
THE SUBSIDIARIES OF PARENT PARTY HERETO FROM TIME TO TIME AS GUARANTORS,
THE LENDERS PARTY HERETO,
and
BANK OF AMERICA, N.A.,
as Administrative Agent, Lead Arranger and Bookrunner
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Page |
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ARTICLE I General Conditions |
1 |
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1.1 |
Definitions |
1 |
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1.2 |
Terms Generally |
52 |
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1.3 |
Accounting Terms |
53 |
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1.4 |
Rounding |
53 |
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1.5 |
Times of Day; Rates |
53 |
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1.6 |
Letter of Credit Amounts |
54 |
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1.7 |
Pro Forma Basis |
54 |
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ARTICLE II Amount and Terms of Credit |
56 |
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2.1 |
Commitment of the Lenders |
56 |
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2.2 |
Increase in Total Commitments |
56 |
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2.3 |
Reserves |
58 |
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2.4 |
Revolving Credit Loans |
58 |
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2.5 |
Overadvances |
62 |
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2.6 |
Computation of Interest and Fees |
63 |
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2.7 |
Evidence of Debt; Notes |
63 |
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2.8 |
Interest on Loans; Default Rate |
63 |
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2.9 |
Inability to Determine Rates |
64 |
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2.10 |
Illegality |
65 |
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2.11 |
Letters of Credit |
65 |
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2.12 |
Increased Costs |
72 |
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2.13 |
Termination or Reduction of Commitments |
73 |
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2.14 |
Optional Prepayment of Revolving Credit Loans; Reimbursement of Lenders |
74 |
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2.15 |
Mandatory Prepayment; Cash Collateral |
75 |
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2.16 |
Credit Card Arrangements; Cash Management |
76 |
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2.17 |
Fees |
79 |
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2.18 |
Maintenance of Loan Account; Statements of Account |
80 |
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2.19 |
Payments |
81 |
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2.20 |
Settlement Amongst Lenders |
83 |
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2.21 |
Taxes |
84 |
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2.22 |
Mitigation Obligations; Replacement of Lenders |
88 |
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2.23 |
Cash Collateral |
89 |
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2.24 |
Defaulting Lenders |
90 |
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2.25 |
Sharing of Payments by Lenders |
92 |
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ARTICLE III Representations and Warranties |
93 |
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3.1 |
Existence, Qualification and Power; Compliance with Laws |
93 |
|
3.2 |
Authorization; No Contravention |
94 |
|
3.3 |
Governmental Authorization; Other Consents |
94 |
|
3.4 |
Enforceability |
94 |
-i -
TABLE OF CONTENTS
(Continued)
|
|
|
Page |
|
Financial Statements; No Material Adverse Effect |
94 |
|
|
3.6 |
Litigation |
95 |
|
3.7 |
No Default |
95 |
|
3.8 |
Ownership of Property; Liens |
95 |
|
3.9 |
Environmental Compliance |
96 |
|
3.10 |
Taxes |
97 |
|
3.11 |
ERISA Compliance |
97 |
|
3.12 |
Subsidiaries; Equity Interests; Investments |
98 |
|
3.13 |
Use of Proceeds; Margin Regulations; Investment Company Act |
99 |
|
3.14 |
Disclosure |
99 |
|
3.15 |
Intellectual Property; Licenses, Etc |
99 |
|
3.16 |
Solvency |
100 |
|
3.17 |
No Casualty, Etc |
100 |
|
3.18 |
Insurance |
100 |
|
3.19 |
Compliance with Laws and Agreements |
100 |
|
3.20 |
Labor Matters |
101 |
|
3.21 |
Security Documents |
101 |
|
3.22 |
Merchantable Inventory; Compliance with FLSA |
101 |
|
3.23 |
OSHA Compliance |
102 |
|
3.24 |
OFAC |
102 |
|
3.25 |
Anti-Corruption Laws |
102 |
|
3.26 |
EEA |
102 |
|
ARTICLE IV Conditions |
102 |
|
|
4.1 |
Conditions to Effectiveness of Credit Agreement |
102 |
|
4.2 |
Conditions Precedent to Each Credit Extension |
105 |
|
ARTICLE V Affirmative Covenants |
106 |
|
|
5.1 |
Financial Statements |
106 |
|
5.2 |
Certificates; Other Information |
108 |
|
5.3 |
Notices |
111 |
|
5.4 |
Payment of Taxes, Etc |
112 |
|
5.5 |
Preservation of Existence, Etc |
112 |
|
5.6 |
Maintenance of Properties |
112 |
|
5.7 |
Maintenance of Insurance |
112 |
|
5.8 |
Compliance with Laws and Material Contracts |
113 |
|
5.9 |
Books and Records |
114 |
|
5.10 |
Inspection Rights |
114 |
|
5.11 |
Covenant to Become a Loan Party, Give Security and Grant License |
115 |
|
5.12 |
Compliance with Environmental Laws |
117 |
|
5.13 |
Further Assurances |
117 |
-ii-
TABLE OF CONTENTS
(Continued)
|
|
|
Page |
|
Information Regarding Loan Parties and Collateral |
117 |
|
|
5.15 |
Physical Inventories |
117 |
|
5.16 |
Use of Proceeds of Credit Extensions |
118 |
|
5.17 |
Pension Plans |
118 |
|
5.18 |
Lien Searches |
118 |
|
5.19 |
Designation as Senior Indebtedness |
118 |
|
5.20 |
Lease Obligations |
118 |
|
5.21 |
Anti-Corruption Laws |
118 |
|
5.22 |
Collateral Access Agreements |
118 |
|
5.23 |
Factoring Arrangements |
119 |
|
ARTICLE VI Negative Covenants |
119 |
|
|
6.1 |
Liens |
119 |
|
6.2 |
Investments |
122 |
|
6.3 |
Indebtedness |
124 |
|
6.4 |
Fundamental Changes |
126 |
|
6.5 |
Dispositions |
127 |
|
6.6 |
Restricted Payments |
129 |
|
6.7 |
Change in Nature of Business |
130 |
|
6.8 |
Transactions with Affiliates |
131 |
|
6.9 |
Burdensome Agreements |
132 |
|
6.10 |
Accounting Changes |
132 |
|
6.11 |
Prepayments, Etc., of Indebtedness |
132 |
|
6.12 |
Amendment of Material Documents |
133 |
|
6.13 |
Use of Proceeds |
133 |
|
6.14 |
Designation of Other Senior Debt |
134 |
|
6.15 |
Minimum Consolidated Fixed Charge Coverage Ratio |
134 |
|
6.16 |
Sanctions |
134 |
|
ARTICLE VII Events of Default |
134 |
|
|
7.1 |
Events of Default |
134 |
|
7.2 |
Remedies Upon Event of Default |
137 |
|
7.3 |
Application of Proceeds |
138 |
|
7.4 |
Curative Equity |
139 |
|
ARTICLE VIII The Administrative Agent |
140 |
|
|
8.1 |
Appointment and Authority |
140 |
|
8.2 |
Rights as a Lender |
141 |
|
8.3 |
Exculpatory Provisions |
141 |
|
8.4 |
Reliance by Administrative Agent |
142 |
|
8.5 |
Delegation of Duties |
142 |
|
8.6 |
Resignation of Administrative Agent |
143 |
-iii-
TABLE OF CONTENTS
(Continued)
|
|
|
Page |
|
Non-Reliance on Administrative Agent and Other Lenders |
144 |
|
|
8.8 |
No Other Duties, Etc |
145 |
|
8.9 |
Administrative Agent May File Proofs of Claim; Credit Bidding |
145 |
|
8.10 |
Collateral and Guaranty Matters |
146 |
|
8.11 |
Loan Documents |
147 |
|
8.12 |
Other Liabilities |
147 |
|
ARTICLE IX Miscellaneous |
148 |
|
|
9.1 |
Amendments, Etc |
148 |
|
9.2 |
Notices; Effectiveness; Electronic Communication |
149 |
|
9.3 |
No Waiver; Cumulative Remedies |
152 |
|
9.4 |
Expenses; Indemnity; Damage Waiver |
152 |
|
9.5 |
Payments Set Aside |
154 |
|
9.6 |
Successors and Assigns |
155 |
|
9.7 |
Confidentiality |
159 |
|
9.8 |
Setoff; Sharing of Excess Payments |
161 |
|
9.9 |
Interest Rate Limitation |
162 |
|
9.10 |
Counterparts; Integration; Effectiveness |
163 |
|
9.11 |
[Reserved] |
163 |
|
9.12 |
Severability |
163 |
|
9.13 |
Replacement of Lenders |
163 |
|
9.14 |
GOVERNING LAW; JURISDICTION; ETC |
164 |
|
9.15 |
WAIVER OF RIGHT TO TRIAL BY JURY |
165 |
|
9.16 |
Agency for Perfection |
166 |
|
9.17 |
USA PATRIOT ACT, ETC |
166 |
|
9.18 |
No Advisory or Fiduciary Responsibility |
166 |
|
9.19 |
Survival of Representations and Warranties |
167 |
|
9.20 |
Press Releases and Related Matters |
167 |
|
9.21 |
Electronic Execution of Assignments and Certain Other Documents |
167 |
|
9.22 |
ENTIRE AGREEMENT |
167 |
|
9.23 |
Judgment Currency |
168 |
|
9.24 |
Joint and Several Liability; Waivers |
168 |
|
9.25 |
Acknowledgement and Consent to Bail-In of EEA Financial Institutions |
172 |
-iv -
|
Exhibit A: |
Form of Assignment and Acceptance |
|
Exhibit B: |
Form of Notice of Borrowing |
|
Exhibit C: |
Form of Joinder |
|
Exhibit D: |
Form of Credit Card Notification |
|
Exhibit E: |
Form of Compliance Certificate |
|
Exhibit F: |
Form of Borrowing Base Certificate |
|
Exhibit G(1) – (4) |
Forms of U.S Tax Compliance Certificates |
|
Exhibit H |
Form of Certificate Regarding Payment Conditions |
SCHEDULES
|
Schedule 1.1: |
Lenders and Commitments |
|
Schedule 1.1(a) |
Existing Letters of Credit |
|
Schedule 1.1(b) |
Permitted Holders |
|
Schedule 1.1(c) |
Intellectual Property |
|
Schedule 2.16(a): |
Credit Card Arrangements |
|
Schedule 2.16(b): |
DDAs |
|
Schedule 3.08(b)(i): |
Owned Real Estate |
|
Schedule 3.08(b)(ii): |
Leased Real Estate |
|
Schedule 3.09(b): |
Environmental Matters |
|
Schedule 3.09(d): |
Environmental Investigation |
|
Schedule 3.11: |
ERISA and Other Pension Matters |
|
Schedule 3.12: |
Subsidiaries; Guarantors; Equity Interests |
|
Schedule 3.20 |
Labor Relations |
|
Schedule 5.02(e): |
Reporting Requirements |
|
Schedule 5.07(c) |
Insurance Policies as on Closing Date |
|
Schedule 6.01: |
Permitted Encumbrances |
|
Schedule 6.02: |
Permitted Investments |
|
Schedule 6.03: |
Existing Indebtedness |
|
Schedule 6.08: |
Affiliate Transactions |
|
Schedule 6.09: |
Burdensome Agreements |
|
Schedule 9.02: |
Administrative Agent’s Office, Certain Addresses for Notices |
-v -
This CREDIT AGREEMENT dated as of March 23, 2016, is among ALLIANCE APPAREL GROUP, INC. a Delaware corporation, EMINENT, INC. , a Delaware corporation and ADVANCE DEVELOPMENT, INC ., a Delaware corporation (each a “ Borrower ” and together, the “ Borrowers ”), TWIST HOLDINGS, LLC , a Delaware limited liability company (“ Twist Holdings ”), ADVANCE HOLDINGS, LLC , a Delaware limited liability company (“ Advance Holdings ” and, collectively or individually, together with Twist Holdings, the (“ Parents ” and each a “ Parent ”), and the Subsidiaries of Parents party hereto from time to time as Guarantors, the Lenders, and BANK OF AMERICA, N.A. , as administrative agent and collateral agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) for itself and the other Lenders and BANK OF AMERICA, N.A. , as Lead Arranger and Bookrunner.
W I T N E S S E T H :
The Borrowers have requested that the Lenders provide a revolving credit facility, and the Lenders are willing to extend such credit to the Borrowers on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:
As used in this Agreement, the following terms have the meanings specified below:
“ ACH ” means automated clearing house transfers.
“ Accommodation Payment ” has the meaning provided in Section 9.24(d).
“ Account(s) ” means (i) ”accounts” as defined in the UCC, (ii) all Payment Intangibles consisting of amounts owing from credit card and debit card issuers and processors and all rights under contracts relating to the creation or collection of such Payment Intangibles and (iii) a right to payment of a monetary obligation, whether or not earned by performance, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, or (c) arising out of the use of a credit or charge card or information contained on or for use with the card. The term “Account” does not include (i) rights to payment evidenced by chattel paper or an instrument, (ii) commercial tort claims, (iii) deposit accounts, (iv) investment property, or (v) letter-of-credit rights or letters of credit.
“ Account Debtor ” means the customer of a Loan Party who is obligated on or under an Account.
“ Account Reserves ” means such reserves as may be established from time to time by the Administrative Agent in the Administrative Agent ’ s Permitted Discretion with respect to the collectability of any Eligible Credit Card Receivable and/or Eligible Wholesale Receivable, including, without limitation, the Dilution Reserve.
“ Acknowledgement ” means that certain Acknowledgement, dated as of the Closing Date, by Capretto, LLC, Advance Development, Inc. and Elyse Walker, in her individual capacity, pursuant to which each party acknowledges and agrees, among other things, that Forward by Elyse Walker, LLC, a California limited liability company, has entered into the Facility Guarantee and the Security Agreement.
“ Acquisition ” means, with respect to a specified Person, (a) a purchase or acquisition of a fifty percent (50.00%) or greater interest in the Capital Stock of any other Person, (b) a purchase or acquisition of all or substantially all of the assets of any other Person, (c) a purchase or acquisition of assets constituting a business unit, line of business or division of any other Person, or (d) any merger, amalgamation or consolidation of such Person with any other Person or other transaction or series of transactions resulting in the acquisition of all or substantially all of the assets, or a fifty percent (50.00%) or greater interest in the Capital Stock of, any Person, in each case in any transaction or group of transactions which are part of a common plan.
“ Additional Commitment Lender ” shall have the meaning provided in Section 2.02(a).
“ Adjusted LIBO Rate ” means an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of one percent) equal to (a) the LIBO Rate multiplied by (b) the Statutory Reserve Rate. The Adjusted LIBO Rate will be adjusted automatically as of the effective date of any change in the Statutory Reserve Rate.
“ Adjustment Date ” has the meaning provided in clause (b) of the definition of “Applicable Margin.”
“ Administrative Agent ” has the meaning provided in the preamble to this Agreement.
“ Administrative Agent’s Account ” has the meaning provided in Section 2.16(d).
“ Administrative Agent’s Office ” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 9.02 , or such other address or account as the Administrative Agent may from time to time notify to the Borrowers and the Lenders.
“ Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
“ Advance Holdings ” means Advance Holdings, LLC, a Delaware limited liability company.
-2 -
“ Affiliate ” means, with respect to a specified Person, any other Person that directly or indirectly through one or more intermediaries Controls, is Controlled by or is under common Control with the Person specified.
“ Agreement ” means this Credit Agreement, as modified, amended, supplemented or restated, and in effect from time to time.
“ Applicable Law ” means as to any Person, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case, whether or not having the force of law and applicable to such Person.
“ Applicable Margin ” means, with respect to other Loans and other Obligations,
(i) from and after the Closing Date until the first Adjustment Date, the percentages per annum set forth in Level II of the pricing grid below; and
(ii) on the first day of each calendar quarter (each, an “ Adjustment Date ”), commencing with the calendar quarter beginning on July 1, 2016, the applicable percentages per annum set forth below determined by reference to the Average Daily Excess Availability Percentage for the most recently ended Fiscal Quarter immediately preceding such Adjustment Date.
If any Borrowing Base Certificate delivered pursuant to this Agreement is at any time restated or otherwise revised, or if the information set forth in any such Borrowing Base Certificate otherwise proves to be false or incorrect such that the Applicable Margin would have been higher than was otherwise in effect during any period, without constituting a waiver of any Default or Event of Default arising as a result thereof, interest due under this Agreement shall be immediately recalculated at such higher rate for any applicable periods and shall be due and payable on demand.
-3 -
“ Appraised Value ” means (a) with respect to Eligible Inventory, the appraised net orderly liquidation value of the Loan Parties ’ Inventory (expressed as a percentage of the Cost of such Inventory) as reasonably determined from time to time by reference to the most recent appraisal received by the Administrative Agent conducted by an independent appraiser reasonably satisfactory to the Administrative Agent and (b) with respect to Eligible Intellectual Property, the appraised forced liquidation value of the Loan Parties ’ Eligible Intellectual Property as reasonably determined from time to time by reference to the most recent appraisal received by the Administrative Agent conducted by an independent appraiser reasonably satisfactory to the Administrative Agent.
“ Approved Fund ” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“ Arranger ” or “ Arrangers ” means Bank of America, N.A., in its capacity as lead arranger and bookrunner.
“ Assignee Group ” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.
“ Assignment and Acceptance ” means an assignment and acceptance entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 9.06(b) ), and accepted by the Administrative Agent, in substantially the form of Exhibit A or any other form (including electronic documentation generated by use of an electronic platform) approved by the Administrative Agent.
“ Attributable Indebtedness ” means, on any date, in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP.
“ Audited Financial Statements ” means the audited combined, consolidated balance sheet of Parents and their Subsidiaries for the fiscal year ending December 31, 2014, and the related combined, consolidated statements of income, stockholders’ equity and cash flows of Parents and their Subsidiaries, audited by KPMG, LLP, independent registered public accountants.
“ Availability Reserves ” means, without duplication of any other Reserves or items that are otherwise addressed or excluded through eligibility criteria, (a) the Customer Credit Liability Reserve, (b) the Rent and Charges Reserve, (c) reserves in respect of Bank Products and Cash Management Services established by the Administrative Agent in its Permitted Discretion, (d) reserves for accrued but unpaid ad valorem, excise, and personal property tax liability and for sale, use, or similar taxes and (e) such other reserves, as the Administrative Agent from time to time determines in its Permitted Discretion, to reflect (i) any impediments to the realization upon the Collateral (including, without limitation, claims and liabilities that the Administrative Agent determines will need to be satisfied in connection with the realization upon such Collateral), and (ii) events, conditions, contingencies or risks which adversely affect any component of the Borrowing Base, the Collateral included in the Borrowing Base or the validity or enforceability of this Agreement or the other Loan Documents or any of the rights or remedies of the Secured Parties hereunder or thereunder.
-4 -
“ Average Daily Excess Availability Percentage ” means, for any period, the percentage derived by dividing (a) the average daily Excess Availability during such period by (b) the average daily Maximum Borrowing Amount during such period.
“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
“ Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.
“ Bank of America ” means Bank of America, N.A., a national banking association, and its successors.
“ Bank Products ” means, collectively, (in each case, whether existing on the Closing Date or arising thereafter) (a) any services or facilities (other than Cash Management Services) provided to any Loan Party by any Lender or any Affiliate of a Lender on account of (i) credit or debit cards, (ii) purchase cards, (iii) merchant services, (iv) lease financing or related services, and (v) supply chain financing, and (b) any Swap Contracts provided to any Loan Party by any Swap Contract Secured Party, provided that any Bank Product for the benefit of any Foreign Subsidiary shall name a Borrower as the party thereto.
“ Bankruptcy Code ” means (Title 11 of the United States Code (11 U.S.C. Section 101 et seq.)) as now or hereafter in effect, or any successor thereto.
“ Blocked Account ” has the meaning provided in Section 2.16(c) .
“ Blocked Account Agreement ” has the meaning provided in Section 2.16(c).
“ Blocked Account Banks ” means the banks with whom deposit accounts are maintained in which funds of any of the Loan Parties from one or more DDAs are deposited and with whom a Blocked Account Agreement has been, or is required to be, executed in accordance with the terms hereof.
“ Borrowers ” means, collectively, Twist Holdings and Advance Holdings and each other Person (other than an Excluded Subsidiary) who becomes a Borrower hereunder in accordance with the terms of this Agreement.
“ Borrower Materials ” has the meaning provided in Section 5.02 .
“ Borrowing ” means the incurrence of Revolving Credit Loans of a single Type, on a single date and having, in the case of LIBOR Loans, a single Interest Period.
-5 -
“ Borrowing Base ” means, at any time of calculation, an amount equal to:
(a) the Cost of Eligible Inventory of the Loan Parties, net of Inventory Reserves, multiplied by ninety percent (90.00%) (or, solely during the Seasonal Advance Period, ninety-two and one-half of one percent (92.50%)) multiplied by the Appraised Value of Eligible Inventory of the Loan Parties;
plus
(b) the face amount of Eligible Credit Card Receivables of the Borrowers, net of Account Reserves, multiplied by ninety percent (90.00%);
plus
(c) the face amount of the Eligible Wholesale Receivables of the Borrowers, net of Account Reserves, if any, in respect thereof, multiplied by eighty-five percent (85.00%);
plus
(d) the Appraised Value of the Eligible Intellectual Property (i) multiplied by fifty percent (50%) until the one year anniversary of the Closing Date, (ii) multiplied by forty-five percent (45%) between the one year anniversary of the Closing Date and the two year anniversary of the Closing Date, (iii) multiplied by forty percent (40%) between the two year anniversary of the Closing Date and the three year anniversary of the Closing Date, (iv) multiplied by thirty-five percent (35%) between the three year anniversary of the Closing Date and the four year anniversary of the Closing Date and (v) multiplied by thirty percent (30%) between the four year anniversary of the Closing Date and the five year anniversary of the Closing Date; provided that the amount of this clause (d) shall not exceed 20% of the Maximum Borrowing Amount, after accounting for the inclusion of Eligible Intellectual Property;
minus
(e) the then amount of all Availability Reserves.
“ Borrowing Base Certificate ” means a certificate in substantially the form of Exhibit F , certified as complete and correct in all material respects on behalf of the Borrowers by a Responsible Officer of each respective Borrower.
“ Borrowing Request ” means a request by the Borrowers for a Borrowing in accordance with Section 2.04 or Section 2.06 , as the case may be.
“ Breakage Costs ” has the meaning provided in Section 2.14(b) .
-6 -
“ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, the state where the Administrative Agent ’ s Office is located, and if such day relates to any LIBOR Loan, means any such day that is also a London Banking Day.
“ Capital Expenditures ” means, with respect to the Loan Parties and their Subsidiaries for any period, any expenditure in respect of the purchase or other acquisition of any fixed or capital asset (excluding normal replacements and maintenance which are properly charged to current operations). For purposes of this definition, the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment or with insurance proceeds shall be included in Capital Expenditures only to the extent of the gross amount by which such purchase price exceeds the credit granted by the seller of such equipment for the equipment being traded in at such time or the amount of such insurance proceeds, as the case may be.
“ Capitalized Leases ” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases; provided that for all purposes hereunder the amount of obligations under any Capitalized Lease shall be the amount thereof accounted for as a liability in accordance with GAAP.
“ Capital Stock ” shall mean, as to any Person that is a corporation, the authorized shares of such Person’s capital stock, including all classes of common, preferred, voting and nonvoting capital stock, and, as to any Person that is not a corporation or an individual, the membership or other ownership interests in such Person, including, without limitation, the right to share in profits and losses, the right to receive distributions of cash and other property, and the right to receive allocations of items of income, gain, loss, deduction and credit and similar items from such Person, whether or not such interests include voting or similar rights entitling the holder thereof to exercise Control over such Person, collectively with, in any such case, all warrants, options and other rights to purchase or otherwise acquire, and all other instruments convertible into or exchangeable for, any of the foregoing.
“ Cash Collateralize ” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the Issuing Bank or the Lenders, as collateral for Obligations in respect of Letters of Credit, or obligations of the Lenders to fund participations in respect thereof, cash or deposit account balances or, if the Administrative Agent and the Issuing Bank shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to the Administrative Agent and the Issuing Bank. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
“ Cash Dominion Event ” means either (a) the occurrence and continuance of any Specified Event of Default, or (b) the failure of the Borrowers, at any time, to maintain Excess Availability in an amount at least equal to the greater of (i) twelve and one-half of one percent (12.50%) of the Maximum Borrowing Amount or (ii) $7,000,000. For purposes of this Agreement, the occurrence of a Cash Dominion Event shall be deemed continuing (x) so long as such Specified Event of Default is
-7-
continuing or has not been waived, and/or (y) if the Cash Dominion Event arises as a result of the Borrowers ’ failure to achieve Excess Availability as required under clause (b) above, until Excess Availability has exceeded the amount required by clause (b) above for sixty (60) consecutive days, in which case a Cash Dominion Event shall no longer be deemed to be continuing for purposes of this Agreement; provided , however , that a Cash Dominion Event may not be so cured on more than five (5) times over the term of this Agreement.
“ Cash Equivalents ” means any of the following types of Investments, to the extent owned by either Borrower or any of their respective Subsidiaries free and clear of all Liens (other than Liens created under the Security Documents):
(a) in the case of any Foreign Subsidiary, such local currencies held by them from time to time in the ordinary course of business and not for speculation;
(b) readily marketable obligations issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof having maturities of not more than three hundred sixty (360) days from the date of acquisition thereof; provided that the full faith and credit of the United States is pledged in support thereof;
(c) time deposits with, or insured certificates of deposit or bankers ’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the United States, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c) of this definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more than 180 days from the date of acquisition thereof;
(d) commercial paper issued by any Person organized under the laws of any state of the United States and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than one hundred eighty (180) days from the date of acquisition thereof;
(e) other short-term investments utilized by Foreign Subsidiaries in accordance with normal investment practices for cash management in investments of a type analogous to the foregoing; and
(f) Investments, classified in accordance with GAAP as current assets of either Borrower or any of their Subsidiaries, in money market investment programs registered under the Investment Company Act of 1940, which are administered by financial institutions that have the highest rating obtainable from either Moody ’s or S&P, and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a), (b), (c), (d) and (e) of this definition.
-8 -
“ Cash Management Services ” means any one or more of the following types of services or facilities provided to any Loan Party by any Lender or any Affiliate of a Lender (in each case, whether existing on the Closing Date or arising thereafter): (a) ACH transactions, (b) treasury and/or cash management services, including, without limitation, controlled disbursement services, depository, overdraft and electronic funds transfer services, and (c) deposit and other accounts . For the avoidance of doubt, Cash Management Services do not include Swap Contracts.
“ Cash Receipts ” has the meaning provided in Section 2.16(d) .
“ CERCLA ” means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq.
“ CERCLIS ” means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S. Environmental Protection Agency.
“ Change in Control ” means an event or series of events by which:
(a) at any time prior to an Initial Public Offering, the Permitted Holders shall cease to own directly or indirectly at least fifty-one percent (51%) or more of the equity securities of Twist Holdings entitled to vote for members of the board of directors or equivalent governing body of Twist Holdings on a fully-diluted basis; or
(b) at any time prior to an Initial Public Offering, the Permitted Holders shall cease to own directly or indirectly at least fifty-one percent (51%) or more of the equity securities of Advance Holdings entitled to vote for members of the board of directors or equivalent governing body of Advance Holdings on a fully-diluted basis; or
(c) at any time after an Initial Public Offering, any “person” or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than the Permitted Holders, directly or indirectly (1) shall have acquired beneficial ownership of (A) more than thirty-five percent (35%) on a fully diluted basis of the economic and/or voting interests in the Capital Stock of Advance Holdings and (B) a percentage of the voting and/or economic interest in the Capital Stock of Advance Holdings on a fully-diluted basis that is greater than the percentage of the voting and/or economic interest in the Capital Stock of Advance Holdings on a fully-diluted basis then held by the Permitted Holders or (2) shall have obtained the power (whether or not exercised) to elect a majority of the members of the board of directors (or similar governing body) of Advance Holdings; or
(d) at any time after an Initial Public Offering, any “person” or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than the Permitted Holders, directly or indirectly (1) shall have acquired beneficial ownership of (A) more than thirty-five percent (35%) on a fully diluted basis of the economic and/or voting interests in the Capital Stock of Twist Holdings and (B) a percentage of the voting and/or economic interest in the Capital Stock of Twist Holdings on a fully-diluted basis that is greater than the percentage of the voting and/or economic interest in the Capital Stock of Twist Holdings on a fully-diluted basis then held by the Permitted Holders or (2) shall have obtained the power (whether or not exercised) to elect a majority of the members of the board of directors (or similar governing body) of Twist Holdings; or
(e) Parents shall cease, directly or indirectly, to own and control legally and beneficially all of the Capital Stock of each Borrower.
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“ Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “ Change in Law, ” regardless of the date enacted, implemented, adopted or issued.
“ Closing Date ” means March 23, 2016.
“ Code ” means the Internal Revenue Code of 1986 and the Treasury regulations promulgated thereunder, as amended from time to time.
“ Collateral ” means any and all “Collateral” or words of similar intent as defined in any applicable Security Document with respect to the applicable Loan Party.
“ Collateral Access Agreement ” means an agreement reasonably satisfactory in form and substance to the Administrative Agent executed by (a) a bailee or other Person in possession of Collateral, including, without limitation, any warehouseman and (b) a landlord of Real Estate leased by any Loan Party (including, without limitation, any warehouse or distribution center), pursuant to which such Person (i) acknowledges the Administrative Agent’s Lien on the Collateral, (ii) releases or subordinates such Person’s Liens in the Collateral held by such Person or located on such Real Estate, (iii) agrees to furnish the Administrative Agent with access to the Collateral in such Person’s possession or on the Real Estate for the purposes of conducting a Liquidation, and (iv) makes such other agreements with the Administrative Agent as the Administrative Agent may reasonably require.
“ Commercial Letter of Credit ” means any Letter of Credit issued for the purpose of providing the primary payment mechanism in connection with the purchase of any materials, goods or services by a Borrower or a Subsidiary in the ordinary course of business of such Borrower or Subsidiary.
“ Commitment ” shall mean, with respect to each Lender, the commitment of such Lender hereunder set forth as its “Commitment” opposite its name on Schedule 1.1 hereto or as may subsequently be set forth in the Register from time to time, and as the same may be increased or reduced from time to time pursuant to this Agreement.
“ Commitment Increase ” shall have the meaning provided in Section 2.02(a) .
“ Commitment Increase Date ” shall have the meaning provided in Section 2.02(c) .
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“ Commitment Percentage ” means with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Total Commitments represented by such Lender ’ s Commitment at such time, subject to adjustment as provided herein . If the commitment of each Lender to make Loans and the obligation of the Issuing Bank to issue Letters of Credit have been terminated or if the Total Commitments have expired, then the Commitment Percentage of each Lender shall be determined based on the Commitment Percentage of such Lender most recently in effect, giving effect to any subsequent assignments . The initial Commitment Percentage of each Lender is set forth opposite the name of such Lender on Schedule 1.1 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.
“ Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq .), as amended from time to time, and any successor statute.
“ Compliance Certificate ” has the meaning provided in Section 5.02(a).
“ Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“ Consolidated ” means, when used to modify a financial term, test, statement, or report of a Person, the application or preparation of such term, test, statement or report (as applicable) based upon the consolidation, in accordance with GAAP, of the financial position, cash flows, or operating results of such Person and its Subsidiaries.
“ Consolidated EBITDA ” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (without duplication of either (x) any item described in any other clause, below, or (y) any item excluded in the calculation of Consolidated Net Income)
a) the following to the extent deducted in calculating such Consolidated Net Income:
i. Consolidated Interest Expense,
ii. the provision for Federal, state, local and foreign income Taxes,
iii. depreciation and amortization expense,
iv. non-cash charges, losses or expenses ( provided that if any such non-cash charges represent an accrual or reserve for potential cash items in any future period, (1) the Borrowers may determine not to add back such non-cash charge in the current period and (2) to the extent the Borrowers do decide to add back such non-cash charge, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA to such extent),
v. fees (including termination fees) and expenses paid or accrued pursuant to the Sponsor Management Agreement,
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vi. cash received in respect of a non-cash gain deducted from Consolidated EBITDA pursuant to clause (b)(ii) below in a prior period,
vii. the amount of “run rate” net cost savings, operating expense reductions and revenue increases projected by the Borrowers in good faith to be realized during the period of twelve (12) months from the determination of Consolidated EBITDA and which are projected to result from actions taken prior to the date of determination of Consolidated EBITDA (and which revenue increases must result from written contractual agreements entered into by the Borrowers and their Subsidiaries with vendors and other third parties prior to the date of determination of Consolidated EBITDA) (calculated on a pro forma basis as though such cost savings, operating expense reductions and revenue increases, as applicable, had been realized on the first day of the period for which Consolidated EBITDA is being determined and if such cost savings, operating expense reductions and revenue increases, as applicable, were realized during the entirety of such period), net of the amount of actual benefits realized during such period from such agreements that, a financial officer of the Borrowers shall have certified to the Administrative Agent that such cost savings, operating expense reductions and revenue increases are reasonably identifiable, quantifiable and factually supportable (it being understood that any such adjustments shall be without duplication of cost savings or additional costs already deducted from net income, or included as an addback to Consolidated EBITDA, for such period, including any pro forma adjustments); provided that, such savings, reductions or revenue increases contemplated by this paragraph (a)(vii), together with those amounts contemplated by paragraphs (a)(viii), (a)(ix) and (a)(x) of this definition of “Consolidated EBITDA” do not exceed in the aggregate 25.0% of Consolidated EBITDA in any four consecutive Fiscal Quarters; provided , further , that projected amounts (and not yet realized) may no longer be added in calculating Consolidated EBITDA pursuant to this paragraph (a)(vii) to the extent occurring more than four full fiscal quarters after the specified action taken in order to realize such projected cost savings,
viii. the amount of any non-recurring severance costs, recruiting costs, restructuring costs and business optimization expenses for such period; provided that, such costs and expenses contemplated by this paragraph (a)(viii), together with those amounts contemplated by paragraphs (a)(vii), (a)(ix) and (a)(x) of this definition of “Consolidated EBITDA” do not exceed in the aggregate 25.0% of Consolidated EBITDA in any four consecutive Fiscal Quarters
ix. any non-recurring fees, charges and other expenses (including severance costs) made or incurred during such period, or any amortization thereof for such period, in connection with any acquisition or investment, the issuance, repayment or amendment of Indebtedness (in each case, whether or not consummated), any disposition, or issuance of capital stock, including the capital stock of any parent company, and including, in each case, permitted to be incurred by this Agreement and whether or not successful or completed (that are paid or otherwise accounted for within 365 days of such transactions (or the proposed transactions to the extent not consummated); provided that, such fees, charges and expenses contemplated by this paragraph (a)(ix), together with those amounts contemplated by paragraphs (a)(vii), (a)(viii) and (a)(x) of this definition of “Consolidated EBITDA” do not exceed in the aggregate 25.0% of Consolidated EBITDA in any four consecutive Fiscal Quarters
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x. pre-opening and opening costs and expenses (including related consulting fees) in connection with new business segments; provided that, such costs and expenses contemplated by this paragraph (a)(x), together with those amounts contemplated by paragraphs (a)(vii), (a)(viii) and (a)(ix) of this definition of “ Consolidated EBITDA ” do not exceed in the aggregate 25.0% of Consolidated EBITDA in any four consecutive Fiscal Quarters,
xi. any costs fees and expenses in connection with an Initial Public Offering,
xii. cash losses realized upon the sale, disposition or discontinuance of assets that are not sold or otherwise disposed of in the ordinary course of business,
xiii. cash payments in respect of earn outs and contingent consideration obligations (including to the extent accounted for as bonus or otherwise), and
xiv. any expenses, charges or losses to the extent covered by insurance or indemnity and actually reimbursed, or, so long as the Borrowers have made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer or indemnifying party and only to the extent that such amount is (i) not denied by the applicable carrier or indemnifying party in writing within 180 days and (ii) 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),
minus
b) the following to the extent included in calculating such Consolidated Net Income:
i. Federal, state, local and foreign income tax credits,
ii. all non-cash items increasing Consolidated Net Income, all as determined on a Consolidated basis in accordance with GAAP and
iii. any cash payments made during such period in respect of non-cash charges, losses or expenses added back pursuant to clause (a)(iv) above during a prior period.
“ Consolidated Fixed Charge Coverage Ratio ” means, with respect to Parents and each of their respective Subsidiaries for any period, the ratio of (a) (i) Consolidated EBITDA for such period minus (ii) the sum of (A) Capital Expenditures made during such period which are not financed with net proceeds of Permitted Indebtedness during such period plus (B) the aggregate amount (but not less than $0) of Federal, state, local and foreign income taxes paid in cash during such period to (b) the sum of (i) Debt Service Charges paid in cash during such period plus (ii) Restricted Payments paid in cash during such period.
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“ Consolidated Interest Expense ” means, with respect to Parents and each of their respective Subsidiaries on a Consolidated basis for any period, (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, (b) all interest paid or payable with respect to discontinued operations and (c) the portion of rent expense under Capitalized Leases that is treated as interest in accordance with GAAP.
“ Consolidated Net Income ” means, with respect to Parents for any period, the aggregate of the net income (loss) of each Borrower and each of its respective Subsidiaries for such period, on a Consolidated basis, and otherwise determined in accordance with GAAP; provided that Consolidated Net Income shall exclude (a) extraordinary gains and extraordinary losses for such period, (b) the net income of any Subsidiary during such period to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary of such income is not permitted by operation of the terms of its Organization Documents or any agreement, instrument or Applicable Law to such Subsidiary during such period, except that each Parent’s equity in any net loss of any such Subsidiary for such period shall be included in determining Consolidated Net Income, (c) any income (or loss) for such period of any Person if such Person is not a Subsidiary, except that each Parent’s equity in the net income of any such Person for such period shall be included in Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to Parents or any of their Subsidiaries as a dividend or other distribution (and in the case of a dividend or other distribution to a Subsidiary, such Subsidiary is not precluded from further distributing such amount to Parents as described in clause (b) of this proviso), (d) the effects of adjustments (including the effects of such adjustments pushed down to Borrowers and their Subsidiaries) in any line item in the Borrowers’ consolidated financial statements required or permitted by Financial Accounting Standards Codification No. 805 – Business Combinations and No. 350 – Intangibles-Goodwill and Other (ASC 805 and ASC 350) (formerly Financial Accounting Standards Board Statement Nos. 141 and 142, respectively) resulting from the application of purchase accounting, including in relation to any acquisition that is consummated on or after the Closing Date or the amortization or write-off of any amounts thereof, net of taxes, (e) any net unrealized gain or loss (after any offset) resulting in such period from Swap Agreements and from the application of Accounting Standards Codification Topic No. 815, Derivatives and Hedging, (f) any non-cash net gain or loss (after any offset) resulting in such period from currency transaction or translation gains or losses (including those related to currency remeasurements of Indebtedness (including any net loss or gain resulting from (A) swap agreements for currency exchange risk and (B) resulting from intercompany indebtedness among such Person and its Subsidiaries)), (g) any non-cash adjustments resulting from the application of Accounting Standards Codification Topic No. 460, Guarantees, or any comparable regulation; and (h) non-cash gains and losses from the early extinguishment of debt and swap contracts.
In addition, notwithstanding anything to the contrary in the foregoing, to the extent not already included in Consolidated Net Income in any period and so long as the expenses, charges and losses with respect to which such amounts relate have not been excluded from Consolidated Net Income in any period, Consolidated Net Income shall include (x) the amount of proceeds received
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from business interruption insurance and (y) reimbursements of any expenses and charges that are covered by indemnification or other reimbursement provisions in connection with any acquisition, Investment or any sale, conveyance, transfer or other disposition of assets permitted under this Agreement.
“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. The terms “ Controlling ” and “ Controlled ” have meanings correlative thereto.
“ Cost ” means the cost of the Loan Parties’ Inventory determined according to the accounting policies used in the preparation of Parents’ audited financial statements as in effect on the Closing Date, and as may be modified after the Closing Date; provided that any such modification is consistent with the determination of Cost used by the appraiser in the most recent appraisal to determine Appraised Value.
“ Credit Card Notifications ” has the meaning provided in Section 2.16(c).
“ Credit Extension ” means each of the following: (a) a Borrowing and (b) with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.
“ Credit Party ” means (a) the Lenders, (b) the Administrative Agent and its respective Affiliates and branches, (c) the Issuing Bank, (d) the Arranger and its Affiliates and branches and (e) the successors and permitted assigns of each of the foregoing.
“ Curative Equity ” means the net amount of common equity contributions made directly or indirectly to Parents in immediately available funds which Parents contribute as additional common equity contributions to Borrowers in immediately available funds and which is designated “Curative Equity” by Borrowers under Section 7.04 of this Agreement at the time it is contributed.
“ Customer Credit Liability Reserve ” means, at any time, an Availability Reserve in respect of the aggregate remaining balance reflected on the books and records of the Loan Parties at such time of (a) outstanding gift certificates and gift cards of the Loan Parties entitling the holder thereof to use all or a portion of the gift certificate or gift card to pay all or a portion of the purchase price for any Inventory (it being understood that, as of the Closing Date, the reserve in this clause (a) shall be limited to 50% of the amount of such gift certificates and gift cards), and (b) outstanding merchandise credits and customer deposits of the Loan Parties.
“ DDAs ” means any checking or other demand deposit account maintained by the Loan Parties. All funds in such DDAs shall be conclusively presumed to be Collateral and proceeds of Collateral and the Administrative Agent or the Lenders shall have no duty to inquire as to the source of the amounts on deposit in the DDAs.
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“ Debt Service Charges ” means, for any period, the sum of (a) Consolidated Interest Expense plus (b) principal payments or redemptions or similar acquisitions for value made or required to be made (other than any (x) principal payments required to be made at maturity which are made with proceeds of a Permitted Refinancing and (y) optional redemptions or prepayments pursuant to a Permitted Refinancing) on account of Indebtedness for borrowed money (including, without limitation, obligations with respect to Capitalized Leases) for such period, in each case determined in accordance with GAAP.
“ Debtor Relief Laws ” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.
“ Default ” means any event or condition described in Section 7.01 that constitutes an Event of Default or that upon notice, lapse of any cure period set forth in Section 7.01 , or both, would, unless cured or waived, become an Event of Default.
“ Default Rate ” means (a) when used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the Prime Rate plus (ii) the Applicable Margin applicable to Prime Rate Loans plus (iii) two percent (2.00%) per annum; provided , however , that with respect to a LIBOR Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Margin) otherwise applicable to such Loan plus two percent (2.00%) per annum and (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Margin for LIBOR Loans plus two percent (2.00%) per annum.
“ Defaulting Lender ” means, subject to Section 2.24(b) , any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrowers 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, the Issuing Bank or any Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit) within two (2) Business Days of the date when due, (b) has notified any Borrower, the Administrative Agent or the Issuing Bank 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 (3) Business Days after written request by the Administrative Agent or the Borrowers, to confirm in writing to the Administrative Agent and the Borrowers 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 Borrowers), or ((d) has, or has a direct or indirect parent company that
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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 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 Capital Stock in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender . Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.24(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 Issuing Bank and each Lender promptly following such determination.
“ Deposit Account ” means any deposit account (as that term is defined in the UCC).
“ Designated Jurisdiction ” means any country or territory to the extent such country or territory itself is the subject of any Sanction.
“ Dilution Factors ” shall mean, without duplication, with respect to any period, the aggregate amount of all deductions, credit memos, returns, adjustments, allowances, bad debt write-offs, charge-offs and other non-cash credits and account adjustments which are recorded to reduce Accounts in a manner consistent with current and historical accounting practices of the Borrowers. The Dilution Factors shall be determined separately for Eligible Wholesale Receivables.
“ Dilution Ratio ” shall mean, for any relevant period of determination (as selected by the Administrative Agent in its reasonable judgment), the amount (expressed as a percentage) equal to (a) the aggregate amount of the applicable Dilution Factors for such period with respect to the relevant Accounts divided by (b) the aggregate amount of sales comprising such relevant Accounts for such period. The Dilution Ratio shall be determined separately for Eligible Wholesale Receivables.
“ Dilution Reserve ” shall mean, at any date, an amount sufficient to reduce the advance rate against Eligible Wholesale Receivables, as applicable, by 1 percentage point for each percentage point by which the applicable Dilution Ratio exceeds 5%.
“ Disposition ” or “ Dispose ” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property (including, without limitation, an Capital Stock of any other Person held by a specified Person) by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
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“ Disqualified Capital Stock ” means any Capital Stock which, by its terms (or by the terms of any security or other Capital Stock into which it is convertible or for which it is exchangeable), is putable or exchangeable, or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Capital Stock (other than Disqualified Capital Stock)), 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 repayment in full of all Obligations and the termination of the Commitments), (b) is redeemable at the option of the holder thereof (other than solely for Capital Stock (other than Disqualified Capital Stock)), in whole or in part, (c) provides for the scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Capital Stock that would constitute Disqualified Capital Stock, in each case, prior to the date that is ninety-one (91) days after the Maturity Date.
“ Dollars ” or “$” refers to lawful money of the United States.
“ EEA Financial Institution ” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“ EEA Resolution Authority ” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“ Eligible Assignee ” means any Person that meets the requirements to be an assignee under Section 9.06(b)(iii) and (v) (subject to such consents, if any, as may be required under Section 9.06(b)(iii) ).
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“ Eligible Credit Card Receivables ” means, as of any date of determination, Accounts due to a Loan Party from VISA, Mastercard, Discover, American Express, Diners Club, JCB, PayPal and Alipay and such other credit card processors and credit providers as shall be reasonably acceptable to the Administrative Agent which arise in the ordinary course of business from the sale of goods or the rendition of services and which have been earned by performance that the Administrative Agent has not determined, in its Permitted Discretion, to exclude from Eligible Credit Card Receivables and is not otherwise excluded as ineligible by virtue of one or more of the criteria set forth below (without duplication of any Reserves established by the Administrative Agent) . The amount of Eligible Credit Card Receivables shall be calculated net of unapplied cash . None of the following shall be deemed to be Eligible Credit Card Receivables:
(a) Accounts due from credit card and debit card processors that have been outstanding for more than five (5) Business Days from the date of sale, or for such longer period(s) as may be approved by the Administrative Agent in its Permitted Discretion;
(b) Accounts due from credit card and debit card processors with respect to which the applicable Loan Party does not have good, valid and marketable title thereto, free and clear of any Lien (other than Liens granted to the Administrative Agent for the benefit of the Secured Parties pursuant to the Security Documents and Permitted Encumbrances);
(c) Accounts due from credit card and debit card processors that are not subject to a perfected first priority security interest in favor of the Administrative Agent for the benefit of the Secured Parties (other than Permitted Encumbrances permitted under Section 6.01(c), (d) or (k) having priority by operation of Applicable Law over the Lien of the Administrative Agent acting as the collateral agent) (the foregoing not being intended to limit the ability of the Administrative Agent to change, establish or eliminate any Reserves in its Permitted Discretion on account of any such Liens);
(d) Accounts due from credit card and debit card processors which are disputed, or with respect to which a claim, counterclaim, offset or chargeback has been asserted, by the related credit card processor (but only to the extent of such dispute, counterclaim, offset or chargeback);
(e) Except as otherwise approved by the Administrative Agent in its Permitted Discretion, Accounts due from credit card and debit card processors as to which the credit card processor or debit card processor has the right under certain circumstances to require a Loan Party to repurchase the Accounts from such credit card or debit card processor;
(f) Except as otherwise approved by the Administrative Agent in its Permitted Discretion, Accounts arising from any private label credit card program or other similar credit arrangement of a Loan Party;
(g) Accounts due from credit card processors which are not located in the United States;
(h) Accounts that are not denominated in Dollars; and
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(i) Accounts acquired in a Permitted Acquisition, unless the Administrative Agent shall have received or conducted a field examination and such other due diligence as the Administrative Agent may reasonably require, all of the results of the foregoing to be reasonably satisfactory to the Administrative Agent; provided, however, that any such collateral audits and examinations shall not be subject to (and shall not be included in) the limitations set forth in Section 5.10 on the number of collateral audits, examination, and appraisals for which the Administrative Agent is entitled to be reimbursed in any period; and
(j) Accounts due from credit card and debit card processors which the Administrative Agent determines in its Permitted Discretion and upon notice to the Borrowers to be unlikely to be collected.
The Administrative Agent shall have the right to establish, modify or eliminate Reserves against Eligible Credit Card Receivables (including, without limitation, for estimates, chargeback or other accrued liabilities or offsets by credit card processors and amounts to adjust for material claims, offsets, defenses or counterclaims or other material disputes with an Account Debtor) from time to time in its Permitted Discretion.
“ Eligible Intellectual Property ” means Intellectual Property of a Borrower, as specified on Schedule 1.1(c), determined by the Administrative Agent, in its Permitted Discretion, to be eligible for inclusion in the calculation of the Borrowing Base. Without limiting the foregoing, no Intellectual Property shall be Eligible Intellectual Property unless:
(a) Such Intellectual Property is validly registered with the PTO or the U.S. Copyright Office, as applicable, or such other equivalent foreign filing or registration office that is acceptable to the Administrative Agent;
(b) A Borrower owns, and has good and valid title to, such Intellectual Property;
(c) Such Borrower is in compliance with the representations, warranties and covenants set forth in this Agreement and the other Loan Documents relating to such Intellectual Property;
(d) The Administrative Agent shall have received evidence that all actions that the Administrative Agent may reasonably deem necessary or appropriate in order to create valid, perfected and enforceable first priority Lien on such Intellectual Property under applicable law (including, without limitation, filings at the PTO or such other equivalent foreign filing or registration office) has been taken; and
(e) Such Intellectual Property conforms with the covenants or representation and warranties in the Loan Documents.
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“ Eligible Inventory ” means, as of any date of determination, items of Inventory of a Loan Party that are finished goods, merchantable and readily saleable to the public in the ordinary course that the Administrative Agent has not determined, in its Permitted Discretion, to exclude from Eligible Inventory and is not otherwise excluded as ineligible by virtue of one or more of the criteria set forth below (without duplication of any Reserves established by the Administrative Agent) . None of the following shall be deemed to be Eligible Inventory:
(a) Inventory with respect to which a Loan Party does not have good, valid and marketable title thereto, free and clear of any Lien (other than Liens granted to the Administrative Agent for the benefit of the Secured Parties pursuant to the Security Documents and Permitted Encumbrances), or is leased by or is on consignment to or by a Loan Party, or that is not solely owned by a Loan Party;
(b) Inventory that (i) is not located in the United States of America or (ii) is located at a location that is not owned or leased by a Loan Party, except to the extent that a Loan Party has furnished the Administrative Agent with (A) any UCC financing statements registration statements or other filings that the Administrative Agent may reasonably determine to be necessary to perfect its security interest in such Inventory at such location, and (B) unless otherwise agreed by the Administrative Agent in its Permitted Discretion, a Collateral Access Agreement executed by the Person owning any such location on terms reasonably acceptable to the Administrative Agent;
(c) Inventory that represents goods which (i) are damaged, defective, “seconds,” excess, obsolete, shopworn or otherwise unmerchantable, (ii) are to be returned to the vendor and which is no longer reflected in the Loan Parties’ stock ledger, (iii) are special-order items, work in process, raw materials, or that constitute tooling or spare parts, shipping materials or supplies used or consumed in a Loan Party’s business, or (iv) are bill and hold goods;
(d) Inventory that represents goods that do not conform in all material respects to the representations and warranties contained in this Agreement or any of the Security Documents;
(e) Inventory that is not subject to a perfected first priority security interest in favor of the Administrative Agent for the benefit of the Secured Parties (subject only to Permitted Encumbrances under Section 6.01(c), (d) or (k) having priority by operation by Applicable Law);
(f) Inventory which consists of samples, labels, bags, packaging materials, and other similar non-merchandise categories;
(g) Inventory as to which casualty insurance in compliance with the provisions of Section 5.07 hereof is not in effect;
(h) Inventory which has been sold but not yet shipped or Inventory to the extent that a Loan Party has accepted a deposit therefor;
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(i) Inventory subject to any licensing, trademark, trade name or copyright agreements with any third parties which would require any consent of any third party for the sale or disposition of that Inventory (which consent has not been obtained) or the payment of any monies to any third party upon such sale or other disposition (to the extent of such monies);
(j) [reserved];
(k) Inventory that is subject to progress billing or retainage, or is Inventory for which a performance, surety or completion bond or similar assurance has been issued;
(l) Inventory acquired in a Permitted Acquisition, unless the Administrative Agent shall have received or conducted (A) appraisals, from appraisers reasonably satisfactory to the Administrative Agent, of such Inventory to be acquired in such Acquisition and (B) a field examination and such other due diligence as the Administrative Agent may reasonably require, all of the results of the foregoing to be reasonably satisfactory to the Administrative Agent; provided, however , that any such collateral audits, examinations and appraisals shall not be subject to (and shall not be included in) the limitations set forth on Section 5.10 on the number of collateral audits, examinations and appraisals for which the Administrative Agent is entitled to be reimbursed in any period;
(m) Inventory consisting of perishable items;
(n) Inventory designated as “non-merchandise” in the most recent appraisal performed for the Administrative Agent; and
(o) Inventory consisting of consigned merchandise or consisting of warranties.
The Administrative Agent shall have the right to establish, modify, or eliminate Reserves against Eligible Inventory from time to time in its Permitted Discretion.
“ Eligible Wholesale Receivables ” shall mean and include with respect to any Borrower, each Account (other than Accounts constituting Eligible Credit Card Receivables) of such Borrower arising in the Ordinary Course of Business of such Borrower’s business which the Administrative Agent has not determined, in its Permitted Discretion, to exclude from Eligible Wholesale Receivables (which Eligible Wholesale Receivables may include, without limitation, Accounts (other than Accounts constituting Eligible Credit Card Receivables). No Account shall be an Eligible Wholesale Receivable if any of the conditions identified below exist:
(a) such Account arises out of a sale made by such Borrower to an Affiliate of such Borrower or to a Person controlled by an Affiliate of such Borrower;
(b) such Account is (i) more than sixty (60) days past due according to the original terms of sale or (ii) more than one hundred and ninety (90) days past the original invoice date;
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(c) 50% or more of the outstanding Accounts of the Account Debtor have become ineligible pursuant to the preceding clause (b) or the Administrative Agent has determined, in its Permitted Discretion, to exclude all Accounts of such Account Debtor from Eligible Wholesale Receivables;
(d) the total Accounts of the Account Debtor to the Borrowers represent more than twenty percent (20%) of the Eligible Wholesale Receivables of the Borrowers at such time, but only to the extent of such excess; provided that the foregoing percentages may, from time to time, be increased in the Administrative Agent’s discretion (as indicated in writing by the Administrative Agent), or decreased in the Administrative Agent’s Permitted Discretion;
(e) (i) any representation or warranty contained in the Loan Documents with respect to such Account has been breached in any material respect or (ii) any covenant contained in the Loan Documents with respect to such Account has been breached in any material respect;
(f) the applicable Account Debtor shall (i) apply for, suffer, or consent to the appointment of, or the taking possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or call a meeting of its creditors, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, or liquidate, dissolve or wind up its affairs, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing, in each case unless, (x) such Account is supported by a letter of credit satisfactory to the Administrative Agent, in its Permitted Discretion (as to form, substance, amount, and issuer or domestic confirming bank), that has been delivered to the Administrative Agent and is directly drawable by the Administrative Agent, (y) with respect to post-petition Accounts of the applicable Account Debtor, such Account Debtor has received debtor-in-possession financing sufficient as determined by the Administrative Agent in its sole discretion (as indicated in writing by the Administrative Agent) to finance the ongoing business activities of such Account Debtor or (z) such Account constitutes an administrative claim under Section 503 of the Bankruptcy Code and the Administrative Agent has determined in its sole discretion (as indicated in writing by the Administrative Agent) to include such Account as an Eligible Wholesale Receivable;
(g) the chief executive office or other principal office of the Account Debtor with respect to such Account is not located in the United States of America;
(h) the sale to the applicable Account Debtor is on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment or any other repurchase or return basis or is evidenced by chattel paper;
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(i) Administrative Agent believes, in its reasonable judgment, that collection of such Account is insecure or that such Account may not be paid by reason of the applicable Account Debtor ’ s financial inability to pay;
(j) the applicable Account Debtor is the United States of America or any state, province, territory, municipality or any department, agency or instrumentality of any of them, unless such Borrower assigns its right to payment of such Account to Administrative Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub- Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other Applicable Laws;
(k) the goods giving rise to such Account have not been shipped to and accepted by the applicable Account Debtor or the services giving rise to such Account have not been performed by such Borrower and accepted by such Account Debtor or the Account otherwise does not represent a final sale;
(l) such Account is subject to a Permitted Factoring Agreement;
(m) the Account is subject to any offset, deduction, defense, dispute, or counterclaim, the applicable Account Debtor is also a creditor or supplier of such Borrower or the Account is contingent in any respect for any reason; provided , however , that such Account shall be ineligible pursuant to this clause (m) only to the extent (i) of such offset, deduction, defense, dispute, counterclaim or contingency and (ii) in the case the applicable Account Debtor is also a creditor or supplier of such Borrower, of the amount owed to such creditor or supplier by such Borrower;
(n) such Account is acquired by such Borrower or such Guarantor Subsidiary pursuant to a Permitted Acquisition and such Account has not been subject to a collateral audit, examination and appraisal by Administrative Agent provided, however , that any such collateral audits, examinations and appraisals shall not be subject to (and shall not be included in) the limitations set forth on Section 5.10 on the number of collateral audits, examinations and appraisals for which the Administrative Agent is entitled to be reimbursed in any period;
(o) the Company has made any agreement with any Account Debtor for any deduction therefrom, but only to the extent of any such deduction;
(p) shipment of the merchandise or the rendition of services with respect to such Account has not been completed;
(q) any return, rejection or repossession of the merchandise with respect to such Account has occurred, but only to the extent of the amount of such Account attributable to the returned, rejected or repossessed merchandise;
(r) such Account is not payable to such Borrower;
(s) the sale represented by such Account is denominated in a currency other than Dollars;
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(t) such Account is not evidenced by an invoice or other writing in form reasonably acceptable to Administrative Agent;
(u) Accounts with respect to which the applicable Account Debtor is located in New Jersey, Minnesota, or any other jurisdiction denying creditors access to its courts in the absence of a Notice of Business Activities Report or other similar filing, unless such Borrower is incorporated under the laws of such jurisdiction or has either qualified as a foreign corporation authorized to transact business in such jurisdiction or has filed a Notice of Business Activities Report or similar filing with the applicable Governmental Authority for the then current year;
(v) such Account is not subject to a perfected first priority security interest in favor of the Administrative Agent for the benefit of the Secured Parties; or
(w) Accounts, to the extent consisting of interest, fees or late charges.
The Administrative Agent shall have the right to establish, modify, or eliminate Reserves against Eligible Wholesale Receivables from time to time in its Permitted Discretion.
“ Environmental Laws ” means all Applicable Laws relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to Hazardous Materials or wastes, air emissions and discharges to waste or public systems.
“ Environmental Liability ” means any liability, contingent or otherwise (including, without limitation, any liability for damages, natural resource damage, costs of environmental remediation, administrative oversight costs, fines, penalties or indemnities), of any Loan Party directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time and the regulations promulgated and rulings issued thereunder.
“ ERISA Affiliate ” means any trade or business (whether or not incorporated) under common control with any Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).
“ ERISA Event ” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of any Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings
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to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower or any ERISA Affiliate.
“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“ Event of Default ” has the meaning provided in Section 7.01. An “Event of Default” shall be deemed to have occurred and to be continuing unless and until that Event of Default has been duly waived in writing by the Administrative Agent with the consent of the Required Lenders or all Lenders (as applicable) in accordance with the terms of this Agreement.
“ Excess Availability ” means, at any time, an amount equal to (a) the Maximum Borrowing Amount at such time minus (b)the Total Outstandings to, or for the account of, the Borrowers at such time.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
“ Excluded Deposit Accounts ” shall have the meaning provided in Section 2.16(d) .
“ Excluded Subsidiary ” means (a) any Foreign Subsidiary, (b) any Subsidiary substantially all of the assets of which constitute (or are treated as constituting for U.S. Federal income tax purposes) the Capital Stock of Foreign Subsidiaries and/or intercompany loans, indebtedness or receivables owed by any Foreign Subsidiaries or treated as owed by any Foreign Subsidiaries for U.S. Federal income tax purposes, (c) any direct or indirect Domestic Subsidiary that is a Subsidiary of a Foreign Subsidiary that is a controlled foreign corporation within the meaning of Section 957 of the Code, in each case, that shall not be a Guarantor, and (d) any Immaterial Subsidiary. For the avoidance of any doubt, no assets of any Excluded Subsidiary shall be included in the Borrowing Base.
“ Excluded Swap Obligation ” means, with respect to any Loan Party, any Swap Obligation if, and to the extent that, all or a portion of any Guarantee of such Loan Party of, or the grant by such Loan Party of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act (determined after giving effect to Section 9.13 and any other “keepwell” provision of any Guarantee and any other “keepwell, support or other agreement” for the benefit of such Loan Party and any and all guarantees of such Loan Party’s Swap Obligations by other Loan Parties) at the time any Guarantee of such Loan Party, or a grant by such Loan Party of a security interest, 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 excluded in accordance with the first sentence of this definition.
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“ Excluded Taxes ” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrowers under Section 2.22(b) ) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 2.21(a)(ii) , (a)(iii) or (c), amounts with respect to such Taxes were payable either to such Lender ’ s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient ’ s failure to comply with Section 2.21(e) and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.
“ Facility Guarantee ” means any Guarantee of the Obligations executed in favor of the Administrative Agent and the other Secured Parties pursuant to Section 5.11 .
“ FASB ASC ” means the Accounting Standards Codification of the Financial Accounting Standards Board.
“ FATCA ” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
“ FCCR Initial Test Date ” means the date upon which an FCCR Trigger Event occurs.
“ FCCR Test Period ” means, for any date of determination under this Agreement, the most recent period of twelve (12) consecutive Fiscal Months of Parents and their Subsidiaries ended on or prior to such date.
