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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 29, 2019

 

Advanced Drainage Systems, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-36557

51-0105665

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

4640 Trueman Boulevard,

Hillard, Ohio

 

43026

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (614) 658-0050

(Former Name or Former Address, if Changed Since Last Report)

 

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

 

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

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

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

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

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

WMS

New York Stock Exchange

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

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

 

 

 


 

Item 1.01Entry into a Material Definitive Agreement

 

Agreement and Plan of Merger

 

On July 31, 2019, Advanced Drainage Systems, Inc. (the “Company”), Ocean Sub, Inc., a wholly-owned subsidiary of the Company (the “Merger Sub”), Infiltrator Water Technologies Ultimate Holdings, Inc. (“Infiltrator”) and 2461461 Ontario Limited, entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Merger Sub merged with and into Infiltrator (the “Merger”), with Infiltrator continuing as the surviving corporation and a wholly-owned subsidiary of the Company.  The closing of the Merger took place simultaneously upon the execution of the Merger Agreement (the “Closing Date”).

 

The Company paid an aggregate purchase price of approximately $1.08 billion in cash in connection with the Merger (the “Merger Consideration”), subject to certain post-closing purchase price adjustments.  Each holder of vested and unexercised Infiltrator stock options outstanding as of the Closing Date received cash in an amount equal to per share cash portion of Merger Consideration in excess of the applicable exercise price per share of such options, subject to adjustment.  The Company financed the Merger Consideration with borrowings under the Company’s new credit agreement, which replaced the Company’s existing credit facilities, as further described below.

 

The Merger Agreement contains customary representations, warranties and covenants from Infiltrator, Merger Sub and the Company, which representations and warranties do not survive the consummation of the Merger.  The Company has obtained a representation and warranty insurance policy that will provide a source of recourse in the event of any breaches of the representations and warranties of Infiltrator contained in the Merger Agreement, subject to a retention amount, exclusions, policy limits and certain other terms and conditions.

 

A copy of the Merger Agreement is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement.

 

The representations, warranties and covenants set forth in the Merger Agreement have been made only for the purposes of that agreement and solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. In addition, such representations and warranties (1) did not survive consummation of the Merger and cannot be the basis for any claims under the Merger Agreement, except in certain limited circumstances such as fraud (as expressly set forth in the Merger Agreement) and (2) were made only as of the dates specified in the Merger Agreement. Accordingly, investors should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of any party to the Merger Agreement or any of their respective subsidiaries, affiliates or businesses.

 

Credit Agreement

 

On the Closing Date, the Company entered into a credit agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and among the Company, as borrower, Barclays Bank PLC, as administrative agent, the several lenders from time to time party thereto, and Barclays Bank PLC and Morgan Stanley Senior Funding, Inc., as joint lead arrangers, joint bookrunners, syndication agents and documentation agents.

 

The Credit Agreement provides for a term loan facility in an initial aggregate principal amount of $1.3 billion (the “Term Loan Facility”), a revolving credit facility in an initial aggregate principal amount of up to $350 million (the “Revolving Credit Facility”), a letter of credit sub-facility in the initial aggregate available amount of up to $50 million, as a sublimit of such Revolving Credit Facility (the “L/C Facility”) and a swing line sub-facility in the aggregate available amount of up to $50 million, as a sublimit of the Revolving Credit Facility.

 

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On the Closing Date, the Company borrowed a total of $1.3 billion under the Term Loan Facility and $145 million under the Revolving Credit Facility, which amounts were used to (i) finance the Merger Consideration paid in connection with the closing of the Merger, (ii) repay the total outstanding amount as of the Closing Date under the Company’s PNC Credit Facility (as defined below), as further described below under Item 1.02 of this Current Report on Form 8-K, (iii) repay outstanding amounts of existing indebtedness incurred by Infiltrator under its outstanding credit facility in effect prior to the Merger, and (iv) pay certain transaction fees and expenses associated with the Merger and the Credit Agreement.

 

The Term Loan Facility must be repaid in equal quarterly installments commencing on January 1, 2020 and continuing on the first day of each consecutive April, July, October and January thereafter. To the extent not previously paid, all then-outstanding amounts under the Term Loan Facility are due and payable on the maturity date of the Term Loan Facility, which is seven years from the Closing Date.  Borrowings under the Revolving Credit Facility are available beginning on the Closing Date and, to the extent not previously paid, all then-outstanding amounts under the Revolving Credit Facility are due and payable on the maturity date of the Revolving Credit Facility, which is five years from the Closing Date.

 

The Credit Agreement includes customary representations, warranties, covenants and events of default.

 

At the option of the Company, borrowings under the Term Loan Facility and under the Revolving Credit Facility (subject to certain limitations) bear interest at either a base rate (as determined pursuant to the Credit Agreement) or at a Eurocurrency Rate (as defined in the Credit Agreement), plus the applicable margin as set forth therein from time to time. In the case of the Revolving Credit Facility, the applicable margin is based on the Company’s consolidated senior secured net leverage ratio (as defined in the Credit Agreement). All borrowings under the Term Loan Facility used to finance the Merger Consideration as described above initially bear interest at the Eurocurrency Rate applicable to Eurocurrency Loans (as defined in the Credit Agreement) denominated in US Dollars.  Beginning 53 days after the Closing Date, the applicable margin for the Term Loan Facility will be increased by 25 basis points every thirty days following the Closing Date until the earlier of (i) the Marketing Commencement Date (as defined in the Credit Agreement) or (ii) 113 days after the Closing Date.

 

The Company has agreed to secure all of its obligations under the Credit Agreement by granting a first priority lien on substantially all of its assets (subject to certain exceptions and limitations), and each of Stormtech, LLC, Advanced Drainage of Ohio, Inc. and Infiltrator Water Technologies, LLC (collectively, the “Guarantors”) has agreed to guarantee the obligations of the Company under the Credit Agreement and to secure the obligations thereunder by granting a first priority lien in substantially all of such Guarantor’s assets (subject to certain exceptions and limitations).

 

The Credit Agreement requires, if the aggregate amount of outstanding exposure under the Revolving Credit Facility exceeds $122,500,000 at the end of any fiscal quarter, the Company to maintain a consolidated senior secured net leverage ratio (commencing with the fiscal quarter ending March 31, 2020) not to exceed 4.25 to 1.00 for any four consecutive fiscal quarter period.

 

The Credit Agreement also includes other covenants, including negative covenants that, subject to certain exceptions, limit the Company’s and its restricted subsidiaries’ (as defined in the Credit Agreement) ability to, among other things: (i) incur additional debt, including guarantees, (ii) create liens upon any of their property, (iii) enter into any merger, consolidation or amalgamation, liquidate, wind up or dissolve, or dispose of all or substantially all of their property or business, (iv) dispose of assets, (v) pay subordinated debt, (vi) make certain investments, (vii) enter into swap agreements, (viii) engage in transactions with affiliates, (ix) engage in new lines of business, (x) modify certain material contractual obligations, organizational documents, accounting policies or fiscal year, or (xi) create or permit restrictions on the ability of any subsidiary of any Loan Party (as defined in the Credit Agreement) to pay dividends or make distributions to the Company or any of its subsidiaries.

 

The Credit Agreement also contains customary provisions requiring the following mandatory prepayments (subject to certain exceptions and limitations): (i) annual prepayments (beginning with the fiscal year ending March 31, 2021) with a percentage of excess cash flow (as defined in the Credit Agreement), (ii) 100% of the net cash proceeds from any non-ordinary course sale of assets and certain casualty or condemnation events, and (iii) 100% of the net cash proceeds of indebtedness not permitted to be incurred under the Credit Agreement.

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A copy of the Credit Agreement is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. In connection with the Credit Agreement, the Company and each Guarantor has also entered into a Guarantee and Collateral Agreement, a form of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference. The foregoing description of these agreements does not purport to be complete and is qualified in its entirety by reference to such agreements.

 

Item 1.02Termination of a Material Definitive Agreement.

 

On July 29, 2019, the Company repaid in full all of its and its subsidiaries indebtedness and other obligations totaling $104,433,181 under that certain Second Amended and Restated Private Shelf Agreement, dated as of June 22, 2017 (as amended, the “Shelf Note Agreement”), by and among the Company, as issuer, the guarantors from time to time a party thereto, PGIM, Inc., as a purchaser and the other purchasers from time to time a party thereto (the “Shelf Noteholders”).  The Company repaid the outstanding indebtedness under the Shelf Note Agreement using borrowings from the Company’s existing credit facility pursuant to that Second Amended and Restated Credit Agreement, dated as of June 22, 2017 (as amended, the “PNC Credit Agreement”), by and among the Company, as borrower, the guarantors from time to time a party thereto, the lenders from time to time party thereto (the “Prior Lenders”), PNC Bank, National Association, as administrative agent for the lenders party thereto, and the other parties thereto.  Concurrently with the repayment, the Shelf Noteholders authorized and directed PNC Bank, National Association, in its capacity as Collateral Agent (as defined in the Shelf Note Agreement) to release the security interests and liens securing the Shelf Note Agreement and the Shelf Note Agreement was terminated.

 

On the Closing Date, using borrowings of the Term Loan Facility and the Revolving Credit Facility, the Company repaid in full all of its and its subsidiaries indebtedness and other obligations totaling $239,240,344 under the PNC Credit Agreement.  Concurrently with the repayment, all security interests and liens held by the Collateral Agent (as defined in the PNC Credit Agreement) on behalf of the Shelf Noteholders and on behalf of the Prior Lenders securing the PNC Credit Agreement were terminated and released and the PNC Credit Agreement was terminated.

 

The credit facilities represented by the Shelf Note Agreement and the PNC Credit Agreement were described in the Current Report on Form 8-K filed by the Company on June 28, 2017 and the PNC Credit Agreement and the Shelf Note Agreement and related agreements were filed as exhibits thereto.  Such description and exhibits are incorporated by reference herein.

 

Item 2.01Completion of Acquisition or Disposition of Assets.

 

The disclosure provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.01 with respect to the terms of the Merger Agreement.

 

Item 2.03

Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

 

The disclosure provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03 with respect to the terms of, and the financial obligations created by, the Credit Agreement.

 

Item 9.01Financial statements and Exhibits

 

In connection with the Merger, the Company is filing with this Current Report on Form 8-K certain historical financial statements of Infiltrator and pro forma financial information of the Company, as further described below.

 

(a) Financial statements of businesses acquired.

 

Audited financial statements of Infiltrator, comprised of the consolidated balance sheets as of December 28, 2018 and December 29, 2017, and consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for the three years ended December 28, 2018, December 29, 2017 and

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December 30, 2016 and the related notes to the consolidated financial statements, are attached to this Current Report on Form 8-K as Exhibit 99.1 and incorporated herein by reference.

 

Consolidated unaudited financial statements of Infiltrator, comprised of the condensed consolidated balance sheets as of July 5, 2019 and December 28, 2018, and condensed consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for the six-months ended July 5, 2019 and June 29, 2018 and the related notes to the consolidated financial statements, are attached to this Current Report on Form 8-K as Exhibit 99.2 and incorporated herein by reference.

 

(b) Pro forma financial information.

 

Unaudited pro forma combined financial information of the Company as of June 30, 2019, for the fiscal year ended March 31, 2019 and for the three months ended June 30, 2019, giving effect to the Merger and related financing under the Credit Facility, are attached to this Current Report on Form 8-K as Exhibit 99.3 and incorporated herein by reference.

 

(d)Exhibits

 

Exhibit No.

Description

 

 

2.1*

Agreement and Plan of Merger, dated as of July 31, 2019, among Advanced Drainage Systems, Inc., ADS Ocean Merger Sub, Inc., Infiltrator Water Technologies Ultimate Holdings, Inc. and 2461461 Ontario Limited, an Ontario corporation.

 

10.1

Credit Agreement, dated as of July 31, 2019, by and among Advanced Drainage Systems, Inc., Barclays Bank PLC, as administrative agent, the several lenders from time to time party thereto, Barclays Bank PLC and Morgan Stanley Senior Funding, Inc., as joint lead arrangers, joint bookrunners, syndication agents and documentation agents.

 

10.2

Advanced Drainage Systems, Inc. Guarantee and Collateral Agreement.

 

23.1

Consent of Deloitte & Touche LLP, independent auditors for Infiltrator Water Technologies Ultimate Holdings, Inc.

 

99.1

Consolidated audited financial statements of Infiltrator Water Technologies Ultimate Holdings, Inc. as of December 28, 2018 and December 29, 2017 and for the three years ended December 28, 2018, December 29, 2017 and December 30, 2016

99.2

Consolidated unaudited financial statements of Infiltrator Water Technologies Ultimate Holdings, Inc., as of July 5, 2019 and December 28, 2018 and for the six months ended July 5, 2019 and June 29, 2018

99.3

Unaudited pro forma combined financial information of Advanced Drainage Systems, Inc. as of June 30, 2019, for the year ended March 31, 2019 and for the three months ended June 30, 2019

_________________

* Pursuant to Item 601(b)(2) of Regulation S-K, the registrant hereby agrees to supplementally furnish to the Securities and Exchange Commission upon request any omitted schedule or exhibit to the Merger Agreement.

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SIGNATURES

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

 

ADVANCED DRAINAGE SYSTEMS, INC.

 

 

 

Date:August 1, 2019By:/s/ Scott A. Cottrill

Name:  Scott A. Cottrill

Title:  EVP, CFO & Secretary

 

 

5

Exhibit 2.1

 

 

Agreement and Plan of Merger

 

by and among

 

INFILTRATOR WATER TECHNOLOGIES ULTIMATE HOLDINGS, INC.

(a Delaware corporation),

 

ADVANCED DRAINAGE SYSTEMS, INC.

(a Delaware corporation),

 

OCEAN SUB, INC.

(a Delaware corporation)

 

and

 

2461461 ONTARIO LIMITED

(an Ontario corporation)

 

 

July 31, 2019

 

 

 

 


 

TABLE OF CONTENTS

 

 

 

Page Number

ARTICLE I

DEFINITIONS

1

1.01

Definitions

1

1.02

Other Definitional Provisions

15

ARTICLE II

THE MERGER

16

2.01

The Merger

16

2.02

Conversion of Capital Stock

16

2.03

Exchange of Certificates; Lost Certificates; Escrow Agent

17

2.04

Options

18

2.05

Certificate of Incorporation

18

2.06

Bylaws

18

2.07

Directors and Officers

19

2.08

Withholding

19

2.09

Appraisal Rights

19

ARTICLE III

THE CLOSING; MERGER CONSIDERATION ADJUSTMENT

19

3.01

The Closing

19

3.02

The Closing Transactions

19

3.03

Closing Cash Proceeds Adjustment

21

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

24

4.01

Organization and Corporate Power

24

4.02

Subsidiaries

24

4.03

Authorization; No Breach; Governmental Bodies; Consents

25

4.04

Capital Stock

26

4.05

Financial Statements

27

4.06

Absence of Undisclosed Liabilities

28

4.07

No Material Adverse Change; Absence of Certain Developments

28

4.08

Title to Properties

30

4.09

Tax Matters

32

4.10

Contracts and Commitments

33

4.11

Intellectual Property

35

4.12

Litigation

36

4.13

Employee Benefit Plans

36

4.14

Insurance

38

4.15

Environmental Matters

38

4.16

Affiliated Transactions

39

4.17

Brokerage

39

4.18

Permits; Compliance with Laws

40

4.19

International Trade Compliance

40

4.20

Employees

40

4.21

Customers and Suppliers

42

ii

 


 

 

 

Page Number

4.22

Data Privacy

43

4.23

Bank Accounts; Powers of Attorney

43

4.24

Product Warranty

43

4.25

Transfer Taxes

44

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND MERGER SUB

44

5.01

Organization and Corporate Power

44

5.02

Authorization

44

5.03

No Violation

44

5.04

Governmental Bodies; Consents

45

5.05

Litigation

45

5.06

Brokerage

45

5.07

Investment Representation

45

5.08

Financing

45

5.09

Solvency

45

5.10

Transfer Taxes

46

ARTICLE VI

COVENANTS OF THE PURCHASER

46

6.01

Access to Books and Records

46

6.02

Director, Manager and Officer Liability and Indemnification

46

6.03

Termination of Confidentiality Agreement

47

6.04

Payments to Optionholders and Other Individuals

47

6.05

Access and Investigation; Non Reliance

48

ARTICLE VII

ADDITIONAL AGREEMENTS AND COVENANTS

48

7.01

Acknowledgement by the Purchaser

48

7.02

Further Assurances

49

7.03

Employees and Employee Benefits

50

7.04

Post-Closing Bonus Amounts

51

ARTICLE VIII

NO SURVIVAL OR CLAIMS FOR REPRESENTATIONS AND WARRANTIES

51

8.01

Survival

51

8.02

Exclusive Remedy; Exceptions

52

ARTICLE IX

TAX MATTERS

52

9.01

Preparation and Filing of Tax Returns; Payment of Taxes

52

9.02

Allocation of Certain Taxes

53

9.03

Transfer Taxes

53

9.04

Cooperation on Tax Matters

53

9.05

Sections 336 and 338 of the Code

54

9.06

No Intermediary Transaction Tax Shelter

54

9.07

Accounting Firm

54

ARTICLE X

MISCELLANEOUS

54

10.01

Press Releases and Communications

54

10.02

Expenses

54

10.03

Notices

55

iii

 


 

 

 

Page Number

10.04

Assignment

56

10.05

Severability

56

10.06

Construction

56

10.07

Amendment and Waiver

57

10.08

Complete Agreement

57

10.09

Third Party Beneficiaries

57

10.10

Counterparts

57

10.11

Governing Law; Jurisdiction; WAIVER OF JURY TRIAL

58

10.12

Representative

58

10.13

Legal Representation

61

10.14

Sources of Recovery; Non-Recourse Parties

62

10.15

Deliveries to the Purchaser

62

10.16

Conflict Between Transaction Documents

62

10.17

Specific Performance

62

10.18

Relationship of the Parties

63

10.19

Prevailing Party

63

 

 

 

 

 

 

 

 

 

 

 

iv

 


 

COMPANY SCHEDULES

Accounting Principles Schedule

Affiliated Transactions Schedule

Authorization Schedule

Bank Accounts Schedule

Bonus Amount Schedule

Brokerage Schedule

Capitalization Schedule

Compliance with Laws Schedule

Contracts Schedule

Customers and Suppliers Schedule

Developments Schedule

Employee Benefits Schedule

Employees Schedule

Environmental Matters Schedule

Estimated Closing Cash Proceeds Schedule

Financial Statements Schedule

Indebtedness Schedule

Insurance Schedule

Intellectual Property Schedule

International Trade Compliance Schedule

Leased Real Property Schedule

Litigation Schedule

Optionholders Schedule

Owned Real Property Schedule

Permits Schedule

Permitted Liens Schedule

Product Warranty Schedule

Stockholders Schedule

Subsidiary Schedule

Taxes Schedule

Transaction Expenses Schedule

Transfer Tax Schedule

Undisclosed Liabilities Schedule

Working Capital Schedule

 

 

v

 


 

EXHIBITS

Exhibit A

Certificate of Merger

Exhibit B

Form of Escrow Agreement

Exhibit C

Form of Letter of Transmittal

Exhibit D

Rules of Engagement for Valuation Firm

Exhibit E

Form of Non‑U.S. Real Property Holding Corporation Status Certificate

 

 

vi


 

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July 31, 2019, is made by and among Infiltrator Water Technologies Ultimate Holdings, Inc., a Delaware corporation (the "Company"), Advanced Drainage Systems, Inc., a Delaware corporation (the "Purchaser"), Ocean Sub, Inc., a Delaware corporation and wholly‑owned subsidiary of the Purchaser (the "Merger Sub"), and 2461461 Ontario Limited, an Ontario corporation (the "Representative"), as representative for the Stockholders and Optionholders.  Capitalized terms used and not otherwise defined herein have the meanings set forth in Article I.

WHEREAS, the Purchaser desires to acquire one hundred percent (100%) of the Company Stock in a reverse subsidiary merger transaction on the terms and subject to the conditions set forth herein;

WHEREAS, the respective boards of directors of the Purchaser, the Merger Sub and the Company have authorized, adopted and approved this Agreement and determined that this Agreement and the Merger are desirable and in the best interests of their respective companies and stockholders;

WHEREAS, the respective boards of directors of the Merger Sub and the Company have recommended the Merger to their respective stockholders;

WHEREAS, the Merger has been approved by the requisite vote of the holders of the outstanding shares of the Company's capital stock entitled to vote thereon at the record date for such vote (the "Stockholder Approval"); and

WHEREAS, the Merger has been approved by the requisite vote of the holders of the outstanding shares of Merger Sub's capital stock entitled to vote thereon at the record date for such vote.

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

Article I
DEFINITIONS

Definitions

.  For purposes hereof, the following terms when used herein shall have the respective meanings set forth below:

"Accounting Firm" is defined in Section 9.07.

"Accounting Principles" means (i) the accounting principles and policies specifically set out in the Accounting Principles Schedule; (ii) to the extent not addressed in clause (i) and not inconsistent with GAAP, the accounting policies, principles, procedures, rules, practices, methodologies, categorizations, and definitions used during the preparation of the consolidated balance sheet included in the Audited Financial Statements dated December 31, 2018; and (iii) to

1


 

the extent not addressed in clauses (i) and (ii), GAAP.  For the avoidance of doubt, clause (i) shall take precedence over clauses (ii) and (iii), and clause (ii) shall take precedence over clause (iii).

"Adjustments" means any amounts (i) paid to the Representative or to the Escrow Agent at the Representative's direction in connection with the final determination of the Closing Cash Proceeds pursuant to Section 3.03 (including from the Purchase Price Adjustment Escrow Funds), subject to Section 10.12, and (ii) released by the Representative or at the Representative's direction from the Representative Holdback Amount pursuant to Section 10.12.

"Affiliate" of any particular Person means any other Person controlling, controlled by or under common control with such particular Person, where "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, Contract or otherwise.

"Affordable Care Act" means the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, and regulatory and other guidance promulgated thereunder.

"Agreement" is defined in the Preamble.

"Audited Financial Statements" is defined in Section 4.05.

"Business Day" means any day other than a Saturday, Sunday, or a day on which all banking institutions of New York, New York are authorized or obligated by Law or executive order to close.

"Capital Lease Obligation" means, without duplication of any item that would otherwise be included in the term Indebtedness, any obligation (including accrued interest) of the Company or its Subsidiaries under a lease agreement that is required to be capitalized pursuant to GAAP.  Notwithstanding the foregoing, Capital Lease Obligations shall not include any breakage costs, prepayment penalties or fees or other similar amounts payable in connection with any capitalized leases; provided, that Capital Lease Obligations shall include breakage costs, prepayment penalties or fees or other similar amounts payable in connection with a capitalized lease but only to the extent that the capital lease requires breakage costs, prepayment penalties or fees or other similar amounts payable in connection with the consummation of the transactions contemplated by this Agreement.

"Cash" means, as of a given time, an amount equal to the aggregate amount of all cash and cash equivalents of the Company or any of its Subsidiaries (including checks received but not yet posted and available), but reduced by the aggregate amount of any checks written by the Company and its Subsidiaries (but not yet cashed) and wires in transit from the Company and its Subsidiaries (but not yet completed), and excluding restricted cash balances (including security deposits, any cash collateral in respect of any letters of credit or surety bonds, and cash held in escrow) and other cash not freely usable in the ordinary course of business by the Company or any of its Subsidiaries.

"Certificate of Merger" means the certificate of merger in the form of Exhibit A.

"Certificates" is defined in Section 2.03.

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"Class A Common Stock" means the Company's Class A Common Stock, par value $0.01 per share.

"Class A Stockholder" means each holder of one or more shares of Class A Common Stock.

"Class A Stockholders' Closing Consideration" is defined in Section 2.02(a).

"Class B Common Stock" means the Company's Class B Common Stock, par value $0.01 per share.

"Class B Liquidation Value" means the amount equal to Ten Cents ($0.10) per share of Class B Common Stock.

"Class B Merger Consideration" means the amount equal to the product of (i) the total number of shares of Class B Common Stock issued and outstanding immediately prior to the Effective Time (other than Class B Common Stock held by the Company as treasury stock or held by the Merger Sub), multiplied by (ii) the Class B Liquidation Value.

"Class C Common Stock" means the Company's Class C Common Stock, par value $0.01 per share.

"Class C Liquidation Value" means the amount of all accrued but unpaid dividends per share of Class C Common Stock pursuant to the Company's certificate of incorporation.

"Class C Merger Consideration" means the amount equal to the product of (i) the total number of shares of Class C Common Stock issued and outstanding immediately prior to the Effective Time (other than Class C Common Stock held by the Company as treasury stock or held by the Merger Sub), multiplied by (ii) the Class C Liquidation Value.

"Closing" is defined in Section 3.01.

"Closing Balance Sheet" is defined in Section 3.03(a).

"Closing Bonus Pool" means the aggregate amount to be distributed pursuant to the Incentive Bonus Plan to Participants payable at the Closing in connection with the transactions contemplated hereby and as set forth on the Bonus Amount Schedule.

"Closing Cash Proceeds" means (i) the Enterprise Value, minus (ii) the amount of Indebtedness outstanding as of immediately prior to the Closing (including any payments or premiums in respect of such Indebtedness that would be attributable to, or which would arise as a result of, a change of control of the Company or any Subsidiary and/or the transactions contemplated hereby), plus (iii) the amount of Cash as of immediately prior to the Closing, minus (iv) the amount (if any) by which Closing Working Capital is less than Target Working Capital, plus (v) the amount (if any) by which Closing Working Capital is greater than Target Working Capital, plus (vi) the Tax Amount, plus (vii) the aggregate exercise price of all Options, minus (viii) the Representative Holdback Amount, minus (ix) all Transaction Expenses, minus (x) the Purchaser Expenses Amount, minus (xi) the Purchase Price Adjustment Escrow Amount, minus (xii) the Class B Merger Consideration, minus (xiii) the Class C Merger Consideration, minus

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(xiv) the Closing Bonus Pool.  For the avoidance of doubt, no items included in the definitions of Cash, Indebtedness, Transaction Expenses, Working Capital, or the Closing Bonus Pool shall be double counted for purposes of calculating the Closing Cash Proceeds hereunder.

"Closing Statement" is defined in Section 3.03(a).

"Closing Working Capital" means Working Capital as of immediately prior to the Closing.

"Code" means the Internal Revenue Code of 1986, as amended.

"Company" is defined in the Preamble.

"Company Counsel" is defined in Section 10.13.

"Company Documents" is defined in Section 4.03(a).

"Company Intellectual Property" is defined in Section 4.11.

"Company Stock" means, collectively, the Class A Common Stock, the Class B Common Stock and the Class C Common Stock.

"Confidentiality Agreement" is defined in Section 6.03.

"Contract" means any contract, agreement, lease, sublease, license, sublicense, subcontract, sale or purchase order, indenture, note, bond, mortgage, deed of trust, legally-binding memorandum of understanding, legally-binding letter of intent or other legally-binding commitment, whether written or oral, including any exhibits, annexes, appendices or attachments thereto.

"Custom and International Trade Law" is defined in Section 4.19.

"D&O Tail Policies" is defined in Section 6.02(a).

"Delaware Law" means the General Corporation Law of the State of Delaware.

"Disclosure Schedules" is defined in Article IV.

"Dissenting Shares" is defined in Section 2.09.

"Effective Time" is defined in Section 2.01(b).

"Electronic Delivery" is defined in Section 10.10.

"Employee Benefit Plan" means each "employee benefit plan" (within the meaning of Section 3(3) of ERISA), whether or not subject to ERISA, and each employment, bonus, incentive, commission, equity purchase, option, equity or other equity-based, retirement or supplemental retirement, pension, profit sharing, deferred compensation, educational assistance, perquisite, sabbatical, relocation, severance, termination, retention, change of control, Code Section 125, life, disability, paid-time off, vacation, fringe benefit, post-retirement or retiree welfare, or other

4


 

material benefit or compensation plan, agreement, program, policy or other arrangement, (i) that is maintained, sponsored, contributed to or obligated to be contributed to by the Company or any Subsidiary of the Company for the benefit of any current or former employee, officer, director or independent contractor of the Company or any Subsidiary of the Company, or the beneficiaries or dependents of any such individual, or (ii) under which the Company or any Subsidiary of the Company has any material Liability, but excluding in each case any plan, program, policy, or arrangement that is required by Law or maintained or administered by a Governmental Body.

"Enterprise Value" means one billion eighty million dollars ($1,080,000,000).

"Environmental Laws" means any applicable Law relating to pollution, public and worker health and safety, or the protection of the environment, including Laws relating to emissions, discharges, releases or threatened releases of Hazardous Substances into ambient air, surface water, ground water or lands or otherwise relating to the manufacture, processing, marketing, labeling, registration, notification, packaging, import, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances.

"Environmental Permits" is defined in Section 4.15(e).

"Equity Securities" means (i) any share capital, partnership interest, membership interest or unit, capital stock, equity interest, voting security or other ownership interest, (ii) any other interest or participation (including phantom units or interests) that confers on a Person the right to receive a unit of the profits and losses of, or distribution of assets of, the issuing entity (including any "profits interests"), (iii) any subscription, call, warrant, option, restricted share, restricted stock unit, stock appreciation right, performance unit, incentive unit or other legally-binding commitment of any kind or character entitling any Person to purchase or otherwise acquire any of the foregoing and (iv) any security convertible into or exercisable or exchangeable for any of the foregoing, and "equity security" or "equity interest" shall have the same meaning.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

"ERISA Affiliate" means any trade or business, whether or not incorporated, that, together with one or more of the Company and/or any Subsidiary of the Company, is or at any relevant time has been treated as a single employer under Code Section 414 or Section 4001 of ERISA.

"Escrow Agent" means Citibank, N.A., or its successor, in its capacity as such pursuant to the Escrow Agreement.

"Escrow Agreement" means the escrow agreement attached as Exhibit B.

"Estimated Closing Cash Proceeds" means seven hundred ninety-six million, nine hundred four thousand, seven hundred twenty-three dollars and four cents ($796,904,723.04), which is the Company's estimate as of the date hereof of the Closing Cash Proceeds, the calculation and components of which are set forth on the Estimated Closing Cash Proceeds Schedule.

"Financial Statements" is defined in Section 4.05.

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"Fraud" means, with respect to any party, any actual knowing and intentional fraud (as opposed to any constructive, reckless or negligent fraud, misrepresentation or breach of warranty) under Delaware common law by such party in making any representation(s) or warranty(ies) expressly and specifically set forth herein (as modified by the Disclosure Schedules) or by such party in making any representation(s) or warranty(ies) expressly and specifically set forth in any other agreement or instrument required to be executed and delivered pursuant hereto, as applicable, with the specific intent to deceive and mislead Purchaser or Merger Sub regarding such representation(s) or warranty(ies).

"GAAP" means United States generally accepted accounting principles.

"Governing Documents" means the legal document(s) by which any Person (other than an individual) establishes its legal existence or which govern its internal affairs, including the articles or certificate of incorporation or formation, bylaws, operating agreement, limited liability company agreement, partnership agreement, shareholders' agreement, voting agreement, voting trust agreement, joint venture agreement, registration rights agreement and any similar agreement and any amendments or supplements to any of the foregoing.

"Governmental Body" means any (i) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature, or any political subdivision thereof, (ii) federal, state, provincial, local, municipal, foreign, or other government, or (iii) governmental or quasi‑governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, organization, regulatory body, or other entity and any court, arbitrator, or other tribunal).

"Hazardous Substances" means petroleum, petroleum hydrocarbons or petroleum products, petroleum by-products, radioactive materials, asbestos or asbestos-containing materials, polychlorinated biphenyls, toxic mold or pesticides; and any other chemicals, materials, substances or wastes which are regulated as a contaminant, pollutant, hazardous or toxic under Environmental Law or which may give rise to standards of conduct or liability pursuant to Environmental Law.

"Incentive Bonus Plan" means the Infiltrator Water Technologies Ultimate Holdings, Inc. Incentive Bonus Plan, adopted March 31, 2016, for Senior Strategic Managers (as defined therein).

"Income Tax Liability Amount" means an amount (which shall not less than zero) equal to the aggregate unpaid Income Tax liabilities of the Company and its Subsidiaries attributable to any Pre-Closing Tax Period that includes the Closing Date; provided, however, that the Income Tax Liability Amount shall be calculated in accordance with the past practice of the Company and its Subsidiaries in filing their Tax Returns, and shall (a) exclude any deferred Tax liabilities and deferred Tax assets, (b) take into account estimated (or other prepaid) Tax payments, (c) take into account any Transaction Tax Deductions, (d) be calculated without regard to any actions of any of Purchaser, the Company and its Subsidiaries, or their respective Affiliates after the Closing (including, for the avoidance of doubt, any amendment of any Tax Return, any filing of any voluntary disclosure agreement with any Taxing Authority, or any other similar action), (e) not take into account any financing or refinancing arrangements entered into at any time by or at the direction of the Purchaser or any of its Affiliates or any other transactions entered into by or at the direction of the Purchaser or any of its Affiliates in connection with the transactions contemplated

6


 

hereby, and (f) exclude any liabilities for accruals or reserves established or required to be established under GAAP methodologies that require the accrual for contingent Taxes or with respect to uncertain Tax positions.

"Income Taxes" mean the United States federal income Tax and any United States state or local or foreign net income Tax or any franchise or business profits Tax incurred in lieu of a Tax on net income.

"Indebtedness" means, without duplication, as of any particular time (including any unpaid principal, premium, accrued and unpaid interest, related expenses, prepayment penalties, make-whole premiums, commitment and other fees, expenses, reimbursements, indemnities and all other amounts payable in connection therewith as of such particular time (or that would become payable as a result of the discharge of such amounts as of such particular time)), (i) the amount of all indebtedness for borrowed money of the Company and its Subsidiaries; (ii) Liabilities of the Company and its Subsidiaries evidenced by bonds, debentures, notes, or other similar instruments or debt securities (other than any customs bonds, any surety or performance bonds, or any similar instruments), (iii) Liabilities of the Company and its Subsidiaries to pay any (A) deferred purchase price (including any working capital and/or purchase price adjustments in connection with business acquisitions by the Company and its Subsidiaries) of property, assets, securities or services, other than trade payables incurred in the ordinary course of business to the extent such payables are included in Closing Working Capital (which amount may be expressed as a positive or negative (i.e., the Company and its Subsidiaries are owed such amount) number and, for the avoidance of doubt, if such amount is a negative number, shall reduce "Indebtedness" by such amount), (B) earn-out obligations, (C) seller notes or (D) other similar contingent payment obligations; (iv) all Liabilities of the Company and its Subsidiaries arising out of interest rate and currency swap arrangements and any other hedging, swap, collar or similar arrangements; (v) Income Tax Liability Amount; (vi) all Liabilities secured by any Lien (other than Permitted Liens) upon any property or assets of the Company or any of its Subsidiaries; (vii) all unpaid management or advisory fees owing to any of the Stockholders, Optionholders or any of their respective Affiliates; (viii) all Liabilities owed to Persons which are Affiliates of the Company prior to the Effective Time but which shall cease to be Affiliates of the Company as of the Effective Time; (ix) any Liability under any arrangement with any director, officer, manager or Senior Strategic Manager of the Company, any of its Subsidiaries or of Ontario Teachers’ Pension Plan Board, including those arising (and those that would arise) as a result of the termination of such arrangement, except for (A) ordinary course employment obligations and bonuses payable to any such Person based on the performance of such Person or the performance of the Company or any of its Subsidiaries (to the extent accrued for in Closing Working Capital), (B) the Total Bonus Pool, (C) any transaction bonus and (D) any severance liabilities resulting from any action taken by or at the direction of the Purchaser or any of its Affiliates; (x) all unpaid or outstanding amounts payable in respect of any legal settlements; (xi) all asset retirement obligations in respect of leased real or personal property (excluding obligations arising pursuant to the terms of any Contract made available to Purchaser) and payables related thereto; (xii) reimbursement Liabilities relating to letters of credit, bankers' acceptances, surety or other bonds or similar instruments or transactions (in each case, solely to the extent drawn or the conditions to draw down have been satisfied); (xiii) deferred compensation in respect of employees or other service providers of the Company or its Subsidiaries (excluding (A) ordinary course salary, wages and bonuses payable to any employee based on the performance of such employee or the performance of the Company or any of its

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Subsidiaries (to the extent accrued for in Closing Working Capital), (B) the Total Bonus Pool and (C) all transaction bonuses); (xiv) any unfunded or underfunded pension liabilities, whether qualified or unqualified (including the employer portion of any payroll, employment or similar Taxes related thereto); (xv) all accrued but unpaid severance liabilities (including the employer portion of any payroll, employment or similar Taxes related thereto) other than any such liabilities resulting from any action taken by or at the direction of the Purchaser or any of its Affiliates; (xvi) any unpaid transaction expenses in respect of previous acquisitions or dispositions (including any such expenses that would constitute "Transaction Expenses" if such expenses were incurred in connection with the transactions contemplated by this Agreement); (xvii) guarantees with respect to any indebtedness of any other Person; and (xviii) all Capital Lease Obligations; provided, that "Indebtedness" shall not include any such liabilities or obligations between the Company and any of its Subsidiaries or between any Subsidiary of the Company and another Subsidiary of the Company, or any liabilities or obligations with respect to leases classified in the Financial Statements as operating leases.