“ FCCR Trigger Event ” means, at any time, the failure of the Borrowers to maintain Excess Availability at least equal to the greater of (i) ten percent (10%) of the Maximum Borrowing Amount and (ii) $7,000,000. For purposes of this Agreement, the occurrence of a FCCR Trigger Event shall be deemed continuing until Excess Availability has exceeded the amount required by the first sentence of this definition for sixty (60)] consecutive days, in which case a FCCR Trigger Event shall no longer be deemed to be continuing for purposes of this Agreement.
“ Federal Funds Effective Rate ” means, 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 Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published
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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.
“ Financial Performance Projections ” means (i) the projected Consolidated balance sheets, statements of income, cash flows, and stockholders’ equity of Parents and their Subsidiaries, (ii) the projected Borrowing Base and (iii) Excess Availability forecasts, in each case, prepared by management of each Borrower and in form reasonably satisfactory to the Administrative Agent (w) as of the Closing Date, (x) on a monthly basis for the twelve full Fiscal Months ended after the Closing Date, (y) in the case of the financial statements required pursuant to clause (i) above, on an annual basis through the fifth anniversary of the Closing Date and (z) giving effect to the Transactions.
“ Financial Officer ” means, with respect to any Loan Party, the chief financial officer, chief accounting officer, treasurer, assistant treasurer, controller or assistant controller of such Loan Party.
“ Fiscal Day ” means each day as determined by the 4-5-4 retail calendar provided by the National Retail Federation.
“Fiscal Month ” means each month as determined by the 4-5-4 retail calendar provided by the National Retail Federation of each Fiscal Year.
“Fiscal Quarter ” means each quarter as determined by the 4-5-4 retail calendar provided by the National Retail Federation of each Fiscal Year, which quarters shall end on the last Fiscal Day of each April, July, October, and January of such Fiscal Year.
“Fiscal Year ” means the period of twelve (12) consecutive months ending on the last day of the 4-5-4 retail calendar provided by the National Retail Federation.
“ Foreign Lender ” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is a resident for tax purposes. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
“ Foreign Subsidiary ” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States or any state thereof or the District of Columbia, or any of its territories or possessions.
“ FRB ” means the Board of Governors of the Federal Reserve System of the United States of America.
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“ Fronting Exposure ” means, at any time there is a Defaulting Lender, with respect to the Issuing Bank, such Defaulting Lender ’ s Commitment Percentage of the outstanding Obligations in respect of Letters of Credit other than Obligations in respect of Letters of Credit as to which such Defaulting Lender ’ s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.
“ Fronting Fee ” shall have the meaning set forth in Section 2.17(c) hereof.
“ Fund ” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.
“ GAAP ” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied; provided, however, that if the Borrowers notify the Administrative Agent that the Borrowers request 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 the Borrowers that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.
“ Governmental Authority ” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“ Guarantee ” means, as to any Person, without duplication, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such
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Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien); provided that the term “ Guarantee ” shall not include endorsements for collection or deposit, in either case in the ordinary course of business, or customary and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition or Disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness) . The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith . The term “ Guarantee ” as a verb has a corresponding meaning.
“ Guarantor ” means, collectively, (a) Parents (b) each Subsidiary of Parents listed on Schedule 3.12 and identified as a “Guarantor” and each other Subsidiary of Parents that shall be required to execute and deliver a Guarantee of the Obligations pursuant to Section 5.11 and (b) with respect to (i) Obligations owing by any Loan Party or any Subsidiary of a Loan Party (other than a Borrower) under any Bank Product or any Cash Management Services or otherwise and (ii) the payment and performance by each Specified Loan Party of its obligations under its Facility Guarantee with respect to all Swap Obligations, the Borrowers.
“ Hazardous Materials ” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
“ Immaterial Subsidiary ” means a Subsidiary of Parents (other than any Borrower) for which (a) the assets of such Subsidiary constitute less than or equal to one percent (1.00%) of the total assets of Parents and their Subsidiaries on a Consolidated basis and collectively with all Immaterial Subsidiaries, less than or equal to five percent (5.00%) of the total assets of Parents and their Subsidiaries on a Consolidated basis, and (b) the revenues of such Subsidiary account for less than or equal to one percent (1.00%) of the total revenues of Parents and their Subsidiaries on a Consolidated basis and collectively with all Immaterial Subsidiaries, less than or equal to five percent (5.00%) of the total revenues of Parents and their Subsidiaries on a Consolidated basis.
“ Indebtedness ” means as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:
(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;
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(b) all direct or contingent obligations of such Person arising under letters of credit (including standby letters of credit and commercial letters of credit), bankers ’ acceptances, bank guaranties, surety bonds, performance bonds and similar instruments issued or created by or for the account of such Person;
(c) net obligations of such Person under any Swap Contract;
(d) all obligations of such Person to pay the deferred purchase price of property or services (other than (i) trade payables in the ordinary course of business (ii) any earn-out obligation until such earn-out obligation becomes due and payable and only to the extent that the contingent consideration relating to such earn-out is not paid within 30 days after such date and (iii) liabilities accrued in the ordinary course and, in each case, not past due for more than sixty (60) days after the date on which such trade account was created);
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements and mortgage, industrial revenue bond, industrial development bond and similar financings), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;
(f) all Attributable Indebtedness and Synthetic Lease Obligations;
(g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Capital Stock in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and
(h) to the extent not otherwise included above, all Guarantees of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.
“ Indemnified Taxes ” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a) , Other Taxes.
“ Indemnitee ” has the meaning provided in Section 9.04(b) .
“ Information ” has the meaning provided in Section 9.07 .
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“ Initial Public Offering ” means the initial offering by Parents or any direct or indirect parent of Parents of its common Capital Stock after the Closing Date in an underwritten primary public offering (other than a public offering pursuant to a registration statement on Form S-8) pursuant to an effective registration statement filed with the U.S. Securities and Exchange Commission in accordance with the Securities Act (whether alone or in connection with or solely pursuant to a secondary public offering).
“ Intellectual Property ” means all present and future: trade secrets, know-how and other proprietary information; trademarks, Internet domain names, service marks, trade dress, trade names, business names, designs, logos, slogans (and all translations, adaptations, derivations and combinations of the foregoing), indicia and other source and/or business identifiers, all of the goodwill related thereto, and all registrations and applications for registrations thereof; works of authorship and other copyrighted works (including copyrights for computer programs), and all registrations and applications for registrations thereof; inventions (whether or not patentable) and all improvements thereto; patents and patent applications, together with all continuances, continuations, divisions, revisions, extensions, reissuances, and reexaminations thereof; industrial design applications and registered industrial designs; books, records, writings, computer tapes or disks, flow diagrams, specification sheets, computer software, source codes, object codes, executable code, data, databases and other physical manifestations, embodiments or incorporations of any of the foregoing; all other intellectual property; all rights to sue and recover at law or in equity for any past, present or future infringement, dilution or misappropriation, or other violation thereof; and all common law and other rights throughout the world in and to all of the foregoing.
“ Intellectual Property Security Agreements ” means the Trademark Security Agreement, Patent Security Agreement and Copyright Security Agreement, each dated as of March 23, 2016, among certain Loan Parties and the Administrative Agent, as the same may be amended, modified, substituted, extended or restated, from time to time.
“ Interest Payment Date ” means (a) with respect to any Loan other than a Prime Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided , however , that if any Interest Period for a LIBOR Loan exceeds three (3) months, the respective dates that fall every three (3) months after the beginning of such Interest Period shall also be Interest Payment Dates, and (b) as to any Prime Rate Loan, the first day of each calendar quarter and the Maturity Date.
“ Interest Period ” means, as to each LIBOR Loan, the period commencing on the date such LIBOR Loan is disbursed or converted to or continued as a LIBOR Loan and ending on the date one (1), three (3) or six (6) months thereafter (in each case, subject to availability), as selected by the Borrowers in the Notice of Borrowing; provided that
(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, in the case of a LIBOR Loan, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;
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(b) any Interest Period pertaining to a LIBOR Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the Maturity Date.
“ Inventory ” has the meaning assigned to such term in the Security Agreement.
“ Inventory Reserves ” means such reserves as may be established from time to time by the Administrative Agent, in its Permitted Discretion, with respect to the saleability of the Eligible Inventory or which reflect such other factors as negatively affect the market value of the Eligible Inventory or which reflect a cost with respect to the salability of such Eligible Inventory. Without limiting the generality of the foregoing, in the Administrative Agent’s Permitted Discretion, Inventory Reserves may include (but are not limited to) reserves based on (i) shrink; (ii) capitalized freight and internal profit reserves used in the Borrowers’ calculation of cost of goods sold; (iii) obsolescence; (iv) reasonably anticipated changes in appraised value of Inventory between appraisals; (v) retail markdowns and markups inconsistent with prior period practice and performance; industry standards; current business plans; or advertising calendar and planned advertising events and (vi) “freight in” charges .
“ Investment ” means, as to any Person, any direct or indirect Acquisition or investment by such Person, whether by means of (a) the purchase or other Acquisition of Capital Stock or debt or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of Indebtedness of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person or (c) any other Acquisition. Notwithstanding the foregoing, neither the creation of accounts receivable, credit card receivables and debit card receivables due to a Loan Party nor the obtaining of trade credit and the deferred payment of other expenses, in each case, incurred in the ordinary course of business, nor the incurrence of contingent obligations or performance guaranties in the ordinary course of business in respect of obligations not constituting Indebtedness, shall be deemed “Investments.” For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment less all cash returns, cash dividends and cash distributions (or the fair market value of any non-cash returns, dividends and distributions) received by such Person).
“ IP Rights ” shall have the meaning given such term in Section 3.15 .
“ ISP ” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).
“ Issuer Documents ” means with respect to any Letter of Credit, the letter of credit application, and any other document, agreement and instrument entered into by the Issuing Bank and any Borrower (or any Subsidiary) or in favor of the Issuing Bank and relating to such Letter of Credit.
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“ Issuing Bank ” means Bank of America, in its capacity as an Issuing Bank hereunder.
“ Joinder Agreement ” shall mean an agreement, in substantially the form attached hereto as Exhibit C , pursuant to which, among other things, a Person becomes a party to, and bound by the terms of, this Agreement and/or the other Loan Documents in the same capacity and to the same extent as a Guarantor.
“ Landlord Lien State ” means any state in which a landlord’s claim for rent has or may have priority by operation of Applicable Law over the Lien of the Administrative Agent in any of the Collateral.
“ Large Inventory Location ” means any distribution center, warehouse, fabrication or manufacturing facility, cross-docking station or storage facility at which Inventory is located.
“ Lease ” means any agreement pursuant to which a Loan Party is entitled to the use or occupancy of any space in a structure, land, improvements or premises for any period of time.
“ Lenders ” means the Lenders having Commitments from time to time or at any time, and each assignee that becomes a party to this Agreement as set forth in Section 9.06 and each Additional Commitment Lender that becomes a party to this Agreement as set forth in Section 2.02 .
“ Lending Office ” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrowers and the Administrative Agent, which office may include any Affiliate of such Lender or any domestic or foreign branch of Lender or such Affiliate. Unless the context otherwise requires, each reference to a Lender shall include its applicable Lending Office.
“ Letter of Credit ” means (a) each Existing Letter of Credit, (b) a letter of credit that (i) is issued by the Issuing Bank pursuant to this Agreement for the account of a Borrower or a Subsidiary, (ii) constitutes a Standby Letter of Credit or Commercial Letter of Credit (and for which the Issuing Bank is not otherwise prohibited from issuing such letter of credit due to the internal general policies of the Issuing Bank), and (iii) is in form reasonably satisfactory to the Issuing Bank and (c) a bankers’ acceptance or time draft issued by the Issuing Bank to a beneficiary of any letter of credit described in foregoing clauses (a) or (b), in form reasonably satisfactory to the Issuing Bank.
“ Letter of Credit Disbursement ” means a payment made by the Issuing Bank to the beneficiary of, and pursuant to, a Letter of Credit.
“ Letter of Credit Fees ” means the fees payable in respect of Letters of Credit pursuant to Section 2.17(b) .
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“ Letter of Credit Outstandings ” means, at any time, the sum of (a) the amount of all Letters of Credit outstanding at such time, plus , without duplication, (b) all amounts theretofore drawn or paid under Letters of Credit for which the Issuing Bank has not then been reimbursed . 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 1.06 . 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 3.14 of the ISP, such Letter of Credit shall be deemed to be “ outstanding ” in the amount so remaining available to be drawn.
“ Letter-of-Credit Rights ” has the meaning assigned to such term in the Security Agreement.
“ Letter of Credit Sublimit ” means an amount equal to the lesser of (a) $10,000,000 and (b) the Commitments. The Letter of Credit Sublimit is part of, and not in addition to, the Commitments.
“ LIBOR ” has the meaning specified in the definition of LIBO Rate.
“ LIBOR Borrowing ” means a Borrowing comprised of LIBOR Loans.
“ LIBOR Loan ” shall mean any Revolving Credit Loan bearing interest at the Adjusted LIBO Rate in accordance with the provisions of Article II.
“ LIBO Rate ” means:
(a) for any Interest Period with respect to a LIBOR Loan, the rate per annum determined by the Administrative Agent at approximately 11:00 a.m., London time, on the day that is two (2) Business Days prior to the first day of such Interest Period by reference to the ICE Benchmark Administration London Interbank Offered Rate or such other rate per annum as is widely recognized as the successor thereto if the ICE Benchmark Administration is no longer making a London Interbank Offered Rate available ( “LIBOR”), as published by Bloomberg (or other commercially available source providing quotations of LIBOR as designated by the Administrative Agent from time to time) for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period; and if the LIBO Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement; and
(b) for any interest calculation with respect to a Prime Rate Loan on any date, the rate per annum equal to LIBOR, at or about 11:00 a.m., London time determined two (2) Business Days prior to such date for U.S. Dollar deposits with a term of one (1) month commencing that day;
provided that to the extent a comparable or successor rate is approved by the Administrative Agent in connection herewith, the approved rate shall be applied in a manner consistent with market practice; provided , further that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.
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“ Lien ” means any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any Capitalized Lease having substantially the same economic effect as any of the foregoing) whether or not filed, recorded or perfected under Applicable Law, and in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.
“ Liquidation ” means the exercise by the Administrative Agent of those rights and remedies accorded to the Administrative Agent under the Loan Documents and Applicable Law as a creditor of the Loan Parties, including (after the occurrence and during the continuation of an Event of Default) the conduct by any or all of the Loan Parties, acting with the consent of the Administrative Agent, of any public, private or “Going-Out-Of-Business Sale” or other Disposition of Collateral for the purpose of liquidating the Collateral. Derivations of the word “Liquidation” (such as “ Liquidate ”) are used with like meaning in this Agreement.
“ Loan Account ” has the meaning provided in Section 2.18 .
“ Loan Documents ” means this Agreement, any Note, the Letters of Credit, all Borrowing Base Certificates, the Acknowledgement, the Security Documents (including, without limitation, the Security Agreement, the Facility Guarantees, the Blocked Account Agreements, the Credit Card Notifications, the Intellectual Property Security Agreements and the Mortgages and the Mortgage Related Documents, if any), the Perfection Certificate, any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.23 of this Agreement and any other agreement now or hereafter executed and delivered in connection herewith (excluding agreements entered into in connection with any transaction arising out of any Bank Products or Cash Management Services), each as amended and in effect from time to time.
“ Loan Party ” or “ Loan Parties ” means the Borrowers and the Guarantors.
“ Loans ” means as applicable, and as the context may require, either (a) a Revolving Credit Loan or (b) collectively, the Revolving Credit Loans.
“ London Banking Day ” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.
“ Margin Stock ” has the meaning assigned to such term in Regulation U.
“ Master Agreement ” has the meaning specified in the definition of “Swap Contract.”
“ Material Adverse Effect ” means a material adverse change in, or a material adverse effect upon (a) the operations, business, assets, liabilities (actual or contingent), condition (financial or otherwise) of Parents or any of their Subsidiaries taken as a whole; (b) the rights and remedies of the Administrative Agent or any Lender under any Loan Document, taken as a whole, or of the ability of any Loan Party to perform its obligations under any loan documentation to which it is a party; or (c) the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.
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“ Material Contract ” means, with respect to any Loan Party or any Subsidiary of a Loan Party, any document or agreement relating to or evidencing Material Indebtedness and each other contract to which such Person is a party involving aggregate consideration payable to or by such Person of $1,000,000 or more in any year or otherwise material to the business, condition (financial or otherwise), operations, performance, properties or prospects of such Person.
“ Material Indebtedness ” means Indebtedness (other than the Obligations) of the Loan Parties and their Subsidiaries, individually or in the aggregate, having an aggregate principal amount exceeding $1,000,000.
“ Material Real Estate ” means Real Estate owned by the Loan Parties with a fair market value of $500,000 or more.
“ Maturity Date ” means March 23, 2021.
“ Maximum Borrowing Amount ” means, at any time, the lesser of (a) the Revolving Credit Ceiling at such time and (b) the Borrowing Base at such time.
“ Maximum Rate ” has the meaning provided in Section 9.09 .
“ Minimum Collateral Amount ” means, 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 100% of the Fronting Exposure of the Issuing Bank 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 2.23(a)(i) , (a)(ii) or (a)(iii) , an amount equal 105% of the Letter of Credit Outstandings, and (iii) otherwise, an amount determined by the Administrative Agent and the Issuing Bank in their sole discretion.
“ Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto.
“ Mortgage ” means a mortgage, deed of trust or deed to secure debt pursuant to which a Loan Party grants to the Administrative Agent, for the benefit of the Credit Parties, a Lien upon any Material Real Estate of such Loan Party, as security for the Obligations.
“ Mortgage Related Documents ” means, with respect to any Material Real Estate, the following, in form and substance reasonably satisfactory to the Administrative Agent and, with respect to any item described in clause (c), received by the Administrative Agent for review at least 15 days prior to the effective date of the Mortgage (or such shorter length of time as is acceptable to the Administrative Agent in its reasonable discretion):
(a) a duly executed and effective Mortgage with respect to such Real Property;
(b) a favorable opinion of counsel to the Loan Parties covering such matters as to the applicable Mortgage as the Administrative Agent may reasonably request; and
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(i) a mortgagee title policy (or binder therefor) covering the Administrative Agent ’s interest under the Mortgage, in a form and amount and by an insurer reasonably acceptable to the Administrative Agent, which must be fully paid on such effective date of the Mortgage;
(ii) such assignments of leases, rents, estoppel letters, attornment agreements, consents, waivers and releases as the Administrative Agent may require with respect to other Persons having an interest in the Real Estate;
(iii) if requested by the Administrative Agent, a current, as-built survey of the Real Estate, containing a metes and bounds property description and flood plain certification, and certified by a licensed surveyor reasonably acceptable to the Administrative Agent;
(iv) if requested by the Administrative Agent, a current appraisal of the Real Estate of such Real Estate complying with the requirements of FIRREA by a third party appraiser reasonably acceptable to the Administrative Agent;
(v) if requested by the Administrative Agent, a Phase I (and to the extent appropriate, Phase II) environmental assessment report, prepared by an environmental consulting firm reasonably satisfactory to the Administrative Agent, and accompanied by such reports, certificates, studies or data as Agent may reasonably require;
(vi) the results of title searches;
(vii) (x) the results of flood zone determinations with respect to such Real Estate, (y) duly executed flood zone notifications by the applicable Loan Party to the extent such Real Estate is determined to be located in a flood zone, and (z) flood insurance in an amount, with endorsements and by an insurer reasonably acceptable to the Administrative Agent, if the Real Estate is within a flood zone; and
(ix) such other documents, instruments, reports, surveys and information as may be reasonably requested by the Administrative Agent in its reasonable discretion, including, without limitation, such as may be necessary to comply with FIRREA.
“ Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which any Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.
“ Multiple Employer Plan ” means a Plan which has two or more contributing sponsors (including any Borrower or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.
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“ New Lending Office ” shall have the meaning provided in Section 2.21(e)(i) .
“ Noncompliance Notice ” shall have the meaning provided in Section 2.06(b) .
“ Non-Consenting Lender ” means any Lender that does not approve any consent, waiver or amendment that requires that (i) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 9.01 and (ii) has been approved by the Required Lenders.
“ Non-Defaulting Lender ” means, at any time, each Lender that is not a Defaulting Lender at such time.
“ Note ” means a promissory note, in form and substance satisfactory to the Administrative Agent, in favor of any Lender evidencing the Loans of such Lender.
“ Notice of Borrowing ” means a notice of (a) Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of LIBOR Loans, pursuant to Section 2.04(b) , which shall be substantially in the form of Exhibit B or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent) appropriately completed and signed by a Responsible Officer of each Borrower.
“ NPL ” means the National Priorities List under CERCLA.
“ Obligations ” means (x) all Loans, other Credit Extensions and advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party and its Subsidiaries arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including charges, interest, expenses, fees, attorneys’ fees, indemnities and other amounts that accrue after the commencement by or against any Loan Party or Subsidiary of any proceeding under any Debtor Relief Law, naming such Person as the debtor in such proceeding, regardless of whether such charges, interest, expenses, fees, attorneys’ fees, indemnities and other amounts are allowed claims in such proceeding, and (y) obligations of any Loan Party and its Subsidiaries arising with respect to any Other Liabilities. Without limiting the generality of the foregoing, the Obligations of the Loan Parties under the Loan Documents (and of their Subsidiaries to the extent they have obligations under the Loan Documents) include (a) the obligation (including guarantee obligations) to pay principal, interest, Letter of Credit commissions, reimbursement obligations, charges, expenses, fees, attorneys’ fees, indemnities and other amounts payable by any Loan Party or its Subsidiaries under any Loan Document, including charges, interest, expenses, fees, attorneys’ fees, indemnities and other amounts that accrue after the commencement by or against any Loan Party or Subsidiary of any proceeding under Debtor Relief Law, naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding, and (b) the obligation of any Loan Party or any of its Subsidiaries to reimburse any amount in respect of any of the foregoing that any Lender, in its sole discretion, may elect to pay or advance on behalf of such Loan Party or such Subsidiary in accordance with, and to the extent permitted, by the Loan Documents.
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“ OFAC ” means the Office of Foreign Assets Control of the U.S. Department of the Treasury.
“ Organization Documents ” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; 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.
“ Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“ Other Liabilities ” means outstanding liabilities with respect to or arising from (a) any Cash Management Services furnished to any of the Loan Parties or any of their Subsidiaries and/or (b) any transaction which arises out of any Bank Product entered into with any Loan Party, as each may be amended from time to time; provided that the “Other Liabilities” shall exclude any Excluded Swap Obligations.
“ Other Taxes ” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.22(b) ).
“ Overadvance ” means the existence of, or the making or issuance of any Loan or a Letter of Credit which shall cause Excess Availability to be less than zero.
“ Parent ” shall have the meaning provided in the first paragraph of this Agreement.
“ Participant ” shall have the meaning provided in Section 9.06(d) .
“ Participant Register ” has the meaning specified in Section 9.06(d).
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“ Payment Conditions ” means, at the time of determination (a) with respect to Specified Payments other than Restricted Payments, that (i) no Default or Event of Default then exists or would arise as a result of the entering into such transaction or the making of such payment and (ii) after giving effect to such Specified Payment, (x) the Consolidated Fixed Charge Coverage Ratio, on a Pro Forma Basis for the twelve Fiscal Months most recently preceding such transaction or payment ( provided that, if any such transaction or payment is to be consummated within thirty (30) days after the end of any Fiscal Month, such calculation shall be made with respect to the twelve Fiscal Months most recently preceding such transaction or payment for which financial statements have been required to be delivered pursuant to Sections 5.01(a) , (b) and (c) hereof), is equal to or greater than 1.00:1.00 and (y) Pro Forma Availability shall be greater than the greater of (A) fifteen percent (15.00%) of the Maximum Borrowing Amount and (B) $15,000,000 and (b) with respect to Restricted Payments, that (i) no Default or Event of Default then exists or would arise as a result of the entering into such transaction or the making of such payment and (ii) after giving effect to such Restricted Payment, (x) the Consolidated Fixed Charge Coverage Ratio, on a Pro Forma Basis for the twelve Fiscal Months most recently preceding such transaction or payment ( provided that, if any such transaction or payment is to be consummated within thirty (30) days after the end of any Fiscal Month, such calculation shall be made with respect to the twelve Fiscal Months most recently preceding such transaction or payment for which financial statements have been required to be delivered pursuant to Sections 5.01(a) , (b) and (c) hereof), is equal to or greater than 1.00:1.00 and (y) Pro Forma Availability shall be greater than the greater of (A) twenty percent (20.00%) of the Maximum Borrowing Amount and (B) $20,000,000 . In accordance with Section 5.02(g) hereof, at least five (5) Business Days prior to the making of any Specified Payment, the Loan Parties shall deliver to the Administrative Agent a certificate of a Responsible Officer of each Borrower as described in Section 5.02(g) substantially in the form attached hereto as Exhibit H .
“ Payment Intangibles ” has the meaning assigned to such term in the Security Agreement.
“ PBGC ” means the Pension Benefit Guaranty Corporation.
“ Pension Act ” means the Pension Protection Act of 2006.
“ Pension Funding Rules ” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.
“ Pension Plan” means any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan), that is maintained or is contributed to by any Borrower and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.
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“ Permitted Acquisition ” means an Acquisition in which each of the following conditions are satisfied:
(a) No Default or Event of Default then exists or would arise from the consummation of such Acquisition;
(b) If the Acquisition is an Acquisition of Capital Stock, (i) such Acquisition shall be consensual and shall have been approved by the board of directors of such Person being acquired and (ii) the Person being acquired shall become a Subsidiary of Parents and, unless such Subsidiary shall be an Excluded Subsidiary, such Subsidiary shall become a Guarantor or a Borrower hereunder and provide security to the Administrative Agent in accordance with Section 5.11 ;
(c) Any material assets acquired shall be utilized in, and if the Acquisition involves a merger, amalgamation, consolidation or stock acquisition, the Person which is the subject of such Acquisition shall be engaged in, a business otherwise permitted to be engaged in by a Loan Party under this Agreement;
(d) All transactions in connection therewith shall be consummated, in all material respects, in accordance with all Requirements of Law;
(e) To the extent the assets acquired are to be included in the Borrowing Base, due diligence (including, without limitation field examinations and appraisals) in respect of such acquired assets in a manner, and with results, satisfactory to the Administrative Agent, in its Permitted Discretion, shall have been completed before they are eligible for inclusion in the Borrowing Base; provided that, notwithstanding anything provided in this paragraph (e) to the contrary, such acquired assets may, in the Administrative Agent’s Permitted Discretion, be included in the determination of the Borrowing Base for not more than thirty (30) days after such assets are acquired if such assets are of the type that are similar to the assets already included in the determination Borrowing Base at such time (as determined by the Administrative Agent in its Permitted Discretion); and
(f) The Borrowers shall have satisfied the Payment Conditions.
“ Permitted Discretion ” means a determination made by the Administrative Agent in good faith in the exercise of its reasonable (from the perspective of a secured asset-based lender) business judgment.
“ Permitted Disposition ” shall have the meaning set forth in Section 6.05 .
“ Permitted Equity Issuance ” means any sale or issuance of any Capital Stock of the Borrowers to the extent permitted hereunder (including any capital contribution).
“ Permitted Encumbrances ” has the meaning set forth in Section 6.01 .
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“ Permitted Factoring Agreement ” means that certain Collection Factoring Agreement among Merchant Factors Corp. and Alliance Apparel Group, Inc., undated, together with other documents related thererto, copies of each of which have been provided to the Administrative Agent on or prior to the Closing Date, and any modifications or replacements thereof which are approved in writing by the Administrative Agent.
“ Permitted Holders ” means (i) those individuals and entities listed as beneficial owners as more particularly set forth on Schedule 1.1(b) hereto (ii) any member of any such Person’s family and (iii) any direct or indirect transferee of any of the foregoing by gift (in trust or otherwise) or testamentary bequest.
“ Permitted Indebtedness ” has the meaning set forth in Section 6.03.
“ Permitted Investments ” has the meaning set forth in Section 6.02.
“ Permitted Junior Liens ” means Liens securing Indebtedness permitted under Section 6.03(h) so long as, if (i) the holder of such Liens (or their representative) shall have entered into an intercreditor agreement satisfactory to the Administrative Agent in its Permitted Discretion, and (ii) the priority of all such Liens on Collateral securing such Indebtedness shall be subject and junior in all respects to the Liens on the Collateral securing the Obligations.
“ Permitted Overadvance ” means an Overadvance that is made, or is permitted to remain outstanding, by the Administrative Agent, in its reasonable discretion, to:
(a) maintain, protect or preserve the Collateral and/or the Secured Parties ’ rights under the Loan Documents or which is otherwise for the benefit of the Secured Parties; or
(b) enhance the likelihood of, or maximize the amount of, repayment of any Obligation; or
(c) pay any other amount chargeable to the Borrowers hereunder;
provided that, (a) at the time the Administrative Agent shall elect to make, or permit to such Overadvance to remain outstanding, such Overadvance together with all other Permitted Overadvances then outstanding, shall not exceed ten percent (10.00%) of the Maximum Borrowing Amount at such time, (ii) unless a Liquidation is taking place, such Overadvance may not remain outstanding for more than ninety (90) consecutive days and (iii) no Overadvance shall be made or permitted to remain outstanding, if after giving effect thereto, the Total Outstandings (including all Overadvances) shall exceed the Revolving Credit Ceiling (as in effect prior to any termination of Commitments pursuant to Section 7.02 hereof).
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“ Permitted Refinancing ” means, with respect to any Person, any modification, refinancing, refunding, renewal or extension of any Indebtedness of such Person; provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed or extended except by an amount equal to unpaid accrued interest and premium thereon plus other reasonable amounts paid, and fees and expenses reasonably incurred (including upfront fees and original issue discount), in connection with such modification, refinancing, refunding, renewal or extension and by an amount equal to any existing commitments unutilized thereunder, (b) such modification, refinancing, refunding, renewal or extension has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being modified, refinanced, refunded, renewed or extended (except by virtue of prior amortization or prior prepayments of the Indebtedness being modified, refinanced, refunded, renewed or extended), (c) at the time thereof, no Event of Default shall have occurred and be continuing, (d) if a Loan Party was not an obligor under the Indebtedness being so refinanced, then no Loan Party shall be an obligor under such modification, refinancing, refunding, renewal or extension, (e) the collateral, if applicable, granted pursuant to any such refinancing Indebtedness is the same or less than the collateral under the Indebtedness being extended, renewed or replaced, (f) to the extent such Indebtedness being modified, refinanced, refunded, renewed or extended is subordinated in right of payment to the Obligations, (i) such modification, refinancing, refunding, renewal or extension is subordinated in right of payment to the Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being modified, refinanced, refunded, renewed or extended, and (ii) the terms and conditions (including, if applicable, as to collateral but excluding as to subordination, interest rate, redemption premium and optional prepayment or optional redemption) of any such modified, refinanced, refunded, renewed or extended Indebtedness, taken as a whole, are not materially less favorable to the Loan Parties and/or the Lenders than the terms and conditions of the Indebtedness being modified, refinanced, refunded, renewed or extended and (g) to the extent that the holders of such Indebtedness being modified, refinanced, refunded, renewed or extended are subject to an intercreditor agreement or arrangement with the Lenders, the holders of such refinancing Indebtedness shall enter into a similar intercreditor agreement or arrangement with the Lenders on terms at least as favorable to the Lenders as those contained in the intercreditor agreement or arrangement governing the Indebtedness being modified, refinanced, refunded, renewed or extended (as determined by the Administrative Agent in its reasonable discretion).
“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“ Perfection Certificate ” means, collectively, (a) that certain Perfection Certificate of each Loan Party existing as of the Closing Date, dated as of the Closing Date and (b) each other perfection certificate which shall be delivered by any Subsidiary of the Borrowers pursuant to the terms hereof.
“ Plan ” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained for employees of any Borrower or any ERISA Affiliate or any such Plan to which any Borrower or any ERISA Affiliate is required to contribute on behalf of any of its employees.
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“ Platform ” has the meaning provided in Section 5.02 .
“ Prime Rate ” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Effective Rate plus 1/2 of 1% (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) the LIBO Rate plus 1.00%; and if Prime Rate shall be less than 0.25%, such rate shall be deemed to 0.25% for purposes of this Agreement. 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 prime 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.
“ Prime Rate Loan ” means any Loan bearing interest at a rate determined by reference to the Prime Rate in accordance with the provisions of Article II.
“ Pro Forma Availability ” means, for any date of calculation, Excess Availability as of the date of any Specified Payment and the projected Excess Availability at the end of each Fiscal Month during the immediately succeeding six (6) Fiscal Month period.
“ Pro Forma Basis ”, “ Pro Forma Compliance ” and “ Pro Forma Effect ” means, in connection with determining compliance with any test or covenant hereunder, calculating such test or covenant as if all Specified Transactions and all of the following transactions in connection with such Specified Transaction occurred as of the first day of the applicable period of measurement in such test or covenant: (a) income statement items (whether positive or negative) attributable to the property or Person subject to such Specified Transaction shall be (i) excluded, in the case of a Disposition of all or substantially all Capital Stock in or assets of any Subsidiary of the Borrowers or any division, business unit, line of business or facility used for operations of the Borrowers or any of its Subsidiaries, and (ii) included, in the case of a Permitted Acquisition or Investment described in the definition of “Specified Transaction”, (b) any retirement of Indebtedness of Parents or their Subsidiaries, and (c) any Indebtedness incurred or assumed by Parents or any of their Subsidiaries in connection therewith and if such Indebtedness has a floating or formula rate, shall have an implied rate of interest for the applicable period for purposes of this definition determined by utilizing the rate which is or would be in effect with respect to such Indebtedness as at the relevant date of determination.
“ Projections ” shall have the meaning given such term in Section 5.01(d) .
“ Public Lender ” has the meaning provided in Section 5.02 .
“ Real Estate ” means all Leases and all land, tenements, hereditaments and any estate or interest therein, together with the buildings, structures, parking areas, and other improvements thereon (including all fixtures), now or hereafter owned by any Loan Party, including all easements, rights-of-way, and similar rights relating thereto and all leases, tenancies, and occupancies thereof.
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“ Recipient ” means the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder.
“ Register ” has the meaning provided in Section 9.06(c).
“ Regulation U ” means Regulation U of the FRB as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“ Regulation X ” means Regulation X of the FRB as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.
“ Release ” has the meaning provided in Section 101(22) of CERCLA.
“ Rent and Charges Reserve ” means the aggregate of (a) all rent and other amounts (including common area maintenance charges) owing by any Loan Party, that is not paid when due, to any landlord, warehouseman, processor, repairman, mechanic, shipper, freight forwarder or other Person who possesses or is in control of any Collateral or could assert a Lien on any Collateral, (b) in the case of Inventory located at a leased premise located in a Landlord Lien State or at a Large Inventory Location, a reserve equal to one month’s rent and other charges payable to any such Person, unless such Person has executed a lien waiver satisfactory to the Administrative Agent.
“ Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty (30) day notice period has been waived.
“ Required Lenders ” means, at any time, Lenders (other than Defaulting Lenders) having Commitments aggregating more than fifty percent (50.00%) of the Total Commitments, or if the Commitments have been terminated, Lenders (other than Defaulting Lenders) whose percentage of the Total Outstandings aggregate more than fifty percent (50.00%) of such Total Outstandings.
“ Reserves ” means all Inventory Reserves, Account Reserves and Availability Reserves.
“ Responsible Officer ” means the chief executive officer, president, vice president, chief financial officer, treasurer or assistant treasurer or other similar officer of a Loan Party and, solely for purposes of the delivery of incumbency certificates pursuant to Section 4.01 , the secretary or assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to Article II, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
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“ Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Capital Stock of Parents or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Capital Stock, or on account of any return of capital to Parents ’ or any Subsidiary ’ s stockholders, partners or members (or the equivalent Persons thereof).
“ Revolving Credit Ceiling ” means the amount of the Total Commitments from time to time in effect.
“ Revolving Credit Loans ” has the meaning provided in Section 2.04(a) .
“ Sarbanes-Oxley Act ” means the Sarbanes-Oxley Act of 2002, as amended.
“ Sanction(s) ” means any sanction administered or enforced by the United States Government (including, without limitation, OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury (“ HMT ”) or other relevant sanctions authority.
“ S&P ” means Standard & Poor’s Financial Services, LLC, a subsidiary of The McGraw-Hill Companies, Inc. and any successor thereto.
“ Seasonal Advance Period ” means calendar months of July, August and October of each year.
“ SEC ” means the Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions.
“ Secured Party ” means (a) each Credit Party, (b) any Lender or Affiliate of a Lender providing Cash Management Services or entering into or furnishing any Bank Products (including any Swap Contract Secured Party), (c) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document, and (d) the successors and, subject to any limitations contained in this Agreement, assigns of each of the foregoing.
“ Securities Act ” means the Securities Act of 1933, as amended.
“ Security Agreement ” means (a) the Security Agreement dated as of the Closing Date among the Loan Parties and the Administrative Agent for the benefit of the Secured Parties and (b) each other security agreement delivered pursuant to Section 5.11 of this Agreement.
“ Security Documents ” means the Security Agreement, the Facility Guarantees, the Intellectual Property Security Agreements, the Mortgages and the Mortgage Related Documents, if any, and each other security agreement or other instrument or document executed and delivered pursuant to this Agreement or any other Loan Document that creates a Lien in favor of the Administrative Agent to secure any of the Obligations.
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“ Settlement Date ” has the meaning provided in Section 2.20(a) .
“ Specified Event of Default ” means the occurrence of any Event of Default of the type described in Sections 7.01(a), 7.01(b)(i), 7.01(b)(ii), 7.01(e), 7.01(f) or 7.01(g) hereof.
“ Specified Loan Party ” means any Loan Party that is not an “eligible contract participant” under the Commodity Exchange Act (determined prior to giving effect to any “keepwell” provision of any Guarantee).
“ Specified Payment ” means any Permitted Acquisition, Permitted Investment, Restricted Payment or prepayment with respect to Indebtedness subject to satisfaction of the Payment Conditions or any component thereof.
“ Specified Transaction ” means, with respect to any period, any Investment, Disposition of all or substantially all of the Capital Stock in or assets of any Subsidiary of Parents or any division, business unit, line of business or facility used for the operations of Parents or any of its Subsidiaries, incurrence or repayment of Indebtedness, the making of any Restricted Payment, or any asset classified as discontinued operations by Parents or any Subsidiary that by the terms of this Agreement requires “Pro Forma Compliance” with a test or covenant hereunder or requires such test or covenant to be tested on a “Pro Forma Basis.”
“ Sponsor ” means any of TSG6 Management, LLC, and its Affiliates, and any fund or partnership managed or advised by any such Person, but not including, however, any portfolio companies of any of the foregoing.
“ Sponsor Management Agreement ” shall mean that certain Management Agreement, dated as of December 31, 2012, by and among Twist Holdings, LLC and Sponsor as in effect on the Closing Date and as the same may be amended, supplement or otherwise modified in a manner not prohibited hereunder.
“ Standby Letter of Credit ” means any Letter of Credit other than a Commercial Letter of Credit.
“ Statutory Reserve Rate ” means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any particular Lender, under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to eurodollar funding (currently referred to as “Eurocurrency liabilities”). The Statutory Reserve Rate for each outstanding LIBOR Loan shall be adjusted automatically as of the effective date of any change in the Statutory Reserve Rate.
“ Store ” means any physical retail store (which includes any real property, fixtures, equipment, inventory and other property related thereto) operated, or to be operated, by any Loan Party.
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“ Subordinated Indebtedness ” means Indebtedness which is expressly subordinated in right of payment to the prior payment in full of the Obligations on terms reasonably acceptable to the Administrative Agent.
“ Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company, or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise Controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of Parents.
“ Swap Contract ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.
“ Swap Contract Secured Parties ” means, with respect to any Swap Contract, collectively, (a) the Administrative Agent or an Affiliate of the Administrative Agent and (b) any Lender or any Affiliate of a Lender.
“ Swap Obligations ” means 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.
“ Swap Termination Value ” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).
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“ Synthetic Lease Obligation ” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).
“ Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“ Termination Date ” means the earlier to occur of (i) the Maturity Date, or (ii) the date on which the maturity of the Obligations (other than the Other Liabilities) is accelerated (or deemed accelerated) and the Commitments are irrevocably terminated (or deemed terminated) in accordance with Article VII.
“ Total Commitments ” means the aggregate of the Commitments of all Lenders. The Total Commitments on the Closing Date are $75,000,000.
“ Total Outstandings ” means, at any time, the aggregate outstanding amount of (a) all Loans at such time, and (b) the Letter of Credit Outstandings at such time.
“ Transactions ” means, collectively, (a) the execution and delivery by the Loan Parties of the Loan Documents to which they are a party and the making of the Loans and the issuance of Letters of Credit (if any) on the Closing Date and (b) the payment of the Transaction Expenses.
“ Transaction Expenses ” shall mean any fees or expenses incurred or paid by Holdings or any of its Subsidiaries in connection with the Transactions to occur on the Closing Date (including in connection with this Agreement and the other Loan Documents).
“ Twist Holdings ” means Twist Holdings, LLC, a Delaware limited liability company.
“ Type ”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Prime Rate.
“ UCC ” means the Uniform Commercial Code as in effect from time to time in the State of New York provided , however , that if a term is defined in Article 9 of the Uniform Commercial Code differently than in another Article thereof, the term shall have the meaning set forth in Article 9; provided further that, if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection, of a security interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “Uniform Commercial Code” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy, as the case may be.
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“ UCP ” means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce ( “ ICC ” ) Publication No. 600 (or such later version thereof as may be in effect at the time of issuance).
“ Unaudited Financial Statements ” means the unaudited combined, consolidated balance sheets and related statements of income, stockholders’ equity and cash flows of Parents and their consolidated Subsidiaries as at the end of and for the Fiscal Quarters ended November 30, 2015, certified by a Financial Officer of each Borrower.
“ Unfunded Pension Liability ” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.
“ United States ” and “ U.S. ” mean the United States of America.
“ U.S. Person ” means any Person that is a “ United States Person ” as defined in Section 7701(a)(30)Section 7701(a)(30) of the Code.
“ U.S. Tax Compliance Certificate ” has the meaning specified in Section 2.21 (e)(ii)(B)(III).
“ Unused Commitment ” shall mean, at any time (a) the then Total Commitments, minus (b) the then Total Outstandings.
“ Unused Fee Rate ” means 0.25%.
“ Unused Fee ” has the meaning provided in Section 2.17(a) .
“ Weighted Average Life to Maturity ” means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (ii) the then outstanding principal amount of such Indebtedness.
“ Withdrawal Liability ” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part 1 of Subtitle E of Title IV of ERISA.
“ Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which writedown and conversion powers are described in the EU Bail-In Legislation Schedule.
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With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “ include ,” “ includes ” and “ including ” shall be deemed to be followed by the phrase “without limitation.” The word “ will ” shall be construed to have the same meaning and effect as the word “ shall .” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “ hereto ,” “ herein ,” “ hereof ” and “ hereunder ,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, (vi) the words “ asset ” and “ property ” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights, and (vii) all references to “$” or “dollars” or to amounts of money and all calculations of Excess Availability, Borrowing Base, permitted “baskets” and other similar matters shall be deemed to be references to the lawful currency of the United States.
(b) In the computation of periods of time from a specified date to a later specified date, the word “ from ” means “ from and including ;” the words “ to ” and “ until ” each mean “ to but excluding ;” and the word “ through ” means “ to and including .”
(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.
(d) This Agreement and the other Loan Documents are the result of negotiation among, and have been reviewed by counsel to, among others, the Loan Parties and the Administrative Agent and are the product of discussions and negotiations among all parties. Accordingly, this Agreement and the other Loan Documents are not intended to be construed against the Administrative Agent or any of the Lenders merely on account of the Administrative Agent’s or any Lender’s involvement in the preparation of such documents.
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(a) Generally . All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Borrowers and their Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 on financial liabilities shall be disregarded.
(b) Changes in GAAP . If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and if either Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that , until so amended, (A) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (B) each Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Without limiting the foregoing, leases shall continue to be classified and accounted for on a basis consistent with that reflected in the Audited Financial Statements for all purposes of this Agreement, notwithstanding any change in GAAP relating thereto, unless the parties hereto shall enter into a mutually acceptable amendment addressing such changes, as provided for above.
(c) Consolidation of Variable Interest Entities . All references herein to consolidated financial statements of Parents and their Subsidiaries or to the determination of any amount for Parents and their Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that Parents are required to consolidate pursuant to FASB ASC 810 as if such variable interest entity were a Subsidiary as defined herein.
1.4 Rounding . Any financial ratios required to be maintained by the Borrowers pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
1.5 Times of Day; Rates . Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).
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 “LIBO Rate” or with respect to any comparable or successor rate thereto.
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1.6 Letter of Credit Amounts . Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided , 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 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.
(a) Notwithstanding anything to the contrary herein, the Consolidated Fixed Charge Coverage Ratio shall be calculated in the manner prescribed by this Section 1.07; provided, that notwithstanding anything to the contrary in clauses (b), (c) or (d) of this Section 1.07, when calculating the Consolidated Fixed Charge Coverage Ratio for purposes of determining actual compliance (and not compliance on a Pro Forma Basis) with Section 6.15, the events described in this Section 1.07 that occurred subsequent to the end of the applicable FCCR Test Period shall not be given pro forma effect.
(b) For purposes of calculating the Consolidated Fixed Charge Coverage Ratio, Specified Transactions (and the incurrence or repayment of any Indebtedness in connection therewith) that have been made (i) during the applicable FCCR Test Period or (ii) subsequent to such FCCR Test Period and prior to or simultaneously with the event for which the calculation of the Consolidated Fixed Charge Coverage Ratio is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable FCCR Test Period. If since the beginning of any applicable FCCR Test Period any Person that subsequently became a Subsidiary or was merged, amalgamated or consolidated with or into the Borrowers or any of its Subsidiaries since the beginning of such FCCR Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section 1.07, then the Consolidated Fixed Charge Coverage Ratio shall be calculated to give pro forma effect thereto in accordance with this Section 1.07.
(c) Whenever pro forma effect is to be given to a Specified Transaction, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Borrowers and may include, for the avoidance of doubt, the amount of cost savings, operating expense reductions and synergies projected by the Borrowers in good faith to be realized as a result of specified actions taken, committed to be taken, or expected to be taken (calculated on a pro forma basis as though such cost savings, operating expense reductions and synergies had been realized on the first day of such period and as if such cost savings, operating expense reductions and synergies were realized during the entirety of such period) relating to such Specified Transaction, net of the amount of actual benefits realized during such period from such actions; provided, that (A) such amounts are reasonably identifiable, quantifiable and factually supportable in the good faith judgment of the Borrowers, (B) such actions are taken, committed to be taken or expected to be taken no later than twelve (12) months after the date of such Specified Transaction, (C) any cost savings, operating expense reductions and synergies that are not actually realized during such period
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may no longer be added pursuant to this clause (c) after the end of the fourth full fiscal quarter ending after the date of such Specified Transaction, and (D) no amounts shall be added pursuant to this clause (c) to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDA, whether through a pro forma adjustment or otherwise, with respect to such period . Notwithstanding the foregoing, (A) all pro forma adjustments under this clause (c) shall not increase pro forma Consolidated EBITDA by more than 10% for any FCCR Test Period and (B) no pro forma adjustments under this clause (c) shall be made in respect of the Transactions (the foregoing not being intended to limit the operation of paragraph (a)(vii) of the definition of “ Consolidated EBITDA ” ).
(d) In the event that the Borrowers or any Subsidiary incurs (including by assumption or guarantees) or repays (including by redemption, repayment, retirement or extinguishment) any Indebtedness included in the calculation of the Consolidated Fixed Charge Coverage Ratio (in each case, other than Indebtedness incurred or repaid under this Agreement in the ordinary course of business for working capital purposes), (i) during the applicable FCCR Test Period or (ii) subsequent to the end of the applicable FCCR Test Period and prior to or simultaneously with the event for which the calculation of the Consolidated Fixed Charge Coverage Ratio is made, then the Consolidated Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence or repayment of Indebtedness, to the extent required, as if the same had occurred on the first day of the applicable FCCR Test Period. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the Consolidated Fixed Charge Coverage Ratio is made had been the applicable rate for the entire period (taking into account any hedging obligations applicable to such Indebtedness). Interest on a Capitalized Lease shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Borrowers to be the rate of interest implicit in such Capitalized Lease in accordance with GAAP. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a London interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Borrowers or Subsidiary may designate.
(e) Whenever any provision of this Agreement requires the Borrowers to be in compliance on a Pro Forma Basis (or in Pro Forma Compliance) with a specified Consolidated Fixed Charge Coverage Ratio in connection with any action to be taken, the Borrowers hereunder shall deliver to the Administrative Agent a certificate of a Responsible Officer setting forth in reasonable detail the calculations demonstrating such compliance.
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ARTICLE II
Amount and Terms of Credit
2.1 Commitment of the Lenders .
(a) Upon the terms and subject to the conditions herein set forth, each Lender, severally and not jointly with any other Lender, agrees to make Loans and the Issuing Bank agrees to issue Letters of Credit, to or for the benefit of the Borrowers, subject in each case to the following limitations:
(i) Total Outstandings (other than as a result of any Permitted Overadvance) shall not at any time exceed the Maximum Borrowing Amount at such time;
(ii) No Lender shall be obligated to make any Credit Extension to the Borrowers, if after giving effect to such Credit Extension, Total Outstandings shall exceed the Revolving Credit Ceiling;
(iii) No Lender shall be obligated to make any Credit Extension to the Borrowers, if after giving effect to such Credit Extension, the sum of (A) the outstanding principal amount of such Lender’s Revolving Credit Loans plus (B) an amount equal to such Lender’s Commitment Percentage of the aggregate principal amount of all Letter of Credit Outstandings and outstanding Permitted Overadvances, shall exceed such Lender’s Commitment; and
(iv) The Issuing Bank shall not be obligated to issue, amend, or extend any Letter of Credit, if after giving effect to any such issuance, amendment or extension, the Letter of Credit Outstandings shall exceed the Letter of Credit Sublimit.
(b) The obligations of the Lenders hereunder to make Loans, to fund participations in Letters of Credit and to make payments pursuant to Section 9.04(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 9.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loans, to purchase its participation or to make its payment under Section 9.04(c) .
2.2 Increase in Total Commitments .
(a) Increase of Total Commitments . At any time and from time to time on or after the Closing Date, so long as no Default or Event of Default exists or would arise therefrom, the Borrowers shall have the right to request an increase of Total Commitments then outstanding by an aggregate amount not to exceed $25,000,000 for all such requests; provided that after giving effect to any increase in the Total Commitments, the Total Commitments shall in no event exceed $100,000,000. The Administrative Agent and the Borrowers shall determine the effective date of such increase and any such requested increase shall be first made available to all existing Lenders on
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a pro rata basis and, to the extent that, on or before the tenth (10th) day following such request for an increase hereunder, such Lenders decline to increase their Commitments (and any Lender who does not respond to a request for an increase in the Commitments requested by the Borrowers shall be deemed to decline such request), or decline to increase their Commitments to the amount requested by the Borrowers, the Borrowers may arrange (or request the Arranger to arrange) for other Eligible Assignees to become a Lender hereunder and to issue commitments in an amount equal to the amount of the increase in the Commitments requested by the Borrowers and not accepted by the existing Lenders (each such increase by either means, a “ Commitment Increase , ” and each Eligible Assignee issuing a, or any Lender increasing its, Commitment, an “ Additional Commitment Lender ” ), provided, however , that (i) no Lender shall be obligated to provide a Commitment Increase, (ii) any Additional Commitment Lender which is not an existing Lender shall be subject to the approval of the Administrative Agent, the Issuing Bank and each Borrower (which approval shall not be unreasonably withheld), and (iii) without the consent of the Administrative Agent, at no time shall the Commitment of any Additional Commitment Lender under this Agreement be less than $10,000,000 . Each Commitment Increase shall be in a minimum aggregate amount of at least $10,000,000 and in integral multiples of $5,000,000 in excess thereof . Any increase in the Total Commitments shall be made on the same terms (including, without limitation, interest terms, payment terms and maturity terms), and shall be subject to the same conditions as the Commitments of the existing Lenders.
(b) Conditions to Effectiveness of each Commitment Increase . No Commitment Increase shall become effective unless and until each of the following conditions has been satisfied or waived:
(i) Each Borrower, the Administrative Agent, and any Additional Commitment Lender that is not an existing Lender shall have executed and delivered a joinder to the Loan Documents in such form as the Administrative Agent shall reasonably require;
(ii) The Borrowers shall have paid such fees and other compensation to the Additional Commitment Lenders and the Arranger as the Borrowers, such Additional Commitment Lenders and the Arranger shall agree;
(iii) If requested by the Administrative Agent, the Borrowers shall deliver to the Administrative Agent and the Lenders an opinion or opinions, in form and substance reasonably satisfactory to the Administrative Agent, from counsel to the Borrowers and dated the effective date of such Commitment Increase;
(iv) A Note (to the extent requested) will be issued at the Borrowers’ expense, to each such Additional Commitment Lender, to be in conformity with requirements of Section 2.07 (with appropriate modification) to the extent necessary to reflect the new Commitment of each Additional Commitment Lender;
(v) The Borrowers and each Additional Commitment Lender shall have delivered such other instruments, documents and agreements as the Administrative Agent may reasonably request in order to effectuate the foregoing;
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(vi) No Default or Event of Default shall have occurred and be continuing or shall result from the consummation of the Commitment Increase; and
(vii) All representations and warranties contained in this Agreement and the other Loan Documents or otherwise made in writing in connection herewith or therewith shall be true and correct on and as of the effective date of each Commitment Increase with the same effect as if made on and as of such date, other than representations and warranties that relate solely to an earlier date, which shall be true and correct in all material respects as of such earlier date.
(c) Notification by Administrative Agent . The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Commitment Increase (with each date of such effectiveness being referred to herein as a “ Commitment Increase Date ”), and at such time (i) the Total Commitments under, and for all purposes of, this Agreement shall be increased by the aggregate amount of each such Commitment Increase, (ii) Schedule 1.1 shall be deemed modified, without further action, to reflect the revised Total Commitments and the Commitment Percentages of the Lenders, and (iii) this Agreement shall be deemed amended, without further action, to the extent necessary to reflect such increased Total Commitments.
(d) Other Provisions . In connection with Commitment Increases hereunder, the Lenders and the Borrowers agree that, notwithstanding anything to the contrary in this Agreement, (i) the Borrowers shall, in coordination with the Administrative Agent, (x) repay outstanding Loans of certain Lenders, and obtain Loans from certain other Lenders (including the Additional Commitment Lenders), or (y) take such other actions as may be reasonably required by the Administrative Agent, in each case to the extent necessary, to have all of the Lenders effectively participate in each of the outstanding Credit Extensions pro rata on the basis of their Commitment Percentages (determined after giving effect to any Commitment Increase pursuant to this Section 2.02 ), and (ii) the Borrowers shall pay to the Lenders any costs of the type referred to in Section 2.14(b) in connection with any repayment and/or Loans required pursuant to preceding clause (i) .
2.3 Reserves . The Administrative Agent shall have the right from time to time, in its Permitted Discretion, to establish, modify, or eliminate any applicable Reserves against the Borrowing Base, Eligible Credit Card Receivables and Eligible Inventory.
(a) Borrowing Procedures .
(i) Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “ Revolving Credit Loan ”) to the Borrowers from time to time, on any Business Day prior to the Termination Date, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment; provided that, after giving effect to such Revolving Credit Loan, each of the conditions set forth in Sections 2.01(a)(i) , (ii) , (iii) and (iv) shall be satisfied. Revolving Credit Loans shall be either Prime Rate Loans or LIBOR Loans as the Borrowers may request. All Revolving Credit Loans made pursuant to the
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same Borrowing shall, unless otherwise specifically provided herein, be Revolving Credit Loans of the same Type . Each Lender may fulfill its Commitment with respect to any Revolving Credit Loan by causing any lending office of such Lender to make such Revolving Credit Loan; provided, however, that any such use of a lending office shall not affect the obligation of the Borrowers to repay such Revolving Credit Loan in accordance with the terms of this Agreement and the other Loan Documents . Within the limits of each Lender ’ s Commitment, and subject to the other terms and conditions hereof, the Borrowers may borrow under this Section 2.04 , prepay under Section 2.14 , and reborrow under this Section 2.04 .
(ii) Each Borrowing of Revolving Credit Loans shall be made upon each Borrower’s irrevocable notice to the Administrative Agent, which may be given by (A) telephone or (B) a Notice of Borrowing; provided that any telephonic notice must be confirmed immediately by delivery to the Administrative Agent of a Notice of Borrowing. Each such Notice of Borrowing must be received by the Administrative Agent not later than 11:00 a.m. (i) three (3) Business Days prior to the requested date of any Borrowing of LIBOR Loans and (ii) on the requested date of any Borrowing of Prime Rate Loans. Such Notice of Borrowing shall contain disbursement instructions and shall specify: (i) whether the Borrowing then being requested is to be a Borrowing of Prime Rate Loans or LIBOR Loans and, if LIBOR Loans, the Interest Period with respect thereto, provided that all Revolving Credit Loans to be made on the Closing Date shall be Prime Rate Loans; (ii) the amount of the proposed Borrowing (which shall be in an integral multiple of $100,000, but not less than $2,000,000 in the case of LIBOR Loans); and (iii) the date of the proposed Borrowing (which shall be a Business Day). If no election of Interest Period is specified in any such notice for a Borrowing of LIBOR Loans, such notice shall be deemed a request for an Interest Period of one (1) month. If no election is made as to the Type of Revolving Credit Loan, such notice shall be deemed a request for Borrowing of Prime Rate Loans. The Administrative Agent shall promptly notify each Lender of its proportionate share of such Borrowing, the date of such Borrowing, the Type of Borrowing being requested and the Interest Period or Interest Periods applicable thereto, as appropriate. On the borrowing date specified in such Notice of Borrowing, each Lender shall make its share of the Borrowing available at the Administrative Agent’s Office no later than 2:00 p.m., in immediately available funds. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension on the Closing Date, Section 4.01 ), the Administrative Agent shall make all funds received in respect of Borrowing of Revolving Credit Loans available to the Borrowers in like funds as received by the Administrative Agent either by (i) crediting the Loan Account with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrowers; provided , however , that if, on the date a Borrowing Request is made with respect to a Revolving Credit Loan, there are Letter of Credit Disbursements outstanding, then the proceeds of such Revolving Credit Loans, first, shall be applied to the payment in full of any such Letter of Credit Disbursements, and second, shall be made available to the Borrowers as provided above.
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(b) Conversion and Continuation of Revolving Credit Loans .
(i) Each conversion of Revolving Credit Loans from one Type to the other, and each continuation of LIBOR Loans shall be made upon the Borrowers’ irrevocable notice to the Administrative Agent, which may be given by (A) telephone or (B) a Notice of Borrowing; provided that any telephonic notice must be confirmed immediately by delivery to the Administrative Agent of a Notice of Borrowing. Each such Notice of Borrowing must be received by the Administrative Agent not later than 11:00 a.m. three (3) Business Days prior to the requested date of any conversion to or continuation of LIBOR Loans or of any conversion of LIBOR Loans to Prime Rate Loans. Each such Notice of Borrowing shall specify (1) whether the Borrowers are requesting a conversion of Revolving Credit Loans from one Type to the other, or a continuation of LIBOR Loans, (2) the requested date of the conversion or continuation, as the case may be (which shall be a Business Day), (3) the principal amount of Revolving Credit Loans to be converted or continued, (4) the Type of Revolving Credit Loans to which existing Revolving Credit Loans are to be converted and (5) if applicable, the duration of the Interest Period with respect thereto. Notwithstanding the foregoing to the contrary:
(A) No Borrowing of Revolving Credit Loans may be converted into, or continued as, LIBOR Loans at any time when any Event of Default has occurred and is continuing;
(B) If less than a full Borrowing of Revolving Credit Loans is converted, such conversion shall be made pro rata among the Lenders based upon their Commitment Percentages in accordance with the respective principal amounts of the Revolving Credit Loans comprising such Borrowing held by such Lenders immediately prior to such conversion;
(C) The aggregate principal amount of Prime Rate Loans being converted into or continued as LIBOR Loans shall be in an integral of $100,000 and at least $2,000,000;
(D) Each Lender shall effect each conversion by applying the proceeds of its new LIBOR Loan or Prime Rate Loan, as the case may be, to its Revolving Credit Loan being so converted;
(E) The Interest Period with respect to a Borrowing of LIBOR Loans effected by a conversion or in respect to the Borrowing of LIBOR Loans being continued as LIBOR Loans shall commence on the date of conversion or the expiration of the current Interest Period applicable to such continuing Borrowing, as the case may be;
(F) A Borrowing of LIBOR Loans may not be converted prior to the last day of an Interest Period applicable thereto, unless the Borrowers pay all Breakage Costs incurred in connection with such conversion; and
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(G) Each request for a conversion or continuation of a Borrowing of LIBOR Loans which fails to state an applicable Interest Period shall be deemed to be a request for an Interest Period of one (1) month.
(ii) If the Borrowers do not give notice to convert any Borrowing of LIBOR Loans, or does not give notice to continue, or does not have the right to continue, any Borrowing as LIBOR Loans, in each case as provided in Section 2.04(b)(ii) above, such Borrowing shall automatically be converted to, or continued as, as applicable, a Borrowing of LIBOR Loans with an Interest Period of one (1) month, at the expiration of the then-current Interest Period, provided that if an Event of Default then exists and is continuing, such Borrowing shall be converted to, or continued as a Prime Rate Loan. The Administrative Agent shall, after it receives notice from each Borrower, promptly give each Lender notice of any conversion, in whole or part, of any Revolving Credit Loan made by such Lender.
(c) Charges to Loan Account . To the extent not paid by the Borrowers when due (after taking into consideration any applicable grace period), the Administrative Agent, without the request of the Borrowers, may advance any interest, fee, or other payment required under any Loan Document to which any Credit Party is entitled and may charge the same to the Loan Account notwithstanding that an Overadvance may result thereby and notwithstanding any failure to satisfy the conditions set forth in Section 4.02 ; provided that such charges do not cause the Total Outstandings to exceed the Total Commitments at such time. The Administrative Agent shall advise the Borrowers of any such advance or charge promptly after the making thereof. Such action on the part of the Administrative Agent shall not constitute a waiver of the Administrative Agent’s rights and the Borrowers’ obligations under Section 2.15(a) . Any amount which is added to the principal balance of the Loan Account as provided in this Section 2.04(c) shall bear interest at the interest rate then and thereafter applicable to Prime Rate Loans.