"Insurance Policies" is defined in Section 4.14.

"Intellectual Property" means all of the following in any jurisdiction throughout the world:  (i) patents, patent applications and patent disclosures; (ii) trademarks, service marks, trade dress, trade names, corporate names, logos and slogans and Internet domain names, together with all goodwill associated with each of the foregoing; (iii) copyrights and copyrightable works; (iv) registrations and applications for any of the foregoing; (v) trade secrets, proprietary information, know‑how and inventions; (vi) intellectual property rights in computer software (including source code, executable code, data, and databases); and (vii) any other intellectual property rights.

"K&E LLP" is defined in Section 10.12(g).

"knowledge" means, with respect to the Company, the actual knowledge (or knowledge such individuals would have had upon reasonable inquiry of their direct reports) of any of Roy E. Moore, Jr., Robert McHugh, Bryan Coppes, Carl Thompson and Ronald Brochu.

"Latest Balance Sheet" is defined in Section 4.05.

"Law" means any law, rule, regulation, judgment, order, decree, or other pronouncement having the effect of law of any Governmental Body.

"Lease" is defined in Section 4.08(b).

"Leased Real Property" is defined in Section 4.08(b).

"Letter of Transmittal" means a letter of transmittal in the form of Exhibit C.

"Liability" means any liability, debt, commitment, obligation, duty, deficiency, penalty, assessment, fine or other loss, fee, cost or expense of any kind or nature whatsoever, whether asserted or unasserted, accrued or unaccrued, absolute or contingent, known or unknown, liquidated or unliquidated and whether due or to become due and regardless of when asserted.

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"Liens" means, with respect to any property or asset, any mortgage, hypothecation, lien, pledge, charge, security interest, deed of trust, lease or sublease, license or sublicense, right of first refusal, option, rights of way, easements, restrictions on transfer of title, encumbrance or other similar adverse claim of any kind in respect of such property or asset.  For the purposes of this Agreement, a Person shall be deemed to own or lease subject to a Lien any property or asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset.

"Material Adverse Change" means any change, occurrence, fact or event that has, or would reasonably be expected to have a materially adverse change to the financial condition, business, results of operations of the Company and its Subsidiaries, taken as a whole, but shall exclude any change, occurrence, fact or event to the extent resulting or arising from: (i) any change in any Law; (ii) any change in interest rates, credit markets, currency exchange rates or general economic conditions (including changes in the price of gas, oil or other natural resources or chemicals); (iii) any change that is generally applicable to the industries in which the Company or any of its Subsidiaries operates; (iv) the public announcement, in and of itself, of the transactions contemplated by this Agreement and the other agreements referenced herein; (v) any action taken by or at the express written direction of the Purchaser or any of its Affiliates that is not required to be taken by the express terms of this Agreement; (vi) any national or international political event or occurrence, including acts of war or terrorism; (vii) any natural disasters, hurricanes, floods, tornados, pandemics, tsunamis, earthquakes or other acts of God; or (viii) any failure by the Company or any Subsidiary thereof to meet any projections, forecasts or estimates of revenue or earnings (it being understood that this clause (viii) shall not prevent a determination that any change, occurrence, fact or event underlying such failure to meet projections, forecasts or estimates has resulted in a Material Adverse Change (to the extent the effect(s) of such change, occurrence, fact or event is not otherwise excluded from this definition of Material Adverse Change)); provided, that, in the case of the foregoing clauses (i), (ii), (iii), (vi) and (vii), if such effect disproportionately affects the Company and its Subsidiaries as compared to other Persons or businesses that operate in the industry in which the Company and its Subsidiaries operate, then the disproportionate aspect of such effect may be taken into account in determining whether a Material Adverse Change has occurred or will occur.

"Merger" is defined in Section 2.01(a).

"Merger Consideration" means, together, the Stockholders' Merger Consideration and the Optionholders' Merger Consideration.

"Merger Sub" is defined in the Preamble.

"Merger Sub Documents" is defined in Section 5.01.

"Multiemployer Plan" means a multiemployer plan, within the meaning of Section 3(37) of ERISA or Section 4001(a)(3) of ERISA, to which the Company or any Subsidiaries of the Company contributes or has an obligation to contribute.

"Non‑Recourse Party" means, with respect to a party, any of such party's former, current and future equityholders, controlling Persons, directors, officers, employees, advisors, agents,

9


 

representatives, Affiliates, members, managers, general or limited partners, or assignees (or any former, current or future equityholder, controlling Person, director, officer, employee, advisor, agent, representative, Affiliate, member, manager, general or limited partner, or assignee of any of the foregoing).

"Objection Notice" is defined in Section 3.03(b).

"Optionholder" means any holder of Options.

"Optionholders' Closing Consideration" is defined in Section 2.04(a).

"Optionholders' Merger Consideration" means the aggregate consideration to which Optionholders become entitled pursuant to Section 2.04(a).

"Options" means all options, warrants and rights to acquire shares of Class A Common Stock which are exercisable (or will become exercisable as a result of the transactions contemplated hereby whether pursuant to the terms of such options, warrants and rights, or at the election of the Company's board of directors), as of immediately prior to the Effective Time.

"Participants" means the Persons identified as Participants (as defined in the Incentive Bonus Plan) set forth on the Bonus Amount Schedule.

"Per Share Portion" means a fraction, the numerator of which is one (1), and the denominator of which is the sum of (i) the total number of shares of Class A Common Stock issued and outstanding immediately prior to the Effective Time (other than Class A Common Stock held by the Company as treasury stock or held by the Merger Sub), plus (ii) the total number of shares of Class A Common Stock issuable upon exercise of all Options that have not been canceled or forfeited prior to the Closing (other than pursuant to this Agreement).

"Permit" means any approvals, authorizations, consents, licenses, permits, registrations or certificates of a Governmental Body.

"Permitted Liens" means (i)  Liens for Taxes not yet due and payable or, if adequate reserves with respect thereto are maintained on the Company's and its Subsidiaries' books in accordance with GAAP, which are being contested in good faith by appropriate proceeding; (ii) landlord's, mechanic's, materialmen's, and other similar statutory Liens arising or incurred in the ordinary course of business for amounts not yet due and payable or, if adequate reserves with respect thereto are maintained on the Company's and its Subsidiaries' books in accordance with GAAP, which are being contested in good faith by appropriate proceeding; (iii) purchase money Liens and Liens securing rental payments under lease arrangements (other than in connection with any breach thereof); (iv) Liens set forth on the Permitted Liens Schedule; (v) zoning, building codes and other land use Laws regulating the use or occupancy of real property or the activities conducted thereon which are imposed by any Governmental Body which do not materially interfere with the current use or value of such real property or the operation of the business; (vi) easements, rights, covenants, conditions and restrictions of record that do not materially interfere with the use or value of real property to which they relate; (vii) charges or claims relating to customer return rights, warranty claims, rebates, refunds and other discounts to customers arising in the ordinary course of business, none of which are material, individually or in the aggregate; (viii)

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Liens that will be terminated in connection with the Closing without any Liability to the Company or any of its Subsidiaries after the Closing; and (ix) non-exclusive licenses of Intellectual Property.

"Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a Governmental Body.

"PII" means information relating to an identified or identifiable natural person (the "data subject") who can be identified, directly or indirectly, from such data or information.

"PII Statements" means each of the Company's and each of its Subsidiary's privacy policies, terms of use, and public notices related to Processing PII.

"Post-Closing Bonus Pool" is defined in Section 7.04.

"Pre‑Closing Tax Period" means any Tax period ending on or before the date hereof and, with respect to a Straddle Period, the portion of such Tax period ending on and including the date hereof.

"Privileged Materials" is defined in Section 10.13.

"Privileges" is defined in Section 10.13.

"Pro Rata Percentage" means, as to any holder of Class A Common Stock that has received any portion of the Merger Consideration, a fraction, (i) the numerator of which is the number of shares of Class A Common Stock held by such Stockholder immediately prior to the Effective Time, and (ii) the denominator of which is the total number of shares of Class A Common Stock held by all Stockholders immediately prior to the Effective Time.

"Processing" means any set of operations performed on PII.

"Purchase Price Adjustment Escrow Account" is defined in Section 3.02(h).

"Purchase Price Adjustment Escrow Amount" means an amount equal to five million dollars ($5,000,000).

"Purchase Price Adjustment Escrow Funds" means the amount of cash held from time to time by the Escrow Agent in the Purchase Price Adjustment Escrow Account pursuant to the Escrow Agreement.

"Purchaser" is defined in the Preamble.

"Purchaser Adjustment Amount" is defined in Section 3.03(e)(i).

"Purchaser Documents" is defined in Section 5.01.

"Purchaser Expenses Amount" means an amount equal to seven million dollars ($7,000,000).

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"R&W Insurance" means the insurance coverage provided pursuant to the R&W Insurance Policy.

"R&W Insurance Policy" means, collectively, each of the buyer-side representations and warranties polices issued by AIG Specialty Insurance Company, Nautilus Insurance Company, Barbican Transaction Liability Consortium 9804, Liberty Surplus Insurance Corporation, Mt. Hawley Insurance Company, Arch Reinsurance Ltd., Markel Bermuda Limited, Everest Reinsurance (Bermuda) Ltd., and Berkley Transactional to the Purchaser.

"Related Party" means (i) Ontario Teachers' Pension Plan Board and its Affiliates, (ii) any direct or indirect holder (or group of related holders) of more than 5% of any class or series of the Equity Securities of the Company or any of its Subsidiaries (other than Ontario Teachers' Pension Plan Board and its Affiliates), (iii) any partner, equityholder, director, officer, manager or senior employee or Affiliate of any Person described in the foregoing clause (ii), or trust or other estate in which such Person has any substantial interest, and (iv) any director, officer, manager or Senior Strategic Manager of the Company, any of its Subsidiaries or of Ontario Teachers’ Pension Plan Board.

"Representative" is defined in the Preamble.

"Representative Holdback Amount" means an amount equal to one million dollars ($1,000,000).

"Retained Employees" is defined in Section 7.03(a).

"RICO" means the Racketeer Influence and Corrupt Organizations Act of 1970, as amended.

"Schedule" is defined in Article IV.

"Stockholder" means any holder of Company Stock.

"Stockholder Approval" is defined in the Preamble.

"Stockholders' Merger Consideration" means, collectively, the aggregate consideration to which the Class A Stockholders become entitled pursuant to Section 2.02(a), together with the Class B Merger Consideration and the Class C Merger Consideration.

"Straddle Period" means a taxable period beginning on or before the date hereof and ending after the date hereof.

"Subsidiary" means, with respect to any Person, any corporation of which a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one (1) or more of the other Subsidiaries of such Person or a combination thereof, or any partnership, association or other business entity of which a majority of the partnership or other similar ownership interest is at the time owned or controlled, directly or indirectly, by such Person or one (1) or more Subsidiaries of such Person or a

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combination thereof.  For purposes of this definition, a Person is deemed to have a majority ownership interest in a partnership, association or other business entity if such Person is allocated a majority of the gains or losses of such partnership, association or other business entity or is or controls the managing director or general partner of such partnership, association or other business entity.  For purposes of this Agreement, (i) an entity shall be considered a Subsidiary for any time period for which it meets the definition of being a Subsidiary even if the entity no longer exists or is no longer a Subsidiary,  (ii) references to Subsidiaries of the Company shall include Subsidiaries of any such Subsidiary, and (iii) references to current Subsidiaries of the Company apply to periods during which the Subsidiary was not a Subsidiary.

"Support Agreements" means the support agreements delivered pursuant to Section 3.02(n).

"Surviving Corporation" is defined in Section 2.01(a).

"Target Working Capital" means forty-three million four hundred eighty-six thousand dollars ($43,486,000).

"Tax" means any (i) tax, fee, levy, duty, tariff, impost or other similar charge of any kind imposed by any Governmental Body or other tax authority, including without limitation (A) any tax or other charge on or measured by income, gain, gross receipts, sales, use, capital stock, franchise, profits, compensation, occupation, value of real or personal property, unclaimed property, escheat, net worth, value of property transferred or value added and (B) any tax or imposition by any Governmental Body for social security, unemployment, disability, workers' compensation, whether direct or indirect, regular or alternative or collected through withholding or from the party actually liable for the tax and (ii) any interest, penalty or additional amounts imposed with respect to the foregoing or with respect to the failure to file, late filing, or incomplete filing of a Tax Return or the filing of an inaccurate Tax Return.

"Tax Amount" means an amount equal to fourteen million nine hundred thousand dollars ($14,900,000).

"Tax Proceeding" means any proceeding, judicial or administrative, involving Taxes or any audit, examination, deficiency asserted or assessment made by the Internal Revenue Service or any other taxing authority.

"Tax Returns" means any return, claims for refund, report, information return or other document (including schedules or any related or supporting information) filed or required to be filed with any Governmental Body in connection with the determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax.

"Total Bonus Pool" means an aggregate amount equal to the sum of the Closing Bonus Pool, plus the Post-Closing Bonus Pool.

"Transaction Expenses" means, without duplication, to the extent not paid prior to the Closing, the amount of all fees, costs and expenses (including fees, costs, commissions and expenses of legal counsel, investment bankers, financial advisors (including the brokers referred to on the Brokerage Schedule), accountants, brokers or other representatives, service providers and

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consultants) incurred by the Company or any of its Subsidiaries in connection with, or incident to, any sale or review of strategic alternatives thereto conducted or pursued by the Company or any of its Subsidiaries (including in connection with any initial public offering), including the negotiation, execution and delivery of this Agreement and the consummation of the transactions contemplated herein, including (i) all transaction bonuses, "success fees" and change-of-control payments, "stay put" bonuses or retention obligations or other compensatory or similar payments (plus, without duplication, any associated withholding Taxes or any Taxes required to be paid by the Company or any of its Subsidiaries with respect thereto, including the employer portion of any payroll Taxes) payable to employees, officers, consultants or directors triggered by the Closing of the transactions contemplated hereby (excluding, in each case, the Total Bonus Pool and any bonuses payable to any employee based on the performance of such employee or the performance of the Company or any of its Subsidiaries, without regard to the transactions contemplated by this Agreement or the consummation thereof, and any consideration payable to any employee due to actions or decisions made by the Purchaser at or after the Closing), (ii) the employer portion of any payroll Taxes with respect to any payments of Optionholders' Merger Consideration made to any Optionholders (excluding, for the avoidance of doubt, any arrangements contemplated by, or otherwise put in place for the benefit of, Purchaser), (iii) one-half of the premium of the D&O Tail Policies, and (iv) any franchise Taxes due and payable by the Company.  Notwithstanding the foregoing, "Transaction Expenses" will exclude all costs, fees and expenses and payment obligations to the extent included in Indebtedness or the Closing Working Capital.

"Transaction Tax Deductions" means any tax deduction attributable to the payment of the Optionholders' Merger Consideration, Transaction Expenses, the Total Bonus Pool, any costs, expenses or other liabilities included in the calculation of Closing Working Capital or Indebtedness, or any deduction for unamortized financing costs of the Company or any of its Subsidiaries and premium deductions arising from the repayment of indebtedness to the extent such deductions can be claimed in a Pre-Closing Tax Period, assuming for these purposes that the parties make any available elections under Revenue Procedure 2011‑29, 2011‑18 IRB 746, to treat seventy percent (70%) of any success‑based fees that were paid as an amount that did not facilitate the Merger, and therefore treat seventy percent (70%) of such costs as deductible in the taxable year that included the date hereof for U.S. federal income tax purposes; provided, however, that for the avoidance of doubt there is no requirement that such elections be made.

"Treasury Regulations" means the United States Treasury Regulations promulgated under the Code, and any reference to any particular Treasury Regulation section shall be interpreted to include any final or temporary revision of or successor to that section regardless of how numbered or classified.

"Valuation Firm" is defined in Section 3.03(b).

"WARN" means the Worker Adjustment and Retraining Notification Act, as amended, and any equivalent state or local law.

"Working Capital" means (i) only those specific line items designated as "current assets" on the Working Capital Schedule (taking into account the exclusions therefrom for Cash, Indebtedness and certain Taxes and intercompany transactions expressly set forth on the Working Capital Schedule), minus (ii) only those specific line items designated as "current liabilities" on

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the Working Capital Schedule (taking into account the exclusions therefrom for Cash, Indebtedness and certain Taxes and intercompany transactions expressly set forth on the Working Capital Schedule), in each case, for the Company and its Subsidiaries on a consolidated basis calculated in accordance with the Accounting Principles.  The Working Capital Schedule sets forth an illustrative example of the calculation of Working Capital (reflecting any such specific adjustments), as of 12:01 a.m. Eastern Time on December 31, 2018.  Such calculation is included for reference purposes only, and notwithstanding anything to the contrary, neither the Company nor any other Person makes any representation or warranty in respect thereof.

Other Definitional Provisions

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(a)Accounting Terms.  Accounting terms which are not otherwise defined in this Agreement have the meanings given to them under GAAP.  To the extent that the definition of an accounting term defined in this Agreement is inconsistent with the meaning of such term under GAAP, the definition set forth in this Agreement will control.

(b)"Hereof," etc.   The terms "hereof," "herein" and "hereunder" and terms of similar import are references to this Agreement as a whole and not to any particular provision of this Agreement.

(c)Successor Laws.  Any reference to any particular Code section or any other Law will be interpreted to include any revision of or successor to that section regardless of how it is numbered or classified.

(d)"Including," etc.  The term "including" has the inclusive meaning frequently identified with the phrase "but not limited to" or "without limitation".

(e)Singular and Plural Forms.  Unless the context otherwise clearly indicates, each defined term used in this Agreement shall have a comparable meaning when used in its plural or in its singular form.

(f)"Or".  The word "or" is not exclusive.

(g)"To the extent".  The phrase "to the extent" means the degree by which, and not "if."

(h)Internal References.  References herein to a specific section, subsection, clause, recital, schedule or exhibit shall refer, respectively, to sections, subsections, clauses, recitals, schedules or exhibits of this Agreement, unless otherwise specified.

(i)Gender.  References herein to any gender shall include each other gender.

(j)Heirs, Executors, etc.  References herein to any Person shall include such Person's heirs, executors, personal representatives, administrators, successors and assigns; provided, however, that nothing contained in this Section 1.02(j) is intended to authorize any assignment or transfer not otherwise permitted by this Agreement.

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(k)Capacity.  References herein to a Person in a particular capacity or capacities shall exclude such Person in any other capacity.

(l)Time Period.  With respect to the determination of any period of time, the word "from" or "since" means "from and including" or "since and including," as applicable, and the words "to" and "until" each means "to and including".

(m)Contract.  References herein to any Contract mean such Contract as amended, supplemented or modified (including any waiver, amendments, modifications, supplements, extension or renewals thereto); provided, however, that any Contract provided or disclosed pursuant to this Agreement or listed on any Schedule (or required to be provided or disclosed or listed on any Schedule hereto) shall also include, disclose and list all amendments, modifications, supplement extensions and renewals.

(n)Calendar Days.  References to any period of days shall be deemed to be the relevant number of calendar days, unless otherwise specified.

(o)Business Day.  If the last day for the giving of any notice or the performance of any act required or permitted under this Agreement is a day that is not a Business Day, then the time for the giving of such notice or the performance of such action shall be extended to the next succeeding Business Day.

(p)"Dollar," etc.  The terms "dollars" or "$" mean dollars in the lawful currency of the United States of America and all payments made pursuant to this Agreement shall be in United States dollars.

Article II
THE MERGER

The Merger

.

(a)At the Effective Time, the Merger Sub shall merge with and into the Company in accordance with Delaware Law (the "Merger"), whereupon the separate existence of the Merger Sub shall cease, and the Company shall be the surviving corporation (the "Surviving Corporation").

(b)The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or at such later time as is specified in the Certificate of Merger (the "Effective Time").

(c)From and after the Effective Time, the Surviving Corporation shall succeed to all the assets, rights, privileges, powers and franchises and be subject to all of the liabilities, restrictions, disabilities and duties of each of the Company and the Merger Sub, all as provided under Delaware Law.

Conversion of Capital Stock

.  At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof:

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(a)Each share of Class A Common Stock issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares, if any, which shall be addressed in accordance with Section 2.09) shall be converted into the right to receive in cash the Per Share Portion of (x) the Estimated Closing Cash Proceeds in accordance with Section 2.03 (collectively, the "Class A Stockholders' Closing Consideration"), and (y) any Adjustments, in each case, after taking into consideration the rights of the Participants to any portion of such consideration pursuant to the Incentive Bonus Plan.  

(b)Each share of Class B Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive in cash the Class B Liquidation Value.  

(c)Each share of Class C Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive in cash the Class C Liquidation Value.  

(d)Each share of Company Stock held immediately prior to the Effective Time by the Company as treasury stock or by the Merger Sub shall be canceled, and no payment shall be made with respect thereto.

(e)Each share of the Merger Sub's common stock issued and outstanding immediately prior to the Effective Time shall be converted into and become one (1) validly issued, fully paid and non‑assessable share of common stock, no par value per share, of the Surviving Corporation.

Exchange of Certificates; Lost Certificates; Escrow Agent

.  The Escrow Agent shall act as disbursing agent in effecting the payment of cash for certificates which, immediately prior to the Closing, represented shares of Company Stock ("Certificates") and which are converted into the right to payment pursuant to Section 2.02.  At or after the Effective Time, each Stockholder shall surrender to the Company Certificates, together with a duly executed Letter of Transmittal, representing the number of shares of Company Stock held by such holder.  On the date hereof or, with respect to any Certificates that have not been surrendered to the Company on the date hereof, one (1) Business Day after surrender of such Certificates, the Escrow Agent shall pay each Stockholder that has surrendered to the Company his, her or its Certificates, duly endorsed in blank or accompanied by duly executed stock powers, together with a duly executed Letter of Transmittal, the amount of cash to which he, she or it is entitled under Section 2.02.  Surrendered Certificates shall forthwith be canceled.  Until so surrendered and exchanged, each such Certificate shall represent solely the right to receive the Stockholders' Merger Consideration into which the shares it theretofore represented shall have been converted pursuant to Section 2.02, and neither the Escrow Agent nor the Surviving Corporation shall be required to pay the holder thereof the cash to which he, she or it would otherwise have been entitled.  Notwithstanding the foregoing, if any Certificate shall have been lost, stolen or destroyed, then, upon the making of an affidavit of such fact by the Person claiming such certificate to be lost, stolen or destroyed and the providing of an indemnity by such Person, in form and substance reasonably satisfactory to the Company, against any claim that may be made against it with respect to such Certificate, the Escrow Agent shall remit the Stockholders' Merger Consideration to be paid in respect of the share(s) of Company Stock represented by such Certificate, in the amounts, at the times, and in the manner contemplated

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by this Article II.  Notwithstanding anything to the contrary, the Escrow Agent shall not be liable to any Stockholder for Stockholders' Merger Consideration delivered to a Governmental Body if such delivery is required pursuant to any applicable abandoned property, escheat or similar Law.

Options

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(a)At the Effective Time, each Optionholder shall become entitled to receive in respect of such Option that is vested, unexercised and outstanding immediately prior to the Effective Time an amount in cash equal to the product of (A) the number of shares of Class A Common Stock such holder could have purchased if such holder had exercised such Option in full (and paid the applicable exercise price in respect thereof) immediately prior to such time, multiplied by (B) (x) the excess of the Per Share Portion of the Estimated Closing Cash Proceeds over the applicable exercise price per share of such Option (collectively, the "Optionholders' Closing Consideration") and (y) the Per Share Portion of any Adjustments, in each case, after taking into consideration the rights of the Participants to any portion of such consideration pursuant to the Incentive Bonus Plan.  

(b)The Surviving Corporation shall act as paying agent in effecting the payment of the Optionholders' Closing Consideration and the Participants' Closing Bonus Pool through the Surviving Corporation's payroll system on the next regularly scheduled payroll date after the date hereof.  The Surviving Corporation (or any other Person that has any withholding obligation with respect to any payment made pursuant to this Section 2.04) shall be entitled to deduct and withhold from any payments to be made pursuant to this Section 2.04 any Taxes required to be deducted and withheld with respect to the making of such payments under the Code or any other applicable provision of Law.  To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to such Optionholder or Participant, as applicable, on behalf of whom such deduction and withholding was made.  Furthermore, in order to ensure compliance with all applicable Tax withholding requirements, the Representative or the Escrow Agent at the Representative's direction may pay or direct payment of any funds which are to be paid to or for the benefit of the Optionholders or Participants (including any portion of the Optionholders' Merger Consideration and any portion of the Participants' Total Bonus Pool) to the Surviving Corporation and have such amounts paid through the Surviving Corporation's payroll system on the next regularly scheduled payroll date after the date of receipt of such amounts.  Upon payment of any such amounts to the Surviving Corporation, the Representative or the Escrow Agent, as applicable, shall be relieved of its obligation to pay such amounts to the Optionholders or Participants, as applicable.

Certificate of Incorporation

.  As of the Effective Time, the certificate of incorporation of the Surviving Corporation shall be amended and restated pursuant to the terms set forth in the Certificate of Merger, and as so amended and restated, shall be the certificate of incorporation of the Surviving Corporation until amended in accordance with applicable Law.

Bylaws

.  The bylaws of the Merger Sub in effect at the Effective Time shall be the bylaws of the Surviving Corporation (except that the title thereof shall read "Bylaws of Infiltrator Water Technologies Ultimate Holdings, Inc.") and, as so amended and restated, shall be the bylaws of the Surviving Corporation until amended in accordance with applicable Law.

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Directors and Officers

.  From and after the Effective Time, until successors are duly elected or appointed in accordance with applicable Law (or their earlier resignation or removal), the directors and officers of the Merger Sub at the Effective Time shall be the directors and officers, as applicable, of the Surviving Corporation.

Withholding

.  The Purchaser and the Surviving Corporation (and any other Person that has any withholding obligation with respect to any payment made pursuant to this Agreement) and the Representative and the Escrow Agent shall be entitled to deduct and withhold from the Merger Consideration and any amounts otherwise payable pursuant to this Agreement to any Person such amounts as the Purchaser, the Surviving Corporation or such other Person is required to deduct and withhold with respect to the making of such payment under the Code or any other applicable provision of Law; provided, that the Purchaser, the Surviving Corporation or such other Person shall provide the Representative with reasonable notice prior to withholding any amounts pursuant to this Section 2.08 (other than any such amounts subject to payroll withholding), and shall work in good faith with the Representative (at the Representative's expense) to minimize any such withheld amounts.  To the extent that amounts are so withheld and are timely paid over to the applicable Tax authority in accordance with applicable Law, such amounts shall be treated for all purposes of this Agreement as having been paid to the person in respect of which such deduction and withholding was made.

Appraisal Rights

.  Notwithstanding anything in this Agreement to the contrary, shares of Company Stock that are outstanding immediately prior to the Effective Time and held by a holder that has demanded and perfected a demand for appraisal for such shares of Company Stock in accordance with Delaware Law Section 262 ("Dissenting Shares") shall not be converted into the right to receive the Merger Consideration, but instead shall only be entitled to the rights provided under Delaware Law Section 262.  At the Effective Time, by virtue of the Merger, (a) all Dissenting Shares shall be cancelled and cease to exist and (b) the holder or holders of Dissenting Shares shall be entitled only to such rights as may be granted to them under Delaware Law Section 262; provided, however, that if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to appraisal and payment under Delaware Law, the right of such holder to such appraisal of its shares of Company Stock shall cease, and such shares of Company Stock shall be deemed converted as of the Effective Time into the right to receive the Merger Consideration, without interest, as provided in this Article II.

Article III

THE CLOSING; MERGER CONSIDERATION ADJUSTMENT

The Closing

.  The closing of the transactions contemplated by this Agreement (the "Closing") shall take place on the date hereof simultaneously with the execution and delivery of this Agreement and remotely via the exchange of documents and signature pages.

The Closing Transactions

.  At the Closing, the parties hereto shall consummate the following transactions:

(a)the Company and the Merger Sub shall pay all franchise Taxes due and payable by the Merger Sub immediately prior to the Effective Time, cause a duly executed copy

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of the Certificate of Merger to be filed with the Secretary of State of the State of Delaware and make all other filings or recordings required by Delaware Law in connection with the Merger;

(b)the Purchaser shall deliver or cause to be delivered to the Escrow Agent an aggregate amount equal to the Class A Stockholders' Closing Consideration (for distribution by the Escrow Agent to each Class A Stockholder of such Class A Stockholder's Per Share Portion of the Estimated Closing Cash Proceeds as determined in accordance with Section 2.02), by wire transfer of immediately available funds to the account(s) designated by the Escrow Agent;

(c)the Purchaser shall deliver or cause to be delivered to the Escrow Agent an aggregate amount equal to the Class B Merger Consideration (for distribution by the Escrow Agent to each holder of Class B Common Stock of an amount equal to the Class B Liquidation Value in respect of each share of Class B Common Stock held by such holder as determined in accordance with Section 2.02), by wire transfer of immediately available funds to the account(s) designated by the Escrow Agent;

(d)the Purchaser shall deliver or cause to be delivered to the Escrow Agent an aggregate amount equal to the Class C Merger Consideration (for distribution by the Escrow Agent to each holder of Class C Common Stock of an amount equal to the Class C Liquidation Value in respect of each share of Class C Common Stock held by such holder as determined in accordance with Section 2.02), by wire transfer of immediately available funds to the account(s) designated by the Escrow Agent;

(e)the Purchaser shall, as instructed by the Representative, deliver to the Company the Closing Bonus Pool (for distribution by the Company to each Participant under the Incentive Bonus Plan who is owed a portion thereof as set forth on the Bonus Amount Schedule) by wire transfer of immediately available funds to the account(s) designated by the Representative;

(f)the Purchaser shall, as instructed by the Representative, deliver or cause to be delivered to the Company an aggregate amount equal to the Optionholders' Closing Consideration (for distribution by the Company to each Optionholder of such holder's portion of the Estimated Closing Cash Proceeds as determined in accordance with Section 2.04), by wire transfer of immediately available funds to the account(s) designated by the Representative;

(g)the Purchaser shall repay, or cause to be repaid, on behalf of the Company, all amounts necessary to discharge fully the then‑outstanding balance of all Indebtedness identified on the Indebtedness Schedule by wire transfer of immediately available funds to the account(s) designated by the holders of such Indebtedness;

(h)the Purchaser shall deliver the Purchase Price Adjustment Escrow Amount to the Escrow Agent for deposit into an escrow account (the "Purchase Price Adjustment Escrow Account") established pursuant to the terms of the Escrow Agreement;

(i)the Purchaser shall deliver the Representative Holdback Amount by wire transfer of immediately available funds to the account(s) designated by the Representative;

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(j)the Purchaser shall pay, on behalf of the Company, all Transaction Expenses to each Person that is owed a portion thereof as set forth on the Transaction Expenses Schedule pursuant to a written invoices from such Person;

(k)the Escrow Agreement shall be executed by each of the Purchaser, the Escrow Agent and the Representative;

(l)the Company shall deliver to the Purchaser executed payoff letters from the holders of Indebtedness identified on the Indebtedness Schedule specifying the amount necessary to release all amounts outstanding as of the Closing (including the principal amount thereof, any prepayment premiums or fees or termination fees with respect thereto, any accrued interest thereon and any expense reimbursement or other amounts due in respect thereof) and providing for the release of all Liens associated with such Indebtedness, as applicable, upon the payment of such outstanding amounts;

(m)the Company shall deliver the affidavit in the form of Exhibit E stating that the Company is not and has not been a United States real property holding corporation, in the form and substance required under Treasury Regulation §§1.897‑2(h) and 1.1445-2(c)(3);

(n)the Company shall deliver to the Purchaser a Support Agreement executed by the Representative in a form mutually agreed by the Representative and the Purchaser, and a Support Agreement executed by each of Roy E. Moore, Jr., Robert McHugh, Bryan Coppes, Carl Thompson and Ronald Brochu in a form mutually agreed by each such individual and the Purchaser; and

(o)the Purchaser shall deliver to the Company a true and correct copy of the R&W Insurance Policy.

For the avoidance of doubt, and notwithstanding anything contained herein to the contrary, the failure of any Stockholder or Optionholder to satisfy any of the deliveries set forth in Section 2.03 and Section 2.04 shall not affect the Purchaser's obligations to deliver to any other Stockholder or Optionholder the portion of the Merger Consideration to which such other Stockholder or Optionholder is entitled at Closing.

Closing Cash Proceeds Adjustment

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(a)As promptly as practicable after the Closing, but in no event later than ninety (90) days after the date hereof, the Purchaser shall prepare and deliver to the Representative a statement (the "Closing Statement") setting forth the Purchaser's calculation of the Closing Cash Proceeds, including each of the components thereof, in each case in accordance with the definition thereof, and a consolidated balance sheet of the Company and its Subsidiaries as of the Closing (the "Closing Balance Sheet").  The Closing Balance Sheet shall (i) be prepared in accordance with the Accounting Principles, and Cash, Indebtedness and the Closing Working Capital (subject to the specific adjustments set forth on the Working Capital Schedule) shall be determined, in accordance with the respective definitions of each set forth herein and (ii) not include any changes in assets or liabilities as a result of purchase accounting adjustments or other changes arising from or resulting as a consequence of the consummation of the Closing except as provided in the definitions of Indebtedness and Transaction Expenses.

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(b)The Purchaser and its Subsidiaries (including the Surviving Corporation and its Subsidiaries) shall (i) permit the Representative and its representatives to have reasonable access to the books, records and other documents (including work papers (upon execution and delivery of customary accountant access letter(s)), schedules, financial statements, memoranda, etc.) pertaining to or used in connection with the preparation of the Closing Statement or the Closing Balance Sheet and the Purchaser's calculation of the Closing Cash Proceeds and provide the Representative with copies thereof (as reasonably requested by the Representative) and (ii) provide the Representative and its representatives reasonable access to the Purchaser's and its Subsidiaries' (including the Surviving Corporation's and its Subsidiaries') employees and advisors (including making their accountants available to respond to reasonable written or oral inquiries of the Representative or its representatives); provided, in each case, that such access shall be in a manner that does not unreasonably interfere with the normal business operations of the Purchaser, the Surviving Corporation and their respective Affiliates.  If the Representative disagrees with any part of the Purchaser's calculation of the Closing Cash Proceeds as set forth on the Closing Statement or the Closing Balance Sheet, the Representative shall, within thirty (30) days after the Representative's receipt of the Closing Statement and the Closing Balance Sheet, notify the Purchaser in writing of such disagreement by setting forth the Representative's calculation of the Closing Cash Proceeds, including each of the components thereof, and describing in reasonable detail the basis for such disagreement (an "Objection Notice").  Any part of the Purchaser's calculation of the Closing Cash Proceeds as set forth on the Closing Statement or Closing Balance Sheet that is not properly objected to in an Objection Notice shall be conclusive and binding on the parties hereto.  If an Objection Notice is delivered to the Purchaser, then the Purchaser and the Representative shall negotiate in good faith to resolve their disagreements with respect to the computation of the Closing Cash Proceeds.  In the event that the Purchaser and the Representative are unable to resolve all such disagreements within thirty (30) days after the Purchaser's receipt of such Objection Notice or such longer period as the Purchaser and the Representative may mutually agree in writing, the Purchaser and the Representative shall submit such remaining disagreements to Duff & Phelps, or a nationally‑recognized valuation or consulting firm and/or independent accountant as is acceptable to the Purchaser and the Representative (the "Valuation Firm").

(c)The Valuation Firm shall act as an expert and not as an arbitrator, and make a final and binding determination with respect to the Purchaser's computation of the Closing Cash Proceeds, including each of the components thereof, to the extent such amounts are in dispute, in accordance with the guidelines and procedures set forth in this Agreement and on Exhibit D as soon as reasonably practicable.  The Purchaser and the Representative shall cooperate with the Valuation Firm during the term of its engagement and shall use commercially reasonable efforts to cause the Valuation Firm to resolve all remaining disagreements with respect to the computation of the Closing Cash Proceeds, including each of the components thereof, as soon as practicable.  The Valuation Firm shall consider only those items and amounts in the Purchaser's and the Representative's respective calculations of the Closing Cash Proceeds, including each of the components thereof, that are in the Objection Notice and identified as being items and amounts to which the Purchaser and the Representative have been unable to agree, and the Valuation Firm may not assign a value to any item in dispute greater than the greatest value or less than the smallest value for such item calculated by either party.  Except as permitted on Exhibit D hereto in order to clarify or understand any position or argument made by a party in a written submission, the Valuation Firm's determination of the Closing Cash Proceeds, including each of the components thereof, shall be based solely on written presentations submitted by the Purchaser and the

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Representative and the terms and standards set forth in this Agreement (i.e., not on the basis of an independent review).  The determination of the Valuation Firm shall be in writing, shall be conclusive and binding upon the parties hereto and shall not be subject to appeal or further review except in the case of manifest clerical error or fraud.

(d)The fees and expenses of the Valuation Firm in determining the Closing Cash Proceeds, including each of the components thereof, shall be borne by the Purchaser, on the one hand, and the Representative, on the other hand, based upon the percentage which the portion of the contested amount not awarded to each party bears to the amount actually contested by such party in the written presentation to the Valuation Firm.  For example, if the Purchaser claims the Closing Cash Proceeds are one thousand dollars ($1,000) less than the amount determined by the Representative, and the Representative contests only five hundred dollars ($500) of the amount claimed by the Purchaser, and if the Valuation Firm ultimately resolves the dispute by awarding the Purchaser three hundred dollars ($300) of the five hundred dollars ($500) contested, then the costs and expenses of the Valuation Firm will be allocated sixty percent (60%) (i.e., 300/500) to the Representative and forty percent (40%) (i.e., 200/500) to the Purchaser.  The Purchaser, on the one hand, and the Representative, on the other hand, shall retain the Valuation Firm and each pay fifty percent (50%) of any retainer.  During such engagement, the Valuation Firm will bill fifty percent (50%) of the total charges to the Purchaser, on the one hand, and fifty percent (50%) of the total charges to the Representative, on the other hand.  In connection with the Valuation Firm's determination of Closing Cash Proceeds, the Valuation Firm shall also determine, pursuant to the terms of the first and second sentences of this Section 3.03(d), and taking into account all fees, costs and expenses of the Valuation Firm already paid by each of the Purchaser, on the one hand, and the Representative, on the other hand, as of the date of such determination, the allocation of the Valuation Firm's fees, costs and expenses between the Purchaser and the Representative, which such determination shall be conclusive and binding upon the parties hereto.

(e)Within five (5) Business Days after the Closing Cash Proceeds, including each of the components thereof, is finally determined pursuant to this Section 3.03:

(i)if the Closing Cash Proceeds as finally determined pursuant to this Section 3.03 are less than the Estimated Closing Cash Proceeds, then the Purchaser and the Representative shall cause the Escrow Agent to: (A) pay to the Purchaser solely and exclusively from the Purchase Price Adjustment Escrow Funds an amount (which in no case shall exceed the Purchase Price Adjustment Escrow Amount) (the "Purchaser Adjustment Amount") equal to such deficiency, and (B) pay to the Representative or to the Escrow Agent at the Representative's direction the amount (if any) by which the amount of the Purchase Price Adjustment Escrow Funds is greater than the Purchaser Adjustment Amount; and

(ii)if the Closing Cash Proceeds as finally determined pursuant to this Section 3.03 are greater than the Estimated Closing Cash Proceeds, then (A) the Purchaser shall, or shall cause the Surviving Corporation or one or more of its Subsidiaries to, pay to the Representative or to the Escrow Agent at the Representative's direction an amount (which in no case shall exceed the Purchase Price Adjustment Escrow Amount) equal to such excess, and (B) the Purchaser and the Representative shall cause the Escrow Agent to pay to the Representative or to

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the Escrow Agent at the Representative's direction an amount equal to all of the Purchase Price Adjustment Escrow Funds.

All payments to be made pursuant to this Section 3.03(e) shall (x) be treated by all parties for Tax purposes as adjustments to the Merger Consideration to the extent permitted by applicable Law and (y) be made by wire transfer of immediately available funds to the account(s) designated by the Purchaser or the Representative, as applicable.  Each of the Purchaser, the Stockholders and the Optionholders hereby agrees and acknowledges that his, her or its right to any payment to be made pursuant to Section 3.03(e) shall be their sole and exclusive remedy for any and all claims arising under this Agreement with respect to this Section 3.03.

Article IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Purchaser that the statements in this Article IV are true and correct as of the date hereof, except as set forth in the corresponding section of the schedules accompanying this Article IV (each, a "Schedule" and, collectively, the "Disclosure Schedules").  The Disclosure Schedules have been arranged for purposes of convenience in separate sections corresponding to the sections of this Article IV; provided, that information disclosed on one section of the Disclosure Schedules shall be deemed to be disclosed on another section of the Disclosure Schedules or be deemed to be an exception to another representation and warranty in this Article IV, in each case, if (but only if) the relevance of such information to such other section of the Disclosure Schedules is reasonably apparent on its face.  Capitalized terms used in the Disclosure Schedules and not otherwise defined therein have the meanings given to them in this Agreement.

Organization and Corporate Power

.  The Company is a corporation duly organized, validly existing and in good standing under Delaware Law, and the Company has all requisite corporate power and authority to own and operate its properties and to carry on its businesses as now conducted.  The Company is qualified to do business and is in good standing (or its equivalent) in every jurisdiction in which its ownership of property or the conduct of business as now conducted requires it to qualify, except where the failure to be so qualified would not constitute a Material Adverse Change.  None of the Company or any of its Subsidiaries has been dissolved or declared bankrupt, nor has a corporate resolution to dissolve or to be declared bankrupt with respect to the Company or any such Subsidiary been adopted and, to the knowledge of the Company, no demands or requests for such dissolution or declaration are pending (before a Governmental Body or otherwise).  True and complete copies of the Governing Documents of the Company and each Subsidiary thereof in effect as of the date hereof have been made available to the Purchaser.  None of the Company or any Subsidiary thereof is in material breach of any of the provisions of any of such Governing Documents.

Subsidiaries

.  Except as set forth on the Subsidiary Schedule, the Company does not own directly or indirectly or hold the right to acquire any Equity Security or other equity interest in any other corporation, organization or entity.  Except as set forth on the Subsidiary Schedule, the Company owns, directly or indirectly, of record and beneficially, all Equity Securities in each of its Subsidiaries, free and clear of all Liens (other than generally applicable transfer restrictions under applicable state and federal securities Laws), and all such Equity

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Securities have been duly authorized and validly issued, fully paid and non‑assessable (to the extent such concept is applicable to such Equity Security) and no such Equity Securities are subject to, or were issued in violation of, any preemptive rights or any other third-party rights created by Law, the Governing Documents of any of the Company's Subsidiaries or any agreement to which any of the Company's Subsidiaries is a party or by which it is bound.  Each of the Company's Subsidiaries is duly formed or organized, validly existing and in good standing (or its equivalent, if applicable) under the applicable Laws of its jurisdiction of formation or organization, and each of the Company's Subsidiaries has all requisite power and authority to own and operate its properties and to carry on its businesses as now conducted.  Each of the Company's Subsidiaries is qualified to do business and is in good standing (or its equivalent) in every jurisdiction in which its ownership of property or the conduct of business as now conducted requires it to qualify, except where the failure to be so qualified would not constitute a Material Adverse Change.

Authorization; No Breach; Governmental Bodies; Consents

.

(a)The Company has full corporate power and authority to execute and deliver this Agreement and each other agreement, document, instrument or certificate contemplated by this Agreement to be executed by the Company in connection with the transactions contemplated by this Agreement (the "Company Documents"), to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance of this Agreement and each of the Company Documents by the Company and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized and approved by all requisite corporate action, and no other corporate proceedings on its part are necessary to authorize the execution, delivery or performance of this Agreement.  This Agreement has been, and each of the Company Documents will be at or prior to the Closing, duly and validly authorized, executed and delivered by the Company, and assuming that this Agreement and each of the Company Documents is a valid and binding obligation of the other parties hereto and thereto, this Agreement constitutes, and each of the Company Documents when so executed and delivered will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar Laws relating to or affecting creditors' rights or to general principles of equity.

(b)Except for the Stockholder Approval, the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, and except as set forth on the Authorization Schedule, the execution, delivery and performance of this Agreement and each of the Company Documents by the Company and the consummation of the transactions contemplated hereby and thereby, or compliance by the Company or its Subsidiaries with any of the provisions hereof or thereof, do not and will not conflict with, result in any material breach of, require any consent, notice or other action under, constitute a material default under (with or without notice or lapse of time or both), result in a material violation of, result in the creation of any Lien upon any material properties or assets of the Company or any of its Subsidiaries under, give rise to any right of termination, cancellation or acceleration of any material obligation or to loss of a material benefit under, or give rise to any obligation of the Company or any of its Subsidiaries to make any material payment under, any provision of (i) the Company's or any of its Subsidiaries' Governing Documents, (ii) any Contract required to be set forth on the Contracts Schedule, (iii) any outstanding judgment, order or decree applicable to the Company or any of its Subsidiaries or any

25


 

of the material properties or assets of the Company or any of its Subsidiaries, (iv) any applicable Law or (v) any material Permit.

(c)Except for the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and assuming the accuracy of the representations and warranties of the Purchaser contained in this Agreement, neither the Company nor any of its Subsidiaries is required to submit any notice, report or other filing with any Governmental Body, and no consent, approval or authorization of any Governmental Body is required to be obtained by the Company or any of its Subsidiaries, in connection with its execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby

Capital Stock

.

(a)As of the date hereof, the authorized capital stock of the Company consists solely of (i) 30,000,000 shares of Class A Common Stock, of which 18,612,450 shares are issued and outstanding and are held of record as indicated on the Stockholders Schedule and 1,664,639.3 shares of Class A Common Stock are issuable upon exercise of outstanding Options which are held of record as indicated on the Stockholders Schedule, (ii) 100 shares of Class B Common Stock, of which 100 shares are issued and outstanding and are held of record as indicated on the Stockholders Schedule, and (iii) one share of Class C Common Stock, of which one share is issued and outstanding and is held of record as indicated on the Stockholders Schedule.  The Optionholders Schedule sets forth, with respect to each Option, the name of the holder, the number of vested and unvested shares subject thereto (immediately prior to the transactions contemplated hereby), the grant date and the exercise price thereof.  Except as set forth in the first sentence of this Section 4.04 and except as set forth on the Capitalization Schedule, there are no outstanding Equity Securities or commitments of any character whatsoever relating to, or securities or rights convertible into, any Equity Securities containing any equity features of the Company or its Subsidiaries, or Contracts, commitments, understandings or arrangements, by which the Company or any of its Subsidiaries is or may become bound to issue additional Equity Securities or other equity interests or commitments of any character whatsoever relating to, or securities or rights convertible into, any Equity Security or other equity interests.

(b)Except as set forth on the Capitalization Schedule, there are no Equity Securities or rights of the Company or any of its Subsidiaries, or Contracts by which the Company or any of its Subsidiaries is bound obligating the Company or any of its Subsidiaries to redeem or otherwise acquire any shares of capital stock or other equity interests of the Company or any of its Subsidiaries.  Except as set forth on the Capitalization Schedule, neither the Company nor any of its Subsidiaries have outstanding bonds, debentures, notes or other similar obligations, the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the stockholders of the Company or any of its Subsidiaries on any matter.  There are no declared and unpaid dividends in respect of any Equity Securities of the Company (other than any accrued but unpaid dividends in respect of the Company's Class C Common Stock pursuant to the Company's certificate of incorporation included in the Class C Merger Consideration).  Except as set forth on the Capitalization Schedule, there are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting of the capital stock or other equity interests of the Company or any of its Subsidiaries.  All of the outstanding Equity Securities of the Company have been duly

26


 

authorized and validly issued, are, as applicable, fully paid and non-assessable and are owned by the Persons set forth on the Stockholders Schedule and Optionholders Schedule free and clear of any Lien (other than generally applicable transfer restrictions under applicable state and federal securities Laws) and no such Equity Securities are subject to, or were issued in violation of, any preemptive rights or any other third-party rights created by Law, the Governing Documents of the Company or any agreement to which the Company is a party or by which it is bound.  Each Option (i) has been granted in compliance with all applicable securities laws or exemptions therefrom and all requirements set forth in the Company stock plans and other applicable Contracts, (ii) has been properly accounted for on the Latest Balance Sheet, (iii) has an exercise price that was no less than the fair market value of the shares of Company Stock underlying such Option on the grant date, and (iv) does not constitute "nonqualified deferred compensation" for purposes of Section 409A of the Code.

Financial Statements

.  

(a)Attached to the Financial Statements Schedule are: (a) the Company's unaudited consolidated balance sheet as of May 31, 2019 (the "Latest Balance Sheet") and the related statement of income, stockholders' equity, and cash flows for the five (5) month period then ended, and (b) the Company's audited consolidated balance sheet and statements of income, stockholders' equity, and cash flows for the fiscal years ended December 31, 2016, December 31, 2017 and December 31, 2018 (the "Audited Financial Statements" and, collectively with the Latest Balance Sheet, the "Financial Statements").  The Financial Statements have been prepared based upon the information contained in the Company's and its Subsidiaries' books and records, have been prepared in conformity with GAAP, and present fairly in all material respects the financial condition and results of operations of the Company and its Subsidiaries as of the times and for the periods referred to therein, subject in the case of the unaudited financial statements to (i) the absence of footnote disclosures and other presentation items none of which if presented would materially differ in amount or nature from those included in the Audited Financial Statements, and (ii) changes resulting from normal year‑end adjustments, which are not material whether individually or in the aggregate.

(b)During the periods covered by the Financial Statements, the accounting controls of the Company and its Subsidiaries have been, and currently are, sufficient to provide reasonable assurances that (i) all transactions are executed in all material respects in accordance with management's general or specific authorization and (ii) all transactions are recorded as necessary to permit the accurate preparation of financial statements in accordance with GAAP, consistently applied, and the accounting principles, methods and practices used in preparing the Audited Financial Statements and to maintain proper accountability for items. 

(c)The inventories set forth in the Latest Balance Sheet were properly stated therein at the lesser of cost or fair market value determined in accordance with GAAP consistently applied by the Company and its Subsidiaries.  Since the Latest Balance Sheet, the inventories of the Company and its Subsidiaries have been maintained in the ordinary course of business in all material respects.  All such inventories are owned free and clear of all Liens (other than Permitted Liens).  All of the inventories recorded on the Latest Balance Sheet consist of, and all inventories of the Company and its Subsidiaries immediately prior to the Effective Time consist of, items of a quality usable or saleable in the normal course of business and are in quantities sufficient for the

27


 

normal operation of the business of the Company and its Subsidiaries in accordance with past practice, except as specifically reserved in the Latest Balance Sheet or in the calculation of the Estimated Closing Cash Proceeds.

(d)All accounts, notes receivable and other receivables reflected on the Latest Balance Sheet, and all accounts and notes receivable arising from or otherwise relating to the business of the Company and its Subsidiaries immediately prior to the Effective Time, are valid, genuine and fully collectable in the aggregate amount thereof, subject to normal and customary trade discounts, less any reserves for doubtful accounts recorded on the Latest Balance Sheet or in the calculation of the Estimated Closing Cash Proceeds.

(e)Since December 31, 2018, (i) the Company and its Subsidiaries have managed their working capital (including timing of collection of accounts receivable and of payment of accounts payable and management of inventory) and deferred revenue amounts in ordinary course of business consistent with past practice; and (ii) there has not been any material change in (x) payment terms to any material customer of, or from any material supplier or third party to, the Company or any Subsidiary or (y) the manner in which the Company or any Subsidiary conducts its business with any material customer that would materially affect the level of inventory required to supply such customer (e.g., customer moving from consigning supplies to the relevant member to requiring it to purchase supplies as part of its own inventory), excluding, for the sake of clarity, any change in the quantum of purchase orders.

Absence of Undisclosed Liabilities

.  Except as set forth on the Undisclosed Liabilities Schedule, the Company has no material Liabilities other than Liabilities (a) to the extent taken into account in calculating the Closing Cash Proceeds as finally determined pursuant to Section 3.03, (b) expressly set forth on the Latest Balance Sheet (and for which adequate accruals or reserves have been established in accordance with GAAP), or (c) which have arisen after the date of the Latest Balance Sheet in the ordinary course of business of the Company and its Subsidiaries (it being understood that in no event shall any tortious conduct, litigation, infringement, violation of Law or breach of Contract or Permit be considered or deemed to be in the ordinary course of business).

No Material Adverse Change; Absence of Certain Developments

.

(a)Except as set forth on the Developments Schedule, since December 31, 2018 through the date hereof, there has not been any Material Adverse Change.

(b)Except as set forth on the Developments Schedule and except in connection with the transactions contemplated by this Agreement, since December 31, 2018 through the date hereof, the Company and its Subsidiaries has conducted its business in the ordinary course consistent with past practice.  Without limiting the generality of the foregoing, and except as set forth on the Developments Schedule and except as contemplated by this Agreement, since December 31, 2018 through the date hereof, neither the Company nor any of its Subsidiaries has:

(i)(A) amended or proposed to amend the respective certificates of incorporation or formation or bylaws, limited liability company agreement or other organizational documents of the Company or any of its Subsidiaries in any manner

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or (B) split, combine or reclassify the capital stock or other equity interests of the Company or any of its Subsidiaries;

(ii)issued, sold, pledged, transferred or disposed of, or agreed to issue, sell, pledge, transfer or dispose of, any shares of capital stock or other equity interests of the Company or any of its Subsidiaries or issued any shares of capital stock or equity interests of any class or issued or become a party to any subscriptions, warrants, rights, options, convertible securities or other agreements or commitments of any character relating to the issued or unissued capital stock or other equity interests of the Company or any of its Subsidiaries (except this Agreement and the agreements contemplated hereby), or granted any stock appreciation or similar rights;

(iii)redeemed, purchased or otherwise acquired any outstanding shares of capital stock or other equity interests of the Company or any of its Subsidiaries or declared or paid any non‑cash dividend or made any other non‑cash distribution to any Person except the Company or one (1) or more of its Subsidiaries;

(iv)(A) granted to any employee of the Company or any of its Subsidiaries any material increase in compensation or benefits, except (1) for pay increases, promotions, and bonuses made in the ordinary course of business or (2) as may be required by applicable Law or by the terms of any Employee Benefit Plan; (B) materially modified or established any Employee Benefit Plan (or any arrangement that would constitute an Employee Benefit Plan, if adopted), except (1) to the extent required by Law or the terms of any Employee Benefit Plan or Contract or (2) as would not be material and would be in the ordinary course of business; (C) hired or terminated the employment of any employee in the position of vice president or above; or (D) implemented any employee layoffs in violation of the WARN Act;

(v)sold, leased, subleased, licensed, sublicensed transferred, pledged, encumbered or otherwise disposed of, or created or incurred any Lien (other than Permitted Liens incurred or non-exclusive licenses or sublicenses granted in the ordinary course of business consistent with past practice) on, any material property or material assets owned by the Company or any of its Subsidiaries, except for (A) the sale, lease, transfer or disposition of inventory or obsolete machinery or equipment in the ordinary course of business and (B) the expiration of Intellectual Property in accordance with its statutory terms;

(vi)materially amended or terminated (except for a termination resulting from the expiration of a Contract in accordance with its terms) any Contract which but for such termination would have been required to be listed on the Contracts Schedule;

(vii)acquired any business or Person, by merger or consolidation, purchase of assets (or any substantial portion of assets) or equity interests, or by any other manner, in a single transaction or a series of related transactions;

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(viii)except in accordance with the capital budget of the Company and its Subsidiaries, committed or authorized any commitment to make any capital expenditures in excess of one million dollars ($1,000,000) in the aggregate, or failed to make material capital expenditures in accordance with such budget;

(ix)made any material change in any method of accounting or auditing practice, except changes required as a result of concurrent changes in GAAP or applicable Law;

(x)made any loans, advances or capital contributions to, or investments in, any other Person except (A) loans, advances or capital contributions by the Company or any of its Subsidiaries to any Subsidiary of the Company, (B) advances to any employee in connection with travel, entertainment or related business expenses or other customary out‑of‑pocket expenses in the ordinary course of business or (C) prepayments made in the ordinary course of business to certain suppliers of the Company and its Subsidiaries;

(xi)(A) made or changed any material Income Tax election, (B) changed any annual Income Tax accounting period, (C) adopted or changed any material method of Income Tax accounting, (D) filed any amended income Tax Return, (E) entered into any "closing agreement" with any taxing authority, (F) settled any material claim or assessment in respect of a material amount of Tax, or (G) consented to any extension or waiver of the limitations period applicable to any Income Tax claim or assessment;

(xii)settled or initiated any legal proceeding by or against the Company or any of its Subsidiaries;

(xiii)suffered or permitted any material loss, damage or destruction to, or any material interruption in the use of, any of the material assets of the Company or any of its Subsidiaries (whether or not covered by insurance);

(xiv)changed its working capital and/or cash management practices or its policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts, accrual of accounts receivable, prepayment of expenses, payment of accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits (in each case including the timing thereof);

(xv)been subject to any material labor disruption or claim of unfair labor practices (as defined in the National Labor Relations Act); or

(xvi)authorized or agreed to take any action described in this Section 4.07(b).

Title to Properties

.

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(a)The Company and its Subsidiaries own good and marketable title to, or hold a valid leasehold interest in, all of the material tangible personal property used by them in the conduct of their business, free and clear of all Liens, except for Permitted Liens.  Each such item of material tangible personal property is in all material respects in operable condition and repair, subject to normal wear and tear, ongoing repairs or refurbishments in the ordinary course and obsolescence in the ordinary course.

(b)The Leased Real Property Schedule contains a list of all real property leased by the Company and its Subsidiaries (the "Leased Real Property").  The Company has delivered to the Purchaser a true and complete copy of the underlying lease (and all modifications, amendments, and supplements thereto) with respect to each parcel of Leased Real Property (each, a "Lease").  Except as set forth on the Leased Real Property Schedule, with respect to each of the Leases:  (i)  either the Company or one (1) of its Subsidiaries has a valid and enforceable leasehold interest in each parcel or tract of real property leased by it (subject, as to enforceability, to applicable bankruptcy, insolvency and similar laws affecting the rights of the parties thereto generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law)); (ii) neither the Company nor any of its Subsidiaries is in material default thereunder nor, to the Company's knowledge, are there any existing material defaults by the lessor thereof; and (iii)  no event has occurred which (with notice, lapse of time or both) would constitute a material breach or default thereunder by the Company or its Subsidiaries (as applicable) or, to the Company's knowledge, any other party thereto.  

(c)Except as set forth on the Owned Real Property Schedule, neither the Company nor any of its Subsidiaries owns any real property.  With respect to each parcel of real property listed on the Owned Real Property Schedule:

(i)either the Company or a Subsidiary of the Company owns good and marketable title to such parcel of real property, free and clear of all Liens, other than (A)  encumbrances and exceptions set forth on the Owned Real Property Schedule, and (B) Permitted Liens;

(ii)there are no leases, subleases, licenses, concessions or other Contracts granting to any party or parties the right of use or occupancy of any portion of such parcel of real property other than those constituting Permitted Liens; and

(iii)there are no outstanding options or rights of first refusal to purchase such parcel of real property, any portion thereof or interest therein.

(d)All of the buildings, fixtures, structures and improvements situated on the Leased Real Property and real property owned by the Company or any of its Subsidiaries are in all material respects in good condition and repair and free from material defects, subject to normal wear and tear, ongoing repairs or refurbishments in the ordinary course and obsolescence in the ordinary course.

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(e)There is no pending or, to the Company's knowledge, threatened material condemnation or eminent domain proceeding, special assessment, rezoning or moratorium affecting the Leased Real Property or the owned real property.

(f)The current use and operation of the Leased Real Property and the owned real property does not violate, in any material respect, any Law, covenant, condition, restriction, easement, license, permit or Contract.

(g)Neither the Company nor any Subsidiary has any claims, Liability or obligations for brokerage commissions, finders' fees or similar fees, commissions or compensations in connection with the Leased Real Property or owned real property.

Tax Matters

.  Except as set forth on the Taxes Schedule:  (a) the Company and its Subsidiaries have timely filed all material Tax Returns which are required to be filed by them, and all such Tax Returns were correct and complete in all material respects, (b) all material Taxes due and owing by the Company and its Subsidiaries have been fully paid or properly accrued, except to the extent of the reserve established by the Company and its Subsidiaries for uncertain Tax positions set forth on their books in accordance with GAAP and to be set forth on the Closing Balance Sheet; (c) all material Taxes which the Company or any of its Subsidiaries is obligated to withhold from amounts owing or payable to any employee, independent contractor, creditor, shareholder or other Person (including, without limitation, payroll tax withholding and withholding under Code §§ 1441, 1442, 1445 and 1446 or similar provisions of any foreign, state, provincial or local law) have been timely withheld, fully paid to the applicable taxing authority of a Governmental Body or properly accrued, and timely reported; (d) no deficiency or proposed adjustment which has not been paid or resolved for any material amount of Tax has been asserted or assessed by any taxing authority of any Governmental Body against the Company or any of its Subsidiaries; (e) neither the Company nor any of its Subsidiaries has consented to extend the time in which any material Tax may be assessed or collected by any taxing authority of any Governmental Body, which extension is still in effect; (f) neither the Company nor any of its Subsidiaries is a party to or bound by, or has any obligation under, any material Tax allocation, sharing, indemnity or similar agreement or arrangement (other than any agreement entered into in the ordinary course of business and not primarily concerning Taxes); (g) neither the Company nor any of its Subsidiaries has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company or any of its Subsidiaries); (h) neither the Company nor any of its Subsidiaries is a party to any agreement, Contract, arrangement or plan that has resulted or would result, separately or in the aggregate (but excluding any agreement, Contract, arrangement or plan entered into or negotiated by the Purchaser, the Merger Sub or any of their respective Affiliates), in the payment of any "excess parachute payment" within the meaning of Code § 280G (or any corresponding provision of state, local or foreign income Tax Law); (i) neither the Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the date hereof as a result of any (A) change in method of accounting for a taxable period ending on or prior to the date hereof, (B) "closing agreement" as described in Code §7121 (or any corresponding or similar provision of state, local, or foreign income Tax Law) executed on or prior to the date hereof, (C) intercompany transaction described in Treasury Regulations under Code §1502 (or any corresponding or similar provision of state, local, or foreign income Tax Law), (D) installment sale or open transaction disposition

32


 

made on or prior to the date hereof or (E) prepaid amount received on or prior to the date hereof; (j) neither the Company nor any of its Subsidiaries has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Code §355 or Code §361; (k) neither the Company nor any of its Subsidiaries is or has been a party to any "listed transaction," as defined in Code §6707A(c)(2) and Reg. §1.6011‑4(b)(2); (l) no portion of the indebtedness of the Company or any of its Subsidiaries constitutes an "applicable high yield discount obligation" as that term is defined in Code § 163(i); (m) there are no Liens relating to Taxes upon the assets of the Company or any of its Subsidiaries other than Permitted Liens; (n) there are no pending audits or examinations of Taxes or Tax Returns of the Company or any of its Subsidiaries for which the Company or any of its Subsidiaries has received written notice from a Tax authority of a Governmental Body; (o) neither the Company nor any of its Subsidiaries is currently the beneficiary of any extension of time in which to file a Tax Return; (p) no written claim has been received by the Company or any of its Subsidiaries from a Tax authority in a jurisdiction in which the Company or the applicable Subsidiary does not file a Tax Return for a type of Tax asserting that the Company or Subsidiary may be subject to such type of Tax in such jurisdiction, other than claims that have been resolved, and the Company has not had a permanent establishment or otherwise become resident for Tax purposes in a country other than the country of its formation or incorporation; (q) neither the Company nor any of its Subsidiaries has any assets that may constitute unclaimed property under applicable law, other than property previously reported on unclaimed property reports, the Company and each of its Subsidiaries has complied in all material respects with all applicable unclaimed property laws; (r) the Company has made available to the Purchaser all private letter rulings, closing agreements and gain recognition agreements obtained by or entered by the Company and/or any of its Subsidiaries and true and complete copies of each Tax Return for Income Taxes filed by the Company or any of its Subsidiaries; (s) the Company has not been a "United States real property holding corporation" as defined in Code § 897(c)(2) in the last five years; (t) neither the Company nor any Subsidiary has participated in or cooperated with an international boycott within the meaning of Code § 999; and (u) no Company Subsidiary that is a "controlled foreign corporation" within the meaning of Code § 957(a) that is organized outside of the United States has generated any "subpart F income" within the meaning of Code § 956 during its taxable year that includes the date hereof or holds any "United States property" within the meaning of Code § 956 or Treasury Regulations thereunder.

Contracts and Commitments

.

(a)Except as set forth on the Contracts Schedule, neither the Company nor any of its Subsidiaries is a party to any:  (i) collective bargaining agreement; (ii) bonus, pension, profit sharing, retirement or other form of deferred compensation plan, other than as set forth in Section 4.13 or the Disclosure Schedules relating thereto; (iii) stock purchase, stock option or similar plan; (iv) Contract for the employment of any individual on a full‑time or consulting basis providing for base compensation in excess of two hundred fifty thousand dollars ($250,000) per annum; (v) Contract relating to the borrowing of money or to mortgaging, pledging or otherwise placing a Lien (other than a Permitted Lien) on any portion of the assets of the Company or any of its Subsidiaries; (vi) guaranty of any obligation for borrowed money or other material guaranty; (vii) lease or agreement under which it is lessee of, or holds or operates any personal property owned by any other party, for which the annual rental exceeds five hundred thousand dollars ($500,000); (viii) lease or agreement under which it is lessor of or permits any third‑party to hold

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or operate any property, real or personal, for which the annual rental exceeds five hundred thousand dollars ($500,000); (ix) other than purchase orders entered into in the ordinary course of business, any Contracts with any supplier required to be listed on the Customers and Suppliers Schedule; (x) other than purchase orders entered into in the ordinary course of business, any Contracts with any customer required to be listed on the Customers and Suppliers Schedule; (xi)  material Contracts pursuant to which the Company or any of its Subsidiaries grants to a thirdparty, or a thirdparty grants to the Company or any of its Subsidiaries, a license to any material Intellectual Property, in each case involving consideration in excess of fifty thousand dollars ($50,000) per annum, other than (A) Contracts for the license of commercially available, off‑the‑shelf software with annual license fees not in excess of fifty thousand dollars ($50,000) per annum and (B) Contracts for the non‑exclusive license of Intellectual Property in the ordinary course of business; (xii) Contracts relating to the acquisition or disposition (whether by merger, sale of equity, sale of assets or otherwise) of any Person or material line of business entered into during the past three (3) years or the future acquisition or disposition (whether by merger, sale of equity, sale of assets or otherwise) of any Person or material line of business; (xiii) any Contract with any distributor involving or reasonably expected to involve an annual commitment, on a going-forward basis, of more than one million dollars ($1,000,000) and any other Contract involving or reasonably expected to involve an annual commitment, on a going-forward basis, by any party thereto (other than distributors), of more than five hundred thousand dollars ($500,000); (xiv) any Contract relating to Indebtedness; (xv) any joint venture, strategic alliance, revenue sharing, partnership or similar Contract; (xvi) any contract with any director, officer, manager or Senior Strategic Manager of the Company, any of its Subsidiaries, Ontario Teachers' Pension Plan Board, the Representative or, to the Company's knowledge, any other Related Party; (xvii) any confidentiality, secrecy or non-disclosure contract (other than any such Contract entered into in the ordinary course of business or any such Contract providing for employment or equity-based arrangements); (xviii) any Contract (A) pursuant to which any other party is granted exclusive rights or "most favored party" rights of any type or scope with respect to any products or services; (B) containing any non-competition covenants or other restrictions that expressly limit the freedom of the Company or any of its Subsidiaries, or in each case, any of their respective successors or assigns or their respective Affiliates to engage or participate, or compete with any other Person, in any line of business, market or geographic area; or (C) containing any "take or pay," minimum commitments or similar provisions; (xix) any Contract obligating the Company or any of its Subsidiaries to provide rebates or similar obligations; (xx) any material agency, dealer, distributor, reseller, sales representative, marketing or other similar Contract providing for commissions; (xxi) any Contracts with any customer or distributor pursuant to which the Company or any of its Subsidiaries provides any warranty not provided in the ordinary course of business; (xxii) any Contract providing for the indemnification of any third-party Person by the Company or any of its Subsidiaries (other than indemnification under customer, distributor or supplier agreements capped at annual revenues (or less) and entered into in the ordinary course of business); or (xxiii) any Contract involving interest rate or foreign currency swaps, commodity swaps, options, caps, collars, hedges or forward exchanges, or other similar agreements, regardless of whether entered into for the purposes of hedging, investment or otherwise.

(b)Each of the Contracts listed or required to be listed on the Contracts Schedule is in full force and effect, and is a legal, valid and binding obligation of the Company or a Subsidiary of the Company which is party thereto, and, to the knowledge of the Company, of the other parties thereto enforceable against each of them in accordance with its terms, in each case,

34


 

subject to bankruptcy, insolvency, reorganization, moratorium and similar Laws relating to or affecting creditors' rights or to general principles of equity.  Except as set forth on the Contracts Schedule, neither the Company nor any Subsidiary of the Company (as applicable) is in material default under any Contract listed on the Contracts Schedule, and, to the knowledge of the Company, the other party to each of the Contracts listed on the Contracts Schedule is not in material default thereunder.  Except as set forth on the Contracts Schedule, no event has occurred that with the lapse of time or the giving of notice or both would constitute a material breach or default on the part of the Company, or any Subsidiary of the Company or, to the knowledge of the Company, any other party under any Contract listed on the Contracts Schedule.  Neither the Company nor any of its Subsidiaries has made a binding waiver of any rights under any of the Contracts listed on the Contracts Schedule.  No party to any Contract listed on the Contracts Schedule has exercised any termination rights with respect thereto, and no party has given notice of any material dispute with respect to any Contract listed on the Contracts Schedule.  The Company has made available to the Purchaser true and correct copies of each Contract listed on the Contracts Schedule.

Intellectual Property

.  

(a)All registered trademarks and applications to register trademarks, patents and patent applications and registered copyrights and applications to register copyrights owned by, and Internet domain names registered to, the Company or any of its Subsidiaries are set forth on the Intellectual Property Schedule (collectively, the "Company Intellectual Property").  Except as set forth on the Intellectual Property Schedule: (i) the Company and each of its Subsidiaries owns all of the Company Intellectual Property indicated on the Intellectual Property Schedule as being owned by such entity, free and clear of all Liens (other than Permitted Liens); (ii) neither the Company nor any of its Subsidiaries has received any written claims within the twelve (12) months prior to the date hereof alleging that the Company or any of its Subsidiaries has infringed or misappropriated the Intellectual Property of any other Person; (iii)  neither the Company nor any of its Subsidiaries is currently infringing or misappropriating the material Intellectual Property of any other Person; (iv) to the Company's knowledge, there is not currently any infringement or misappropriation by any other Person of any material Company Intellectual Property; (v) all required filings and fees related to the Company Intellectual Property have been timely submitted with and paid to the relevant Governmental Bodies and authorized registrars; and (vi) the Company and each of its Subsidiaries owns or has a valid license or other right to use all Intellectual Property that is used in the operation of its business or in any products or services of the Company or any of its Subsidiaries.

(b)Except as set forth on the Intellectual Property Schedule, the Company and its Subsidiaries have taken all necessary steps and precautions, in all material respects, (i) to maintain its rights to the Company Intellectual Property and any licensed Intellectual Property used in the operation of their business, and (ii) to protect the secrecy, confidentiality and value of their trade secrets, including by requiring all Persons having access thereto to execute binding, written non-disclosure agreements.  The Company's and its Subsidiaries' trade secrets are not part of the public knowledge or literature, and have not been used by a third party, divulged (other than pursuant to a confidentiality agreement) or misappropriated either for the benefit of any Person (other than the Company and its Subsidiaries) or to the detriment of the Company or its Subsidiaries.