(d) Notification of Interest Rate . The Administrative Agent shall promptly notify the Borrowers and the Lenders of the interest rate applicable to any Interest Period for LIBOR Loans upon determination of such interest rate. At any time that Prime Rate Loans are outstanding, the Administrative Agent shall notify the Borrowers and the Lenders of any change of Bank of America’s prime rate used in determining the Prime Rate promptly following the public announcement of such change.
(e) Number of Interest Periods . After giving effect to all Borrowings, all conversions of Revolving Credit Loans from one Type to the other, and all continuations of Loans as the same Type, there not be more than six Interest Periods in effect with respect to the Loans.
(f) Cashless Settlement . 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 each Borrower, the Administrative Agent, and such Lender.
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(a) Notwithstanding anything to the contrary contained in this Agreement, if the Borrowers shall request that Credit Parties make, or permit to remain outstanding, any Loans or Letters of Credit which shall cause an Overadvance, the Administrative Agent may, in its sole discretion, elect to make, or permit to remain outstanding such Overadvance to the extent such Overadvance constitutes a Permitted Overadvance. If a Permitted Overadvance is made, or permitted to remain outstanding, pursuant to the preceding sentence, then all Lenders shall be bound to make, or permit to remain outstanding, such Permitted Overadvance based upon their Commitment Percentage in accordance with the terms of this Agreement, regardless of whether the conditions to lending set forth in Section 4.02 have been met. A Permitted Overadvance may be made as a Revolving Credit Loan or as an issuance of a Letter of Credit and each Lender and the Issuing Bank, as applicable, agrees to make any such requested Revolving Credit Loan or Letter of Credit available to the Borrowers. The obligation of each Lender and the Issuing Bank, as applicable, to participate in each Permitted Overadvance shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or other right which such Person may have against any other Credit Party, the Borrowers or any other Person for any reason whatsoever, (ii) the occurrence or continuance of a Default, or (iii) any other occurrence, event or condition. The making of any such Permitted Overadvance on any one occasion shall not obligate the Administrative Agent or any Lender to make or permit any Permitted Overadvance on any other occasion. No funding of a Permitted Overadvance or sufferance of an Overadvance shall constitute a waiver by Administrative Agent or the Lenders of any Event of Default caused thereby. In no event shall any Borrower or other Loan Party be deemed a beneficiary of this Section 2.05 nor authorized to enforce any of its terms. The Required Lenders may, upon not less than five (5) Business Days prior written notice, revoke the authority of the Administrative Agent to make further Permitted Overadvances.
(b) No Permitted Overadvance shall modify or abrogate any of the provisions of Section 2.11(d) or Section 2.11(g) regarding the Lenders’ obligations to reimburse any Letter of Credit Disbursement and to purchase participations with respect to Letter of Credit Disbursements, respectively. Notwithstanding anything herein to the contrary, no event or circumstance shall result in any claim or liability against the Administrative Agent for any “inadvertent Overadvances” resulting from changed circumstances beyond the control of the Administrative Agent (such as a reduction in the value of Collateral included in the Borrowing Base)), and such “inadvertent Overadvances” shall not reduce the amount of Permitted Overadvances allowed hereunder.
(c) All Permitted Overadvances shall be payable by the Borrowers on demand by Administrative Agent or the Required Lenders. All other Overadvances (other than Permitted Overadvances) shall be payable in accordance with the requirements of Section 2.15(a) . All Permitted Overadvances and other Overadvances shall constitute Obligations secured by the Collateral and entitled to all benefits of the Loan Documents.
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2.6 Computation of Interest and Fees . All computations of interest for Prime Rate Loans (including Prime Rate Loans determined by reference to the LIBO Rate) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed . All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year) . Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid; provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.19(a) , bear interest for one day . Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.
(a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrowers and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrowers shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.
(b) In addition to the accounts and records referred to in Section 2.07(a) , each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.
2.8 Interest on Loans; Default Rate
(a) (i) Subject to the provisions of subsection (b) below, (i) each LIBOR Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the LIBO Rate for such Interest Period plus the Applicable Margin; and (ii) each Prime Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Prime Rate plus the Applicable Margin.
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(i) During the continuance of any Specified Event of Default, all outstanding Obligations hereunder shall bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by Applicable Law . All such interest shall be due and payable upon demand.
(ii) Subject to Section 2.08(b) , Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto, the Termination Date and at such other times as may be specified herein. Accrued interest on all Loans after the Termination Date shall be payable on demand. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.
2.9 Inability to Determine Rates . If in connection with any request for a LIBOR Loan or a conversion to or continuation thereof, (a) the Administrative Agent determines that (i) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such LIBOR Loan, or (ii) adequate and reasonable means do not exist for determining the LIBO Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan or in connection with an existing or proposed Prime Rate Loan (in each case, with respect to clause (a)(i) above, “ Impacted Loans ”), or (b) the Administrative Agent or the Required Lenders determine that for any reason the LIBO Rate for any requested Interest Period with respect to a proposed LIBOR Loan does not adequately and fairly reflect the cost to such Lenders of funding such LIBOR Loan, the Administrative Agent will promptly so notify each Borrower and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain LIBOR Loans shall be suspended, to the extent of the affected LIBOR Loans or Interest Periods, and (y) in the event of a determination described in the preceding sentence with respect to the LIBO Rate component of the Prime Rate, the utilization of the LIBO Rate component in determining the Prime Rate shall be suspended, in each case, until the Administrative Agent upon the instruction of the Required Lenders revokes such notice. Upon receipt of such notice, the Borrowers may revoke any pending request for a Borrowing of, conversion to or continuation of LIBOR Loans (to the extent of the affected LIBOR Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Borrowing of Prime Rate Loans in the amount specified therein.
Notwithstanding the foregoing, if the Administrative Agent has made the determination described in clause (a)(i) of this Section, the Administrative Agent, in consultation with the Borrowers and the affected 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 under clause (a) of the first sentence of this Section, (2) the Administrative Agent or the Required Lenders notify the Administrative Agent and the Borrowers 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 determines that any Applicable 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 Borrowers written notice thereof.
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2.10 Illegality . If any Lender determines that any Applicable Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its Lending Office to perform any of its obligations hereunder or make, maintain or fund or charge interest with respect to any Credit Extension or to determine or charge interest rates based upon the Adjusted LIBO Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to each Borrower through the Administrative Agent, (a) any obligation of such Lender to issue, make, maintain, fund or charge interest with respect to any such Credit Extension or continue LIBOR Loans or to convert Prime Rate Loans to LIBOR Loans shall be suspended, and (b) if such notice asserts the illegality of such Lender making or maintaining Prime Rate Loans the interest rate on which is determined by reference to the LIBO Rate component of the Prime Rate, the interest rate on which Prime Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the LIBO Rate component of the Prime Rate, in each case until such Lender notifies the Administrative Agent and each Borrower that the circumstances giving rise to such determination no longer exist . Upon receipt of such notice, (x) the Borrowers shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all LIBOR Loans of such Lender to Prime Rate Loans (the interest rate on which Prime Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the LIBO Rate component of the Prime Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such LIBOR Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBOR Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the LIBO Rate, the Administrative Agent shall during the period of such suspension compute the Prime Rate applicable to such Lender without reference to the LIBO Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon LIBO Rate . Upon any such prepayment or conversion, the Borrowers shall also pay accrued interest on the amount so prepaid or converted.
(a) Upon the terms and subject to the conditions herein set forth, at any time and from time to time after the date hereof and prior to the Termination Date, the Borrowers may request the Issuing Bank to issue, and subject to the terms and conditions contained herein, (A) the Issuing Bank shall, in reliance upon the agreements of the Lenders set forth in this Section 2.11 , issue, for the account of the Borrowers or a Subsidiary, one or more Letters of Credit denominated in Dollars and (B) the Lenders severally agree to participate in each such Letter of Credit issued for the account of the Borrowers or its Subsidiaries and any drawings thereunder; provided , however , that no Credit Extension in respect of a Letter of Credit shall be made if after giving effect to such Credit Extension (i) the aggregate Letter of Credit Outstandings shall exceed the Letter of Credit Sublimit, or (ii) any of the conditions set forth in Sections 2.01(a)(i) , (ii) or (iii) would not be satisfied; provided , further , that no Letter of Credit shall be issued unless the Issuing Bank shall have received notice from the Administrative Agent that the conditions to such issuance have been met; provided further that any Letter of Credit issued for the benefit of any Subsidiary that is not a Borrower or a Guarantor shall
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be issued naming the Borrowers as the account party on any such Letter of Credit but such Letter of Credit may contain a statement that it is being issued for the benefit of such Subsidiary; providedfurther that the Issuing Bank shall not be required to make any Credit Extension in respect of any Letter of Credit, if, in its reasonable discretion: (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Issuing Bank from issuing such Letter of Credit, or any Applicable Law relating to the Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the Issuing Bank in good faith deems material to it, (B) the issuance of such Letter of Credit would violate one or more policies of the Issuing Bank applicable to letters of credit generally, (C) except as otherwise agreed by the Administrative Agent and the Issuing Bank, such Letter of Credit is to be denominated in a currency other than Dollars; or (D) any Lender is at that time a Defaulting Lender, unless the Issuing Bank has entered into arrangements, including the delivery of Cash Collateral, satisfactory to the Issuing Bank (in its sole discretion) with the Borrowers or such Lender to eliminate the Issuing Bank ’ s actual or potential Fronting Exposure (after giving effect to Section 2.24(a)(iv) ) 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 Obligations in respect of Letters of Credit as to which the Issuing Bank has actual or potential Fronting Exposure, as it may elect in its sole discretion . The Issuing Bank shall not be under any obligation to amend any Letter of Credit if (A) the Issuing Bank 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 . The Issuing Bank (unless the Issuing Bank is Bank of America or any of its Affiliates) shall notify the Administrative Agent in writing on each Business Day of all Letters of Credit issued on the prior Business Day by the Issuing Bank.
(b) Each Standby Letter of Credit shall expire at or prior to the close of business on the earlier of the date which is (i) one (1) year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one (1) year after such renewal or extension) and (ii) five (5) Business Days prior to the Maturity Date; provided , however , that (A) each Standby Letter of Credit may, upon the request of the Borrowers, include a provision whereby such Letter of Credit shall be renewed automatically (unless the Issuing Bank notifies the beneficiary thereof at least thirty (30) days prior to the then-applicable expiration date that such Letter of Credit will not be renewed) for additional consecutive periods of twelve (12) months or less (but not beyond the date that is five (5) Business Days prior to the Maturity Date) and (B) with the prior written consent of the Issuing Bank and the Administrative Agent, a Standby Letter of Credit may have an expiry date after the Maturity Date, so long as such Letter of Credit is Cash Collateralized (in an amount equal to one hundred five percent (105%) of the maximum amount thereof) not less than sixty (60) days prior to the Maturity Date.
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(c) Each Commercial Letter of Credit shall expire at or prior to the close of business on the earlier of the date which is (i) ninety (90) days after the date of the issuance of such Commercial Letter of Credit and (ii) five (5) Business Days prior to the Maturity Date.
(d) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the Issuing Bank shall notify each Borrower and the Administrative Agent thereof. Drafts drawn under each Letter of Credit shall be reimbursed by the Borrowers by paying to the Administrative Agent an amount equal to such drawing not later than 11:00 a.m. on the date of any payment by the Issuing Bank under a Letter of Credit, provided that (i) in the absence of written notice to the contrary from the Borrowers, and subject to the other provisions of this Agreement, such payments shall be financed when due with a Prime Rate Loan to the Borrowers in an equivalent amount (without regard to the minimum and multiples specified in for the principal amount of any such Loan) and, to the extent so financed, the Borrowers’ obligation to make such payment shall be discharged and replaced by the resulting Prime Rate Loan, and (ii) in the event that the Borrowers have notified the Administrative Agent that it will not so finance any such payments, the Borrowers will make payment directly to the Issuing Bank when due. The Administrative Agent shall promptly remit the proceeds from any Loans made pursuant to clause (i) or clause (iii) above (and the Administrative Agent may apply Cash Collateral provided for this purpose) in reimbursement of a draw under a Letter of Credit to the Issuing Bank. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and each Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make payment thereunder; provided, however , that any failure to give or delay in giving such notice shall not relieve the Borrowers of their obligation to reimburse the Issuing Bank and the Lenders with respect to any such payment.
(e) If the Issuing Bank shall make any Letter of Credit Disbursement, then, unless the Borrowers shall reimburse the Issuing Bank in full on the date provided in Section 2.11(d) above, the unpaid amount thereof shall bear interest at the rate per annum then applicable to Prime Rate Loans for each day from and including the date such payment is made to, but excluding, the date that the Borrowers reimburses the Issuing Bank therefor, provided, however , that, if the Borrowers fail to reimburse the Issuing Bank when due pursuant to Section 2.11(d) , then interest shall accrue at the Default Rate. Interest accrued pursuant to this paragraph shall be for the account of, and promptly remitted by the Administrative Agent, upon receipt to, the Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to Section 2.11(g) to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.
(f) Immediately upon the issuance of any Letter of Credit by the Issuing Bank (or the amendment of a Letter of Credit increasing the amount thereof), and without any further action on the part of the Issuing Bank, the Issuing Bank shall be deemed to have sold to each Lender, and each such Lender shall be deemed unconditionally and irrevocably to have purchased from the Issuing Bank, without recourse or warranty, an undivided interest and participation, to the extent of such Lender’s Commitment Percentage, in such Letter of Credit, each drawing thereunder and the obligations of the Borrowers under this Agreement and the other Loan Documents with respect
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thereto . Upon any change in the Total Commitments pursuant to Section 2.02 , Section 2.13 , Section 2.15 or Section 9.06 of this Agreement, it is hereby agreed that with respect to all Letter of Credit Outstandings, there shall be an automatic adjustment to the participations hereby created to reflect the new Commitment Percentages of the assigning and assignee Lenders and the Additional Commitment Lenders, if applicable . Any action taken or omitted by the Issuing Bank under or in connection with a Letter of Credit, if taken or omitted in the absence of gross negligence or willful misconduct, shall not create for the Issuing Bank any resulting liability to any Lender.
(g) In the event that the Issuing Bank makes any Letter of Credit Disbursement and the Borrowers shall not have reimbursed such amount in full to the Issuing Bank pursuant to this Section 2.11(d) , the Issuing Bank shall promptly notify the Administrative Agent, which shall promptly notify each Lender of such failure, and each Lender shall promptly and unconditionally pay to the Administrative Agent (and the Administrative Agent may apply Cash Collateral provided for this purpose), for the account of the Issuing Bank the amount of such Lender’s Commitment Percentage of such unreimbursed payment and in same day funds. If the Issuing Bank so notifies the Administrative Agent and the Administrative Agent so notifies the Lenders prior to 11:00 a.m. on any Business Day, each such Lender shall make available to the Issuing Bank such Lender’s Commitment Percentage of the amount of such payment on such Business Day in same day funds (or if such notice is received by the Lenders after 11:00 a.m. on the day of receipt, payment shall be made on the immediately following Business Day in same day funds). Each lender’s obligation to reimburse the Issuing Bank for amounts drawn under Letters of Credit, as contemplated by this Section 2.12(g) , 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 Issuing Bank, either Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default; or (C) any pother occurrence, event or condition, whether or not similar to any of the foregoing. No such reimbursement by the Lenders shall relieve or otherwise impair the obligation of the Borrowers to reimburse the Issuing Bank for the amount of any payment made by the Issuing Bank under any Letter of Credit, together with interest as provided herein. If and to the extent such Lender shall not have so made its Commitment Percentage of the amount of such payment available to the Issuing Bank, such Lender agrees to pay to the Issuing Bank forthwith on demand such amount, together with interest thereon, for each day from such date until the date such amount is paid to the Administrative Agent for the account of the Issuing Bank at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Issuing Bank in connection with the foregoing. Each Lender agrees to fund its Commitment Percentage of such unreimbursed payment notwithstanding a failure to satisfy any applicable lending conditions or the provisions of Section 2.01 or Section 2.06 , or the occurrence of the Termination Date. The failure of any Lender to make available to the Issuing Bank its Commitment Percentage of any payment under any Letter of Credit shall neither relieve any Lender of its obligation hereunder to make available to the Issuing Bank its Commitment Percentage of any payment under any Letter of Credit on the date required, as specified above, nor increase the obligation of such other Lender. Subject to the provisions of Section 2.24 , whenever any Lender has made payments to the Issuing Bank in respect of any reimbursement obligation for any Letter of Credit, such Lender shall be entitled to share ratably,
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based on its Commitment Percentage, in all payments and collections thereafter received on account of such reimbursement obligation (whether directly from the Borrowers or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent).
(h) Whenever the Borrowers desire that the Issuing Bank issue a Letter of Credit (or the amendment, renewal or extension (other than automatic renewal or extensions) of an outstanding Letter of Credit), each Borrower shall give to the Issuing Bank and the Administrative Agent at least three (3) Business Days’ (or such shorter period as may be agreed to by the Issuing Bank, in its sole discretion) prior written (including, without limitation, by telegraphic, telex, facsimile or cable communication) notice specifying the date on which the proposed Letter of Credit is to be issued, amended, renewed or extended (which shall be a Business Day), the amount of the Letter of Credit so requested, the expiration date of such Letter of Credit, the name and address of the beneficiary thereof, and the provisions thereof. If requested by the Issuing Bank, the Borrowers shall also submit documentation (including, any Issuer Documents) on the Issuing Bank’s standard form in connection with any request for the issuance, amendment, renewal or extension of a Letter of Credit, provided that in the event of a conflict or inconsistency between the terms of such documentation (including, any Issuer Documents) and this Agreement, the terms of this Agreement shall supersede any inconsistent or contrary terms in such documentation and this Agreement shall control.
(i) Subject to the limitations set forth below, the obligations of the Borrowers to reimburse the Issuing Bank for any Letter of Credit Disbursement shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including, without limitation (it being understood that any such payment by the Borrowers shall be without prejudice to, and shall not constitute a waiver of, any rights the Borrowers might have or might acquire hereunder as a result of the payment by the Issuing Bank of any draft or the reimbursement by the Borrowers thereof): (i) any lack of validity or enforceability of a Letter of Credit, this Agreement, or any other Loan Document; (ii) the existence of any claim, counterclaim, setoff, defense or other right that any 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 Issuing Bank or any of the other Lenders, 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; (iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein 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; (iv) waiver by the Issuing Bank of any requirement that exists for the Issuing Bank’s protection and not the protection of the Borrowers or any waiver by the Issuing Bank which does not in fact materially prejudice the Borrowers; (v) honor of a demand for payment presented electronically even if such Letter of Credit requires that demand be in the form of a draft; (vi) any payment made by the Issuing Bank 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; (vii) any payment by the Issuing Bank under such
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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 Issuing Bank 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; (viii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.11 , constitute defense available to, a legal or equitable discharge of, or provide a right of setoff against, any Loan Party ’ s obligations hereunder; (ix) the fact that any Event of Default shall have occurred and be continuing; or (x) any adverse change in the relevant exchange rates . No Credit Party shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit 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 or any consequence arising from causes beyond the control of the Issuing Bank . The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as determined by a court of competent jurisdiction or another independent tribunal having jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination . In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented that appear on their face to be in compliance with the terms of a Letter of Credit, the Issuing Bank may, in its reasonable discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit . The Borrowers 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 Borrowers ’ instructions or other irregularity, the Borrowers will immediately notify the Issuing Bank.
(j) Each Lender and each Loan Party agrees that, in paying any drawing under a Letter of Credit, the Issuing Bank shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the Issuing Bank, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the Issuing Bank shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrowers hereby assume all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided , however , that this assumption is not intended to, and shall not, preclude the Borrowers’ pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the Issuing Bank, the Administrative Agent, any of their respective Related Parties nor any
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correspondent, participant or assignee of the Issuing Bank shall be liable or responsible for any of the matters described in clauses (i) through (x) of Section 2.11(i) ; provided , however , that anything in such clauses to the contrary notwithstanding, the Borrowers may have a claim against the Issuing Bank, and Issuing Bank may be liable to the Borrowers, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrowers which the Borrowers prove were caused by the Issuing Bank ’ s willful misconduct or gross negligence or the Issuing Bank ’ s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit . In furtherance and not in limitation of the foregoing, the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the Issuing Bank shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason . The Issuing Bank may send a Letter of Credit or conduct any communication to or from the beneficiary via the Society for Worldwide Interbank Financial Telecommunication ( “ SWIFT ” ) message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary.
(k) Unless otherwise expressly agreed by the Issuing Bank and the Borrowers when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the UCP shall apply to each commercial Letter of Credit. Notwithstanding the foregoing, the Issuing Bank shall not be responsible to the Borrowers for, and the Issuing Bank’s rights and remedies against the Borrowers shall not be impaired by, any action or inaction of the Issuing Bank required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including Applicable Law or any order of a jurisdiction where the Issuing Bank or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade - 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.
(l) In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.
(m) The Borrowers shall pay directly to the Issuing Bank for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the Issuing Bank 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.
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(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender or the Issuing Bank or the London interbank market any other condition, cost or expense affecting this Agreement or LIBOR 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, converting to, continuing or maintaining any Loan the interest on which is determined by reference to the LIBOR Rate (or, in the case of clause (ii) above, any Loan), or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or any other amount), then upon the request of such Lender or the Issuing Bank, the Borrowers will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in Law affecting such Lender or the Issuing Bank or any Lending Office of such Lender or such Lender’s or the Issuing Bank’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company would have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy), then from time to time the Borrowers will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction suffered.
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(c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section 2.12 and delivered to each Borrower shall be conclusive absent manifest error . The Borrowers shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to the foregoing provisions of this Section 2.12 shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation, provided that the Borrowers shall not be required to compensate a Lender or the Issuing Bank pursuant to the foregoing provisions this Section for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrowers of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).
(e) Each Borrower’s obligations under this Section 2.12 shall survive the replacement of a Lender or the Issuing Bank, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.
2.13 Termination or Reduction of Commitments .
(a) Termination or Reduction of Total Commitments . Upon at least five (5) Business Days’ prior written notice to the Administrative Agent, the Borrowers may, at any time, in whole permanently terminate, or from time to time in part permanently reduce, the Total Commitments. Each such reduction shall be in the principal amount of $5,000,000 or any integral multiple thereof. Each such reduction or termination shall (i) be applied ratably to the Commitments of each Lender and (ii) be irrevocable at the effective time of any such termination or reduction. The Borrowers shall pay to the Administrative Agent for application as provided herein (i) at the effective time of any such termination (but not any partial reduction), all earned and unpaid fees on account of the Total Commitments so terminated, and (ii) at the effective time of any such reduction or termination, all Breakage Costs incurred in connection therewith and any amount by which the Total Outstandings on such date exceed the amount to which the Total Commitments are to be reduced effective on such date. The Borrowers shall not terminate or reduce the Total Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed the Total Commitment. A permanent reduction of the Total Commitments shall not require a corresponding pro rata reduction in the Letter of Credit Sublimit; provided, however , that if the Total Commitments are reduced to an amount less than the Letter of Credit Sublimit, then the Letter of Credit Sublimit shall be reduced to an amount equal to the Total Commitments.
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(b) Termination Date . Upon the Termination Date, the Commitments of the Lenders shall be terminated in full, and the Borrowers shall pay, in full and in cash, all outstanding Loans and all other outstanding Obligations then owing by them to the Lenders (including, without limitation, all Breakage Costs incurred in connection therewith).
2.14 Optional Prepayment of Revolving Credit Loans; Reimbursement of Lenders .
(a) The Borrowers shall have the right at any time and from time to time to prepay without premium or penalty (but subject to payment of Breakage Costs as provided herein) (without a reduction in the Total Commitments) outstanding Loans in whole or in part, (x) with respect to LIBOR Loans, upon at least two (2) Business Days’ prior written, telex or facsimile notice to the Administrative Agent, prior to 1:00 p.m., and (y) with respect to Prime Rate Loans, on the same Business Day as such notice is furnished to the Administrative Agent, prior to 1:00 p.m., subject in each case to the following limitations:
(i) Subject to Section 2.15 , all prepayments shall be paid to the Administrative Agent for application to the prepayment of outstanding Revolving Credit Loans ratably in accordance with each Lender’s Commitment Percentage;
(ii) Subject to the foregoing, outstanding Prime Rate Loans of the Borrowers shall be prepaid before outstanding LIBOR Loans of the Borrowers are prepaid (except as otherwise directed by the Borrowers). Each partial prepayment of LIBOR Loans shall be in an integral multiple of $100,000 (but in no event less than $2,000,000). No prepayment of LIBOR Loans shall be permitted pursuant to this Section 2.14 prior to the last day of an Interest Period applicable thereto, unless the Borrowers reimburse the Lenders for all Breakage Costs associated therewith, within five (5) Business Days of receiving a written demand for such reimbursement which sets forth the calculation of such Breakage Costs in reasonable detail. No partial prepayment of a Borrowing of LIBOR Loans shall result in the aggregate principal amount of the LIBOR Loans remaining outstanding pursuant to such Borrowing being less than $2,000,000 (unless all such outstanding LIBOR Loans are being prepaid in full); and
(iii) Each notice of prepayment shall specify (1) the prepayment date, (2) the principal amount and Type of the Loans to be prepaid and (3) in the case of LIBOR Loans, the Borrowing or Borrowings pursuant to which such Loans were made. Each notice of prepayment shall be revocable, provided that, with five (5) Business Days of receiving a written demand for such reimbursement which sets forth the calculation of such Breakage Costs in reasonable detail the Borrowers shall reimburse the Lenders for all Breakage Costs associated with the revocation of any notice of prepayment. The Administrative Agent shall, promptly after receiving notice from a Borrower hereunder, notify each applicable Lender of the principal amount and Type of the Loans held by such Lender which are to be prepaid, the prepayment date and the manner of application of the prepayment.
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(b) The Borrowers shall reimburse each Lender as set forth below for any loss, cost or expense (herein, collectively, “ Breakage Costs ” ) incurred or to be incurred by such Lender as a result of (i) any continuation, conversion, payment or prepayment of any Revolving Credit Loan other than a Prime Rate Loan on a day other than the last day of the Interest Period for such Revolving Credit Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise), (ii) any failure by the Borrowers (for a reason other than the failure of such Lender to make a Revolving Credit Loan) to prepay, borrow, continue or convert any Revolving Credit Loan other than a Prime Rate Loan on the date or in the amount notified by the Borrowers, (iii) in the event that after a Borrower delivers a notice of commitment reduction under Section 2.13 or a notice of prepayment under Section 2.14 in respect of LIBOR Loans, such commitment reductions or such prepayments are not made on the day specified in such notice of reduction or prepayment or (iv) any assignment of a LIBOR Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrowers pursuant to Section 2.22 , including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Revolving Credit Loan or from fees payable to terminate the deposits from which such funds were obtained . The Borrowers shall also pay any customary administrative fees charged by such Lender in connection with the foregoing . For purposes of calculating amounts payable by the Borrowers to the Lenders under this Section 2.14(b) , each Lender shall be deemed to have funded each LIBOR Loan made by it at the LIBO Rate used in determining the Adjusted LIBO Rate for such Revolving Credit Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such LIBOR Loan was in fact so funded . Any Lender demanding reimbursement for such loss shall deliver to the Borrowers from time to time one or more certificates setting forth the amount of such loss as determined by such Lender and setting forth in reasonable detail the manner in which such amount was determined and such amounts shall be due within ten (10) Business Days after the receipt of such notice . Each Borrower ’ s obligations under this Section 2.14 shall survive the replacement of a Lender or the Issuing Bank, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.
(c) Subject to the foregoing, whenever any partial prepayment of Revolving Credit Loans are to be applied to LIBOR Loans, such LIBOR Loans shall be prepaid in the chronological order of their Interest Payment Dates or as the Borrowers may otherwise designate in writing.
2.15 Mandatory Prepayment; Cash Collateral .
The outstanding Obligations shall be subject to prepayment as follows:
(a) If at any time the amount of Total Outstandings cause Excess Availability to be less than zero, the Borrowers will, immediately (y) prepay the Loans in an amount necessary to eliminate such deficiency; and (z) if, after giving effect to the prepayment in full of all outstanding Loans, such deficiency has not been eliminated, Cash Collateralize Letter of Credit Outstandings in an amount necessary to eliminate such deficiency.
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(b) The Loans shall be repaid daily in accordance with (and to the extent required under) the provisions of Section 2.16 , to the extent then applicable and without regard to minimum and integral amounts).
(c) Except during the continuance of a Cash Dominion Event, any Cash Receipts and other payments received by the Administrative Agent shall be applied as the Borrowers shall direct the Administrative Agent in writing, and otherwise consistent with the provisions of Section 2.14.
(d) The Borrowers shall prepay the Obligations (without a reduction in the Total Commitments) with 100% of the net cash proceeds received by the Borrowers or any other Loan Party in connection with any asset sale made pursuant to Section 6.05(h) , such prepayment to be made contemporaneously with the receipt of such proceeds.
(e) The Borrowers shall prepay the Obligations (without a reduction in the Total Commitments) with 100% of the net cash proceeds received by the Borrowers or any other Loan Party from any casualty or other loss with respect to any Collateral, such prepayment to be made contemporaneously with the receipt of such proceeds; provided, however (i) the amount of such prepayment may be net of amounts required to be paid to any holder of Indebtedness which is secured by a senior lien on such Collateral and (ii) so long as (x) the amount of such proceeds does not exceed $250,000 and (y) no Default or Event of Default shall have then occurred or would exist after giving effect to such casualty or other loss with respect to such Collateral, the Borrowers may retain such proceeds to replace or repair such Collateral, so long as (A) such repair or replacement is completed within one (1) year of such casualty or loss and (2) any remaining proceeds are thereafter applied to the prepayment of the Obligations.
(f) The Borrowers shall repay the Obligations as required pursuant to Section 2.13(b) .
(g) The Borrowers shall prepay the Obligations (without a reduction in the Total Commitments) with 100% of the proceeds of Curative Equity received by the Borrowers or any other Loan Party pursuant to Section 7.04 , such prepayment to be made contemporaneously with the receipt of such proceeds.
2.16 Credit Card Arrangements; Cash Management .
(a) Annexed hereto as Schedule 2.16(a) is a list describing, as of the Closing Date, all arrangements to which any Loan Party is a party with respect to the payment to such Loan Party of the proceeds of all credit card and debit card charges for sales by such Loan Party.
(b) Annexed hereto as Schedule 2.16(b) is a list describing, as of the Closing Date, all Deposit Accounts (including DDAs) of each Loan Party. Promptly upon the request of the Administrative Agent, the Borrowers shall deliver to the Administrative Agent an update to Schedule 2.16(b) , setting forth all Deposit Accounts (including DDAs) that are maintained by the Loan Parties as of such date, which schedule shall include, with respect to each depository (i) the name and address of such depository; (ii) the account number(s) maintained with such depository; and (iii) a contact person responsible for the maintenance of such accounts at such depository.
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(c) To the extent not previously delivered, each Loan Party shall:
(i) on or prior to the thirty (30) day anniversary of the Closing Date or such later date as the Administrative Agent shall agree in writing, deliver to the Administrative Agent notifications (each, a “ Credit Card Notification ”) substantially in the form attached hereto as Exhibit D which have been executed on behalf of such Loan Party and addressed to such Loan Party’s credit card and debit card clearinghouses and processors listed on Schedule 2.16(b) ; and
(ii) on or prior to the sixty (60) day anniversary of the Closing Date, or such later date as to which the Administrative Agent, in its discretion, shall agree (such date, the “ Blocked Account Date ”), enter into a blocked account agreement (each, a “ Blocked Account Agreement ”), reasonably satisfactory to the Administrative Agent, with each Blocked Account Bank, with respect to each Deposit Account (including, for the avoidance of doubt, those accounts described in Section 2.16(c)(iii) below) in which funds of any Loan Party are concentrated (collectively, the “ Blocked Accounts ”).
(iii) on or prior to the one hundred eighty (180) day anniversary of the Closing Date, or such later date as to which the Administrative Agent, in its discretion, shall agree, move its main concentration accounts and disbursement accounts to an account with the Administrative Agent.
(d) Each Loan Party covenants that it shall cause, and each Credit Card Notification and Blocked Account Agreement entered into by a Loan Party shall require, during the continuance of a Cash Dominion Event (and delivery of notice thereof from the Administrative Agent), the ACH or wire transfer on each Business Day (and whether or not there is then an outstanding balance in the Loan Account) of all available cash receipts (the “ Cash Receipts ”) to the account maintained by the Administrative Agent at Bank of America (the “ Administrative Agent’s Account ”), from:
(i) the sale of Inventory and other Collateral;
(ii) all proceeds of collections of Accounts;
(iii) each Blocked Account (including all cash deposited therein from each DDA); and
(iv) the cash proceeds of all credit card and debit card charges.
If any cash or Cash Equivalents owned by any Loan Party (other than (i) petty cash accounts funded in the ordinary course of business, the deposits in which shall not aggregate more than $100,000 or exceed $25,000 with respect to any one account (or in each case, such greater amounts to which the Administrative Agent may agree), and (ii) payroll, trust and tax withholding accounts funded in the ordinary course of business and required by Applicable Law (collectively, the “ Excluded Deposit Accounts ”)) are deposited to any account, or held or invested in any manner, otherwise than in a Blocked Account that is subject to a Blocked Account Agreement (or a Deposit
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Account which is swept daily to a Blocked Account), then the Borrowers shall cause all funds in such accounts or so held or so invested to be transferred with such frequency as may be required by the Administrative Agent to a Blocked Account that is subject to a Blocked Account Agreement (or a Deposit Account which is swept daily to a Blocked Account).
(e) The Loan Parties may close Deposit Accounts or Blocked Accounts and/or open new DDAs or Blocked Accounts, subject to the execution and delivery to the Administrative Agent of appropriate Blocked Account Agreements (except with respect to any payroll, trust and tax withholding accounts or unless expressly waived by the Administrative Agent) consistent with the provisions of this Section 2.16 and otherwise reasonably satisfactory to the Administrative Agent. The Loan Parties shall furnish the Administrative Agent with prior written notice of their intention to open or close a Blocked Account and the Administrative Agent shall promptly notify each Borrower as to whether the Administrative Agent shall require a Blocked Account Agreement with the Person with whom such account will be maintained. Unless consented to in writing by the Administrative Agent, the Loan Parties shall not enter into any agreements with credit card or debit card processors other than the ones expressly contemplated herein unless contemporaneously therewith, a Credit Card Notification, is executed and delivered to the Administrative Agent. The Loan Parties may also maintain one or more disbursement accounts to be used by the Loan Parties for disbursements and payments (including payroll) in the ordinary course of business or as otherwise permitted hereunder.
(f) The Loan Parties shall establish and maintain cash management arrangements and procedures, including Blocked Accounts and Deposit Account concentration arrangements, reasonably satisfactory to the Administrative Agent.
(g) The Administrative Agent’s Account shall at all times be under the sole dominion and control of the Administrative Agent. The Borrowers hereby acknowledge and agree that (i) they have no right of withdrawal from the Administrative Agent’s Account, (ii) the funds on deposit in the Administrative Agent’s Account shall at all times continue to be collateral security for all of the Obligations, and (iii) the funds on deposit in the Administrative Agent’s Account shall be applied as provided in this Agreement. After the occurrence and during the continuance of a Cash Dominion Event, the Borrowers shall prepay the Loans with proceeds and collections received by the Loan Parties and transferred into the Administrative Agent’s Account in accordance with Section 2.16(d) . In the event that, notwithstanding the provisions of this Section 2.16 , during the continuation of a Cash Dominion Event, any Borrower receives or otherwise has dominion and control of any such proceeds or collections, such proceeds and collections shall be held in trust by such Borrower for the Administrative Agent, shall not be commingled with any of such Borrower’s other funds or deposited in any account of such Borrower and shall promptly be deposited into the Administrative Agent’s Account or dealt with in such other fashion as such Borrower may be instructed by the Administrative Agent.
(h) Any amounts received in the Administrative Agent’s Account at any time when all of the Obligations then due have been and remain fully repaid shall be remitted to the operating account of the Borrowers maintained with the Administrative Agent.
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(i) The Administrative Agent shall promptly (but in any event within five (5) Business Day) furnish written notice to each Person with whom a Blocked Account is maintained of any termination of a Cash Dominion Event.
(j) The following shall apply to deposits and payments under and pursuant to this Agreement:
(i) Funds shall be deemed to have been deposited to the Administrative Agent’s Account on the Business Day on which deposited, provided that such deposit is available to the Administrative Agent by 4:00 p.m. on that Business Day (except that if the Obligations are being paid in full, by 2:00 p.m., on that Business Day);
(ii) Funds paid to the Administrative Agent, other than by deposit to the Administrative Agent’s Account, shall be deemed to have been received on the Business Day when they are good and collected funds, provided that such payment is available to the Administrative Agent by 4:00 p.m. on that Business Day (except that if the Obligations are being paid in full, by 2:00 p.m., on that Business Day);
(iii) If a deposit to the Administrative Agent’s Account or payment is not available to the Administrative Agent until after 4:00 p.m. on a Business Day, such deposit or payment shall be deemed to have been made at 9:00 a.m. on the then next Business Day;
(iv) If any item deposited to the Administrative Agent’s Account and credited to the Loan Account is dishonored or returned unpaid for any reason, whether or not such return is rightful or timely, the Administrative Agent shall have the right to reverse such credit and charge the amount of such item to the applicable Loan Account and the Borrowers shall indemnify the Secured Parties against all out-of-pocket claims and losses resulting from such dishonor or return; and
(v) All amounts received under this Section 2.16 shall be applied in the manner set forth in Section 7.03 .
(a) The Borrowers shall pay the Administrative Agent, for the account of the Lenders, an aggregate fee (the “ Unused Fee ”) equal to the Unused Fee Rate per annum (on the basis of actual days elapsed in a year of 360 days) of the average daily balance of the Lenders’ respective Unused Commitment during the Fiscal Quarter just ended (or relevant period with respect to the payment being made through the first Fiscal Quarter ending after the Closing Date or on the Termination Date), subject to adjustment as provided in Section 2.24 . The Unused Fee shall be paid in arrears, on the first day of each Fiscal Quarter after the execution of this Agreement and on the Termination Date. The Administrative Agent shall pay the Unused Fee to the Lenders upon the Administrative Agent’s receipt of the Unused Fee based upon each Lender’s pro rata share of the average daily balance of the Lenders’ Unused Commitment, subject to adjustment as provided in Section 2.24 .
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(b) The Borrowers shall pay the Administrative Agent, for the account of the Lenders who are then participating in the Letters of Credit, subject to Section 2.24 , on the first day of each Fiscal Quarter and on demand after the Termination Date, in arrears, a fee calculated on the basis of a 360 day year, as applicable and actual days elapsed (each, a “ Letter of Credit Fee ” ), equal to the then Applicable Margin for LIBOR Loans.
(c) The Borrowers shall pay to the Issuing Bank, in addition to all Letter of Credit Fees otherwise provided for herein, (i) the reasonable and customary fees and charges of the Issuing Bank in connection with the negotiation, settlement and amendment of each Letter of Credit issued by the Issuing Bank and (ii) a fronting fee (each, a “ Fronting Fee ”) equal to one-eighth of one percent (0.125%) on the amount of all Letters of Credit. Each such Fronting Fee shall be payable on the first day of each Fiscal Quarter and on demand after the Termination Date, in arrears. In addition, but without duplication, the Borrowers shall pay directly to the Issuing Bank for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the Issuing Bank relating to letters of credit as from time to time in effect.
(d) All fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for the account of the Administrative Agent and other Credit Parties as provided herein. Once due, all fees shall be fully earned and shall not be refundable when paid under any circumstances.
2.18 Maintenance of Loan Account; Statements of Account .
(a) The Administrative Agent shall maintain an account on its books in the name of the Borrowers (each, the “ Loan Account ”) which will reflect (i) all Loans and other advances made by the Lenders to the Borrowers or for the Borrowers’ account, (ii) all Letter of Credit Disbursements, fees and interest that have become payable as herein set forth, and (iii) any and all other monetary Obligations that have become payable; provided that any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations.
(b) The Loan Account will be credited with all amounts received by the Administrative Agent from the Borrowers or from other Persons for the Borrowers’ account, including all amounts received in the Administrative Agent’s Account from the Blocked Account Banks, and the amounts so credited shall be applied as set forth in and to the extent required by Section 2.15 or Section 7.03 , as applicable. After the end of each calendar quarter, the Administrative Agent shall send to the Borrowers a statement accounting for the charges (including interest), loans, advances and other transactions occurring among and between the Administrative Agent, the Lenders and the Borrowers during such calendar quarter. The quarterly statements, absent manifest error, shall be deemed presumptively correct (provided however that no error in any such statement shall limit or otherwise affect the obligation of any Borrower hereunder to pay any amount owing with respect to the Obligations).
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(a) All payments to be made by the Borrowers under the Loan Documents shall be made free and clear of and without condition or deduction for any counterclaim, defense, recoupment or setoff. The Borrowers shall make each payment required to be made hereunder or under any other Loan Document prior to 2:00 p.m. on the date when due. 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 at the Administrative Agent’s Office, except payments to be made directly to the Issuing Bank as expressly provided herein and except that payments pursuant to Section 2.12 , Section 2.14(b) , Section 2.21 , and Section 9.04 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein. The Administrative Agent shall distribute any such payments to the appropriate recipient promptly following receipt thereof. If any payment under any Loan Document shall be due on a day that is not a Business Day, except with respect to LIBOR Borrowings, the date for payment shall be extended to the next succeeding Business Day, and, if any payment due with respect to LIBOR Borrowings 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, unless that succeeding Business Day is in the next calendar month, in which event, the date of such payment shall be on the last Business Day of subject calendar month, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.
(b) All funds received by and available to the Administrative Agent to pay principal, unreimbursed drawings under Letters of Credit, interest, fees and other amounts then due hereunder, shall, subject to Section 2.15 , be applied in accordance with the provisions of Section 2.15 or Section 7.03 ratably among the parties entitled thereto in accordance with the amounts of principal, unreimbursed drawings under Letters of Credit, interest, fees and other amounts then due to such respective parties. For purposes of calculating interest due to a Lender, that Lender shall be entitled to receive interest on the actual amount contributed by that Lender towards the principal balance of the Loans outstanding during the applicable period covered by the interest payment made by the Borrowers. Any net principal reductions to the Loans received by the Administrative Agent in accordance with the Loan Documents during such period shall not reduce such actual amount so contributed, for purposes of calculation of interest due to that Lender, until the Administrative Agent has distributed to the applicable Lender its Commitment Percentage thereof. All credits against the Obligations shall be conditioned upon final payment to the Administrative Agent of the items giving rise to such credits. If any item credited to the Loan Account is dishonored or returned unpaid for any reason, whether or not such return is rightful or timely, the Administrative Agent shall have the right to reverse such credit and charge the amount of such item to the Loan Account and the Borrowers shall indemnify the Secured Parties against all claims and losses resulting from such dishonor or return.
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(c) Unless the Administrative Agent shall have received notice from the Borrowers prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrowers will not make such payment, the Administrative Agent may assume that the Borrowers have made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due . In such event, if the Borrowers have not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation . A notice of the Administrative Agent to the Borrowers with respect to any amount owing under this clause (c) shall be conclusive, absent manifest error.
(d) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of LIBOR Loans (or, in the case of any Borrowing of Prime Rate 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 Administrative Agent may assume that such Lender has made such share available on such date in accordance with the terms hereof and may, in reliance upon such assumption, make available to the Borrowers 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 Borrowers severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrowers to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Effective 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 Borrowers, the interest rate applicable to Prime Rate Loans. If the Borrowers 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 Borrowers the amount of such interest paid by the Borrowers 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 Borrowers shall be without prejudice to any claim the Borrowers may have against a Lender that shall have failed to make such payment to the Administrative Agent. A notice of the Administrative Agent to any Lender with respect to any amount owing under this clause (d) shall be conclusive, absent manifest error.
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(e) If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II , and such funds are not made available to the Borrowers by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.
(f) The obligations of the Lenders hereunder to make Loans, to fund participations in Letters of Credit and to make payments pursuant to Section 9.04(c) are several and not joint. The failure of any Lender to make any Loan, to fund any participation or to make any payment under Section 9.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase it participation or to make its payment under Section 9.04(c) .
(g) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.
2.20 Settlement Amongst Lenders .
(a) The amount of each Lender’s Commitment Percentage of outstanding Revolving Credit Loans shall be computed weekly (or more frequently in the Administrative Agent’s discretion) and shall be adjusted upward or downward based on all Loans and repayments of Loans received by the Administrative Agent as of 3:00 p.m. on the first Business Day (such date, the “ Settlement Date ”) following the end of the period specified by the Administrative Agent.
(b) The Administrative Agent shall deliver to each of the Lenders promptly after a Settlement Date a summary statement of the amount of outstanding Loans for the period and the amount of repayments received for the period. As reflected on the summary statement, subject to the provisions of, and adjustments pursuant to, Section 2.24 , (i) the Administrative Agent shall transfer to each Lender its Commitment Percentage of repayments, and (ii) each Lender shall transfer to the Administrative Agent (as provided below) or the Administrative Agent shall transfer to each Lender, such amounts as are necessary to insure that, after giving effect to all such transfers, the amount of Revolving Credit Loans made by each Lender with respect to Revolving Credit Loans to the Borrowers shall be equal to such Lender’s Commitment Percentage of Revolving Credit Loans, as applicable, outstanding as of such Settlement Date. If the summary statement requires transfers to be made to the Administrative Agent by the Lenders and is received prior to 1:00 p.m. on a Business Day, such transfers shall be made in immediately available funds no later than 3:00 p.m. that day; and, if received after 1:00 p.m., then no later than 3:00 p.m. on the next Business Day. The obligation of each Lender to transfer such funds is irrevocable, unconditional and without recourse to or warranty by the Administrative Agent. If and to the extent any Lender shall not have so made its transfer to the Administrative Agent, such Lender agrees to pay to the Administrative Agent, forthwith on demand such amount, together with interest thereon, for each day from such date until the date such amount is paid to the Administrative Agent, at the Federal Funds Effective Rate.
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(a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes .
(i) Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Laws. If any Applicable Laws (as determined in the good faith discretion of the Administrative Agent) require the deduction or withholding of any Tax from any such payment by the Administrative Agent or a Loan Party, then the Administrative Agent or such Loan Party shall be entitled to make such deduction or withholding, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.
(ii) If any Loan Party or the Administrative Agent shall be required by the Code to withhold or deduct any Taxes, including both United States Federal backup withholding and withholding taxes, from any payment, then (A) the Administrative Agent shall withhold or make such deductions as are determined by the Administrative Agent to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the Administrative Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 2.21 ) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.
(iii) If any Loan Party or the Administrative Agent shall be required by any Applicable Laws other than the Code to withhold or deduct any Taxes from any payment, then (A) such Loan Party or the Administrative Agent, as required by such Laws, shall withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) such Loan Party or the Administrative Agent, to the extent required by such Laws, shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with such Laws, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 2.21 ) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.
(b) Payment of Other Taxes by the Loan Parties . Without limiting the provisions of subsection (a) above, the Loan Parties shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
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(c) Tax Indemnifications . (i) Each of the Loan Parties shall, and do hereby jointly and severally indemnify each Recipient, and shall make payment in respect thereof within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.21 ) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority . A certificate as to the amount of such payment or liability delivered to each Borrower by a Lender or the Issuing Bank (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error . Each of the Loan Parties shall, and does hereby, jointly and severally, indemnify the Administrative Agent, and shall make payment in respect thereof within ten (10) days after demand therefor, for any amount which a Lender or the Issuing Bank for any reason fails to pay indefeasibly to the Administrative Agent as required pursuant to Section 2.21(c)(ii) below.
(ii) Each Lender and the Issuing Bank shall, and does hereby, severally indemnify, and shall make payment in respect thereof within ten (10) days after demand therefor, (x) the Administrative Agent against any Indemnified Taxes attributable to such Lender or the Issuing Bank (but only to the extent that no Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of any Loan Party to do so), (y) the Administrative Agent and the Loan Parties, as applicable, against any Taxes attributable to such Lender ’s failure to comply with the provisions of Section 9.06(d) relating to the maintenance of a Participant Register and (z) the Administrative Agent and the Loan Parties, as applicable, against any Excluded Taxes attributable to such Lender or the Issuing Bank, in each case, that are payable or paid by the Administrative Agent or the Loan Parties in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender and the Issuing Bank hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender or the Issuing Bank, as the case may be, under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this clause (ii) .
(d) Evidence of Payments . As soon as practicable after any payment of Taxes by the Loan Parties to a Governmental Authority as provided in this Section 2.21 , each Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Applicable Laws to report such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
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(e) Status of Lenders; Tax Documentation .
(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrowers and the Administrative Agent, at the time or times reasonably requested by either Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the such Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by either Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by such Borrower or the Administrative Agent as will enable the Borrowers or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.21(e)(ii)(A) , (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii) Without limiting the generality of the foregoing, in the event that any Borrower is a U.S. Person,
(A) any Lender that is a U.S. Person shall deliver to the Borrowers and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of either Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;
(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrowers and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of either Borrower or the Administrative Agent), whichever of the following is applicable:
(I) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN-E (or W-8BEN, as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E (or W-8BEN, as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
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(II) executed originals of IRS Form W-8ECI;
(III) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit G-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of any Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “ U.S. Tax Compliance Certificate ”) and (y) executed copies of IRS Form W-8BEN-E (or W-8BEN, as applicable); or
(IV) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E (or W-8BEN, as applicable), a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-2 or Exhibit G-3 , IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-4 on behalf of each such direct and indirect partner.
(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrowers and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of either Borrower or the Administrative Agent), executed copies (or originals, as required) of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrowers or the Administrative Agent to determine the withholding or deduction required to be made; and
(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrowers and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by either 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 either Borrower or the Administrative Agent as may be necessary for such Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
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(iii) Each Lender agrees that if any form or certification it previously delivered pursuant to this Section 2.21 expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrowers and the Administrative Agent in writing of its legal inability to do so.
(f) Treatment of Certain Refunds . Unless required by Applicable Laws, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender or the Issuing Bank, or have any obligation to pay to any Lender or the Issuing Bank, any refund of Taxes withheld or deducted from funds paid for the account of such Lender or the Issuing Bank, as the case may be. If any Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified by any Loan Party or with respect to which any Loan Party has paid additional amounts pursuant to this Section 2.21 , it shall pay to such Loan Party an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by such Loan Party under this Section 2.21 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that each Loan Party, upon the request of the Recipient, agrees to repay the amount paid over to the such Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the event the Recipient is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection, in no event will the applicable Recipient be required to pay any amount to such Loan Party pursuant to this subsection the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any Recipient to make available its tax returns (or any other information relating to its taxes that it deems confidential) to any Loan Party or any other Person.
(g) Survival . Each party’s obligations under this Section 2.21 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender or the Issuing Bank, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.
2.22 Mitigation Obligations; Replacement of Lenders .
(a) Designation of a Different Lending Office . Each Lender may make any Credit Extension to any Borrower through any Lending Office, provided that the exercise of this option shall not affect the obligation of any Borrower to repay the Credit Extension in accordance with the terms of this Agreement. If any Lender requests compensation under Section 2.12 , or requires any Borrower to pay any Indemnified Taxes or additional amounts to any Lender, the Issuing Bank, or any Governmental Authority for the account of any Lender or the Issuing Bank pursuant to Section 2.21 , or if any Lender gives a notice pursuant to Section 2.10 , then at the request of either Borrower such Lender or the Issuing Bank shall, as applicable, use reasonable efforts to
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designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender or the Issuing Bank, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.12 or 2.21 , as the case may be, in the future, or eliminate the need for the notice pursuant to Section 2.10 , as applicable, and (ii) in each case, would not subject such Lender or the Issuing Bank, as the case may be, to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or the Issuing Bank, as the case may be . The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender or Issuing Bank in connection with any such designation or assignment.
(b) Replacement of Lenders . If any Lender requests compensation under Section 2.12 , or if any Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.21 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 2.22(a) , the Borrowers may replace such Lender in accordance with Section 9.13.
(a) Certain Credit Support Events . If (i) the Issuing Bank has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an unreimbursed Letter of Credit Disbursement, (ii) as of the date that is five (5) days prior to the Termination Date, there shall exist any Letter of Credit Outstandings, (iii) the Borrowers shall be required to provide Cash Collateral pursuant to Section 2.11(b) or Section 7.02 or (iv) there shall exist a Defaulting Lender, the Borrowers shall immediately (in the case of clause (iii) above) or within three (3) Business Days (in all other cases) following any request by the Administrative Agent or the Issuing Bank, 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 2.24(a)(iv) and any Cash Collateral provided by the Defaulting Lender).
(b) Grant of Security Interest . The Borrowers, 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 Issuing Bank 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 2.23(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 Issuing Bank as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrowers 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 Borrowers 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.
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(c) Application . Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.23 or Sections 2.06 , 2.11 , 2.15 , 2.24 or 7.02 in respect of Letters of Credit shall be held and applied to the satisfaction of the specific Letter of Credit Outstandings, 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 otherwise provided for herein.
(d) Release . 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 9.06(b)(vi)) ) or (ii) the determination by the Administrative Agent and the Issuing Bank that there exists excess Cash Collateral; provided , however , (x) that Cash Collateral furnished by or on behalf of a Loan Party shall not be released during the continuance of a Default or Event of Default (and following application as provided in this Section 2.23 may be otherwise applied in accordance with Section 7.03 ), and (y) the Person providing Cash Collateral and the Issuing Bank may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.
(a) Adjustments . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by Applicable Law:
(i) Waivers and Amendments . Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 9.01 .
(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 9.08 ), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any amounts owing by 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 Issuing Bank hereunder; third , to Cash Collateralize the Issuing Bank’s Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.23 ; fourth , as the Borrowers may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth , if so determined by the Administrative Agent and the Borrowers, 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
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and (y) Cash Collateralize the Issuing Bank ’ s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.23 ; sixth , to the payment of any amounts owing to the Lenders or the Issuing Bank as a result of any judgment of a court of competent jurisdiction obtained by any Lender or the Issuing Bank 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 exists, to the payment of any amounts owing to the Borrowers as a result of any judgment of a court of competent jurisdiction obtained by the Borrowers 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 drawing under any Letter of Credit 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 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and Obligations in respect of Letters of Credit owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or Obligations in respect of Letters of Credit owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in Obligations in respect of Letters of Credit are held by the Lenders pro rata in accordance with the Commitments hereunder without giving effect to Section 2.24(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 2.24(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 Unused Fee pursuant to Section 2.17(a) for any period during which that Lender is a Defaulting Lender (and the Borrowers shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).
(B) Each Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Commitment Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.23 .
(C) With respect to any fee payable under Section 2.17(c) not required to be paid to any Defaulting Lender pursuant to clause (B) above, the Borrowers 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 Letters of Credit that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to the Issuing Bank the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such Issuing Bank’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.
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(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure . All or any part of such Defaulting Lender ’ s participation in Letters of Credit shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Commitment Percentages (calculated without regard to such Defaulting Lender ’ s Commitment) but only to the extent that (x) the conditions set forth in Section 4.02 are satisfied at the time of such reallocation (and, unless the Borrowers shall have otherwise notified the Administrative Agent at such time, the Borrowers shall be deemed to have represented and warranted that such conditions are satisfied at such time) and (y) such reallocation does not cause the sum of (A) the outstanding principal amount of any Non-Defaulting Lender ’ s Revolving Credit Loans plus (B) an amount equal to such Non-Defaulting Lender ’ s Commitment Percentage of the aggregate principal amount of all Letter of Credit Outstandings and outstanding Permitted Overadvances to exceed such Non-Defaulting Lender ’ s Commitment . Subject to Section 9.03 , no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender 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 . If the reallocation described in clause (a)(iv) above cannot, or can only partially, be effected, the Borrowers shall, without prejudice to any right or remedy available to it hereunder or under Applicable Law, Cash Collateralize the Issuing Bank’s Fronting Exposure in accordance with procedures set forth in Section 2.23 .
(b) Defaulting Lender Cure . If the Borrowers, the Administrative Agent and the Issuing Bank 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 Loans and funded and unfunded participations in Letters of Credit to be held on a pro rata basis by the Lenders in accordance with their Commitment Percentages (without giving effect to Section 2.24(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 Borrowers while that Lender was a Defaulting Lender; and provided , further , that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
2.25 Sharing of Payments by Lenders . If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Loans made by it, or the participations in Obligations in respect of Letters of Credit held by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and subparticipations in Obligations in respect of Letters of Credit of the other Lenders, or make such other adjustments as
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shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:
(i) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and
(ii) the provisions of this Section shall not be construed to apply to (A) any payment made by or on behalf of the Borrowers pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (B) the application of Cash Collateral provided for in Section 2.23 , or (C) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or subparticipations in Obligations in respect of Letters of Credit to any assignee or participant, other than an assignment to any Borrower or any Affiliate thereof (as to which the provisions of this Section shall apply).
Each 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 such Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Borrower in the amount of such participation.
ARTICLE III
Representations and Warranties
To induce the Credit Parties to make the Loans and to issue Letters of Credit, the Loan Parties, jointly and severally, make the following representations and warranties to each Credit Party with respect to each Loan Party:
3.1 Existence, Qualification and Power; Compliance with Laws . Each Loan Party and each of its Subsidiaries (a) is a Person duly organized or formed, validly existing and in good standing under the Applicable Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party (including, with respect to the Borrowers, to borrow money and request Letters of Credit hereunder), (c) is duly qualified and is licensed and, as applicable, in good standing under the Applicable Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, and (d) has all requisite governmental licenses, authorizations, consents and approvals to operate its business as currently conducted; except in each case referred to in clause (b), (c) or (d), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.
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3.2 Authorization; No Contravention . The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is a party (a) are within such Loan Party ’ s corporate or other powers and have been duly authorized by all necessary corporate or other organizational action, and (b) do not and will not (i) contravene the terms of any of such Person ’ s Organization Documents, (ii) conflict with or result in any breach or contravention of, or the creation of (or requirement to create) any Lien under or require any payment to be made under (x) any contractual obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (y) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (iii) violate any Applicable Law; except with respect to any conflict, breach or contravention or payment (but not creation of Liens) referred to in clause (ii)(x), to the extent that such conflict, breach, contravention or payment, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
3.3 Governmental Authorization; Other Consents . No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with (a) the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, (b) the grant by any Loan Party of the Liens granted by it pursuant to the Security Documents, (c) the perfection or maintenance of the Liens created under the Security Documents (including the priority thereof) or (d) the exercise by the Administrative Agent or any Lender of their rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Security Documents, except for (i) filings necessary to perfect the Liens on the Collateral granted by the Loan Parties in favor of the Secured Parties and (ii) the approvals, consents, exemptions, authorizations, actions, notices and filings which have been duly obtained, taken, given or made and are in full force and effect.
3.4 Enforceability . This Agreement and each other Loan Document has been duly executed and delivered by each Loan Party that is party thereto. This Agreement and each other Loan Document constitutes, a legal, valid and binding obligation of each such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and by general principles of equity.
3.5 Financial Statements; No Material Adverse Effect.
(a) (i) The Audited Financial Statements fairly present in all material respects the financial condition of Parents and their consolidated Subsidiaries as of the dates thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the periods covered thereby, except as otherwise expressly noted therein and (ii) the Unaudited Financial Statements fairly present in all material respects the financial condition of Parents and their consolidated Subsidiaries as of the dates thereof and their results of operations, cash flows and changes in shareholders’ equity for the period covered thereby in accordance with GAAP consistently applied throughout the periods covered thereby, except as otherwise expressly noted therein, subject to normal year-end audit adjustments and the absence of footnotes.
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(b) Since December 31, 2014 there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.
(c) As of the Closing Date, neither any Loan Party nor any Subsidiary has any Material Indebtedness or other material obligations or liabilities (including liabilities for taxes and material commitments), direct or contingent other than (i) the liabilities reflected on Schedule 6.03 , and (ii) obligations arising under this Agreement and the other Loan Documents.
(d) As of the Closing Date, the Financial Performance Projections delivered to the Administrative Agent represent the Borrowers’ best good faith estimate of future financial performance and are based on assumptions believed by the Borrowers to be fair and reasonable in light of current market conditions, it being acknowledged and agreed by Administrative Agent and Lenders that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by such Financial Performance Projections may differ from the projected results set forth therein.
3.6 Litigation . There are no actions, suits, proceedings, investigations, claims or disputes pending or, to the knowledge of the Loan Parties after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against any Loan Party or any Subsidiary or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the Transactions contemplated hereby, or (b) either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
3.7 No Default . Neither any Loan Party nor any Subsidiary thereof is in default under or with respect to, or a party to, any contractual obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 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.
3.8 Ownership of Property; Liens .
(a) Each Loan Party and each of its Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, or easements or other limited property interests in, all real property necessary in the ordinary conduct of its business, free and clear of all Liens except (i) for minor defects in title that do not materially interfere with its ability to conduct its business or to utilize such assets for their intended purposes, (ii) Liens permitted by Section 6.01 and except (iii) where the failure to have such title could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) Schedule 3.08(b)(i) sets forth the address (including county) of all Real Estate that is owned by the Loan Parties as of the Closing Date. Schedule 3.08(b)(ii) sets forth the address of all Real Estate that is leased by the Loan Parties as of the Closing Date, together with a list of the lessor with respect to each such Lease. Except as would not reasonably be expected to result in a Material Adverse Effect, each such Lease is in full force and effect and the Loan Parties are not in default of the terms thereof.
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3.9 Environmental Compliance .