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(c)Except as set forth on the Intellectual Property Schedule, the Company and its Subsidiaries have obtained valid and effective work made for hire Contracts and assignments from all current and former employees and independent contractors of all rights of such Persons in any the Company Intellectual Property developed by such Persons.

Litigation

.  Except as set forth on the Litigation Schedule, there are no actions, suits, complaints, claims, demands, petitions, mediations, arbitrations, other proceedings or, to the Company's knowledge, investigations, pending or, to the Company's knowledge, threatened by or against the Company or any of its Subsidiaries, at law or in equity, or any of the Company's or its Subsidiaries' properties or assets, or before or by any Governmental Body as of the date hereof.  Except as set forth on the Litigation Schedule, neither the Company nor any of its Subsidiaries is subject to any outstanding judgment, order, injunction or decree of any Governmental Body as of the date hereof.  The Company is fully insured (subject to customary retentions) with respect to each of the ongoing matters set forth (or required to be set forth) on the Litigation Schedule.

Employee Benefit Plans

.

(a)The Employee Benefits Schedule lists each material Employee Benefit Plan.  With respect to each Employee Benefit Plan, the Company has made available to the Purchaser true and complete copies of, to the extent applicable to such Employee Benefit Plan (or to the extent no such copy exists, a written description of all material terms):  (i) the current plan document; (ii) the three (3) most recent Forms 5500 and Forms 8955-SSA required to have been filed and all schedules thereto; (iii) the most recent IRS determination or opinion letter; (iv) the current summary plan descriptions and summaries of material modifications to the extent required under ERISA; (v) the most recent and currently in effect funding agreements, service provider agreements, insurance contracts, investment management agreements and recordkeeping agreements (if any and to the extent such agreements are in the possession of the Company); (vi) the three (3) most recent plan years' nondiscrimination testing; and (vii) all material correspondence to or from a Governmental Body in the past three (3) years.

(b)Except as disclosed in the Employee Benefits Schedule:

(i)Each Employee Benefit Plan has been operated and administered in compliance in all material respects with its terms and with all applicable Laws, including ERISA and the Code and the Affordable Care Act; and, except as would not reasonably be expected to result in a material liability to the Company and its Subsidiaries, all contributions and premiums required to have been paid by the Company and its Subsidiaries to any Employee Benefit Plan under the terms of any such Employee Benefit Plan or its related trust, insurance contract or other funding arrangement, or pursuant to any applicable Law have been paid within the time prescribed by any such Employee Benefit Plan, arrangement or applicable Law.  There is no action, claim, investigation, suit or other proceeding pending or threatened in writing or, to the Company's knowledge, threatened verbally against, or arising out of, any Employee Benefit Plan or the assets of any Employee Benefit Plan (other than routine claims and appeals for benefits) and no facts or circumstances exist that would reasonably be expected to give rise to any such action, claim, investigation, suit, or other proceeding.

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(ii)Each Employee Benefit Plan intended to be qualified under Code Section 401(a) has received a favorable determination letter, where applicable, from the Internal Revenue Service as to its qualification under the Code or is the subject of a favorable Internal Revenue Service opinion letter issued to a prototype or volume submitter plan sponsor; and, to the Company's knowledge, nothing has occurred since the date of such determination or opinion letter that would reasonably be expected to adversely affect such qualification or tax-exempt status.

(iii)No Employee Benefit Plan is (1) a Multiemployer Plan, (2) subject to the funding standards of Code Section 412 or Section 302 or Title IV of ERISA, or (3) a "multiple employer welfare arrangement" as defined in Section 3(40) of ERISA.  Neither the Company nor any of its Subsidiaries has any Liability (including on account of an ERISA Affiliate) under Title IV of ERISA for which the Company or any Subsidiary of the Company would be liable.

(iv)No current or former employee, officer, director or independent contractor of the Company or any Subsidiary of the Company (or any dependent thereof) is or will become entitled to receive post-employment life insurance or medical benefits under any Employee Benefit Plan by reason of service to the Company or its Subsidiaries, other than coverage mandated by Code Section 4890B, Part 6 of Subtitle B of Title I of ERISA or other similar applicable Laws.  None of the Company or its Subsidiaries has incurred (whether or not assessed) or is subject to any material Tax or penalty under Code Section 4980H or with respect to the reporting requirements of the Affordable Care Act under Code Section 6055 and Code Section 6056.

(v)Except as set forth on the Employee Benefits Schedule, the consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another event or events, (1) entitle any employee, officer, director or independent contractor of the Company or its Subsidiaries to any material severance pay, unemployment compensation or any other compensation; (2) accelerate the time of payment or vesting, or increase the amount of compensation due any such individual, under any Employee Benefit Plan; or (3) require any contributions or payments to fund any obligations under any Employee Benefit Plan.

(vi)Neither the Company nor its Subsidiaries has (1) any withdrawal liability with respect to a complete or partial withdrawal from any Multiemployer Plan or (2) any Liability under Section 4204 of ERISA.

(vii)Each Employee Benefit Plan that is a "nonqualified deferred compensation plan" within the meaning of Treasury Regulation Section 1.409A-1 has been and is in compliance in all material respects with Section 409A of the Code and the Treasury Regulations and guidance promulgated thereunder such that no material Taxes or interest shall be due and owing after the Closing in respect of such Employee Benefit Plan failing to be in such compliance.  There is no Contract, Employee Benefit Plan or other arrangement to which the Company or its

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Subsidiaries is a party, or obligated, which requires the Company or any of its Subsidiaries to pay a Tax gross-up, indemnification payment or reimbursement for Taxes under Code Section 409A or Code Section 4999.

Insurance

.  The Insurance Schedule sets forth each insurance policy maintained by (or that provide coverage to) the Company and its Subsidiaries as of the date hereof or on any of their properties, assets, products, business or personnel (the "Insurance Policies").  Each such policy is in full force and effect and all premiums due thereon have been timely paid and no notice of cancellation or termination has been received by the Company or any of its Subsidiaries.  Neither the Company nor any of its Subsidiaries is in material default with respect to any provision contained in any Insurance Policy or has failed to give any notice or present any material claim under any Insurance Policy in due and timely fashion.  No Insurance Policy will be affected in any material respect by the consummation of the transactions contemplated by this Agreement.  There is no threatened termination of, material premium increase with respect to, or material alteration of coverage under, any such Insurance Policies.  There is no material claim pending under any Insurance Policy as to which coverage has been denied or disputed by the applicable insurer.  None of the Company or any of its Subsidiaries has any material self-insurance programs.  The Company has provided to the Purchaser true, correct and complete copies of all Insurance Policies.

Environmental Matters

.  Except as set forth on the Environmental Matters Schedule:

(a)The Company and its Subsidiaries are, and for the past four (4) years have been, in material compliance with all Environmental Laws.

(b)Neither the Company nor any of its Subsidiaries have during the past four (4) years (or prior to such time to the extent unresolved) received any written notice, report, order, directive or information request regarding any actual or alleged material violation of or material liability or material investigatory, corrective or remedial obligation under Environmental Laws.

(c)Neither the Company nor any of its Subsidiaries has treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, released, or exposed any Person to any Hazardous Substance, or owned or operated any property or facility which is or has been contaminated by any Hazardous Substance, in each case except in material compliance with Environmental Laws and in a manner and in such concentrations that would not give rise to any current or future material investigative, corrective, remedial or other liabilities under Environmental Laws.

(d)Neither the Company nor any of its Subsidiaries is subject to any current or, to the Company's knowledge, threatened, claim, order, directive, complaint or investigation regarding any material remedial obligation or material liability of the Company or its Subsidiaries under Environmental Laws.

(e)The Company and its Subsidiaries hold and are in material compliance with all material permits, licenses and authorizations required under Environmental Laws (the "Environmental Permits") for their current operations at and occupancy of the real property listed on the Leased Real Property Schedule or the Owned Real Property Schedule, which Environmental

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Permits are in full force and effect and for which any necessary renewal applications have been timely filed.

(f)Neither the Company nor any of its Subsidiaries has assumed, become subject (whether by agreement or operation of law), or provided an indemnity with respect to any material liability of any other Person arising under Environmental Laws.

(g)The Company and its Subsidiaries have furnished to the Purchaser copies of all compliance audits, site assessment reports and other documents, in each case, materially bearing on their compliance with and Liabilities arising under Environmental Laws and, to the extent in their possession, custody or reasonable control.

(h)Neither this Agreement nor the consummation of the transactions that are the subject of this Agreement will result in any obligations for site investigation or cleanup, or notification to or consent of government agencies or third parties pursuant to the Connecticut Transfer Act, CGS 22a-134 et seq. and the rules and regulations promulgated thereunder.

Affiliated Transactions

.  

(a)Other than (x) this Agreement and (y) ordinary course Contracts incident to employment by or service to the Company or any of its Subsidiaries of any Person, except as set forth on the Affiliated Transactions Schedule, (A) no director, officer, manager or Senior Strategic Manager of the Company, any of its Subsidiaries, or Ontario Teachers' Pension Plan Board and, to the Company's knowledge, no other Related Party (i) directly or (including with respect to Ontario Teachers' Pension Plan Board, to the Company's knowledge) indirectly owns, or otherwise has any right, title or interest in, to or under, any material property or right, tangible or intangible, that is or is currently contemplated to be used by the Company or any of its Subsidiaries other than independent licenses to Intellectual Property owned by a third party, or (ii) licenses, or licensed in the past three (3) years, any Intellectual Property either to or from the Company or any of its Subsidiaries, (B) no director, officer, manager or Senior Strategic Manager of the Company, any of its Subsidiaries, Ontario Teachers' Pension Plan Board, the Representative or, to the Company's knowledge, any other Related Party (i) is a party to any Contract with, has provided services to or has received services from the Company or any of its Subsidiaries in the past three (3) years (including any monitoring, management or similar agreement) or (ii) is indebted to or, in the past three (3) years, has borrowed money from or lent money to, the Company or any Subsidiary, and (C) all Contracts between the Company or any of its Subsidiaries', on the one hand, and any Related Party, on the other hand, are on an arms' length terms.

(b)Other than (x) this Agreement and (y) ordinary course Contracts incident to employment by or service to the Company or any of its Subsidiaries of any Person, all of the Contracts set forth (or required to be set forth) on the Affiliated Transactions Schedule, and all amounts owed to any Related Party, shall be completed, satisfied or terminated prior to the Closing, in each case at the Company's sole expense, and without any Liability to the Surviving Corporation or any of its Subsidiaries (or Purchaser or any of its Affiliates) on or after the Closing.

Brokerage

.  Except as set forth on the Brokerage Schedule, there are no claims or Liabilities for brokerage commissions, finders' fees or similar fee, commission or compensation in

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connection with the this Agreement, the Company Documents or transactions contemplated hereby or thereby based on any arrangement or agreement made by or on behalf of the Company or any of its Subsidiaries.

Permits; Compliance with Laws

.

(a)Except as set forth on the Permits Schedule, each of the Company and its Subsidiaries holds and is, and for the past three (3) years has been, in compliance, in all material respects, with all material Permits which are required for the operation of the business of the Company and its Subsidiaries as presently conducted.  All such Permits are valid and in full force and effect, and, to the Company's knowledge, no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to, and the consummation of the transactions contemplated hereby will not, result in the expiration, revocation, suspension, lapse, limitation or other impairment of any such Permit.  Neither the Company nor any of its Subsidiaries has received notice in the past three (3) years of any proceedings pending or, to the knowledge of the Company, threatened, relating to the suspension, revocation or modification of any material Permit which is required for the operation of the business of the Company and its Subsidiaries as presently conducted.  No such material Permit is held in the name of any employee, officer, director, equity holder, or agent on behalf of the Company or any of its Subsidiaries.

(b)Except as set forth on the Compliance with Laws Schedule: (i) the Company and its Subsidiaries are, and for the past three (3) years have been, in compliance, in all material respects, with all Laws applicable to their respective businesses, operations and assets as currently or then, as the case may be, operated; and (ii) neither the Company nor any of its Subsidiaries has, during the past three (3) years, received any written notice of any action or proceeding against it alleging any material failure to comply with any applicable Law.

International Trade Compliance

.  Except as set forth on the International Trade Compliance Schedule, the Company and its Subsidiaries are, and for the past three (3) years have been, in compliance, in all material respects, with the Export Administration Regulations, the International Traffic in Arms Regulations, the statutes, regulations, and Executive Orders administered by the U.S. Department of the Treasury, Office of Foreign Assets Control, the Foreign Corrupt Practices Act, and the U.S. import laws administered by U.S. Customs and Border Protection (each, a "Custom and International Trade Law").  Without limiting the foregoing, neither the Company nor any Subsidiary has submitted any disclosures or received any notice that it is subject to any civil or criminal investigation, audit or other inquiry involving or otherwise relating to any alleged or actual violation of any Custom and International Trade Law.

Employees

.

(a)The Employees Schedule sets forth a true, correct and complete list of all officers, directors and employees of the Company and its Subsidiaries (the "Employees") earning annual compensation from the Company or its Subsidiaries in excess of $150,000, listing each such individual's name (except names shall not be provided for Canadian Employees), position, location, employer, annual remuneration, status as exempt/non-exempt from overtime requirements, bonus for the current fiscal year and the most recently completed fiscal year and whether any such employee is on an employer-sponsored, non-immigrant visa and if so, the type

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and expiration date, and each such employee's current status (as to leave or disability status and full time or part time, and temporary or permanent status).  The employee census located as document 13.6 in the "Project Water" data room maintained by Intralinks on behalf of the Company was true, correct and complete in all material respects as of May 14, 2019, and the employee census located as document 13.8 in the "Project Water" data room maintained by Intralinks on behalf of the Company was true, correct and complete in all material respects as of June 1, 2019.  In the ninety (90) days prior to Closing, neither the Company nor any of its Subsidiaries has taken any action which would constitute a "plant closing" or "mass layoff" within the meaning of WARN or similar legislation in other jurisdictions in which the Company or any of its Subsidiaries operate or issued any notification of a plant closing or mass layoff required by WARN.

(b)Except as set forth on the Contracts Schedule, neither the Company nor any of its Subsidiaries is party to or bound by any collective bargaining agreement with any labor organization.  Except as set forth on the Employees Schedule:  (i) to the Company's knowledge, there are and within the past three (3) years have been no union organizing activities or certification applications involving employees of the Company or any of its Subsidiaries; (ii) there are no pending or, to the Company's knowledge, threatened strikes, work stoppages, walkouts, lockouts or similar material labor disputes, and no such disputes have occurred within the past three (3) years; and (iii) neither the Company nor any of the Subsidiaries has committed a material unfair labor practice in the past three (3) years, and there are no pending or, to the Company's knowledge, threatened, unfair labor practice charges or complaints against the Company or any of its Subsidiaries.  To the Company's knowledge, no trade union has applied to have the Company or any of its Subsidiaries declared a related employer pursuant to the Labour Relations Act (Ontario) or any similar legislation in any jurisdiction in which the Company or any of its Subsidiaries carries on business.

(c)There are no outstanding assessments, penalties, fines, liens, charges, surcharges, or other amounts due or owing pursuant to any workplace safety and insurance/workers' compensation legislation in respect of the Company or any of its Subsidiaries and neither the Company nor or any of its Subsidiaries has been reassessed in any material respect under such legislation during the past three (3) years.

(d)The Company and its Subsidiaries are, and for the past three (3) years have been, in compliance in all material respects with all applicable Laws pertaining to employment and employment practices, workers' compensation, terms and conditions of employment, worker safety, worker classification, wages and hours, civil rights, discrimination, affirmative action, plant closing and mass layoff, family and medical leave, immigration and the payment of social security and other taxes.  Without limiting the generality of the previous sentence, during the preceding three (3) years, except as would not result in a material liability to the Company or its Subsidiaries:  (i) each individual who renders or has rendered services to the Company and its Subsidiaries who is or has been classified as having the status of a leased employee, independent contractor, or other non-employee status for any purpose (including for purposes of taxation and Tax reporting) has been properly so characterized, and (ii) each employee of the Company and its Subsidiaries who is or has been classified as exempt from the overtime provisions of applicable wage and hour Laws has been properly so characterized.  Except as would not result in a material liability to the Company or its Subsidiaries, the Company and its Subsidiaries are not delinquent in making any

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or liable for any payment to any trust or other fund or to any Governmental Body, with respect to unemployment compensation benefits, social security or other benefits or obligations for employees (other than routine payments to be made in the ordinary course of business).  There are no pending claims against the Company or any Subsidiary under any workers compensation plan or policy or for long term disability that would not be covered by the workers compensation or long term disability plan or policy (subject to applicable deductibles and liability limitations).  There are no controversies pending or, to the knowledge of the Company, threatened, between the Company and its Subsidiaries and any of their respective employees or former employees, which controversies would reasonably be expected to result in a material action, suit, proceeding, claim, arbitration or investigation before any Governmental Body.  In the past three (3) years, the Company and its Subsidiaries have not, nor have any of their respective representatives or employees, committed any material unfair labor practice in connection with the operation of the respective businesses of the Company or its Subsidiaries, and there is no charge or complaint against the Company or its Subsidiaries by the National Labor Relations Board or any comparable Governmental Body pending or to the knowledge of the Company, threatened.

(e)To the Company's knowledge, no Employee is in material violation of any term of any employment agreement, non-competition agreement, or any restrictive covenant to a former employer relating to the right of any such employee to be employed by the Company or its Subsidiaries because of the nature of the business conducted or presently proposed to be conducted by the Company or its Subsidiaries or to the use of trade secrets or proprietary information of others.  Except as set forth on the Employees Schedule, no officer or senior-management level employee has given written or, to the Company's knowledge, verbal notice to the Company or its Subsidiaries of his or her intent, nor to the knowledge of the Company, does any such officer or employee intend, to terminate his or her employment with the Company or its Subsidiaries within twelve (12) months of the Closing.  Neither the Company nor any Subsidiary has any contractual obligation with any of its employees in the United States to provide any particular period of notice prior to terminating the employment of any Employee or provide a severance payment following termination of employment, except as set forth on the Employees Schedule.

(f)Except as set forth on the Employees Schedule, there are no outstanding loans to any Employee or former director, employee or worker made or arranged by the Company or any Subsidiary.

Customers and Suppliers

.  The Customers and Suppliers Schedule sets forth (a) a list of the top ten (10) customers of the Company and its Subsidiaries on a consolidated basis by volume of sales to such customers, and (b) a list of the top ten (10) suppliers of the Company and its Subsidiaries on a consolidated basis by dollar value of net purchases from such suppliers, for each of the fiscal years ended December 31, 2016, December 31, 2017, and December 31, 2018.  Neither the Company nor any of its Subsidiaries has received any written or, to the Company's knowledge, oral indication from any of the customers listed on the Customers and Suppliers Schedule to the effect that any such customer will stop, materially decrease the rate of, or materially change the payment or price or other material terms with respect to, buying products from the Company or any of its Subsidiaries.  Except as set forth on the Customers and Suppliers Schedule, neither the Company nor any of its Subsidiaries has received any written or, to the Company's knowledge, oral indication from any of the suppliers listed on the Customers and Suppliers Schedule to the effect that any such supplier will stop, materially decrease the rate of, or

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materially change the payment or price or other material terms with respect to, supplying products or services to the Company or any of its Subsidiaries.

Data Privacy

.  For the past three (3) years: (a) all PII of the Company and each of its Subsidiaries has been collected and processed by or on behalf of the Company or its Subsidiaries in compliance in all material respects with applicable Laws and all PII Statements (including U.S. and Canadian federal, state and provincial Laws relating to privacy or data security and the General Data Protection Regulation (Regulation (EU) 2016/679) and its implementations in the EU Member States); (b) the Company and each of its Subsidiaries has disclosed all PII Processing activities in PII Statements that materially comply with all applicable Laws; and (c) the Company and each of its Subsidiaries has protected such PII with adequate and reasonable security measures consistent with commercially reasonable practices and materially consistent with applicable Law.  The Company and each of its Subsidiaries have the right to use and disclose all of the information in its customer database, including all PII contained therein, as the Company and its Subsidiaries use and disclose such PII in the ordinary course of business.  Except as would not be material to the Company, the Company and each of its Subsidiaries has secured all necessary authorization and consent relating to PII as necessary to consummate the transactions contemplated by this Agreement.  No lawsuits are pending or, to knowledge of the Company, threatened, against the Company or any of its Subsidiaries alleging that Company or any of its Subsidiaries (or anyone acting on behalf of the Company and or its Subsidiaries) has violated or has otherwise not complied with any applicable Laws or PII Statements with respect to any PII.

Bank Accounts; Powers of Attorney

.  The Bank Accounts Schedule forth (a) the names of all banks, trust companies, savings and loan associations and other financial institutions at which the Company or any of its Subsidiaries maintains a savings, checking, or other account of any nature, certificate of deposit, lock box or safe deposit box, and separately each other lock box or other account to which any payments due to the Company or any of its Subsidiaries are routed or required or requested to be made, (b) the names of all persons that are authorized as signatories to act or to deal in connection therewith, and (c) all outstanding powers of attorney or similar authorizations granted by the Company or any of its Subsidiaries, copies of which have been furnished to the Purchaser to the extent in the possession or control of the Company or its Subsidiaries.

Product Warranty

.  Each product manufactured, sold, leased or delivered by the Company or any of its Subsidiaries has been in conformity in all material respects with all applicable contractual commitments and all express and implied warranties, and neither the Company nor any of its Subsidiaries has any material Liability (and there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any Liability) for replacement or repair thereof or other damages in connection therewith, other than to the extent of the reserve for product warranty claims set forth on the face of the Latest Balance Sheet (rather than in any notes thereto) as adjusted for the passage of time through the Closing in accordance with the past custom and practice of the Company and its Subsidiaries.  The Product Warranty Schedule sets forth the standard terms and conditions of sale or lease for each of the Company and its Subsidiaries (containing applicable guaranty, warranty, and indemnity provisions), copies of which have been furnished to the Purchaser.  No product manufactured, sold, leased, or delivered by the Company or any of its

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Subsidiaries is subject to any guaranty, warranty, or other indemnity beyond the applicable standard terms and conditions of sale or lease as set forth in the Product Warranty Schedule.

Transfer Taxes

.  To the Company's knowledge, there are no Taxes to which Section 9.03 applies other than Taxes, if any, described on the Transfer Tax Schedule.

Article V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND MERGER SUB

The Purchaser and the Merger Sub represent and warrant to the Stockholders, the Optionholders, the Company and the Representative that the statements in this Article V are true and correct as of the date hereof.

Organization and Corporate Power

.  The Purchaser is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, with full power and authority to execute and deliver this Agreement and each other agreement, document, instrument or certificate contemplated by this Agreement to be executed by the Purchaser in connection with the transactions contemplated by this Agreement (the "Purchaser Documents") and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The Merger Sub is a corporation duly organized, validly existing, and in good standing and active status under the Laws of the State of Delaware, with full corporate power and authority to enter into this Agreement and each other agreement, document, instrument or certificate contemplated by this Agreement to be executed by the Merger Sub in connection with the transactions contemplated by this Agreement (the "Merger Sub Documents") and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The Merger Sub is a wholly‑owned direct Subsidiary of the Purchaser.

Authorization

.  The execution, delivery and performance of this Agreement and each of the Purchaser Documents or the Merger Sub Documents (as applicable) by the Purchaser and the Merger Sub and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized and approved by all requisite corporate action, and no other corporate proceedings on their part are necessary to authorize the execution, delivery or performance of this Agreement.  This Agreement has been, and each of the Purchaser Documents or the Merger Sub Documents (as applicable) will be at or prior to the Closing, duly and validly authorized, executed and delivered by the Purchaser and the Merger Sub (as applicable), and assuming that each of this Agreement, the Purchaser Documents and the Merger Sub Documents is a valid and binding obligation of the other parties hereto and thereto, this Agreement constitutes, and each of the Purchaser Documents or the Merger Sub Documents (as applicable) when so executed and delivered will constitute, a legal, valid and binding obligation of the Purchaser and the Merger Sub, enforceable against the Purchaser and the Merger Sub in accordance with its respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar Laws relating to or affecting creditors' rights or to general principles of equity.

No Violation

.  Neither the Purchaser nor the Merger Sub is subject to or obligated under its certificate of incorporation or its bylaws (or equivalent governing documents), any applicable Law, or rule or regulation of any Governmental Body, or any material agreement or instrument, or any license, franchise or permit, or subject to any order, writ, injunction or decree,

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which would be breached or violated in any material respect by the Purchaser's or the Merger Sub's execution, delivery or performance of this Agreement and the Purchaser Documents or the Merger Sub Documents (as applicable).

Governmental Bodies; Consents

.  Except for the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and assuming the accuracy of the representations and warranties of the Company contained in this Agreement, neither the Purchaser nor the Merger Sub is required to submit any notice, report or other filing with any Governmental Body in connection with the execution, delivery or performance by it of this Agreement or the consummation of the transactions contemplated hereby.  Assuming the accuracy of the representations and warranties of the Company contained in this Agreement, no consent, approval or authorization of any Governmental Body or any other party or Person is required to be obtained by the Purchaser or the Merger Sub in connection with its execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby.  

Litigation

.  There are no actions, suits or proceedings pending or, to the Purchaser's or Merger Sub's knowledge, overtly threatened against or affecting the Purchaser or the Merger Sub at law or in equity, or before or by any Governmental Body, which would adversely affect the Purchaser's or the Merger Sub's performance under this Agreement or the consummation of the transactions contemplated hereby.

Brokerage

.  Except for Barclays Capital, Inc. and Morgan Stanley & Co. LLC, there are no Liabilities for brokerage commissions, finders' fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of the Purchaser or the Merger Sub.

Investment Representation

.  The Purchaser is acquiring the Company Stock for its own account with the present intention of holding such securities for investment purposes and not with a view to, or for sale in connection with, any distribution of such securities in violation of any securities Laws.

Financing

.  The Purchaser and the Merger Sub have sufficient immediately available cash funds to satisfy payment of the Merger Consideration and the payment by the Purchaser and the Merger Sub of all fees, costs, expenses and other amounts payable by the Purchaser and the Merger Sub hereunder or in connection with the transactions contemplated hereby, including to pay the Closing Cash Proceeds and all fees and expenses of the Purchaser related to the transactions contemplated by this Agreement and the Purchaser Documents, and to satisfy all other payment obligations of the Purchaser contemplated herein and therein.  

Solvency

.  Immediately after giving effect to the transactions contemplated by this Agreement, and assuming (a) the accuracy of the representations and warranties of the Company contained in this Agreement (without giving effect to any materiality or Material Adverse Change qualification contained herein), (b) any estimates, projections or forecasts prepared by or on behalf of the Company that have been provided to the Purchaser have been prepared in good faith based upon assumptions that were and continue to be reasonable, and (c) the Company is solvent immediately prior to the Effective Time, then as of immediately following the Closing, the Surviving Corporation and each of its Subsidiaries will (i) be able to pay their respective debts as

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they become due and will own property which has a fair saleable value greater than the amounts required to pay their respective debts (including a reasonable estimate of the amount of all contingent liabilities) and (ii) have adequate capital to carry on their respective businesses.  No transfer of property is being made and no obligation is being incurred by the Purchaser in connection with the transactions contemplated by this Agreement with the intent to hinder, delay or defraud either present or future creditors of the Company or its Subsidiaries.

Transfer Taxes

.  To the Purchaser's or Merger Sub's knowledge, there are no Taxes to which Section 9.03 applies other than Taxes, if any, described on the Transfer Tax Schedule.

Article VI
COVENANTS OF THE PURCHASER

Access to Books and Records

.  From and after the Closing, the Purchaser shall, and shall cause the Surviving Corporation and its Subsidiaries to, provide, the Representative and its agents and advisors with reasonable access (for the purpose of examining and copying), during normal business hours, and upon reasonable advance notice, to the accounting and Tax books and records (including work papers upon execution and delivery of customary accountant access letter(s)) of the Surviving Corporation and its Subsidiaries with respect to periods or occurrences prior to the date hereof for purposes of complying with any applicable tax, financial reporting or regulatory requirements or any other reasonable business purpose as may be reasonably required by Purchaser; provided, however, that nothing in this Section  6.01 shall require the Purchaser, the Surviving Corporation or any of its Subsidiaries to provide such access to the Representative and its agents connection with any disputes arising under this Agreement.  Unless otherwise consented to in writing by the Representative, none of the Purchaser, the Surviving Corporation or any of its Subsidiaries shall, for a period of seven (7) years following the date hereof, destroy, alter or otherwise dispose of any of the material accounting or Tax books and records of the Company and its Subsidiaries for any period prior to the date hereof without first offering to surrender to the Representative such books and records or any portion thereof which the Purchaser, the Surviving Corporation or any of their respective Subsidiaries may intend to destroy, alter or dispose of.

Director, Manager and Officer Liability and Indemnification

.

(a)Simultaneously with the Closing, the Purchaser shall, or shall cause the Surviving Corporation to, purchase from an insurance carrier with the same or better credit rating as the Company's current insurance carrier with respect to directors', managers' and officers' liability insurance a prepaid insurance policy (i.e., "tail coverage") which provide "side A, B and C directors and officers" insurance coverage for each of the individuals who were officers, directors, managers or similar functionaries of the Company or any of its Subsidiaries at or prior to the Effective Time with a policy limit of at least ten million dollars ($10,000,000) on terms no less favorable (including in with respect to scope) as the policy or policy(ies) maintained by the Company or any of its Subsidiaries immediately prior to the Closing for the benefit of such individuals for an aggregate period of not less than six (6) years with respect to claims arising from acts, events or omissions that occurred at or prior to the Closing, including with respect to the transactions contemplated by this Agreement (such policies, the "D&O Tail Policies").  The parties expressly acknowledge and agree that one-half (but only one-half) of the premium of the D&O Tail Policies shall be treated as Transaction Expenses for all purposes hereunder.

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(b)For a period of six (6) years after the Closing, the Purchaser shall cause the Surviving Corporation and each of its Subsidiaries (i) to maintain provisions in its Governing Documents concerning the exculpation or indemnification of the Company's and its Subsidiaries' former and current officers, directors, managers or similar functionaries that are no less favorable to those Persons than the provisions in the Governing Documents of the Company and its Subsidiaries as of the date hereof and (ii) not to amend, repeal or otherwise modify such provisions in any respect that would adversely affect the rights of those Persons thereunder, in each case, except as required by Law, it being the intent of the parties hereto that the indemnitees and exculpees to whom this Section 6.02 applies shall continue to be entitled to such exculpation and indemnification provisions (including with respect to advancement of expenses).  The Purchaser agrees and acknowledges that this Section 6.02 shall be binding on the Purchaser's successors and assigns.

(c)If the Surviving Corporation, its Subsidiaries or any of their respective successors or assigns (i) shall consolidate with or merge into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) shall transfer all or substantially all of its properties and assets to any Person, then, and in each such case, proper provisions shall be made so that the successors and assigns of the Surviving Corporation and its Subsidiaries shall assume all of the obligations set forth in this Section 6.02.

(d)Notwithstanding anything in this Agreement to the contrary, if any claim, action, suit, proceeding or investigation (whether arising before, at or after the Closing) is made against any individual who is an indemnitee or exculpee to whom this Section 6.02 applies, on or prior to the sixth (6th) anniversary of the Effective Time, the provisions of this Section 6.02 shall continue in effect until the final disposition of such claim, action, suit, proceeding or investigation.

(e)The obligations under this Section 6.02 shall not be terminated or modified in such a manner as to affect adversely any indemnitee or exculpee to whom this Section 6.02 applies without the consent of such affected indemnitee or exculpee.  The provisions of this Section 6.02 are intended for the benefit of, and will be enforceable by (as express third‑party beneficiaries), each such indemnitee or exculpee and his or her heirs and representatives, successors and assigns and are in addition to, and not in substitution for, any other rights to indemnification or contribution that any such person may have had by Contract or otherwise.

Termination of Confidentiality Agreement

.  The Confidentiality Agreement, dated as of January 10, 2019, by and between the Purchaser and the Company (the "Confidentiality Agreement"), shall, without further action of any party, terminate and be of no further force or effect as of the Closing.

Payments to Optionholders and Other Individuals

.  In order to ensure compliance with applicable Tax requirements, any payments that are compensatory in nature for Income Tax purposes and are made hereunder to any Optionholder, Participant or other individual (including, for the avoidance of doubt, disbursements of any portion of the Optionholders' Merger Consideration, or Total Bonus Pool, but subject to Section 2.04) shall be made through the payroll processing system of the Surviving Corporation or any of its Subsidiaries.  

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Access and Investigation; Non‑Reliance

.  Each of the Purchaser, the Merger Sub and their respective representatives (a) have had access to and the opportunity to review all of the documents in the "Project Water" data room maintained by Intralinks on behalf of the Company, and (b) have been afforded access to the books and records, facilities and officers, directors, employees and other representatives of the Company and its Subsidiaries for purposes of conducting a due diligence investigation with respect thereto.  The Purchaser and the Merger Sub and each of their respective Non‑Recourse Parties have each conducted to its satisfaction an independent investigation and verification of the financial condition, results of operations, assets, liabilities, properties and projected operations of the Company, each of its Subsidiaries and any of their respective joint ventures and businesses, and, in making its determination to proceed with the transactions contemplated by this Agreement, each of the Purchaser and the Merger Sub and each of their respective Non‑Recourse Parties (i) have relied solely on the results of such independent investigation and verification and on the representations and warranties of the Company expressly and specifically set forth in Article IV (together with any representations and warranties expressly and specifically made by the Stockholders in their respective Letters of Transmittal), as qualified by the Disclosure Schedules, and (ii) have not relied on any other representations, warranties or statements (including by omission) of any kind or nature, whether written or oral, expressed or implied, statutory or otherwise (including, for the avoidance of doubt, relating to quality, quantity, condition, merchantability, fitness for a particular purpose or conformity to samples) of any of the Company, the Stockholders and Optionholders, the Representative or any of their respective Non-Recourse Parties as to any matter concerning the Company, any of its Subsidiaries or any of their respective joint ventures or businesses or in connection with this Agreement or the transactions contemplated by this Agreement, or with respect to the accuracy or completeness of any information provided to (or otherwise acquired by) the Purchaser or the Merger Sub or any of their respective Non-Recourse Parties in connection with this Agreement or the transactions contemplated by this Agreement (including, for the avoidance of doubt, any statements, information, documents, projections, forecasts or other materials made available to the Purchaser, the Merger Sub or any of their respective Non-Recourse Parties in certain "data room" or presentations, including "management presentations").  In connection with the transactions contemplated hereby, each of the Purchaser and Merger Sub has been represented by, and adequately consulted with, legal counsel of their choice and each of the Purchaser, the Merger Sub and such counsel has carefully read this Agreement and has been given time to consider this Agreement, understands this Agreement and, after such consideration, and with such understanding, the Purchaser and the Merger Sub have knowingly, freely and without coercion entered into this Agreement and, in particular, this Section 6.05 and Section 7.01.

Article VII
ADDITIONAL AGREEMENTS AND COVENANTS

Acknowledgement by the Purchaser

.  The representations and warranties of the Company expressly and specifically set forth in Article IV (together with any representations and warranties expressly and specifically made by the Stockholders in their respective Letters of Transmittal), as qualified by the Disclosure Schedules, constitute the sole and exclusive representations, warranties, and statements (including by omission) of any kind or nature, whether written or oral, expressed or implied, statutory or otherwise (including, for the avoidance of doubt, relating to quality, quantity, condition, merchantability, fitness for a particular purpose or conformity to samples) of any of the Company, the Stockholders and Optionholders, the

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Representative or any of their respective Non‑Recourse Parties as to any matter concerning the Company, any of its Subsidiaries or any of their respective joint ventures or businesses or in connection with this Agreement or the transactions contemplated by this Agreement, or with respect to the accuracy or completeness of any information provided to (or otherwise acquired by) the Purchaser or the Merger Sub or any of their respective Non‑Recourse Parties in connection with this Agreement or the transactions contemplated by this Agreement (including, for the avoidance of doubt, any statements, information, documents, projections, forecasts or other material made available to the Purchaser, the Merger Sub or any of their respective Non‑Recourse Parties in certain "data rooms" or presentations including "management presentations") and all other purported representations and warranties or statements (including by omission) are hereby disclaimed by the Company, the Stockholders and Optionholders, the Representative and each of their respective Non‑Recourse Parties and (i) each of the Purchaser and its Non‑Recourse Parties has and will only rely on the representations and warranties of the Company expressly and specifically set forth in Article IV and the representations and warranties expressly and specifically made by the Stockholders in their respective Letters of Transmittal, (ii) each of the Purchaser and its Non‑Recourse Parties hereby expressly and irrevocably acknowledges and agrees that he, she or it has not relied on any other representations, warranties or statements (including by omission on any basis or theory whatsoever (including in contract, tort or equity, on public policy grounds, under any Law (including under securities Laws, RICO or otherwise)), and (iii) none of the Purchaser or the Merger Sub or any of their respective Non‑Recourse Parties shall have any claim with respect to their purported use of, or reliance on, any such representations, warranties or statements (including by omission).  The Purchaser and the Merger Sub are otherwise acquiring the Company, its Subsidiaries, its joint ventures and their respective businesses on an "AS IS, WHERE IS" basis.  Without in any way limiting the generality of the foregoing, the Purchaser and the Merger Sub acknowledge that there are uncertainties inherent in attempting to make projections, forward looking statements and other forecasts and estimates, and certain business plan information, that the Purchaser and the Merger Sub are familiar with such uncertainties, that the Purchaser, the Merger Sub and their Non‑Recourse Parties are taking full responsibility for making their own evaluation of the adequacy and accuracy of any such projections, forward looking statements, forecasts, estimates and business plan information provided to (or otherwise acquired by) the Purchaser, the Merger Sub and their respective Non‑Recourse Parties in connection with the transactions contemplated by this Agreement (including the reasonableness of the assumptions underlying such projections, forward looking statements, forecasts, estimates and business plan information).  Under no circumstances shall any of the representations and warranties of the Company made herein be imputed to, or deemed to have been made by, any other Person (including, for the avoidance of doubt, the Representative or any Stockholder).

Further Assurances

.  From time to time following the Closing, as and when requested in writing by any party hereto and at such requesting party's expense, any other party shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions as such requesting party may reasonably deem necessary to evidence and effectuate the transactions contemplated by this Agreement.

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Employees and Employee Benefits

.

(a)Salary and Wages.  The Purchaser will cause the Company and its Subsidiaries to continue the employment effective immediately after the Closing of all employees of the Company and its Subsidiaries, including each such employee on medical, disability, family or other leave of absence as of the date hereof.  All such employees of the Company and its Subsidiaries who are employed by the Company and its Subsidiaries immediately following the Closing are referred to as "Retained Employees".  The Purchaser will cause the Company and its Subsidiaries to provide each such Retained Employee who remains employed with at least the same base wages, annual base salary and annual rate of cash bonus potential (determined as a percentage of annual base salary) (but excluding any equity plan program or arrangement) provided to each such employee on the date hereof for a period of at least one (1) year following the date hereof; provided, however, that nothing in this Section 7.03(a) shall obligate the Purchaser or the Company or any of its Subsidiaries to continue the employment of any such Retained Employee for any specific period.

(b)Employee Benefits.  For a period of at least one (1) year following the date hereof, the Purchaser shall provide, or shall cause the Company and its Subsidiaries to provide, each Retained Employee with benefits (other than any equity-based compensation) that are substantially similar in the aggregate to the benefits provided to such Retained Employee immediately prior to the Closing; provided, however, that for the avoidance of doubt, the Purchaser may provide better benefits in the aggregate than the benefits provided to such Retained Employees immediately prior to the Closing.

(c)Severance.  Without limiting the foregoing provisions of this Section 7.03, the Purchaser shall, or shall cause the Surviving Corporation and its Subsidiaries to, pay severance benefits to Retained Employees whose employment with the Surviving Corporation or any of its Subsidiaries is involuntarily terminated other than for cause within twelve (12) months following the date hereof in amounts no less favorable than the amount of severance benefits to which such persons would have been entitled under the terms of the applicable Employee Benefit Plan as in effect as of the date hereof.

(d)Employee Service Credit.  The Purchaser (i) shall give, or cause the Company and its Subsidiaries to give, each Retained Employee credit under any benefit plan or personnel policies that cover the Retained Employee after the Closing, including any vacation, sick leave and severance policies, for purposes of eligibility, vesting and entitlement to vacation, sick leave and severance benefits for the Retained Employee's service with the Company and its Affiliates prior to the Closing, to the same extent recognized by the Company or its Subsidiaries or any predecessor thereof as of the date hereof, (ii) shall allow such Retained Employees to participate in each plan providing welfare benefits (including medical, life insurance, long‑term disability insurance and long‑term care insurance) without regard to preexisting‑condition limitations, waiting periods, evidence of insurability or other exclusions or limitations not imposed on the Retained Employee by the corresponding Employee Benefit Plans immediately prior to the Closing, and (iii) if any welfare benefit plan or Canadian Welfare Plan is terminated prior to the end of the plan year that includes the date hereof, the Purchaser shall credit the Retained Employee with any expenses that were covered by such welfare benefit plan(s) or Canadian Welfare Plan(s)

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for purposes of determining deductibles, co‑pays and other applicable limits under any similar replacement plans.

(e)Vacation Pay and Personal Holidays.  The Purchaser shall cause the Company and its Subsidiaries to continue to credit to each Retained Employee all vacation and personal holiday pay that the Retained Employee is entitled to use but has not used as of the date hereof (including any earned vacation or personal holiday pay to be used in future years), and shall assume all liability for the payment of such amounts.

(f)No Third‑Party Beneficiaries.  The provisions of this Section 7.03 are solely for the benefit of the parties to this Agreement, and no current or former employee, officer, director, manager or consultant, or any other individual associated therewith, shall be regarded for any purpose as a third‑party beneficiary of this Section 7.03.  In no event shall the terms of this Agreement be deemed to (i) establish, amend or modify any Employee Benefit Plan or any other "employee benefit plan" as defined in Section 3(3) of ERISA, or any other benefit plan, program, agreement or arrangement maintained or sponsored by the Company, the Purchaser, the Surviving Corporation and their respective Subsidiaries or any of their respective Affiliates; (ii) alter or limit the ability of the Purchaser, the Surviving Corporation or any of their respective Subsidiaries to amend, modify or terminate any Employee Benefit Plan or any other benefit or employment plan, program, agreement or arrangement after the Closing; or (iii) confer upon any current or former employee, officer, director or consultant, any right to employment or continued employment or continued service with the Purchaser, the Surviving Corporation or any of their respective Subsidiaries, or constitute or create an employment agreement with any employee.

Post-Closing Bonus Amounts

.  The Surviving Corporation shall, or shall cause one or more of its Subsidiaries to, pay to each Participant any additional amount due (if any) pursuant to the Incentive Bonus Plan in excess of the portion of the Closing Bonus Pool paid to such individual at Closing (such additional amount, in the aggregate across all Participants, the "Post-Closing Bonus Pool") and, in each such case, any portion of the Post-Closing Bonus Pool owed to such Participant, if any, shall be taken into account in determining the Merger Consideration payable to the Stockholders and the Optionholders following the Closing and such portion of the Post-Closing Bonus Pool shall be paid to each Participant pursuant to Section 6.04 at such time or times as distributions are made to the Stockholders and Optionholders.  Prior to the payment of any of the Post-Closing Bonus Pool, the Representative shall deliver to the Purchaser and the Surviving Corporation a schedule setting forth the amount owed to each eligible Participant and the Surviving Corporation shall pay to each Participant the amount set forth on such schedule pursuant to this Section 7.04.

Article VIII
NO SURVIVAL OR CLAIMS FOR REPRESENTATIONS AND WARRANTIES

Survival

.  None of the representations or warranties in Article IV or Article V shall survive the Closing and each such representation and warranty shall terminate on and as of the Closing, and no claims may be brought with respect to such representations or warranties from or after the Closing other than (i) the Purchaser or any additional insureds under the R&W Insurance Policy against the insurers thereunder in accordance with the terms thereof or (ii) to the extent expressly permitted by the last sentence of Section 8.02.  All of the covenants in this Agreement

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which are to be performed at or after the Closing shall survive for the time periods specified therein and shall terminate once such covenants are fully performed.

Exclusive Remedy; Exceptions

.  From and after the Closing, the Purchaser's and its Non-Recourse Parties' sole and exclusive remedy against the Representative, the Stockholders, the Optionholders and each of their respective Non‑Recourse Parties, whether in any individual, corporate or any other capacity, with respect to any and all claims relating (directly or indirectly) to the subject matter of this Agreement or the transactions contemplated hereby, regardless of the legal theory under which such liability or obligation may be sought to be imposed (whether sounding in contract or tort, or whether at law or in equity, on public policy grounds, under any Law (including under securities Laws or RICO) or otherwise, shall be solely and exclusively for breach of any agreement or covenant to the extent provided in Section 8.01, the provisions of the Escrow Agreement or the terms and conditions of each Stockholder's Letter of Transmittal or, if applicable, Support Agreement.  In furtherance of the foregoing, the Purchaser and the Merger Sub each hereby waives and releases to the fullest extent permitted under applicable Law, each Stockholder, each Optionholder, the Representative and each of their respective Non‑Recourse Parties, whether in any individual, corporate or any other capacity, from and against any and all other rights, claims and causes of action it may have against any Stockholder, any Optionholder, the Representative or any of their respective Non‑Recourse Parties relating (directly or indirectly) to the subject matter of this Agreement or the transactions contemplated hereby (including relating to any exhibit, Schedule or document delivered hereunder), including whether arising under or based upon any Law or otherwise and including any rights to rescission of the transactions contemplated hereby, other than claims for breach of any agreement or covenant herein surviving, and requiring performance at or after, the Closing to the extent provided in Section 8.01, the provisions of the Escrow Agreement or the terms and conditions of each Stockholder's Letter of Transmittal or, if applicable, Support Agreement.  The limits imposed on the Purchaser's and its Non-Recourse Parties' remedies with respect to this Agreement and the transactions contemplated hereby (including this Section 8.02) were specifically bargained for between sophisticated parties and were specifically taken into account in the determination of the amounts to be paid to the Stockholders and Optionholders hereunder.  None of the Purchaser or any of its Non-Recourse Parties may avoid the limitations on liability set forth in this Agreement by seeking damages for breach of Contract, tort or pursuant to any other theory of liability.  Notwithstanding the foregoing, nothing in Section 8.01 or this Section 8.02 shall limit a party's right to (i) seek specific performance of the other parties' obligations under any covenant herein surviving, and requiring performance at or after, the Closing in accordance with Section 10.17 or (ii) bring a claim for Fraud.

Article IX
TAX MATTERS

Preparation and Filing of Tax Returns; Payment of Taxes

.

(a)Subject to Section 9.01(b), the Purchaser shall prepare, or cause to be prepared, and timely file, or cause to be filed, all Tax Returns with respect to the Company (or the Surviving Corporation) or any Subsidiary thereof that are due after the date of Closing and that have not been filed.  The Purchaser shall make, or cause to be made, all payments required with respect to any such Tax Returns.

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(b)Any Tax Return to be prepared and filed after the date hereof for taxable periods beginning before the date hereof shall be prepared on a basis consistent with the past practice of the Company and its Subsidiaries in filing their Tax Returns unless Purchaser (A) obtains the prior written consent of the Representative, not to be unreasonably withheld, conditioned or delayed or (B) after consultation with the Representative, Purchaser obtains a written opinion of a nationally recognized law firm or accounting firm that it is more likely than not that following past practice would not comply with applicable tax law, or (C) Purchaser indemnifies and holds harmless the Representative and Class A Stockholders against any adverse financial effects of such action.  

Allocation of Certain Taxes

.  In the case of any Straddle Period of the Company, (i) property, ad valorem, and similar Taxes of the Company and its Subsidiaries charged on a periodic basis allocable to the Pre-Closing Tax Period shall be equal to the amount of such Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period and the denominator of which is the number of days in the entire Straddle Period; and (ii) Taxes other than Taxes described in the foregoing clause (i) of the Company and its Subsidiaries allocable to the Pre-Closing Tax Period shall be computed as if such taxable period ended as of the end of the date hereof.

Transfer Taxes

.  At the Closing or, if due thereafter, promptly when due, all gross receipts, transfer Taxes, gains Taxes, real property transfer Taxes, sales Taxes, use Taxes, excise Taxes, stamp Taxes, conveyance Taxes and any other similar Taxes (but for the avoidance of doubt, not Income Taxes) applicable to, arising out of or imposed upon the transactions contemplated hereunder shall be paid by the Purchaser, except that any such Taxes imposed by a jurisdiction of which a Stockholder or Optionholder is resident shall be borne by such Stockholder or Optionholder if such Taxes would not be payable if the Stockholder or Optionholder were not a resident of such jurisdiction.  The Purchaser shall prepare any Tax Returns with respect to Taxes for which it is liable pursuant to this Section 9.03, and the Representative shall cooperate with the Purchaser in the preparation of such Tax Returns.

Cooperation on Tax Matters

.

(a)The Purchaser, on the one hand, and the Representative, on the other hand, and their respective Affiliates shall cooperate in (i) the preparation of all Tax Returns for any Tax periods and (ii) the conduct of any Tax Proceeding, for which one (1) party could reasonably require the assistance of the other party in obtaining any necessary information.  Such cooperation shall include, but not be limited to, furnishing prior years' Tax Returns or return preparation packages illustrating previous reporting practices or containing historical information relevant to the preparation of such Tax Returns, and furnishing such other information within such party's possession requested by the other party as is relevant to the preparation of the Tax Returns or the conduct of the Tax Proceeding.  Such cooperation and information also shall include promptly forwarding copies of appropriate notices and forms or other communications received from or sent to any Governmental Body which relate to the Surviving Corporation, the Company or any Subsidiary, and providing copies of all relevant Tax Returns, together with accompanying schedules and related workpapers, documents relating to rulings or other determinations by any Governmental Body and records concerning the ownership and tax basis of property, which the requested party may possess.

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(b)The Purchaser shall control all Tax Proceedings with respect to the Surviving Corporation, the Company or any Subsidiary.  

Sections 336 and 338 of the Code

.  No party to this Agreement shall make an election under Section 336 or Section 338 of the Code with respect to the transactions contemplated by this Agreement.

No Intermediary Transaction Tax Shelter

.  The Purchaser shall not take any action or cause any action to be taken with respect to the Surviving Corporation subsequent to the Closing that would cause the transactions contemplated hereby to constitute part of a transaction that is the same as, or substantially similar to, the "Intermediary Transaction Tax Shelter" described in Internal Revenue Service Notice 2001‑16, 2001-1 C.B. 730 as clarified by Notice 2008‑111, 2008-2 C.B. 1299.

Accounting Firm

.  Any dispute as to Taxes shall be resolved by a nationally recognized accounting firm selected by the parties (or if the Purchaser and Representative cannot agree, designated by the Valuation Firm, in which case the firm shall be a firm that does not regularly provide assistance to any Person with a material financial interest in the outcome and which is consented to in writing by the Purchaser and Representative (such consent not to be unreasonably withheld, conditioned or delayed)) (the "Accounting Firm") in accordance with the guidelines set forth in Exhibit D, mutatis mutandis, and the past practices of the Company shall be the Accounting Firm's standard for resolution of any such dispute wherever applicable.

Article X
MISCELLANEOUS

Press Releases and Communications

.  No press release or public announcement related to this Agreement or the transactions contemplated herein shall be issued or made without the joint approval of the Purchaser and the Representative, unless required by Law (in the reasonable opinion of counsel) in which case the Purchaser and the Representative shall have the right to review and comment on such press release or announcement prior to publication; provided, that the Representative shall be entitled to communicate with and may disclose the terms and the existence of this Agreement and the transactions contemplated herein to its Affiliates in order that such Persons may provide information about the subject matter of this Agreement and the transactions contemplated herein to their respective ultimate beneficiaries and prospective beneficiaries.

Expenses

.  Except as otherwise provided herein, all fees, costs and expenses (including fees, costs and expenses of legal counsel, investment bankers, brokers or other representatives and consultants and appraisal fees, costs and expenses, and travel, lodging, entertainment and associated expenses) incurred in connection with the negotiation and performance of this Agreement, the Company Documents and the Purchaser Documents, and the consummation of the transactions contemplated hereby and thereby (a) by the Company, the Stockholders or the Optionholders shall be paid by the Stockholders and Optionholders or, prior to the Closing, by the Company, or (b) by the Purchaser or the Merger Sub shall be paid by the Purchaser.  Without limiting the generality of the foregoing, the Purchaser shall pay any and all expenses relating to the R&W Insurance and to any surveys, title insurance and environmental due

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diligence.  For the avoidance of doubt, the expenses for which the Company is responsible pursuant to this Section 10.02 are and shall be Transaction Expenses to the extent not paid prior to the Closing.

Notices

.  Except as otherwise expressly provided herein, all notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when personally delivered, (b) when transmitted via telecopy (or other facsimile device) to the number set out below or transmitted by electronic mail if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), (c) the day following the day (except if not a Business Day, then the next Business Day) on which the same has been delivered prepaid to a reputable national overnight air courier service or (d) the third Business Day following the day on which the same is sent by certified or registered mail, postage prepaid, in each case to the respective parties hereto at the address set forth below, or at such other address as such party may specify by written notice to the other party hereto:

Notices to the Purchaser, the Merger Sub or the Surviving Corporation:

 

Advanced Drainage Systems, Inc.
4640 Trueman Boulevard
Hilliard, Ohio 43026
Attention:  D. Scott Barbour, President and Chief Executive Officer
Facsimile:(614) 658-0052
Email:scott.barbour@ads-pipe.com

 

with a copy to:

 

Squire Patton Boggs (US) LLP
41 South High Street, Suite 2000
Columbus, Ohio 43215
Attention:Matthew S. Bailey and
Matthew C. Palmer
Facsimile:(614) 365-2499
Email:matthew.bailey@squirepb.com
matthew.palmer@squirepb.com

 

Notices to the Representative:

 

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c/o Ontario Teachers' Pension Plan Board

5650 Yonge Street

Toronto, ON M2M 4H5
Attention: Russell Hammond,

                        Robin Shah and
Legal Department
Facsimile:(416) 730-3771
Email:Russell_Hammond@otpp.com,

                        Robin_Shah@otpp.com and
legal@otpp.com

 

with a copy to:

 

Kirkland & Ellis LLP
300 North LaSalle Street
Chicago, Illinois  60654
Attention:Jeremy S. Liss, P.C. and
Matthew S. Arenson, P.C.
Facsimile:(312) 862‑2200
Email:jeremy.liss@kirkland.com and matthew.arenson@kirkland.com

 

Assignment

.  This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, except that neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated by either the Purchaser or the Company without the prior written consent of the other party; provided, that each of the Purchaser, the Merger Sub and the Surviving Corporation may assign their respective rights under this Agreement to their lenders as collateral security for their obligations under any of their secured debt financing arrangements.

Severability

.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable Law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

Construction

.  The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any Person.  The headings of the sections and paragraphs of this Agreement have been inserted for convenience of reference only and shall in no way restrict or otherwise modify any of the terms or provisions hereof.  The specification of any dollar amount or the inclusion of any item in the representations and warranties contained in this Agreement, the Disclosure Schedules or exhibits is not intended to imply that the amounts, or higher or lower amounts, or the items so included, or other items, are or are not required to be disclosed (including whether such amounts or items are required to be disclosed as material or threatened) or are within or outside of the ordinary course of business, and no party shall use the fact of the setting of the amounts or the fact of the inclusion of any item in this Agreement, the Disclosure Schedules, or exhibits in any dispute or controversy between the parties hereto as to whether any obligation, item or matter not set forth or included in this Agreement, the Disclosure Schedules, or exhibits is or is not required to be disclosed (including whether the amount or items are required to be disclosed as material or threatened) or is within or outside of the ordinary course of business for purposes of this Agreement.  In addition, matters reflected in the Disclosure Schedules as exceptions to a particular representation or warranty are not necessarily limited to matters required by this Agreement to be reflected in the Disclosure Schedules.  Such additional matters are set forth for informational purposes only and do not necessarily include other matters of a similar nature.  The

56


 

information contained in this Agreement, in the Disclosure Schedules, and exhibits hereto is disclosed solely for purposes of this Agreement, and no information contained herein or therein shall be deemed to be an admission by any party hereto to any third‑party of any matter whatsoever (including any violation of Law or breach of Contract).

Amendment and Waiver

.  Except as provided herein, any provision of this Agreement or the Disclosure Schedules or exhibits hereto may be amended or waived only in a writing signed by the Purchaser, the Company and the Representative.  No waiver of any provision hereunder or any breach or default thereof shall extend to or affect in any way any other provision or prior or subsequent breach or default.

Complete Agreement

.  This Agreement and the other agreements, instruments, and documents contemplated hereby or executed in connection herewith (including the Confidentiality Agreement) contain the complete agreement between the parties hereto and supersede any prior understandings, agreements or representations by or between the parties hereto, written or oral, which may have related to the subject matter hereof in any way.  In the event an ambiguity or question of intent or interpretation arises with respect to this Agreement, the terms and provisions of the execution version of this Agreement will control and prior drafts of this Agreement and the documents referenced herein will not be considered or analyzed for any purpose (including in support of parol evidence proffered by any Person in connection with this Agreement) and will be deemed not to provide any evidence as to the meaning of the provisions hereof or the intent of the parties hereto.

Third‑Party Beneficiaries

.  The Stockholders and the Optionholders are third‑party beneficiaries of this Agreement and may suffer losses for any breach of this Agreement by the Purchaser (or, after the Closing, the Surviving Corporation or the Merger Sub).  The provisions of this Agreement are intended for the benefit of, and shall be enforceable by the Representative for the benefit of, the Stockholders and Optionholders, and the Representative shall have the exclusive right, but not the obligation, to enforce any obligations of the Purchaser, Merger Sub, or the Surviving Corporation under this Agreement for the benefit of the Stockholders and Optionholders.  Section 6.02 shall be enforceable by each indemnitee or exculpee to whom Section 6.02 applies, and his or her heirs and representatives.  Except as otherwise expressly provided herein, nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement, the Stockholders, the Optionholders, and, for purposes of Section 6.02, each indemnitee or exculpee to whom Section 6.02 applies, and his or her heirs and representatives, any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement.

Counterparts

.  This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, may be executed in two (2) or more counterparts, all of which shall constitute one and the same instrument.  Any such counterpart, to the extent delivered by means of a facsimile machine or by .pdf, .tif, .gif, .jpeg or similar attachment to electronic mail (any such delivery, an "Electronic Delivery") shall be treated in all manner and respects as an original executed counterpart and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto, each other party hereto or to any signed agreement or instrument entered into in connection with this Agreement, or the applicable signed agreement,

57


 

instrument or amendment, or any amendments hereto or thereto, shall re execute the original form of this Agreement and deliver such form to all other parties hereto or thereto.  No party hereto shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such party forever waives any such defense, except to the extent such defense relates to lack of authenticity.  Minor variations in the form of the signature page, including footers from earlier versions of this Agreement or any such other document, will be disregarded in determining a party's intent or the effectiveness of such signature.  

Governing Law; Jurisdiction; WAIVER OF JURY TRIAL

.  All issues and questions concerning the construction, validity, interpretation and enforceability of this Agreement and the exhibits and schedules hereto, and all claims and disputes arising hereunder or thereunder or in connection herewith or therewith, whether purporting to sound in contract or tort, or at law or in equity, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to any choice of Law or conflict of Law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware.  The parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of the Court of Chancery of the State of Delaware or, to the extent such court declines jurisdiction, first to any federal court, or second, to any state court, each located in Wilmington, Delaware, to the exclusion of other courts, and hereby waive the right to assert the lack of personal or subject matter jurisdiction or improper venue in connection with any such suit, action or other proceeding.  In furtherance of the foregoing, each of the parties hereto (a) waives the defense of inconvenient forum, (b) agrees not to commence any suit, action or other proceeding arising out of this Agreement or any transactions contemplated hereby other than in any such court, and (c) agrees that a final judgment in any such suit, action or other proceeding shall be conclusive and may be enforced in other jurisdictions by suit or judgment or in any other manner provided by Law.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY LITIGATION, ACTION, PROCEEDING, CROSS‑CLAIM, OR COUNTERCLAIM IN ANY COURT (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF, RELATING TO OR IN CONNECTION WITH (i) THIS AGREEMENT OR THE VALIDITY, PERFORMANCE, INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF OR (ii) THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, AUTHORIZATION, EXECUTION, DELIVERY, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.  

Representative

.

(a)Effective upon and by virtue of the Stockholder Approval, and without any further act of any of the equityholders of the Company, the Representative is hereby irrevocably appointed as the representative, agent, proxy, and attorney in fact (coupled with an interest) for all of the equityholders of the Company for all purposes under this Agreement including the full power and authority on such equityholders' behalf:  (i) to consummate the transactions contemplated under this Agreement and the other agreements, instruments, and documents contemplated hereby or executed in connection herewith, (ii) to negotiate claims and disputes arising under, or relating to, this Agreement and the other agreements, instruments, and documents contemplated hereby or executed in connection herewith (including, for the avoidance of doubt, the adjustment of Closing Cash Proceeds contemplated by Section 3.03), (iii) to receive and

58


 

disburse to, or cause to be received or disbursed to, any equityholder of the Company any funds received on behalf of such equityholder under this Agreement (including, for the avoidance of doubt, any portion of the Merger Consideration) or otherwise; provided, however, that in each such case, any amounts owed to any Participant, if any, shall be taken into consideration in determining the Merger Consideration payable to the equityholders of the Company and paid to the Participants pursuant to Section 6.04 and Section 7.04 in connection therewith, (iv) to withhold any amounts received on behalf of any equityholder of the Company pursuant to this Agreement (including, for the avoidance of doubt, any portion of the Merger Consideration) or to satisfy any and all obligations or liabilities of any equityholder of the Company or the Representative in the performance of any of their commitments hereunder (including, for the avoidance of doubt, the satisfaction of payment obligations in connection with the adjustment of Closing Cash Proceeds contemplated by Section 3.03), (v) to execute and deliver any amendment or waiver to this Agreement and the other agreements, instruments, and documents contemplated hereby or executed in connection herewith (without the prior approval of any equityholder of the Company), (vi) to receive and disburse to, or cause to be received or disbursed to, any individual pursuant to any incentive compensation agreement providing for a transaction bonus, in effect as of the Closing and (vii)  to take all other actions to be taken by or on behalf of any equityholder of the Company in connection with this Agreement and the other agreements, instruments, and documents contemplated hereby or executed in connection herewith.  Such agency and proxy are coupled with an interest, are therefore irrevocable without the consent of the Representative and shall survive the death, incapacity, bankruptcy, dissolution or liquidation of each equityholder of the Company.  All decisions and actions by the Representative shall be binding upon each equityholder of the Company, and no such equityholder shall have the right to object, dissent, protest or otherwise contest the same.  The Representative shall have no duties or obligations hereunder, including any fiduciary duties, except those set forth herein, and such duties and obligations shall be determined solely by the express provisions of this Agreement.

(b)Effective upon and by virtue of the Stockholder Approval, and without any further act of any of the equityholders of the Company, the Representative and its Non‑Recourse Parties shall be indemnified, held harmless and reimbursed by each Class A Stockholder severally (based on each Class A Stockholder's Pro Rata Percentage), and not jointly, against all costs, expenses (including reasonable attorneys' fees), judgments, fines and amounts paid or incurred by the Representative and its Non‑Recourse Parties in connection with any claim, action, suit or proceeding to which the Representative or such other Person is made a party by reason of the fact that it is or was acting as the Representative pursuant to the terms of this Agreement (including, for the avoidance of doubt, the satisfaction of payment obligations in connection with the adjustment of Closing Cash Proceeds contemplated by Section 3.03).  Any and all amounts paid or incurred by the Representative and its Non‑Recourse Parties in connection with any claim, action, suit or proceeding to which the Representative or such other Person is made a party by reason of the fact that it is or was acting as the Representative pursuant to the terms of this Agreement are on behalf of the equityholders of the Company (and, not for the avoidance, on behalf of the Representative in any other capacity, as a Stockholder or otherwise).

(c)Neither the Representative nor any of its Non‑Recourse Parties shall incur any liability to any equityholder of the Company by virtue of the failure or refusal of the Representative or any of its Non‑Recourse Parties for any reason to consummate the transactions contemplated hereby or relating to the performance of their duties hereunder.  The Representative

59


 

and its Non‑Recourse Parties shall have no liability in respect of any action, claim or proceeding brought against any such Person by any equityholder of the Company, regardless of the legal theory under which such liability or obligation may be sought to be imposed, whether sounding in contract or tort, or whether at law or in equity, or otherwise, if any such Person took or omitted taking any action in good faith.

(d)If the Representative pays or causes to be paid any amounts in connection with any obligation or liability of an equityholder of the Company in connection with the transactions contemplated hereby (including, for the avoidance of doubt, the adjustment of Closing Cash Proceeds contemplated by Section 3.03), any such payments and the reasonable expenses of the Representative incurred in administering or defending the underlying dispute or claim may be reimbursed, when and as incurred, from the Representative Holdback Amount (and, if not so reimbursed from the Representative Holdback Amount, the Representative shall be indemnified, held harmless and reimbursed by each Class A Stockholder severally (based on each Class A Stockholder's Pro Rata Percentage), and not jointly, for such amount(s)).  The Representative may, in its sole and absolute discretion, distribute, or cause to be distributed, any or all of the funds received or held by it on behalf of the equityholders of the Company (including, for the avoidance of doubt, any portion of the Merger Consideration) to one (1) or more of such equityholders at any time after the date hereof, which such distribution(s) of funds may be different (i.e., with respect to amount, timing, conditionality or otherwise) for each such equityholder.  Upon full reimbursement of all expenses, costs, obligations or liabilities incurred by the Representative in the performance of its duties hereunder, the Representative shall distribute, or cause to be distributed, all remaining funds held by it on behalf of the equityholders of the Company to such equityholders.

(e)Notwithstanding anything to the contrary set forth herein, the Representative and its Affiliates shall not be liable for any loss to any equityholder of the Company for any action taken or not taken by the Representative or for any act or omission taken or not taken in reliance upon the actions taken or not taken or decisions, communications or writings made, given or executed by the Purchaser or the Merger Sub or the Surviving Corporation.

(f)All references to the "Representative" herein mean such Person in its capacity as representative of the equityholders of the Company and not, for the avoidance of doubt, in any other capacity, as a Stockholder or otherwise.  

(g)Except as may have been expressly and specifically agreed to in writing by an equityholder of the Company, on the one hand, and Kirkland & Ellis LLP ("K&E LLP"), on the other hand, and except for the Representative, Ontario Teachers' Pension Plan Board and their respective Affiliates (i) K&E LLP has not and is not representing, and shall not be deemed to have represented any equityholder of the Company in connection with the transactions contemplated hereby, and (ii) K&E LLP has not and is not providing any advice or counsel (including legal advice or counsel), and shall not be deemed to have provided counsel or advice, to any equityholder of the Company in connection with the transactions contemplated hereby.  Each equityholder of the Company agrees that K&E LLP may represent the Representative, Ontario Teachers' Pension Plan Board, and their respective Affiliates in any matter related to the transactions contemplated hereby including matters which maybe adverse to such equityholders and, in furtherance thereof, each such equityholder consents to, and waives, without limitation, restriction or condition of any

60


 

kind, any actual or potential conflict or other actual or potential objection with respect to K&E LLP's representation of the Representative, Ontario Teachers' Pension Plan Board, and their respective Affiliates in any matter related to the transactions contemplated hereby.

(h)The Purchaser shall be entitled to deal exclusively with the Representative on all matters relating to this Agreement and, subject to receipt of notification of the appointment of a new Representative (with the provisions of this Section 10.13 applying equally to such new Representative), shall be entitled to rely conclusively (without further evidence of any kind whatsoever) on any document executed or purported to be executed on behalf of the Stockholders or the Optionholders by the Representative, and on any other action taken or purported to be taken on behalf of any Stockholder or Optionholder by the Representative, as being fully binding upon such Person.  Notices or communications to or from the Representative shall constitute notice to or from each Stockholder or Optionholder.  Any decision or action by the Representative hereunder, including any agreement between the Representative and the Purchaser relating to the defense, payment or settlement of any claims under this Agreement, shall constitute a decision or action of all Stockholders and Optionholders and shall be final, binding and conclusive upon each such Person.  No Stockholder or Optionholder shall have the right to object to, dissent from, protest or otherwise contest the same.

Legal Representation

.  Following consummation of the transactions contemplated hereby, the Company and its Subsidiaries' current and former legal counsel (including K&E LLP) (each, "Company Counsel") may serve as counsel to each and any of the Representative, the Stockholders, the Optionholders and their respective Non‑Recourse Parties, in connection with any litigation, claim or obligation arising out of or relating to this Agreement or the transactions contemplated by this Agreement notwithstanding such representation or any continued representation of any other Person (including the Representative, Ontario Teachers' Pension Plan Board and their respective Affiliates), and each of the parties hereto (on behalf of itself and each of its Non‑Recourse Parties) consents thereto and waives any conflict of interest arising therefrom.  The decision to represent any of the Representative, the Stockholders, the Optionholders and their respective Non‑Recourse Parties shall be solely that of any such Company Counsel.  Any attorney‑client privilege, work product protection or expectation of confidentiality arising out of or as a result of any Company Counsel's representing of the Company or any of its Subsidiaries in any matter relating in any way to Ontario Teachers' Pension Plan Board's and its Affiliates' pre-Closing ownership of or investment in the Company or in connection with the transactions contemplated by this Agreement (collectively, the "Privileges") shall survive the Closing and shall remain in full force and effect; provided, that notwithstanding anything to the contrary in this Agreement or any Company Document, the Privileges and all information, data, documents or communications, in any format and by whomever possessed, covered by or subject to any of the Privileges (collectively, "Privileged Materials") shall, from and after the Closing, automatically be assigned and exclusively belong to, and be controlled by, the Representative.  For the avoidance of doubt, as to any Privileged Materials, the Purchaser, the Merger Sub and the Company (including, after the Closing, the Surviving Corporation), together with any of their respective Affiliates, successors or assigns, agree that no such party may use or rely on any of the Privileged Materials in any action or claim against or involving any of the parties hereto or any of their respective Non‑Recourse Parties after the Closing, and the Representative, Ontario Teachers' Pension Plan Board and their respective Affiliates shall have the right to assert any of the Privileges against the Company (including, after the Closing, the Surviving Corporation) and its Subsidiaries.  

61


 

The Company (including, after the Closing, the Surviving Corporation) further agrees that, on its own behalf and on behalf of its Subsidiaries, any Company Counsel's retention by the Surviving Corporation or any of its Subsidiaries shall be deemed completed and terminated without any further action by any Person effective as of the Closing.  The Surviving Corporation shall cause each of its future direct and indirect Subsidiaries and its and their successors and assigns that are not signatories to this Agreement to fulfill and comply with the terms of this Section 10.13 and take any and all other steps necessary to effect the agreements in this Section 10.13.

Sources of Recovery; Non-Recourse Parties

.  The Purchaser hereby acknowledges and agrees that, except as expressly provided in Section 3.03(e) or the last sentence of Section 8.02, and remedies pursuant to the express terms and conditions of the Escrow Agreement, the Letters of Transmittal and Support Agreements, none of the Stockholders, the Optionholders, the Representative nor any of their respective Non-Recourse Parties, shall have any liability, responsibility or obligation arising under this Agreement or any exhibit or Schedule hereto, or any ancillary agreement, certificate or other document entered into, made, delivered, or made available in connection herewith, or as a result of any of the transactions contemplated hereby or thereby, the foregoing being the sole and exclusive remedies for all claims, disputes and losses arising hereunder or thereunder or in connection herewith or therewith, whether purporting to sound in contract or tort, or at law or in equity, or otherwise.

Deliveries to the Purchaser

.  The Purchaser agrees and acknowledges that all documents or other items delivered in writing (including by electronic mail) to the Purchaser or its representatives in connection with the transactions contemplated by this Agreement or uploaded and made available in the online "data room" established by Intralinks for "Project Water" on or before the date that is one (1) Business Day prior to the date hereof shall be deemed to have been delivered, provided or made available to the Purchaser, the Merger Sub or their representatives for all purposes hereunder.

Conflict Between Transaction Documents

.  The parties hereto agree and acknowledge that to the extent any terms and provisions of this Agreement are in any way inconsistent with or in conflict with any term, condition or provision of any other agreement, document or instrument contemplated hereby, this Agreement shall govern and control.