(a) There are no claims, actions, suits, or proceedings alleging potential liability or responsibility for violation of, or otherwise relating to, any Environmental Law that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Except as specifically disclosed in Schedule 3.09(b) or except as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) none of the properties currently or formerly owned, leased or operated by any Loan Party or any of its Subsidiaries is listed or proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state, provincial or local list or is adjacent to any such property; (ii) to the knowledge of the Loan Parties, there are no, and never have been, any underground or aboveground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed of on any property currently owned, leased or operated by any Loan Party or any of its Subsidiaries or, to its knowledge, on any property formerly owned or operated by any Loan Party or any of its Subsidiaries; (iii) to the knowledge of the Loan Parties, there is no asbestos or asbestos-containing material, the renewal or remediation of which is required by any Environmental Law, on any property currently owned or operated by any Loan Party or any of its Subsidiaries; and (iv) to the knowledge of the Loan Parties, Hazardous Materials have not been released, discharged or disposed of by any Person on any property currently or formerly owned, leased or operated by any Loan Party or any of its Subsidiaries and Hazardous Materials have not otherwise been released, discharged or disposed of by any of the Loan Parties and their Subsidiaries at any other location.
(c) The properties owned, leased or operated by the Loan Parties and their Subsidiaries do not contain any Hazardous Materials in amounts or concentrations which (i) constitute, or constituted a violation of, (ii) require remedial action under, or (iii) could give rise to liability under, Environmental Laws, which violations, remedial actions and liabilities, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.
(d) Except as specifically disclosed in Schedule 3.09(d) , neither any Loan Party nor any of their Subsidiaries is undertaking, or has completed, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any Governmental Authority or the requirements of any Environmental Law except for such investigation or assessment or remedial or response action that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
(e) All Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries have been disposed of in a manner not reasonably expected to result, individually or in the aggregate, in a Material Adverse Effect.
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(f) Except as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect, none of the Loan Parties and their Subsidiaries has contractually assumed any liability or obligation under or relating to any Environmental Law.
(g) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not require any notification, registration, filing, reporting, disclosure, investigation, remediation or cleanup pursuant to any applicable Environmental Law, except for any requirement the noncompliance with which could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(h) As of the Closing Date, the Borrowers have made available to the Administrative Agent and the Lenders all material documents, studies, and reports in the possession, custody or control of the Loan Parties concerning compliance with or liability under Environmental Law, including those concerning the actual or suspected existence of Hazardous Material at Real Estate or facilities currently or formerly owned, operated, leased or used by the Loan Parties which could reasonably be expected to have a Material Adverse Effect.
3.10 Taxes . Parents and their Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all federal, state and other material Taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate actions diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against the Loan Parties or any of their Subsidiaries that would, if made, have a Material Adverse Effect. Neither any Loan Party nor any Subsidiary thereof is party to any tax sharing agreement.
(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state laws. Each Pension Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service. To the best knowledge of the Loan Parties, nothing has occurred that would prevent or cause the loss of such tax-qualified status.
(b) There are no pending or, to the best knowledge of the Loan Parties, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.
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(c) (i) No ERISA Event has occurred, and neither any Loan Party nor any ERISA Affiliate is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan; (ii) each Loan Party and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) as of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and neither any Loan Party nor any ERISA Affiliate knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) neither any Loan Party nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (v) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.
(d) Neither any Loan Party nor any ERISA Affiliate maintains or contributes to, or has any unsatisfied obligation to contribute to, or liability under, any active or terminated Pension Plan other than (i) on the Closing Date, those listed on Schedule 3.11 hereto and (B) thereafter, Pension Plans not otherwise prohibited by this Agreement.
3.12 Subsidiaries; Equity Interests; Investments . As of the Closing Date, neither Borrower nor any other Loan Party has any Subsidiaries other than those specifically disclosed in Schedule 3.12 , and all of the outstanding Capital Stock in their respective Subsidiaries has been validly issued, is fully paid and nonassessable and all Capital Stock owned by such Borrower or any other Loan Party is owned free and clear of all Liens except (i) those created under the Security Documents, if any, and (ii) any nonconsensual Lien that is permitted under Section 6.01 . As of the Closing Date, Schedule 3.12 (a) sets forth the name and jurisdiction of each Subsidiary, (b) sets forth the ownership interest of Parents and any other Subsidiary in each Subsidiary, including the percentage of such ownership and (c) identifies each Subsidiary that shall be a Borrower or a Guarantor on the Closing Date. Schedule 3.12 sets forth a complete and accurate list of all Investments held by any Loan Party or any Subsidiary of a Loan Party on the date hereof, showing as of the date hereof the amount, obligor or issuer and maturity, if any, thereof. The copy of the Organizational Documents of each Loan Party and each amendment thereto provided pursuant to Section 4.01(d) is a true and correct copy of each such document, each of which is valid and in full force and effect.
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3.13 Use of Proceeds; Margin Regulations; Investment Company Act .
(a) No Loan Party or Subsidiary is engaged nor will it engage, principally or as one of its important activities, in the business of purchasing or carrying Margin Stock, or extending credit for the purpose of purchasing or carrying Margin Stock and no proceeds of any Loan or drawings under any Letter of Credit will be used for the purpose of purchasing or carrying Margin Stock, or any other purpose that violates Regulation U. The value of the Margin Stock at any time owned by the Loan Parties and their Subsidiaries at any time a Credit Extension constitutes a “purpose credit” (within the meaning of Regulation U) does not exceed twenty-five percent (25.00%) of the value of the assets of either of the Borrowers only or the Loan Parties and their Subsidiaries taken as a whole.
(b) Neither Parents nor any Subsidiary is or is required to be registered as an “investment company”, or is subject to regulation, under the Investment Company Act of 1940.
3.14 Disclosure . Each Loan Party has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect. No report, financial statement, confidential information, memorandum, certificate or other written information furnished by or on behalf of any Loan Party to any Credit Party in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, not materially misleading; provided that with respect to the Financial Performance Projections, the Loan Parties represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time of preparation.
3.15 Intellectual Property; Licenses, Etc . Each of the Loan Parties and their Subsidiaries own, license or possess the right to use, all of the trademarks, service marks, trade names, domain names, copyrights, patents, patent rights, licenses, technology, software, know-how database rights, design rights and other intellectual property rights (collectively, “ IP Rights ”) that are reasonably necessary for the operation of their respective businesses as currently conducted, and, without conflict with the rights of any Person, except to the extent such conflicts, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. No IP Rights, advertising, product, process, method, substance, part or other material used by any Loan Party or any Subsidiary in the operation of their respective businesses as currently conducted infringes upon any rights held by any Person except for such infringements, individually or in the aggregate, which could not reasonably be expected to have a Material Adverse Effect. No claim or litigation regarding any of the IP Rights, is pending or, to the knowledge of any Loan Party, threatened against any Loan Party or Subsidiary, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
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3.16 Solvency . Immediately after giving effect to the application of the proceeds of all extensions of credit (including those made on the Closing Date), (a) the fair value of the assets of each Borrower and each Parent and its Subsidiaries, on a consolidated basis, exceeds, on a consolidated basis, its/their debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Borrower and each Parent and its Subsidiaries, on a consolidated basis, is greater than the amount that will be required to pay the liability, individually or, as applicable, on a consolidated basis, of its/their debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Borrower and each Parent and its Subsidiaries, on a consolidated basis, is/are able to pay its/their debts and liabilities, subordinated, contingent or otherwise, as such liabilities become absolute and matured; and (d) each Borrower and each Parent and its Subsidiaries, on a consolidated basis, is/are not engaged in, and is/are not about to engage in, business for which it has (or, as applicable, they) have unreasonably small capital . For purposes of this Section 3.16 , the amount of any contingent liability at any time shall be computed as the amount that would reasonably be expected to become an actual and matured liability.
3.17 No Casualty, Etc . Neither the businesses nor the properties of any Loan Party or any Subsidiary thereof are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
3.18 Insurance . The properties of each Parent and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrowers, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where such Parent or the applicable Subsidiary operates.
3.19 Compliance with Laws and Agreements . Each Loan Party is in compliance with all Applicable Law and Material Contracts, except where the failure to comply, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. Without limiting the generality of the foregoing, each Loan Party has obtained all permits, licenses and other authorizations which are required with respect to the ownership and operations of its business, except where the failure to obtain such permits, licenses or other authorizations, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. Each Loan Party is in compliance with all terms and conditions of all such permits, licenses, orders and authorizations, except where the failure to comply with such terms or conditions, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
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(a) There are no strikes, work stoppages, slowdowns or lockouts existing, pending (or, to the knowledge of any Loan Party, threatened) against or involving any Loan Party or any Subsidiary of any Loan Party, except for those that would not, in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as set forth in Schedule 3.20 , as of the Closing Date, (a) there is no collective bargaining or similar agreement with any union, labor organization, works council or similar representative covering any employee of any Loan Party or any Subsidiary of any Loan Party, (b) no petition for certification or election of any such representative is existing or pending with respect to any employee of any Loan Party or any Subsidiary of any Loan Party and (c) no such representative has sought certification or recognition with respect to any employee of any Loan Party or any Subsidiary of any Loan Party.
(b) Each of the Loan Parties is in compliance with all employment agreements, employment contracts, collective bargaining agreements and other agreements among any such Loan Party and its employees (collectively, “ Labor Contracts ”) and all applicable federal, state and local labor and employment laws including those related to equal employment opportunity and affirmative action, labor relations, minimum wage, overtime, child labor, medical insurance continuation, worker adjustment and relocation notices, immigration controls and worker and unemployment compensation, where the failure to comply would constitute a Material Adverse Effect. Except as would not, in the aggregate, reasonably be expected to have a Material Adverse Effect, there are no outstanding grievances, arbitration awards or appeals therefrom arising out of the Labor Contracts.
3.21 Security Documents . The Security Documents create in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral described therein as security for the Obligations to the extent that a legal, valid, binding and enforceable security interest in such Collateral may be created under any Applicable Law of the United States and any states thereof, including, without limitation, the Uniform Commercial Code and the Security Documents constitute, or will upon the filing of financing statements and the obtaining of “control”, in each case, as applicable, with respect to the relevant Collateral as required under the Uniform Commercial Code, the creation of a fully perfected first priority Lien on, and security interest in, all right, title and interest of the Borrowers and each Guarantor thereunder in such Collateral, in each case prior and superior in right to any other Person (other than Permitted Encumbrances having priority under Applicable Law), except as permitted hereunder or under any other Loan Document, in each case to the extent that a security interest may be perfected by the filing of a financing statement under the UCC or by obtaining “control”.
3.22 Merchantable Inventory; Compliance with FLSA . All Inventory included in the determination of the Borrowing Base is of good and merchantable quality and free from defects, and has been produced, to the knowledge of any Loan Party, in compliance with all Applicable Laws, rules, regulations, and governmental standards, including, without limitation, the requirements of the U.S. Fair Labor Standards Act, as amended (29 U.S.C. §§201 et seq.), and the regulations promulgated thereunder.
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3.23 OSHA Compliance . Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, each Loan Party has duly complied with, and its facilities, business, assets, property, leaseholds, real property and equipment are in compliance in all material respects with, the provisions of the Federal Occupational Safety and Health Act . There have been no outstanding citations, notices or orders of non-compliance issued to any Loan Party or relating to its business, assets, property, leaseholds or equipment under any such laws, rules or regulations which remain unresolved.
3.24 OFAC . No Loan Party, nor any Subsidiary, nor, to the knowledge of the Loan Parties and their Subsidiaries, any director, officer, employee, agent, affiliate or representative thereof, is an individual or entity that is, or is owned or controlled by any individual or entity that is (a) currently the subject or target of any Sanctions, (b) included on OFAC’s List of Specially Designated Nationals, HMT’s Consolidated List of Financial Sanctions Targets and the Investment Ban List, or any similar list enforced by any other relevant sanctions authority or (c) located, organized or resident in a Designated Jurisdiction.
3.25 Anti-Corruption Laws . The Loan Parties and their Subsidiaries have conducted their businesses in compliance with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other similar anti-corruption legislation in other jurisdictions, and have instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.
3.26 EEA . Neither Borrower nor any Guarantor is an EEA Financial Institution.
4.1 Conditions to Effectiveness of Credit Agreement .
The effectiveness of this Agreement and the obligation of the Lenders to make each Loan and of the Issuing Bank to issue each Letter of Credit on the Closing Date is subject to the satisfaction by the Loan Parties (or the waiver by the Lenders) of each of the following conditions precedent:
(a) The Administrative Agent (or its counsel) shall have received from each Loan Party and each Lender either (i) a counterpart of this Agreement and all other Loan Documents signed on behalf of each such party thereto or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission or electronic .pdf copy of a signed signature page of this Agreement or any other relevant Loan Document) that each such party has signed a counterpart of this Agreement and all other Loan Documents to which it is a party.
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(b) The Administrative Agent shall have received a notice with respect to any Borrowing to be made on the Closing Date or any Letter of Credit to be issued on the Closing Date, as the case may be, as required by Article II, and in the case of the issuance of a Letter of Credit, the Issuing Bank shall have received notice with respect thereto in accordance with Section 2.11 .
(c) The Administrative Agent shall have received a written opinion (addressed to the Administrative Agent and the Lenders and dated the Closing Date) of Ropes & Gray, LLP counsel for the Loan Parties, covering such matters relating to the Loan Parties, the Loan Documents or the transactions contemplated thereby as the Administrative Agent shall reasonably request. The Loan Parties hereby request such counsel to deliver such opinions.
(d) The Administrative Agent shall have received (i) a copy of the certificate or articles of incorporation or organization (or similar organizational document), including all amendments thereto, of each Loan Party, certified, if applicable, as of a recent date by the Secretary of State of the state of its organization, and a certificate as to the good standing of each Loan Party as of a recent date, from such Secretary of State or similar Governmental Authority; (ii) a certificate of the Secretary or Assistant Secretary of each Loan Party dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the by-laws or operating (or limited liability company) agreement 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, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the board of directors (or equivalent governing body) of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such Person is a party, the Transactions and, in the case of the Borrowers, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation or organization of such Loan Party have not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to clause (i) above, and (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 (iii) a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to clause (ii) above.
(e) The Administrative Agent shall have received (i) the results of (x) searches of the Uniform Commercial Code filings (or equivalent filings) and (y) judgment and tax lien searches, made with respect to the Loan Parties in the states or other jurisdictions of formation of such Person and with respect to such other locations and names listed on the Perfection Certificate, together with (in the case of clause (y)) copies of the financing statements (or similar documents) disclosed by such search and (ii) the Administrative Agent shall have received evidence of the completion of all other actions, recordings and filings of or with respect to the Security Agreement that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created thereby on a first priority basis, including, without limitation, proper financing statements in form appropriate for filing under the Uniform Commercial Code of all jurisdictions that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created under the Security Agreement, covering the Collateral described in the Security Agreement and Blocked Account Agreements and the control agreements with respect to securities accounts, in each case required pursuant to the Loan Documents and duly executed by the appropriate parties.
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(f) The Administrative Agent shall have received a certificate of a Responsible Officer of each Borrower (i) either (A) attaching copies of all consents, licenses and approvals required in connection with the consummation by each Loan Party of the Transactions, the execution, delivery and performance by each Loan Party and/or the validity against each Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect, or (B) stating that no such consents, licenses or approvals are so required and (ii) attesting to the solvency of each Borrower, individually, and Parents and their Subsidiaries, on a consolidated basis.
(g) The Administrative Agent and the Arrangers shall have (i) completed their due diligence investigation of the Borrowers and their subsidiaries, in each case, in scope, and with results, satisfactory to Administrative Agent and the Arrangers and (ii) received, and shall be satisfied with, the results of all Collateral appraisals and commercial finance examinations reasonably requested by the Administrative Agent.
(h) The Administrative Agent shall have received a certificate of a Responsible Officer of each Borrower certifying that the conditions specified in Sections 4.02(b) and (c) have been satisfied.
(i) The Administrative Agent shall have received all such financial statements and projections reasonably requested by the Administrative Agent (including, without limitation, such pro forma financial statements as may be reasonably requested, giving pro forma effect to the Transaction on the Closing Date) and the capital structure of Parents and their Subsidiaries that is satisfactory to the Administrative Agent and the Lenders.
(j) The Administrative Agent shall have received evidence reasonably satisfactory to it (including calculations demonstrating) that immediately after giving effect to the Transactions, including all Credit Extensions on the Closing Date, Excess Availability shall not be less than an amount equal to 25% of the Maximum Borrowing Amount.
(k) The Administrative Agent shall have received all documentation and other information about the Loan Parties required under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the USA PATRIOT Act.
(l) (i) Since December 31, 2014, there shall not have occurred any Material Adverse Effect, (ii) there shall be no actions, suits, investigations, proceedings, claims or disputes pending or, to the knowledge of any Loan Party, threatened in writing or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against any Loan Party or any of its Subsidiaries or against any of their properties or revenues that (x) either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or (y) involve any of the Loan Documents and (iii) the Administrative Agent shall have received a certificate from a Responsible Officer of each Borrower certifying as to the matters set forth in this Section 4.01(l) .
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(m) The Administrative Agent shall have received an acceptable Borrowing Base Certificate dated the Closing Date, and executed by a Financial Officer of each Borrower.
(n) The Administrative Agent shall have received evidence of the Loan Parties’ insurance together with endorsements thereto, naming the Administrative Agent, on behalf of the Lenders, as an additional insured or loss payee, as the case may be, all as and to the extent required by the Loan Documents.
(o) The Administrative Agent shall have received evidence reasonably satisfactory to it that substantially concurrently with the making of the initial Loans hereunder, all indebtedness under that certain credit agreement between Eminent, Inc. and Bank of the West has been paid in full, all commitments to extend credit thereunder shall have terminated, all security documents entered into in connection therewith have terminated and all liens and security interests filed in connection therewith have been terminated.
(p) The Administrative Agent, the Arrangers and the Lenders shall have received all applicable fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced prior to the Closing Date, reimbursement or payment of all out of pocket expenses required to be reimbursed or paid by the Borrowers hereunder or under any other Loan Document.
(q) Unless waived by the Administrative Agent, the Borrowers shall have paid all fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings ( provided that such estimate not thereafter preclude a final settling of accounts between the Borrowers and the Administrative Agent).
Without limiting the generality of clause (e) of Section 8.03 , for purposes of determining compliance with the conditions specified in this Section 4.01 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
4.2 Conditions Precedent to Each Credit Extension .
The obligation of the Lenders to make each Loan and of the Issuing Bank to issue each Letter of Credit (or to amend, renew or extend (other than automatic renewal or extensions) of an outstanding Letter of Credit) on and after the Closing Date is subject to the satisfaction by the Loan Parties or the waiver of each of the following conditions precedent:
(a) The Administrative Agent shall have received, in the case of a Borrowing, a Borrowing Request as required by Section 2.04 , and in the case of the issuance, amendment, renewal or extension of a Letter of Credit, the Issuing Bank shall have received notice with respect thereto in accordance with Section 2.11 .
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(b) All representations and warranties contained in this Agreement and the other Loan Documents or otherwise made in writing in connection herewith or therewith shall be true and correct in all material respects with the same effect as if made on and as of such date, other than representations and warranties that relate solely to an earlier date; and
(c) Both before and after giving effect to each Credit Extension, (x) no Default or Event of Default shall have occurred and be continuing and (y) Excess Availability shall not be less than zero (0).
The request by the Borrowers for, and the acceptance by the Borrowers of, each Credit Extension shall be deemed to be a representation and warranty by the Loan Parties that the conditions specified in this Section 4.02 have been satisfied at that time and that after giving effect to such extension of credit the Borrowers shall continue to be in compliance with the then Borrowing Base. The conditions set forth in this Section 4.02 are for the sole benefit of the Administrative Agent and each other Credit Party and may be waived by the Administrative Agent (with the consent of the Required Lenders), in whole or in part, without prejudice to the rights of the Administrative Agent or any other Credit Party.
ARTICLE V
Affirmative Covenants
Until (i) the Total Commitments have expired or been terminated, (ii) the principal of and interest on each Loan and all fees and other Obligations (other than contingent indemnity obligations with respect to then unasserted claims and the Other Liabilities) shall have been paid in full, (iii) all Letters of Credit shall have expired or terminated (or been Cash Collateralized or backstopped in a manner reasonably satisfactory to the Issuing Bank) and (iv) all Letter of Credit Outstandings have been reduced to zero (or Cash Collateralized or backstopped in a manner reasonably satisfactory to the Issuing Bank), each Loan Party covenants and agrees with the Credit Parties that:
The Borrowers will deliver to the Administrative Agent for prompt further distribution to each Lender:
(a) as soon as available, but in any event within one-hundred twenty (120) days after the end of each Fiscal Year of Parents, (i) a Consolidated, combined balance sheet of Parents and their Subsidiaries as at the end of such Fiscal Year, and the related Consolidated, combined statements of income or operations, stockholders’ equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail and prepared in accordance with GAAP consistently applied, audited and accompanied by a report and opinion of Ernst & Young or any other independent registered public accounting firm that in the commercially reasonable opinion of the Administrative Agent is of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or
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explanatory paragraph or any qualification or exception as to the scope of such audit (other than any qualification due to the pending maturing of any Indebtedness or the prospective default of any financial covenant) and shall be to the effect that such financial statements fairly represent the financial condition and results of operations of Parents and their Subsidiaries on a combined, consolidated basis in accordance with GAAP consistently applied and (ii) a management ’ s discussion and analysis, in a form reasonably satisfactory to the Administrative Agent, of the financial condition and results of operations of Parents and their Subsidiaries for such Fiscal Year, as compared to amounts for the previous Fiscal Year;
(b) as soon as available, but in any event within forty-five (45) days after the end of each of the first three (3) Fiscal Quarters of each Fiscal Year of Parents, (i) a Consolidated, combined balance sheet of Parents and their Subsidiaries as at the end of such Fiscal Quarter, and the related (A) Consolidated statements of income or operations for such Fiscal Quarter and for the portion of the Fiscal Year then ended and (B) Consolidated, combined statements of cash flows for the portion of the Fiscal Year then ended, setting forth in each case in comparative form the figures for the corresponding Fiscal Quarter of the previous Fiscal Year and the corresponding portion of the previous Fiscal Year or the previous Fiscal Year end, all in reasonable detail and certified by a Responsible Officer of each Borrower as fairly presenting in all material respects the financial condition, results of operations and cash flows of Parents and their Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and (ii) a management’s discussion and analysis, in a form reasonably satisfactory to the Administrative Agent, of the financial condition and results of operations of Parents and their Subsidiaries for such Fiscal Quarter and the then elapsed portion of the fiscal year, as compared to the comparable periods in the previous fiscal year;
(c) as soon as available, but in any event within thirty (30) days after the end of each Fiscal Month of Parents (other than any such Fiscal Month that is also a Fiscal Quarter end), a Consolidated, combined balance sheet of Parents and their Subsidiaries as at the end of each such Fiscal Month, and the related (A) Consolidated, combined statements of income or operations for such Fiscal Month and for the portion of the Fiscal Year then ended and (B) Consolidated, combined statements of cash flows for the portion of the Fiscal Year then ended, setting forth in each case in comparative form the figures for the previous Fiscal Year and the corresponding portion of the previous Fiscal Year, all in reasonable detail and certified by a Responsible Officer of each Borrower as fairly presenting in all material respects the financial condition, results of operations and cash flows of Parents and their Subsidiaries;
(d) as soon as available, and in any event no later than sixty (60) days after the commencement of each Fiscal Year of Parents, (i) a detailed Consolidated, combined budget by month for such Fiscal Year (including a projected Consolidated, combined balance sheet of Parents and their Subsidiaries, the related Consolidated, combined statements of projected cash flow and projected income and a summary of the material underlying assumptions applicable thereto), (ii) the projected Borrowing Base and (iii) Excess Availability forecasts, in each case, as of the end of each month of such Fiscal Year, and, as soon as available, significant revisions, if any, of such budget and projections with respect to such Fiscal Year (collectively, the “ Projections ”), which Projections shall
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in each case be in form and substance satisfactory to the Administrative Agent and accompanied by a certificate of a Responsible Officer stating that such Projections are based on estimates, information and assumptions believed to be reasonable and that such Responsible Officer has no reason to believe that such Projections are incorrect or misleading in any material respect;
(e) As soon as available, and in any event no later than fifteen (15) Business Days after the end of each Fiscal Month, a Borrowing Base Certificate, showing the Borrowing Base as of the close of business on the last day of such Fiscal Month, provided, however, that if (A) any Event of Default has occurred and is continuing or (B) Excess Availability is less than the greater of (x) fifteen percent (15.00%) of the Maximum Borrowing Amount at such time and (y) $10,000,000, for three (3) consecutive Business Days, then such Borrowing Base Certificate shall be furnished on Wednesday of each week (or, if Wednesday is not a Business Day, on the next succeeding Business Day), as of the close of business on the immediately preceding Saturday until the date on which, in the case of clause (A) above, such Event of Default is waived or cured or, in the case of clause (B) above, Excess Availability has been greater than the greater of (I) fifteen percent (15.00%) of the Maximum Borrowing Amount and (II) $10,000,000, in each case for forty-five (45) consecutive calendar days after the occurrence of such event; and
(f) promptly upon receipt thereof, copies of all management letters from the Loan Parties’ independent certified public accountants submitted by such accountants to management in connection with their annual audit (i) commenting on any material weakness in the Loan Parties’ internal controls, and (ii) subject to the consent of such accountants (which consent the Borrowers shall in good faith seek to obtain) commenting on any other matters relating to the Loan Parties’ internal controls.
5.2 Certificates; Other Information . The Borrowers will deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:
(a) contemporaneously with the delivery of the financial statements referred to in Section 5.01(a) , Section 5.01(b) and Section 5.01(c) (or the date on which such delivery is required), a duly completed Compliance Certificate signed by a Responsible Officer of each Borrower in the form of Exhibit E hereto (a “ Compliance Certificate ”) (i) certifying as to whether a Default or Event of Default has occurred and, if a Default or Event of Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations with respect to the Consolidated Fixed Charge Coverage Ratio for the relevant period (whether or not the Borrowers are subject to the Consolidated Fixed Charge Coverage Ratio in Section 6.16 ), (iii) detailing all Store openings and Store closings during the immediately preceding fiscal period, and stating the aggregate number of the Loan Parties’ Stores as of the first day of the current fiscal period, and (iv) setting forth in reasonable detail the status of rental payments for each of the Loan Parties’ (A) warehouses and distribution centers, and (B) other leased locations in the Landlord Lien States designated by the Administrative Agent in its commercially reasonable judgment (which, as of the Closing Date, are Washington, Pennsylvania and Virginia), and (v) stating whether any change in GAAP or in the application thereof has
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occurred since the date of Parents most recent audited financial statements and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such Compliance Certificate (which delivery may, unless the Administrative Agent, or a Lender requests executed originals, be by electronic communication including fax or email in .pdf format and shall be deemed to be an original authentic counterpart thereof for all purposes);
(b) promptly after the same are publicly available, copies of all annual, regular, periodic and special reports and registration statements which Parents file with the SEC or with any Governmental Authority that may be substituted therefor (other than amendments to any registration statement (to the extent such registration statement, in the form it became effective, is delivered), exhibits to any registration statement and, if applicable, any registration statement on Form S-8) and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;
(c) promptly after the furnishing thereof, copies of any material request or material notices received by any Loan Party or any Subsidiary (other than in the ordinary course of business) or material statements or material reports furnished to any holder of Indebtedness or debt securities of any Loan Party or of any of its Subsidiaries and not otherwise required to be furnished to the Lenders pursuant to any other clause of this Section 5.02 ;
(d) together with the delivery of each Compliance Certificate pursuant to Section 5.02(a) , a report setting forth the information required by Section 2.03(c) of the Security Agreement or confirming that there has been no change in such information since the Closing Date or the date of the last such report);
(e) The financial and collateral reports described on Schedule 5.02(e) hereto, at the times set forth in such Schedule 5.02(e) ;
(f) promptly when available, (i) a copy of the acquisition agreement and other acquisition documents relating to any Permitted Acquisition and (ii) updated schedules to this Agreement and the Security Agreement after giving effect to such Permitted Acquisition;
(g) at least three (3) Business Days prior to the making of any Specified Payment, a certificate of a Responsible Officer of each Borrower, in form and substance reasonably satisfactory to the Administrative Agent, substantially in the form attached hereto as Exhibit H , certifying that the conditions specified in clauses (a), (b) and (c) of the definition of “Payment Conditions” have been satisfied (or such other conditions as may be applicable to such Specified Payment, as the case may be) and attaching reasonably detailed calculations demonstrating that the conditions specified in clauses (b) and (c) of the definition of “Payment Conditions” are satisfied (or such other conditions as may be applicable to such Specified Payment, as the case may be), with such supporting documentation as the Administrative Agent may reasonably request; and
(h) promptly, such additional information regarding the business, legal, financial or corporate affairs of any Loan Party or any Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender through the Administrative Agent may from time to time reasonably request.
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Documents required to be delivered pursuant to Section 5.01(a) , Section 5.01(b) , Section 5.01(c) or Section 5.02(c) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which either Borrower posts such documents, or provides a link thereto on either Borrower ’ s website on the Internet at the website address listed on Schedule 9.02 ; or (ii) on which such documents are posted on either Borrower ’ s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) each Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender upon its request to such Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) each Borrower shall notify the Administrative Agent and each Lender by facsimile or electronic mail of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions ( i.e. , soft copies) of such documents . The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by either Borrower with any such request by a Lender, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
Each Borrower hereby acknowledges that (a) the Administrative Agent and/or an Affiliate thereof may, but shall not be obligated to, make available to the Lenders and the Issuing Bank materials and/or information provided by or on behalf of the Borrowers hereunder (collectively, “ Borrower Materials ”) by posting the Borrower Materials on IntraLinks, SyndTrak, ClearPar, or a substantially similar electronic transmission system (the “ Platform ”) and (b) certain of the Lenders (each, a “ Public Lender ”) may have personnel who do not wish to receive material non-public information with respect to the Borrowers or their Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. Each Borrower hereby agrees that so long as such Borrower is the issuer of any outstanding debt or equity securities that are registered or issued pursuant to a private offering or is actively contemplating issuing any such securities (w) all such Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” each Borrower shall be deemed to have authorized the Administrative Agent, any Affiliate thereof, the Issuing Bank and the Lenders to treat such Borrower Materials as not containing any material non-public information (although it may be sensitive and proprietary) with respect to the Borrowers or its securities for purposes of United States Federal and state securities laws ( provided , however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.07 ); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent and any Affiliate thereof 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 Side Information.” Notwithstanding the foregoing, the Borrowers shall be under no obligation to mark any Borrower Materials “PUBLIC”.
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5.3 Notices . Promptly after obtaining knowledge thereof, the Borrowers shall notify the Administrative Agent in writing:
(a) of the occurrence of any Default, specifying the nature and extent thereof and the action (if any) which is proposed to be taken with respect thereto;
(b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including arising out of or resulting from (i) breach or non-performance of, or any default or event of default under, a contractual obligation of any Loan Party or any Subsidiary, (ii) any dispute, litigation, investigation, proceeding or suspension between any Loan Party or any Subsidiary and any Governmental Authority, (iii) the commencement of, or any material development in, any litigation or proceeding affecting any Loan Party or any Subsidiary thereof, (iv) any strikes, lockouts or slowdowns against any Loan Party, or (v) the occurrence of any ERISA Event;
(c) Any material change in any Loan Party’s financial reporting practices;
(d) The filing of any Lien for unpaid Taxes against any Loan Party in excess of $250,000.
(e) The discharge by any Loan Party of its present independent accountants or any withdrawal or resignation by such independent accountants;
(f) Any casualty or other insured damage to any portion of the Collateral included in the Borrowing Base in excess of $250,000, or the commencement of any action or proceeding for the taking of any interest in a portion of the Collateral included in the Borrowing Base in excess of $250,000 or any part thereof or interest therein under power of eminent domain or by condemnation or similar proceeding;
(g) The occurrence of any ERISA Event;
(h) Any new dispute, litigation, investigation, proceeding or suspension or the occurrence of any material development in any dispute, litigation, investigation, proceeding or suspension existing as of the Closing Date, or any judgments or determinations in any of the foregoing, at any time which would reasonably be expected to result in (x) liabilities in excess of $250,000 (excluding amounts covered by insurance, but solely to the extent the relevant independent third party insurer has not denied coverage therefor) or (y) a Material Adverse Effect;
(i) the creation, establishment or acquisition of any Subsidiary or the issuance by or to any Loan Party of any Capital Stock with respect to any Subsidiary that is not an Immaterial Subsidiary;
(j) any incurrence of Debt in excess of $500,000 or dispositions of Collateral (other than in the Ordinary Course of Business) with a fair market value in excess of $500,000 in each case, by any Loan Party;
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(k) As required by Section 5.14 ; and
(l) The receipt of any notice of default by a Loan Party under, or notice of termination of, any Lease for any of the Loan Parties’ distribution centers or warehouses.
Each notice pursuant to this Section shall be accompanied by a written statement of a Responsible Officer of each Borrower (x) that such notice is being delivered pursuant to this Section 5.03 , and (y) setting forth details of the occurrence referred to therein and stating what action the Borrowers have taken and proposes to take with respect thereto. Each notice pursuant to Section 5.03(a) shall described with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.
5.4 Payment of Taxes, Etc . The Loan Parties shall pay, discharge or otherwise satisfy as the same shall become due and payable, (a) all its Indebtedness and other obligations in accordance with their terms and (b) all its obligations and liabilities in respect of Taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, except, (x) in the case of either clause (a) or (b), to the extent the failure to pay, discharge or otherwise satisfy the same could not reasonably be expected to have a Material Adverse Effect and (y) in the case of clause (b), where the validity or amount thereof is being contested in good faith by appropriate actions and such Loan Party or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP, and such contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation.
5.5 Preservation of Existence, Etc . The Loan Parties shall (a) preserve, renew and maintain in full force and effect their legal existence under the Applicable Laws of the jurisdiction of its organization except in a transaction permitted by Section 6.04 or Section 6.05 , and (b) take all reasonable action to maintain all rights, privileges (including its good standing), permits, licenses and franchises necessary or desirable in the normal conduct of its business, except (i) to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect or (ii) pursuant to a transaction permitted by Section 6.04 or Section 6.05 .
5.6 Maintenance of Properties . Unless the failure to do so could not reasonably be expected to have a Material Adverse Effect, each Loan Party shall (a) maintain, preserve and protect all of its properties and equipment necessary in the operation of its business in good working order, repair and condition, ordinary wear and tear excepted and casualty or condemnation excepted, and (b) make all necessary renewals, replacements, modifications, improvements, upgrades, extensions and additions thereof or thereto in accordance with prudent industry practice.
5.7 Maintenance of Insurance .
(a) The Loan Parties shall maintain with financially sound and reputable insurance companies, insurance with respect to their properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts (after giving effect to any self-insurance reasonable and customary for similarly situated Persons engaged in the same or similar businesses as Parents and their Subsidiaries) as are customarily carried under similar circumstances by such other Persons. The Loan Parties shall furnish to the Administrative Agent, upon written request, full information as to the insurance carried.
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(b) Casualty, loss, fire and extended coverage policies maintained with respect to any Collateral shall be endorsed or otherwise amended to include (i) a non-contributing mortgage clause (regarding improvements to real property) and a lenders ’ loss payable clause (regarding personal property), in form and substance reasonably satisfactory to the Administrative Agent, which endorsements or amendments shall provide that the insurer shall pay all proceeds otherwise payable to the Loan Parties under the policies directly to the Administrative Agent (provided that the Administrative Agent ’ s application of such proceeds shall be subject to Section 2.15(e) ), (ii) a provision to the effect that none of the Loan Parties, Credit Parties (in their capacity as such) or any other Affiliate of a Loan Party shall be a co-insurer (the foregoing not being deemed to limit the amount of self-insured retention or deductibles under such policies, which self-insured retention or deductibles shall be consistent with business practices in effect on the Closing Date or as otherwise determined by the Responsible Officers of the Loan Parties acting reasonably in their business judgment), and (iii) such other provisions as the Administrative Agent may reasonably require from time to time to protect the interests of the Credit Parties . Commercial general liability policies shall be endorsed to name the Administrative Agent as an additional insured . Each endorsement to such casualty or liability policy referred to in this Section 5.07(b) shall also provide that it shall not be canceled, modified in any manner that would cause this Section 5.07 to be violated, or not renewed (i) by reason of nonpayment of premium except upon not less than ten (10) days ’ prior written notice thereof by the insurer to the Administrative Agent (giving the Administrative Agent the right to cure defaults in the payment of premiums) or (ii) for any other reason except upon not less than thirty (30) days ’ prior written notice thereof by the insurer to the Administrative Agent . The Borrowers shall deliver to the Administrative Agent, prior to the cancellation, any modification or non-renewal of any such policy of insurance, a copy of a renewal or replacement policy (or other evidence of renewal of a policy previously delivered to the Administrative Agent, including an insurance binder) together with evidence satisfactory to the Administrative Agent of payment of the premium therefor.
(c) The Administrative Agent acknowledges that the insurance policies described on Schedule 5.07 are satisfactory to it as of the Closing Date and are in compliance with the provisions of this Section 5.07 .
5.8 Compliance with Laws and Material Contracts . Each Loan Party shall (a) comply in all material respects with the requirements of all Applicable Laws applicable to it or to its business or property, except where the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect and (b) perform and observe all the terms and provisions of each Material Contract to be performed or observed by it, maintain each such Material Contract in full force and effect, enforce each such Material Contract in accordance with its terms, take all such action to such end as may be from time to time requested by the Administrative Agent and, upon request of the Administrative Agent, make to each other party to each such Material Contract such demands and requests for information and reports or for action as any Loan Party or any of its Subsidiaries is entitled to make under such Material Contract, and cause each of its Subsidiaries to do so, other than where the failure to do so, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
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5.9 Books and Records . Each Loan Party shall maintain proper books of record and account, in which full, true and correct in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of Parents or their Subsidiaries, as the case may be.
(a) Each Loan Party will permit any representatives and independent contractors designated by the Administrative Agent and each Lender, upon reasonable prior notice and at the expense of the Borrowers, to visit and inspect its properties, to discuss its affairs, finances and condition with its officers and to examine and make extracts from its books and records, all at such reasonable times during normal business hours and as may be reasonably requested upon reasonable advance notice to the Borrowers. Nothing contained in this Section 5.10(a) shall be deemed to limit or modify the rights of the Administrative Agent under Section 5.10(b) hereof.
(b) Each Loan Party will from time to time upon the request of the Administrative Agent, permit the Administrative Agent or professionals (including consultants, accountants, lawyers, examiners and appraisers) retained by the Administrative Agent, on reasonable prior notice, to conduct Collateral appraisals and commercial finance examinations, including, without limitation, of (i) the Borrowers’ practices in the computation of the then Borrowing Base, and (ii) the assets included in the Borrowing Base and related financial and Collateral information such as, but not limited to, sales, gross margins, payables, accruals and reserves. Subject to the following, the Loan Parties shall pay the reasonable out-of-pocket fees and expenses of the Administrative Agent or such professionals with respect to all such evaluations, appraisals and examinations.
(i) The Administrative Agent may conduct one (1) commercial finance examination during each twelve-month period, at the Loan Parties’ expense; provided that, if Excess Availability is less than the greater of (x) twenty percent (20.00%) of the Maximum Borrowing Amount or (y) $12,500,000, in each case, at any time during such twelve-month period, the Administrative Agent may conduct up to two (2) commercial finance examinations during such twelve-month period, each at the Loan Parties’ expense. Notwithstanding anything to the contrary contained herein, the Administrative Agent (A) may undertake one (1) additional commercial finance examination during any twelve-month period at the expense of the Lenders, and (B) after the occurrence and during the continuance of any Event of Default, may cause such additional commercial finance examinations to be taken as the Administrative Agent, in its reasonable discretion, determines are appropriate (each, at the expense of the Loan Parties).
(ii) The Administrative Agent may conduct one (1) appraisal of the Loan Parties’ Inventory during any twelve-month period at the Loan Parties’ expense; provided that, (A) if Excess Availability is less than the greater of (x) twenty percent (20.00%) of the Maximum Borrowing Amount or (y) $12,500,000, in each case, at any time during such twelvemonth period, the Administrative Agent may conduct up to two (2) appraisals of the Loan Parties’ Inventory during such twelve-month period, each at the Loan Parties’ expense. Notwithstanding anything to the contrary contained herein, the Administrative Agent (A) may undertake one (1) additional Inventory
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appraisal in each twelve-month period at the sole expense of the Lenders, (B) after the occurrence and during the continuance of any Event of Default, may cause such additional Inventory appraisals to be taken as the Administrative Agent, in its reasonable discretion, determines are appropriate (each, at the expense of the Loan Parties) and (C) may, at the expense of the Lenders, cause such additional appraisals to be conducted as the Administrative Agent, in its sole discretion, determines appropriate.
(iii) The Administrative Agent may conduct three (3) appraisals of the Loan Parties’ Intellectual Property between the Closing Date and the Maturity Date at the Loan Parties’ expense. Notwithstanding anything to the contrary contained herein, the Administrative Agent (A) after the occurrence and during the continuance of any Event of Default, may cause such additional Inventory appraisals to be taken as the Administrative Agent, in its reasonable discretion, determines are appropriate (each, at the expense of the Loan Parties) and (B) may, at the expense of the Lenders, cause such additional appraisals to be conducted as the Administrative Agent, in its sole discretion, determines appropriate.
(c) The Loan Parties shall at all times retain independent certified public accountants that in the commercially reasonable opinion of the Administrative Agent are of national standing and shall instruct such accountants to cooperate with, and be available to, the Administrative Agent or its representatives to discuss the annual audited statements, the Loan Parties’ financial performance, financial condition, operating results, controls, and such other matters, within the scope of the retention of such accountants for such audited statements, as may be raised by the Administrative Agent, subject however, if requested by such accountants, to the execution of an access agreement by the Administrative Agent and such accountants in form reasonably satisfactory to each of them; provided that a representative of the Borrowers shall be given the opportunity to be present all such discussions.
5.11 Covenant to Become a Loan Party, Give Security and Grant License . At the Borrowers’ expense, the Loan Parties shall take all action necessary or reasonably requested by the Administrative Agent to ensure that all Persons who are obligated to become a Loan Party, including, without limitation, any Persons acquired in a Permitted Acquisition, and to grant Liens in favor of the Administrative Agent in the Collateral shall have done so, including:
(a) upon the formation or acquisition of any new direct or indirect wholly-owned Subsidiary (in each case, other than an Excluded Subsidiary) by any Loan Party:
(i) within thirty (30) days after such formation, acquisition or designation or such longer period as the Administrative Agent may agree in its discretion:
(A) cause each such Subsidiary to become a Loan Party and execute and deliver to the Administrative Agent a Joinder Agreement;
(B) cause each such Subsidiary that is required to become a Loan Party to furnish to the Administrative Agent a description of the real and immovable properties owned or leased by a Parent or such Subsidiary, as applicable, in detail reasonably satisfactory to the Administrative Agent;
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(C) cause (x) each such Subsidiary that is required to become a Loan Party to duly execute and deliver to the Administrative Agent a Security Agreement, a Facility Guarantee and any other Security Document, as reasonably requested by and in form and substance reasonably satisfactory to the Administrative Agent (consistent with the Security Documents in effect on the Closing Date), in each case granting Liens to the Administrative Agent to secure the Obligations and (y) each direct or indirect parent of each such Subsidiary that is required to be a Loan Party to duly execute and deliver to the Administrative Agent a Security Agreement, a Facility Guarantee and such other Security Documents as reasonably requested by and in form and substance reasonably satisfactory to the Administrative Agent (consistent with the Security Documents in effect on the Closing Date), in each case granting Liens to the Administrative Agent to secure the Obligations;
(D) take and cause each such Subsidiary and each direct or indirect parent of such Subsidiary to take whatever action (including the filing of UCC financing statements) as may be necessary in the reasonable opinion of the Administrative Agent to vest in the Administrative Agent (or in any representative of the Administrative Agent designated by it) valid Liens to the extent required under the Loan Documents, enforceable against all third parties in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and by general principles of equity;
(E) with respect to any Real Estate of the Loan Parties acquired after the Closing Date which constitutes Material Real Estate, upon request by the Administrative Agent, cause the applicable Loan Parties to (x) duly execute and deliver to the Administrative Agent a Mortgage or such other Security Document, as reasonably requested by and in form and substance reasonably satisfactory to the Administrative Agent, to grant Liens encumbering such Real Estate in favor of the Administrative Agent to secure the Obligations and (y) deliver each of the Mortgage Related Documents;
(ii) within thirty (30) days after the request therefor by the Administrative Agent (or such longer period as the Administrative Agent may agree in writing in its sole discretion), deliver to the Administrative Agent a signed copy of an opinion, addressed to the Administrative Agent and the other Credit Parties, of counsel for the Loan Parties reasonably acceptable to the Administrative Agent as to such matters set forth in this Section 5.11(a) as the Administrative Agent may reasonably request.
(b) After the Closing Date, concurrently with the acquisition of any material personal property by any Loan Party or of any personal property in connection with a Permitted Acquisition, and if such personal property shall not already be subject to a perfected Lien in favor of the Administrative Agent, the Borrowers shall give notice thereof to the Administrative Agent and promptly thereafter shall cause such assets to be subjected to a Lien to the extent required by the Loan Documents and will take, or cause the relevant Loan Party to take, such actions as shall be necessary or reasonably requested by the Administrative Agent to grant and perfect or record such Lien.
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5.12 Compliance with Environmental Laws . Except, in each case, to the extent that the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Loan Parties shall comply, and take all reasonable actions to cause all lessees and other Persons operating or occupying its properties to comply with all applicable Environmental Laws and permits; obtain and renew all permits necessary for its operations and properties; and, in each case to the extent required by Environmental Laws, conduct any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all Environmental Laws.
5.13 Further Assurances . Each Loan Party will 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 and other documents), that may be required under any Applicable Law, or which the Administrative Agent or the Required Lenders may reasonably request, to effectuate the transactions contemplated by the Loan Documents or to grant, preserve, protect or perfect the Liens created or intended to be created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Loan Parties. Without limiting the foregoing, the Loan Parties shall use commercially reasonable efforts to obtain a Collateral Access Agreement from any Person from whom a Loan Party enters into a Lease after the Closing Date for a warehouse or distribution center prior to entering into such Lease.
5.14 Information Regarding Loan Parties and Collateral . The Borrowers will furnish to the Administrative Agent prompt written notice of any change in: (a) any Loan Party’s name; (b) the location of any Loan Party’s chief executive office or its principal place of business; (c) any Loan Party’s organizational structure or jurisdiction of incorporation or formation; or (d) any Loan Party’s Federal Taxpayer Identification Number or organizational identification number assigned to it by its state or province of organization. The Loan Parties agree not to effect or permit any change referred to in the preceding sentence unless all filings, publications and registrations, have been made (or will be made in a timely fashion) under the UCC or other Applicable Law that are required in order for the Administrative Agent to continue at all times following such change to have a valid, legal and perfected first priority security interest to the extent required under the Security Documents (subject only to Permitted Encumbrances having priority under Applicable Law) in all the Collateral for its own benefit and the benefit of the other Secured Parties.
5.15 Physical Inventories . The Loan Parties, at their own expense, shall cause not less than one (1) physical count of Inventory to be undertaken in each twelve (12) month period (or alternatively, periodic cycle counts) in conjunction with the preparation of its annual audited financial statements, conducted following such methodology as is consistent with the methodology used in the immediately preceding Inventory (or cycle count) or as otherwise may be reasonably satisfactory to the Administrative Agent. Following the completion of such Inventory count, and in any event by the next date required for the delivery of a Borrowing Base Certificate hereunder, the Borrowers shall deliver the results of such physical inventory to the Administrative Agent and shall post such results to the Loan Parties’ stock ledgers and general ledgers, as applicable.
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5.16 Use of Proceeds of Credit Extensions . The proceeds of all Credit Extensions will be used only (a) to refinance existing Indebtedness of the Borrowers and their Subsidiaries, (b) to pay fees and expenses incurred in connection with the Transactions, and (c) for general corporate purposes not in contravention of any Applicable Law or of any Loan Document . No part of the proceeds of any Credit Extension will be used, whether directly or indirectly, for any purpose that entails a violation of any of the regulations of the FRB, including Regulations U and X.
5.17 Pension Plans . Each Loan Party shall cause each of its Plans to be duly qualified and administered in all respects in compliance with all Applicable Laws, and the terms of the Plans and any agreements relating thereto, except for such non-compliance as would not reasonably be expected to have a Material Adverse Effect. Each Loan Party and each of its Subsidiaries shall use reasonable commercial efforts to ensure that it, except where failure to do so would not reasonably be expected to have a Material Adverse Effect: (a) has no Unfunded Pension Liability in respect of any Plan, including any Plan to be established and administered by it or them; and (b) does not cause any Plan to engage in a prohibited transaction (within the meaning of ERISA) or violate its fiduciary responsibility rules under ERISA with respect to any Plan that could reasonably be expected to result in liability.
5.18 Lien Searches . Promptly following receipt of the acknowledgment copy of any financing statements filed under the Uniform Commercial Code in any jurisdiction or any other Lien filed in any filing office in any jurisdiction (other than any Liens filed by Administrative Agent), deliver to Administrative Agent completed requests for information listing such financing statement or Lien filing and all other effective financing statements or Lien filings filed in such jurisdiction that name any Loan Party as debtor, together with copies of such other financing statements or Lien filings.
5.19 Designation as Senior Indebtedness . Designate all Obligations as “Designated Senior Indebtedness” (or such other similar term) under, and defined in, any documents, agreements or indentures relating to or evidencing any Subordinated Indebtedness and all supplements thereto.
5.20 Lease Obligations . Each Loan Party shall timely and fully pay and perform its obligations under all leases and other agreements with respect to each leased location or public warehouse where any Collateral is or may be located, except for such payments or other obligations that (i) are being contested in good faith by appropriate proceedings diligently conducted and (ii) for which adequate reserves in accordance with GAAP are being maintained by such Person.
5.21 Anti-Corruption Laws . Each Loan Party shall, and shall cause each Subsidiary to conduct its businesses in compliance with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other similar anti-corruption legislation in other jurisdictions, and maintain policies and procedures designed to promote and achieve compliance with such laws.
5.22 Collateral Access Agreements . The Borrowers shall use commercially reasonable efforts to cause to be delivered to the Administrative Agent, within ninety (90) days of the Closing Date, a Collateral Access Agreement with respect to each distribution center or warehouse operated by the Borrowers, exclusive of any individual distribution center or warehouse containing collateral with a value of less than $2,500,000; provided that the aggregate value of all of the collateral in all distribution centers and warehouses so excluded shall not exceed $5,000,000.
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5.23 Factoring Arrangements . Not later than thirty (30) days after the Closing Date (or such later date as the Administrative Agent shall agree in its sole discretion), the Borrowers shall deliver to the Administrative Agent evidence in form and substance reasonably satisfactory to the Administrative Agent that the Borrower ’ s factoring agreement(s) and related UCC financing statement(s) shall have been modified in a manner reasonably satisfactory to the Administrative Agent (including to clarify that the assets subject thereto do not include any credit card receivables or any other assets included in the Borrowing Base); it being agreed that, to the extent such evidence is not received by the Administrative Agent by such date, the Administrative Agent may, in its Permitted Discretion, implement Availability Reserves against the Borrowing Base or (without duplication) exclude Accounts from the Borrowing Base.
Until (i) the Total Commitments have expired or been terminated, (ii) the principal of and interest on each Loan and all fees and other Obligations (other than contingent indemnity obligations with respect to then unasserted claims and the Other Liabilities) shall have been paid in full, (iii) all Letters of Credit shall have expired or terminated (or been Cash Collateralized or backstopped in a manner reasonably satisfactory to the Issuing Bank) and (iv) all Letter of Credit Outstandings have been reduced to zero (or Cash Collateralized or backstopped in a manner reasonably satisfactory to the Issuing Bank), each Loan Party covenants and agrees with the Credit Parties that:
6.1 Liens . No Loan Party will, nor will any Loan Party permit any Subsidiary to, create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following (each a “ Permitted Encumbrance ”):
(a) Liens securing any Obligations;
(b) Liens existing on the Closing Date and listed on Schedule 6.01 and any modifications, replacements, renewals or extensions thereof; provided that (i) the Lien does not extend to any additional property other than (A) after-acquired property that is affixed or incorporated into the property covered by such Lien or financed by Indebtedness permitted under Section 6.03 , and (B) proceeds and products thereof, (ii) the direct or any contingent obligor with respect thereto is not changed, and (iii) the renewal, extension or refinancing of the obligations secured or benefited by such Liens is permitted by Section 6.03 ;
(c) Liens for Taxes, assessments or governmental charges which are not required to be paid pursuant to Section 5.04 ;
(d) Statutory or common law Liens of landlords, sub-landlords, carriers, warehousemen, mechanics, materialmen, repairmen, construction contractors or other like Liens imposed by Applicable Law or other customary Liens (other than Liens in respect of Indebtedness) in favor of landlords, in each case, arising in the ordinary course of business which secure amounts not overdue for a period of more than thirty (30) days and no other action has been taken to enforce
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such Lien or which are being contested in good faith and by appropriate actions diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP and such contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation;
(e) (i) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA and (ii) pledges and deposits in the ordinary course of business 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 the Borrowers or any Subsidiary;
(f) deposits to secure the performance of bids, trade contracts, governmental contracts and leases (other than Indebtedness for borrowed money), statutory obligations, surety, stay, customs and appeal bonds, performance bonds and other obligations of a like nature (including those to secure health, safety and environmental obligations) incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions, encroachments, servitudes, rights of way, licenses, protrusions, site plan agreements, development agreements, contract zoning agreements and other similar encumbrances, rights, agreements and minor title defects affecting real property which, in the aggregate, do not in any case materially interfere with the ordinary conduct of the business of Parents or any Subsidiary;
(h) Liens securing judgments for the payment of money not constituting an Event of Default under Section 7.01(h) ;
(i) Liens securing Indebtedness permitted under Section 6.03(e) ; provided that (i) such Liens attach concurrently with or within ninety (90) days after the acquisition, repair, replacement, construction or improvement (as applicable) of the property subject to such Liens and, in the case of any acquisition, the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition, (ii) such Liens do not at any time encumber any property except for accessions, replacements or additions to such property other than the property financed by such Indebtedness and the proceeds and the products thereof and customary security deposits and, (iii) with respect to Capitalized Leases, such Liens do not at any time extend to or cover any assets (except for accessions, replacements or additions to such assets) other than the assets subject to such Capitalized Leases, and the proceeds and products thereof and customary security deposits; provided that individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender; (iv) Liens securing any Permitted Refinancing of Indebtedness under Section 6.03(e) , provided that such Liens do not extend to any property that was not subject to the Lien securing the Indebtedness being refinanced;
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(j) leases, licenses, subleases or sublicenses granted to others in the ordinary course of business which do not (i) interfere in any material respect with the business of any Loan Party or any Subsidiary thereof, or (ii) secure any Indebtedness;
(k) 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 in the ordinary course of business which payments are not overdue and no other action has been taken to enforce such Lien or which are being contested in good faith and by appropriate actions diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP and such contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation;
(l) Liens (i) arising by operation of law under Article 4 of the UCC in connection with collection of items provided for therein, and (ii) in favor of a banking or other financial institution arising as a matter of law encumbering deposits or other funds maintained with a financial institution (including the right of set-off) and which are within the general parameters customary in the banking industry;
(m) Liens (i) on cash advances in favor of the seller of any property to be acquired in a Permitted Acquisition, an Investment permitted pursuant to Section 6.02(l) or to be applied against the purchase price for such Permitted Acquisition or Investment, and (ii) consisting of an agreement to dispose of any property in a Permitted Disposition, in each case, solely to the extent such Permitted Acquisition or Permitted Disposition, as the case may be, would have been permitted on the date of the creation of such Lien;
(n) Liens on property of any Foreign Subsidiary that is not a Loan Party and that does not constitute Collateral, which Liens secure Indebtedness of the applicable Foreign Subsidiary permitted under Section 6.03 ;
(o) Liens existing on the property (other than assets included in the Borrowing Base) of any Person at the time such Person becomes a Subsidiary after the Closing Date (other than Liens on the Capital Stock 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, and (ii) such Lien does not extend to or cover any other assets or property (other than the proceeds or products thereof and accessions or additions thereto);
(p) any interest or title (and all encumbrances and other matters affecting such interest or title) of a licensor, sublicensor, lessor or sublessor under licenses and leases entered into by the Borrowers or any of its Subsidiaries in the ordinary course of business provided that no such lease or sublease shall constitute a Capitalized Lease;
(q) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods entered into by the Borrowers or any of their Subsidiaries in the ordinary course of business permitted by this Agreement;
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(r) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;
(s) Liens arising from precautionary UCC filings regarding “true” operating leases or the consignment of goods to a Loan Party;
(t) Liens placed on the Capital Stock of any joint venture entity in the form of a transfer restriction, purchase option, call or similar right of a third party joint venture partner;
(u) ground leases in respect of real property on which facilities owned or leased by the Borrowers or any of its Subsidiaries are located;
(v) Liens arising by operation of law in the United States under Article 2 of the UCC in favor of a reclaiming seller of goods or buyer of goods;
(w) (i) zoning, building, entitlement and other land use regulations by Governmental Authorities with which the normal operation of the business complies, and (ii) any zoning or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property that does not materially interfere with the ordinary conduct of the business of the Borrowers and its Subsidiaries, taken as a whole;
(x) without duplication of, or aggregation with, any other Lien permitted under any other clause of this Section 6.01, other Liens securing Indebtedness outstanding in an aggregate principal amount not to exceed $100,000 at any time outstanding;
(y) without duplication of, or aggregation with, any other Lien permitted under any other clause of this Section 6.01, other Liens securing Indebtedness outstanding in an aggregate principal amount not to exceed $250,000 at any time outstanding so long as such Liens do not attach to assets included in the Borrowing Base;
(z) Liens on assets not included in the Borrowing Base which are entered into in connection with Permitted Factoring Agreements.
The designation of a Lien as a Permitted Encumbrance shall not limit or restrict the ability of the Administrative Agent to establish any Reserve relating thereto.
6.2 Investments . No Loan Party shall, nor shall any Loan Party permit any Subsidiary to, make or hold any Investments, except the following (each a “ Permitted Investment ”):
(a) Investments held by the Loan Parties and their Subsidiaries in the form of Cash Equivalents;
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(b) loans or advances to officers, directors and employees of the Loan Parties and their Subsidiaries in an aggregate amount not to exceed $250,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes;
(c) Investments (i) by Parents and their Subsidiaries in their respective Subsidiaries outstanding on the date hereof and set forth on Schedule 3.12 , (ii) additional Investments by the Borrowers or any Subsidiary in any Loan Party (other than Parents) and (iii) additional Investments by any Subsidiary that is not a Loan Party in any other such Subsidiary that is also not a Loan Party;
(d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors and other credits to suppliers in the ordinary course of business;
(e) Investments by the Borrowers and their Subsidiaries consisting of Permitted Acquisitions;
(f) Investments existing on the Closing Date (other than those referred to in Section 6.02(c)(i) ) and set forth on Schedule 6.02 ;
(g) Investments in Swap Contracts permitted under Section 6.03 ;
(h) promissory notes and other noncash consideration received by the Borrowers and their Subsidiaries in connection with Permitted Dispositions;
(i) Investments in the ordinary course of business consisting of endorsements for collection or deposit and customary trade arrangements with customers consistent with past practices;
(j) Investments (including debt obligations and Capital Stock) received in connection with the bankruptcy or reorganization of suppliers and customers or in settlement of delinquent obligations of, or other disputes with, customers and suppliers arising in the ordinary course of business or upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment;
(k) so long as immediately after giving effect to any such Investment, no Event of Default has occurred and is continuing and without duplication of any other clauses of this Section 6.02 , Investments by the Borrowers or any Subsidiary (A) in any Foreign Subsidiary, constituting an exchange of Capital Stock of such Foreign Subsidiary for Indebtedness of such Foreign Subsidiary or (B) constituting Guarantees of Indebtedness or other monetary obligations of Foreign Subsidiaries owing to any Loan Party;
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(l) Investments to the extent that payment for such Investments is made solely with Capital Stock of any direct or indirect parent of the Borrowers not resulting in a Change in Control;
(m) Guarantees by the Borrowers or any Subsidiary of leases (other than Capitalized Leases) or of other obligations that do not constitute Indebtedness, in each case entered into in the ordinary course of business consistent with past practices;
(n) Investments of the Borrowers and their Subsidiaries consisting of Guarantees constituting Permitted Indebtedness;
(o) Investments (which may include Investments in any Foreign Subsidiary); provided that (i) at the time of making such Investment, and after giving effect thereto, no Default or Event of Default shall then exist and (ii) the outstanding aggregate amount of such Investments shall not exceed $2,500,000 at any time (net of any return representing a return of capital in respect of any such Investment); and
(p) other Investments of the Borrowers and their Subsidiaries, provided that (i) the Payment Conditions are satisfied at the time of such Investment and (ii) at least five (5) Business Days prior to the making of any such Investment under this Section 6.02(p) , the Loan Parties shall deliver to the Administrative Agent a certificate of a Responsible Officer of each Borrower confirming compliance with clause (i) of this paragraph (o) and attaching reasonably detailed calculations demonstrating that the condition specified in clause (i) is satisfied.