Specific Performance

.  The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, and that money damages or legal remedies would not be an adequate remedy for any such damages.  Therefore, it is accordingly agreed that each party shall be entitled to enforce specifically the terms and provisions of this Agreement, or to enforce compliance with, the covenants and obligations of any other party, in any court of competent jurisdiction, and appropriate injunctive relief shall be granted in connection therewith.  Any party seeking an injunction, a decree or order of specific performance shall not be required to provide any bond or other security in connection therewith and any such remedy shall be in addition and not in substitution for any other remedy to which such party is entitled at law or in equity.  The parties shall not assert that a remedy of specific performance or other equitable relief is unenforceable, invalid, contrary to law or inequitable for any reason, and shall not assert that a remedy of monetary damages would provide an adequate remedy or that the parties otherwise have an adequate remedy at law.  No party pursuing an injunction or injunctions to prevent breaches of

62


 

this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 10.17 will be required to provide any bond or other security in connection therewith. 

Relationship of the Parties

.  Nothing in this Agreement shall be deemed to constitute the parties hereto as joint venturers, alter egos, partners or participants in an unincorporated business or other separate entity, nor, except as expressly and specifically set forth in Section 10.12, in any manner create any principal‑agent, fiduciary or other special relationship between the parties hereto.  No party shall have any duties (including fiduciary duties) towards any other party hereto except as specifically set forth herein.

Prevailing Party

.  Other than with respect to disputes arising pursuant to Section 3.03, in any dispute arising out of or related to this Agreement, any of the exhibits or schedules hereto, or any agreement, document, instrument or certificate contemplated hereby, or any transactions contemplated hereby or thereby, the applicable adjudicating body shall award to the prevailing party, if any, the costs and attorneys' fees reasonably incurred by the prevailing party in connection with the dispute and the enforcement of its rights under this Agreement, any of the exhibits or schedules hereto, or any agreement, document, instrument or certificate contemplated hereby and, if the adjudicating body determines a party to be the prevailing party under circumstances where the prevailing party won on some but not all of the claims and counterclaims, the adjudicating body may award the prevailing party an appropriate percentage of the costs and attorneys' fees reasonably incurred by the prevailing party in connection with the adjudication and the enforcement of its rights under this Agreement, any of the exhibits or schedules hereto, or any agreement, document, instrument or certificate contemplated hereby or thereby.  The Representative shall be entitled to satisfy any obligations owed pursuant to this Section 10.19 from the Representative Holdback Amount.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement and Plan of Merger on the date first above written.

 

The Company:

 

Infiltrator Water Technologies Ultimate Holdings, Inc.

 

 

 

By:   /s/ Roy E. Moore, Jr.

 

Name: Roy E. Moore, Jr.

 

Title: President and Chief Executive Officer

 

 

 

 

Signature Page to Agreement and Plan of Merger


 

 

The Purchaser:

 

Advanced Drainage Systems, Inc.

 

 

 

By: /s/ D. Scott Barbour

 

Name: D. Scott Barbour

 

Title: President and Chief Executive Officer

 

 

 

 

 

 

 

The Merger Sub:

 

Ocean Sub, Inc.

 

 

 

By: /s/ D. Scott Barbour

 

Name: D. Scott Barbour

 

Title: President and Chief Executive Officer

Signature Page to Agreement and Plan of Merger

 


 

 

The Representative:

(solely in its capacity as the Representative)

 

2461461 Ontario Limited

 

 

 

By:  /s/ Russell Hammond

 

Name: Russell Hammond

 

Title: Authorized Signatory

 

Signature Page to Agreement and Plan of Merger

 


 

 

 

Exhibit 10.1

 

Execution Version

 

 

 

CREDIT AGREEMENT

dated as of July 31, 2019

among

ADVANCED DRAINAGE SYSTEMS, INC.,
as Borrower

THE LENDERS PARTY HERETO

and

BARCLAYS BANK PLC,
as Administrative Agent

 

BARCLAYS BANK PLC, and
MORGAN STANLEY SENIOR FUNDING, INC.,

as Joint Lead Arrangers and Joint Bookrunners

 

BARCLAYS BANK PLC, and
MORGAN STANLEY SENIOR FUNDING, INC.,
as Syndication Agents

 

and

 

BARCLAYS BANK PLC, and
MORGAN STANLEY SENIOR FUNDING, INC.,
as Documentation Agents

 

 

 

 

 

 

 

 

 

 

 

 

1

 


 

TABLE OF CONTENTS

 

 

 

Page Number

Section 1.

DEFINITIONS

1

1.1

Defined Terms

1

1.2

Other Definitional Provisions

52

1.3

Certain Calculations and Tests

53

1.4

Divisions

57

1.5

Interest Rates; LIBOR Notification

57

1.6

Cashless Rollovers

58

1.7

Compliance with Certain Sections

58

1.8

Exchange Rates; Currency Equivalents; Basket Calculations

58

Section 2.

AMOUNT AND TERMS OF TERM LOANS

59

2.1

Term Loans

59

2.2

Procedure for the Initial Term Loan Borrowing

59

2.3

Repayment of Initial Term Loans

59

Section 3.

AMOUNT AND TERMS OF REVOLVING COMMITMENTS

59

3.1

Revolving Commitments

59

3.2

Procedure for Revolving Loan Borrowing

60

3.3

Swingline Commitment

60

3.4

Procedure for Swingline Borrowing; Refunding of Swingline Loans; Successor Swingline Lenders

61

3.5

Commitment Fees, etc.

63

3.6

Termination or Reduction of Revolving Commitments

63

3.7

Letter of Credit Commitment

63

3.8

Procedure for Issuance of Letters of Credit

65

3.9

Fees and Other Charges

66

3.1

Letter of Credit Participations

66

3.11

Reimbursement Obligation of the Borrower

67

3.12

Obligations Absolute

67

3.13

Letter of Credit Payments

68

Section 4.

GENERAL PROVISIONS APPLICABLE TO LOANS AND  LETTERS OF CREDIT

68

4.1

Optional Prepayments

68

4.2

Mandatory Prepayments

69

4.3

Conversion and Continuation Options

71

4.4

Limitations on Eurocurrency Tranches

72

4.5

Interest Rates and Payment Dates; Administrative Agent Fees; Other Fees

72

4.6

Computation of Interest and Fees

73

i

 


 

 

 

Page Number

4.7

Inability to Determine Interest Rate; Benchmark Replacement.

74

4.8

Pro Rata Treatment and Payments

75

4.9

Requirements of Law

77

4.10

Taxes

78

4.11

Indemnity

82

4.12

Change of Lending Office

82

4.13

Replacement of Lenders

83

4.14

Evidence of Debt

83

4.15

Illegality

84

4.16

Defaulting Lenders

84

4.17

Incremental Facilities

86

4.18

Extension Amendments

89

4.19

Refinancing Facilities

92

Section 5.

REPRESENTATIONS AND WARRANTIES

93

5.1

Financial Condition

93

5.2

No Change

94

5.3

Corporate Existence; Compliance with Law

94

5.4

Power; Authorization; Enforceable Obligations

95

5.5

No Legal Bar

95

5.6

Litigation

95

5.7

No Default

95

5.8

Ownership of Property; Liens

95

5.9

Intellectual Property

96

5.10

Taxes

96

5.11

Federal Regulations

96

5.12

Labor Matters

96

5.13

ERISA

96

5.14

Investment Company Act

97

5.15

Restricted Subsidiaries

97

5.16

Use of Proceeds

97

5.17

Environmental Matters

97

5.18

Accuracy of Information, etc.

98

5.19

Security Documents

99

5.20

Solvency

100

5.21

Regulation H

100

5.22

Anti-Terrorism Laws

100

5.23

Anti-Corruption Laws and Sanctions

101

5.24

EEA Financial Institutions

101

5.25

Beneficial Ownership Certificate

101

Section 6.

CONDITIONS PRECEDENT

101

6.1

Conditions to Initial Extension of Credit

101

6.2

Conditions to Each Extension of Credit after the Closing Date

104

ii

 


 

 

 

Page Number

Section 7.

AFFIRMATIVE COVENANTS

104

7.1

Financial Statements

104

7.2

Certificates; Other Information

105

7.3

Payment of Obligations; Payment of Taxes

107

7.4

Maintenance of Existence; Compliance

107

7.5

Maintenance of Property; Insurance

108

7.6

Inspection of Property; Books and Records; Discussions

108

7.7

Notices

108

7.8

Environmental Laws

109

7.9

Additional Collateral, etc.

109

7.10

Use of Proceeds

113

7.11

Further Assurances

113

7.12

Ratings

113

7.13

Post-Closing Items

113

Section 8.

NEGATIVE COVENANTS

113

8.1

Financial Condition Covenant

114

8.2

Indebtedness

114

8.3

Liens

118

8.4

Fundamental Changes

121

8.5

Disposition of Property

122

8.6

Restricted Payments

124

8.7

Investments

126

8.8

Optional Payments and Modifications of Certain Debt Instruments; Certain Modifications

129

8.9

Transactions with Affiliates

130

8.10

[Reserved]

131

8.11

Hedge Agreements

131

8.12

Changes in Fiscal Periods

131

8.13

Negative Pledge Clauses

131

8.14

Clauses Restricting Subsidiary Distributions

132

8.15

Lines of Business

134

Section 9.

EVENTS OF DEFAULT

134

Section 10.

THE ADMINISTRATIVE AGENT AND OTHER REPRESENTATIVES

137

10.1

Appointment

137

10.2

Delegation of Duties

138

10.3

Exculpatory Provisions

138

10.4

Reliance by the Administrative Agent

138

10.5

Notice of Default

139

10.6

Non-Reliance on Administrative Agent and Other Lenders

139

10.7

Indemnification

140

10.8

Agent in Its Individual Capacity

140

iii

 


 

 

 

Page Number

10.9

Successor Administrative Agent

141

10.10

Administrative Agent Generally

142

10.11

Other Representatives

142

10.12

Withholding Tax

142

10.13

Administrative Agent May File Proofs of Claim

142

10.14

Certain ERISA Matters

143

10.15

Intercreditor Agreements.

144

Section 11.

MISCELLANEOUS

145

11.1

Amendments and Waivers

145

11.2

Notices

147

11.3

No Waiver; Cumulative Remedies

148

11.4

Survival of Representations and Warranties

149

11.5

Payment of Expenses; Indemnity

149

11.6

Successors and Assigns; Participations and Assignments

151

11.7

Adjustments; Set-off

158

11.8

Counterparts

158

11.9

Severability

158

11.10

Integration

159

11.11

GOVERNING LAW

159

11.12

Submission To Jurisdiction; Waivers

159

11.13

Acknowledgments

159

11.14

Releases of Guarantees and Liens

160

11.15

Confidentiality

160

11.16

WAIVERS OF JURY TRIAL

161

11.17

USA PATRIOT Act

161

11.18

Lender Action

161

11.19

Certain Undertakings with Respect to Certain Affiliate Lenders

162

11.20

No Fiduciary Duty

163

11.21

Acknowledgment and Consent to Bail-In of EEA Financial Institutions

163

11.22

Judgment Currency

164

11.23

Acknowledgment Regarding Any Supported QFCs

164

 

 

 

 

 

 

 

 

 

 

 

 

iv

 


 

 

 

 

 

 

 

SCHEDULES:

 

 

1.1(b)

Closing Date Unrestricted Subsidiaries

1.1(c)

Existing Letters of Credit

1.1(d)

Term Loan Allocations

1.1(e)

Revolving Commitment Allocations

1.1(f)

Issuing Lenders and L/C Commitments

5.4

Consents, Authorizations, Filings and Notices

5.6

Litigation

5.15

Restricted Subsidiaries

7.13

Post-Closing Items

8.2(d)

Scheduled Existing Indebtedness

8.3(i)

Scheduled Existing Liens

8.7(e)

Scheduled Existing Investments

8.9(i)

Transactions with Affiliates

8.13(d)

Negative Pledge

EXHIBITS:

A

Form of Guarantee and Collateral Agreement

B

Form of Compliance Certificate

C

Form of Closing Certificate of the Guarantors

D

Form of Mortgage

E-1

Form of Assignment and Assumption

E-2

Form of Affiliated Lender Assignment and Assumption

F

Form of Exemption Certificate

G-1

Form of Term Note

G-2

Form of Revolving Note

G-3

Form of Swingline Note

H

[Reserved]

I

Form of Solvency Certificate

J

Form of Closing Certificate of the Borrower

K-1

Form of Intercreditor Agreement

K-2

Form of Pari Debt Intercreditor Agreement

 

 

 

 

v

 


 

THIS CREDIT AGREEMENT, dated as of July 31, 2019 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, this Agreement), is by and among Advanced Drainage Systems, Inc., a Delaware corporation (the Borrower), the several banks and other financial institutions or entities from time to time parties hereto (collectively, the Lenders), the Issuing Lenders from time to time parties hereto and Barclays Bank PLC, as administrative agent (in such capacity, the Administrative Agent).

Recitals

WHEREAS, the Borrower has requested that, substantially simultaneously with the consummation of the Acquisition, (a) the Term Lenders extend Term Loans in an aggregate principal amount of $1,300,000,000, (b) the Revolving Lenders provide Revolving Commitments in an aggregate principal amount of $350,000,000 and (c) the Issuing Lenders agree to issue Letters of Credit in an aggregate amount available to be drawn not in excess of the Total L/C Commitments; and

WHEREAS, the Lenders and the Issuing Lenders are willing to provide such extensions of credit, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent, the Lenders and the Issuing Lenders to enter into this Agreement and to induce the Lenders and the Issuing Lenders to make their respective extensions of credit to the Borrower hereunder, the parties hereto hereby agree as follows:

Section 1.DEFINITIONS

Defined Terms

.  As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.

Acquisition”: the acquisition by the Borrower of 100% of the capital stock of the Target pursuant to the Acquisition Agreement.

Acquisition Agreement”: that certain Agreement and Plan of Merger, dated as of the date hereof, by and among the Borrower, the Target, Ocean Sub, Inc. and 2461461 Ontario Limited and, together with all exhibits, schedules and disclosure letters thereto.

Additional Lender”:  as defined in Section 4.17(b).

Administrative Agent”:  as defined in the preamble to this Agreement.

Affiliate”:  as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person.  For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

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Affiliated Lender Assignment and Assumption:  an Affiliated Lender Assignment and Assumption, substantially in the form of Exhibit E-2.

Affiliated Lenders”:  the Borrower, its Subsidiaries and their respective Affiliates.

Aggregate Exposure”:  with respect to any Lender at any time, an amount equal to (a) until the initial funding thereof on the Closing Date, the aggregate amount of such Lender’s Commitments at such time, (b) thereafter, the sum of (i) the aggregate then unpaid principal amount of such Lender’s Term Loans and (ii) the amount of such Lender’s Revolving Commitment then in effect or, if the Revolving Commitments have been terminated, the amount of such Lender’s Revolving Extensions of Credit then outstanding.

Aggregate Exposure Percentage”:  with respect to any Lender at any time, the ratio (expressed as a percentage) of (a) such Lender’s Aggregate Exposure at such time to (b) the Aggregate Exposure of all Lenders at such time.

Agreement”:  as defined in the preamble to this Agreement.

Agreement Currency”:  as defined in Section 11.22.

All-In Yield”:  as to any Indebtedness, the yield thereof, whether in the form of interest rate, margin, original issue discount, upfront fees or Eurocurrency Rate or Base Rate “floor”; provided that original issue discount and upfront fees shall be equated to interest based on assumed four-year life to maturity (or, if less, the stated life to maturity at the time of incurrence of the applicable Indebtedness); provided, further, that “All-In Yield” shall not include customary arrangement or commitment fees payable to any of the Other Representatives (or their respective affiliates) in connection with the Loans or to one or more arrangers (or their respective affiliates) in connection with any Incremental Loans (and any fee payable to any Lender in lieu of any portion of any such fee payable to any such arranger or affiliate thereof).

Anti-Corruption Laws”:  all laws, rules, and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption.

Applicable Margin”:  for any day (a) with respect to Revolving Loans and Swingline Loans, the rate per annum by reference to the grid below which corresponds to the Consolidated Senior Secured Net Leverage Ratio as of the relevant date of determination below the heading “Revolving Loans”, (b) with respect to Initial Term Loans the rate per annum for Eurocurrency Loans shall be 3.25% and the Applicable Margin for Base Rate Loans shall be 2.25% and (c) with respect to any Incremental Term Loans, the rate per annum set forth in the applicable Incremental Commitment Agreement with respect thereto.

Category

Consolidated Senior Secured Net Leverage Ratio

Revolving Loans

Eurocurrency Loans

Base Rate Loans

 

22

 

 


 

1

> 2.75:1.00

3.25%

2.25%

2

< 2.75:1.00

3.00%

2.00%

 

Notwithstanding the foregoing, until the date the Borrower shall have delivered  the financial statements and certificates required by Section 7.1(a)(ii) and Section 7.2(a), respectively, for the period ended September 30, 2019, the Consolidated Senior Secured Net Leverage Ratio shall be deemed to be in Category 2 for purposes of determining the Applicable Margin. In addition, (a) at any time during which the Borrower has failed to deliver the financial statements and certificates required by Sections 7.1(a)(i) or 7.1(a)(ii) and Section 7.2(a), respectively, or (b) at any time after the occurrence and during the continuance of an Event of Default, the Consolidated Senior Secured Net Leverage Ratio shall be deemed to be in Category 1 for purposes of determining the Applicable Margin.

Notwithstanding the foregoing, until the Marketing Commencement Date has occurred, the Applicable Margin with respect to the Initial Term Loans shall increase on the 53rd day following the Closing Date to a rate per annum set forth below which corresponds to the date and period of time following the Closing Date:

Number of Days After the Closing Date

Applicable Margin for Eurocurrency Loans

Applicable Margin for Base Rate Loans

53-82

3.50%

2.50%

83-112

3.75%

2.75%

113 and thereafter

4.00%

3.00%

Applicable Period”:  as defined in Section 4.6(c).

Application”:  an application, in a form as the applicable Issuing Lender may reasonably specify from time to time to request such Issuing Lender issue a Letter of Credit.

Approved Currency” means each of Dollars, Euros, Canadian Dollars and Pesos.

Approved Fund”:  (a) a CLO and (b) with respect to any Lender that is a fund which invests in commercial loans, any other fund that invests in commercial loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

Asset Sale”:  any Disposition of Property or series of related Dispositions of Property (including any issuance or sale of Capital Stock of any Restricted Subsidiary of the Borrower, but excluding any Disposition permitted by Section 8.5 (other than any Dispositions

33

 

 


 

permitted pursuant to Section 8.5(s) thereof) that yields gross proceeds to any Group Member (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $5,000,000.

Asset Swap”: a concurrent purchase and sale or exchange of Property between the Borrower or any of its Restricted Subsidiaries and another Person; provided that (i) the Borrower or such Restricted Subsidiary, as the case may be, receives consideration at least equal to the fair market value (such fair market value to be determined on the date of the contract agreeing to such transaction) as determined in good faith by the Borrower and (ii) such Property is useful to the business of the Borrower or such Restricted Subsidiary.

Assignee”:  as defined in Section 11.6(b)(i).

Assignment and Assumption”:  an Assignment and Assumption, substantially in the form of Exhibit E-1.

Available Amount”:  at any time, an amount (if a positive number) equal to (a) 50% of Consolidated Net Income of the Borrower and its Restricted Subsidiaries for the period (taken as one accounting period) commencing on July 1, 2019 to the end of the most recently ended fiscal quarter for which financial statements have been delivered to the extent not otherwise applied; plus (b) 100% of the aggregate Net Cash Proceeds received by the Borrower from the sale of Capital Stock (excluding Disqualified Capital Stock) of the Borrower or from any capital contributions to the Borrower made in cash or Cash Equivalents (excluding Disqualified Capital Stock) to the extent such Net Cash Proceeds have not been otherwise applied to build the Available Amount or any other basket for the incurrence of Indebtedness or the making of any Investment or Restricted Payment; plus (c) 100% of the aggregate Net Cash Proceeds received by the Borrower from third-party Indebtedness and Disqualified Capital Stock of the Borrower and its Restricted Subsidiaries, in each case, issued after the Closing Date, which have been exchanged or converted into Capital Stock (excluding Disqualified Capital Stock) of the Borrower to the extent such Net Cash Proceeds have not been otherwise applied to build the Available Amount or any other basket for the incurrence of Indebtedness or the making of any Investment or Restricted Payment; plus (d) 100% of the aggregate Net Cash Proceeds and the fair market value of marketable securities or other property received by the Borrower and its Restricted Subsidiaries since the Closing Date from Dispositions of Investments made using the Available Amount; plus (e) 100% of the returns, profits, distributions and similar amounts received in cash or Cash Equivalents by the Borrower and its Restricted Subsidiaries on Investments made using the Available Amount (including Investments in Unrestricted Subsidiaries); plus (f) 100% of the Investments of the Borrower and its Restricted Subsidiaries made using the Available Amount in any Unrestricted Subsidiary that has been re-designated as a Restricted Subsidiary or that has been merged or consolidated with or into the Borrower or any of its Restricted Subsidiaries (up to the fair market value of the Investments of the Borrower and its Restricted Subsidiaries in such Unrestricted Subsidiary at the time of such re-designation or merger or consolidation), in each case, after the Closing Date; plus (g) Declined Amounts; minus (h) without duplication, an amount equal to the sum of (i) redemptions, repurchases, defeasances or other prepayments of Junior Debt pursuant to Section 8.8(a)(i), (ii) Restricted Payments made pursuant to Section 8.6(e)(i) and

44

 

 


 

(iii) Investments made pursuant to Section 8.7(bb)(i)(z), in each case, after the Closing Date and prior to such time or contemporaneously therewith.

Available Revolving Commitment”:  as to any Revolving Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Revolving Commitment then in effect over (b) such Lender’s Revolving Extensions of Credit then outstanding; provided, that, in calculating any Lender’s Revolving Extensions of Credit for the purpose of determining such Lender’s Available Revolving Commitment pursuant to Section 3.5, the aggregate principal amount of Swingline Loans then outstanding shall be deemed to be zero.

Backstop L/C”:  as defined in Section 3.7(a).

Bail-In Action”:  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”:  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.

Base Rate”:  for any day, a fluctuating rate per annum equal to the highest of (a) the Federal Funds Effective Rate in effect for such day plus 0.50%, (b) the Prime Rate in effect on such day and (c) the Eurocurrency Rate applicable to Eurocurrency Loans denominated in Dollars for a one-month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.00%; provided, that for the avoidance of doubt, the LIBO Rate for any day shall be based on the rate determined on such day at approximately 11:00 a.m. (London time) by reference to the ICE Benchmark Administration Interest Settlement Rates (or the successor thereto if the ICE Benchmark Administration is no longer making a LIBO Rate available) for deposits in Dollars (as set forth by any service selected by the Administrative Agent that has been nominated by the ICE Benchmark Administration (or the successor thereto if the ICE Benchmark Administration is no longer making a LIBO Rate available) as an authorized vendor for the purpose of displaying such rates). Any change in such rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Eurocurrency Rate applicable to Eurocurrency Loans denominated in Dollars shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Eurocurrency Rate applicable to Eurocurrency Loans denominated in Dollars, as the case may be.

Base Rate Loans”:  Loans the rate of interest applicable to which is based upon the Base Rate.

Benchmark Replacement” means the sum of: (a) the alternate benchmark rate (which may include Term SOFR) that has been selected by the Administrative Agent and the Borrower giving due consideration to (i) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a rate of interest as a replacement to LIBO Rate for U.S. dollar-denominated syndicated credit facilities and (b) the Benchmark

55

 

 


 

Replacement Adjustment; provided that, if the Benchmark Replacement as so determined would be less than zero, the Benchmark Replacement will be deemed to be zero for the purposes of this Agreement.

Benchmark Replacement Adjustment” means, with respect to any replacement of LIBO Rate with an Unadjusted Benchmark Replacement for each applicable Interest Period, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of LIBO Rate with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of LIBO Rate with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated syndicated credit facilities at such time.

Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest and other administrative matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement).

Benchmark Replacement Date” means the earlier to occur of the following events with respect to LIBO Rate:

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

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

Benchmark Transition Event” means the occurrence of one or more of the following events with respect to LIBO Rate:

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

66

 

 


 

(2) a public statement or publication of information by the regulatory supervisor for the administrator of LIBO Rate, the U.S. Federal Reserve System, an insolvency official with jurisdiction over the administrator for LIBO Rate, a resolution authority with jurisdiction over the administrator for LIBO Rate or a court or an entity with similar insolvency or resolution authority over the administrator for LIBO Rate, which states that the administrator of LIBO Rate has ceased or will cease to provide LIBO Rate permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide LIBO Rate; or

(3) a public statement or publication of information by the regulatory supervisor for the administrator of LIBO Rate announcing that LIBO Rate is no longer representative.

Benchmark Transition Start Date” means (a) in the case of a Benchmark Transition Event, the earlier of (i) the applicable Benchmark Replacement Date and (ii) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 90th day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than 90 days after such statement or publication, the date of such statement or publication) and (b) in the case of an Early Opt-in Election, the date specified by the Administrative Agent or the Required Lenders, as applicable, by notice to the Borrower, the Administrative Agent (in the case of such notice by the Required Lenders) and the Lenders.

Benchmark Unavailability Period” means, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to LIBO Rate and solely to the extent that LIBO Rate has not been replaced with a Benchmark Replacement, the period (x) beginning at the time that such Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced LIBO Rate for all purposes hereunder in accordance with Section 4.7 and (y) ending at the time that a Benchmark Replacement has replaced LIBO Rate for all purposes hereunder pursuant to Section 4.7.

Beneficial Ownership Certificate”:  a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.

Beneficial Ownership Regulation”:  31 C.F.R. § 1010.230.

Benefit Plan”:  any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.

Benefited Lender”:  as defined in Section 11.7(a).

Blocked Person”:  as defined in Section 5.22(b).

Board”:  the Board of Governors of the Federal Reserve System of the United States (or any successor).

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Borrower:  as defined in the preamble to this Agreement.

Borrower Historical Financial Statements”:  as defined in Section 5.1(a).

Borrowing Date”:  any Business Day specified by the Borrower as a date on which the Borrower requests the relevant Lenders to make Loans hereunder.

Business”:  as defined in Section 5.17(b).

Business Day”:  any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; and when used in connection with a Eurocurrency Loan for a LIBOR quoted currency, the term “Business Day” shall also exclude any day on which banks are not open for general business in London.

Canadian Dollars” and “CAD $”: the lawful money of Canada.

Capital Expenditures”: for any period, without duplication, with respect to any Person, (a) any expenditure or commitment to expend money for any purchase or other acquisition of any asset, including capitalized leasehold improvements, which would be classified as a fixed or capital asset on a consolidated balance sheet of such Person prepared in accordance with GAAP and (b) Capital Lease Obligations; provided that, in any event, “Capital Expenditures” shall exclude any Permitted Acquisition and any other Investment permitted hereunder.

Capital Lease Obligations”:  as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as finance leases in accordance with Accounting Standard Codification 842, “Leases”.

Capital Stock”:  any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing, but excluding Indebtedness convertible or exchangeable into any such capital stock to the extent not yet converted into capital stock.

Cash Collateral”:  as defined in Section 3.7(a).

Cash Collateralize”:  as defined in Section 3.7(a).

Cash Equivalents”:  (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000; provided, however, that time deposits (including eurodollar time deposits), certificates of deposit (including eurodollar

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certificates of deposit) and bankers’ acceptances in an aggregate amount not to exceed $2,000,000 may be maintained at any commercial bank of recognized standing organized under the laws of the United States (or any State or territory thereof) that does not satisfy the capital and surplus requirements and rating requirements set forth in this clause (b); (c) commercial paper of an issuer rated at least A-2 by S&P or P-2 by Moodys or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least AA by S&P or AA by Moodys; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition or money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moodys and (iii) have portfolio assets of at least $5,000,000,000.  In the case of Investments by any Foreign Subsidiary that is a Restricted Subsidiary or Investments made in a country outside the U.S., Cash Equivalents shall also include investments of the type and maturity described in clauses (a) through (g) above of foreign obligors, which Investments or obligors (or the parents of such obligors) have ratings described in such clauses or equivalent ratings from comparable foreign rating agencies.

Change of Control”: if any Person, entity, or “group” (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act) shall at any time have acquired direct or indirect beneficial ownership of a percentage of the voting power of the outstanding Capital Stock of the Borrower (which is at the time entitled to vote in the election of the Board of Directors of the Borrower) that exceeds 35% thereof.  For purposes of this definition, (x) “beneficial ownership” shall be as defined in Rules 13(d)-3 and 13(d)-5 under the Securities Exchange Act and (y) the phrase Person or “group” is within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act, but excluding any Permitted Investors and any employee benefit plan or Benefit Plan (including the ESOP) of such Person or “group” and its subsidiaries and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan.  

CLO”:  any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or an affiliate of such Lender.

Closing Date”:  the first date on which the conditions precedents set forth in Section 6.1 have been satisfied (or waived) and the initial funding hereunder shall have occurred, which date is July 31, 2019.

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Code:  the Internal Revenue Code of 1986, as amended from time to time.

Collateral”:  all property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document, except to the extent constituting Excluded Collateral (as defined in the Guarantee and Collateral Agreement).

Commitment”:  as to any Lender, the Revolving Commitment of such Lender.

Commitment Fee Rate”:  the applicable rate per annum by reference to the following which corresponds to the Consolidated Senior Secured Net Leverage Ratio as of the relevant date of determination.

Category

Consolidated Senior Secured Net Leverage Ratio

Commitment Fee Rate

1

> 2.75:1.00

0.325%

2

< 2.75:1.00

0.20%

Notwithstanding the foregoing, until the date the Borrower shall have delivered the financial statements and certificates required by Section 7.1(a)(ii) and Section 7.2(a), respectively, for the period ended September 30, 2019, the Consolidated Senior Secured Net Leverage Ratio shall be deemed to be in Category 2 for purposes of determining the Commitment Fee Rate.  In addition, (a) at any time during which the Borrower has failed to deliver the financial statements and certificates required by Sections 7.1(a)(i) or 7.1(a)(ii) and Section 7.2(a), respectively, or (b) at any time after the occurrence and during the continuance of an Event of Default, the Consolidated Senior Secured Net Leverage Ratio shall be deemed to be in Category 1 for purposes of determining the Commitment Fee Rate.

Commonly Controlled Entity”:  any trade or business, whether or not incorporated, that is under common control with the Borrower within the meaning of Section 4001 of ERISA or (solely for purposes of Section 302 of ERISA and Section 412 of the Code) is part of a group that includes the Borrower and that is treated as a single employer under Section 414 of the Code.

Compliance Certificate”:  a certificate duly executed by a Responsible Officer on behalf of the Borrower substantially in the form of Exhibit B.

Consolidated Coverage Ratio”:  as of any date of determination, the ratio of (a) the aggregate amount of Consolidated EBITDA for the period of four consecutive fiscal quarters ended on the most recent Test Date to (b) Consolidated Interest Expense for such four fiscal quarters.

Consolidated Current Assets”: at any date, all amounts (other than cash and Cash Equivalents) that would be set forth opposite the caption “total current assets” (or any like caption) on the most recent consolidated balance sheet of the Borrower and its Restricted Subsidiaries in accordance with GAAP.

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Consolidated Current Liabilities: at any date, all amounts that would be set forth opposite the caption “total current liabilities” (or any like caption) on the most recent consolidated balance sheet of the Borrower and its Restricted Subsidiaries in accordance with GAAP, but excluding (a) the current portion of Consolidated Total Debt and (b) all Indebtedness consisting of Revolving Loans or Swingline Loans.

Consolidated EBITDA”:  for any period:

(a)Consolidated Net Income for such period plus,

(b)without duplication and to the extent reflected as a charge in arriving at such Consolidated Net Income for such period, the sum of the following amounts for such period:

(i)the aggregate amount of all provisions for all taxes (whether or not paid, estimated or accrued) based upon the income and profits of the Borrower or a Restricted Subsidiary or alternative taxes imposed as reflected in the provision for income taxes in the Borrower’s consolidated financial statements,

(ii)interest expense, amortization or write-off of debt discount and debt issuance costs, and commissions, discounts and other fees and charges associated with Indebtedness (including the Loans),

(iii)depreciation and amortization expense,

(iv)amortization of intangibles (including goodwill) and organization costs,

(v)any extraordinary, unusual or non-recurring charges, expenses or losses (whether cash or non-cash) (including such expenses in connection with actual or prospective litigation, legal settlements, fines, judgments or orders),

(vi)(A) ESOP Compensation and (B) non-cash compensation expenses from stock, options to purchase stock and stock appreciation rights issued to the management of the Borrower,

(vii)any other non-cash charges, non-cash expenses or non-cash losses of the Borrower or any of its Restricted Subsidiaries for such period (including deferred rent but excluding any such charge, expense or loss incurred in the ordinary course of business that constitutes an accrual of or a reserve for cash charges for any future period); provided, however, that cash payments made in such period or in any future period in respect of such non-cash charges, expenses or losses (excluding any such charge, expense or loss incurred in the ordinary course of business that constitutes an accrual of or a reserve for cash charges for any future period) shall be subtracted from Consolidated Net Income in calculating Consolidated EBITDA in the period when such payments are made,

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(viii)any impairment charges, write-off, depreciation or amortization of intangibles arising pursuant to Accounting Standards Codification Topic 805, “Business Combinations” or Topic 350, “Intangibles-Goodwill and Other” and any other non-cash charges resulting from purchase accounting,

(ix)proceeds of business interruption insurance in an amount representing the earnings for the applicable period that such proceeds are intended to replace (whether or not received so long as such Person in good faith expects to receive the same within the next four (4) fiscal quarters (it being understood that to the extent not actually received within such fiscal quarters, such proceeds shall be deducted in calculating Consolidated EBITDA for such fiscal quarters)),

(x)any earn-out obligation and contingent consideration obligations (including adjustments thereof and purchase price adjustments) incurred in connection with any Permitted Acquisition or any other Investment made in compliance with Section 8.7 or any Investment consummated prior to the Closing Date, which is paid or accrued during such period,

(xi)to the extent actually reimbursed or reimbursable by third parties pursuant to indemnification or reimbursement provisions or similar agreements or insurance, fees, costs, expenses or reserves incurred to the extent covered by indemnification provisions in any agreement in connection with any sale of Capital Stock, Permitted Acquisition, Investment, Restricted Payment, Asset Sale, or incurrences, repayments or amendments of Indebtedness, in each case, including any such transaction consummated prior to the Closing Date and whether or not received so long as such Person in good faith expects to receive the same within the next four (4) fiscal quarters (it being understood that to the extent not actually received within such fiscal quarters, such proceeds shall be deducted in calculating Consolidated EBITDA for such fiscal quarters),

(xii)pro forma cost savings, operating expense reductions, operating improvements and synergies related to, and net of the amount of actual benefits realized during such period, from the Acquisition, Permitted Acquisitions or other permitted Investments, restructurings, cost savings initiatives or other initiatives that are reasonably identifiable, factually supportable and projected by the  Borrower in good faith to result from actions that have been taken, committed to be taken or are expected to be taken (in the good faith determination of the Borrower), in each case, within eighteen (18) months after such event; provided that the aggregate amount of addbacks made pursuant to this clause (xii) shall not exceed 25% of Consolidated EBITDA for such period (calculated prior to giving effect to any adjustments pursuant to this clause (xii)),

(xiii)any reduction in revenue resulting from the purchase accounting effects of adjustments to deferred revenue in component amounts required or permitted by GAAP and related authoritative pronouncements (including the effects of such adjustments pushed down to the Borrower and its

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Restricted Subsidiaries), as a result of any acquisition consummated prior to the Closing Date or any Permitted Acquisition,

(xiv)any loss realized upon the sale or other disposition of any asset (including pursuant to any sale/leaseback transaction) that is not Disposed of in the ordinary course of business and any loss realized upon the sale or other disposition of any Capital Stock of any Person,

(xv)any unrealized losses in respect of Hedge Agreements,

(xvi)any unrealized foreign currency translation losses in respect of transactions or balances denominated in a currency other than the functional currency of such Person,

(xvii)any proportional share of unconsolidated Affiliates’ interest, taxes, depreciation and amortization,

(xviii)cash receipts not included in Consolidated EBITDA in any period solely to the extent that the corresponding non-cash gains relating to such receipts were deducted in the calculation of Consolidated EBITDA pursuant to clause (b)(vii) above for any previous period and not added back,

(xix)any costs, fees and expenses associated with the cost reduction, operational restructuring and business improvement efforts of any consulting firm engaged by the Borrower or its Restricted Subsidiaries to perform such service;

(xx)the amount of any restructuring charges or reserve (including those relating to severance, relocation costs and one-time compensation charges), any charges, costs, fees and expenses realized upon the termination or cancellation of leases, software licenses or other contracts in connection with the operational restructuring and business improvement efforts of the Borrower and its Restricted Subsidiaries; and

(xxi)Transaction Costs, and any other costs, fees and expenses incurred in connection with and charges related to any Permitted Acquisition, Investments, issuances or Incurrence of Indebtedness, Dispositions, issuances of Capital Stock or refinancing transactions and modifications of instruments of Indebtedness, in each case, whether or not consummated; minus

(c)to the extent included in arriving at such Consolidated Net Income for such period, the sum of the following amounts for such period:

(i)interest income,

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(ii)any extraordinary, unusual or non-recurring income or gains whether or not included as a separate item in the statement of Consolidated Net Income,

(iii)all non-cash gains on the sale or disposition of any property other than inventory sold in the ordinary course of business,

(iv)any other non-cash income (excluding any items that represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period that are described in the parenthetical to clause (b)(vii) above),

(v)any gain realized upon the sale or other disposition of any asset (including pursuant to any sale/leaseback transaction) that is not Disposed of in the ordinary course of business and any gain realized upon the sale or other disposition of any Capital Stock of any Person,

(vi)any unrealized gains in respect of Hedge Agreements, and

(vii)any unrealized foreign currency translation gains in respect of transactions or balances denominated in a currency other than the functional currency of such Person, all as determined on a consolidated basis.