6.3 Indebtedness . The Loan Parties will not, nor will any Loan Party permit any Subsidiary to, create, incur, assume or suffer to exist any Indebtedness, except the following (each “ Permitted Indebtedness ”):
(a) Indebtedness consisting of Obligations of the Loan Parties and their Subsidiaries under the Loan Documents;
(b) Indebtedness outstanding on the Closing Date and listed on Schedule 6.03 ;
(c) Guarantees by the Borrowers and their Subsidiaries in respect of Indebtedness of the Borrowers or any Subsidiary otherwise permitted hereunder); provided that (A) no Guarantee by any Subsidiary of any Indebtedness shall be permitted unless such Subsidiary shall be a Borrower or a Guarantor and (B) if the Indebtedness being Guaranteed is subordinated to the Obligations, such Guarantee shall be subordinated to the Facility Guarantee of the Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness;
(d) Indebtedness of the Borrowers or any Subsidiary of the Borrowers owing to a Borrower or any other Subsidiary of a Borrower to the extent constituting an Investment permitted by Section 6.02 ; provided that, all such Indebtedness of any Loan Party owed to any Person that is not, or ceases to be, a Loan Party shall be subject to the subordination terms set forth in ARTICLE VI of the Security Agreement;
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(e) Attributable Indebtedness and other Indebtedness (including Capitalized Leases) of the Borrowers and their Subsidiaries financing the acquisition, construction, repair, replacement or improvement of fixed or capital assets; provided that (i) such Indebtedness is incurred concurrently with or within ninety (90) days after the applicable acquisition, construction, repair, replacement or improvement, and (ii) no Default or Event of Default shall exist after giving effect to the incurrence of such Indebtedness;
(f) Indebtedness of the Borrowers and their Subsidiaries in respect of Swap Contracts designed to hedge against interest rates, foreign exchange rates or commodities pricing risks incurred in the ordinary course of business and not for speculative purposes;
(g) other unsecured Indebtedness of the Borrowers and their Subsidiaries; provided that, (i) no Event of Default then exists or would arise therefrom and (ii) the Consolidated Fixed Charge Coverage Ratio, on a Pro Forma Basis for the twelve Fiscal Months most recently preceding the incurrence of such Indebtedness, is equal to or greater than 1.00:1.00, (iii) to the extent such Indebtedness is to be secured by Liens on any Collateral, the Administrative Agent shall have entered into an intercreditor agreement, in form and substance satisfactory to the Administrative Agent, with holders of such Indebtedness (or an agent or trustee therefor) and (iv) such debt does not mature or become due and payable prior to the Maturity Date;
(h) Indebtedness representing deferred compensation, severance, and health and welfare retirement benefits to current and former employees of the Parents, the Borrowers and their Subsidiaries incurred in the ordinary course of business or existing on the Closing Date;
(i) Indebtedness consisting of promissory notes issued by any Loan Party to current or former officers, directors , employees and consultants, their respective estates, spouses or former spouses to finance the purchase or redemption of Capital Stock of the Parents or the Borrowers or any direct or indirect parent of the Parents or the Borrowers permitted by Section 6.06;
(j) Indebtedness incurred by the Borrowers or its Subsidiaries in connection with any Permitted Acquisition, Investment or disposition expressly permitted hereunder constituting indemnification obligations or obligations in respect of purchase price (including earnouts) or other similar adjustments, provided that in the case of a disposition, the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including non-cash proceeds (the fair market value of such non-cash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Borrowers and its Subsidiaries in connection with such Acquisition or Investment;
(k) Indebtedness consisting of obligations of the Borrowers or its Subsidiaries under deferred compensation or other similar arrangements incurred by such Person in connection with the Transaction and Permitted Acquisitions or any other Investment expressly permitted hereunder;
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(l) Obligations with respect to Cash Management Services and other Indebtedness in respect of netting services, overdraft protections and similar arrangements in each case in connection with deposit accounts;
(m) As long as the Payment Conditions are satisfied, after giving effect thereto, Subordinated Indebtedness and other unsecured non-amortizing long term Indebtedness in an aggregate principal amount not to exceed $25,000,000.
(n) Obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by the Borrowers or any of its Subsidiaries or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case in the ordinary course of business or consistent with past practice;
(o) Guarantees and letters of credit and surety bonds (other than Guarantees of, or letters of credit and surety bonds related to, Indebtedness) issued by the Borrowers and its Subsidiaries in connection with Permitted Acquisitions and Permitted Dispositions;
(p) Indebtedness due to any landlord in connection with the financing by such landlord of leasehold improvements;
(q) Extensions, renewals and replacements of any such Indebtedness described in clauses (b) , (e) , (g), and (p); provided that such Indebtedness constitutes a Permitted Refinancing; and
(r) Indebtedness under Permitted Factoring Agreements.
6.4 Fundamental Changes . No Loan Party shall, nor shall it permit any Subsidiary to, merge, amalgamate, dissolve, liquidate, wind up, consolidate with or into another Person, or dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that:
(a) any Subsidiary may merge or amalgamate with (i) any Borrower (including a merger or amalgamation, the purpose of which is to reorganize such Borrower into a new jurisdiction so long as (A) such jurisdiction is one of the United States of America, (B) no Default or Event of Default shall have occurred and be continuing at the time of, and after giving effect to, such merger or amalgamation, (C) the Administrative Agent shall have received not less than ten (10) Business Days written notice of such merger or amalgamation, and (D) the Administrative Agent shall have received all such documents, instruments, certificates, legal opinions, and shall have made all such filings and recordations, in each case, as it shall reasonably require in connection with such merger or amalgamation); provided that such Borrower shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries; provided that when any Subsidiary that is a Loan Party is merging or amalgamating with another Subsidiary, a Loan Party shall be the continuing or surviving Person;
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(b) (i) any Subsidiary that is not a Loan Party may merge, amalgamate or consolidate with or into any other Subsidiary that is not a Loan Party, and (ii) any Loan Party may merge, amalgamate or consolidate with any other Loan Party (other than Parents), provided that (x) if a Borrower is a party thereto, a Borrower shall be the continuing or surviving Person and (y) if a Borrower is a party thereto, such Borrower shall be the continuing or surviving Person;
(c) any Subsidiary may dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to a Borrower or to another Subsidiary of a Borrower; provided that if the transferor in such a transaction is a Loan Party, then (i) the transferee must be another Loan Party, or (ii) to the extent constituting an Investment, such Investment must be a Permitted Investment in accordance with Section 6.02 ;
(d) any Subsidiary may merge or amalgamate with any other Person (other than Parents) in order to effect a Permitted Investment; provided that the continuing or surviving Person shall be a wholly-owned Subsidiary (and, if such Subsidiary shall have been a Loan Party, the continuing or surviving Person shall also be a Loan Party), which together with each of its Subsidiaries, shall have complied with the requirements of Section 5.11 ; and
(e) (i) any Loan Party (other than the Borrowers) may dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to another Loan Party (other than Parents) and (ii) any Subsidiary that is not a Loan Party may dispose of all or substantially all its assets (including any disposition that is in the nature of a liquidation) to the Borrowers or another Subsidiary.
6.5 Dispositions . The Loan Parties shall not, nor shall any Loan Party permit any Subsidiary to, make any Disposition or enter into any agreement to make any Disposition, except the following (each, a “ Permitted Disposition ”):
(a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business and dispositions of property no longer used or useful in the conduct of the business of the Loan Parties and their Subsidiaries including, without limitation, the abandonment of or failure to maintain Intellectual Property and with respect to closed sales and distribution channels; provided, that, without the prior written consent of the Administrative Agent, in no case shall any Borrower or Parent abandon or fail to maintain its rights and interests in (i) the websites or domain names associated with “revolveclothing.com“, “revolve.com“ or “fwrd.com“ or (ii) any other website, domain name or sales or distribution channel which is then used for the sale of Collateral included in the Borrowing Base; provided that the foregoing shall not preclude the Borrower or Parent from ceasing to use any such website or domain name so long as (i) the Administrative Agent shall be satisfied that such cessation does not impair the salability of inventory included in the Borrowing Base, (ii) commercially reasonable steps are taken to forward traffic to a new or updated website or domain name, and (iii) the Administrative Agent shall be entitled to appraise the inventory sold through such website, domain name or distribution channel (and such appraisal shall be in addition to the appraisals permitted by Section 5.10(b)(ii)).
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(b) Dispositions of Inventory in the ordinary course of business;
(c) Dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such disposition are promptly applied to the purchase price of such replacement property;
(d) Dispositions of property to the Borrowers or to a Subsidiary; provided that if the transferor of such property is a Loan Party, the transferee thereof must either be another Loan Party (other than Parents), in which event the Administrative Agent shall retain its perfected Lien on the property so disposed of, subject to the same priority as existed prior to such disposition;
(e) Dispositions permitted by Section 6.04 ;
(f) Dispositions of Cash Equivalents in the ordinary course of Business for other Cash Equivalents or other property in connection with a transaction that is not otherwise prohibited by this Agreement or the other Loan Documents;
(g) non-exclusive licenses and sub-licenses of IP Rights in the ordinary course of business and substantially consistent with past practice, provided that no such licenses shall limit or otherwise impair the ability of the Borrowers or the Administrative Agent to sell Inventory;
(h) as long as no Event of Default hereof then exists or would arise therefrom, and no Overadvance would result therefrom, bulk sales or other dispositions of the Loan Parties’ Inventory not in the ordinary course of business, but in each case, on arm’s length terms; provided, that the aggregate amount of all such Inventory so disposed of by the Borrowers and their Subsidiaries in any Fiscal Year of the Borrowers shall not exceed an amount equal to ten percent (10%) of the total value of the Borrowing Base as of the commencement of such Fiscal Year;
(i) sales of non-core assets acquired in connection with a Permitted Acquisition and sales of Real Estate acquired in a Permitted Acquisition which, within thirty days of the date of the Acquisition (or such longer period as the Administrative Agent shall agree in writing, in its sole discretion), are designated in writing to the Administrative Agent as being held for sale and not for the continued operation of a Store;
(j) Dispositions of Investments in joint ventures to the extent required by, or made pursuant to customary buy/sell arrangements between, the joint venture parties set forth in joint venture arrangements and similar binding arrangements; and
(k) Dispositions of property (other than assets included in the Borrowing Base) not otherwise permitted under this Section 6.05 , provided that (i) at the time of such Disposition, no Default or Event of Default shall exist or would result from such Disposition and (ii) the aggregate book value of all property disposed of pursuant to this clause (i) shall not exceed $500,000 in any Fiscal Year or $1,000,000 in the aggregate after the Closing Date; provided that any disposition of any property pursuant to this Section 6.05 (except for Dispositions pursuant to Section 6.05(e) and Dispositions from a Loan Party to another Loan Party), shall be for no less than the fair market value
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of such property at the time of such disposition and, (1) in the case of Accounts and Inventory, solely for cash consideration, and (2) in the case of any other assets, at least seventy-five percent (75.00%) of the consideration is payable in cash at the time of consummation of the transaction.
6.6 Restricted Payments . The Loan Parties shall not, nor shall any Loan Party permit any Subsidiary to declare or make, directly or indirectly, any Restricted Payment, except:
(a) each Subsidiary may make Restricted Payments to the Loan Parties (other than Parents) and any other Person (other than Parents) that owns Capital Stock in such Subsidiary, ratably according to their respective holdings of the type of Capital Stock in respect of which such Restricted Payment is being made;
(b) Parents and each Subsidiary may declare and make dividend payments or other distributions payable solely in the Capital Stock (other than Disqualified Capital Stock) of such Person;
(c) Parents may repurchase, retire, or otherwise acquire Capital Stock of Parents from any Permitted Holder or any former or present employee of either Borrower or any of their Subsidiaries, or any of their respective estates, spouses or former spouses pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement (and the Borrowers and their Subsidiaries may make Restricted Payments (in an amount not exceeding the amounts set forth in the proviso to this clause (c) ) to Parents solely for such purpose); provided that amounts payable under this clause (c) do not exceed (x) in any calendar year, $1,000,000 or (y) $2,500,000 in the aggregate during the term of this Agreement;
(d) Parents may make cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock of Parents (and the Borrowers and their Subsidiaries may make Restricted Payments to Parents solely for such purpose); provided, however , that any such cash payment shall not be for the purpose of evading the limitations of this Agreement;
(e) Parents may issue and sell their common Capital Stock;
(f) The Borrowers and their Subsidiaries may declare and pay dividends or distributions to, or make loans to, Parents in amounts required for each Parent to pay:
(i) franchise taxes and other fees, Taxes and expenses required to maintain such Parent’s corporate existence;
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(ii) for any taxable period in which the Borrowers and any of their Subsidiaries is a member of a consolidated, combined or similar income tax group of which such Parent is the common parent (a “ Tax Group ” ), to pay federal, foreign, state and local income taxes of such Tax Group that are attributable to the taxable income of such Person; provided that, for each taxable period, the amount of such payments made in respect of such taxable period in the aggregate shall not exceed the amount that such Person would have been required to pay in respect of federal, foreign, state and local income taxes in the aggregate if such Person was a corporation paying taxes separately from any Tax Group (it being understood and agreed that if any Borrower or any Subsidiary pays any such federal, foreign, state or local income taxes directly to such taxing authority, that a Restricted Payment in duplication of such amount shall not be permitted to be made pursuant to this clause (ii)); provided further that the permitted payment pursuant to this clause (ii) with respect to any taxes of any Subsidiary that is an Excluded Subsidiary for any taxable period shall be limited to the amount actually paid with respect to such period by such Excluded Subsidiary to the Borrowers or the other Loan Parties for the purposes of paying such consolidated, combined or similar taxes;
(iii) (A) its operating expenses incurred in the ordinary course of business and other corporate overhead costs and expenses (including administrative, legal, accounting and similar expenses provided by third parties), which are reasonable and customary and incurred in the ordinary course of business and attributable to the ownership or operations of the Borrowers and their Subsidiaries and (B) Transaction Expenses and any reasonable and customary indemnification claims made by directors or officers of such Parent attributable to the ownership or operations of the Borrowers and their Subsidiaries; and
(iv) customary salary, bonus and other benefits payable to officers and employees of such Parent to the extent such salaries, bonuses and other benefits are attributable to the ownership or operation of the Borrowers and their Subsidiaries;
(g) in addition to any Restricted Payments permitted under any other clause of this Section 6.06 , the Loan Parties and their Subsidiaries may make other Restricted Payments to the holders of their respective Capital Stock as long as the Payment Conditions are satisfied.
6.7 Change in Nature of Business .
(a) The Loan Parties shall not, nor shall any Loan Party permit any Subsidiary to, engage in any material line of business substantially different from those lines of business conducted by the Borrowers and their Subsidiaries on the date hereof or any business reasonably related or ancillary thereto or a reasonable extension thereof.
(b) Parents shall not conduct, transact or otherwise engage in any business or operations other than those incidental to (i) its ownership of the Capital Stock of the Borrowers, (ii) the maintenance of its legal existence, (iii) the performance of the Loan Documents, (iv) any public offering of its common stock or any other issuance of its Capital Stock not prohibited by this Article VI, (v) any transaction that any Parent is permitted to enter into or consummate under this Article VI, (vi) participating in tax, accounting and other administrative matters as a member of the
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consolidated group of such Parent, the Borrowers and the other Subsidiaries, and (vii) providing indemnification to officers and directors . Furthermore, notwithstanding anything to the contrary herein contained, Parents shall not (i) own any material assets other than the Capital Stock of the Borrowers or (ii) grant any Liens in any of its assets (other than Liens granted to the Administrative Agent, for the benefit of the Credit Parties, under the Loan Documents or any Permitted Refinancing thereof).
6.8 Transactions with Affiliates . The Loan Parties shall not, nor shall any Loan Party permit any Subsidiary to, enter into any transaction of any kind with any Affiliate, whether or not in the ordinary course of business, other than (a) transactions (x) among the Loan Parties or a Person that becomes a Loan Party as a result of such transaction or (y) among Persons who are not Loan Parties, (b) on terms substantially as favorable to such Loan Party or such Subsidiary as would be obtainable by such Loan Party or such Subsidiary at the time in a comparable arm’s-length transaction with a Person other than an Affiliate, (c) payments due pursuant to the Sponsor Management Agreement on account of management, monitoring, consulting, and transaction and advisory fees (including termination fees), provided that such payments may not be made if a Specified Event of Default has occurred and is continuing or would arise therefrom, provided further that such fees not paid may accrue and be payable on or after the date when the applicable Specified Event of Default has been cured or waived and no additional Specified Event of Default has occurred and is continuing or would arise as a result of such payment, (d) payments of indemnities and expense reimbursements under the Sponsor Management Agreement as in effect on the Closing Date, (e) equity issuances, repurchases, retirements or other acquisitions or retirements of Capital Stock of the Loan Parties permitted under Section 6.06 , (f) loans and other transactions by a Borrowers and its Subsidiaries to the extent permitted under this Article VI, (g) employment and severance arrangements between a Borrower and its Subsidiaries and their respective officers and employees in the ordinary course of business, (h) payments by the Subsidiaries pursuant to the tax sharing agreements among Parents and their Subsidiaries on customary terms to the extent attributable to the ownership or operation of Parents, the Borrowers and their Subsidiaries, (i) the payment of customary fees, compensation, and reasonable out of pocket costs to, and indemnities provided on behalf of, directors, officers and employees of Parents, the Borrowers and their Subsidiaries in the ordinary course of business to the extent attributable to the ownership or operation of Parents, the Borrowers and their Subsidiaries, (j) transactions pursuant to permitted agreements in existence on the Closing Date and set forth on Schedule 6.08 or any amendment thereto to the extent such an amendment is not adverse to the Lenders in any material respect, and (k) dividends, redemptions and repurchases permitted under Section 6.06 ; and (l) so long as no Specified Event of Default has occurred and is continuing or would result therefrom, customary payments by the Borrowers and any of its Subsidiaries 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 members of the board of directors or a majority of the disinterested members of the board of directors of the Borrowers, in good faith.
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6.9 Burdensome Agreements . The Loan Parties shall not, nor shall any Loan Party permit any Subsidiary to, enter into or permit to exist any contractual obligation (other than this Agreement or any other Loan Document) that limits the ability of (a) any Subsidiary of a Borrower that is not a Loan Party to make Restricted Payments to any Loan Party or to make or repay loans or advances to or otherwise transfer assets to or make Investments in a Borrower or any other Loan Party or (b) Parents, either Borrower or any other Loan Party to create, incur, assume or suffer to exist Liens on property of such Person for the benefit of the Secured Parties with respect to the Obligations or under the Loan Documents; provided that the foregoing clauses (a) and (b) shall not apply to contractual obligations which (i) (x) exist on the Closing Date and (to the extent not otherwise permitted by this Section 6.09 ) are listed on Schedule 6.09 hereto and (y) to the extent contractual obligations permitted by clause (x) are set forth in an agreement evidencing Indebtedness, are set forth in any agreement evidencing any permitted renewal, extension or refinancing of such Indebtedness so long as such renewal, extension or refinancing does not expand the scope of such contractual obligation in any material respect, (ii) are binding on a Subsidiary at the time such Subsidiary first becomes a Subsidiary of a Borrower, so long as such contractual obligations were not entered into solely in contemplation of such Person becoming a Subsidiary of a Borrower, (iii) represent Indebtedness of a Subsidiary of a Borrower which is not a Loan Party which is permitted pursuant to Section 6.03 , (iv) arise in connection with any Permitted Disposition, (v) are customary provisions in joint venture agreements and other similar agreements applicable to joint ventures and applicable solely to such joint venture entered into in the ordinary course of business, (vi) are negative pledges and restrictions on Liens in favor of any holder of Indebtedness permitted under Section 6.03 but solely to the extent any negative pledge relates to the property financed by or the subject of such Indebtedness, and (vii) are customary restrictions on leases, subleases, licenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate to the assets subject thereto.
6.10 Accounting Changes . The Loan Parties shall not, nor shall any Loan Party permit any Subsidiary to, make any change in their Fiscal Year; provided, however, that the Borrowers may, upon written notice to the Administrative Agent, change its Fiscal Year to any other Fiscal Year reasonably acceptable to the Administrative Agent, in which case, the Borrowers and the Administrative Agent will, and are hereby authorized by the Lenders to, make any adjustments to this Agreement that are necessary to reflect such change in Fiscal Year.
6.11 Prepayments, Etc., of Indebtedness . No Loan Party will, nor will it permit any Subsidiary to, make or agree to pay or make any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Indebtedness, 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 of any Indebtedness, except:
(a) payments in Capital Stock (as long as no Change in Control would result therefrom) and payments of interest in-kind of the Loan Parties or the accretion of interest on Permitted Indebtedness;
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(b) payments of principal and interest as and when due in respect of any Subordinated Indebtedness (subject to applicable subordination provisions relating thereto);
(c) payments of principal (including mandatory prepayments) and interest as and when due in respect of any Permitted Indebtedness (other than Subordinated Indebtedness);
(d) voluntary prepayments of Indebtedness in connection with a Permitted Refinancing of such Indebtedness; and
(e) if the Payment Conditions are satisfied, voluntary prepayments, purchases, redemptions, defeasances and mandatory prepayments, redemptions and repurchases in whole or in part of any Permitted Indebtedness.
6.12 Amendment of Material Documents .
(a) No Loan Party will, nor shall any Loan Party permit any Subsidiary to amend, modify or waive any of its rights or obligations under (i) the Sponsor Management Agreement, (ii) any Material Indebtedness or any Permitted Refinancing thereof to (1) shorten the maturity date of any Material Indebtedness to a date which is prior to ninety-one (91) days after the Maturity Date, (2) except as provided in clause (1) , shorten the date scheduled for any principal payment or increase the amount of any required principal payment, the result of which would be to require principal payments on account thereof in excess of the amounts previously required over the twenty-four (24) months following such amendment, modification or waiver, (3) modify the subordination provisions thereof or (4) be otherwise materially adverse to the interests of the Credit Parties, (iii) any of its Organization Documents to the extent such amendment, modification or waiver would reasonably likely have a Material Adverse Effect, or (iv) any document evidencing Indebtedness permitted under Section 6.03(h) , to the extent such amendment, modification or waiver would be materially adverse to the interests of the Credit Parties.
(a) Use the proceeds of any Borrowing or Letter of Credit, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.
(b) Directly or indirectly, use the proceeds of any Borrowing or Letter of Credit, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other individual or entity, to fund any activities of or business with any individual or entity, or in any Designated Jurisdiction, that, at the time of such funding, is subject of Sanctions, or in any other manner that will result in a violation by any individual or entity (including any individual or entity participating in the transaction, whether as Lender, Arranger, Administrative Agent, Issuing Bank, or otherwise) of Sanctions.
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6.14 Designation of Other Senior D ebt . Designate any Indebtedness (other than the Indebtedness under the Loan Documents) of Parents or any of their Subsidiaries as “ Designated Senior Debt ” (or any similar term) under, and as defined in, any documents, agreements or indentures relating to or evidencing any Subordinated Indebtedness and all supplements thereto.
6.15 Minimum Consolidated Fixed Charge Coverage Ratio . At any time that a FCCR Trigger Event has occurred and is continuing (including, for the avoidance of doubt, on any FCCR Initial Test Date), the Borrowers shall not permit the Consolidated Fixed Charge Coverage Ratio to be less than 1.00 to 1.00 as of the last day of any FCCR Test Period.
6.16 Sanctions . No Loan Party shall, nor shall it permit any Subsidiary to, directly or indirectly used the proceeds of any Credit Extension, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other individual or entity, to fund any activities of or business with any individual or entity, or in any Designated Jurisdiction that, at the time of such funding, is the subject of Sanctions or in any other manner that will result in a violation by any individual or entity (including any individual or entity participating in the transaction, whether as Lender, Arranger, Administrative Agent, Issuing Bank or otherwise) of Sanctions.
7.1 Events of Default . The occurrence of any of the following events shall constitute an “ Event of Default ” hereunder:
(a) Non-Payment . The Borrowers or any other Loan Party fails to (i) pay when and as required to be paid herein, any amount of principal of any Loan, or any reimbursement obligation in respect of any Letter of Credit Disbursement, (ii) deposit any funds as Cash Collateral as and when required, or (iii) within five (5) Business Days after the same becomes due, any interest on any Loan or any other amount payable hereunder or with respect to any other Loan Document; or
(b) Specific Covenants . Any Loan Party fails to perform or observe any term, covenant or agreement contained in (i) any of Section 2.16 , 5.02(a) , 5.02(e) , 5.02(g) , 5.03 , 5.05 , 5.07 , 5.10 , 5.11 , 5.14 , 5.15 , or Article VI , (ii) Section 5.01(e) and such failure (x) at any time that Borrowing Base Certificates are being delivered on a weekly basis, continues for three (3) days and (y) at any time that Borrowing Base Certificates are being delivered on a monthly basis, continues for five (5) days, or (iii) Section 5.01 (other than clause (e) thereof), and such failure continues for five (5) days; or
(c) Other Defaults . Any Loan Party fails to perform or observe any other covenant or agreement (not specified in Section 7.01(a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty (30) days; or
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(d) Representations and Warranties . Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrowers or any other Loan Party herein, in any other Loan Document, or in any document required to be delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or
(e) Cross-Default. (i) Any Loan Party or any Subsidiary thereof (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Material Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $1,000,000 or (B) fails to observe or perform any other agreement or condition relating to any such Material Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Material Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Material Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by such Loan Party or such Subsidiary as a result thereof is greater than the $1,000,000; or
(f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator, or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator, or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or
(g) Inability to Pay Debts ; Attachment. (i) Any Loan Party or any Subsidiary becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within thirty (30) days after its issue or levy; or
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(h) Judgments . There is entered against any Loan Party or any Subsidiary thereof (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments and orders) exceeding $1,000,000 (to the extent not covered (other than to the extent of customary deductibles) by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of thirty (30) consecutive days during which the same is not discharged, satisfied, vacated or during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or
(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of a Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $500,000 or (ii) a Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $500,000; or
(j) Invalidity ofLoan Documents. (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 (including as a result of a transaction permitted under Section 6.04 or Section 6.05 ) or as a result of acts or omissions by the Administrative Agent or any Lender or the satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party contests in writing (or supports any other Person in contesting) the validity or enforceability of any provision of any Loan Document; or any Loan Party denies in writing that it has any or further liability or obligation under any Loan Document (other than as a result of repayment in full of the Obligations and termination of the Commitments), or purports in writing to revoke or rescind any Loan Document; or (ii) any challenge by or on behalf of any Loan Party, receiver, trustee, custodian, conservator, monitor, liquidator, rehabilitator, administrator, administrative receiver or similar officer for any Loan Party or for all or any material part of its property to the validity of any Loan Document or the applicability or enforceability of any Loan Document strictly in accordance with the subject Loan Document’s terms or which seeks to void, avoid, limit, or otherwise adversely affect any security interest created by or in any Loan Document or any payment made pursuant thereto; or
(k) Change in Control. There occurs any Change in Control; or
(l) Security Documents. Any Security Document after delivery thereof shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected first priority Lien (subject to Permitted Encumbrances) on any part of the Collateral; or
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(m) Termination of Business . Except as permitted under Section 6.05 , the determination of the Loan Parties, whether by vote of the Loan Parties ’ board of directors or otherwise to: suspend the operation of the Loan Parties ’ business in the ordinary course, liquidate all or substantially all of the Loan Parties ’ assets, or employ an agent or other third party to conduct any so-called liquidation or “ Going-Out-Of-Business ” sales for Loan Parties ’ websites which are necessary or material to the Loan Parties ’ business; or
(n) Termination of Guarantee . The termination of the Facility Guarantee or any other guaranty of the Obligations (except for any release or termination permitted hereunder); or
(o) Indictment . The indictment of any Loan Party, under any Applicable Law where the crime alleged would constitute a felony under Applicable Law and such indictment remains unquashed or such legal process remains undismissed for a period of sixty (60) days or more; or
(p) Subordination Provisions . Any payment, remedy blockage or turnover provision in favor of the Administrative Agent and the Lenders in respect of any Subordinated Indebtedness ceases to be in full force and effect.
7.2 Remedies Upon Event of Default .
If any Event of Default occurs and is continuing, the Administrative Agent may and, at the request of the Required Lenders, shall take any or all of the following actions:
(a) declare the Commitment of each Lender to make Loans and any obligation of the Issuing Bank to issue Letters of Credit to be terminated, whereupon such Commitments and obligation shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrowers;
(c) require that the Borrowers Cash Collateralize the amount of the Letter of Credit Outstandings (in an amount equal to one hundred five percent (105%) of the amount of outstanding Letters of Credit plus one hundred five percent (105%) of the then unreimbursed amounts due to the Issuing Bank); and
(d) exercise on behalf of itself and the Secured Parties all rights and remedies available to it and the Secured Parties under the Loan Documents or Applicable Law;
provided that upon the occurrence of an actual or deemed entry of an order for relief with respect to any Loan Party under any Debtor Relief Law, the obligation of each Lender to make Loans and any obligation of the Issuing Bank to issue Letters of Credit shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid
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shall automatically become due and payable, and the obligation of the Borrowers to Cash Collateralize the amount of Letter of Credit Outstandings as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.
After the occurrence and during the continuance of any Event of Default and acceleration of the Obligations, all proceeds realized from any Loan Party or on account of any Collateral owned by a Loan Party or any payments in respect of any Obligations and all proceeds of the Collateral, shall be applied in the following order:
(a) FIRST, ratably to pay the Obligations in respect of any fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent) then due to the Administrative Agent until paid in full;
(b) SECOND, ratably to pay the Obligations in respect of any fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the respective Lenders and the Issuing Bank) then due to the Lenders and the Issuing Bank, until paid in full;
(c) THIRD, ratably to pay interest accrued in respect of the Obligations (other than any Obligations on account of Cash Management Services, Bank Products and other outstanding Other Liabilities) until paid in full;
(d) FOURTH, ratably to pay principal due in respect of the Revolving Credit Loans until paid in full;
(e) FIFTH, to the Administrative Agent, to be held by the Administrative Agent, for the ratable benefit of the Issuing Bank and the Lenders as Cash Collateral in an amount up to 105% of the then Letter of Credit Outstandings until paid in full;
(f) SIXTH, ratably to pay any other outstanding Obligations (including any Obligations on account of Cash Management Services, Bank Products and other Obligations constituting Other Liabilities); and
(g) SEVENTH, to the Borrowers or such other Person entitled thereto under Applicable Law.
Notwithstanding the foregoing to the contrary, Excluded Swap Obligations with respect to any Guarantor shall not be paid with amounts received from such Guarantor or its assets, but appropriate adjustments shall be made with respect to payments from other Loan Parties to preserve the allocation to Obligations otherwise set forth above in this Section.
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(a) Subject to the limitations set forth in clause (f) below, Borrowers may cure (and shall be deemed to have cured) an Event of Default arising out of a breach of the financial covenant set forth in Section 6.15 (the “ Specified Financial Covenant ”) if the Borrowers receive the cash proceeds of an investment of Curative Equity within 10 days after the date that is the earlier to occur of (i) the date on which the Compliance Certificate is delivered to the Administrative Agent in respect of the period with respect to which any such breach occurred and (ii) the date on which the Compliance Certificate is required to be delivered to Administrative Agent pursuant to Section 5.02 in respect of the period with respect to which any such breach occurred; provided , that each Borrower’s right to so cure an Event of Default shall be contingent on their timely delivery of such Compliance Certificate as required under Section 5.02 .
(b) Borrowers shall promptly notify the Administrative Agent of its receipt of any proceeds of Curative Equity (and shall immediately apply the same to the payment of the Obligations as provided in Section 2.15(g) ).
(c) Any investment of Curative Equity shall be in immediately available funds and, subject to the limitations set forth in clause (f) below, shall be in an amount that is sufficient to cause Parents and their Subsidiaries to be in compliance with the Specified Financial Covenant as of the last day of the most recently ended fiscal month for which a Compliance Certificate is delivered to Agent pursuant to Section 5.02 in respect of the period with respect to which any such breach occurred, calculated for such purpose as if such amount of Curative Equity were additional Consolidated EBITDA of Parents and their Subsidiaries as of such date.
(d) In respect of the period end on which Curative Equity is used, Borrowers shall deliver a Compliance Certificate (or an updated Compliance Certificate at the time of an investment of Curative Equity conforming to the requirements of this Section 7.04 occurring after the date on which a Compliance Certificate is due pursuant to Section 5.02 , an “ Updated Compliance Certificate ”) which shall (i) include evidence of their receipt of Curative Equity proceeds, and (ii) set forth a calculation of the financial results and balance sheet of Parents and their Subsidiaries as at such month end (including for such purposes the proceeds of such Curative Equity (broken out separately) as deemed Consolidated EBITDA as if received on such date), which shall confirm that on a pro forma basis after taking into account the receipt of the Curative Equity proceeds by Borrower, Parents and their Subsidiaries would have been in compliance with the Specified Financial Covenant as of such date.
(e) Upon delivery of a Compliance Certificate pursuant to Section 5.02 (or an Updated Compliance Certificate) conforming to the requirements of this Section 7.04 , any Event of Default that occurred and is continuing as a result of a breach of the Specified Financial Covenant shall be deemed cured with no further action required by the Required Lenders. Prior to the date of the delivery of a Compliance Certificate pursuant to Section 5.02 (or an Updated Compliance Certificate) conforming to the requirements of this Section 7.04 , any Event of Default that has occurred as a result of a breach of the Specified Financial Covenant shall be deemed to be
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continuing and, as a result, the Lenders (including the Issuing Bank) shall have no obligation to make additional loans or otherwise extend additional credit hereunder . In the event a Borrower does not cure all financial covenant violations as provided in this Section 7.04 , the existing Event(s) of Default shall continue unless waived in writing by the Required Lenders in accordance herewith.
(f) Notwithstanding the foregoing, Borrowers’ rights under this Section 7.04 may (i) be exercised not more than 4 times during the term of this Agreement and (ii) not be exercised twice within any 365 day period. Any amount of Curative Equity that is in excess of the amount sufficient to cause Parents and their Subsidiaries to be in compliance with the Specified Financial Covenant as at such date shall not constitute Curative Equity. Curative Equity shall be disregarded for purposes of determining pricing, financial ratio-based conditioning or any baskets with respect to the covenants contained in this Agreement, there shall not have been a breach of any covenant under this Agreement by reason of having no longer included such Curative Equity in any basket during the relevant period and there shall be no pro forma reduction in Indebtedness with the proceeds of any Curative Equity for purposes of determining compliance with the Specified Financial Covenant or for determining pricing, financial ratio-based conditioning or any baskets with respect to the covenants contained in this Agreement, in each case in the period in which such Curative Equity is used.
To the extent that Curative Equity is received and included in the calculation of the Specified Financial Covenant as deemed Consolidated EBITDA for any period pursuant to this Section 7.04 , such Curative Equity shall be deemed to be Consolidated EBITDA for purposes of determining compliance with the Specified Financial Covenant for subsequent periods that include such period.
ARTICLE VIII
The Administrative Agent
8.1 Appointment and Authority .
(a) Each of the Lenders and the Issuing Bank hereby irrevocably appoints, designates and authorizes Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Bank, and neither Parents nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
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(b) The Administrative Agent shall also act as the “ collateral agent ” under the Loan Documents, and each of the Lenders (including in its capacities a potential provider of Cash Management Services and/or provider of Bank Products (including as a Swap Contract Secured Party)) and the Issuing Bank hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender and the Issuing Bank for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto . In this connection, the Administrative Agent, as “ collateral agent ” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 8.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Article VIII and Article IX (including Section 9.04(c) , as though such co-agents, sub-agents and attorneys-in-fact were the “ collateral agent ” under the Loan Documents) as if set forth in full herein with respect thereto.
8.2 Rights as a Lender . The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrowers or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
8.3 Exculpatory Provisions . The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and
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(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrowers or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.
(d) The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 9.01 and 7.02 ) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by a Borrower, a Lender or the Issuing Bank.
(e) The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
8.4 Reliance by Administrative Agent . The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrowers), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
8.5 Delegation of Duties . The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or
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through their respective Related Parties . The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent . The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
8.6 Resignation of Administrative Agent .
(a) The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Bank and the Borrowers. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrowers, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “ Resignation Effective Date ”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that in no event shall any such successor Administrative Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective with such notice on the Resignation Effective Date.
(b) If the Person serving as the Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by Applicable Law, by notice in writing to the Borrowers and such Person remove such Person as Administrative Agent and, in consultation with the Borrowers, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days (or such earlier day as shall be agreed by the Required Lenders) (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (i) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the Issuing Bank under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (ii) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the Issuing Bank directly, until such time, if any, as the Required Lenders appoint a successor Administrative
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Agent as provided for above . Upon the acceptance of a successor ’ s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 2.21(g) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section) . The fees payable by the Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrowers and such successor . After the retiring or removed Administrative Agent ’ s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 9.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them (i) while the retiring or removed Administrative Agent was acting as Administrative Agent and (ii) after such resignation or removal for as long as any of them continues to act in any capacity hereunder or under the other Loan Documents, including , without limitation , (A) acting as collateral agent or otherwise holding any collateral security on behalf of any of the Secured Parties and (B) in respect of any actions taken in connection with transferring the agency to any successor Administrative Agent.
(d) Any resignation or removal by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as the Issuing. If Bank of America resigns as the Issuing Bank, it shall retain all the rights, powers, privileges and duties of the Issuing Bank hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as Issuing Bank and all Obligations with respect thereto, including the right to require the Lenders to make Prime Rate Loans or fund risk participations in unreimbursed payments pursuant to Section 2.11(g) . Upon the appointment by the Borrowers of a successor Issuing Bank hereunder (which successor shall in all cases be a Lender other than a Defaulting Lender), (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank, (ii) the retiring Issuing Bank shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (iii) the successor Issuing Bank 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.
8.7 Non-Reliance on Administrative Agent and Other Lenders . Each Lender and the Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
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8.8 No Other Duties, Etc . Anything herein to the contrary notwithstanding, none of the titles listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the Issuing Bank hereunder.
8.9 Administrative Agent May File Proofs of Claim; Credit Bidding . 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 Letter of Credit Outstandings 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 Borrowers) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Credit Extensions 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 Issuing Bank and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Issuing Bank and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the Issuing Bank and the Administrative Agent under any other provisions of the Loan Documents, including Sections 2.17 and 9.04 ) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the Issuing Bank to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders and the Issuing Bank, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.17 and 9.04 .
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or the Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the Issuing Bank to authorize the Administrative Agent to vote in respect of the claim of any Lender or the Issuing Bank or in any such proceeding.
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 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
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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 of the contingent claim amount used in allocating the contingent interests) in the asset or assets so purchased (or in the Capital Stock 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 Capital Stock 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 clauses (a) through (j) of Section 9.01 of this Agreement, and (iii) 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 Capital Stock 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.
8.10 Collateral and Guaranty Matters . Without limiting the provisions of Section 8.09 , each of the Lenders and the Issuing Bank irrevocably authorize the Administrative Agent, at its option and in its discretion,
(a) to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Total Commitments and payment in full of all Obligations (other than (A) contingent indemnification obligations and (B) contingent obligations consisting of Other Liabilities) and the expiration or termination of all Letters of Credit (other than Letters of Credit as to which other arrangements reasonably satisfactory to the Administrative Agent and the Issuing Bank shall have been made), (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, or (iii) if approved, authorized or ratified in writing in accordance with Section 9.01 ;
(b) to release any Guarantor from its obligations under the Facility Guarantee if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder; and
(c) to subordinate any 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 6.01(i) .
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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 Guarantor from its obligations under the Facility Guarantee pursuant to this Section 8.10 . In each case as specified in this Section 8.10 , the Administrative Agent will, at the Borrowers ’ expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Security Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Guaranty, in each case in accordance with the terms of the Loan Documents and this Section 8.10 .
The Administrative Agent shall not be 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 Administrative Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.
Upon request by the Borrowers, the Administrative Agent shall execute and deliver to the Borrowers, at Borrowers’ sole expense, any and all releases, discharges or subordination agreements and shall re-deliver any Collateral in its possession as shall be reasonably required in connection with the release, merger or subordination permitted hereunder, in each case, subject to the Administrative Agent’s receipt of a certification by the Borrowers stating that the release, discharge or subordination transaction giving rise to such release, discharge or subordination is permitted hereunder and as to such other matters as the Administrative Agent may reasonably request.
8.11 Loan Documents . Without limiting the generality of the provisions of the last paragraph of Section 8.03 , for purposes of determining compliance with the conditions specified in Section 4.01 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
8.12 Other Liabilities . Except as otherwise expressly set forth herein or in any Facility Guarantee or any Security Document, no holder of Other Liabilities that obtains the benefits of Section 7.03 , any Facility Guarantee or any Collateral by virtue of the provisions hereof or of any Facility Guarantee or any Security Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) (or to notice of or to consent to any amendment, waiver or modification of the provisions hereof or of the Guaranty or any Security Document) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents. Notwithstanding any other provision of this Article VIII to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, any Other Liabilities.
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9.1 Amendments, Etc . Except as otherwise set forth in this Agreement, no amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrowers or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and each Borrower or the applicable Loan Party, as the case may be, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that, no such amendment, waiver or consent shall:
(a) waive any condition set forth in Section 4.01 , solely as it relates to the payment of any fees and expenses of the Administrative Agent;
(b) extend or increase the Commitment of any Lender without the written consent of such Lender (it being understood that a waiver of any condition precedent set forth in Section 4.02 or the waiver of any Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension or increase of any Commitment of any Lender);
(c) postpone any date scheduled for, or reduce the amount of, any payment of principal, interest, fees or other amounts payable under the Loan Documents or reduce the amount of, waive or excuse any such payment or postpone the expiration of the Commitments or the Maturity Date, without the prior written consent of all Lenders directly affected thereby provided that, only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrowers to pay interest at the Default Rate;
(d) reduce the principal of, or the rate of interest specified herein on, any Loan, or any fees or other amounts payable hereunder or under any other Loan Document without the prior written consent of all Lenders directly affected thereby; provided that, only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrowers to pay interest at the Default Rate;
(e) change any provision of this Section 9.01 , the definition of “Required Lenders”, or any other provision of any Loan Document specifying the number or percentage of Lenders required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the prior written consent of all Lenders;
(f) other than in a transaction permitted under Section 6.05 , release all or substantially all, or subordinate the lien of the Administrative Agent on all or substantially all, of the Collateral in any transaction or series of related transactions, without the prior written consent of all Lenders;
(g) other than in connection with a transaction permitted under Section 6.04 or Section 6.05 , release all or substantially all of the value of the Facility Guarantee, without the written consent of each Lender, except to the extent the release of any Guarantor from the Facility Guarantee is permitted pursuant to Section 8.10 (in which case such release may be made by the Administrative Agent acting alone);
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(h) without the prior written consent of all Lenders, change the definition of the terms “ Excess Availability ” or “ Borrowing Base ” or any component definition of any such terms (including the applicable advance rates) if as a result thereof the amounts available to be borrowed by the Borrowers would be increased; provided, however, that the foregoing shall not limit the discretion of the Administrative Agent to change, establish or eliminate any Reserves; or
(i) without the prior written consent of all Lenders, modify the definition of Permitted Overadvance so as to increase the amount thereof, or to cause the aggregate Commitments (or the Commitment of any Lender) to be exceeded as a result thereof, or, except as provided in such definition, the time period for a Permitted Overadvance; or
(j) without the prior written consent of all Lenders, change Section 2.15 , Section 2.16(j)(v) , Section 7.03 , or amend or modify the ratable requirement of Section 9.08(b) ; and provided further that (i) no amendment, waiver or consent shall, unless in writing and signed by the Issuing Bank in addition to the Lenders required above, affect the rights or duties of the Issuing Bank under this Agreement or any Letter of Credit application relating to any Letter of Credit issued or to be issued by it and (ii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of, or any fees or other amounts payable to, the Administrative Agent under this Agreement or any other Loan Document, may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.
9.2 Notices; Effectiveness; Electronic Communication .
(a) Notices Generally . Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by fax transmission or e-mail transmission as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(i) if to the Borrowers, any other Loan Party, the Administrative Agent or the Issuing Bank, to the address, fax number, e-mail address or telephone number specified for such Person on Schedule 9.02 ; and; and
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(ii) if to any other Lender, to the address, fax number, e-mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrowers).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by fax transmission shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below shall be effective as provided in such subsection (b).
(b) Electronic Communications . Notices and other communications to the Administrative Agent, the Lenders and the Issuing Bank 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 Issuing Bank pursuant to Article II if such Lender or the Issuing Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent, the Issuing Bank or a Borrower (on behalf of the other Loan Parties) may each, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices and other communications posted to an Internet or intranet website shall be deemed received by the intended recipient upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail address or other written acknowledgment) indicating that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii), if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient.
(c) The Platform . THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE 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
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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 any Loan Party, any Lender, the Issuing Bank or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrowers ’ , Loan Party ’ s or the Administrative Agent ’ s transmission of Borrower Materials or notices through the Platform, any other electronic platform or electronic messaging service, or through the Internet.
(d) Change of Address, Etc . Each of the Loan Parties, the Administrative Agent and the Issuing Bank may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to each Loan Party, the Administrative Agent and the Issuing Bank. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, facsimile number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrowers or any of their securities for purposes of United States Federal or state securities laws.
(e) Reliance by Administrative Agent, Issuing Bank and Lenders . The Administrative Agent, the Issuing Bank and the Lenders shall be entitled to rely and act upon any notices (including telephonic notices, Notices of Borrowing, and letter of credit applications) purportedly given by or on behalf of any 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. Each Borrower shall indemnify the Administrative Agent, the Issuing Bank, 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 a 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.
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9.3 No Waiver; Cumulative Remedies . No failure by any Credit Party to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege . The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 7.02 for the benefit of all Credit Parties; provided , however , that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) the Issuing Bank from exercising the rights and remedies that inure to its benefit (solely in its capacity as the Issuing Bank) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 9.08(a) (subject to the terms of Section 9.08(b) ), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided , further , that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 7.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 9.08(b) , any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
9.4 Expenses; Indemnity; Damage Waiver .
(a) Costs and Expenses . The Loan Parties shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out of pocket expenses incurred by the Administrative Agent, any Lender or the Issuing Bank (including the fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or the Issuing Bank), and shall pay all fees and time charges for attorneys who may be employees of the Administrative Agent, any Lender or the Issuing Bank, in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.
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(b) Indemnification by the Borrowers . The Borrowers jointly and severally shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and the Issuing Bank, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ” ) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrowers or any other Loan Party arising out of, in connection with, any actual or prospective claim, litigation, investigation or proceeding relating to arising out of (whether based on contract, tort or any other theory, whether brought by a third party or by the Borrowers or any other Loan Party or any of any Borrower ’ s or such Loan Party ’ s directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto) (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents (including in respect of any matters addressed in Section 2.21 ), (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by Parents or any of their Subsidiaries, or any Environmental Liability related in any way to Parents or any of their Subsidiaries or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee, the bad faith breach by such Indemnitee of its obligations under the Loan Documents or disputes among Indemnitees (other than those relating to the any claim against the Borrowers) or (y) result from a claim brought by any Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee ’ s obligations hereunder or under any other Loan Document, if such Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction . Without limiting the provisions of Section 2.21(C) , this Section 9.04(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
(c) Reimbursement by Lenders . To the extent that the Borrowers for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the Issuing Bank or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the Issuing Bank or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the Total Outstandings at such time) of such unpaid amount
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(including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be made severally among them based on such Lenders ’ Commitment Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the Issuing Bank in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or the Issuing Bank in connection with such capacity . The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.01(b) .
(d) Waiver of Consequential Damages, Etc . To the fullest extent permitted by Applicable Law, no Loan Party shall assert, and each Loan Party hereby waives, and acknowledges that no other Person shall have, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by others of any information or other materials distributed to such party by such Indemnitee 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.
(e) Payments . All amounts due under this Section shall be payable not later than ten (10) Business Days after demand therefor.
(f) Survival . The agreements in this Section and the Indemnity provisions of Section 9.02(e) shall survive the resignation of the Administrative Agent and the Issuing Bank, the replacement of any Lender, the termination of the Total Commitments and the repayment, satisfaction or discharge of all the other Obligations.
9.5 Payments Set Aside . To the extent that any payment by or on behalf of the Borrowers is made to any Credit Party, or any Credit Party 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 such Credit Party 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 Issuing Bank 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 Effective Rate from time to time in effect. The obligations of the Lenders and the Issuing Bank under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.
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(a) Successors and Assigns Generally . The provisions of this Agreement and the other Loan Documents shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns permitted hereby, except neither a Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of Section 9.06(b) , (ii) by way of participation in accordance with the provisions of Section 9.06(d) , or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 9.06(f) (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders . Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Revolving Credit Loans (including for purposes of this Section 9.06(b) , participations in Letter of Credit Outstandings) at the time owing to it); provided that any such assignment shall be subject to the following conditions:
(i) Minimum Amounts .
(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Revolving Credit Loans at the time owing to it or contemporaneous assignments to related Approved Funds (determined after giving effect to such assignments) that equal at least the amount specified in clause (b)(i)(B) of this Section in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Revolving Credit Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Revolving Credit 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 or, if “Trade Date” is specified in the Assignment and Acceptance, as of the Trade Date, shall not be less than $10,000,000, unless each of the Administrative Agent and, so long as no Specified Event of Default has occurred and is continuing, the Borrowers otherwise consent (each such consent not to be unreasonably withheld or delayed).
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(ii) Proportionate Amounts . Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender ’ s rights and obligations under this Agreement with respect to the Revolving Credit Loans or the Commitment assigned;
(iii) Required Consents . No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:
(A) the consent of each Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) a Specified Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrowers shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten (10) Business Days after having received notice thereof; provided , further , that the Borrowers’ consent shall not be required during the primary syndication of the credit facility provided herein.
(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Commitment if such assignment is to a Person that is not a Lender with a Commitment, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and
(C) the consent of the Issuing Bank shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding).
(iv) Assignment and Acceptance . The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee in the amount of $3,500; provided , however , that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
(v)
No Assignment to Certain Persons
. No such assignment shall be made
(A) to any Borrower or any of such Borrower’s Affiliates or Subsidiaries, or (B) to any Defaulting Lender or any of its Subsidiary, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), or (C) to a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural Person).
(vi) Certain Additional Payments . In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions,
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including funding, with the consent of the Borrowers and the Administrative Agent, the applicable pro rata share of Revolving Credit Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, the Issuing Bank or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit in accordance with its Commitment Percentage . Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under Applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party to this Agreement 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 2.12 , 2.14(b) , 2.21 and 9.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided , that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Upon request, the Borrowers (at their expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 9.06(d) .
(c) Register . The Administrative Agent, acting solely for this purpose as an agent of Borrowers (and such agency being solely for tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Acceptance delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans and Obligations in respect of Letter of Credit 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 Borrowers, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
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(d) Participations . Any Lender may at any time, without the consent of, or notice to, the Borrowers or the Administrative Agent, sell participations to any Person (other than a natural Person, or a holding company, investment vehicle, or trust for, or owned and operated for the primary benefit of a natural Person, a Defaulting Lender or any Borrower or any of such Borrower ’ s Affiliates or Subsidiaries) (each, a “ Participant ” ) in all or a portion of such Lender ’ s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Revolving Credit Loans (including such Lender ’ s participations in Letter of Credit Outstandings) owing to it); provided that (i) such Lender ’ s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent, the Lenders and the Issuing Bank shall continue to deal solely and directly with such Lender in connection with such Lender ’ s rights and obligations under this Agreement . For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 9.04(c) without regard to the existence of any participation.
Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 9.01 that affects such Participant. Subject to subsection (e) of this Section, the Borrowers agree that each Participant shall be entitled to the benefits of Sections 2.12 , 2.14(b) and 2.21 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 9.06(b) (it being understood that the documentation required under Section 2.21(e) shall be delivered to the Lender who sells the participation) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 9.06(b) ; provided that such Participant (A) agrees to be subject to the provisions of Section 2.22(b) as if it were an assignee under paragraph (b) of this Section and (B) shall not be entitled to receive any greater payment under Section 2.21 or 2.12 , with respect to any participation, than the Lender from whom it acquired the applicable participation would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at a Borrower’s request and expense, to use reasonable efforts to cooperate with any Borrower to effectuate the provisions of Section 2.22(a) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08(a) as though it were a Lender, provided such Participant agrees to be subject to Section 9.08(b) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrowers, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant
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Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary . For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(e) Certain Pledges . Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(f) Resignation as Issuing Bank after Assignment . Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment and Revolving Credit Loans pursuant to Section 9.06(b) , Bank of America may, upon 30 days’ notice to the Borrowers and the Lenders, resign as the Issuing Bank. In the event of any such resignation as the Issuing Bank, the Borrowers shall be entitled to appoint from among the Lenders a successor Issuing Bank hereunder; provided , however , that no failure by the Borrowers to appoint any such successor shall affect the resignation of Bank of America as the Issuing Bank. If Bank of America resigns as the Issuing Bank, it shall retain all the rights, powers, privileges and duties of the Issuing Bank hereunder with respect to all of its Letters of Credit outstanding as of the effective date of its resignation as the Issuing Bank and all Obligations on account of such Letters of Credit (including the right to require the Lenders to make Revolving Credit Loans or fund risk participations in Letter of Credit Disbursements pursuant to Section 2.11(g) ). Upon the appointment of a successor Issuing Bank, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank, and (b) the successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit issued by Bank of America, 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.
9.7 Confidentiality . Each of the Administrative Agent, the Lenders and the Issuing Bank agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by Applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to
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(i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or any Eligible Assignee invited to be a Lender pursuant to Section 2.02 or (ii) any actual or prospective counterparty (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrowers and their obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating the Borrowers or their Subsidiaries or the credit facilities provided hereunder, (ii) the provider of any Platform or other electronic delivery service used by the Administrative Agent, the Issuing Bank to deliver Borrower Materials or notices to the Lenders or (iii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the consent of the Borrowers or (i) to the extent such Information (A) becomes publicly available other than as a result of a breach of this Section or (B) becomes available to the Administrative Agent, any Lender, the Issuing Bank or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrowers . 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 Administrative Agent and the Lenders in connection with the administration of this Agreement, the other Loan Documents, and the Commitments.
For purposes of this Section, “ Information ” means all information received from any Loan Party or any Subsidiary thereof relating to any Loan Party or any Subsidiary thereof or their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the Issuing Bank on a nonconfidential basis prior to disclosure by any Loan Party or any Subsidiary thereof, provided that, in the case of information received from a Loan Party or any such Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
Each of the Administrative Agent, the Lenders and the Issuing Bank acknowledges that (a) the Information may include material non-public information concerning the Borrowers or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with Applicable Law, including United States Federal and state securities laws.
The Loan Parties and their Affiliates agree that they will not in the future issue any press releases or other public disclosure using the name of the Administrative Agent or any Lender or their respective Affiliates or referring to this Agreement or any of the Loan Documents without the prior written consent of the Administrative Agent, unless (and only to the extent that) the Loan Parties or such Affiliate is required to do so under law and then, in any event the Loan Parties or such Affiliate will consult with such Person before issuing such press release or other public disclosure.
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The Loan Parties consent to the publication by the Administrative Agent or any Lender of customary advertising material relating to the transactions contemplated hereby using the name, product photographs, logo or trademark of the Loan Parties.
9.8 Setoff; Sharing of Excess Payments .
(a) In addition to any rights and remedies of the Lenders provided by Applicable Law, upon the occurrence and during the continuance of any Event of Default, each Lender, the Issuing Bank and their respective Affiliates is authorized at any time and from time to time, without prior notice to any Borrower or any other Loan Party, any such notice being waived by the Loan Parties to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the Issuing Bank or any such Affiliate to or for the credit or the account of the respective Loan Parties against any and all Obligations owing to such Lender, the Issuing Bank or any such Affiliate hereunder or under any other Loan Document, now or hereafter existing, irrespective of whether or not such Credit Party or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender or Issuing Bank different from the branch, office or Affiliate holding such deposit or obligated on such Indebtedness; provided , that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.24 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. Each Lender agrees promptly to notify the Borrowers and the Administrative Agent after any such set off and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Lender and the Issuing Bank under this Section 9.08 are in addition to other rights and remedies (including other rights of setoff) that the Administrative Agent, such Lender and the Issuing Bank may have.
(b) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of (a) Obligations due and payable to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender at such time to (ii) the aggregate amount of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time) of payments on account of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time obtained by all the Lenders at such time or (b) Obligations owing (but not due and payable) to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing (but not due and payable) to such Lender at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Loan Parties at such time) of payment on account of the Obligations
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in respect of the Facilities owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time obtained by all of the Lenders at such time then the Lender receiving such greater proportion shall (i) notify the Administrative Agent of such fact, and (ii) purchase (for cash at face value) participations in the Revolving Credit Loans and subparticipations in Letter of Credit Outstandings of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of Obligations then due and payable to the Lenders or owing (but not due and payable) to the Lenders, as the case may be, provided that:
(A) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and
(B) the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of the Borrowers pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (y) the application of Cash Collateral provided for in Section 2.23 , or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or subparticipations in Letter of Credit Outstandings to any assignee or participant, other than an assignment to the Borrowers or any Affiliate thereof (as to which the provisions of this Section shall apply).
(c) Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.
9.9 Interest Rate Limitation . Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by Applicable Law (the “ Maximum Rate ”). If any Credit Party shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrowers. In determining whether the interest contracted for, charged, or received by a Credit Party exceeds the Maximum Rate, such Person may, to the extent permitted by Applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
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9.10 Counterparts; Integration; Effectiveness . This Agreement and each other Loan Document may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract . This Agreement, the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent or the Issuing Bank, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof . Except as provided in Section 4.01 , this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto . Delivery of an executed signature page of this Agreement or any other Loan Document, or any certificate delivered thereunder, by fax transmission or e-mail transmission (e.g. “ pdf ” or “ tif ” ) shall be effective as delivery of a manually executed counterpart of this Agreement or such other Loan Document or certificate . Without limiting the foregoing, to the extent a manually executed counterpart is not specifically required to be delivered under the terms of any Loan Document, upon the request of any party, such fax transmission or e-mail transmission shall be promptly followed by such manually executed counterpart.
9.12 Severability . If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 9.12 , if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent or the Issuing Bank, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.
9.13 Replacement of Lenders . If any Borrower is entitled to replace a Lender pursuant to the provisions of Section 2.22 , or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then any Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 9.06 ), all of its interests, rights (other than its existing rights to payments pursuant to Sections 2.12 and 2.21 ) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:
(a) the Borrowers shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 9.06(b) ;
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(b) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and funded participations in Letter of Credit Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 2.14(b) ) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or any Borrower (in the case of all other amounts);
(c) in the case of any such assignment resulting from a claim for compensation under Section 2.12 or payments required to be made pursuant to Section 2.21 , such assignment will result in a reduction in such compensation or payments thereafter;
(d) such assignment does not conflict with Applicable Laws;
(e) in the case of an assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent; and
(f) A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling any Borrower to require such assignment and delegation cease to apply.
9.14 GOVERNING LAW; JURISDICTION; ETC .
(a) GOVERNING LAW . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) SUBMISSION TO JURISDICTION . THE BORROWERS AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER, THE L/C ISSUER, OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR
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PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT . EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW . NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWERS OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c) WAIVER OF VENUE . THE BORROWERS AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION. THE BORROWERS AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) SERVICE OF PROCESS . EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.02 . NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
9.15 WAIVER OF RIGHT TO TRIAL BY JURY . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
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9.16 Agency for Perfection . Each Lender hereby appoints each other Lender as agent for the purpose of perfecting Liens for the benefit of the Administrative Agent and the Secured Parties, in assets which, in accordance with Article 9 of the UCC or any other Applicable Law of the United States of America or otherwise can be perfected only by possession . Should any Secured Party (other than the Administrative Agent) obtain possession of any such Collateral, such Secured Party shall notify the Administrative Agent thereof, and, promptly upon the Administrative Agent ’ s request therefor shall deliver such Collateral to the Administrative Agent, or otherwise deal with such Collateral in accordance with the Administrative Agent ’ s instructions.
9.17 USA PATRIOT ACT, ETC . Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the Act. The Loan Parties shall, promptly following a request by the Administrative Agent or any Lender, provide all such other documentation and information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.
9.18 No Advisory or Fiduciary Responsibility . In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each of the Borrowers and the other Loan Parties acknowledges and agrees that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent and the Arranger are arm’s-length commercial transactions between the Borrowers, the other Loan Parties and their respective Affiliates, on the one hand, and the Administrative Agent and the Arranger and, as applicable, its Affiliates and the Lenders and their Affiliates (collectively, solely for purposes of this Section, the “ Lenders ”) on the other hand, (B) each of the Borrowers and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) each of the Borrowers and the other Loan Parties is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent and the Arranger each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrowers, any other Loan Party or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent nor the Arranger has any obligation to the Borrowers, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent and the Arranger and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrowers, the other Loan Parties and their respective Affiliates, and neither the Administrative Agent nor the Arranger has any obligation to disclose any of such interests to the Borrowers, any other Loan Party or any of their respective Affiliates. To the fullest
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extent permitted by law, each of the Borrowers and the other Loan Parties hereby waives and releases any claims that it may have against the Administrative Agent and the Arranger with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
9.19 Survival of Representations and Warranties . All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.
9.20 Press Releases and Related Matters . Each Loan Party consents to the publication by the Administrative Agent of customary trade advertising material in tombstone format relating to the financing transactions contemplated by this Agreement using any Loan Party’s name, and with the consent of the Borrowers, logo or trademark. The Administrative Agent shall provide a draft reasonably in advance of any advertising material to the Borrowers for review and comment prior to the publication thereof. The Administrative Agent and the Lenders reserve the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.
9.21 Electronic Execution of Assignments and Certain Other Documents . The words “execute,” “execution,” “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation Assignment and Acceptances, amendments or other modifications, Notices of Borrowing, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, 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 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 notwithstanding anything contained herein to the contrary the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it.
9.22 ENTIRE AGREEMENT . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
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9.23 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 Borrowers in respect of any such sum due from it to the Administrative Agent, the Issuing Bank or any Lender 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, the Issuing Bank or such Lender, as the case may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent, the Issuing Bank or such Lender, as the case may be, 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, the Issuing Bank or any Lender from the Borrowers in the Agreement Currency, the Borrowers agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent, the Issuing Bank or such Lender, as the case may be, against such loss . If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent, the Issuing Bank or any Lender in such currency, the Administrative Agent, the Issuing Bank or such Lender, as the case may be, agrees to return the amount of any excess to the Borrowers (or to any other Person who may be entitled thereto under applicable law)
9.24 Joint and Several Liability; Waivers .
(a) Each Loan Party is part of a group of affiliated Persons, and each Loan Party expects to receive substantial direct and indirect benefits from the extension of the credit facility established pursuant to this Agreement. In consideration of the foregoing, each Loan Party hereby irrevocably and unconditionally agrees that it is jointly and severally liable for all of the Obligations, whether now or hereafter existing or due or to become due and that the Obligations are the joint and several obligation of each Loan Party.
(b) The obligations of the Loan Parties under the Loan Documents may be enforced by the Administrative Agent any Loan Party or all Loan Parties in any manner or order selected by the Administrative Agent or the Required Lenders in their sole discretion. To the fullest extent permitted by Applicable Law, the obligations of each Loan Party hereunder shall not be affected by (i) the failure of any Credit Party to assert any claim or demand or to enforce or exercise any right or remedy against any other Loan Party under the provisions of this Agreement, any other Loan Document or under Applicable Law, (ii) any rescission, waiver, amendment or modification of, or any release of any Loan Party from, any of the terms or provisions of, this Agreement, any other Loan Document, or (iii) the failure to perfect any security interest in, or the release of, any of the Collateral or other security held by or on behalf of the Administrative Agent or any other Credit Party.
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(c) To the fullest extent permitted by Applicable Law, the obligations of each Loan Party to pay the Obligations in full hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than the payment in full in cash of the Obligations after the termination of all Commitments to any Loan Party under any Loan Document), including any claim of waiver, release, surrender, alteration or compromise of any of the Obligations, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Obligations or otherwise . Without limiting the generality of the foregoing, to the fullest extent permitted by Applicable Law, the obligations of each Loan Party hereunder shall not be discharged or impaired or otherwise affected by the failure of the Administrative Agent or any other Credit Party to assert any claim or demand or to enforce any remedy under this Agreement, any other Loan Document or any other agreement, by any waiver or modification of any provision of any thereof, any default, failure or delay, willful or otherwise, in the performance of any of the Obligations, or by any other act or omission that may or might in any manner or to any extent vary the risk of any Loan Party or that would otherwise operate as a discharge of any Loan Party as a matter of law or equity (other than the payment in full in cash of all the Obligations after termination of all Commitments to any Loan Party under any Loan Document).
(d) To the fullest extent permitted by Applicable Law, each Loan Party waives any defense based on or arising out of any defense of any other Loan Party or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any other Loan Party, other than the payment in full in cash of all the Obligations after the termination of all Commitments to any Loan Party under any Loan Document. To the fullest extent permitted by Applicable Law, the Administrative Agent and the other Credit 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 Obligations, make any other accommodation with any other Loan Party, or exercise any other right or remedy available to them against any other Loan Party, without affecting or impairing in any way the liability of any Loan Party hereunder except to the extent that all the Obligations have been indefeasibly paid in full in cash and performed in full after the termination of Commitments to any Loan Party under any Loan Document. Pursuant to, and to the fullest extent permitted by, Applicable Law, each Loan Party 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 Loan Party against any other Loan Party, as the case may be, or any security. To the fullest extent permitted by Applicable Law, each Loan Party waives any and all suretyship defenses.
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(e) Upon payment by any Loan Party of any Obligations, all rights of such Loan Party against any other Loan Party arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior payment in full in cash of all the Obligations (other than contingent indemnity obligations for then unasserted claims) and the termination of all Commitments to any Loan Party under any Loan Document . If any amount shall erroneously be paid to any Loan Party on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness of any Loan Party, such amount shall be held in trust for the benefit of the Credit Parties and shall forthwith be paid to the Administrative Agent to be credited against the payment of the Obligations, whether matured or unmatured, in accordance with the terms of this Agreement and the other Loan Documents . Subject to the foregoing, to the extent that any Loan Party shall, under this Agreement as a joint and several obligor, repay any of the Obligations constituting Loans made to another Loan Party hereunder (an “ Accommodation Payment ” ), then the Loan Party making such Accommodation Payment shall be entitled to contribution and indemnification from, and be reimbursed by, each of the other Loan Parties in an amount equal to a fraction of such Accommodation Payment, the numerator of which fraction is such other Loan Party ’ s Allocable Amount and the denominator of which is the sum of the Allocable Amounts of all of the Loan Parties . As of any date of determination, the “ Allocable Amount ” of each Loan Party shall be equal to the maximum amount of liability for Accommodation Payments which could be asserted against such Loan Party hereunder without (a) rendering such Loan Party “ insolvent ” within the meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act ( “ UFTA ” ) or Section 2 of the Uniform Fraudulent Conveyance Act ( “ UFCA ” ), (b) leaving such Loan Party with unreasonably small capital or assets, within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving such Loan Party unable to pay its debts as they become due within the meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA.
(f) Without limiting the generality of the foregoing, or of any other waiver or other provision set forth in this Agreement, to the fullest extent permitted by Applicable Law, each Loan Party waives all rights and defenses arising out of an election of remedies by any Credit Party, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed such Credit Party’s rights of subrogation and reimbursement against such Loan Party.
(g) Each Loan Party hereby agrees to keep each other Loan Party fully apprised at all times as to the status of its business, affairs, finances, and financial condition, and its ability to perform its Obligations under the Loan Documents, and in particular as to any adverse developments with respect thereto. Each Loan Party hereby agrees to undertake to keep itself apprised at all times as to the status of the business, affairs, finances, and financial condition of each other Loan Party, and of the ability of each other Loan Party to perform its Obligations under the Loan Documents, and in particular as to any adverse developments with respect to any thereof. Each Loan Party hereby agrees, in light of the foregoing mutual covenants to inform each other, and to keep themselves and each other informed as to such matters, that the Credit Parties shall have no duty to inform any Loan Party of any information pertaining to the business, affairs, finances, or financial
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condition of any other Loan Party, or pertaining to the ability of any other Loan Party to perform its Obligations under the Loan Documents, even if such information is adverse, and even if such information might influence the decision of one or more of the Loan Parties to continue to be jointly and severally liable for, or to provide Collateral for, the Obligations of one or more of the other Loan Parties . To the fullest extent permitted by applicable law, each Loan Party hereby expressly waives any duty of the Credit Parties to inform any Loan Party of any such information.
(h) This joint and several obligations of the Loan Parties under this Section 9.24 shall continue in full force and effect or be revived, as the case may be, if any payment by or on behalf of any Loan Party is made, or the Administrative Agent or any other Secured Party exercises its right of setoff, in respect of the Obligations and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or any other Secured Party in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Laws or otherwise, all as if such payment had not been made or such setoff had not occurred and regardless of any prior revocation, rescission, termination or reduction. The obligations of the Loan Parties under this paragraph shall survive termination of this Agreement.
(i) Each Loan Party that is a Qualified ECP Guarantor at the time the Guarantee or the grant of the security interest under the Loan Documents, in each case, by any Specified Loan Party, 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 its 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 ECP Guarantor’s obligations and undertakings under this Section 9.23 voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations and undertakings of each Qualified ECP Guarantor under this Section shall remain in full force and effect until the Obligations have been indefeasibly paid and performed in full. Each Qualified ECP Guarantor intends this Section to constitute, and this Section 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 the purposes of this Section 9.23(i) , the term “ Qualified ECP Guarantor ” shall mean, at anytime, each Loan Party with total assets exceeding $10,000,000 or that qualifies at such time as an “eligible contract participant” under the Commodity Exchange Act and can cause another person to qualify as an “eligible contract participant” at such time under §1a(18)(A)(v)(II) of the Commodity Exchange Act.
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9.25 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 Lender that is an EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, m ay 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 Lender that is an EEA Financial Institution; and
(b) the effects of any Bail-in Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
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TWIST HOLDINGS, LLC
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By: |
/s/ Mike Karanikolas |
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Name: Mike Karanikolas |
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Title: Co-Chief Executive Officer |
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ADVANCE HOLDINGS, LLC
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By: |
/s/ Mike Karanikolas |
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Name: Mike Karanikolas |
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Title: Co-Chief Executive Officer |
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ALLIANCE APPAREL GROUP, INC
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By: |
/s/ Mike Karanikolas |
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Name: Mike Karanikolas |
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Title: Co-Chief Executive Officer |
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EMINENT, INC
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By: |
/s/ Mike Karanikolas |
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Name: Mike Karanikolas |
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Title: Co-Chief Executive Officer |
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ADVANCE DEVELOPMENT, INC
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By: |
/s/ Mike Karanikolas |
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Name: Mike Karanikolas |
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Title: Co-Chief Executive Officer |
[Signature Page to Credit Agreement]
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By: |
/s/ Mike Karanikolas |
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Name: Mike Karanikolas |
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Title: Co-Chief Executive Officer |
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BANK OF AMERICA, N.A
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By: |
/s/ Roger Malouf |
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Name: Roger Malouf |
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Title: Director |
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BANK OF AMERICA, N.A.,
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By: |
/s/ Roger Malouf |
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Name: Roger Malouf |
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Title: Director |
[Signature Page to Credit Agreement]
FORM OF 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] Assignor identified in item 1 below ([the][each, an] “ Assignor ”) and [the][each] 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] hereunder are several and not joint.] Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (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 included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][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.
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Assignor[s]: |
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Assignee[s]: |
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[for each Assignee, indicate [Affiliate][Approved Fund] of [ identify Lender ]]
A–1
3. Borrowers : Alliance Apparel Group, Inc., Eminent, Inc. and Advance Development, Inc.
4. Administrative Agent : Bank of America, N.A., as the administrative agent and collateral agent under the Credit Agreement
5. Credit Agreement : Credit Agreement, dated as of March 23, 2016, is among ALLIANCE APPAREL GROUP, INC. a Delaware corporation, EMINENT, INC., a Delaware corporation and ADVANCE DEVELOPMENT, INC., a Delaware corporation (each a “Borrower” and together, the “Borrowers”), TWIST HOLDINGS, LLC, a Delaware limited liability company (“Twist Holdings”), ADVANCE HOLDINGS, LLC, a Delaware limited liability company (“Advance Holdings” and, collectively or individually, together with Twist Holdings, the (“Parents” and each a “Parent”), and the Subsidiaries of Parents party thereto from time to time as Guarantors, the Lenders, and BANK OF AMERICA, N.A., as administrative agent and collateral agent (in such capacity, including any successor thereto, the “Administrative Agent”) for itself and the other Lenders.
6. Assigned Interest :
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Trade Date: |
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Effective Date: , 20 [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
[ Remainder of Page Intentionally Left Blank ]
A–2
The terms set forth in this Assignment and Acceptance are hereby agreed to:
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ASSIGNOR : |
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[NAME OF ASSIGNOR] |
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ASSIGNEE : |
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[NAME OF ASSIGNOR] |
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[Consented to and] Accepted: |
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BANK OF AMERICA, N.A., as Administrative Agent |
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[Consented to:] |
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A–3
ANNEX 1 TO ASSIGNMENT AND ACCEPTANCE
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 Borrowers, 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 Borrowers, 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 9.06(b)(iii), (v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under Section 9.06(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][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 5.01 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached hereto is any 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 the Administrative 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.
A–4
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, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Acceptance by telecopy or electronic transmission 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 (without regard to any conflict of laws principles that would result in the application of the laws of another jurisdiction).
[ Remainder of Page Intentionally Left Blank ]
A–5
FORM OF NOTICE OF [BORROWING][CONTINUATION][CONVERSION]
Date:
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To: |
Bank of America, N.A., as Administrative Agent |
100 Federal Street
Boston, Massachusetts 02110
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement, dated as of March 23, 2016, is among ALLIANCE APPAREL GROUP, INC. a Delaware corporation, EMINENT, INC., a Delaware corporation and ADVANCE DEVELOPMENT, INC., a Delaware corporation (each a “ Borrower ” and together, the “ Borrowers ”), TWIST HOLDINGS, LLC, a Delaware limited liability company (“ Twist Holdings ”), ADVANCE HOLDINGS, LLC, a Delaware limited liability company (“ Advance Holdings ” and, collectively or individually, together with Twist Holdings, the (“ Parents ” and each a “ Parent ”), and the Subsidiaries of Parents party thereto from time to time as Guarantors, the Lenders, and BANK OF AMERICA, N.A., as administrative agent and collateral agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) for itself and the other Lenders. Capitalized terms used but not defined herein shall have the meanings set forth in the Credit Agreement.
The undersigned hereby requests (select one):
☐ A Borrowing of Revolving Credit Loans
☐ A conversion of Revolving Credit Loans
☐ A continuation of Revolving Credit Loans
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On ___________________________________ (a Business Day). |
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In the amount of $_______________________. |
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Comprised of: |
☐ LIBOR Loans with an Interest Period of ________ month(s)
☐ Prime Rate Loans
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In the case of a Borrowing, the proceeds of which are to be disbursed to the following account(s): |
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B–1
[The Borrowers hereby certify that the Borrowing requested herein is not in contravention of any provision contained in Section 2.01 of the Credit Agreement and would not cause any Lender to make any Loan in excess of the limitations contained in Section 2.01 of the Credit Agreement.
[The Borrowers hereby represent and warrant that the conditions specified in Sections 4.02(b) and (c) shall be satisfied on and as of the date of the applicable Credit Extension.]
[ Remainder of Page Left Intentionally Blank ]
B–2
IN WITNESS WHEREOF, the undersigned has caused this notice to be duly executed and delivered as of the date first above written.
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ALLIANCE APPAREL GROUP, INC., |
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as a Borrower |
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By: |
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Name: |
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Title: |
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EMINENT, INC., |
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as a Borrower |
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By: |
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Name: |
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ADVANCE DEVELOPMENT, INC., |
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as a Borrower |
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By: |
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Name: |
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B–3
FORM OF JOINDER TO CREDIT AGREEMENT
This Joinder to Credit Agreement (this “ Joinder ”) is made as of ____________, 20__, by and among: ___________________________, a _____________________________________ (the “New Borrower”), with its principal executive offices at __________________________; and BANK OF AMERICA, N.A., a national banking association, having a place of business at 100 Federal Street, Boston, Massachusetts 02110, as administrative agent and as collateral agent (in such capacities, the “ Administrative Agent ”) for its own benefit and the benefit of the other Secured Parties (as defined in the Credit Agreement referred to below);
W I T N E S S E T H:
A. Reference is made to a certain Credit Agreement dated as of March 23, 2016, is among ALLIANCE APPAREL GROUP, INC. a Delaware corporation, EMINENT, INC., a Delaware corporation and ADVANCE DEVELOPMENT, INC., a Delaware corporation (each a “ Borrower ” and together, the “ Borrowers ”), TWIST HOLDINGS, LLC, a Delaware limited liability company (“ Twist Holdings ”), ADVANCE HOLDINGS, LLC, a Delaware limited liability company (“ Advance Holdings ” and, collectively or individually, together with Twist Holdings, the (“ Parents ” and each a “ Parent ”), and the Subsidiaries of Parents party thereto from time to time as Guarantors, the Lenders, and BANK OF AMERICA, N.A., as administrative agent and collateral agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) for itself and the other Lenders. All capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the Credit Agreement.
B. The New Borrower desires to become a party to, and bound by the terms of, the Credit Agreement and the other Loan Documents in the same capacity and to the same extent as the Existing Borrowers thereunder.
C. Pursuant to the terms of the Credit Agreement, in order for the New Borrower to become party to the Credit Agreement and the other Loan Documents as provided herein, the New Borrower and the Existing Borrowers are required to execute this Joinder.
NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
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Joinder and Assumption of Obligations . Effective as of the date of this Joinder, the New Borrower hereby acknowledges that the New Borrower has received and reviewed a copy of the Credit Agreement, and hereby: |
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joins in the execution of, and becomes a party to, the Credit Agreement as a Borrower, as indicated by its signature below; |
C–1
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(c) |
assumes and agrees to perform all applicable duties and Obligations of a Loan Party under the Credit Agreement and the other Loan Documents. |
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Representations and Warranties . The New Borrower hereby makes all representations, warranties and other statements (other than representations, warranties and statements which specifically relate solely to an earlier date) of a Borrower under the Credit Agreement and the other Loan Documents, in each case, with the same force and effect as if such New Borrower was a signatory to the Credit Agreement and the other Loan Documents and was expressly named as a Borrower therein. |
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Ratification of Loan Documents . All of the terms and conditions of the Credit Agreement and of the other Loan Documents shall remain in full force and effect as in effect prior to the date hereof, without releasing any Loan Party thereunder or Collateral therefor. |
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Conditions Precedent to Effectiveness . This Joinder shall not be effective until each of the following conditions precedent have been fulfilled to the satisfaction of the Administrative Agent: |
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This Joinder shall have been duly executed and delivered by the respective parties hereto, and shall be in full force and effect and shall be in form and substance reasonably satisfactory to the Administrative Agent. |
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All action on the part of the New Borrower and the other Loan Parties necessary for the valid execution, delivery and performance by the New Borrower of this Joinder and all other documentation, instruments, and agreements required to be executed in connection herewith shall have been duly and effectively taken and evidence thereof reasonably satisfactory to the Administrative Agent shall have been provided to the Administrative Agent. |
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The New Borrower (and each other Loan Party, to the extent requested by the Administrative Agent) shall each have delivered the following to the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent: |
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Certificate of legal existence and good standing issued by the Secretary of State of the State of its incorporation or organization. |
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Perfection Certificate in the form delivered by the Loan Parties on the Closing Date. |
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Execution and delivery by the New Borrower of the following Loan Documents: |
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Joinder to the Security Agreement; |
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Joinder of the Facility Guarantee; |
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Joinder to each other Security Document, as applicable; and |
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Such other documents, agreements and certificates as the Administrative Agent may reasonably require. |
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The Administrative Agent shall have received a favorable written legal opinion of the Loan Parties’ counsel addressed to the Administrative Agent and the other Lenders, covering such matters relating to the New Borrower, the Loan Documents and/or the transactions contemplated thereby as the Administrative Agent shall reasonably request. |
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The Administrative Agent shall have received all documents and instruments, (including UCC financing statements, Blocked Account Agreements and Credit Card Notifications), required by law or reasonably requested by the Administrative Agent to create or perfect the first priority Lien (subject only to Permitted Encumbrances having priority by operation of Applicable Law) intended to be created under the Loan Documents and all such documents and instruments shall have been so filed, registered or recorded to the reasonable satisfaction of the Administrative Agent. |
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All reasonable out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation and negotiation of this Joinder and related documents (including the fees and expenses of counsel to the Administrative Agent) shall have been paid in full by the Borrowers. |
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The Loan Parties shall have executed and delivered to the Administrative Agent such additional documents, instruments, and agreements as the Administrative Agent may reasonably request. |
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This Joinder may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, and all of which together shall constitute one instrument. Delivery by telecopier or by electronic .pdf copy of an executed counterpart of a signature page to this Joinder shall be effective as delivery of an original executed counterpart of this Joinder. |
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This Joinder expresses the entire understanding of the parties with respect to the transactions contemplated hereby. No prior negotiations or discussions shall limit, modify, or otherwise affect the provisions hereof. |
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Any determination that any provision of this Joinder or any application hereof is invalid, illegal or unenforceable in any respect and in any instance shall not affect the validity, legality, or enforceability of such provision in any other instance, or the validity, legality or enforceability of any other provisions of this Joinder. |
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THIS JOINDER AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS JOINDER AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. |
[SIGNATURE PAGES FOLLOW]
C–4
IN WITNESS WHEREOF, each of the undersigned has caused this Joinder to be duly executed and delivered by its proper and duly authorized officer as of the date set forth above.
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NEW BORROWER : |
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By: |
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Name: |
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Title: |
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ADMINISTRATIVE AGENT : |
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BANK OF AMERICA, N.A. |
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By: |
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C–5
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ACKNOWLEDGED AND AGREED : |
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ALLIANCE APPAREL GROUP, INC., as a Borrower |
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By: |
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Name: |
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Title: |
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EMINENT, INC., |
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as a Borrower |
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By: |
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Name: |
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Title: |
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ADVANCE DEVELOPMENT, INC., |
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as a Borrower |
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By: |
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Name: |
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[INSERT OTHER BORROWERS], |
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as a Borrower |
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By: |
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C–6
FORM OF CREDIT CARD NOTIFICATION
PREPARE ON LOAN PARTY LETTERHEAD - ONE FOR EACH PROCESSOR
[______________, 20_]
BY CERTIFIED MAIL -- RETURN RECEIPT REQUESTED
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To: |
[Name and Address of Processor] |
(the “ Processor ”)
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Re: |
_____________________________________Merchant Account Number: _____________________. The credit card processing agreement between ________________ and ________________ dated ________________ (the “ Processing Agreement ”). |
Dear Sir/Madam:
Under various agreements among ________________, a ________________ with an address at ________________ (the “Loan Party”) and Bank of America, N.A., a national banking association with offices at 100 Federal Street, Boston, Massachusetts 02110, as administrative agent and as collateral agent (in such capacities, the “ Administrative Agent ”) for the benefit of a syndicate of lenders and certain other secured parties (the “ Secured Parties ”), the Loan Party has granted to the Administrative Agent, for the benefit of itself and the other Secured Parties, a security interest in and to, among other things, the Loan Party’s inventory, credit card receivables, certain accounts, books and records relating to the foregoing, and proceeds therefrom, including without limitation, all amounts due or to become due from the Processor to the Loan Party pursuant to the Processing Agreement between the Processor and the Loan Party.
Under the terms and provisions of the agreements with the Administrative Agent, under certain circumstances, the Loan Party is obligated to deliver all proceeds of the Loan Party’s accounts, accounts receivable and inventory to the Administrative Agent. Such proceeds include all credit card charges (the “ Charges ”) submitted by the Loan Party to the Processor for processing and the amounts which the Processor owes to the Loan Party on account thereof (the “ Credit Card Proceeds ”) and all other amounts due or to become due to the Loan Party under the Processing Agreement.
Until the Processor receives notification from an officer of the Administrative Agent as provided below, all amounts due from time to time from the Processor to the Loan Party (including Credit Card Proceeds, payment from any reserve account or the like or other payments) shall be transferred only as follows:
D–1
By ACH, Depository Transfer Check, or Electronic Depository Transfer to:
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ABA # |
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For Credit to |
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Account No. |
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After the Processor receives notification from an officer of the Administrative Agent, all amounts shall be transferred as the Processor may be instructed from time to time in writing by an officer of the Administrative Agent. After the Processor receives notification from the Administrative Agent that all obligations of the Loan Party to the Secured Parties have been paid in full and the commitments of the Secured Parties to make loans to the Loan Party have terminated, all amounts shall thereafter be transferred as the Processor may be instructed by the Loan Party.
Upon request of an officer of the Administrative Agent, a copy of each periodic statement provided by the Processor to the Loan Party should be provided to the Administrative Agent at the following address (which address may be changed upon seven (7) days written notice given to the Processor by an officer of the Administrative Agent):
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Bank of America, N.A. |
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100 Federal Street |
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MA5-100-09-01 |
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Boston, Massachusetts 02110 |
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Attention: Roger Malouf |
The Processor shall be fully protected in acting on any order or direction by an officer of the Administrative Agent given in accordance with the terms of this letter respecting the Charges and the Credit Card Proceeds without making any inquiry whatsoever as to the Administrative Agent’s right or authority to give such order or direction or as to the application of any payment made pursuant thereto.
This letter may be amended only by notice in writing signed by an officer of the Loan Party and an officer of the Administrative Agent and may be terminated solely by written notice signed by an officer of the Administrative Agent.
[ Signature Pages Follow. ]
D–2
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Very truly yours, |
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[LOAN PARTY] |
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By: |
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Name: |
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Title: |
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ACKNOWLEDGED AND ACCEPTED: |
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BANK OF AMERICA, N.A., as Administrative Agent |
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By: |
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D–3
EXHIBIT E TO THE CREDIT AGREEMENT
FORM OF COMPLIANCE CERTIFICATE
Financial Statement Date: ________, ____
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To: |
Bank of America, N.A. |
100 Federal Street
MA5-100-09-01
Boston, Massachusetts 02110
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of March 23, 2016, is among ALLIANCE APPAREL GROUP, INC. a Delaware corporation, EMINENT, INC., a Delaware corporation and ADVANCE DEVELOPMENT, INC., a Delaware corporation (each a “ Borrower ” and together, the “ Borrowers ”), TWIST HOLDINGS, LLC, a Delaware limited liability company (“ Twist Holdings ”), ADVANCE HOLDINGS, LLC, a Delaware limited liability company (“ Advance Holdings ” and, collectively or individually, together with Twist Holdings, the (“ Parents ” and each a “ Parent ”), and the Subsidiaries of Parents party thereto from time to time as Guarantors, the Lenders, and BANK OF AMERICA, N.A., as administrative agent and collateral agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) for itself and the other Lenders. Capitalized terms used herein but not defined shall have the meanings set forth in the Credit Agreement.
The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the _________________________________of the respective Borrower, and that, as such, he/she is authorized to execute and deliver this Certificate to the Administrative Agent on the behalf of the such Borrower, and that:
[ Use following paragraph 1 for fiscal year-end financial statements ]
1. The Borrowers have delivered the (i) year-end audited financial statements required by Section 5.01(a) of the Credit Agreement for the Fiscal Year of Parents ended as of the above date, together with the report and opinion of an independent certified public accountant required by such section and (ii) a management’s discussion and analysis of the financial condition and results of operations of Parents and its Subsidiaries for such Fiscal Year, as compared to the comparable periods in the previous Fiscal Year.
[ Use following paragraph 1 for fiscal quarter-end financial statements ]
1. The Borrowers have delivered the (i) unaudited financial statements required by Section 5.01(b) of the Credit Agreement for the Fiscal Quarter of Parents ended as of the above date. Such financial statements fairly present in all material respects the financial condition, results of operations and cash flows of Parents and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes and (ii) a management’s discussion and analysis of the financial condition and results of operations of Parent and its Subsidiaries for such Fiscal Quarter and the then elapsed portion of the Fiscal Year, as compared to the comparable periods in the previous Fiscal Year.
E–1
[ Use following paragraph 1 for monthly financial statements ]
1. The Borrowers have delivered the unaudited financial statements required by Section 5.01(c) of the Credit Agreement for the Fiscal Month of Parents ended as of the above date. Such financial statements fairly present in all material respects the financial condition, results of operations and cash flows of Parents and its Subsidiaries.
2. The undersigned has reviewed and is familiar with the terms of the Credit Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of Parents, the Borrowers and the other Loan Parties during the accounting period covered by such financial statements.
3. A review of the activities of Parents, the Borrowers and the other Loan Parties during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period Parents, Borrowers and the other Loan Parties performed and observed all their respective Obligations under the Loan Documents, and
[ select one: ]
[to the best knowledge of the undersigned, during such fiscal period the Borrowers and the other Loan Parties performed and observed each covenant and condition of the Loan Documents applicable to such Person, and no Default or Event of Default has occurred and is continuing.]
--or--
[to the best knowledge of the undersigned, the following covenants or conditions have not been performed or observed and the following is a list of each such Default or Event of Default and its nature and status:]
4. All representations and warranties contained in the Credit Agreement and the other Loan Documents or otherwise made in writing in connection herewith or therewith are true and correct in all material respects on and as of the date hereof with the same effect as if made on and as of the date hereof, other than representations and warranties that relate solely to an earlier date , which are true and correct in all material respects as of such earlier date; provided that any representation and warranty which is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct in all respects on such respective dates.
5. The financial covenant analyses and information set forth on Schedule 1 attached hereto are true and accurate on and as of the date of this Certificate.
6. Schedule 2 hereto sets forth in reasonable detail all Store openings and Store closings during the accounting period covered by the financial statements delivered pursuant to Paragraph 1 above, and states the aggregate number of the Loan Parties’ Stores as of the first day of the date hereof.
E–2
7. Schedule 3 hereto sets forth in reasonable detail the status of rental payments for each of the Loan Parties’ (i) warehouses and distribution centers and (ii) other leased locations in the Landlord Lien States designated by the Administrative Agent in its commercially reasonable judgment (which, as of the Closing Date, are Washington, Pennsylvania and Virginia) during the accounting period covered by the financial statements delivered pursuant to Paragraph 1 above.
8. There has been no change in GAAP or the application thereof since the date of the audited financial statements furnished to the Administrative Agent for the Fiscal Year ending ___________, other than the material accounting changes as disclosed on Schedule 4 hereto.
[ Signature Page Follows ]
IN WITNESS WHEREOF, I have executed this Certificate as of the date first set forth above.
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ALLIANCE APPAREL GROUP, INC., as a Borrower |
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EMINENT, INC., as a Borrower |
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ADVANCE DEVELOPMENT, INC., as a Borrower |
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E–3
For the Month/Quarte r/Year ended (“ Statement Date ”)
SCHEDULE 1
to the Compliance Certificate
($ in 000’s)
Consolidated EBITDA and Consolidated Fixed Charge Coverage Ratio
(in accordance with the definition of Consolidated EBITDA and Consolidated Fixed Charge Coverage Ratio as set forth in the Credit Agreement)
[See attached Worksheet to be agreed between the Administrative Agent and the Borrowers]
E–4
For the Month/Quarte r/Year ended (“ Statement Date ”)
SCHEDULE 2
(a) Store openings and Store closings for the period ending as of the Statement Date:
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(b) Aggregate number of the Loan Parties’ Stores as of the Statement Date:
E–5
For the Month/Quarte r/Year ended (“ Statement Date ”)
SCHEDULE 3
Status of Rental Payments
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For the Month/Quarte r/Year ended (“ Statement Date ”)
SCHEDULE 4
Changes in GAAP since the Fiscal Year ending
E–7
FORM OF BORROWING BASE CERTIFICATE
Date: , 20
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To: |
Bank of America, N.A., as Administrative Agent |
100 Federal Street
Boston, Massachusetts 02110
Attention: Roger Malouf
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Re: |
Credit Agreement dated as of March 23, 2016, is among ALLIANCE APPAREL GROUP, INC. a Delaware corporation, EMINENT, INC., a Delaware corporation and ADVANCE DEVELOPMENT, INC., a Delaware corporation (each a “ Borrower ” and together, the “ Borrowers ”), TWIST HOLDINGS, LLC, a Delaware limited liability company (“ Twist Holdings ”), ADVANCE HOLDINGS, LLC, a Delaware limited liability company (“ Advance Holdings ” and, collectively or individually, together with Twist Holdings, the (“ Parents ” and each a “ Parent ”), and the Subsidiaries of Parents party thereto from time to time as Guarantors, the Lenders, and BANK OF AMERICA, N.A., as administrative agent and collateral agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) for itself and the other Lenders. Capitalized terms used herein but not defined shall have the meanings set forth in the Credit Agreement. |
Ladies and Gentlemen:
This Borrowing Base Certificate is delivered pursuant to Section 5.01(e) of the Credit Agreement. The undersigned, a duly authorized and acting Responsible Officer of each respective Borrower, hereby certifies to the Administrative Agent as follows:
1. Attached hereto as Exhibit A is the Borrowing Base as of the close of business on , 20 .
2. The Borrowing Base attached hereto as Exhibit A is complete and correct in all material respects, and is prepared in accordance with the Credit Agreement.
[ Remainder of Page Intentionally Left Blank ]
F–1
IN WITNESS WHEREOF, the undersigned Responsible Officer of each Borrower has executed this Certificate on behalf of such Borrower.
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ALLIANCE APPAREL GROUP, INC., as a Borrower |
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EMINENT, INC., as a Borrower |
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ADVANCE DEVELOPMENT, INC., as a Borrower |
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F–2
Borrowing Base
[See attached Work Sheet]
F–3
EXHIBIT G-1 TO CREDIT AGREEMENT
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is made to that certain Credit Agreement dated as of March 23, 2016, is among ALLIANCE APPAREL GROUP, INC. a Delaware corporation, EMINENT, INC., a Delaware corporation and ADVANCE DEVELOPMENT, INC., a Delaware corporation (each a “ Borrower ” and together, the “ Borrowers ”), TWIST HOLDINGS, LLC, a Delaware limited liability company (“ Twist Holdings ”), ADVANCE HOLDINGS, LLC, a Delaware limited liability company (“ Advance Holdings ” and, collectively or individually, together with Twist Holdings, the (“ Parents ” and each a “ Parent ”), and the Subsidiaries of Parents party thereto from time to time as Guarantors, the Lenders, and BANK OF AMERICA, N.A., as administrative agent and collateral agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) for itself and the other Lenders. All capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the Credit Agreement.
Pursuant to the provisions of Section 2.21(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of any Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrowers with a certificate of its non-U.S. Person status on IRS Form W-8BEN-E (or W-8BEN, as applicable). By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrowers and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrowers and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
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[NAME OF LENDER] |
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Date: , 20[ ]
G–1
EXHIBIT G-2 TO CREDIT AGREEMENT
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is made to that certain Credit Agreement dated as of March 23, 2016, is among ALLIANCE APPAREL GROUP, INC. a Delaware corporation, EMINENT, INC., a Delaware corporation and ADVANCE DEVELOPMENT, INC., a Delaware corporation (each a “ Borrower ” and together, the “ Borrowers ”), TWIST HOLDINGS, LLC, a Delaware limited liability company (“ Twist Holdings ”), ADVANCE HOLDINGS, LLC, a Delaware limited liability company (“ Advance Holdings ” and, collectively or individually, together with Twist Holdings, the (“ Parents ” and each a “ Parent ”), and the Subsidiaries of Parents party thereto from time to time as Guarantors, the Lenders, and BANK OF AMERICA, N.A., as administrative agent and collateral agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) for itself and the other Lenders. All capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the Credit Agreement.
Pursuant to the provisions of Section 2.21(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of any Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN-E (or W-8BEN, as applicable). By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
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Date: , 20[ ]
G–2
EXHIBIT G-3 TO CREDIT AGREEMENT
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is made to that certain Credit Agreement dated as of March 23, 2016, is among ALLIANCE APPAREL GROUP, INC. a Delaware corporation, EMINENT, INC., a Delaware corporation and ADVANCE DEVELOPMENT, INC., a Delaware corporation (each a “ Borrower ” and together, the “ Borrowers ”), TWIST HOLDINGS, LLC, a Delaware limited liability company (“ Twist Holdings ”), ADVANCE HOLDINGS, LLC, a Delaware limited liability company (“ Advance Holdings ” and, collectively or individually, together with Twist Holdings, the (“ Parents ” and each a “ Parent ”), and the Subsidiaries of Parents party thereto from time to time as Guarantors, the Lenders, and BANK OF AMERICA, N.A., as administrative agent and collateral agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) for itself and the other Lenders. All capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the Credit Agreement.
Pursuant to the provisions of Section 2.21(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of any Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN-E (or W-8BEN, as applicable) or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN-E (or W-8BEN, as applicable) from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
G–3
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Date:
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G–4
EXHIBIT G-4 TO CREDIT AGREEMENT
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is made to that certain Credit Agreement dated as of March 23, 2016, is among ALLIANCE APPAREL GROUP, INC. a Delaware corporation, EMINENT, INC., a Delaware corporation and ADVANCE DEVELOPMENT, INC., a Delaware corporation (each a “ Borrower ” and together, the “ Borrowers ”), TWIST HOLDINGS, LLC, a Delaware limited liability company (“ Twist Holdings ”), ADVANCE HOLDINGS, LLC, a Delaware limited liability company (“ Advance Holdings ” and, collectively or individually, together with Twist Holdings, the (“ Parents ” and each a “ Parent ”), and the Subsidiaries of Parents party thereto from time to time as Guarantors, the Lenders, and BANK OF AMERICA, N.A., as administrative agent and collateral agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) for itself and the other Lenders. All capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the Credit Agreement.
Pursuant to the provisions of Section 2.21(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of any Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrowers with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN-E (or W-8BEN, as applicable) or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN-E (or W-8BEN, as applicable) from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrowers and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrowers and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
G–5
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Date: , 20[ ]
G–6
FORM OF CERTIFICATE REGARDING PAYMENT CONDITIONS
Date of Certificate:
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To: |
Bank of America, N.A., as Administrative Agent Ladies and Gentlemen: |
Reference is made to that certain Credit Agreement dated as of March 23, 2016, is among ALLIANCE APPAREL GROUP, INC. a Delaware corporation, EMINENT, INC., a Delaware corporation and ADVANCE DEVELOPMENT, INC., a Delaware corporation (each a “ Borrower ” and together, the “ Borrowers ”), TWIST HOLDINGS, LLC, a Delaware limited liability company (“ Twist Holdings ”), ADVANCE HOLDINGS, LLC, a Delaware limited liability company (“ Advance Holdings ” and, collectively or individually, together with Twist Holdings, the (“ Parents ” and each a “ Parent ”), and the Subsidiaries of Parents party thereto from time to time as Guarantors, the Lenders, and BANK OF AMERICA, N.A., as administrative agent and collateral agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) for itself and the other Lenders. All capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the Credit Agreement.
[ Insert party name ] intends to make a Specified Payment in the amount of $[___] on or about [ insert date ] pursuant to Section 5.02(g) of the Credit Agreement.
The undersigned, solely in [his][her] capacity as duly authorized and acting Responsible Officer of each respective Borrower, and not in [his][her] individual capacity, hereby certifies as of the date hereof and as of the date of the Specified Payment, that:
(a) no Default or Event of Default exists or would arise as a result of the entering into such transaction or the making of the Specified Payment;
(b) after giving effect to the making of the Specified Payment, Pro Forma Availability will be equal to or greater than the greater of (x) twenty percent (20.00%) of the Maximum Borrowing Amount, and (y) $20,000,000, as demonstrated by the calculations attached hereto as Exhibit A ; and
(c) after giving effect to the making of the Specified Payment the Consolidated Fixed Charge Coverage Ratio, on a Pro Forma Basis for the four Fiscal Quarters most recently preceding the transaction or payment is equal to or greater than 1.00:1.00, as demonstrated by the calculations attached hereto as Exhibit B .
(d) Accordingly, the Payment Conditions in respect of the Specified Payment described above are satisfied.
H–1
IN WITNESS WHEREOF, the undersigned authorized and acting Responsible Officer of each respective Borrower has duly executed this Certificate as of __________________, 20__.
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ALLIANCE APPAREL GROUP, INC., as a Borrower |
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EMINENT, INC., as a Borrower |
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ADVANCE DEVELOPMENT, INC., as a Borrower |
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[Pro Forma Availability Calculation]
H–3
[Consolidated Fixed Charge Coverage Ratio Calculation]
H–4
Exhibit 10.11
AMENDMENT NO. 1 TO CREDIT AGREEMENT
This AMENDMENT (this “ Amendment ”) dated as of March 15, 2018, is made in respect of that certain Credit Agreement, dated as of March 23, 2016 (as amended, amended and restated, restated, extended, supplemented, modified and otherwise in effect from time to time, the “ Credit Agreement ”) among ALLIANCE APPAREL GROUP, INC. a Delaware corporation, EMINENT, INC. , a Delaware corporation and ADVANCE DEVELOPMENT, INC ., a Delaware corporation (each a “ Borrower ” and together, the “ Borrowers ”), TWIST HOLDINGS, LLC , a Delaware limited liability company (“ Twist Holdings ”), ADVANCE HOLDINGS, LLC , a Delaware limited liability company (“ Advance Holdings ” and, collectively or individually, together with Twist Holdings, the (“ Parents ” and each a “ Parent ”), and the Subsidiaries of Parents party thereto from time to time as Guarantors, the Lenders, and BANK OF AMERICA, N.A. , as administrative agent and collateral agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) for itself and the other Lenders and BANK OF AMERICA, N.A. , as Lead Arranger and Bookrunner. Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Credit Agreement.
W I T N E S S E T H :
WHEREAS , certain Loan Parties are entering into a transaction pursuant to which, among other things, (i) the Capital Stock of Twist Holdings will be contributed to Advance Holdings and (ii) a portion of the Capital Stock of Forward by Elyse Walker, LLC may be contributed by Advance Holdings to Advance Development, Inc. (together, the “ Transaction ”); and
WHEREAS , in anticipation of the Transaction, the Loan Parties have requested that the Administrative Agent amend Section 6.02 and Section 6.07(b) of the Credit Agreement and update certain Schedules to the Credit Agreement and the Security Agreement.
NOW THEREFORE , in consideration of the foregoing recitals, mutual agreements contained herein and for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Loan Parties and the Administrative Agent hereby agree as follows:
§1. Amendments to Credit Agreement .
(a) Section 6.02 of the Credit Agreement is hereby amended by (i) deleting the word “and” at the end of clause (o) thereof, (ii) deleting the “.” at the end of clause (p) thereof and replacing it with “; and”, and (ii) adding the following new clause (q) at the end thereof: “Investments consisting of the contribution by Advance Holdings of its ownership interest in the Capital Stock of Forward by Elyse Walker, LLC to Advance Development, Inc.”
(b) Section 6.07(b) of the Credit Agreement is hereby amended by ( i ) replacing the text of clause (i) of the first sentence thereof with the following new text : “its ownership of the Capital Stock of the Borrowers and, in the case of Advance Holdings, the ownership of the Capital Stock of Twist Holdings” , and ( ii ) replacing the text of clause (i) of the last sentence thereof with the following new text: “own any material assets other than the Capital Stock of the Borrowers and, in the case of Advance Holdings, the Capital Stock of Twist Holdings” .
§2. Replacement of Certain Schedules . Schedule 3.12 to the Credit Agreement (Subsidiaries) and Schedule IV to the Security Agreement (Pledged Interests) are hereby replaced by, respectively, Schedule 3.12 and Schedule IV attached hereto.
§3. Miscellaneous .
(a) Loan Documents . Except as otherwise expressly provided by this Amendment, all of the terms, conditions and provisions of the Credit Agreement and the documents related to the Credit Agreement shall remain the same. Except as specifically set forth in this Amendment, the Credit Agreement and the documents related to the Credit Agreement, are and shall continue in full force and effect and are hereby in all respects ratified, and this Amendment and the Credit Agreement and the documents related to the Credit Agreement shall be read and construed as one instrument, and the failure to comply with the provisions of this Amendment shall constitute a default and an Event of Default under the Credit Agreement.
(b) Governing Law . This Amendment shall be governed by, and shall be construed in accordance with, the laws of the State of New York without regard to any choice of law, rules or principles to the contrary.
(c) Counterparts . This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. Receipt by facsimile or electronic transmission of any executed signature page to this Amendment shall constitute effective delivery of such signature page.
[ Remainder of Page Intentionally Left Blank. ]
2
IN WITNESS WHEREOF , the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.
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TWIST HOLDINGS, LLC , |
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as a Parent and a Guarantor |
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By: |
/s/ Mike Karanikolas |
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Name: Mike Karanikolas |
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Title: CEO |
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ADVANCE HOLDINGS, LLC, |
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as a Parent and a Guarantor |
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By: |
/s/ Mike Karanikolas |
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Name: Mike Karanikolas |
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Title: CEO |
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ALLIANCE APPAREL GROUP, INC. , |
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as a Borrower |
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By: |
/s/ Mike Karanikolas |
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Name: Mike Karanikolas |
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Title: CEO |
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EMINENT, INC., |
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as a Borrower |
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By: |
/s/ Mike Karanikolas |
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Name: Mike Karanikolas |
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Title: CEO |
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ADVANCE DEVELOPMENT, INC., |
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as a Borrower |
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By: |
/s/ Mike Karanikolas |
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Name: Mike Karanikolas |
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Title: CEO |
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FORWARD BY ELYSE WALKER, LLC, |
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as a Guarantor |
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By: |
/s/ Mike Karanikolas |
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Name: Mike Karanikolas |
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Title: CEO |
[Revolve – Signature Page to Amendment No. 1 to Credit Agreement]
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BANK OF AMERICA, N.A. , as Administrative |
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Agent |
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By: |
Roger Malouf |
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Name: Roger Malouf |
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Title: Director |
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BANK OF AMERICA, N.A. , as a Lender and as |
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Issuing Bank |
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By: |
Roger Malouf |
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Name: Roger Malouf |
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Title: Director |
SCHEDULE IV TO SECURITY AGREEMENT
PLEDGED INTERESTS
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Grantor |
Issuer |
Class and Par Value |
Certificate No. |
Number of Shares Pledged |
Percent of Issuer's Equity |
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Advance Holdings, LLC |
Advance Development, Inc. |
Common Stock, $0.01 Par |
1 |
3,000 |
100 |
|
Advance Development, Inc. |
Forward by Elyse Walker, LLC |
N/A |
N/A |
N/A |
85 |
|
Advance Holdings, LLC |
Forward by Elyse Walker, LLC |
N/A |
N/A |
N/A |
15 |
|
Advance Holdings ,LLC |
Twist Holdings, LLC |
N/A |
N/A |
N/A |
100 |
|
Twist Holdings, LLC |
Eminent, Inc. |
Common Stock, $0.01 Par |
1 |
3,000 |
100 |
|
Twist Holdings, LLC |
Alliance Apparel Group, Inc. |
Common Stock, $0.01 Par |
1 |
3,000 |
100 |
|
Eminent, Inc. |
RVLV UK Limited |
OrdinaryShares, GBPI.00 |
1 |
150,000 |
100 |
|
Forward by Elyse Walker, LLC |
FWRD UK Limited |
OrdinaryShares, GBP1.00 |
1 |
50,000 |
100 |
Subsidiaries: Equity Interests
|
Company holding Equity Interest |
Jurisdiction of Organization |
Issuer of Equity Interest |
# Shares Owned |
Certificate No. |
Vii Ownership Interest |
|
Advance Holdings, LLC |
Delaware |
Twist Holdings, LLC |
N/A |
N/A |
100 |
|
Advance Holdings, LLC |
Delaware |
Advance Development , Inc. |
3,000 |
1 |
100 |
|
Advance Development, Inc. |
Delaware |
Fonvard by Elyse Walker, LLC |
N/A |
N/A |
85 |
|
Advance Holdings, LLC |
Delaware |
Forward by Elyse Walker, LLC |
N/A |
N/A |
15 |
|
Twist Holdings, LLC |
Delaware |
Eminent, Inc. |
3,000 |
1 |
100 |
|
Twist Holdings, LLC |
Delaware |
Alliance Apparel Group, Inc. |
3,000 |
1 |
100 |
|
Eminent, Inc. |
Delaware |
RVLV UK Limited |
150,000 |
1 |
100 |
|
Forward by Elyse Walker, LLC |
Delaware |
FWRD UK Limited |
50,000 |
1 |
100 |
Exhibit 10.12
EMINENT, Inc.
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the “ Agreement ”) is entered into as of the Effective Date (as defined below) by and between Eminent, Inc. (the “ Company ”), and Michael Karanikolas (“ Executive ”).
1. Duties and Scope of Employment .
(a) Positions and Duties . As of the Effective Date, Executive will continue to serve as the Company’s Co-Chief Executive Officer and report to the Company’s Board. Executive will render business and professional services in the performance of Executive’s duties, consistent with Executive’s position within the Company, as will reasonably be assigned to Executive by the Board.
(b) Obligations . During the Employment Term, Executive will perform Executive’s duties faithfully and to the best of Executive’s ability and will devote Executive’s full business efforts and time to the Company. For the duration of the Employment Term, Executive agrees not to (i) actively engage in any other employment, occupation, or consulting activity for any direct or indirect remuneration or (ii) serve on other boards of directors, in all cases, without the prior approval of the Board. Executive further agrees to comply with all Company policies, including, for the avoidance of any doubt, any insider trading policies and compensation clawback policies currently in existence or that may be adopted by the Company during the Employment Term.
(c) Employment Term; At-Will Employment . The parties agree that Executive’s employment with the Company remains “at-will” employment and may be terminated at any time with or without cause or notice. Executive understands and agrees that neither Executive’s job performance nor promotions, commendations, bonuses or the like from the Company give rise to or in any way serve as the basis for modification, amendment, or extension, by implication or otherwise, of Executive’s employment with the Company. However, as described in this Agreement, Executive may be entitled to severance payments and benefits depending on the circumstances of Executive’s termination of employment with the Company.
2. Compensation .
(a) Base Salary . The Company will pay Executive an annual salary of $450,000 as compensation for Executive’s services. The annual base salary will be paid periodically in accordance with the Company’s normal payroll practices and be subject to the usual, required withholdings. Executive’s annual base salary will be subject to periodic review by the Company’s board of directors or its compensation committee (either, the “ Committee ”) and adjustments may be made by the Committee.
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(b) Equity . Executive will be eligible to receive Equity Awards pursuant to any plans or arrangements the Company or its affiliates may have in effect from time to time. The Committee will determine in its discretion whether Executive will be granted any Equity Awards and the terms of any Equity Awards in accordance with the terms of any applicable plan or arrangement that may be in effect from time to time.
3. Employee Benefits . Executive will be entitled to participate in employee benefit plans and programs of the Company, if any, on the same terms and conditions as other similarly-situated employees to the extent that Executive’s position, tenure, salary, age, health and other qualifications make Executive eligible to participate in the plans or programs, subject to the rules and regulations applicable thereto. The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time.
4. PTO . Executive will be entitled to paid time off (PTO) in accordance with the Company’s PTO policy, with the timing and duration of specific days off mutually and reasonably agreed to by the parties.
5. Expenses . The Company will reimburse Executive for reasonable travel, entertainment or other expenses incurred by Executive in the furtherance of or in connection with the performance of Executive’s duties under this Agreement, in accordance with the Company’s expense reimbursement policy as in effect from time to time.
7. Severance and Change in Control Benefits .
(a) Qualified Termination . Subject to Section 9, o n a Qualified Termination, Executive will be eligible to receive the following payments and benefits from the Company:
(i) Salary Severance . The Company will pay Executive a lump-sum payment equal to 6 months of Executive’s Base Salary on the first regular payroll date of the Company following the date on which the Release becomes irrevocable (subject to any delay as required under Section 9 below).
(ii) COBRA . The Company will pay Executive a lump-sum payment equal to the aggregate cost of COBRA premiums for Executive and his eligible dependents to continue health care coverage under COBRA for a period of 6 months from the date of Executive’s termination of employment (with such payment based on the COBRA premium rates in effect on the date of Executive’s termination of employment). This payment will be paid on the first regular payroll date of the Company following the date on which the Release becomes irrevocable (subject to any delay as required under Section 9 below), and regardless of whether Executive or his eligible dependents elects continuation coverage pursuant to COBRA.
(iii) Equity Vesting . 100% of the then-unvested shares subject to each of Executive’s then-outstanding Equity Awards will immediately vest and, in the case of options and stock appreciation rights, will become exercisable (for the avoidance of doubt, no more than 100 % of the shares subject to the then-outstanding portion of an Equity Award may vest and become exercisable under this provision). In the case of an Equity Award with performance-based vesting, unless otherwise specified in the applicable Equity Award agreement governing such award, all performance goals and other vesting criteria will be deemed achieved at the greater of actual
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performance measured as of the date of termination or 100 % of target levels. Any restricted stock units, performance shares , performance units, and/or similar full value awards that vest under this paragraph will be settled on the date on which the Release becomes irrevocab le (subject to any delay as required under Section 9 below) .
(b) Termination other than a Qualified Termination . If the termination of Executive’s employment with the Company Group is not a Qualified Termination, then Executive will not be entitled to receive severance or other benefits.
(c) Death of Executive . If Executive dies before all payments or benefits Executive is entitled to receive under this Agreement have been paid, the unpaid amounts will be paid to Executive’s designated beneficiary, if living, or otherwise to Executive’s personal representative in a lump-sum payment as soon as possible following Executive’s death.
(d) Transfer between the Company Group . For purposes of this Agreement, if Executive is involuntarily transferred from one member of the Company Group to another, the transfer will not be a termination without Cause but may give Executive the ability to resign for Good Reason.
(e) Exclusive Remedy . In the event of a termination of Executive’s employment with the Company Group, the provisions of this Agreement are intended to be and are exclusive and in lieu of any other rights or remedies to which Executive may otherwise be entitled, whether at law, tort or contract, or in equity. Executive will be entitled to no benefits, compensation or other payments or rights upon termination of employment other than those benefits expressly set forth in this Agreement.
8. Accrued Compensation . On any termination of Executive’s employment with the Company Group, Executive will be entitled to receive all accrued but unpaid vacation, expense reimbursements, wages, and other benefits due to Executive under any Company-provided plans, policies, and arrangements or as otherwise required by applicable law.
9. Conditions to Receipt of Severance .
(a) Separation Agreement and Release of Claims . Executive’s receipt of any severance payments or benefits upon Executive’s Qualified Termination under Section 7 is subject to Executive signing and not revoking the Company’s then-standard separation agreement and release of claims in substantially the form set forth as Exhibit A hereto, subject to any changes that the Company believes are necessary or appropriate (the “ Release ” and that requirement, the “ Release Requirement ”), which must become effective and irrevocable no later than the 60th day following Executive’s Qualified Termination (the “ Release Deadline ”). If the Release does not become effective and irrevocable by the Release Deadline, Executive will forfeit any right to severance payments or benefits under Section 7. In no event will severance payments or benefits under Section 7 be paid or provided until the Release actually becomes effective and irrevocable. To the extent that payments are delayed under Section 9(c), the Company will pay or provide Executive the severance payments and benefits that Executive would otherwise have received under Section 7 on or prior to that date, with the balance of the severance payments and benefits being paid or provided as originally scheduled.
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(b) Return of Company Property . Executive ’s receipt of any severance payments or benefits upon Executive ’s Quali fied Termination under Section 7 is subject to Executive returning all documents and other property provided to Executive by any member of the Company Group (with the exception of a copy of the Employee Handbook and personnel documents specifically relating to Executive), developed or obtained by Executive in connection with his employment with the Company Group, or otherwise belonging to the Company Group.
(c) Section 409A . The Company intends that all payments and benefits provided under this Agreement or otherwise are exempt from, or comply with, the requirements of Section 409A of the Code and any guidance promulgated under Section 409A of the Code (collectively, “ Section 409A ”) so that none of the payments or benefits will be subject to the additional tax imposed under Section 409A, and any ambiguities in this Agreement will be interpreted in accordance with this intent. No payment or benefits to be paid to Executive, if any, under this Agreement or otherwise, when considered together with any other severance payments or separation benefits that are considered deferred compensation under Section 409A (together, the “ Deferred Payments ”), will be paid or otherwise provided until Executive has a “separation from service” within the meaning of Section 409A. Any severance benefits that would be considered Deferred Payments will be paid on, or, in the case of installments, will not commence until, the 60th day following Executive’s separation from service, or, if later, such time as required under this paragraph. Except as required under this paragraph, any installment payments that would have been made to you during the 60-day period immediately following Executive’s separation from service but for the preceding sentence will be paid to you on the 60th day following Executive’s separation from service and the remaining payments will be made as provided above. If, at the time of Executive’s termination of employment, Executive is a “specified employee” within the meaning of Section 409A, then the payment of the Deferred Payments will be delayed to the extent necessary to avoid the imposition of the additional tax imposed under Section 409A, which generally means that Executive will receive payment on the first payroll date that occurs on or after the date that is 6 months and 1 day following Executive’s termination of employment. The Company reserves the right to amend this Agreement as it considers necessary or advisable, in its sole discretion and without the consent of Executive or any other individual, to comply with any provision required to avoid the imposition of the additional tax imposed under Section 409A or to otherwise avoid income recognition under Section 409A prior to the actual payment of any benefits or imposition of any additional tax. Each payment, installment, and benefit payable under this Agreement is intended to constitute a separate payment for purposes of U.S. Treasury Regulation Section 1.409A-2(b)(2). In no event will any member of the Company Group reimburse Executive for any taxes that may be imposed on Executive as a result of Section 409A.
(d) Resignation of Officer and Director Positions . Executive’s receipt of any severance payments or benefits upon Executive’s Qualified Termination under Section 7 is subject to Executive resigning from all officer and director positions with all members of the Company Group and Executive executing any documents the Company may require in connection with the same.
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(a) Reduction of Severance Benefits . If any payment or benefit that Executive would receive from any Company Group member or any other party whether in connection with the provisions in this Agreement or otherwise (the “ Payment ”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “ Excise Tax ”), then the Payment will be equal to the Best Results Amount. The “ Best Results Amount ” will be either (A) the full amount of the Payment or (B) a lesser amount that would result in no portion of the Payment being subject to the Excise Tax, whichever of those amounts, taking into account the applicable federal, state and local employment taxes, income taxes and the Excise Tax, results in Executive’s receipt, on an after-tax basis, of the greater amount. If a reduction in payments or benefits constituting parachute payments is necessary so that the Payment equals the Best Results Amount, reduction will occur in the following order: reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of employee benefits. In the event that acceleration of vesting of stock award compensation is to be reduced, the acceleration of vesting will be cancelled in the reverse order of the date of grant of Executive’s equity awards unless Executive elects in writing a different order for cancellation. Executive will be solely responsible for the payment of all personal tax liability that is incurred as a result of the payments and benefits received under this Agreement, and Executive will not be reimbursed by any member of the Company Group for any of those payments of personal tax liability.
(b) Determination of Excise Tax Liability . The Company will select a professional services firm to make all of the determinations required to be made under these paragraphs relating to parachute payments. The Company will request that firm provide detailed supporting calculations both to the Company and Executive prior to the date on which the event that triggers the Payment occurs if administratively feasible, or subsequent to that date if events occur that result in parachute payments to Executive at that time. For purposes of making the calculations required under these paragraphs relating to parachute payments, the firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith determinations concerning the application of the Code. The Company and Executive will furnish to the firm any information and documents as the firm may reasonably request in order to make a determination under these paragraphs relating to parachute payments. The Company will bear all costs the firm may reasonably incur in connection with any calculations contemplated by these paragraphs relating to parachute payments. Any determination by the firm will be binding upon the Company and Executive, and the Company will have no liability to Executive for the determinations of the firm.
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11. Definition s . The following terms referred to in this Agreement will have the following meanings:
(a) Base Salary . “ Base Salary ” means Executive’s annual base salary as in effect immediately prior to Executive’s Qualified Termination (or if the termination is due to a resignation for Good Reason based on a material reduction in base salary, as applicable, then Executive’s annual base salary in effect immediately prior to the reduction) or, if Executive’s Qualified Termination is a CIC Qualified Termination and the amount is greater, at the level in effect immediately prior to the Change in Control.
(b) Board . “ Board ” means the Company’s Board of Directors.
(c) Cause . “ Cause ” (i) Executive’s failure to perform Executive’s duties or responsibilities to the Company Group or deliberate violation of a Company Group policy, including but not limited to those relating to insider trading or sexual harassment; (ii) Executive’s commission of any act of fraud, embezzlement, dishonesty or any other misconduct; (iii) unauthorized use or disclosure by Executive of any proprietary information or trade secrets of the Company Group or any other party to whom Executive owes an obligation of nondisclosure as a result of Executive’s relationship with the Company Group; (iv) Executive’s breach of any of Executive’s obligations under any written agreement or covenant with the Company Group, including this Agreement and the Confidentiality Agreement; or (v) Executive’s violation of any federal or state law or regulation applicable to the business of the Company Group.
(d) Change in Control . “ Change in Control ” means the occurrence of any of the following events:
(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“ Person ”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent ( 50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection, (A) the acquisition of additional stock by any one Person, who is considered to own more than fifty percent ( 50%) of the total voting power of the stock of the Company will not be considered a Change in Control, and (B) if the stockholders of the Company immediately before such change in ownership continue to retain immediately after the change in ownership, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately prior to the change in ownership, the direct or indirect beneficial ownership of fifty percent (50%) or more of the total voting power of the stock of the Company or of the ultimate parent entity of the Company, such event will not be considered a Change in Control under this subsection (i). For this purpose, indirect beneficial ownership will include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company, as the case may be, either directly or through one or more subsidiary corporations or other business entities; or
(ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12)-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this subsection (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or
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(iii) A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) ‑month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than fifty percent ( 50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty percent ( 50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent ( 50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent ( 50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Section 409A.
Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
(e) Change in Control Period . “ Change in Control Period ” means the period beginning 3 months prior to a Change in Control and ending 6 months following a Change in Control.
(f) COBRA . “ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
(g) Code . “ Code ” means the Internal Revenue Code of 1986, as amended.
(h) Company Group . “ Company Group ” means the Company and its subsidiaries and affiliates.
(i) Disability . “ Disability ” means that Executive, at the time notice is given, has been unable to substantially perform his or her duties under this Agreement for not less than one-hundred and twenty (120) work days within a twelve (12) consecutive month period as a result of Executive’s incapacity due to a physical or mental condition and, if reasonable accommodation is required by law, after any reasonable accommodation.
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(j) Equity Awards . “ Equity Awards ” means awards to purchase equity of any member of the Company Group , including awards of stock options, restricted stock, restricted stock units, performance sha res, or performance stock units .
(k) Good Reason . “ Good Reason ” means the termination of Executive ’s employment with the Company Group by Executive in accordance with the next sentence after the occurrence of one or more of the following events without Executive’s express written consent: (i) a material reduction of Executive’s duties, authorities, or responsibilities relative to Executive’s duties, authorities, or responsibilities in effect immediately prior to the reduction; provided, however, that continued employment following a Change in Control with substantially the same duties, authorities, or responsibilities with respect to the Company Group’s business and operations will not constitute “Good Reason” (for example, “Good Reason” does not exist if Executive is employed by the Company Group or a successor with substantially the same duties, authorities, or responsibilities with respect to the Company Group’s business that Executive had immediately prior to the Change in Control regardless of whether Executive’s title is revised to reflect Executive’s placement within the overall corporate hierarchy or whether Executive provides services to a subsidiary, affiliate, business unit or otherwise); (ii) a material reduction by a Company Group member in Executive’s annual total target cash compensation; provided, however, that, a reduction of annual total target cash compensation that also applies to substantially all other similarly situated employees of the Company Group members will not constitute “Good Reason”; (iii) a material change in the geographic location of Executive’s primary work facility or location by more than 50 miles from Executive’s then present location; provided, that a relocation to a location that is within 50 miles from Executive’s then-present primary residence will not be considered a material change in geographic location, or (iv) failure of a successor corporation to assume the obligations under this Agreement. In order for the termination of Executive’s employment with a Company Group member to be for Good Reason, Executive must not terminate employment without first providing written notice to the Company of the acts or omissions constituting the grounds for “Good Reason” within 90 days of the initial existence of the grounds for “Good Reason” and a cure period of 30 days following the date of written notice (the “ Cure Period ”), the grounds must not have been cured during that time, and Executive must terminate Executive’s employment within 30 days following the Cure Period.
(l) Qualified Termination . “ Qualified Termination ” means a termination of Executive’s employment either (i) by a Company Group member without Cause (excluding by reason of Executive’s death or Disability) or (ii) by Executive for Good Reason, in either case, during the Change in Control Period (a “ CIC Qualified Termination ”).
(m) Confidentiality Agreement . “ Confidentiality Agreement ” means the At-Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement in effect as of the Effective Date and attached as Exhibit B .