Notwithstanding anything to the contrary contained herein, for each of the fiscal quarters set forth below, Consolidated EBITDA shall be deemed to be the amount set forth below opposite such fiscal quarter; provided that with respect to the fiscal quarter ended September 30, 2018, such amount may be adjusted by the Borrower (to the extent reasonably documented by the Borrower and in consultation with the Administrative Agent) prior to the Marketing Commencement Date:

Fiscal Quarter Ended

Consolidated EBITDA

June 30, 2019

$117,161,000

March 31, 2019

$63,265,000

December 31, 2018

$71,296,000

September 30, 2018

$105,493,000

Consolidated Interest Expense”:  for any period, (a) the total interest expense (payable in cash during such period) of the Borrower and its Restricted Subsidiaries to the extent deducted in calculating Consolidated Net Income, net of any interest income of the Borrower and its Restricted Subsidiaries, including any such interest expense consisting of (i) interest expense attributable to Capital Lease Obligations, (ii) [reserved], (iii) interest in respect of Indebtedness of any other Person that has been guaranteed by the Borrower or any Restricted Subsidiary, (iv) [reserved], (v) the interest portion of any deferred payment obligation and (vi) commissions, discounts and other fees and charges with respect to letters of credit and bankers’ acceptance financing, plus (b) preferred stock dividends paid in cash in respect of Disqualified Capital Stock of the Borrower held by Persons other than the Borrower or a Restricted Subsidiary, minus (c) to

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the extent otherwise included in such interest expense referred to in clause (a) above, amortization or write-off of financing costs, in each case under clauses (a) through (c) as determined on a consolidated basis in accordance with GAAP; provided, that gross interest expense shall be determined after giving effect to any net payments made or received by the Borrower and its Restricted Subsidiaries with respect to interest rate Hedge Agreements; provided, further, that, notwithstanding anything to the contrary contained herein, Consolidated Interest Expense (x) for the fiscal quarter period ending on September 30, 2019, shall be calculated for the fiscal quarter ended on September 30, 2019 and multiplied by 4, (y) for the two fiscal quarter period ending on December 31, 2019, shall be calculated for the two consecutive fiscal quarters ended on December 31, 2019 and multiplied by 2, and (z) for the three fiscal quarter period ending on March 31, 2020, shall be calculated for the three consecutive fiscal quarters ended on March 31, 2020 and multiplied by 1.333.

Consolidated Net Income”:  for any period, the consolidated net income (or loss) of the Borrower and its Restricted Subsidiaries, prior to the impact of non-controlling interest of partially owned consolidated subsidiaries, determined in accordance with GAAP.

Consolidated Net Leverage Ratio”:  the ratio of (a) Consolidated Total Debt on the last day of any fiscal quarter of the Borrower to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters then ended.

Consolidated Senior Secured Net Leverage Ratio”:  the ratio of (a) Consolidated Total Debt on the last day of any fiscal quarter of the Borrower, except that portion thereof consisting of Indebtedness that is not secured by a Lien on any Property of any Group Member, to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters then ended.

Consolidated Total Assets”:  as of any date, the total assets of Borrower and its Restricted Subsidiaries, determined in accordance with GAAP, as set forth on the consolidated balance sheet of Borrower as of such date.

Consolidated Total Debt”:  at any date, (a) the aggregate amount shown or required by GAAP to be shown as a liability on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries as of such date (reduced by unamortized debt issuance costs) in respect of (i) all obligations for borrowed money; (ii) all Capital Lease Obligations and purchase money indebtedness; (iii) any obligations evidenced by notes, bonds, debentures or other similar instruments; and (iv) all unreimbursed obligations in respect of drawn letters of credit, bank guarantees or similar instruments (provided that Consolidated Total Debt shall not include Indebtedness in respect of any letter of credit, bank guaranty or similar instrument, except to the extent of any unreimbursed obligations in respect of any drawn letter of credit, bank guaranty or similar instruments) minus (b) Unrestricted Cash; provided, that, solely for purposes of calculating Consolidated Total Debt in connection with determining the Consolidated Senior Secured Net Leverage Ratio for purposes of Sections 4.17 and 8.2(w), Unrestricted Cash that is the proceeds of the Incremental Loans Incurred under Sections 4.17 or Indebtedness Incurred pursuant to Section 8.2(w) shall be excluded. For the avoidance of doubt, in no event shall there be included in Consolidated Total Debt any operating lease liabilities as shown on the balance sheet in accordance with GAAP.

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Consolidated Working Capital: at any date, (a) Consolidated Current Assets on such date minus (b) Consolidated Current Liabilities on such date.

Contractual Obligation”:  as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

Covenant Triggering Event”: as defined in Section 8.1.

Credit Agreement Refinancing Indebtedness”:  (a) Permitted Pari Passu Refinancing Debt, (b) Permitted Junior Refinancing Debt, (c) Permitted Unsecured Refinancing Debt, and (d) Indebtedness Incurred or Refinancing Revolving Commitments obtained pursuant to a Refinancing Amendment, in each case, issued, incurred or otherwise obtained (including by means of the extension or renewal of existing Indebtedness) in exchange for, or to extend, renew, replace or refinance, in whole or part, existing Term Loans, Incremental Loans, Refinancing Term Loans, Refinancing Revolving Loans, outstanding Revolving Loans or (in the case of Refinancing Revolving Commitments obtained pursuant to a Refinancing Amendment) Revolving Commitments, Incremental Revolving Commitments or Refinancing Revolving Commitments hereunder (including any successive Credit Agreement Refinancing Indebtedness) (“Refinanced Debt”); provided, that (i) such extending, renewing or refinancing Indebtedness (including, if such Indebtedness includes any Refinancing Revolving Commitments, the unused portion of such Refinancing Revolving Commitments) is in an original aggregate principal amount not greater than the aggregate principal amount of the Refinanced Debt (and, in the case of Refinanced Debt consisting, in whole or in part, of unused Revolving Commitments or Refinancing Revolving Commitments, the amount thereof), plus accrued and unpaid interest capitalized, any premium or other reasonable amount paid, and fees and expenses reasonably incurred in connection therewith, (ii) such Indebtedness has a later maturity and a Weighted Average Life to Maturity equal to or greater than the Refinanced Debt, (iii) such Refinanced Debt shall be repaid, defeased or satisfied and discharged, and all accrued interest, fees and premiums (if any) in connection therewith shall be paid, on the date such Credit Agreement Refinancing Indebtedness is issued, Incurred or obtained; provided, that to the extent that such Refinanced Debt consists, in whole or in part, of Revolving Commitments or Refinancing Revolving Commitments (or Revolving Loans, Refinancing Revolving Loans or Swingline Loans Incurred pursuant to any Revolving Commitments or Refinancing Revolving Commitments), such Revolving Commitments or Refinancing Revolving Commitments, as applicable, shall be terminated, and all accrued fees in connection therewith shall be paid, on the date such Credit Agreement Refinancing Indebtedness is issued, Incurred or obtained, (iv) such Indebtedness will have terms and conditions (other than pricing, premiums, fees, rate floors, and optional prepayment terms) that are not more disadvantageous to the Borrower than (or in the case of any Credit Agreement Refinancing Indebtedness in the form of notes, are on market terms or are not more disadvantageous to the Borrower than), or (taken as a whole) are no more favorable to the investors (or in the case of any Credit Agreement Refinancing Indebtedness in the form of notes, are on market terms or are no more favorable to the investors) providing such Credit Agreement Refinancing Indebtedness than, the Refinanced Debt (except for covenants or other provisions applicable only to the period after the Latest Maturity Date), and (v) such Indebtedness may be incurred in the form of a bridge or other interim credit facility intended to be refinanced with long-term indebtedness (and such bridge

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or other interim credit facility shall be deemed to satisfy clause (ii) of this definition so long as (x) such credit facility includes customary rollover provisions and (y) assuming such bridge or other interim credit facility were to be extended pursuant to such rollover provisions, such extended credit facility would comply with clause (ii) above) and in which case, on or prior to the first anniversary of the incurrence of such bridge or other interim credit facility, clause (iv) in this definition shall not prohibit the inclusion of customary terms for bridge facilities, including customary mandatory prepayment, repurchase or redemption provisions.

Debtor Relief Laws” means the Bankruptcy Code of the United States of America, 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.

Debtor Relief Plan” means a plan of reorganization or plan of liquidation pursuant to any Debtor Relief Laws.

Declined Amount”:  as defined in Section 4.2(f).

Declining Lender”:  as defined in Section 4.2(f).

Default”:  any of the events specified in Section 9, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

Defaulting Lender”:  any Lender, as determined by the Administrative Agent in its reasonable discretion, that has (a) failed to fund any portion of its Loans or participations in Letters of Credit or Swingline Loans within three Business Days of the date required to be funded by it hereunder (unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied), (b) notified the Borrower, the Administrative Agent, any Issuing Lender, the Swingline Lender or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a Loan or issuing a Letter of Credit, as applicable, under this Agreement cannot be satisfied) or under other agreements generally in which it commits to extend credit, (c) failed, within three Business Days after request by the Administrative Agent, the Borrower or any Issuing Lender, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans and participations in then outstanding Letters of Credit and Swingline Loans (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 or such Issuing Lender and the Borrower), (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, or (e) (i) become or is insolvent or has a parent company that has become or is insolvent, (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver,

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conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or (iii) become the subject of or has a parent company that has become the subject of a Bail-In Action; provided, that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.

Discharge”:  as defined in Section 1.3(d)(ii).

Disinterested Director”: with respect to any Person and transaction, a member of the board of directors (or equivalent governing body) of such Person who does not have any material direct or indirect financial interest in or with respect to such transaction.

Disposition”:  with respect to any Property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof.  The terms “Dispose” and “Disposed of” shall have correlative meanings.

Disqualified Capital Stock”:  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), or upon the happening of any event or condition (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, (b) is redeemable at the option of the holder thereof, 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 of clauses (a) through (d) above, prior to the date that is ninety-one (91) days after the later of the Revolving Termination Date and the date final payment is due on the Term Loans. Notwithstanding the preceding sentence, (A) if such Capital Stock is issued pursuant to any plan for the benefit of directors, officers, employees, members of management, managers or consultants or by any such plan to such directors, officers, employees, members of management, managers or consultants, in each case, in the ordinary course of business of the Borrower or any Restricted Subsidiary, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by the issuer thereof in order to satisfy applicable statutory or regulatory obligations, and (B) no Capital Stock held by any future, present or former employee, director, officer, manager, member of management or consultant (or their respective Affiliates or immediate family members) of the Borrower (or any Subsidiary) shall be considered Disqualified Capital Stock because such stock is redeemable or subject to repurchase pursuant to any management equity subscription agreement, stock option, stock appreciation right or other stock award agreement, stock ownership plan, put agreement, stockholder agreement or similar agreement that may be in effect from time to time.

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Disqualified Institution” means, on any date, (a) any Person designated by the Borrower as a “Disqualified Institution” by written notice delivered to the Administrative Agent on or prior to the Closing Date and (b) any other Person that is a competitor of the Borrower or any of its Restricted Subsidiaries, which Person has been designated by the Borrower as a “Disqualified Institution” by written notice to the Administrative Agent and the Lenders (including by posting such notice to the Platform) not less than three Business Days prior to such date; provided that “Disqualified Institutions” shall exclude any Person that the Borrower has designated as no longer being a “Disqualified Institution” by written notice delivered to the Administrative Agent from time to time.

Documentation Agents”: Barclays Bank PLC and Morgan Stanley Senior Funding, Inc.

Dollars” and “$”:  denote the lawful currency of the United States of America.

Dollar Equivalent” means, with respect to an amount denominated in Dollars, such amount, and with respect to an amount denominated in any other Approved Currency, the equivalent in Dollars of such amount determined at the Exchange Rate on the applicable Valuation Date.

Domestic Subsidiary”:  any Restricted Subsidiary of the Borrower organized under the laws of any jurisdiction within the United States.

DQ List”:  as defined in Section 11.6(f)(iv).

Early Opt-in Election” means the occurrence of:

(1) (i) a determination by the Administrative Agent or (ii) a notification by the Required Lenders to the Administrative Agent (with a copy to the Borrower) that the Required Lenders have determined that U.S. dollar-denominated syndicated credit facilities being executed at such time, or that include language similar to that contained in Section 4.7, are being executed or amended, as applicable, to incorporate or adopt a new benchmark interest rate to replace LIBO Rate, and

(2) (i) the election by the Administrative Agent or (ii) the election by the Required Lenders to declare that an Early Opt-in Election has occurred and the provision, as applicable, by the Administrative Agent of written notice of such election to the Borrower and the Lenders or by the Required Lenders of written notice of such election to the Administrative Agent.

Earnout Obligation”:  an obligation to pay the seller in an acquisition a future payment that is contingent upon the financial performance of the business acquired in such acquisition exceeding a specified benchmark level and that becomes payable when such excess financial performance is achieved.

EEA Financial Institution”:  (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

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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”:  any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

EEA Resolution Authority”:  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 11.6 (subject to such consents, if any, as may be required under Section 11.6). For the avoidance of doubt, a Disqualified Institution shall not be an Eligible Assignee.

Environmental Laws”:  any and all applicable foreign, federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees or other Requirements of Law (including common law) regulating, relating to or imposing liability concerning protection or preservation of the environment and natural resources, including those relating to the generation, use storage, transportation, disposal, release, or threatened release of, or exposure to, Materials of Environmental Concern.

Environmental Permits”:  any and all permits, licenses, approvals, registrations, exemptions and other authorizations issued by any Governmental Authority under any Environmental Law.

ERISA”:  the Employee Retirement Income Security Act of 1974, as amended from time to time, the regulations promulgated thereunder and any successor thereto.

Escrow Debt”:  Indebtedness permitted to be incurred hereunder that is incurred in connection with any transaction permitted hereunder for so long as proceeds thereof have been deposited into an escrow account on customary terms to secure such Indebtedness pending the application of such proceeds to finance such transaction.

ESOP”: the Advanced Drainage Systems, Inc. Employee Stock Ownership Plan and the Advanced Drainage Systems, Inc. Employee Stock Ownership Trust, and any successor Benefit Plan, and related trust, thereto.

ESOP Compensation”: the non-cash charge portion of the ESOP compensation expense reflected in Borrower’s financial statements.

EU Bail-In Legislation Schedule”:  the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

Euro” or “”:the single currency of the European Union as constituted by the Treaty on European Union and as referred to in the legislative measures of the European Union for the introduction of, changeover to or operation of the Euro in one or more member states, being

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in part legislative measures to implement the European and Monetary Union as contemplated in the Treaty on European Union.

Eurocurrency Loans”:  Loans the rate of interest applicable to which is based upon the Eurocurrency Rate.

Eurocurrency Rate”:  with respect to (a) any Eurocurrency Loan denominated in Dollars for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1.00%) equal to the Eurodollar Base Rate for such Interest Period multiplied by the Statutory Reserve Rate, (b) any Eurocurrency Loan denominated in Euros, (i) the rate per annum determined by the Administrative Agent to be the offered rate which appears on the page of the Reuters Screen which displays the European interbank offered rate administered by the Banking Federation of the European Union (such page currently being the EURIBOR01 page) (the “EURIBO Rate”) for deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Euros, determined as of approximately 11:00 a.m. (Brussels, Belgium time), two Business Days prior to the commencement of such Interest Period, or (ii) in the event the rate referenced in the preceding clause (i) does not appear on such page or service or if such page or service shall cease to be available, the rate determined by the Administrative Agent to be the offered rate on such other page or other service which displays the EURIBO Rate for deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Euros, determined as of approximately 11:00 a.m. (London, England time) two Business Days prior to the commencement of such Interest Period; provided that if EURIBO Rates are quoted under either of the preceding clauses (i) or (ii), but there is no such quotation for the Interest Period elected, the EURIBO Rate shall be equal to the Interpolated Rate, (c) any Eurocurrency Loan denominated in Canadian Dollars, (i) the rate per annum determined by the Administrative Agent to be the offered rate which appears on the page of the Reuters Screen which displays the Canadian Dollar Offered Rate (such page currently being the CDOR page) (the “CDOR Rate”) for deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Canadian Dollars, determined as of approximately 11:00 a.m. (Toronto time), two Business Days prior to the commencement of such Interest Period, or (ii) in the event the rate referenced in the preceding clause (i) does not appear on such page or service or if such page or service shall cease to be available, the rate determined by the Administrative Agent to be the offered rate on such other page or other service which displays the CDOR Rate for deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Canadian Dollars, determined as of approximately 11:00 a.m. (Toronto time) two Business Days prior to the commencement of such Interest Period; provided that if CDOR Rates are quoted under either of the preceding clauses (i) or (ii), but there is no such quotation for the Interest Period elected, the CDOR Rate shall be equal to the Interpolated Rate, and (d) any Eurocurrency Loan denominated in Pesos, the rate per annum equal to the Mexican Interbank Equilibrium Interest Rate or the successor thereto as approved by the Administrative Agent as published by Banco de México (or on any successor or substitute service providing rate quotations comparable to those currently provided by such service, as determined by the Administrative Agent from time to time) rounded to the nearest 1/100th of 1% (with .005% being rounded up) per annum, at approximately 12:30 p.m. (Mexico City, Mexico time) two Business Days prior to the commencement of such Interest Period.  The Eurocurrency Rate for any Eurocurrency Loan that includes the Statutory Reserve Rate as a component of the calculation will be adjusted automatically with respect to all

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such Eurocurrency Loan then outstanding as of the effective date of any change in the Statutory Reserve Rate.

Eurocurrency Tranche”:  the collective reference to Eurocurrency Loans under a particular Facility for which the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day).

Eurodollar Base Rate”:  for any Interest Period as to any Eurocurrency Loan denominated in Dollars, (i) the rate per annum determined by the Administrative Agent to be the offered rate which appears on the page of the Reuters Screen which displays the London interbank offered rate administered by ICE Benchmark Administration Limited (such page currently being the LIBOR01 page) (the “LIBO Rate”) for deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Dollars, determined as of approximately 11:00 a.m. (London, England time), two Business Days prior to the commencement of such Interest Period, or (ii) in the event the rate referenced in the preceding clause (i) does not appear on such page or service or if such page or service shall cease to be available, the rate determined by the Administrative Agent to be the offered rate on such other page or other service which displays the LIBO Rate for deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Dollars, determined as of approximately 11:00 a.m. (London, England time) two Business Days prior to the commencement of such Interest Period; provided that if LIBO Rates are quoted under either of the preceding clauses (i) or (ii), but there is no such quotation for the Interest Period elected, the LIBO Rate shall be equal to the Interpolated Rate; and provided, further, that if any such rate determined pursuant to the preceding clauses (i) or (ii) is less than zero, the Eurodollar Base Rate will be deemed to be zero.

Event of Default”:  any of the events specified in Section 9; provided, that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

Excess Cash Flow”:  for any fiscal year of the Borrower, the excess, if any, of:

(a)the sum, without duplication, of:

(i)Consolidated Net Income for such fiscal year;

(ii)the amount of all non-cash charges (including depreciation and amortization) to the extent deducted in arriving at such Consolidated Net Income (excluding any such non-cash charge to the extent that it represents an accrual or reserve for a potential cash charge in any future fiscal year or amortization of a prepaid cash gain that was paid in a prior fiscal year);

(iii)the amount of the decrease, if any, in Consolidated Working Capital for such fiscal year; and

(iv)the aggregate amount of non-cash losses on the Disposition of Property by the Borrower and its Restricted Subsidiaries during such fiscal year

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(other than sales of inventory in the ordinary course of business), to the extent deducted in arriving at such Consolidated Net Income; minus

(b)the sum, without duplication, of:

(i)the amount of all non-cash credits included in arriving at such Consolidated Net Income;

(ii)Capital Expenditures made by the Borrower and its Restricted Subsidiaries in cash during such fiscal year (or paid in cash following the end of such fiscal year and prior to the date the mandatory prepayment is required to be made pursuant to Section 4.2(c); provided that any such expenditure included in this clause (b)(ii) pursuant to this parenthetical shall not be deducted in calculating Excess Cash Flow for the fiscal year in which it is made), in each case, except to the extent funded by the incurrence of long-term Indebtedness (other than revolving Indebtedness);

(iii)the aggregate amount of all regularly scheduled principal payments of Funded Debt (including, without limitation, the Term Loans) made by the Borrower and its Restricted Subsidiaries in cash during such fiscal year (other than in respect of any revolving credit facility unless there is an equivalent scheduled permanent reduction in commitments thereunder), in each case, except to the extent funded by the incurrence of long-term Indebtedness;

(iv)the amount of the increase, if any, in Consolidated Working Capital for such fiscal year;

(v)the aggregate amount of non-cash gains on the Disposition of Property by the Borrower and its Restricted Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent included in arriving at such Consolidated Net Income;

(vi)the aggregate amount of consideration paid in cash during such period with respect to a Permitted Acquisition or other Investment in a third party permitted hereunder, in each case to the extent such payments were not and have not been funded with additional long-term Indebtedness (other than revolving Indebtedness); and

(vii)the aggregate amount of Restricted Payments made in cash during such fiscal year pursuant to clauses (b), (c) and (e) of Section 8.6,  Investments made in cash during such fiscal year pursuant to clauses (f), (h), (j), (bb) and (cc) of Section 8.7, and repayments of Indebtedness made in cash during such fiscal year pursuant to clause (i) and (ii) of Section 8.8, in each case, except to the extent funded by the incurrence of long-term Indebtedness (other than revolving Indebtedness).

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Exchange Act:  the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

Exchange Rate” means the rate at which any currency (the “Original Currency”) may be exchanged into Dollars (the “Exchanged Currency”), as set forth on such date on the relevant Reuters screen at or about 11:00 a.m. (London, England time) on such date.  In the event that such rate does not appear on the Reuters screen, the “Exchange Rate” with respect to such Original Currency into such Exchanged Currency shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and the Borrower or, in the absence of such agreement, such “Exchange Rate” shall instead be the Administrative Agent’s spot rate of exchange in the interbank market where its foreign currency exchange operations in respect of such Original Currency are then being conducted, at or about 11:00 a.m. (local time), on such date for the purchase of the Exchanged Currency, with such Original Currency for delivery two Business Days later; provided, that, if at the time of any such determination, no such spot rate can reasonably be quoted, the Administrative Agent may use any reasonable method as it deems applicable to determine such rate, and such determination shall be conclusive absent manifest error.

Excluded Indebtedness”:  all Indebtedness permitted by Section 8.2 (except the net cash proceeds of any Permitted Pari Passu Refinancing Debt, Permitted Junior Refinancing Debt or other Credit Agreement Refinancing Indebtedness).

Excluded Subsidiaries”:  (a) any Immaterial Subsidiary, (b) any Foreign Subsidiary, (c) any Subsidiary that is not a Wholly Owned Subsidiary of the Borrower; provided that a Subsidiary that ceases to be a Wholly Owned Subsidiary of the Borrower solely as a result of the Capital Stock of such Subsidiary becoming owned by an Affiliate of the Borrower shall not be deemed to be an Excluded Subsidiary pursuant to this clause (c), (d) any Unrestricted Subsidiary, (e) any special purpose vehicle (or similar entity), (f) any captive insurance subsidiary (g) any not-for-profit Subsidiary, (h) any Subsidiary, including any regulated entity that is subject to net worth or net capital or similar capital and surplus restrictions, that is prohibited or restricted by applicable Requirement of Law, accounting policies or by contractual obligation existing on the Closing Date (or, with respect to any Subsidiary acquired by the Borrower or a Restricted Subsidiary after the Closing Date (and so long as such contractual obligation was not incurred in contemplation of such acquisition), on the date such Subsidiary is so acquired) from providing a guaranty pursuant to the Guarantee and Collateral Agreement, or if such guaranty would require governmental (including regulatory) or third party consent, approval, license or authorization (except to the extent that such consent, approval, license or authorization has been obtained) and (i) any other Subsidiary with respect to which the Administrative Agent and the Borrower reasonably agree that the cost or other consequences of providing a guarantee of or granting Liens to secure the Obligations would be excessive in relation to the practical benefit to be afforded thereby.

Excluded Swap Obligations”: as defined in the Guarantee and Collateral Agreement.

Excluded Taxes”:  as defined in Section 4.10(b).

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Existing Debt Agreements: each of (i) the Second Amended and Restated Credit Agreement, dated as of June 22, 2017 (as amended from time to time), by and among the Borrower, as borrower, the guarantors from time to time party thereto, the lenders from time to time party thereto, PNC Bank, National Association, as administrative agent for the lenders party thereto, and the other parties thereto (the “Existing Credit Agreement”); (ii) the Second Amended and Restated Private Shelf Agreement, dated as of June 22, 2017, by and among the Borrower, as issuer, the guarantors from time to time party thereto, PGIM, Inc., as a purchaser, and the other purchasers from time to time party thereto and (iii) the First Lien Credit Agreement, dated as of May 27, 2015, among Infiltrator Water Technologies, LLC, as the borrower and Deutsche Bank AG New York Branch, as administrative agent, and the other parties thereto.

Existing Letter of Credit”:  any “Letter of Credit” issued for the account of the Borrower or any of its Subsidiaries under the Existing Debt Agreements prior to the Closing Date and scheduled in Schedule 1.1(c) (as such Schedule may be supplemented after the Closing Date in connection with the initial syndication of the Revolving Facility).

Existing Loans:  as defined in Section 4.18(a).

Existing Tranche”:  as defined in Section 4.18(a).

Extended Loans”:  as defined in Section 4.18(a).

Extended Tranche”:  as defined in Section 4.18(a).

Extending Lender”:  as defined in Section 4.18(b).

Extending Revolving Lender”:  as defined in Section 4.18(b).

Extending Term Loan Lender”:  as defined in Section 4.18(b).

Extension Amendment”:  as defined in Section 4.18(c).

Extension Date”:  as defined in Section 4.18(d).

Extension Election”:  as defined in Section 4.18(b).

Extension Request”:  as defined in Section 4.18(a).

Facility”:  any Term Facility or the Revolving Facility, as the context may require, and “Facilities” means all of them, collectively.

FATCA”:  Sections 1471 through 1474 of the Code, effective as of the date hereof (and any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations promulgated thereunder or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any

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intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.

Federal Funds Effective Rate”:  for any day, the rate calculated by the Federal Reserve Bank of New York based on such day’s federal funds transactions by depository institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the federal funds effective rate; provided, that if the Federal Funds Effective Rate for any day is less than zero, the Federal Funds Effective Rate for such day will be deemed to be zero.

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

First Tier Foreign Subsidiary”:  each Foreign Subsidiary with respect to which the Borrower or any of its Domestic Subsidiaries directly owns or controls all of such Foreign Subsidiary’s issued and outstanding Capital Stock.

Fitch”:  Fitch Ratings, Inc. and any affiliate thereof and any successor thereto that is a nationally-recognized rating agency.

Fixed Amount”:  as defined in Section 1.3(c).

Fixed Incremental Amount”:  as defined in the definition of “Incremental Amount.”

Fixed Restricted Payment Basket Amount”:  $100,000,000 in each fiscal year.

Flood Insurance Laws”:  collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statute thereto,  (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto and (iv) the  Flood Insurance Reform Act of 2004 and the Biggert –Waters Flood Insurance Reform Act of 2012, as now or hereafter in effect or any successor statute thereto, in each case, together with all statutory and regulatory provisions consolidating, amending, replacing, supplementing, implementing  or interpreting any of the foregoing, as amended or modified from time to time.

Foreign Currency Equivalent” means, with respect to an amount denominated in Euros, Canadian Dollars or Pesos, such amount, and with respect to an amount denominated in Dollars, the equivalent in Euros, Canadian Dollars or Pesos of such amount determined at the Exchange Rate on the applicable Valuation Date.

Foreign Subsidiary”:  any Restricted Subsidiary of the Borrower that is not a Domestic Subsidiary or that is a Foreign Subsidiary Holdco.

Foreign Subsidiary Holdco”: any Domestic Subsidiary that (a) has no material assets other than equity (or equity and other securities) of one or more Foreign Subsidiaries and

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other assets relating to the ownership interest in any such securities and (b) has no Guarantee Obligations in respect of any Indebtedness of the Borrower or any Domestic Subsidiary. As of the Closing Date, the Foreign Subsidiary Holdcos are ADS Worldwide, Inc., a Delaware corporation, and ADS International, Inc., a Delaware corporation.

Former Properties”: as defined in Section 5.17(d).

Funding Office”:  the office of the Administrative Agent specified in Section 11.2 or such other office as may be specified from time to time by the Administrative Agent as its funding office by written notice to the Borrower and the Lenders.

GAAP”:  generally accepted accounting principles in the United States as in effect from time to time except that for purposes of Section 8.1, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the most recent audited financial statements referred to in Section 5.1.  In the event that any Accounting Change shall occur and such change would otherwise result in a change in the method of calculation of financial covenants, standards or terms in this Agreement or if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any Accounting Change occurring after the Closing Date in GAAP regardless of whether any such notice is given before or after any Accounting Change or in the application thereof, then the Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made.  Until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred.  “Accounting Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC. For purposes of calculations made pursuant to the terms of this Agreement, GAAP will be deemed to treat operating leases and capital leases in a manner consistent with their treatment under generally accepted accounting principles as reflected in the audited financial statements of the Borrower and its consolidated Subsidiaries for the fiscal year ended March 31, 2019, notwithstanding any modifications or interpretive changes thereto that may have occurred thereafter or may occur hereafter, unless the parties hereto shall enter into a mutually acceptable amendment addressing such changes, as provided for above and all lease liabilities and right of use assets in each case related to operating leases shall be excluded from all calculations made under this Agreement.

Governmental Authority”:  any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners).

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Group Members:  the collective reference to the Borrower and its Restricted Subsidiaries.

Guarantee and Collateral Agreement”:  that certain Guarantee and Collateral Agreement, substantially in the form of Exhibit A, dated as of the date hereof, by the Borrower and each Subsidiary Guarantor in favor of the Administrative Agent, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

Guarantee Obligation”:  as to any Person (the “guaranteeing person”), any obligation of (a) the guaranteeing person or (b) another Person (including any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation which (in the case of either clause (a) or clause (b)), guarantees or has the effect of guaranteeing any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any such obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business or product warranties 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 Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.

Hedge Agreements”:  any interest rate protection agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.

Immaterial Subsidiary”:  any Restricted Subsidiary that is not a Material Subsidiary; provided that all Immaterial Subsidiaries, in the aggregate, shall not contribute greater than ten percent (10%) of the Borrower’s Consolidated Total Assets as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 7.1.

Incremental Amount”: at any time, an amount not to exceed:

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(a)the greater of (i) $350,000,000 and (ii) 100% of Consolidated EBITDA for the most recently ended period of four consecutive fiscal quarters for which financial statements have been delivered pursuant to Section 7.1; plus

(b)the aggregate principal amount of the sum of (i) voluntary prepayments of Term Loans and Incremental Equivalent Debt and/or permanent reductions of the Revolving Commitments or commitments in respect of any Incremental Equivalent Debt and (ii) the consideration paid in connection with any purchases of any Loans outstanding hereunder pursuant to Section 4.13(b) or Section 11.6(g) by an Affiliated Lender from time to time, except, in each case, to the extent (x) such prepayments were funded with the proceeds of long-term Indebtedness (other than revolving credit facilities) or (y) such Term Loans or Incremental Equivalent Debt were incurred pursuant to the Ratio Incremental Amount (together with clause (a) above, the “Fixed Incremental Amount”, which shall be reduced by previously used amounts of the Fixed Incremental Amount for Incremental Facilities and Incremental Equivalent Debt); plus

(c)an unlimited amount if, after giving effect to the incurrence of any Incremental Facilities or Incremental Equivalent Debt (assuming for this purpose that the Incremental Revolving Commitments being Incurred at the time of such calculation are fully drawn), (i) in the case of Incremental Facilities or Incremental Equivalent Debt secured by a Lien on the Collateral that is pari passu with, or junior to, the Liens securing the Secured Obligations, the Consolidated Senior Secured Net Leverage Ratio is less than or equal to 3.50:1.00, and (ii) in the case of any unsecured Incremental Facilities or unsecured Incremental Equivalent Debt, the Consolidated Net Leverage Ratio is less than or equal to 3.75:1.00 (the amounts described in clauses (i) and (ii) above, the “Ratio Incremental Amount”); provided that for purposes of this clause (c), if the proceeds of the relevant Incremental Facility or Incremental Equivalent Debt will be applied to finance a Limited Condition Acquisition, the Ratio Incremental Amount will be determined in accordance with Section 1.3. It is understood and agreed that if the applicable incurrence test is satisfied on a pro forma basis after giving effect to any Incremental Facility or Incremental Equivalent Debt in lieu thereof, such Incremental Facility or Incremental Equivalent Debt, as applicable, may be incurred under the Ratio Incremental Amount regardless of whether there is capacity under the Fixed Incremental Amount.

Incremental Commitment Agreement”:  an agreement delivered by an Incremental Lender, in form and substance reasonably satisfactory to the Administrative Agent and accepted by the Borrower, by which an Incremental Lender provides its Incremental Commitment in accordance with the terms of Section 4.17.

Incremental Commitments”:  as defined in Section 4.17(a).

Incremental Equivalent Debt”:  as defined in Section 8.2(w).

Incremental Facilities”:  as defined in Section 4.17(a).

Incremental Lender”:  a Lender, Approved Fund or other Person that provides an Incremental Commitment.

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Incremental Loans:  as defined in Section 4.17(a).

Incremental Revolving Commitments”:  as defined in Section 4.17(a).

Incremental Revolving Facility”:  as defined in Section 4.17(a).

Incremental Revolving Facility Lender”:  with respect to any Incremental Revolving Facility, each Revolving Lender providing any portion of such Incremental Revolving Facility.

Incremental Revolving Loans”:  as defined in Section 4.17(a).

Incremental Term Facility”:  as defined in Section 4.17(a).

Incremental Term Loan Commitments”:  as defined in Section 4.17(a).

Incremental Term Loans”: as defined in Section 4.17(c).

Incur”:  issue, assume, enter into any Guarantee Obligation in respect of, incur or otherwise become liable for; and the terms “Incurs,” “Incurred” and “Incurrence” shall have a correlative meaning; provided, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary of the Borrower (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary.  The accrual of interest or dividends, the accretion of accreted value, the accretion of amortization of original issue discount and the payment of interest or dividends in the form of additional Indebtedness will not be deemed to be an Incurrence of Indebtedness.  Any Indebtedness issued at a discount (including Indebtedness on which interest is payable through the issuance of additional Indebtedness) shall be deemed Incurred at the time of original issuance of the Indebtedness at the initial accreted amount thereof.

Incurrence-Based Amount”:  as defined in Section 1.3(c).