12. Confidential Information . As a condition to entering into this Agreement, Executive agrees to continue to abide by the terms of the Confidentiality Agreement.
13. Assignment . This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors, and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any successor of the Company will be deemed substituted for the
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Company under the terms of this Agreement for all purposes. For this purpose, “ successor ” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.
14. Notices . All notices and other communications required or permitted under this Agreement shall be in writing and will be effectively given (a) upon actual delivery to the party to be notified, (b) 24 hours after confirmed facsimile transmission, (c) 1 business day after deposit with a recognized overnight courier or (d) 3 business days after deposit with the U.S. Postal Service by first class certified or registered mail, return receipt requested, postage prepaid, addressed (i) if to Executive, at the address Executive shall have most recently furnished to the Company in writing, (ii) if to the Company, at the following address:
If to the Company:
Eminent, Inc.
16800 Edwards Road
Cerritos, CA 90703
ATTN: Chief Executive Officer
15. Severability . In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision.
16. Integration . This Agreement, along with the Confidentiality Agreement and the plans and agreements governing any Equity Award (except as specifically modified herein), represent the entire agreement and understanding between the parties as to the subject matter in this Agreement and supersede all prior or contemporaneous agreements whether written or oral. This Agreement may be modified only by agreement of the parties by a written instrument executed by the parties that is designated as an amendment to this Agreement.
17. Waiver of Breach . The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.
18. Headings . All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.
19. Tax Withholding . All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.
20. Arbitration . Any dispute or controversy arising out of or relating to any interpretation, construction, performance or breach of this Agreement or the Confidentiality Agreement , will be settled by arbitration pursuant to the arbitration provisions set forth in the Confidentiality Agreement .
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21. Governing Law . This Agreement will be governed by the laws of the State of California (with the exception of its conflict of laws provisions).
22. Acknowledgment . Executive acknowledges that Executive has had the opportunity to discuss this matter with and obtain advice from Executive’s private attorney, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement.
23. Gender Neutral . Wherever used in this Agreement, a pronoun in the masculine gender will be considered as including the feminine gender unless the context clearly indicates otherwise.
24. Counterparts . This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned.
[Signature page follows.]
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IN WITNESS WHEREOF, each of the parties has executed this Agreement (in the case of the Company, by a duly authorized officer), effective as of the last date set forth below (the “ Effective Date ”).
COMPANY:
EMINENT, Inc.
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By: |
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/s/ Jesse Timmermans |
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Date: |
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September 28, 2018 |
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Title: |
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Chief Financial Officer |
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EXECUTIVE:
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/s/ Michael Karanikolas |
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Date: |
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September 28, 2018 |
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Michael Karanikolas |
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[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
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RELEASE OF CLAIMS
1. The undersigned employee, whose employment was terminated on ___________ (“Separation Date”), ______________ (“you” or “your”) hereby warrants and agrees with respect to Eminent, Inc. dba Revolve Clothing and its employees, owners, agents and representatives (hereinafter, collectively the “Company”) as follows:
CONSIDERATION.
Severance Payments and Benefits. In consideration of your acceptance of this Agreement, and subject to your meeting in full your obligations hereunder, the Company agrees it will pay you the severance payments and benefits set forth in Section [7] / [8] of the Employment Agreement to which this release is attached subject to the terms and conditions set forth therein.
No other Payments or Benefits. All wages, compensation, vacation, benefits or like or similar payments of any kind have already been fully paid to you . Except as may be set forth elsewhere in this Agreement, you acknowledge that you are not entitled to any other compensation, severance pay or benefits of any kind.
COMPLETE RELEASE.
Release . You irrevocably and unconditionally release all the claims described in hereunder that you may now have or which may arise before you sign this Agreement against the following persons or entities (the “Releasees”): the Company and all of its past and present owners, general partner(s), limited partners, officers, directors, employees, agents, representatives, assigns, attorneys, insurers, subsidiaries, Affiliates, predecessors, benefit plans, the benefit plans’ sponsors, fiduciaries, administrators, affiliates and agents, and any other persons acting by, through, under or in concert with any of the persons or entities listed in this subsection. You further agree to indemnify and hold harmless the Company from any and all taxes, penalties, attorneys’ fees or other charges with respect to the consideration in Section 1 above. For the purposes of this Agreement, “Affiliates” means all persons and entities directly or indirectly controlling, controlled by or under common control with the Company, where control may be by management authority, equity interest, or otherwise.
Claims Released . The claims released by you with respect to the Releasees include all claims, promises, debts, causes of action or similar rights of any type or nature contingent or non-contingent, matured or unmatured, liquidated or unliquidated, whether or not known, suspected or claimed you have or had or may have which in any way relate to the payment under this Agreement, your employment with the Company or the cessation of that employment. The claims you are releasing include, but are not limited to, claims arising under any:
Anti-Discrimination Statutes, such as Title VII of the Civil Rights Act of 1964, 42 U.S.C. §1981; Section 503 of the Rehabilitation Act of 1973; the Fair Labor Standards Act (including the Equal Pay Act) which prohibit race, color, religion, sex and national origin discrimination in employment; the Age Discrimination in Employment Act of 1967 (29 U.S.C. §621
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through 634) and all amendments thereto, which prohibits age discrimination in employment; the California Fair Employment and Housing Act, which prohibits all forms of harassment, discrimination and retaliation; the Americans with Disabilities Act, which prohibits discrimination against individuals with disabilities; the Family Medical Leave Act of 1993; the California Family Rights Act; any other federal, state or municipal statute or ordinance relating to discrimination in employment or unfair employment practices; or any compensation-related claim including but not limited to misclassification, unpaid wages or penalties, overtime, meal and rest period pay, severance pay, bonus, sick leave, holiday pay, vacation pay, life insurance, health or medical insurance, employee benefit plan, or any other fringe benefit; and
Other laws, such as the California Constitution and the California Labor Code which regulates wages, hours and working conditions, workers’ compensation laws and all other laws which regulate employment in California or elsewhere; or any other federal, state or local laws whether based on statute, regulation or common law, providing recourse for alleged wrongful discharge, breach of contract (actual or implied), breach of the covenant of good faith and fair dealing, physical or personal injury, privacy, emotional distress, fraud, negligent misrepresentation, libel, slander, defamation, assault, battery, other torts, and similar or related claims.
Notwithstanding, this release shall not apply to any obligations that you have under this Agreement.
Release Extends to Both Known and Unknown Claims . This release covers both claims that you know about and claims you may not know about. You expressly waive all rights afforded by laws regarding a waiver of unknown claims including under California Civil Code §1542, and you do so understanding and acknowledging the significance of such a waiver. Section 1542 states as follows:
“ A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. ”
You hereby acknowledge that you may hereafter discover facts different from or in addition to those that you now know or believed to be true when you expressly agreed to assume the risk of the possible discovery of additional facts, and you agree that this Agreement will be and remain effective regardless of such additional or different facts. You expressly agree that this Agreement shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown or unsuspected claims, demands, causes of action, governmental, regulatory or enforcement actions, charges, obligations, damages, liabilities, and attorneys’ fees and costs, if any, as well as those relating to any other claims, demands, causes of action, obligations, damages, liabilities, charges and attorneys’ fees and costs specified herein.
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2. In addition to the release of claims in Paragraph 2, you also agree to the following:
Termination of Employment . You acknowledge that your employment with the Company has terminated as of the Separation Date. You agree that you have no right to re-employment and will not seek same.
No Pursuit of Released Claims or Incitement . You promise never to file or prosecute a lawsuit or any claim or complaint administrative or otherwise against the Company and its Affiliates, and that you have not done so in the past nor will you encourage others to do so. You agree that you will not induce or incite claims of discrimination, wrongful discharge, sexual or other forms of harassment, breach of contract, tortious acts or any other claims of any type whatsoever against the Company by any other person or employee, relating to such individual’s employment or business dealings with the Company.
Company Property . In signing this Agreement, you represent and warrant that you will return to the Company, as of the Separation Date, any and all documents, materials and information (whether in hardcopy, on electronic media or otherwise) related to the business of the Company and its Affiliates (whether present or otherwise), and all keys, access cards, credit cards, computer hardware and software, telephones and telephone-related equipment and all other property of the Company or any of its Affiliates in your possession or control. Further, you represent and warrant that you will not retain any copy or derivation of any documents, materials or information (whether in hardcopy, on electronic media or otherwise) of the Company or any of its Affiliates. Recognizing that your employment with the Company will terminate as of the Separation Date, you represent and warrant that you will not, following the Separation Date, for any purpose, attempt to access or use any computer or computer network or system of the Company or any of its Affiliates, including without limitation the electronic mail system, and you agree that you will not do so. Further, you acknowledge that you have disclosed to the Company all passwords necessary or desirable to obtain access to, or that would assist in obtaining access to, all information which you have password-protected on any computer equipment, network, or system of the Company or any of its Affiliates.
Confidentiality . You agree that you have kept and will keep completely confidential the fact, amount, and terms of this Agreement. You also agree herein that you will not disclose anything about this Agreement or any alleged disputes, complaints or claims you may have against the Company or its Affiliates, or any of the Company’s or any of its Affiliates’ trade secrets or confidential, proprietary or financial information to anyone (other than your immediate family, attorney and/or tax advisor, provided each such person is informed of and agrees to be bound by this confidentiality provision), specifically including, but not limited to, any past or present employee of the Company or to any representative of any media.
Non-Disparagement . You agree that you will not publicly disparage or comment negatively about the Company or any of its Affiliates, their officers, directors employees or agents, and you will not engage in or encourage other persons to engage in litigation against the Company or any of the other Releasees.
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Non-Solicitation . For a period of one ( 1 ) year following the Separation Date, you will not and will not assist any other third party to: (i) solicit for hiring any employee of the Company or any of its Affiliates or seek to persuade any employee of the Company or any of its Affiliates to discontinue such employment; or (ii) solicit or encourage any independent contractor providing services to the Company or any of its Affiliates to terminate or diminish its relationship with them. For the purposes of this agreement, an “employee” or an “independent contractor” of the Company of any of its Affiliates is any person who was such at any time during your employment with the Company.
No Work-Related Injuries or Illnesses . You acknowledge that you are not aware of any work-related injuries or illnesses you sustained as of the Separation Date of this Agreement.
OTHER TERMS.
Non‑Admission of Liability . By providing you payment in this Agreement, the Company is not admitting that it or anyone else has done anything wrong. You agree that this Agreement shall not be admissible in any court or other forum for any purpose other than the enforcement of its terms.
Severability . The provisions of this Agreement are severable. If any part of it is found to be unenforceable, all other provisions shall remain fully valid and enforceable.
Voluntary Agreement . You represent and agree that you have carefully read this Agreement, that you understand all of its terms, and that you are entering into it knowingly and voluntarily. You represent and agree you have had the opportunity to consult independent counsel regarding the content and legal effect of this Agreement.
No Representations . You represent that in signing this Agreement, you do not rely on nor have you relied on any representation or statement not specifically set forth in this Agreement by any of the Releasees with regard to the subject matter, basis or effect of this Agreement or otherwise.
NATURE, EFFECT AND INTERPRETATION OF THIS AGREEMENT.
Entire Agreement . This Agreement, and the terms of your Employment Agreement set forth in Section 1 above, are the entire Agreement between you and the Company; it may not be modified or canceled in any manner except by a writing signed by both the Company and you. You acknowledge that the Company has made no promises to you other than those in this Agreement.
Successors and Assignees . This Agreement shall bind your heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of all Releasees and their respective heirs, administrators, representatives, executors, successors and assigns.
Interpretation . This Agreement shall be construed as a whole according to its fair meaning, and not strictly for or against any of the parties.
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GOVERNING LAW, JURISDICTION AND VENUE.
This Agreement shall be interpreted under the laws of the State of California, both as to interpretation and performance. Any action initiated under this Agreement shall be brought in the County of Los Angeles, in the State of California.
If either party to this Agreement institutes any legal action or administrative proceeding against the other with respect to this Agreement or any claim hereunder, the prevailing party shall be entitled to recover all damages, costs, expenses and attorneys’ fees incurred as a result of such action.
EFFECTIVE DATE OF THIS AGREEMENT.
This Agreement was presented to you for your review and consideration on ____________ (“Review Date”). You are entitled to review and consider this Agreement for twenty-one (21) calendar days following the Review Date before signing and returning this Agreement to the Company, unless you choose to execute the Acknowledgment and Waiver attached hereto. If you do not accept the terms of this Agreement in writing within twenty-one (21) days of the Review Date, any offer implied by the presentation of this Agreement for your review and consideration is withdrawn in its entirety at that time. For a period of seven (7) calendar days following your execution of this Agreement, you may revoke this Agreement (“Revocation Period”). You may revoke this Agreement only by giving the Company formal, written notice of your revocation of this Agreement, to be received by the David Staels, CHRO of Revolve, located at 16610 Marquardt, Ave, Cerritos, CA 90703 by the close of business on the seventh (7 th ) day following your execution of this Agreement. This Agreement shall not become effective in any respect until the Revocation Period has expired without notice of revocation. In the absence of your revocation of this Agreement, the eighth (8 th ) day after your execution of this Agreement shall be the “Effective Date” of this Agreement, at which time the rights of all parties under this Agreement become fully enforceable.
3. PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. BY SIGNING BELOW, YOU ACKNOWLEDGE THAT YOU HAVE READ AND UNDERSTAND THE TERMS OF THIS AGREEMENT, AND THAT IT IS YOUR INTENT TO RELEASE ANY CLAIMS YOU HAVE OR MAY HAVE AGAINST THE COMPANY, AS DESCRIBED ABOVE, IN EXCHANGE FOR THE SEVERANCE PAY OFFERED BY THE COMPANY. YOU ALSO ACKNOWLEDGE THAT YOU EITHER HAVE CONSULTED AN ATTORNEY REGARDING THIS AGREEMENT OR YOU HAVE ELECTED NOT TO CONSULT AN ATTORNEY, AND ARE THEREFORE KNOWINGLY AND VOLUNTARILY ENTERING INTO THIS AGREEMENT.
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ACKNOWLEDGMENT AND WAIVER
I, ________________, acknowledge I was given twenty-one (21) days to review and consider the foregoing Agreement and voluntarily chose to sign the Agreement prior to the expiration of the twenty-one (21) day period.
I declare under penalty of perjury of the laws of the State of California that the foregoing is true and correct.
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EMPLOYEE
__________________________
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DATE: |
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CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
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Exhibit 10.13
EMINENT, Inc.
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the “ Agreement ”) is entered into as of the Effective Date (as defined below) by and between Eminent, Inc. (the “ Company ”), and Michael Mente (“ Executive ”).
1. Duties and Scope of Employment .
(a) Positions and Duties . As of the Effective Date, Executive will continue to serve as the Company’s Co-Chief Executive Officer and report to the Company’s Board. Executive will render business and professional services in the performance of Executive’s duties, consistent with Executive’s position within the Company, as will reasonably be assigned to Executive by the Board.
(b) Obligations . During the Employment Term, Executive will perform Executive’s duties faithfully and to the best of Executive’s ability and will devote Executive’s full business efforts and time to the Company. For the duration of the Employment Term, Executive agrees not to (i) actively engage in any other employment, occupation, or consulting activity for any direct or indirect remuneration or (ii) serve on other boards of directors, in all cases, without the prior approval of the Board. Executive further agrees to comply with all Company policies, including, for the avoidance of any doubt, any insider trading policies and compensation clawback policies currently in existence or that may be adopted by the Company during the Employment Term.
(c) Employment Term; At-Will Employment . The parties agree that Executive’s employment with the Company remains “at-will” employment and may be terminated at any time with or without cause or notice. Executive understands and agrees that neither Executive’s job performance nor promotions, commendations, bonuses or the like from the Company give rise to or in any way serve as the basis for modification, amendment, or extension, by implication or otherwise, of Executive’s employment with the Company. However, as described in this Agreement, Executive may be entitled to severance payments and benefits depending on the circumstances of Executive’s termination of employment with the Company.
2. Compensation .
(a) Base Salary . The Company will pay Executive an annual salary of $450,000 as compensation for Executive’s services. The annual base salary will be paid periodically in accordance with the Company’s normal payroll practices and be subject to the usual, required withholdings. Executive’s annual base salary will be subject to periodic review by the Company’s board of directors or its compensation committee (either, the “ Committee ”) and adjustments may be made by the Committee.
(b) Equity . Executive will be eligible to receive Equity Awards pursuant to any plans or arrangements the Company or its affiliates may have in effect from time to time. The Committee will determine in its discretion whether Executive will be granted any Equity Awards and the terms of any Equity Awards in accordance with the terms of any applicable plan or arrangement that may be in effect from time to time.
3. Employee Benefits . Executive will be entitled to participate in employee benefit plans and programs of the Company, if any, on the same terms and conditions as other similarly-situated employees to the extent that Executive’s position, tenure, salary, age, health and other qualifications make Executive eligible to participate in the plans or programs, subject to the rules and regulations applicable thereto. The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time.
4. PTO . Executive will be entitled to paid time off (PTO) in accordance with the Company’s PTO policy, with the timing and duration of specific days off mutually and reasonably agreed to by the parties.
5. Expenses . The Company will reimburse Executive for reasonable travel, entertainment or other expenses incurred by Executive in the furtherance of or in connection with the performance of Executive’s duties under this Agreement, in accordance with the Company’s expense reimbursement policy as in effect from time to time.
7. Severance and Change in Control Benefits .
(a) Qualified Termination . Subject to Section 9, o n a Qualified Termination, Executive will be eligible to receive the following payments and benefits from the Company:
(i) Salary Severance . The Company will pay Executive a lump-sum payment equal to 6 months of Executive’s Base Salary on the first regular payroll date of the Company following the date on which the Release becomes irrevocable (subject to any delay as required under Section 9 below).
(ii) COBRA . The Company will pay Executive a lump-sum payment equal to the aggregate cost of COBRA premiums for Executive and his eligible dependents to continue health care coverage under COBRA for a period of 6 months from the date of Executive’s termination of employment (with such payment based on the COBRA premium rates in effect on the date of Executive’s termination of employment). This payment will be paid on the first regular payroll date of the Company following the date on which the Release becomes irrevocable (subject to any delay as required under Section 9 below), and regardless of whether Executive or his eligible dependents elects continuation coverage pursuant to COBRA.
(iii) Equity Vesting . 100% of the then-unvested shares subject to each of Executive’s then-outstanding Equity Awards will immediately vest and, in the case of options and stock appreciation rights, will become exercisable (for the avoidance of doubt, no more than 100 % of the shares subject to the then-outstanding portion of an Equity Award may vest and become exercisable under this provision). In the case of an Equity Award with performance-based vesting, unless otherwise specified in the applicable Equity Award agreement governing such award, all performance goals and other vesting criteria will be deemed achieved at the greater of actual
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performance measured as of the date of termination or 100 % of target levels. Any restricted stock units, performance shares , performance units, and/or similar full value awards that vest under this paragraph will be settled on the date on which the Release becomes irrevocab le (subject to any delay as required under Section 9 below) .
(b) Termination other than a Qualified Termination . If the termination of Executive’s employment with the Company Group is not a Qualified Termination, then Executive will not be entitled to receive severance or other benefits.
(c) Death of Executive . If Executive dies before all payments or benefits Executive is entitled to receive under this Agreement have been paid, the unpaid amounts will be paid to Executive’s designated beneficiary, if living, or otherwise to Executive’s personal representative in a lump-sum payment as soon as possible following Executive’s death.
(d) Transfer between the Company Group . For purposes of this Agreement, if Executive is involuntarily transferred from one member of the Company Group to another, the transfer will not be a termination without Cause but may give Executive the ability to resign for Good Reason.
(e) Exclusive Remedy . In the event of a termination of Executive’s employment with the Company Group, the provisions of this Agreement are intended to be and are exclusive and in lieu of any other rights or remedies to which Executive may otherwise be entitled, whether at law, tort or contract, or in equity. Executive will be entitled to no benefits, compensation or other payments or rights upon termination of employment other than those benefits expressly set forth in this Agreement.
8. Accrued Compensation . On any termination of Executive’s employment with the Company Group, Executive will be entitled to receive all accrued but unpaid vacation, expense reimbursements, wages, and other benefits due to Executive under any Company-provided plans, policies, and arrangements or as otherwise required by applicable law.
9. Conditions to Receipt of Severance .
(a) Separation Agreement and Release of Claims . Executive’s receipt of any severance payments or benefits upon Executive’s Qualified Termination under Section 7 is subject to Executive signing and not revoking the Company’s then-standard separation agreement and release of claims in substantially the form set forth as Exhibit A hereto, subject to any changes that the Company believes are necessary or appropriate (the “ Release ” and that requirement, the “ Release Requirement ”), which must become effective and irrevocable no later than the 60th day following Executive’s Qualified Termination (the “ Release Deadline ”). If the Release does not become effective and irrevocable by the Release Deadline, Executive will forfeit any right to severance payments or benefits under Section 7. In no event will severance payments or benefits under Section 7 be paid or provided until the Release actually becomes effective and irrevocable. To the extent that payments are delayed under Section 9(c), the Company will pay or provide Executive the severance payments and benefits that Executive would otherwise have received under Section 7 on or prior to that date, with the balance of the severance payments and benefits being paid or provided as originally scheduled.
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(b) Return of Company Property . Executive ’s receipt of any severance payments or benefits upon Executive ’s Quali fied Termination under Section 7 is subject to Executive returning all documents and other property provided to Executive by any member of the Company Group (with the exception of a copy of the Employee Handbook and personnel documents specifically relating to Executive), developed or obtained by Executive in connection with his employment with the Company Group, or otherwise belonging to the Company Group.
(c) Section 409A . The Company intends that all payments and benefits provided under this Agreement or otherwise are exempt from, or comply with, the requirements of Section 409A of the Code and any guidance promulgated under Section 409A of the Code (collectively, “ Section 409A ”) so that none of the payments or benefits will be subject to the additional tax imposed under Section 409A, and any ambiguities in this Agreement will be interpreted in accordance with this intent. No payment or benefits to be paid to Executive, if any, under this Agreement or otherwise, when considered together with any other severance payments or separation benefits that are considered deferred compensation under Section 409A (together, the “ Deferred Payments ”), will be paid or otherwise provided until Executive has a “separation from service” within the meaning of Section 409A. Any severance benefits that would be considered Deferred Payments will be paid on, or, in the case of installments, will not commence until, the 60th day following Executive’s separation from service, or, if later, such time as required under this paragraph. Except as required under this paragraph, any installment payments that would have been made to you during the 60-day period immediately following Executive’s separation from service but for the preceding sentence will be paid to you on the 60th day following Executive’s separation from service and the remaining payments will be made as provided above. If, at the time of Executive’s termination of employment, Executive is a “specified employee” within the meaning of Section 409A, then the payment of the Deferred Payments will be delayed to the extent necessary to avoid the imposition of the additional tax imposed under Section 409A, which generally means that Executive will receive payment on the first payroll date that occurs on or after the date that is 6 months and 1 day following Executive’s termination of employment. The Company reserves the right to amend this Agreement as it considers necessary or advisable, in its sole discretion and without the consent of Executive or any other individual, to comply with any provision required to avoid the imposition of the additional tax imposed under Section 409A or to otherwise avoid income recognition under Section 409A prior to the actual payment of any benefits or imposition of any additional tax. Each payment, installment, and benefit payable under this Agreement is intended to constitute a separate payment for purposes of U.S. Treasury Regulation Section 1.409A-2(b)(2). In no event will any member of the Company Group reimburse Executive for any taxes that may be imposed on Executive as a result of Section 409A.
(d) Resignation of Officer and Director Positions . Executive’s receipt of any severance payments or benefits upon Executive’s Qualified Termination under Section 7 is subject to Executive resigning from all officer and director positions with all members of the Company Group and Executive executing any documents the Company may require in connection with the same.
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10. Limitation on Payments .
(a) Reduction of Severance Benefits . If any payment or benefit that Executive would receive from any Company Group member or any other party whether in connection with the provisions in this Agreement or otherwise (the “ Payment ”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “ Excise Tax ”), then the Payment will be equal to the Best Results Amount. The “ Best Results Amount ” will be either (A) the full amount of the Payment or (B) a lesser amount that would result in no portion of the Payment being subject to the Excise Tax, whichever of those amounts, taking into account the applicable federal, state and local employment taxes, income taxes and the Excise Tax, results in Executive’s receipt, on an after-tax basis, of the greater amount. If a reduction in payments or benefits constituting parachute payments is necessary so that the Payment equals the Best Results Amount, reduction will occur in the following order: reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of employee benefits. In the event that acceleration of vesting of stock award compensation is to be reduced, the acceleration of vesting will be cancelled in the reverse order of the date of grant of Executive’s equity awards unless Executive elects in writing a different order for cancellation. Executive will be solely responsible for the payment of all personal tax liability that is incurred as a result of the payments and benefits received under this Agreement, and Executive will not be reimbursed by any member of the Company Group for any of those payments of personal tax liability.
(b) Determination of Excise Tax Liability . The Company will select a professional services firm to make all of the determinations required to be made under these paragraphs relating to parachute payments. The Company will request that firm provide detailed supporting calculations both to the Company and Executive prior to the date on which the event that triggers the Payment occurs if administratively feasible, or subsequent to that date if events occur that result in parachute payments to Executive at that time. For purposes of making the calculations required under these paragraphs relating to parachute payments, the firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith determinations concerning the application of the Code. The Company and Executive will furnish to the firm any information and documents as the firm may reasonably request in order to make a determination under these paragraphs relating to parachute payments. The Company will bear all costs the firm may reasonably incur in connection with any calculations contemplated by these paragraphs relating to parachute payments. Any determination by the firm will be binding upon the Company and Executive, and the Company will have no liability to Executive for the determinations of the firm.
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11. Definition s . The following terms referred to in this Agreement will have the following meanings:
(a) Base Salary . “ Base Salary ” means Executive’s annual base salary as in effect immediately prior to Executive’s Qualified Termination (or if the termination is due to a resignation for Good Reason based on a material reduction in base salary, as applicable, then Executive’s annual base salary in effect immediately prior to the reduction) or, if Executive’s Qualified Termination is a CIC Qualified Termination and the amount is greater, at the level in effect immediately prior to the Change in Control.
(b) Board . “ Board ” means the Company’s Board of Directors.
(c) Cause . “ Cause ” (i) Executive’s failure to perform Executive’s duties or responsibilities to the Company Group or deliberate violation of a Company Group policy, including but not limited to those relating to insider trading or sexual harassment; (ii) Executive’s commission of any act of fraud, embezzlement, dishonesty or any other misconduct; (iii) unauthorized use or disclosure by Executive of any proprietary information or trade secrets of the Company Group or any other party to whom Executive owes an obligation of nondisclosure as a result of Executive’s relationship with the Company Group; (iv) Executive’s breach of any of Executive’s obligations under any written agreement or covenant with the Company Group, including this Agreement and the Confidentiality Agreement; or (v) Executive’s violation of any federal or state law or regulation applicable to the business of the Company Group.
(d) Change in Control . “ Change in Control ” means the occurrence of any of the following events:
(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“ Person ”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent ( 50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection, (A) the acquisition of additional stock by any one Person, who is considered to own more than fifty percent ( 50%) of the total voting power of the stock of the Company will not be considered a Change in Control, and (B) if the stockholders of the Company immediately before such change in ownership continue to retain immediately after the change in ownership, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately prior to the change in ownership, the direct or indirect beneficial ownership of fifty percent (50%) or more of the total voting power of the stock of the Company or of the ultimate parent entity of the Company, such event will not be considered a Change in Control under this subsection (i). For this purpose, indirect beneficial ownership will include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company, as the case may be, either directly or through one or more subsidiary corporations or other business entities; or
(ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12)-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this subsection (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or
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(iii) A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) ‑month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than fifty percent ( 50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty percent ( 50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent ( 50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent ( 50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Section 409A.
Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
(e) Change in Control Period . “ Change in Control Period ” means the period beginning 3 months prior to a Change in Control and ending 6 months following a Change in Control.
(f) COBRA . “ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
(g) Code . “ Code ” means the Internal Revenue Code of 1986, as amended.
(h) Company Group . “ Company Group ” means the Company and its subsidiaries and affiliates.
(i) Disability . “ Disability ” means that Executive, at the time notice is given, has been unable to substantially perform his or her duties under this Agreement for not less than one-hundred and twenty (120) work days within a twelve (12) consecutive month period as a result of Executive’s incapacity due to a physical or mental condition and, if reasonable accommodation is required by law, after any reasonable accommodation.
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(j) Equity Awards . “ Equity Awards ” means awards to purchase equity of any member of the Company Group , including awards of stock options, restricted stock, restricted stock units, performance sha res, or performance stock units .
(k) Good Reason . “ Good Reason ” means the termination of Executive ’s employment with the Company Group by Executive in accordance with the next sentence after the occurrence of one or more of the following events without Executive’s express written consent: (i) a material reduction of Executive’s duties, authorities, or responsibilities relative to Executive’s duties, authorities, or responsibilities in effect immediately prior to the reduction; provided, however, that continued employment following a Change in Control with substantially the same duties, authorities, or responsibilities with respect to the Company Group’s business and operations will not constitute “Good Reason” (for example, “Good Reason” does not exist if Executive is employed by the Company Group or a successor with substantially the same duties, authorities, or responsibilities with respect to the Company Group’s business that Executive had immediately prior to the Change in Control regardless of whether Executive’s title is revised to reflect Executive’s placement within the overall corporate hierarchy or whether Executive provides services to a subsidiary, affiliate, business unit or otherwise); (ii) a material reduction by a Company Group member in Executive’s annual total target cash compensation; provided, however, that, a reduction of annual total target cash compensation that also applies to substantially all other similarly situated employees of the Company Group members will not constitute “Good Reason”; (iii) a material change in the geographic location of Executive’s primary work facility or location by more than 50 miles from Executive’s then present location; provided, that a relocation to a location that is within 50 miles from Executive’s then-present primary residence will not be considered a material change in geographic location, or (iv) failure of a successor corporation to assume the obligations under this Agreement. In order for the termination of Executive’s employment with a Company Group member to be for Good Reason, Executive must not terminate employment without first providing written notice to the Company of the acts or omissions constituting the grounds for “Good Reason” within 90 days of the initial existence of the grounds for “Good Reason” and a cure period of 30 days following the date of written notice (the “ Cure Period ”), the grounds must not have been cured during that time, and Executive must terminate Executive’s employment within 30 days following the Cure Period.
(l) Qualified Termination . “ Qualified Termination ” means a termination of Executive’s employment either (i) by a Company Group member without Cause (excluding by reason of Executive’s death or Disability) or (ii) by Executive for Good Reason, in either case, during the Change in Control Period (a “ CIC Qualified Termination ”).
(m) Confidentiality Agreement . “ Confidentiality Agreement ” means the At-Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement in effect as of the Effective Date and attached as Exhibit B .
12. Confidential Information . As a condition to entering into this Agreement, Executive agrees to continue to abide by the terms of the Confidentiality Agreement.
13. Assignment . This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors, and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any successor of the Company will be deemed substituted for the
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Company under the terms of this Agreement for all purposes. For this purpose, “ successor ” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.
14. Notices . All notices and other communications required or permitted under this Agreement shall be in writing and will be effectively given (a) upon actual delivery to the party to be notified, (b) 24 hours after confirmed facsimile transmission, (c) 1 business day after deposit with a recognized overnight courier or (d) 3 business days after deposit with the U.S. Postal Service by first class certified or registered mail, return receipt requested, postage prepaid, addressed (i) if to Executive, at the address Executive shall have most recently furnished to the Company in writing, (ii) if to the Company, at the following address:
If to the Company:
Eminent, Inc.
16800 Edwards Road
Cerritos, CA 90703
ATTN: Chief Executive Officer
15. Severability . In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision.
16. Integration . This Agreement, along with the Confidentiality Agreement and the plans and agreements governing any Equity Award (except as specifically modified herein), represent the entire agreement and understanding between the parties as to the subject matter in this Agreement and supersede all prior or contemporaneous agreements whether written or oral. This Agreement may be modified only by agreement of the parties by a written instrument executed by the parties that is designated as an amendment to this Agreement.
17. Waiver of Breach . The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.
18. Headings . All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.
19. Tax Withholding . All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.
20. Arbitration . Any dispute or controversy arising out of or relating to any interpretation, construction, performance or breach of this Agreement or the Confidentiality Agreement , will be settled by arbitration pursuant to the arbitration provisions set forth in the Confidentiality Agreement .
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21. Governing Law . This Agreement will be governed by the laws of the State of California (with the exception of its conflict of laws provisions).
22. Acknowledgment . Executive acknowledges that Executive has had the opportunity to discuss this matter with and obtain advice from Executive’s private attorney, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement.
23. Gender Neutral . Wherever used in this Agreement, a pronoun in the masculine gender will be considered as including the feminine gender unless the context clearly indicates otherwise.
24. Counterparts . This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned.
[Signature page follows.]
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IN WITNESS WHEREOF, each of the parties has executed this Agreement (in the case of the Company, by a duly authorized officer), effective as of the last date set forth below (the “ Effective Date ”).
COMPANY:
EMINENT, Inc.
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By: |
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/s/ Jesse Timmermans |
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Date: |
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September 28, 2018 |
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Title: |
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Chief Financial Officer |
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EXECUTIVE:
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/s/ Michael Mente |
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Date: |
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September 28, 2018 |
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Michael Mente |
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[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
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EXHIBIT A
RELEASE OF CLAIMS
1. The undersigned employee, whose employment was terminated on ___________ (“Separation Date”), ______________ (“you” or “your”) hereby warrants and agrees with respect to Eminent, Inc. dba Revolve Clothing and its employees, owners, agents and representatives (hereinafter, collectively the “Company”) as follows:
CONSIDERATION.
Severance Payments and Benefits. In consideration of your acceptance of this Agreement, and subject to your meeting in full your obligations hereunder, the Company agrees it will pay you the severance payments and benefits set forth in Section [7] / [8] of the Employment Agreement to which this release is attached subject to the terms and conditions set forth therein.
No other Payments or Benefits. All wages, compensation, vacation, benefits or like or similar payments of any kind have already been fully paid to you . Except as may be set forth elsewhere in this Agreement, you acknowledge that you are not entitled to any other compensation, severance pay or benefits of any kind.
COMPLETE RELEASE.
Release . You irrevocably and unconditionally release all the claims described in hereunder that you may now have or which may arise before you sign this Agreement against the following persons or entities (the “Releasees”): the Company and all of its past and present owners, general partner(s), limited partners, officers, directors, employees, agents, representatives, assigns, attorneys, insurers, subsidiaries, Affiliates, predecessors, benefit plans, the benefit plans’ sponsors, fiduciaries, administrators, affiliates and agents, and any other persons acting by, through, under or in concert with any of the persons or entities listed in this subsection. You further agree to indemnify and hold harmless the Company from any and all taxes, penalties, attorneys’ fees or other charges with respect to the consideration in Section 1 above. For the purposes of this Agreement, “Affiliates” means all persons and entities directly or indirectly controlling, controlled by or under common control with the Company, where control may be by management authority, equity interest, or otherwise.
Claims Released . The claims released by you with respect to the Releasees include all claims, promises, debts, causes of action or similar rights of any type or nature contingent or non-contingent, matured or unmatured, liquidated or unliquidated, whether or not known, suspected or claimed you have or had or may have which in any way relate to the payment under this Agreement, your employment with the Company or the cessation of that employment. The claims you are releasing include, but are not limited to, claims arising under any:
Anti-Discrimination Statutes, such as Title VII of the Civil Rights Act of 1964, 42 U.S.C. §1981; Section 503 of the Rehabilitation Act of 1973; the Fair Labor Standards Act (including the Equal Pay Act) which prohibit race, color, religion, sex and national origin discrimination in employment; the Age Discrimination in Employment Act of 1967 (29 U.S.C. §621
through 634) and all amendments thereto, which prohibits age discrimination in employment; the California Fair Employment and Housing Act, which prohibits all forms of harassment, discrimination and retaliation; the Americans with Disabilities Act, which prohibits discrimination against individuals with disabilities; the Family Medical Leave Act of 1993; the California Family Rights Act; any other federal, state or municipal statute or ordinance relating to discrimination in employment or unfair employment practices; or any compensation-related claim including but not limited to misclassification, unpaid wages or penalties, overtime, meal and rest period pay, severance pay, bonus, sick leave, holiday pay, vacation pay, life insurance, health or medical insurance, employee benefit plan, or any other fringe benefit; and
Other laws, such as the California Constitution and the California Labor Code which regulates wages, hours and working conditions, workers’ compensation laws and all other laws which regulate employment in California or elsewhere; or any other federal, state or local laws whether based on statute, regulation or common law, providing recourse for alleged wrongful discharge, breach of contract (actual or implied), breach of the covenant of good faith and fair dealing, physical or personal injury, privacy, emotional distress, fraud, negligent misrepresentation, libel, slander, defamation, assault, battery, other torts, and similar or related claims.
Notwithstanding, this release shall not apply to any obligations that you have under this Agreement.
Release Extends to Both Known and Unknown Claims . This release covers both claims that you know about and claims you may not know about. You expressly waive all rights afforded by laws regarding a waiver of unknown claims including under California Civil Code §1542, and you do so understanding and acknowledging the significance of such a waiver. Section 1542 states as follows:
“ A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. ”
You hereby acknowledge that you may hereafter discover facts different from or in addition to those that you now know or believed to be true when you expressly agreed to assume the risk of the possible discovery of additional facts, and you agree that this Agreement will be and remain effective regardless of such additional or different facts. You expressly agree that this Agreement shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown or unsuspected claims, demands, causes of action, governmental, regulatory or enforcement actions, charges, obligations, damages, liabilities, and attorneys’ fees and costs, if any, as well as those relating to any other claims, demands, causes of action, obligations, damages, liabilities, charges and attorneys’ fees and costs specified herein.
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YOUR PROMISES.
2. In addition to the release of claims in Paragraph 2, you also agree to the following:
Termination of Employment . You acknowledge that your employment with the Company has terminated as of the Separation Date. You agree that you have no right to re-employment and will not seek same.
No Pursuit of Released Claims or Incitement . You promise never to file or prosecute a lawsuit or any claim or complaint administrative or otherwise against the Company and its Affiliates, and that you have not done so in the past nor will you encourage others to do so. You agree that you will not induce or incite claims of discrimination, wrongful discharge, sexual or other forms of harassment, breach of contract, tortious acts or any other claims of any type whatsoever against the Company by any other person or employee, relating to such individual’s employment or business dealings with the Company.
Company Property . In signing this Agreement, you represent and warrant that you will return to the Company, as of the Separation Date, any and all documents, materials and information (whether in hardcopy, on electronic media or otherwise) related to the business of the Company and its Affiliates (whether present or otherwise), and all keys, access cards, credit cards, computer hardware and software, telephones and telephone-related equipment and all other property of the Company or any of its Affiliates in your possession or control. Further, you represent and warrant that you will not retain any copy or derivation of any documents, materials or information (whether in hardcopy, on electronic media or otherwise) of the Company or any of its Affiliates. Recognizing that your employment with the Company will terminate as of the Separation Date, you represent and warrant that you will not, following the Separation Date, for any purpose, attempt to access or use any computer or computer network or system of the Company or any of its Affiliates, including without limitation the electronic mail system, and you agree that you will not do so. Further, you acknowledge that you have disclosed to the Company all passwords necessary or desirable to obtain access to, or that would assist in obtaining access to, all information which you have password-protected on any computer equipment, network, or system of the Company or any of its Affiliates.
Confidentiality . You agree that you have kept and will keep completely confidential the fact, amount, and terms of this Agreement. You also agree herein that you will not disclose anything about this Agreement or any alleged disputes, complaints or claims you may have against the Company or its Affiliates, or any of the Company’s or any of its Affiliates’ trade secrets or confidential, proprietary or financial information to anyone (other than your immediate family, attorney and/or tax advisor, provided each such person is informed of and agrees to be bound by this confidentiality provision), specifically including, but not limited to, any past or present employee of the Company or to any representative of any media.
Non-Disparagement . You agree that you will not publicly disparage or comment negatively about the Company or any of its Affiliates, their officers, directors employees or agents, and you will not engage in or encourage other persons to engage in litigation against the Company or any of the other Releasees.
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Non-Solicitation . For a period of one ( 1 ) year following the Separation Date, you will not and will not assist any other third party to: (i) solicit for hiring any employee of the Company or any of its Affiliates or seek to persuade any employee of the Company or any of its Affiliates to discontinue such employment; or (ii) solicit or encourage any independent contractor providing services to the Company or any of its Affiliates to terminate or diminish its relationship with them. For the purposes of this agreement, an “employee” or an “independent contractor” of the Company of any of its Affiliates is any person who was such at any time during your employment with the Company.
No Work-Related Injuries or Illnesses . You acknowledge that you are not aware of any work-related injuries or illnesses you sustained as of the Separation Date of this Agreement.
OTHER TERMS.
Non‑Admission of Liability . By providing you payment in this Agreement, the Company is not admitting that it or anyone else has done anything wrong. You agree that this Agreement shall not be admissible in any court or other forum for any purpose other than the enforcement of its terms.
Severability . The provisions of this Agreement are severable. If any part of it is found to be unenforceable, all other provisions shall remain fully valid and enforceable.
Voluntary Agreement . You represent and agree that you have carefully read this Agreement, that you understand all of its terms, and that you are entering into it knowingly and voluntarily. You represent and agree you have had the opportunity to consult independent counsel regarding the content and legal effect of this Agreement.
No Representations . You represent that in signing this Agreement, you do not rely on nor have you relied on any representation or statement not specifically set forth in this Agreement by any of the Releasees with regard to the subject matter, basis or effect of this Agreement or otherwise.
NATURE, EFFECT AND INTERPRETATION OF THIS AGREEMENT.
Entire Agreement . This Agreement, and the terms of your Employment Agreement set forth in Section 1 above, are the entire Agreement between you and the Company; it may not be modified or canceled in any manner except by a writing signed by both the Company and you. You acknowledge that the Company has made no promises to you other than those in this Agreement.
Successors and Assignees . This Agreement shall bind your heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of all Releasees and their respective heirs, administrators, representatives, executors, successors and assigns.
Interpretation . This Agreement shall be construed as a whole according to its fair meaning, and not strictly for or against any of the parties.
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GOVERNING LAW, JURISDICTION AND VENUE.
This Agreement shall be interpreted under the laws of the State of California, both as to interpretation and performance. Any action initiated under this Agreement shall be brought in the County of Los Angeles, in the State of California.
If either party to this Agreement institutes any legal action or administrative proceeding against the other with respect to this Agreement or any claim hereunder, the prevailing party shall be entitled to recover all damages, costs, expenses and attorneys’ fees incurred as a result of such action.
EFFECTIVE DATE OF THIS AGREEMENT.
This Agreement was presented to you for your review and consideration on ____________ (“Review Date”). You are entitled to review and consider this Agreement for twenty-one (21) calendar days following the Review Date before signing and returning this Agreement to the Company, unless you choose to execute the Acknowledgment and Waiver attached hereto. If you do not accept the terms of this Agreement in writing within twenty-one (21) days of the Review Date, any offer implied by the presentation of this Agreement for your review and consideration is withdrawn in its entirety at that time. For a period of seven (7) calendar days following your execution of this Agreement, you may revoke this Agreement (“Revocation Period”). You may revoke this Agreement only by giving the Company formal, written notice of your revocation of this Agreement, to be received by the David Staels, CHRO of Revolve, located at 16610 Marquardt, Ave, Cerritos, CA 90703 by the close of business on the seventh (7 th ) day following your execution of this Agreement. This Agreement shall not become effective in any respect until the Revocation Period has expired without notice of revocation. In the absence of your revocation of this Agreement, the eighth (8 th ) day after your execution of this Agreement shall be the “Effective Date” of this Agreement, at which time the rights of all parties under this Agreement become fully enforceable.
3. PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. BY SIGNING BELOW, YOU ACKNOWLEDGE THAT YOU HAVE READ AND UNDERSTAND THE TERMS OF THIS AGREEMENT, AND THAT IT IS YOUR INTENT TO RELEASE ANY CLAIMS YOU HAVE OR MAY HAVE AGAINST THE COMPANY, AS DESCRIBED ABOVE, IN EXCHANGE FOR THE SEVERANCE PAY OFFERED BY THE COMPANY. YOU ALSO ACKNOWLEDGE THAT YOU EITHER HAVE CONSULTED AN ATTORNEY REGARDING THIS AGREEMENT OR YOU HAVE ELECTED NOT TO CONSULT AN ATTORNEY, AND ARE THEREFORE KNOWINGLY AND VOLUNTARILY ENTERING INTO THIS AGREEMENT.
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ACKNOWLEDGMENT AND WAIVER
I, ________________, acknowledge I was given twenty-one (21) days to review and consider the foregoing Agreement and voluntarily chose to sign the Agreement prior to the expiration of the twenty-one (21) day period.
I declare under penalty of perjury of the laws of the State of California that the foregoing is true and correct.
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EMPLOYEE
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DATE: |
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EXHIBIT B
CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
Exhibit 10.14
EMINENT, Inc.
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the “ Agreement ”) is entered into as of the Effective Date (as defined below) by and between Eminent, Inc. (the “ Company ”), and Jesse Timmermans (“ Executive ”).
1. Duties and Scope of Employment .
(a) Positions and Duties . As of the Effective Date, Executive will continue to serve as the Company’s Chief Financial Officer and report to the Company’s Chief Executive Officer (the “ CEO ”). Executive will render business and professional services in the performance of Executive’s duties, consistent with Executive’s position within the Company, as will reasonably be assigned to Executive by the CEO.
(b) Obligations . During the Employment Term, Executive will perform Executive’s duties faithfully and to the best of Executive’s ability and will devote Executive’s full business efforts and time to the Company. For the duration of the Employment Term, Executive agrees not to (i) actively engage in any other employment, occupation, or consulting activity for any direct or indirect remuneration or (ii) serve on other boards of directors, in all cases, without the prior approval of the Board. Executive further agrees to comply with all Company policies, including, for the avoidance of any doubt, any insider trading policies and compensation clawback policies currently in existence or that may be adopted by the Company during the Employment Term.
(c) Employment Term; At-Will Employment . The parties agree that Executive’s employment with the Company remains “at-will” employment and may be terminated at any time with or without cause or notice. Executive understands and agrees that neither Executive’s job performance nor promotions, commendations, bonuses or the like from the Company give rise to or in any way serve as the basis for modification, amendment, or extension, by implication or otherwise, of Executive’s employment with the Company. However, as described in this Agreement, Executive may be entitled to severance payments and benefits depending on the circumstances of Executive’s termination of employment with the Company.
2. Compensation .
(a) Base Salary . The Company will pay Executive an annual salary of $300,000 as compensation for Executive’s services. The annual base salary will be paid periodically in accordance with the Company’s normal payroll practices and be subject to the usual, required withholdings. Executive’s annual base salary will be subject to periodic review by the Company’s board of directors or its compensation committee (either, the “ Committee ”) and adjustments may be made by the Committee.
(b) Target Bonus . Executive will be eligible to receive an annual target bonus of $75,000 (the “ Target Bonus ”) upon achievement of performance objectives to be determined by the Committee . Executive’s Target Bonus will be subject to periodic review by the Committee and adjustments may be made by the Committee. The amount of any Target Bonus to be paid to Executive, if any, and the timing of such payment will be: (i) determined in the sole discretion of the Committee pursuant to the terms of the Company’s bonus plan governing such opportunity and (ii) subject to Executive’s continued employment with the Company through the payment date , provided that if Executive ’s employment with the Company is terminated by the Company without Cause during a performance period and before such payment date, the Company will pay Executive the prorated portion of the actual bonus that Executive would have received based on the achievement of the relevant performance metrics had Executive been employed with the Company through the payment date , with the proration based on the number of days in which Executive is employed during that performance period .
(c) Equity . Executive will be eligible to receive Equity Awards pursuant to any plans or arrangements the Company or its affiliates may have in effect from time to time. The Committee will determine in its discretion whether Executive will be granted any Equity Awards and the terms of any Equity Awards in accordance with the terms of any applicable plan or arrangement that may be in effect from time to time.
3. Employee Benefits . Executive will be entitled to participate in employee benefit plans and programs of the Company, if any, on the same terms and conditions as other similarly-situated employees to the extent that Executive’s position, tenure, salary, age, health and other qualifications make Executive eligible to participate in the plans or programs, subject to the rules and regulations applicable thereto. The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time.
4. PTO . Executive will be entitled to paid time off (PTO) in accordance with the Company’s PTO policy, with the timing and duration of specific days off mutually and reasonably agreed to by the parties.
5. Expenses . The Company will reimburse Executive for reasonable travel, entertainment or other expenses incurred by Executive in the furtherance of or in connection with the performance of Executive’s duties under this Agreement, in accordance with the Company’s expense reimbursement policy as in effect from time to time.
7. Severance and Change in Control Benefits .
(a) Qualified Termination . Subject to Section 9, o n a Qualified Termination, Executive will be eligible to receive the following payments and benefits from the Company:
(i) Salary Severance . The Company will pay Executive a lump-sum payment equal to 6 months of Executive’s Base Salary on the first regular payroll date of the Company following the date on which the Release becomes irrevocable (subject to any delay as required under Section 9 below).
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(ii) COBRA . T he Company will pay Executive a lump-sum payment equal to the aggregate cost of COBRA premiums for Executive and his eligible dependents to continue health care coverage under COBRA for a period of 6 months from the date of Executive’s termination of employment (with such payment based on the COBRA premium rates in effect on the date of Executive’s termination of employment) . This payment will be paid on the first regular payroll date of the Company following the date on which the Release becomes irrevocable (subject to any delay as required under Section 9 below), and regardless of whether Executive or his eligible dependents elects continuation coverage pursuant to COBRA.
(iii) Equity Vesting . 100% of the then-unvested shares subject to each of Executive’s then-outstanding Equity Awards will immediately vest and, in the case of options and stock appreciation rights, will become exercisable (for the avoidance of doubt, no more than 100 % of the shares subject to the then-outstanding portion of an Equity Award may vest and become exercisable under this provision). In the case of an Equity Award with performance-based vesting, unless otherwise specified in the applicable Equity Award agreement governing such award, all performance goals and other vesting criteria will be deemed achieved at the greater of actual performance measured as of the date of termination or 100% of target levels. Any restricted stock units, performance shares, performance units, and/or similar full value awards that vest under this paragraph will be settled on the date on which the Release becomes irrevocable (subject to any delay as required under Section 9 below).
(b) Termination other than a Qualified Termination . If the termination of Executive’s employment with the Company Group is not a Qualified Termination, then Executive will not be entitled to receive severance or other benefits.
(c) Death of Executive . If Executive dies before all payments or benefits Executive is entitled to receive under this Agreement have been paid, the unpaid amounts will be paid to Executive’s designated beneficiary, if living, or otherwise to Executive’s personal representative in a lump-sum payment as soon as possible following Executive’s death.
(d) Transfer between the Company Group . For purposes of this Agreement, if Executive is involuntarily transferred from one member of the Company Group to another, the transfer will not be a termination without Cause but may give Executive the ability to resign for Good Reason.
(e) Exclusive Remedy . In the event of a termination of Executive’s employment with the Company Group, the provisions of this Agreement are intended to be and are exclusive and in lieu of any other rights or remedies to which Executive may otherwise be entitled, whether at law, tort or contract, or in equity. Executive will be entitled to no benefits, compensation or other payments or rights upon termination of employment other than those benefits expressly set forth in this Agreement.
8. Accrued Compensation . On any termination of Executive’s employment with the Company Group, Executive will be entitled to receive all accrued but unpaid vacation, expense reimbursements, wages, and other benefits due to Executive under any Company-provided plans, policies, and arrangements or as otherwise required by applicable law.
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9. Conditions to Receipt of Severance .
(a) Separation Agreement and Release of Claims . Executive’s receipt of any severance payments or benefits upon Executive’s Qualified Termination under Section 7 is subject to Executive signing and not revoking the Company’s then-standard separation agreement and release of claims in substantially the form set forth as Exhibit A hereto, subject to any changes that the Company believes are necessary or appropriate (the “ Release ” and that requirement, the “ Release Requirement ”), which must become effective and irrevocable no later than the 60th day following Executive’s Qualified Termination (the “ Release Deadline ”). If the Release does not become effective and irrevocable by the Release Deadline, Executive will forfeit any right to severance payments or benefits under Section 7. In no event will severance payments or benefits under Section 7 be paid or provided until the Release actually becomes effective and irrevocable. To the extent that payments are delayed under Section 9(c), the Company will pay or provide Executive the severance payments and benefits that Executive would otherwise have received under Section 7 on or prior to that date, with the balance of the severance payments and benefits being paid or provided as originally scheduled.
(b) Return of Company Property . Executive’s receipt of any severance payments or benefits upon Executive’s Qualified Termination under Section 7 is subject to Executive returning all documents and other property provided to Executive by any member of the Company Group (with the exception of a copy of the Employee Handbook and personnel documents specifically relating to Executive), developed or obtained by Executive in connection with his employment with the Company Group, or otherwise belonging to the Company Group.
(c) Section 409A . The Company intends that all payments and benefits provided under this Agreement or otherwise are exempt from, or comply with, the requirements of Section 409A of the Code and any guidance promulgated under Section 409A of the Code (collectively, “ Section 409A ”) so that none of the payments or benefits will be subject to the additional tax imposed under Section 409A, and any ambiguities in this Agreement will be interpreted in accordance with this intent. No payment or benefits to be paid to Executive, if any, under this Agreement or otherwise, when considered together with any other severance payments or separation benefits that are considered deferred compensation under Section 409A (together, the “ Deferred Payments ”), will be paid or otherwise provided until Executive has a “separation from service” within the meaning of Section 409A. Any severance benefits that would be considered Deferred Payments will be paid on, or, in the case of installments, will not commence until, the 60th day following Executive’s separation from service, or, if later, such time as required under this paragraph. Except as required under this paragraph, any installment payments that would have been made to you during the 60-day period immediately following Executive’s separation from service but for the preceding sentence will be paid to you on the 60th day following Executive’s separation from service and the remaining payments will be made as provided above. If, at the time of Executive’s termination of employment, Executive is a “specified employee” within the meaning of Section 409A, then the payment of the Deferred Payments will be delayed to the extent necessary to avoid the imposition of the additional tax imposed under Section 409A, which generally means that Executive will receive payment on the first payroll date that occurs on or after the date that is 6 months and 1 day following Executive’s termination of employment. The Company reserves the right to amend this Agreement as it considers necessary or advisable, in its sole discretion and without the consent of Executive or any other individual, to comply with any provision required to avoid the imposition of the additional tax imposed under Section 409A or to otherwise avoid income
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recognition under Section 409A prior to the actual payment of any benefits or imposition of any additional tax. Each payment, installment, and benefit payable under t his Agreement is intended to constitute a separate payment for purposes of U.S. Treasury Regulation Section 1.409A-2(b)(2). In no event will any member of the Company Group reimburse Executive for any taxes that may be imposed on Executive as a result of Section 409A.
(d) Resignation of Officer and Director Positions . Executive’s receipt of any severance payments or benefits upon Executive’s Qualified Termination under Section 7 is subject to Executive resigning from all officer and director positions with all members of the Company Group and Executive executing any documents the Company may require in connection with the same.
10. Limitation on Payments .
(a) Reduction of Severance Benefits . If any payment or benefit that Executive would receive from any Company Group member or any other party whether in connection with the provisions in this Agreement or otherwise (the “ Payment ”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “ Excise Tax ”), then the Payment will be equal to the Best Results Amount. The “ Best Results Amount ” will be either (A) the full amount of the Payment or (B) a lesser amount that would result in no portion of the Payment being subject to the Excise Tax, whichever of those amounts, taking into account the applicable federal, state and local employment taxes, income taxes and the Excise Tax, results in Executive’s receipt, on an after-tax basis, of the greater amount. If a reduction in payments or benefits constituting parachute payments is necessary so that the Payment equals the Best Results Amount, reduction will occur in the following order: reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of employee benefits. In the event that acceleration of vesting of stock award compensation is to be reduced, the acceleration of vesting will be cancelled in the reverse order of the date of grant of Executive’s equity awards unless Executive elects in writing a different order for cancellation. Executive will be solely responsible for the payment of all personal tax liability that is incurred as a result of the payments and benefits received under this Agreement, and Executive will not be reimbursed by any member of the Company Group for any of those payments of personal tax liability.
(b) Determination of Excise Tax Liability . The Company will select a professional services firm to make all of the determinations required to be made under these paragraphs relating to parachute payments. The Company will request that firm provide detailed supporting calculations both to the Company and Executive prior to the date on which the event that triggers the Payment occurs if administratively feasible, or subsequent to that date if events occur that result in parachute payments to Executive at that time. For purposes of making the calculations required under these paragraphs relating to parachute payments, the firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith determinations concerning the application of the Code. The Company and Executive will furnish to the firm any information and documents as the firm may reasonably request in order to make a determination under these paragraphs relating to parachute payments. The Company will bear all costs the firm may reasonably incur in connection with any calculations contemplated by these paragraphs relating to parachute payments. Any determination by the firm will be binding upon the Company and Executive, and the Company will have no liability to Executive for the determinations of the firm.
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11. Definition s . The following terms referred to in this Agreement will have the following meanings:
(a) Base Salary . “ Base Salary ” means Executive’s annual base salary as in effect immediately prior to Executive’s Qualified Termination (or if the termination is due to a resignation for Good Reason based on a material reduction in base salary, as applicable, then Executive’s annual base salary in effect immediately prior to the reduction) or, if Executive’s Qualified Termination is a CIC Qualified Termination and the amount is greater, at the level in effect immediately prior to the Change in Control.
(b) Board . “ Board ” means the Company’s Board of Directors.
(c) Cause . “ Cause ” (i) Executive’s failure to perform Executive’s duties or responsibilities to the Company Group or deliberate violation of a Company Group policy, including but not limited to those relating to insider trading or sexual harassment; (ii) Executive’s commission of any act of fraud, embezzlement, dishonesty or any other misconduct; (iii) unauthorized use or disclosure by Executive of any proprietary information or trade secrets of the Company Group or any other party to whom Executive owes an obligation of nondisclosure as a result of Executive’s relationship with the Company Group; (iv) Executive’s breach of any of Executive’s obligations under any written agreement or covenant with the Company Group, including this Agreement and the Confidentiality Agreement; or (v) Executive’s violation of any federal or state law or regulation applicable to the business of the Company Group.
(d) Change in Control . “ Change in Control ” means the occurrence of any of the following events:
(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“ Person ”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent ( 50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection, (A) the acquisition of additional stock by any one Person, who is considered to own more than fifty percent ( 50%) of the total voting power of the stock of the Company will not be considered a Change in Control, and (B) if the stockholders of the Company immediately before such change in ownership continue to retain immediately after the change in ownership, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately prior to the change in ownership, the direct or indirect beneficial ownership of fifty percent (50%) or more of the total voting power of the stock of the Company or of the ultimate parent entity of the Company, such event will not be considered a Change in Control under this subsection (i). For this purpose, indirect beneficial ownership will include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company, as the case may be, either directly or through one or more subsidiary corporations or other business entities; or
(ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12)-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this subsection (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or
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(iii) A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) ‑month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than fifty percent ( 50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty percent ( 50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent ( 50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent ( 50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Section 409A.
Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
(e) Change in Control Period . “ Change in Control Period ” means the period beginning 3 months prior to a Change in Control and ending 6 months following a Change in Control.
(f) COBRA . “ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
(g) Code . “ Code ” means the Internal Revenue Code of 1986, as amended.
(h) Company Group . “ Company Group ” means the Company and its subsidiaries and affiliates.
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(i) Disability . “ Disability ” means that Executive , at the time notice is give n, has been unab le to substantially perform his or her duties under this Agreement for not less than one-hundred and twenty (120) work days within a twelve (12) consecutive month period as a result of Executive’s incapacity due to a physical or mental condition and, if reasonable accommodation is required by law, after any reasonable accommodation.
(j) Equity Awards . “ Equity Awards ” means awards to purchase equity of any member of the Company Group, including awards of stock options, restricted stock, restricted stock units, performance shares, or performance stock units.
(k) Good Reason . “ Good Reason ” means the termination of Executive ’s employment with the Company Group by Executive in accordance with the next sentence after the occurrence of one or more of the following events without Executive’s express written consent: (i) a material reduction of Executive’s duties, authorities, or responsibilities relative to Executive’s duties, authorities, or responsibilities in effect immediately prior to the reduction; provided, however, that continued employment following a Change in Control with substantially the same duties, authorities, or responsibilities with respect to the Company Group’s business and operations will not constitute “Good Reason” (for example, “Good Reason” does not exist if Executive is employed by the Company Group or a successor with substantially the same duties, authorities, or responsibilities with respect to the Company Group’s business that Executive had immediately prior to the Change in Control regardless of whether Executive’s title is revised to reflect Executive’s placement within the overall corporate hierarchy or whether Executive provides services to a subsidiary, affiliate, business unit or otherwise); (ii) a material reduction by a Company Group member in Executive’s annual total target cash compensation; provided, however, that, a reduction of annual total target cash compensation that also applies to substantially all other similarly situated employees of the Company Group members will not constitute “Good Reason”; (iii) a material change in the geographic location of Executive’s primary work facility or location by more than 50 miles from Executive’s then present location; provided, that a relocation to a location that is within 50 miles from Executive’s then-present primary residence will not be considered a material change in geographic location, or (iv) failure of a successor corporation to assume the obligations under this Agreement. In order for the termination of Executive’s employment with a Company Group member to be for Good Reason, Executive must not terminate employment without first providing written notice to the Company of the acts or omissions constituting the grounds for “Good Reason” within 90 days of the initial existence of the grounds for “Good Reason” and a cure period of 30 days following the date of written notice (the “ Cure Period ”), the grounds must not have been cured during that time, and Executive must terminate Executive’s employment within 30 days following the Cure Period.
(l) Qualified Termination . “ Qualified Termination ” means a termination of Executive’s employment either (i) by a Company Group member without Cause (excluding by reason of Executive’s death or Disability) or (ii) by Executive for Good Reason, in either case, during the Change in Control Period (a “ CIC Qualified Termination ”).
(m) Confidentiality Agreement . “ Confidentiality Agreement ” means the At-Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement in effect as of the Effective Date and attached as Exhibit B .
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12. Confidential Information . As a condition to entering into this Agreement, Executive agrees to continue to abide by the terms of the Confidentiality Agreement.
13. Assignment . This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors, and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.
14. Notices . All notices and other communications required or permitted under this Agreement shall be in writing and will be effectively given (a) upon actual delivery to the party to be notified, (b) 24 hours after confirmed facsimile transmission, (c) 1 business day after deposit with a recognized overnight courier or (d) 3 business days after deposit with the U.S. Postal Service by first class certified or registered mail, return receipt requested, postage prepaid, addressed (i) if to Executive, at the address Executive shall have most recently furnished to the Company in writing, (ii) if to the Company, at the following address:
If to the Company:
Eminent, Inc.
16800 Edwards Road
Cerritos, CA 90703
ATTN: Chief Executive Officer
15. Severability . In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision.
16. Integration . This Agreement, along with the Confidentiality Agreement and the plans and agreements governing any Equity Award (except as specifically modified herein), represent the entire agreement and understanding between the parties as to the subject matter in this Agreement and supersede all prior or contemporaneous agreements whether written or oral. This Agreement may be modified only by agreement of the parties by a written instrument executed by the parties that is designated as an amendment to this Agreement.
17. Waiver of Breach . The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.
18. Headings . All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.
19. Tax Withholding . All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.
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20. Arbitration . Any dispute or controversy arising out of or relating to any interpretation, construction, performance or breach of this Agreement or the Confidentiality Agreement , will be settled by arbitration pursuant to the arbitration provisions set forth in the Confidentiality Agreement .
21. Governing Law . This Agreement will be governed by the laws of the State of California (with the exception of its conflict of laws provisions).
22. Acknowledgment . Executive acknowledges that Executive has had the opportunity to discuss this matter with and obtain advice from Executive’s private attorney, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement.
23. Gender Neutral . Wherever used in this Agreement, a pronoun in the masculine gender will be considered as including the feminine gender unless the context clearly indicates otherwise.
24. Counterparts . This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned.
[Signature page follows.]
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IN WITNESS WHEREOF, each of the parties has executed this Agreement (in the case of the Company, by a duly authorized officer), effective as of the last date set forth below (the “ Effective Date ”).
COMPANY:
EMINENT, Inc.
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By: |
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/s/ Michael Karanikolas |
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Date: |
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September 28, 2018 |
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Title: |
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Co-Chief Executive Officer |
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EXECUTIVE:
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/s/ Jesse Timmermans |
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Date: |
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September 28, 2018 |
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Jesse Timmermans |
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[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
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RELEASE OF CLAIMS
1. The undersigned employee, whose employment was terminated on ___________ (“Separation Date”), ______________ (“you” or “your”) hereby warrants and agrees with respect to Eminent, Inc. dba Revolve Clothing and its employees, owners, agents and representatives (hereinafter, collectively the “Company”) as follows:
CONSIDERATION.
Severance Payments and Benefits. In consideration of your acceptance of this Agreement, and subject to your meeting in full your obligations hereunder, the Company agrees it will pay you the severance payments and benefits set forth in Section [7] / [8] of the Employment Agreement to which this release is attached subject to the terms and conditions set forth therein.
No other Payments or Benefits. All wages, compensation, vacation, benefits or like or similar payments of any kind have already been fully paid to you . Except as may be set forth elsewhere in this Agreement, you acknowledge that you are not entitled to any other compensation, severance pay or benefits of any kind.
COMPLETE RELEASE.
Release . You irrevocably and unconditionally release all the claims described in hereunder that you may now have or which may arise before you sign this Agreement against the following persons or entities (the “Releasees”): the Company and all of its past and present owners, general partner(s), limited partners, officers, directors, employees, agents, representatives, assigns, attorneys, insurers, subsidiaries, Affiliates, predecessors, benefit plans, the benefit plans’ sponsors, fiduciaries, administrators, affiliates and agents, and any other persons acting by, through, under or in concert with any of the persons or entities listed in this subsection. You further agree to indemnify and hold harmless the Company from any and all taxes, penalties, attorneys’ fees or other charges with respect to the consideration in Section 1 above. For the purposes of this Agreement, “Affiliates” means all persons and entities directly or indirectly controlling, controlled by or under common control with the Company, where control may be by management authority, equity interest, or otherwise.
Claims Released . The claims released by you with respect to the Releasees include all claims, promises, debts, causes of action or similar rights of any type or nature contingent or non-contingent, matured or unmatured, liquidated or unliquidated, whether or not known, suspected or claimed you have or had or may have which in any way relate to the payment under this Agreement, your employment with the Company or the cessation of that employment. The claims you are releasing include, but are not limited to, claims arising under any:
Anti-Discrimination Statutes, such as Title VII of the Civil Rights Act of 1964, 42 U.S.C. §1981; Section 503 of the Rehabilitation Act of 1973; the Fair Labor Standards Act (including the Equal Pay Act) which prohibit race, color, religion, sex and national origin discrimination in employment; the Age Discrimination in Employment Act of 1967 (29 U.S.C. §621
through 634) and all amendments thereto, which prohibits age discrimination in employment; the California Fair Employment and Housing Act, which prohibits all forms of harassment, discrimination and retaliation; the Americans with Disabilities Act, which prohibits discrimination against individuals with disabilities; the Family Medical Leave Act of 1993; the California Family Rights Act; any other federal, state or municipal statute or ordinance relating to discrimination in employment or unfair employment practices; or any compensation-related claim including but not limited to misclassification, unpaid wages or penalties, overtime, meal and rest period pay, severance pay, bonus, sick leave, holiday pay, vacation pay, life insurance, health or medical insurance, employee benefit plan, or any other fringe benefit; and
Other laws, such as the California Constitution and the California Labor Code which regulates wages, hours and working conditions, workers’ compensation laws and all other laws which regulate employment in California or elsewhere; or any other federal, state or local laws whether based on statute, regulation or common law, providing recourse for alleged wrongful discharge, breach of contract (actual or implied), breach of the covenant of good faith and fair dealing, physical or personal injury, privacy, emotional distress, fraud, negligent misrepresentation, libel, slander, defamation, assault, battery, other torts, and similar or related claims.
Notwithstanding, this release shall not apply to any obligations that you have under this Agreement.
Release Extends to Both Known and Unknown Claims . This release covers both claims that you know about and claims you may not know about. You expressly waive all rights afforded by laws regarding a waiver of unknown claims including under California Civil Code §1542, and you do so understanding and acknowledging the significance of such a waiver. Section 1542 states as follows:
“ A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. ”
You hereby acknowledge that you may hereafter discover facts different from or in addition to those that you now know or believed to be true when you expressly agreed to assume the risk of the possible discovery of additional facts, and you agree that this Agreement will be and remain effective regardless of such additional or different facts. You expressly agree that this Agreement shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown or unsuspected claims, demands, causes of action, governmental, regulatory or enforcement actions, charges, obligations, damages, liabilities, and attorneys’ fees and costs, if any, as well as those relating to any other claims, demands, causes of action, obligations, damages, liabilities, charges and attorneys’ fees and costs specified herein.
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2. In addition to the release of claims in Paragraph 2, you also agree to the following:
Termination of Employment . You acknowledge that your employment with the Company has terminated as of the Separation Date. You agree that you have no right to re-employment and will not seek same.
No Pursuit of Released Claims or Incitement . You promise never to file or prosecute a lawsuit or any claim or complaint administrative or otherwise against the Company and its Affiliates, and that you have not done so in the past nor will you encourage others to do so. You agree that you will not induce or incite claims of discrimination, wrongful discharge, sexual or other forms of harassment, breach of contract, tortious acts or any other claims of any type whatsoever against the Company by any other person or employee, relating to such individual’s employment or business dealings with the Company.
Company Property . In signing this Agreement, you represent and warrant that you will return to the Company, as of the Separation Date, any and all documents, materials and information (whether in hardcopy, on electronic media or otherwise) related to the business of the Company and its Affiliates (whether present or otherwise), and all keys, access cards, credit cards, computer hardware and software, telephones and telephone-related equipment and all other property of the Company or any of its Affiliates in your possession or control. Further, you represent and warrant that you will not retain any copy or derivation of any documents, materials or information (whether in hardcopy, on electronic media or otherwise) of the Company or any of its Affiliates. Recognizing that your employment with the Company will terminate as of the Separation Date, you represent and warrant that you will not, following the Separation Date, for any purpose, attempt to access or use any computer or computer network or system of the Company or any of its Affiliates, including without limitation the electronic mail system, and you agree that you will not do so. Further, you acknowledge that you have disclosed to the Company all passwords necessary or desirable to obtain access to, or that would assist in obtaining access to, all information which you have password-protected on any computer equipment, network, or system of the Company or any of its Affiliates.
Confidentiality . You agree that you have kept and will keep completely confidential the fact, amount, and terms of this Agreement. You also agree herein that you will not disclose anything about this Agreement or any alleged disputes, complaints or claims you may have against the Company or its Affiliates, or any of the Company’s or any of its Affiliates’ trade secrets or confidential, proprietary or financial information to anyone (other than your immediate family, attorney and/or tax advisor, provided each such person is informed of and agrees to be bound by this confidentiality provision), specifically including, but not limited to, any past or present employee of the Company or to any representative of any media.
Non-Disparagement . You agree that you will not publicly disparage or comment negatively about the Company or any of its Affiliates, their officers, directors employees or agents, and you will not engage in or encourage other persons to engage in litigation against the Company or any of the other Releasees.
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Non-Solicitation . For a period of one ( 1 ) year following the Separation Date, you will not and will not assist any other third party to: (i) solicit for hiring any employee of the Company or any of its Affiliates or seek to persuade any employee of the Company or any of its Affiliates to discontinue such employment; or (ii) solicit or encourage any independent contractor providing services to the Company or any of its Affiliates to terminate or diminish its relationship with them. For the purposes of this agreement, an “employee” or an “independent contractor” of the Company of any of its Affiliates is any person who was such at any time during your employment with the Company.
No Work-Related Injuries or Illnesses . You acknowledge that you are not aware of any work-related injuries or illnesses you sustained as of the Separation Date of this Agreement.
OTHER TERMS.
Non‑Admission of Liability . By providing you payment in this Agreement, the Company is not admitting that it or anyone else has done anything wrong. You agree that this Agreement shall not be admissible in any court or other forum for any purpose other than the enforcement of its terms.
Severability . The provisions of this Agreement are severable. If any part of it is found to be unenforceable, all other provisions shall remain fully valid and enforceable.
Voluntary Agreement . You represent and agree that you have carefully read this Agreement, that you understand all of its terms, and that you are entering into it knowingly and voluntarily. You represent and agree you have had the opportunity to consult independent counsel regarding the content and legal effect of this Agreement.
No Representations . You represent that in signing this Agreement, you do not rely on nor have you relied on any representation or statement not specifically set forth in this Agreement by any of the Releasees with regard to the subject matter, basis or effect of this Agreement or otherwise.
NATURE, EFFECT AND INTERPRETATION OF THIS AGREEMENT.
Entire Agreement . This Agreement, and the terms of your Employment Agreement set forth in Section 1 above, are the entire Agreement between you and the Company; it may not be modified or canceled in any manner except by a writing signed by both the Company and you. You acknowledge that the Company has made no promises to you other than those in this Agreement.
Successors and Assignees . This Agreement shall bind your heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of all Releasees and their respective heirs, administrators, representatives, executors, successors and assigns.
Interpretation . This Agreement shall be construed as a whole according to its fair meaning, and not strictly for or against any of the parties.
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GOVERNING LAW, JURISDICTION AND VENUE.
This Agreement shall be interpreted under the laws of the State of California, both as to interpretation and performance. Any action initiated under this Agreement shall be brought in the County of Los Angeles, in the State of California.
If either party to this Agreement institutes any legal action or administrative proceeding against the other with respect to this Agreement or any claim hereunder, the prevailing party shall be entitled to recover all damages, costs, expenses and attorneys’ fees incurred as a result of such action.
EFFECTIVE DATE OF THIS AGREEMENT.
This Agreement was presented to you for your review and consideration on ____________ (“Review Date”). You are entitled to review and consider this Agreement for twenty-one (21) calendar days following the Review Date before signing and returning this Agreement to the Company, unless you choose to execute the Acknowledgment and Waiver attached hereto. If you do not accept the terms of this Agreement in writing within twenty-one (21) days of the Review Date, any offer implied by the presentation of this Agreement for your review and consideration is withdrawn in its entirety at that time. For a period of seven (7) calendar days following your execution of this Agreement, you may revoke this Agreement (“Revocation Period”). You may revoke this Agreement only by giving the Company formal, written notice of your revocation of this Agreement, to be received by the David Staels, CHRO of Revolve, located at 16610 Marquardt, Ave, Cerritos, CA 90703 by the close of business on the seventh (7 th ) day following your execution of this Agreement. This Agreement shall not become effective in any respect until the Revocation Period has expired without notice of revocation. In the absence of your revocation of this Agreement, the eighth (8 th ) day after your execution of this Agreement shall be the “Effective Date” of this Agreement, at which time the rights of all parties under this Agreement become fully enforceable.
3. PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. BY SIGNING BELOW, YOU ACKNOWLEDGE THAT YOU HAVE READ AND UNDERSTAND THE TERMS OF THIS AGREEMENT, AND THAT IT IS YOUR INTENT TO RELEASE ANY CLAIMS YOU HAVE OR MAY HAVE AGAINST THE COMPANY, AS DESCRIBED ABOVE, IN EXCHANGE FOR THE SEVERANCE PAY OFFERED BY THE COMPANY. YOU ALSO ACKNOWLEDGE THAT YOU EITHER HAVE CONSULTED AN ATTORNEY REGARDING THIS AGREEMENT OR YOU HAVE ELECTED NOT TO CONSULT AN ATTORNEY, AND ARE THEREFORE KNOWINGLY AND VOLUNTARILY ENTERING INTO THIS AGREEMENT.
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ACKNOWLEDGMENT AND WAIVER
I, ________________, acknowledge I was given twenty-one (21) days to review and consider the foregoing Agreement and voluntarily chose to sign the Agreement prior to the expiration of the twenty-one (21) day period.
I declare under penalty of perjury of the laws of the State of California that the foregoing is true and correct.
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EMPLOYEE
__________________________
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DATE: |
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CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
Exhibit 10.15
EMINENT, Inc.
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the “ Agreement ”) is entered into as of the Effective Date (as defined below) by and between Eminent, Inc. (the “ Company ”), and David Pujades (“ Executive ”).
1. Duties and Scope of Employment .
(a) Positions and Duties . As of the Effective Date, Executive will continue to serve as the Company’s Chief Operating Officer and Head of Strategy and report to the Company’s Chief Executive Officer (the “ CEO ”). Executive will render business and professional services in the performance of Executive’s duties, consistent with Executive’s position within the Company, as will reasonably be assigned to Executive by the CEO.
(b) Obligations . During the Employment Term, Executive will perform Executive’s duties faithfully and to the best of Executive’s ability and will devote Executive’s full business efforts and time to the Company. For the duration of the Employment Term, Executive agrees not to (i) actively engage in any other employment, occupation, or consulting activity for any direct or indirect remuneration or (ii) serve on other boards of directors, in all cases, without the prior approval of the Board. Executive further agrees to comply with all Company policies, including, for the avoidance of any doubt, any insider trading policies and compensation clawback policies currently in existence or that may be adopted by the Company during the Employment Term.
(c) Employment Term; At-Will Employment . As of the Effective Date, Executive and Company mutually agree Executive will continue to be employed by the Company through the end of the IPO Period, and will remain employed on an at-will basis thereafter (the period during which Executive is employed with the Company, the “ Employment Term ”). The parties agree that Executive’s employment with the Company during the Employment Term remains “at-will” employment and may be terminated at any time with or without cause or notice; provided, however, that in the event the Company desires to terminate Executive’s employment with the Company during the IPO Period for reasons other than Cause, the Company must first either provide notice to the Executive for the remaining duration of the IPO Period (such termination not to take effect until the end of the IPO Period) or provide the payments and benefits under Section 7(b). Executive understands and agrees that neither Executive’s job performance nor promotions, commendations, bonuses or the like from the Company give rise to or in any way serve as the basis for modification, amendment, or extension, by implication or otherwise, of Executive’s employment with the Company. However, as described in this Agreement, Executive may be entitled to severance payments and benefits depending on the circumstances of Executive’s termination of employment with the Company.
(a) Base Salary . The Company will pay Executive an annual salary of $424,000 as compensation for Executive’s services. The annual base salary will be paid periodically in accordance with the Company’s normal payroll practices and be subject to the usual, required withholdings. Executive’s annual base salary will be subject to periodic review by the Company’s board of directors or its compensation committee (either, the “ Committee ”) and adjustments may be made by the Committee.
(b) Target Bonus . Executive will be eligible to receive an annual target bonus of 40% of Executive’s annual base salary (the “ Target Bonus ”) upon achievement of performance objectives to be determined by the Committee. Executive’s Target Bonus will be subject to periodic review by the Committee and adjustments may be made by the Committee. The amount of any Target Bonus to be paid to Executive, if any, and the timing of such payment will be: (i) determined in the sole discretion of the Committee pursuant to the terms of the Company’s bonus plan governing such opportunity and (ii) subject to Executive’s continued employment with the Company through the payment date, provided that if Executive’s employment with the Company is terminated by the Company without Cause during a performance period and before such payment date, the Company will pay Executive the prorated portion of the actual bonus that Executive would have received based on the achievement of the relevant performance metrics had Executive been employed with the Company through the payment date, with the proration based on the number of days in which Executive is employed during that performance period.
(c) Equity .
(i) Executive will be eligible to receive Equity Awards pursuant to any plans or arrangements the Company or its affiliates may have in effect from time to time. The Committee will determine in its discretion whether Executive will be granted any Equity Awards and the terms of any Equity Awards in accordance with the terms of any applicable plan or arrangement that may be in effect from time to time.
(ii) Any outstanding Equity Awards held by Executive as of the Effective Date shall continue to be governed by the terms and conditions of the Advance Holdings, LLC 2013 Equity Incentive Plan (the “ 2013 Plan ”) and form of option agreement thereunder, except as otherwise amended by Sections 7 and 8 of this Agreement. For clarity, as set forth in Section 7(b) of the 2013 Plan, in the event of a dividend, split or combination of the interests subject to Equity Awards granted under the 2013 Plan (including a reverse split), recapitalization or other change in the capital structure that constitutes an equity restructuring within the meaning of ASC Topic 718 (each such an event being an “ Equity Change” ), the 2013 Plan administrator shall make appropriate adjustments to the number and kind of equity interests or securities subject to such Equity Awards granted thereunder that are then outstanding or subsequently granted, any exercise prices relating to such Equity Awards and any other provision of such Equity Awards affected by such change. Such adjustments made by the 2013 Plan Administrator shall be equitable and result in the value of each such Equity Award immediately following the occurrence of the Equity Change being approximately equivalent value of such Equity Award as of immediately before the occurrence of the Equity Change.
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3. Employee Benefits . Executive will be entitled to participate in employee benefit plans and programs of the Company, if any, on the same terms and conditions as other similarly-situated employees to the extent that Executive’s position, tenure, salary, age, health and other qualifications make Executive eligible to participate in the plans or programs, subject to the rules and regulations applicable thereto. The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time.
4. PTO . Executive will be entitled to paid time off (PTO) in accordance with the Company’s PTO policy, with the timing and duration of specific days off mutually and reasonably agreed to by the parties.
5. Expenses . The Company will reimburse Executive for reasonable travel, entertainment or other expenses incurred by Executive in the furtherance of or in connection with the performance of Executive’s duties under this Agreement, in accordance with the Company’s expense reimbursement policy as in effect from time to time.
7. Severance and Change in Control Benefits .
(a) Non-CIC Qualified Termination . Subject to Section 9, on a Non-CIC Qualified Termination, Executive will be eligible to receive the following payments and benefits from the Company:
(i) Continuing Salary Severance . The Company will pay Executive continuing payments of severance pay at a rate equal to Executive’s Base Salary for a period of 6 months. The severance will be paid, less applicable withholdings, in installments over the severance period in accordance with the Company’s regular payroll procedures, with the first installment to be paid on the first regular payroll date of the Company following the date on which the Release (as defined below) becomes irrevocable (subject to Section 9 of this Agreement).
(ii) COBRA . The Company will pay Executive a lump-sum payment equal to the aggregate cost of COBRA premiums for Executive and his eligible dependents to continue health care coverage under COBRA for a period of 6 months from the date of Executive’s termination of employment (with such payment based on the COBRA premium rates in effect on the date of Executive’s termination of employment). This payment will be paid on the first regular payroll date of the Company following the date on which the Release becomes irrevocable (subject to any delay as required under Section 9 below), and regardless of whether Executive or his eligible dependents elects continuation coverage pursuant to COBRA.
(iii) Equity Vesting . Except as provided in Section 7(b), none of the then-unvested shares subject to each of Executive’s then-outstanding Equity Awards will be entitled to accelerated vesting and, in the case of options and stock appreciation rights, accelerated exercisability.
(b) Early Non-CIC Qualified Termination . Subject to Section 9, on an Early Non-CIC Qualified Termination, Executive will be eligible to receive the following benefits from the Company in addition to all payments and benefits described in Section 7(a)(i)-(iii):
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(i) Continuing Salary Severance . The Company will pay Executive continuing payments of severance pay at a rate equal to Executive’s Base Salary through the end of the IPO Period . The severance will be paid, less applicable withholdings, in installments over the severance period in accordance with the Company’s regular payroll procedures, with the first installment to be paid on the first regular payroll date of the Company following the date on which the Release (as defined below) becomes irrevocable (subject to Section 9 of this Agreement).
(ii) COBRA . The Company will pay Executive a lump-sum payment equal to the aggregate cost of COBRA premiums for Executive and his eligible dependents to continue health care coverage under COBRA for a period from the date of Executive’s termination of employment (with such payment based on the COBRA premium rates in effect on the date of Executive’s termination of employment) through the end of the IPO Period. This payment will be paid on the first regular payroll date of the Company following the date on which the Release becomes irrevocable (subject to any delay as required under Section 9 below), and regardless of whether Executive or his eligible dependents elects continuation coverage pursuant to COBRA.
(iii) Equity Vesting . That number of then-unvested shares subject to each of Executive’s then-outstanding Equity Awards that would have vested and become exercisable as of the end of the IPO Period (had Executive remained continuously employed with the Company Group through that time) will immediately vest and become exercisable. Any other then-unvested portion of Executive’s then-outstanding Equity Awards will remain outstanding for 3 months or until the occurrence of a Change in Control (whichever is earlier) so that any benefits due on a CIC Qualified Termination as set forth in Section 7(c)(iii) below can be provided if a Change in Control occurs within 3 months following the applicable Early Non-CIC Qualified Termination (provided that in no event will Executive’s stock options or similar Equity Awards remain outstanding beyond the Equity Award’s maximum term to expiration). If no Change in Control occurs within 3 months following an applicable Qualified Termination, any unvested portion of Executive’s then-outstanding Equity Awards automatically will be forfeited permanently on the date that is 3 months following such Qualified Termination.
(c) CIC Qualified Termination . Subject to Section 9, o n a CIC Qualified Termination, Executive will be eligible to receive the following payments and benefits from the Company:
(i) Salary Severance . The Company will pay Executive a lump-sum payment equal to 6 months of Executive’s Base Salary on the first regular payroll date of the Company following the date on which the Release becomes irrevocable (subject to any delay as required under Section 9 below).
(ii) COBRA . The Company will pay Executive a lump-sum payment equal to the aggregate cost of COBRA premiums for Executive and his eligible dependents to continue health care coverage under COBRA for a period of 6 months from the date of Executive’s termination of employment (with such payment based on the COBRA premium rates in effect on the date of Executive’s termination of employment). This payment will be paid on the first regular payroll date of the Company following the date on which the Release becomes irrevocable (subject to any delay as required under Section 9 below), and regardless of whether Executive or his eligible dependents elects continuation coverage pursuant to COBRA.
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(iii) Equity Vesting . 100 % of the then-unvested shares subject to each of Executive’s then-outstanding Equity Awards will immediately vest and, in the case of options and stock appreciation rights, will become exercisable (for the avoidance of doubt, no more than 100 % of the shares subject to the then-outstanding portion of an Equity Award may vest and become exercisable under this provision). In the case of an Equity Award with performance-based vesting, unless otherwise specified in the applicable Equity Award agreement governing such award, all performance goals and other vesting criteria will be deemed achieved at the greater of actual performance measured as of the date of termination or 100 % of target levels. Any restricted stock units, performance shares , performance units, and/or similar full value awards that vest under this paragraph will be settled on the date on which the Release becomes irrevocab le (subject to any delay as required under Section 9 below) .
(d) Termination other than a Qualified Termination . If the termination of Executive’s employment with the Company Group is not a Qualified Termination, then Executive will not be entitled to receive severance or other benefits.
(e) Non- Duplication of Payment or Benefits . If (i) Executive’s Qualified Termination occurs prior to a Change in Control that qualifies Executive for severance payments and benefits under Sections 7(a) or 7(b), as applicable, and (ii) a Change in Control occurs within the 3‑month period following Executive’s Qualified Termination that qualifies Executive for severance payments and benefits under Section 7(c), then (A) Executive will cease receiving any further payments or benefits under Sections 7(a) or 7(b), as applicable, and (B) Executive will receive the payments and benefits under Section 7(c) instead but each of the payments and benefits otherwise payable under Section 7(c) will be offset by the corresponding payments or benefits Executive already received under Sections 7(a) or 7(b), as applicable.
(f) Death of Executive . If Executive dies before all payments or benefits Executive is entitled to receive under this Agreement have been paid, the unpaid amounts will be paid to Executive’s designated beneficiary, if living, or otherwise to Executive’s personal representative in a lump-sum payment as soon as possible following Executive’s death.
(g) Transfer between the Company Group . For purposes of this Agreement, if Executive is involuntarily transferred from one member of the Company Group to another, the transfer will not be a termination without Cause but may give Executive the ability to resign for Good Reason.
(h) Exclusive Remedy . In the event of a termination of Executive’s employment with the Company Group, the provisions of this Agreement are intended to be and are exclusive and in lieu of any other rights or remedies to which Executive may otherwise be entitled, whether at law, tort or contract, or in equity. Executive will be entitled to no benefits, compensation or other payments or rights upon termination of employment other than those benefits expressly set forth in this Agreement.
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8. Accrued Compensation . On any termination of Executive ’s employment with the Company Group, Executive will be entitled to receive all accrued but unpaid vacation, expense reimbursements, wages, and other benefits due to Executive under any Company-provided plans, policies, and arrangements or as otherwise required by applicable law .
9. Conditions to Receipt of Severance .
(a) Separation Agreement and Release of Claims . Executive’s receipt of any severance payments or benefits upon Executive’s Qualified Termination under Section 7 is subject to Executive signing and not revoking the Company’s then-standard separation agreement and release of claims in substantially the form set forth as Exhibit A hereto, subject to any changes that the Company believes are necessary or appropriate (the “ Release ” and that requirement, the “ Release Requirement ”), which must become effective and irrevocable no later than the 60th day following Executive’s Qualified Termination (the “ Release Deadline ”). If the Release does not become effective and irrevocable by the Release Deadline, Executive will forfeit any right to severance payments or benefits under Section 7. In no event will severance payments or benefits under Section 7 be paid or provided until the Release actually becomes effective and irrevocable. To the extent that payments are delayed under Section 9(c), the Company will pay or provide Executive the severance payments and benefits that Executive would otherwise have received under Section 7 on or prior to that date, with the balance of the severance payments and benefits being paid or provided as originally scheduled.
(b) Return of Company Property . Executive’s receipt of any severance payments or benefits upon Executive’s Qualified Termination under Section 7 is subject to Executive returning all documents and other property provided to Executive by any member of the Company Group (with the exception of a copy of the Employee Handbook and personnel documents specifically relating to Executive), developed or obtained by Executive in connection with his employment with the Company Group, or otherwise belonging to the Company Group.
(c) Section 409A . The Company intends that all payments and benefits provided under this Agreement or otherwise are exempt from, or comply with, the requirements of Section 409A of the Code and any guidance promulgated under Section 409A of the Code (collectively, “ Section 409A ”) so that none of the payments or benefits will be subject to the additional tax imposed under Section 409A, and any ambiguities in this Agreement will be interpreted in accordance with this intent. No payment or benefits to be paid to Executive, if any, under this Agreement or otherwise, when considered together with any other severance payments or separation benefits that are considered deferred compensation under Section 409A (together, the “ Deferred Payments ”), will be paid or otherwise provided until Executive has a “separation from service” within the meaning of Section 409A. Any severance benefits that would be considered Deferred Payments will be paid on, or, in the case of installments, will not commence until, the 60th day following Executive’s separation from service, or, if later, such time as required under this paragraph. Except as required under this paragraph, any installment payments that would have been made to you during the 60-day period immediately following Executive’s separation from service but for the preceding sentence will be paid to you on the 60th day following Executive’s separation from service and the remaining payments will be made as provided above. If, at the time of Executive’s termination of employment, Executive is a “specified employee” within the meaning of Section 409A, then the payment of the Deferred Payments will be delayed to the extent necessary to
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avoid the imposition of the additional tax imposed under Section 409A, which generally means that Executive will receive payment on the first payroll date that occurs on or after the date that is 6 months and 1 day following Executive ’s termination of employment. The Company reserves the right to amend t his Agreement as it considers necessary or advisable, in its sole discretion and without the consent of Executive or any other individual, to comply with any provision required to avoid the imposition of the additional tax imposed under Section 409A or to otherwise avoid income recognition under Section 409A prior to the actual payment of any benefits or imposition of any additional tax. Each payment, installment, and benefit payable under t his Agreement is intended to constitute a separate payment for purposes of U.S. Treasury Regulation Section 1.409A-2(b)(2). In no event will any member of the Company Group reimburse Executive for any taxes that may be imposed on Executive as a result of Section 409A.
(d) Resignation of Officer and Director Positions . Executive’s receipt of any severance payments or benefits upon Executive’s Qualified Termination under Section 7 is subject to Executive resigning from all officer and director positions with all members of the Company Group and Executive executing any documents the Company may require in connection with the same.
10. Limitation on Payments .
(a) Reduction of Severance Benefits . If any payment or benefit that Executive would receive from any Company Group member or any other party whether in connection with the provisions in this Agreement or otherwise (the “ Payment ”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “ Excise Tax ”), then the Payment will be equal to the Best Results Amount. The “ Best Results Amount ” will be either (A) the full amount of the Payment or (B) a lesser amount that would result in no portion of the Payment being subject to the Excise Tax, whichever of those amounts, taking into account the applicable federal, state and local employment taxes, income taxes and the Excise Tax, results in Executive’s receipt, on an after-tax basis, of the greater amount. If a reduction in payments or benefits constituting parachute payments is necessary so that the Payment equals the Best Results Amount, reduction will occur in the following order: reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of employee benefits. In the event that acceleration of vesting of stock award compensation is to be reduced, the acceleration of vesting will be cancelled in the reverse order of the date of grant of Executive’s equity awards unless Executive elects in writing a different order for cancellation. Executive will be solely responsible for the payment of all personal tax liability that is incurred as a result of the payments and benefits received under this Agreement, and Executive will not be reimbursed by any member of the Company Group for any of those payments of personal tax liability.
(b) Determination of Excise Tax Liability . The Company will select a professional services firm to make all of the determinations required to be made under these paragraphs relating to parachute payments. The Company will request that firm provide detailed supporting calculations both to the Company and Executive prior to the date on which the event that triggers the Payment occurs if administratively feasible, or subsequent to that date if events occur that result in parachute payments to Executive at that time. For purposes of making the calculations required under these paragraphs relating to parachute payments, the firm may make reasonable
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assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith determinations concerning the application of the Code. The Company and Executive will furnish to the firm any information and documents as the firm may reasonably request in order to make a determination under these paragraphs relating to parachute payments. The Company will bear all costs the firm may reasonably incur in connection with any calculations contemplated by these paragraphs relating to parachute payments. Any determination by the firm will be binding upon the Company and Executive , and the Company will have no liability to Executive for the determinations of the firm.
11. Definitions . The following terms referred to in this Agreement will have the following meanings:
(a) Base Salary . “ Base Salary ” means Executive’s annual base salary as in effect immediately prior to Executive’s Qualified Termination (or if the termination is due to a resignation for Good Reason based on a material reduction in base salary, as applicable, then Executive’s annual base salary in effect immediately prior to the reduction) or, if Executive’s Qualified Termination is a CIC Qualified Termination and the amount is greater, at the level in effect immediately prior to the Change in Control.
(b) Board . “ Board ” means the Company’s Board of Directors.
(c) Cause . “ Cause ” (i) Executive’s failure to perform Executive’s duties or responsibilities to the Company Group or deliberate violation of a Company Group policy, including but not limited to those relating to insider trading or sexual harassment; (ii) Executive’s commission of any act of fraud, embezzlement, dishonesty or any other misconduct; (iii) unauthorized use or disclosure by Executive of any proprietary information or trade secrets of the Company Group or any other party to whom Executive owes an obligation of nondisclosure as a result of Executive’s relationship with the Company Group; (iv) Executive’s breach of any of Executive’s obligations under any written agreement or covenant with the Company Group, including this Agreement and the Confidentiality Agreement; or (v) Executive’s violation of any federal or state law or regulation applicable to the business of the Company Group.
(d) Change in Control . “ Change in Control ” means the occurrence of any of the following events:
(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“ Person ”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent ( 50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection, (A) the acquisition of additional stock by any one Person, who is considered to own more than fifty percent ( 50%) of the total voting power of the stock of the Company will not be considered a Change in Control, and (B) if the stockholders of the Company immediately before such change in ownership continue to retain immediately after the change in ownership, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately prior to the change in ownership, the direct or indirect beneficial ownership of fifty percent (50%) or more of the total voting power of the stock of the Company or of the ultimate parent entity of the Company, such event will not be considered a Change in Control
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under this subsection (i). For this purpose, indirect beneficial ownership will include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company, as the case may be, either directly or through one or more subsidiary corporations or other business entities; or
(ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12)-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this subsection (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or
(iii) A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12)‑month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than fifty percent ( 50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty percent ( 50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent ( 50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent ( 50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Section 409A.
Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
(e) Change in Control Period . “ Change in Control Period ” means the period beginning 3 months prior to a Change in Control and ending 12 months following a Change in Control.
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(f) COBRA . “ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
(g) Code . “ Code ” means the Internal Revenue Code of 1986, as amended.
(h) Company Group . “ Company Group ” means the Company and its subsidiaries and affiliates.
(i) Disability . “ Disability ” means that Executive, at the time notice is given, has been unable to substantially perform his or her duties under this Agreement for not less than one-hundred and twenty (120) work days within a twelve (12) consecutive month period as a result of Executive’s incapacity due to a physical or mental condition and, if reasonable accommodation is required by law, after any reasonable accommodation.
(j) Equity Awards . “ Equity Awards ” means awards to purchase equity of any member of the Company Group, including awards of stock options, restricted stock, restricted stock units, performance shares, or performance stock units.
(k) Good Reason . “ Good Reason ” means the termination of Executive ’s employment with the Company Group by Executive in accordance with the next sentence after the occurrence of one or more of the following events without Executive’s express written consent: (i) a material reduction of Executive’s duties, authorities, or responsibilities relative to Executive’s duties, authorities, or responsibilities in effect immediately prior to the reduction; provided, however, that continued employment following a Change in Control with substantially the same duties, authorities, or responsibilities with respect to the Company Group’s business and operations will not constitute “Good Reason” (for example, “Good Reason” does not exist if Executive is employed by the Company Group or a successor with substantially the same duties, authorities, or responsibilities with respect to the Company Group’s business that Executive had immediately prior to the Change in Control regardless of whether Executive’s title is revised to reflect Executive’s placement within the overall corporate hierarchy or whether Executive provides services to a subsidiary, affiliate, business unit or otherwise); (ii) a material reduction by a Company Group member in Executive’s annual total target cash compensation; provided, however, that, a reduction of annual total target cash compensation that also applies to substantially all other similarly situated employees of the Company Group members will not constitute “Good Reason”; (iii) a material change in the geographic location of Executive’s primary work facility or location by more than 50 miles from Executive’s then present location; provided, that a relocation to a location that is within 50 miles from Executive’s then-present primary residence will not be considered a material change in geographic location, or (iv) failure of a successor corporation to assume the obligations under this Agreement. In order for the termination of Executive’s employment with a Company Group member to be for Good Reason, Executive must not terminate employment without first providing written notice to the Company of the acts or omissions constituting the grounds for “Good Reason” within 90 days of the initial existence of the grounds for “Good Reason” and a cure period of 30 days following the date of written notice (the “ Cure Period ”), the grounds must not have been cured during that time, and Executive must terminate Executive’s employment within 30 days following the Cure Period.
(l) IPO . “ IPO ” means the effective date of a registration statement under the Securities Act of 1933, as amended for the primary initial public offering of the securities of the Company or another member of the Company Group.
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(m) IPO Period . “ IPO Period ” means the date commencing on the IPO and ending on the first business day following the expiration of the lock -up period as defined in Company’s S - 1 registration statement filed in connection with the IPO .
(n) Qualified Termination . “ Qualified Termination ” means (i) a termination of Executive’s employment by a Company Group member without Cause (excluding by reason of Executive’s death or Disability) on a date that is outside of the IPO Period and, in any event, outside of the Change in Control Period (a “ Non-CIC Qualified Termination ”), (ii) a termination of Executive’s employment by a Company Group member without Cause (including by reason of Executive’s death or Disability) occurring during the IPO Period (a “ Early Non-CIC Qualified Termination ”), or (iii) a termination of Executive’s employment either (A) by a Company Group member without Cause (excluding by reason of Executive’s death or Disability) or (B) by Executive for Good Reason, in either case, during the Change in Control Period (a “ CIC Qualified Termination ”).
(o) Confidentiality Agreement . “ Confidentiality Agreement ” means the At-Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement in the form attached hereto as Exhibit B .
12. Confidential Information . As a condition to entering into this Agreement, Executive agrees to executive and deliver the Confidentiality Agreement.
13. Assignment . This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors, and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.
14. Notices . All notices and other communications required or permitted under this Agreement shall be in writing and will be effectively given (a) upon actual delivery to the party to be notified, (b) 24 hours after confirmed facsimile transmission, (c) 1 business day after deposit with a recognized overnight courier or (d) 3 business days after deposit with the U.S. Postal Service by first class certified or registered mail, return receipt requested, postage prepaid, addressed (i) if to Executive, at the address Executive shall have most recently furnished to the Company in writing, (ii) if to the Company, at the following address:
If to the Company:
Eminent, Inc.
16800 Edwards Road
Cerritos, CA 90703
ATTN: Chief Executive Officer
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15. Severability . In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision.
16. Integration . This Agreement, along with the Confidentiality Agreement and the plans and agreements governing any Equity Award (except as specifically modified herein), represent the entire agreement and understanding between the parties as to the subject matter in this Agreement and supersede all prior or contemporaneous agreements whether written or oral. This Agreement may be modified only by agreement of the parties by a written instrument executed by the parties that is designated as an amendment to this Agreement.
17. Waiver of Breach . The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.
18. Headings . All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.
19. Tax Withholding . All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.
20. Arbitration . Any dispute or controversy arising out of or relating to any interpretation, construction, performance or breach of this Agreement or the Confidentiality Agreement , will be settled by arbitration pursuant to the arbitration provisions set forth in the Confidentiality Agreement .
21. Governing Law . This Agreement will be governed by the laws of the State of California (with the exception of its conflict of laws provisions).
22. Acknowledgment . Executive acknowledges that Executive has had the opportunity to discuss this matter with and obtain advice from Executive’s private attorney, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement.
23. Gender Neutral . Wherever used in this Agreement, a pronoun in the masculine gender will be considered as including the feminine gender unless the context clearly indicates otherwise.
24. Counterparts . This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned.
[Signature page follows.]
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IN WITNESS WHEREOF, each of the parties has executed this Agreement (in the case of the Company, by a duly authorized officer), effective as of the last date set forth below (the “ Effective Date ”).
COMPANY:
EMINENT, Inc.
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By: |
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/s/ Jesse Timmermans |
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Date: |
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September 28, 2018 |
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Title: |
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Chief Financial Officer |
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EXECUTIVE:
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David Pujades |
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Date: |
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September 28, 2018 |
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David Pujades |
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[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
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RELEASE OF CLAIMS
1. The undersigned employee, whose employment was terminated on ___________ (“Separation Date”), ______________ (“you” or “your”) hereby warrants and agrees with respect to Eminent, Inc. dba Revolve Clothing and its employees, owners, agents and representatives (hereinafter, collectively the “Company”) as follows:
CONSIDERATION.
Severance Payments and Benefits. In consideration of your acceptance of this Agreement, and subject to your meeting in full your obligations hereunder, the Company agrees it will pay you the severance payments and benefits set forth in Section [7] / [8] of the Employment Agreement to which this release is attached subject to the terms and conditions set forth therein.
No other Payments or Benefits. All wages, compensation, vacation, benefits or like or similar payments of any kind have already been fully paid to you . Except as may be set forth elsewhere in this Agreement, you acknowledge that you are not entitled to any other compensation, severance pay or benefits of any kind.
COMPLETE RELEASE.
Release . You irrevocably and unconditionally release all the claims described in hereunder that you may now have or which may arise before you sign this Agreement against the following persons or entities (the “Releasees”): the Company and all of its past and present owners, general partner(s), limited partners, officers, directors, employees, agents, representatives, assigns, attorneys, insurers, subsidiaries, Affiliates, predecessors, benefit plans, the benefit plans’ sponsors, fiduciaries, administrators, affiliates and agents, and any other persons acting by, through, under or in concert with any of the persons or entities listed in this subsection. You further agree to indemnify and hold harmless the Company from any and all taxes, penalties, attorneys’ fees or other charges with respect to the consideration in Section 1 above. For the purposes of this Agreement, “Affiliates” means all persons and entities directly or indirectly controlling, controlled by or under common control with the Company, where control may be by management authority, equity interest, or otherwise.
Claims Released . The claims released by you with respect to the Releasees include all claims, promises, debts, causes of action or similar rights of any type or nature contingent or non-contingent, matured or unmatured, liquidated or unliquidated, whether or not known, suspected or claimed you have or had or may have which in any way relate to the payment under this Agreement, your employment with the Company or the cessation of that employment. The claims you are releasing include, but are not limited to, claims arising under any:
Anti-Discrimination Statutes, such as Title VII of the Civil Rights Act of 1964, 42 U.S.C. §1981; Section 503 of the Rehabilitation Act of 1973; the Fair Labor Standards Act (including the Equal Pay Act) which prohibit race, color, religion, sex and national origin discrimination in employment; the Age Discrimination in Employment Act of 1967 (29 U.S.C. §621 through 634) and all amendments thereto, which prohibits age discrimination in employment; the
California Fair Employment and Housing Act, which prohibits all forms of harassment, discrimination and retaliation; the Americans with Disabilities Act, which prohibits discrimination against individuals with disabilities; the Family Medical Leave Act of 1993; the California Family Rights Act; any other federal, state or municipal statute or ordinance relating to discrimination in employment or unfair employment practices; or any compensation-related claim including but not limited to misclassification, unpaid wages or penalties, overtime, meal and rest period pay, severance pay, bonus, sick leave, holiday pay, vacation pay, life insurance, health or medical insurance, employee benefit plan, or any other fringe benefit; and
Other laws, such as the California Constitution and the California Labor Code which regulates wages, hours and working conditions, workers’ compensation laws and all other laws which regulate employment in California or elsewhere; or any other federal, state or local laws whether based on statute, regulation or common law, providing recourse for alleged wrongful discharge, breach of contract (actual or implied), breach of the covenant of good faith and fair dealing, physical or personal injury, privacy, emotional distress, fraud, negligent misrepresentation, libel, slander, defamation, assault, battery, other torts, and similar or related claims.
Notwithstanding, this release shall not apply to any obligations that you have under this Agreement.
Release Extends to Both Known and Unknown Claims . This release covers both claims that you know about and claims you may not know about. You expressly waive all rights afforded by laws regarding a waiver of unknown claims including under California Civil Code §1542, and you do so understanding and acknowledging the significance of such a waiver. Section 1542 states as follows:
“ A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. ”
You hereby acknowledge that you may hereafter discover facts different from or in addition to those that you now know or believed to be true when you expressly agreed to assume the risk of the possible discovery of additional facts, and you agree that this Agreement will be and remain effective regardless of such additional or different facts. You expressly agree that this Agreement shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown or unsuspected claims, demands, causes of action, governmental, regulatory or enforcement actions, charges, obligations, damages, liabilities, and attorneys’ fees and costs, if any, as well as those relating to any other claims, demands, causes of action, obligations, damages, liabilities, charges and attorneys’ fees and costs specified herein.
YOUR PROMISES.
2. In addition to the release of claims in Paragraph 2, you also agree to the following:
Termination of Employment . You acknowledge that your employment with the Company has terminated as of the Separation Date. You agree that you have no right to re-employment and will not seek same.
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No Pursuit of Released Claims or Incitement . You promise never to file or prosecute a lawsuit or any claim or complaint administrative or otherwise against the Company and its Affiliates, and that you have not done so in the past nor will you encourage others to do so. You agree that you will not induce or incite claims of discrimination, wrongful discharge, sexual or other forms of harassment, breach of contract, tortious acts or any other claims of any type whatsoever against the Company by any other person or employee, relating to such individual’s employment or business dealings with the Company.
Company Property . In signing this Agreement, you represent and warrant that you will return to the Company, as of the Separation Date, any and all documents, materials and information (whether in hardcopy, on electronic media or otherwise) related to the business of the Company and its Affiliates (whether present or otherwise), and all keys, access cards, credit cards, computer hardware and software, telephones and telephone-related equipment and all other property of the Company or any of its Affiliates in your possession or control. Further, you represent and warrant that you will not retain any copy or derivation of any documents, materials or information (whether in hardcopy, on electronic media or otherwise) of the Company or any of its Affiliates. Recognizing that your employment with the Company will terminate as of the Separation Date, you represent and warrant that you will not, following the Separation Date, for any purpose, attempt to access or use any computer or computer network or system of the Company or any of its Affiliates, including without limitation the electronic mail system, and you agree that you will not do so. Further, you acknowledge that you have disclosed to the Company all passwords necessary or desirable to obtain access to, or that would assist in obtaining access to, all information which you have password-protected on any computer equipment, network, or system of the Company or any of its Affiliates.
Confidentiality . You agree that you have kept and will keep completely confidential the fact, amount, and terms of this Agreement. You also agree herein that you will not disclose anything about this Agreement or any alleged disputes, complaints or claims you may have against the Company or its Affiliates, or any of the Company’s or any of its Affiliates’ trade secrets or confidential, proprietary or financial information to anyone (other than your immediate family, attorney and/or tax advisor, provided each such person is informed of and agrees to be bound by this confidentiality provision), specifically including, but not limited to, any past or present employee of the Company or to any representative of any media.
Non-Disparagement . You agree that you will not publicly disparage or comment negatively about the Company or any of its Affiliates, their officers, directors employees or agents, and you will not engage in or encourage other persons to engage in litigation against the Company or any of the other Releasees.
Non-Solicitation . For a period of one (1) year following the Separation Date, you will not and will not assist any other third party to: (i) solicit for hiring any employee of the Company or any of its Affiliates or seek to persuade any employee of the Company or any of its Affiliates to discontinue such employment; or (ii) solicit or encourage any independent contractor providing services to the Company or any of its Affiliates to terminate or diminish its relationship with them. For the purposes of this agreement, an “employee” or an “independent contractor” of the Company of any of its Affiliates is any person who was such at any time during your employment with the Company.
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No Work-Related Injuries or Illnesses . You acknowledge that you are not aware of any work-related injuries or illnesses you sustained as of the Separation Date of this Agreement.
OTHER TERMS.
Non‑Admission of Liability . By providing you payment in this Agreement, the Company is not admitting that it or anyone else has done anything wrong. You agree that this Agreement shall not be admissible in any court or other forum for any purpose other than the enforcement of its terms.
Severability . The provisions of this Agreement are severable. If any part of it is found to be unenforceable, all other provisions shall remain fully valid and enforceable.
Voluntary Agreement . You represent and agree that you have carefully read this Agreement, that you understand all of its terms, and that you are entering into it knowingly and voluntarily. You represent and agree you have had the opportunity to consult independent counsel regarding the content and legal effect of this Agreement.
No Representations . You represent that in signing this Agreement, you do not rely on nor have you relied on any representation or statement not specifically set forth in this Agreement by any of the Releasees with regard to the subject matter, basis or effect of this Agreement or otherwise.
NATURE, EFFECT AND INTERPRETATION OF THIS AGREEMENT.
Entire Agreement . This Agreement, and the terms of your Employment Agreement set forth in Section 1 above, are the entire Agreement between you and the Company; it may not be modified or canceled in any manner except by a writing signed by both the Company and you. You acknowledge that the Company has made no promises to you other than those in this Agreement.
Successors and Assignees . This Agreement shall bind your heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of all Releasees and their respective heirs, administrators, representatives, executors, successors and assigns.
Interpretation . This Agreement shall be construed as a whole according to its fair meaning, and not strictly for or against any of the parties.
GOVERNING LAW, JURISDICTION AND VENUE.
This Agreement shall be interpreted under the laws of the State of California, both as to interpretation and performance. Any action initiated under this Agreement shall be brought in the County of Los Angeles, in the State of California.
If either party to this Agreement institutes any legal action or administrative proceeding against the other with respect to this Agreement or any claim hereunder, the prevailing party shall be entitled to recover all damages, costs, expenses and attorneys’ fees incurred as a result of such action.
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EFFECTIVE DATE OF THIS AGREEMENT.
This Agreement was presented to you for your review and consideration on ____________ (“Review Date”). You are entitled to review and consider this Agreement for twenty-one (21) calendar days following the Review Date before signing and returning this Agreement to the Company, unless you choose to execute the Acknowledgment and Waiver attached hereto. If you do not accept the terms of this Agreement in writing within twenty-one (21) days of the Review Date, any offer implied by the presentation of this Agreement for your review and consideration is withdrawn in its entirety at that time. For a period of seven (7) calendar days following your execution of this Agreement, you may revoke this Agreement (“Revocation Period”). You may revoke this Agreement only by giving the Company formal, written notice of your revocation of this Agreement, to be received by the David Staels, CHRO of Revolve, located at 16610 Marquardt, Ave, Cerritos, CA 90703 by the close of business on the seventh (7 th ) day following your execution of this Agreement. This Agreement shall not become effective in any respect until the Revocation Period has expired without notice of revocation. In the absence of your revocation of this Agreement, the eighth (8 th ) day after your execution of this Agreement shall be the “Effective Date” of this Agreement, at which time the rights of all parties under this Agreement become fully enforceable.
3. PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. BY SIGNING BELOW, YOU ACKNOWLEDGE THAT YOU HAVE READ AND UNDERSTAND THE TERMS OF THIS AGREEMENT, AND THAT IT IS YOUR INTENT TO RELEASE ANY CLAIMS YOU HAVE OR MAY HAVE AGAINST THE COMPANY, AS DESCRIBED ABOVE, IN EXCHANGE FOR THE SEVERANCE PAY OFFERED BY THE COMPANY. YOU ALSO ACKNOWLEDGE THAT YOU EITHER HAVE CONSULTED AN ATTORNEY REGARDING THIS AGREEMENT OR YOU HAVE ELECTED NOT TO CONSULT AN ATTORNEY, AND ARE THEREFORE KNOWINGLY AND VOLUNTARILY ENTERING INTO THIS AGREEMENT.
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ACKNOWLEDGMENT AND WAIVER
I, ________________, acknowledge I was given twenty-one (21) days to review and consider the foregoing Agreement and voluntarily chose to sign the Agreement prior to the expiration of the twenty-one (21) day period.
I declare under penalty of perjury of the laws of the State of California that the foregoing is true and correct.
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EMPLOYEE
__________________________
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DATE: |
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CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
Exhibit 10.16
Revolve Group, INC.
OUTSIDE DIRECTOR COMPENSATION POLICY
Effective , 2018
Revolve Group, Inc. (the “ Company ”) believes that granting equity and cash compensation to members of its Board of Directors (the “ Board ,” and members of the Board, the “ Directors ”) represents an effective tool to attract, retain, and reward Directors who are not employees of the Company (the “ Outside Directors ”). This Outside Director Compensation Policy (the “ Policy ”) formalizes the Company’s policy regarding cash compensation and grants of equity to its Outside Directors. Unless otherwise defined in this Policy, any capitalized terms used in this Policy will have the meaning given such term in the Company’s 2018 Equity Incentive Plan, as amended from time to time (the “ Plan ”), or if the Plan is no longer in use at the time of an equity award, the meaning given such term or any similar term in the equity plan then in place under which such equity award is granted. Each Outside Director will be solely responsible for any tax obligations incurred by such Outside Director as a result of the equity and cash payments such Outside Director receives under this Policy.
This Policy will be effective as of the effective date of the registration statement in connection with the initial public offering of the Company’s securities (such date, the “ Effective Date ”).
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1. |
Cash Compensation |
Annual Cash Retainer
Each Outside Director will be paid an annual cash retainer of $50,000. There are no per-meeting attendance fees for attending Board meetings or meetings of any committee of the Board.
Non-Executive Chair, Committee Chair and Committee Member Annual Cash Retainer
Effective as of the Registration Date, each Outside Director who serves as chair of a committee of the Board or member of a committee of the Board will be eligible to earn additional annual cash retainers as follows:
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Chair of Audit Committee: |
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$15,000 |
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Member of Audit Committee: |
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$7,500 |
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(excluding Committee Chair) |
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Chair of Compensation Committee: |
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$10,000 |
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Member of Compensation Committee: |
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$5,000 |
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(excluding Committee Chair) |
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Chair of Nominating and Governance Committee: |
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$7,500 |
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Member of Nominating and Governance Committee: |
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$3,750 |
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(excluding Committee Chair) |
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Each annual cash retainer under this Policy will be paid quarterly in arrears on a prorated basis to each Outside Director who has served in the relevant capacity at any point during the immediately preceding fiscal quarter, and such payment shall be made no later than 30 days following the end of such immediately preceding fiscal quarter. For purposes of clarification, an Outside Director who has served as an Outside Director, as a member of an applicable committee (or chair thereof) during only a portion of the relevant Company fiscal quarter will receive a pro-rated payment of the quarterly payment of the applicable annual cash retainer(s), calculated based on the number of days during such fiscal quarter such Outside Director has served in the relevant capacities. For purposes of clarification, an Outside Director who has served as an Outside Director, as a member of an applicable committee (or chair thereof), as applicable, from the Effective Date through the end of the fiscal quarter containing the Effective Date (the “ Initial Period ”) will receive a prorated payment of the quarterly payment of the applicable annual cash retainer(s), calculated based on the number of days during the Initial Period that such Outside Director has served in the relevant capacities.
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2. |
Equity Compensation |
Outside Directors may receive any Awards (except Incentive Stock Options) under the Plan (or the applicable equity plan in place at the time of grant), including discretionary Awards not covered under this Policy. All grants of Awards to Outside Directors under this Section 2 will be automatic and nondiscretionary, except as otherwise provided herein, and will be made in accordance with the following provisions and all other provisions of the Plan that are not inconsistent with this Policy:
(a) Initial Awards . Subject to Section 11 of the Plan, each person who first becomes an Outside Director on or following the Effective Date automatically will be granted an award of restricted stock units covering a number of Shares having a Value equal to the Initial Award Value, rounded to the nearest whole Share (the “ Initial Award ”), which grant will be effective on the first trading date on or after the date on which such person first becomes an Outside Director on or following the Effective Date, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy. The “ Initial Award Value ” will be either (x) $100,000 or (y) if the scheduled date of the Annual Meeting next following the date the Initial Award is granted (or if the date of such Annual Meeting has not been scheduled, the 1-year anniversary of the Annual Meeting immediately preceding the date the Initial Award is granted) is within 6 months after the date the Initial Award is granted, $50,000. Notwithstanding the foregoing, a Director who was an Employee (an “ Inside Director ”) who ceases to be an Inside Director, but who remains a Director, will not receive an Initial Award. Subject to Section 3 below and Section 14 of the Plan, each Initial Award will vest as to 100% of the restricted stock units upon the earlier of the 1‑year anniversary of the grant date or the day prior to the Company’s next Annual Meeting occurring after the grant date, in each case, provided that the Outside Director continues to serve as an Outside Director through the applicable vesting date.
(b) Annual Awards . Subject to Section 11 of the Plan, each Outside Director automatically will be granted an award of restricted stock units covering a number of Shares having a Value of $100,000, rounded to the nearest whole Share (each, an “ Annual Award ”), which grant will be effective on the date of each annual meeting of stockholders (each, an “ Annual Meeting ”), beginning with the first Annual Meeting following the Effective Date; provided that any Outside Director who is not continuing as a Director following the applicable Annual Meeting will not receive an Annual Award with respect to such Annual Meeting. Subject to Section 3 below and Section 14 of the Plan, each Annual Award will vest as to 100% of the restricted stock units upon the earlier of the 1‑year anniversary of the grant date or the day prior to the Company’s next Annual Meeting occurring after the grant date, in each case, provided that the Outside Director continues to serve as an Outside Director through the applicable vesting date.
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(c) Value . For purposes of this Policy, “ Value ” means the grant date fair value (determined in accordance with U.S. generally accepted accounting principles) , or such other methodology the Board or a Designated Committee may determine prior to the grant of the Initial Award or Annual Award becoming effective, as applicable.
(d) No Discretion . No person will have any discretion to select which Outside Directors will be granted any Awards under this Policy or to determine the number of Shares to be covered by such Awards, as applicable (except as provided in Section 7 below).
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3. |
Change in Control |
In the event of a Change in Control, each Outside Director will fully vest in his or her outstanding Company equity awards, including any Initial Award or Annual Award, provided that the Outside Director continues to be an Outside Director through such date.
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4. |
Expenses |
Each Outside Director’s reasonable, customary, and properly documented expenses in connection with service on the Board or any committee of the Board will be reimbursed by the Company.
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5. |
Additional Provisions |
All provisions of the Plan and form of award agreement approved for use under the Plan not inconsistent with this Policy will apply to Awards granted to Outside Directors.
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6. |
Section 409A |
It is the intent of this Policy that this Policy and all payments hereunder be exempt from or otherwise comply with the requirements of Section 409A (as defined below) so that none of the compensation to be provided hereunder will be subject to the additional tax imposed under 409A of the Internal Revenue Code of 1986, as amended, and the final regulations and guidance thereunder, as may be amended from time to time (together, “ Section 409A ”), and any ambiguities or ambiguous terms herein will be interpreted to be so exempt or comply. In no event will cash compensation or expense reimbursement payments under this Policy be paid after the later of (i) 15th day of the 3rd month following the end of the Company’s fiscal year in which the compensation is earned or expenses are incurred, as applicable, or (ii) 15th day of the 3rd month following the end of the calendar year in which the compensation is earned or expenses are incurred, as applicable. As such, all payments under this Policy are intended to fall within the “short-term deferral” exception under Section 409A. In no event will the Company be obligated to reimburse an Outside Director for any taxes imposed or other costs incurred as a result of Section 409A or otherwise because of the receipt of compensation under this Policy.
The Board or any committee designated by the Board (a “ Designated Committee ”), may amend, suspend or terminate this Policy at any time and for any reason. This includes, that the Board or a Designated Committee in its discretion may at any time change and otherwise revise the terms of the cash compensation granted under this Policy, including, without limitation, the amount of cash and timing of unearned compensation to be paid on or after the date the Board or a Designated Committee, as applicable determines to make any such change or revision. Any amendment to the terms of any cash compensation granted under the Policy will be effective no earlier than the date such amendment is made. Further, the
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Board or a Designated Committee in its discretion may at any time change and otherwise revise the terms of Awards granted under this Policy, including, without limitation, the number of Shares subject thereto, the vesting schedule of Awards, and the type of Awards to be granted on or after the date the Board or a Designated Committee, as applicable, determines to make any such change or revision. Notwithstanding the foregoing, no amendment of this Policy will permit any Outside Director to be paid, issued or granted, in any Fiscal Year, cash compensation and equity awards (including any cash compensation, Initial Award, or Annual Awards provided under this Policy ) that would exceed the per person limits in Section 11 of the Plan . If, on the date of an Award grant under this Policy, an equity incentive plan other than the Plan is the primary equity incentive plan used by the Company, all references to the Plan in this Policy shall, with respect to such Award, be deemed to refer to the Company’s primary equity incentive plan in use at the time of such Award grant, including that references to Section 11 of the Plan shall be deemed to refer to the section(s) of such primary equity incentive plan relating to the per person limits on the number or value of Shares that an Outside Director may receive under such plan during the period specified therein, and references to Section 14 of the Plan shall be deemed to refer to the section(s) of such primary equity incentive plan relating to adjustments to the Shares, dissolution or liquidation or the Company, and/or merger or Change in Control (or similar transactions) of the Company.
Notwithstanding the foregoing, no amendment, alteration, suspension or termination of this Policy will materially impair the rights of an Outside Director with respect to compensation that already has been paid or awarded, unless otherwise mutually agreed between the Outside Director and the Company. Termination of this Policy will not affect the Board’s or a Designated Committee ’s ability to exercise the powers granted to it under the Plan with respect to Awards granted under the Plan pursuant to this Policy prior to the date of such termination.
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Subsidiaries of Registrant
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Name of Subsidiary |
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Jurisdiction of Incorporation |
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Twist Holdings, LLC |
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Delaware |
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Eminent, Inc. |
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Delaware |
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Advance Development, Inc. |
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Delaware |
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Forward by Elyse Walker, LLC |
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California |
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Alliance Apparel Group, Inc. |
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Delaware |
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RVLV UK Limited |
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United Kingdom |
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Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
The Board of Managers Advance Holdings, LLC:
We consent to the use of our report included herein and to the reference to our firm under the heading “Experts” in the prospectus.
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KPMG LLP |
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/s/ KPMG LLP |
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Irvine, California |
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September 28, 2018 |
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