Indebtedness”:  of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables Incurred in the ordinary course of such Person’s business which are not more than ninety (90) days past due and Earnout Obligations), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (excluding trade accounts payable incurred in the ordinary course of business), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of acceptances, letters of credit or similar arrangements, (g) all Guarantee Obligations of such Person in respect of obligations of others of the kind referred to in clauses (a) through (f) above, (h) all obligations of the kind referred to in clauses (a) through (g) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation; provided, that the amount

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of such Indebtedness shall be limited to the lesser of such obligation and the value of the property subject to such Lien if such Person has not assumed or become liable for the payment of such obligation, (i) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of Disqualified Capital Stock of such Person, and (j) for the purposes of Sections 8.2 and 9(e) only, all obligations of such Person in respect of Hedge Agreements, but in each case in the above clauses excluding obligations under operating leases, Escrow Debt and obligations under employment contracts entered into in the ordinary course of business. For the avoidance of doubt, lease liabilities with respect to operating leases shall not be considered Indebtedness. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Persons ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.

Indemnified Liabilities”:  as defined in Section 11.5.

Indemnitee”:  as defined in Section 11.5.

Initial Term Commitment”:  the Term Commitment of each Initial Term Lender on the Closing Date.  The aggregate amount of the Initial Term Commitments of all Initial Term Lenders as of the Closing Date is $1,300,000,000.

Initial Term Facility”:  the term loan facility evidenced by the aggregate Initial Term Loans of all Initial Term Lenders at such time.

Initial Term Lender”:  each Term Lender that has a Term Commitment or holds Term Loans on the Closing Date.

Initial Term Loans”:  the Term Loans made on the Closing Date.

Insolvency”:  with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

Insolvent”:  pertaining to a condition of Insolvency.

Intellectual Property”:  the collective reference to all rights and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses and technology, know-how, trade secrets and proprietary information of any type, domain names and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

Intellectual Property Security Agreement”:  each Intellectual Property Security Agreement to be executed and delivered by each applicable Loan Party in accordance with Section 5.9 of the Guarantee and Collateral Agreement.

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Intercreditor Agreement:  an intercreditor agreement substantially in the form of Exhibit K-1 hereto or such other form that is reasonably acceptable to the Administrative Agent.

Interest Payment Date”:  (a) as to any Base Rate Loan (other than any Swingline Loan), the first day of each April, July, October and January to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any Eurocurrency Loan having an Interest Period of three months or less, the last day of such Interest Period, (c) as to any Eurocurrency Loan having an Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period, (d) as to any Loan (other than any Revolving Loan that is a Base Rate Loan and any Swingline Loan), the date of any repayment or prepayment made in respect thereof and (e) as to any Swingline Loan, the day that such Loan is required to be repaid.

Interest Period”:  as to any Eurocurrency Loan, (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurocurrency Loan and ending one, two, three or six or, if acceptable to all Lenders under the relevant Facility, 12 months or less than one month thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurocurrency Loan and ending one, two, three or six or, if acceptable to all Lenders under the relevant Facility, 12 months or less than one month thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent no later than 1:00 p.m., New York City time, on the date that is three Business Days prior to the last day of the then current Interest Period with respect thereto; provided, that, all of the foregoing provisions relating to Interest Periods are subject to the following:

(i)if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

(ii)the Borrower may not select an Interest Period under a particular Facility that would extend beyond the Revolving Termination Date or beyond the date final payment is due on the Term Loans, as applicable;

(iii)any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; and

(iv)the Borrower shall select Interest Periods so as not to require a payment or prepayment of any Eurocurrency Loan during an Interest Period for such Loan.

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Interpolated Rate:  in relation to the LIBO Rate, the rate which results from interpolating on a linear basis between:

(a)the applicable LIBO Rate for the longest period (for which that LIBO Rate is available) which is less than the Interest Period of that Loan, and

(b)the applicable LIBO Rate for the shortest period (for which that LIBO Rate is  available) which exceeds the Interest Period of that Loan,

each as of approximately 11:00 a.m. (London, England time) two Business Days prior to the commencement of such Interest Period of that Loan.

Investments”:  as defined in Section 8.7.

Issuing Lender”:  as the context may require, (a) each Lender listed in Schedule 1.1(f) hereto, acting through any of its Affiliates or branches, in its capacity as an issuer of Letters of Credit hereunder, (b) with respect to each Existing Letter of Credit, the Lender that issued such Existing Letter of Credit, and (c) any other Lender that may become an Issuing Lender pursuant to Section 3.7(c), with respect to Letters of Credit issued by such Lender.  Each Issuing Lender may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates or branches of such Issuing Lender, in which case the term “Issuing Lender” shall include any such Affiliate or branch with respect to Letters of Credit issued by such Affiliate or branch.

Joint Bookrunner”:  each of Barclays Bank PLC and Morgan Stanley Senior Funding, Inc.

Judgment Currency”:  as defined in Section 11.22.

Junior Debt”:  as defined in Section 8.8.

L/C Commitment”:  as to each Issuing Lender, the amount listed next to its name in Schedule 1.1(f) hereto, as the same may be reduced or increased from time to time in accordance herewith.

L/C Fee Payment Date”:  the first day of each April, July, October and January and the last day of the Revolving Commitment Period.

L/C Obligations”:  at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit that have not then been reimbursed pursuant to Section 3.11.  The L/C Obligations as to any Revolving Lender shall be such Lender’s Revolving Percentage of the L/C Obligations then outstanding.

L/C Participants”:  the collective reference to all the Revolving Lenders (other than the Issuing Lenders in their capacities as such).

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Latest Maturity Date:  as of any date of determination, the latest maturity or expiration date applicable to any Loan or Commitment hereunder at such time, including the latest maturity or expiration date of any Incremental Loan, any Refinancing Term Loan, any Refinancing Revolving Loan or any Refinancing Revolving Commitment, in each case as extended in accordance with this Agreement from time to time.

Lead Arrangers”:  Barclays Bank PLC and Morgan Stanley Senior Funding, Inc.

Lender Vote/Directive”:  as defined in Section 11.21.

Lenders”:  as defined in the preamble hereto (including for the avoidance of doubt, the Term Lenders, the Revolving Lenders, the Swingline Lender and any Issuing Lender).

Letters of Credit”:  as defined in Section 3.7(a).

LIBO Rate”:  as defined in the definition of “Eurodollar Base Rate.”

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

Limited Condition Acquisition”:  any Permitted Acquisition or other permitted Investment that is not conditioned upon receipt of financing.

Loan”:  any loan made by any Lender pursuant to this Agreement.

Loan Documents”:  this Agreement, the Security Documents, the Notes and each other agreement and each other material certificate or document executed by any Loan Party and delivered to the Administrative Agent or any Lender pursuant to this Agreement or any Security Document; provided that the Syndication and Fee Letter shall not be a Loan Document.

Loan Parties”:  the collective reference to the Borrower and the Subsidiary Guarantors.

Majority Facility Lenders”:  with respect to any Facility, the holders of more than 50% of the aggregate unpaid principal amount of the Term Loans or the Revolving Extensions of Credit, as the case may be, outstanding under such Facility (or, in the case of the Revolving Facility, prior to any termination of the Revolving Commitments, the holders of more than 50% of the Total Revolving Commitments).  The Loans and Commitments of any Defaulting Lender shall be disregarded in determining Majority Facility Lenders with respect to any Facility at any time.  The Loans and Commitments of any Affiliated Lender shall, for purposes of this definition, be subject to Section 11.21.

Management Advances”:  advances, loans or promissory notes issued on an unsecured basis by the Borrower to a Management Investor in accordance with the Management

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Stock Agreements to fund all or a portion of the purchase price paid in connection with the repurchase by the Borrower of its Capital Stock from such Management Investor, if such repurchase is occasioned by the death, disability, or retirement of such Management Investor.

Management Investors”:  present or former officers, employees or directors of a Group Member who beneficially own outstanding capital stock of the Borrower.

Management Stock Agreements”:  any subscription agreement or stockholders agreement between the Borrower and any Management Investor.

Marketing Commencement Date”:  the date the Borrower delivers to the Lead Arrangers the Required Financial Statements (as defined in the Syndication and Fee Letter) and the information required for the Information Memorandum (as defined in the Syndication and Fee Letter) (other than portions thereof customarily provided by financing arrangers and limited, in the case of financial information, to the Required Financial Statements).

Material Adverse Effect:  (a) on the Closing Date with respect to the Target, a Target Material Adverse Effect or (b) after the Closing Date, a material adverse effect on (i) the business, assets, property, financial condition or results of operations of the Group Members, taken as a whole or (ii) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.

Material Domestic Subsidiary”:  each Domestic Subsidiary which, for the most recently ended period of four consecutive fiscal quarters for which financial statements have been delivered pursuant to Section 7.1, contributed greater than five percent (5.0%) of the Borrower’s Consolidated Total Assets as of the end of such period. For purposes of this definition, Consolidated Total Assets shall be Consolidated Total Assets of (A) the Borrower and its consolidated subsidiaries and (B) the Domestic Subsidiary being tested, in each case determined in accordance with GAAP.

Material Foreign Subsidiary”:  each Foreign Subsidiary which, for the most recently ended period of four consecutive fiscal quarters for which financial statements have been delivered pursuant to Section 7.1, contributed greater than five percent (5.0%) of the Borrower’s Consolidated Total Assets as of the end of such period. For purposes of this definition, Consolidated Total Assets shall be Consolidated Total Assets of (A) the Borrower and its consolidated subsidiaries and (B) the Foreign Subsidiary being tested, in each case determined in accordance with GAAP.

Material Subsidiary”:  each Material Domestic Subsidiary and each Material Foreign Subsidiary.

Materials of Environmental Concern”:  any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any substances, materials or wastes, defined, listed or regulated as hazardous or toxic under any Environmental Law, including polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants, contaminants, radioactive materials,

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and any other substances that are regulated pursuant to or could give rise to liability under any Environmental Law.

Modification”:  a mortgage modification or new Mortgage in proper form for recording in the relevant jurisdiction and in a form reasonably satisfactory to the Administrative Agent.

Moody’s”:  Moody’s Investors Service, Inc. and any affiliate thereof and any successor thereto that is a nationally-recognized rating agency.

Mortgaged Properties”:  the owned real properties listed on Schedule 1.01(a), as to which the Administrative Agent for the benefit of the Secured Parties shall be granted a Lien pursuant to the Mortgages.

Mortgages”:  each of the mortgages, deeds to secure debts and deeds of trust made by any Loan Party in favor of, or for the benefit of, the Administrative Agent for the benefit of the Secured Parties, substantially in the form of Exhibit D (with such changes thereto as (a) shall be advisable under the law of the jurisdiction in which such mortgage, deed to secure debt or deed of trust is to be recorded and (b) do not have a material adverse effect on any Loan Party), as amended, restated, modified, supplemented or extended from time to time.

Multiemployer Plan”:  a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

Net Cash Proceeds”:  as estimated in good faith by the Borrower, (a) in connection with any Asset Sale or any Recovery Event, the proceeds thereof in the form of cash (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or by the Disposition of any non-cash consideration received in connection therewith or otherwise, but only as and when received, and Cash Equivalents at their maturity) of such Asset Sale or Recovery Event, net of attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset that is the subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a Security Document) and other reasonable fees and expenses actually incurred in connection therewith and net of taxes paid, payable or reasonably estimated to be payable as a result thereof and net of the Borrower’s good faith estimate of payments required to be made with respect to unassumed liabilities relating to the properties sold within 90 days of such Asset Sale (provided that, to the extent such cash proceeds are not used to make payments in respect of such unassumed liabilities within 90 days of such Asset Sale, such cash proceeds shall constitute Net Cash Proceeds) and (b) in connection with any issuance or sale of Capital Stock or any Incurrence of Indebtedness, the cash proceeds received from such issuance or Incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions and other reasonable fees and expenses actually incurred in connection therewith; provided, that amounts provided as a reserve, in accordance with GAAP, against any liability under any indemnification obligations or purchase price adjustment associated with any of the foregoing shall not constitute Net Cash Proceeds except to the extent and at the time any such amounts are released from such reserve.

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Non-Consenting Lender:  as defined in Section 4.13(a).

Non-Defaulting Lender”:  any Lender other than a Defaulting Lender.

Non-Excluded Taxes”:  as defined in Section 4.10(b).

Non-Extending Lender”:  as defined in Section 4.18(e).

Non-public Information”:  information which has not been disseminated in a manner making it available to investors generally, within the meaning of Regulation FD of the Securities Act 1933, as amended.

Non-U.S. Lender”:  as defined in Section 4.10(e).

Notes”:  the collective reference to any promissory note evidencing Loans.

Obligations”:  the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Borrower or any Subsidiary (solely with respect to any Specified Hedge Agreement or Specified Cash Management Arrangement) to the Administrative Agent or to any Lender (or, in the case of Specified Hedge Agreements or Specified Cash Management Arrangements, any Qualified Counterparty), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter Incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge Agreement, any Specified Cash Management Arrangements or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses, overdraft charges (including all reasonable fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise; provided, that (i) obligations of the Borrower or any Subsidiary under any Specified Hedge Agreement or Specified Cash Management Arrangement shall be secured and guaranteed pursuant to the Security Documents only to the extent that, and for so long as, the other Obligations are so secured and guaranteed and (ii) any release of Collateral or any release of the obligations of the Borrower or the Subsidiary Guarantors effected in the manner permitted by this Agreement shall not require the consent of holders of obligations under Specified Hedge Agreements or Specified Cash Management Arrangements.  Notwithstanding the foregoing, Obligations shall not include any Excluded Swap Obligations.

Organizational Documents”:  as to any Person, its certificate or articles of incorporation and by-laws if a corporation, its partnership agreement if a partnership, its limited liability company agreement if a limited liability company, or other organizational or governing documents of such Person.

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Other Applicable Indebtedness: Indebtedness permitted hereunder that is secured on a pari passu basis with the Obligations.

Other Representatives”: the Lead Arrangers, the Joint Bookrunners, the Syndication Agent(s) and the Documentation Agent(s).

Other Taxes”:  any and all present or future stamp, court or documentary, intangible, recording or filing taxes or any other excise taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery, performance, registration or enforcement of, from the receipt or perfection of a security interest under, or otherwise with respect to, this Agreement or any other Loan Document, except for any such Taxes described in clause (i) of the definition of Excluded Taxes imposed with respect to an assignment.

Pari Debt Intercreditor Agreement”:  an intercreditor agreement substantially in the form of Exhibit K-2 hereto or such other form that is reasonably acceptable to the Administrative Agent.

Participant”:  as defined in Section 11.6(c)(i).

Participant Register”:  as defined in Section 11.6(c)(iii).

Patriot Act”:  as defined in Section 11.18.

PBGC”:  the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor thereto).

Permitted Acquisition”:  any acquisition by purchase or otherwise of all or substantially all of the business, assets or at least a majority of the Capital Stock (other than directors’ qualifying shares) of any Person or a business unit of a Person so long as, subject to Section 1.3, (a) no Event of Default has occurred and is continuing at the time such acquisition is made and no Event of Default would result from the completion of such acquisition, (b) on a pro forma basis after giving effect to such acquisition, all related transactions (including the Incurrence and use of proceeds of all Indebtedness Incurred in connection therewith) and all other acquisitions and dispositions and related transactions at any time completed as if completed on the first day of the 12-month period ending on the most recent Test Date, (i) the Borrower would have been in compliance with Section 8.1 on the Test Date (assuming compliance with Section 8.1 was required on the Test Date) and (ii) the Consolidated Net Leverage Ratio on the Test Date would not have exceeded 6.00:1.00, and (c) if the aggregate consideration for such acquisition is more than $50,000,000, the Borrower delivers to the Administrative Agent a certificate of a Responsible Officer demonstrating in reasonable detail that the pro forma tests in clause (b) above are satisfied.

Permitted Encumbrances”:  the (a) outstanding liens, easements, restrictions, security interests and other exceptions to title set forth in the policy of title insurance insuring the lien of any Mortgage and (b) liens and security interests in favor of the mortgagee under any Mortgage created or permitted by the Loan Documents.

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Permitted Foreign Entities:  any First Tier Foreign Subsidiary which is a Restricted Subsidiary.

Permitted Foreign Investment”:  an Investment made by the Borrower or another Loan Party to any Permitted Foreign Entity or any other Wholly Owned Foreign Subsidiary after the Closing Date; provided that, the proceeds of such Investment are used by such Permitted Foreign Entity or Wholly Owned Foreign Subsidiary, as applicable, solely to directly, or indirectly through any Foreign Subsidiary of such Permitted Foreign Entity or Wholly Owned Foreign Subsidiary, finance a Permitted Acquisition.

Permitted Investors”:  collectively, any Management Investors and all of their respective Permitted Transferees.

Permitted Junior Refinancing Debt”:  secured Indebtedness Incurred by the Borrower or any other Loan Party in the form of one or more series of junior lien secured notes or junior lien loans; provided, that (i) such Indebtedness is secured by the Collateral on a junior priority basis to the Obligations hereunder and the obligations in respect of any Permitted Pari Passu Refinancing Debt and such Indebtedness is not secured by any property or assets of the Borrower or any Restricted Subsidiary of the Borrower other than the Collateral, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness in respect of Term Loans, Incremental Loans, Refinancing Term Loans, outstanding Revolving Loans or outstanding Refinancing Revolving Loans, (iii) such Indebtedness does not mature or have scheduled amortization or payments of principal prior to the date that is the Latest Maturity Date at the time such Indebtedness is Incurred, (iv) the security agreements relating to such Indebtedness are substantially the same as the Security Documents (with such differences as are reasonably satisfactory to the Administrative Agent), (v) such Indebtedness is not guaranteed by any Restricted Subsidiaries other than the Subsidiary Guarantors, (vii) a Senior Representative validly acting on behalf of the holders of such Indebtedness shall have become party to an Intercreditor Agreement or, if an Intercreditor Agreement has previously been entered into in connection with any other Permitted Junior Refinancing Debt, execute a joinder to the then existing Intercreditor Agreement in substantially the form provided in the Intercreditor Agreement, and (vii) such Indebtedness may be incurred in the form of a bridge or other interim credit facility intended to be refinanced with long-term indebtedness (and such bridge or other interim credit facility shall be deemed to satisfy clause (iii) of this definition so long as (x) such credit facility includes customary “rollover” provisions and (y) assuming such bridge or other interim credit facility were to be extended pursuant to such “rollover” provisions, such extended credit facility would comply with clause (iii) above) and in which case, on or prior to the first anniversary of the incurrence of such “bridge” or other interim credit facility, nothing in this definition shall prohibit the inclusion of customary terms for “bridge” facilities, including customary mandatory prepayment, repurchase or redemption provisions.  Permitted Junior Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.

Permitted Liens”:  any Liens permitted by Section 8.3.

Permitted Pari Passu Refinancing Debt”:  any secured Indebtedness Incurred by the Borrower or any other Loan Party in the form of one or more series of senior secured notes;

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provided, that (i) such Indebtedness is secured by the Collateral on a pari passu basis (but without regard to the control of remedies) with the Obligations hereunder and such Indebtedness is not secured by any property or assets of the Borrower or any Restricted Subsidiary other than the Collateral, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness in respect of Term Loans, Incremental Loans, Refinancing Term Loans, outstanding Revolving Loans or outstanding Refinancing Revolving Loans, (iii) such Indebtedness does not mature or have scheduled amortization or payments of principal prior to the date that is the Latest Maturity Date at the time such Indebtedness is Incurred, (iv) the security agreements relating to such Indebtedness are substantially the same as the Security Documents (with such differences as are reasonably satisfactory to the Administrative Agent), (v) such Indebtedness is not guaranteed by any Restricted Subsidiaries other than the Subsidiary Guarantors, (vi) a Senior Representative validly acting on behalf of the holders of such Indebtedness shall have become party to the Intercreditor Agreement and/or Pari Debt Intercreditor Agreement (as applicable) or, if either such agreement has previously been entered into in connection with any other Permitted Pari Passu Refinancing Debt, execute a joinder to such then existing agreements in substantially the form provided therein, and (vii) such Indebtedness may be incurred in the form of a bridge or other interim credit facility intended to be refinanced with long-term indebtedness (and such bridge or other interim credit facility shall be deemed to satisfy clause (iii) of this definition so long as (x) such credit facility includes customary rollover provisions and (y) assuming such bridge or other interim credit facility were to be extended pursuant to such rollover provisions, such extended credit facility would comply with clause (iii) above) and in which case, on or prior to the first anniversary of the incurrence of such bridge or other interim credit facility, nothing in this definition shall prohibit the inclusion of customary terms for bridge facilities, including customary mandatory prepayment, repurchase or redemption provisions.  Permitted Pari Passu Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.

Permitted Refinancing”:  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, 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, (c) if the Indebtedness being modified, refinanced, refunded, renewed or extended is unsecured, such modification, refinancing, refunding, renewal or extension is unsecured, (d) if the Indebtedness being modified, refinanced, refunded, renewed or extended is subordinated in right of payment to the Obligations or any Lien securing such Indebtedness is subordinated, such modification, refinancing, refunding, renewal or extension is subordinated in right of payment to the Obligations and such Lien is subordinated, in each case 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, taken as a whole, and (e) the primary obligors and guarantors in respect of

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such Indebtedness being modified, refinanced, refunded, renewed or extended remain the same (or constitute a subset thereof).

Permitted Transferees”:  in the case of any Management Investors, (i) his or her heirs, executors, administrators, testamentary trustees, legatees or beneficiaries, (ii) his or her spouse, parents, siblings, members of his or her immediate family (including adopted children) or direct lineal descendants or (iii) a trust, the beneficiaries of which, or a corporation or partnership, the stockholders or partners of which, include only the Management Investor, as the case may be, and his or her spouse, parents, siblings, members of his or her immediate family (including adopted children) and/or direct lineal descendants.

Permitted Unsecured Refinancing Debt”:  unsecured Indebtedness Incurred by the Borrower or any other Loan Party in the form of one or more series of senior or subordinated unsecured notes or loans; provided that (i) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness in respect of Term Loans, Incremental Loans, Refinancing Term Loans, outstanding Revolving Loans or outstanding Refinancing Revolving Loans, (ii) such Indebtedness does not mature or have scheduled amortization or payments of principal prior to the date that is the Latest Maturity Date at the time such Indebtedness is Incurred, (iii) such Indebtedness is not guaranteed by any Restricted Subsidiaries other than the Subsidiary Guarantors, (iv) such Indebtedness is not secured by any Lien on any property or assets of Borrower or any Restricted Subsidiary, and (v) such Indebtedness may be incurred in the form of a bridge or other interim credit facility intended to be refinanced with long-term indebtedness (and such bridge or other interim credit facility shall be deemed to satisfy clause (ii) of this definition so long as (x) such credit facility includes customary “rollover” provisions and (y) assuming such bridge or other interim credit facility were to be extended pursuant to such “rollover” provisions, such extended credit facility would comply with clause (ii) above) and in which case, on or prior to the first anniversary of the incurrence of such “bridge” or other interim credit facility, nothing in this definition shall prohibit the inclusion of customary terms for “bridge” facilities, including customary mandatory prepayment, repurchase or redemption provisions. Permitted Unsecured Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.

Person”:  an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

Pesos”:  the lawful money of the United Mexican States.

Plan”:  at a particular time, any employee pension benefit plan that is covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

Platform”:  as defined in Section 7.2(f).

Pledged Notes”:  as defined in the Guarantee and Collateral Agreement.

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Pledged Stock:  as defined in the Guarantee and Collateral Agreement.

Prime Rate”:  the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as determined by the Administrative Agent).

Projections”:  as defined in Section 7.2(b).

Properties”:  as defined in Section 5.17(a).

Property”:  any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including Capital Stock.

PTE”:  a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

PTO”:  as defined in Section 5.19(c).

Qualified Counterparty”:  with respect to any Specified Hedge Agreement or Specified Cash Management Arrangement, any counterparty thereto that, (i) at or before the time such Specified Hedge Agreement or Specified Cash Management Arrangement was entered into or (ii) on or after the Closing Date, was a Lender or the Administrative Agent or an affiliate of a Lender.

Quotation Day”:  with respect to any Eurocurrency Loan for any Interest Period, two Business Days prior to the commencement of such Interest Period (unless, in each case, market practice differs in the relevant market where the Eurocurrency Rate for such currency is to be determined, in which case the Quotation Day will be determined by the Administrative Agent in accordance with market practice in such market (and if quotations would normally be given on more than one day, then the Quotation Day will be the last of those days)).

Ratio Incremental Amount”: as defined in clause (c) of the definition of “Incremental Amount.”

Recovery Event”:  any settlement of or payment in respect of any property or casualty insurance claim or any condemnation proceeding relating to any asset of any Group Member, other than (x) any such settlement or payment arising by reason of any loss of revenues or interruption of business or operations caused thereby and (y) any such settlement or payment constituting reimbursement or compensation for amounts previously paid by any Group Member in respect of the theft, loss, destruction, damage or other similar event relating to any such claim or proceeding.

Refinanced Debt”:  as defined in the definition of “Credit Agreement Refinancing Indebtedness.”

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Refinancing”: the payment in full of the Existing Debt Agreements.

Refinancing Amendment”:  an amendment to this Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Borrower executed by each of (a) the Borrower, (b) the Administrative Agent and (c) each Additional Lender and Lender that agrees to provide any portion of the Credit Agreement Refinancing Indebtedness being Incurred pursuant thereto, in accordance with Section 4.19.

Refinancing Revolving Commitments”:  the revolving credit commitments hereunder that result from a Refinancing Amendment.

Refinancing Revolving Loans”:  the Revolving Loans made pursuant to any Refinancing Revolving Commitment.

Refinancing Term Commitments”:  one or more Tranches of term loan commitments hereunder that result from a Refinancing Amendment.

Refinancing Term Loans”:  one or more Tranches of Term Loans that result from a Refinancing Amendment.

Register”:  as defined in Section 11.6(b)(iv).

Registered Equivalent Notes”:  with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act of 1933, substantially identical notes (having the same Guarantee Obligation) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.

Regulation T”:  Regulation T of the Board as in effect from time to time.

Regulation U”:  Regulation U of the Board as in effect from time to time.

Regulation X”:  Regulation X of the Board as in effect from time to time.

Reimbursement Obligation”:  the obligation of the Borrower to reimburse each Issuing Lender pursuant to Section 3.11 for amounts drawn under Letters of Credit.

Reinvestment Deferred Amount”:  with respect to any Reinvestment Event, an amount equal to the aggregate Net Cash Proceeds received by any Group Member in connection therewith that would have otherwise been required to be applied to prepay the Term Loans pursuant to Section 4.2(b)(i) but for the delivery of the Reinvestment Notice.

Reinvestment Event”:  any Asset Sale or Recovery Event in respect of which the Borrower has delivered a Reinvestment Notice.

Reinvestment Notice”:  a written notice executed by a Responsible Officer stating that no Event of Default has occurred and is continuing and that the Borrower (directly or indirectly through a Restricted Subsidiary) intends to use an amount equal to all or a specified portion of the

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Net Proceeds of an Asset Sale or Recovery Event to acquire, improve or repair fixed or capital assets useful in its business, or to complete a Permitted Acquisition.

Reinvestment Prepayment Amount”:  with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant Reinvestment Prepayment Date to acquire, improve or repair fixed or capital assets useful in the Borrower’s business, to acquire a brand or trademark and related assets or to complete a Permitted Acquisition.

Reinvestment Prepayment Date”:  with respect to any Reinvestment Event the date occurring eighteen months after the receipt by the Borrower of proceeds relating to such Reinvestment Event (or the 180th day thereafter if the Borrower or any of its Restricted Subsidiaries has entered into a legally binding commitment to apply such proceeds in accordance with the applicable Reinvestment Notice).

Related Persons”:  with respect to any specified Person, such Person’s Affiliates and the respective officers, directors, employees, attorneys, agents and advisors of such Person and such Person’s Affiliates.

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

Removal Effective Date”:  as defined in Section 10.9(b).

Reportable Event”:  any of the events set forth in Section 4043(b) of ERISA, other than those events as to which the thirty day notice requirement is waived by regulation in effect as of the date hereof.

Repricing Transaction”:  (i) prepayment or refinancing of all or a portion of the Term Loans concurrently with the Incurrence by the Borrower of any long-term bank debt financing or any other financing similar to the Term Loans having a lower All-In Yield than the All-In Yield applicable to the Term Loans and (ii) any amendment which reduces the All-In-Yield applicable to the Term Loans; provided that “Repricing Transaction” shall not include (a) any Transformative Acquisition, (b) a transaction that results in a Change of Control, and (c) any syndication of the Term Loans (including by assignment from the Initial Term Lenders) occurring on or prior to the Syndication Date (as defined in the Syndication and Fee Letter) (and any related amendments). For the avoidance of doubt, a Repricing Transaction shall not include any repayment or refinancing consummated with proceeds of an offering of debt or equity securities by the Borrower or any of its Subsidiaries.

Required Lenders”:  at any time, the holders of more than 50% of the sum of (i) the aggregate unpaid principal amount of the Term Loans then outstanding and (ii) the Revolving Commitments then in effect or, if the Revolving Commitments have been terminated, the Revolving Extensions of Credit then outstanding.  The Loans and Commitments of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.  The Loans and

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Commitments of any Affiliated Lender shall, for purposes of this definition, be subject to Section 11.21.

Required Prepayment Percentage”: 50%, or, if as of the end of the most recent fiscal year (starting with the fiscal year ending on March 31, 2021), the Consolidated Senior Secured Net Leverage Ratio is less than or equal to 2.25 to 1.00 but greater than 1.75 to 1.00, 25%, or if on the date of the applicable prepayment, the Consolidated Senior Secured Net Leverage Ratio is less than or equal to 1.75 to 1.00, 0%.

Requirement of Law”:  as to any Person, any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

Responsible Officer”:  with respect to any Person, the chief executive officer, president, vice president, chief financial officer, secretary, treasurer, assistant secretary, assistant treasurer, manager, director or duly appointed attorney-in-fact or similar Person or any other person designated by the board of directors or managing officers, as applicable, in a resolution.

Restricted Payments”:  as defined in Section 8.6.

Restricted Subsidiary”:  any Subsidiary of the Borrower other than an Unrestricted Subsidiary.  The Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, that immediately prior and immediately after giving effect to such designation (x) the Borrower would have been in compliance with Section 8.1 on the Test Date (assuming compliance with Section 8.1 was required on the Test Date) on a pro forma basis after giving effect to such designation and all related transactions at any time completed as if completed on the first day of the 12-month period ending on the most recent Test Date and (y) no Default or Event of Default shall have occurred and be continuing.  Any such designation by Borrower shall be evidenced to the Administrative Agent by promptly delivering to the Administrative Agent a certificate signed by a Responsible Officer of the Borrower certifying that such designation complied with the foregoing provisions. The designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute (i) the incurrence at the time of designation of any Investment, Indebtedness and Liens of such Subsidiary existing at such time and (ii) a return on any Investment by the Borrower in such Subsidiary pursuant to sub-clause (C) of the definition of Unrestricted Subsidiary in an amount equal to the fair market value at the date of such designation of the Borrower’s Investment in such Subsidiary.  

Revolving Commitment”:  as to any Lender, the obligation of such Lender, if any, to make Revolving Loans and participate in Swingline Loans and Letters of Credit in an aggregate principal and/or face amount not to exceed, (a) in the case of Lenders party hereto as of the Closing Date, the amount set forth opposite such Lender’s name on Schedule 1.1(e) hereto and (b) in the case of Lenders that become parties hereto after such date, the amount set forth in the Assignment and Assumption by which such Lender became a party hereto, in each case of the foregoing clauses (a) and (b), as the same may be changed from time to time pursuant to the terms hereof.  The initial aggregate amount of Revolving Commitments as of the Closing Date is $350,000,000.

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Revolving Commitment Period:  the period from and including the Closing Date up to but excluding the Business Day preceding the Revolving Termination Date.

Revolving Extensions of Credit”:  as to any Revolving Lender at any time, an amount equal to the sum of (a) the Dollar Equivalent of the aggregate principal amount of all Revolving Loans held by such Lender then outstanding, (b) such Lender’s Revolving Percentage of the L/C Obligations then outstanding and (c) such Lender’s Revolving Percentage of the aggregate principal amount of Swingline Loans then outstanding.

Revolving Facility”:  at any time, the aggregate amount of the Revolving Lenders’ Revolving Commitments at such time (including any Incremental Revolving Commitments).

Revolving Lender”:  each Lender that has a Revolving Commitment or that holds Revolving Loans.

Revolving Loans”:  as defined in Section 3.1(a).

Revolving Percentage”:  as to any Revolving Lender at any time, the percentage which such Lender’s Revolving Commitment then constitutes of the Total Revolving Commitments (or, at any time after the Revolving Commitments shall have expired or terminated, the percentage which the aggregate principal amount of such Lender’s Revolving Loans then outstanding constitutes of the aggregate principal amount of the Revolving Loans then outstanding).

Revolving Termination Date”:  the earlier of (a) the fifth anniversary of the Closing Date and (b) the date on which the Revolving Commitments are terminated pursuant to any provision of this Agreement.

S&P”:  Standard & Poor’s Ratings Services and any affiliate thereof and any successor thereto that is a nationally-recognized rating agency.

Sanctioned Country”:  at any time, a country or territory which is the subject or target of comprehensive Sanctions (at the time of this Agreement, Cuba, the Crimea region, Iran, North Korea and Syria).

Sanctioned Person”:  at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, the or by the United Nations Security Council, the European Union or any EU member state, (b) any Person organized or resident in a Sanctioned Country or (c) any Person owned 50 % or more or controlled by any such Person.

Sanctions”:  economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.

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SEC:  the Securities and Exchange Commission, any successor thereto and otherwise any analogous Governmental Authority.

Secured Obligations”:  as defined in the Guarantee and Collateral Agreement.

Secured Parties”:  as defined in the Guarantee and Collateral Agreement.

Security Documents”:  the collective reference to the Guarantee and Collateral Agreement, the Intellectual Property Security Agreements, Modifications, the Mortgages and all other security documents hereafter delivered to the Administrative Agent granting a Lien on any property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document.

Senior Representative”:  with respect to any series of Permitted Pari Passu Refinancing Debt or Permitted Junior Refinancing Debt, the trustee, administrative agent, collateral agent, security agent or similar agent under the indenture or agreement pursuant to which such Indebtedness is issued, Incurred or otherwise obtained, as the case may be, and each of their successors in such capacities.

Single Employer Plan”:  any Plan that is covered by Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code, but that is not a Multiemployer Plan.

SOFR” with respect to any day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark, (or a successor administrator) on the Federal Reserve Bank of New York’s Website.

Solvent”:  with respect to any Person, as of any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature.  For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

Specified Acquisition Agreement Representations” means the representations made by or on behalf of the Target or its subsidiaries in the Acquisition Agreement as are material to the interests of the Lenders, but only to the extent that the Borrower or its applicable Affiliates have the right (taking into account any applicable cure provisions) to terminate its (or their)

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obligations under the Acquisition Agreement or decline to consummate the Acquisition as a result of a breach of any such representations in the Acquisition Agreement.

Specified Cash Management Arrangement”:  any arrangement for treasury, depositary or cash management services (including any credit card, commercial card, merchant card or other stored value card services and any processing of payments and other administrative services with respect thereto) provided to the Borrower or any of its Subsidiaries by a Qualified Counterparty in connection with any transfer or disbursement of funds through an automated clearinghouse or on a same day or immediate or accelerated availability basis that has been designated as a Specified Cash Management Arrangement by notice from the Borrower to the Administrative Agent.  The designation by the Borrower of any such arrangement as a Specified Cash Management Arrangement shall not create in favor of the Qualified Counterparty that is a party thereto any rights in connection with the management, enforcement or release of any Collateral or of the Obligations of the Borrower or any Subsidiary Guarantor under the Guarantee and Collateral Agreement.

Specified Existing Tranche”:  as defined in Section 4.18(a).

Specified Hedge Agreement”:  any Hedge Agreement between the Borrower or any of its Subsidiaries and any Qualified Counterparty that has been designated as a Specified Hedge Agreement by notice from the Borrower to the Administrative Agent (it being understood that one notice with respect to a specified ISDA Master Agreement may designate all transactions thereunder as being “Obligations” under a Specified Hedge Agreement, without the need for separate notices for each individual transaction thereunder).  The designation by the Borrower of any Hedge Agreement as a Specified Hedge Agreement (a) shall constitute a representation and warranty by the Borrower that such Hedge Agreement is permitted by Section 8.11 (upon which such Qualified Counterparty shall be entitled to rely conclusively) and (b) shall not create in favor of the Qualified Counterparty that is a party thereto any rights in connection with the management, enforcement or release of any Collateral or of the Obligations of the Borrower or any Subsidiary Guarantor under the Guarantee and Collateral Agreement except to the extent expressly set forth in the Guarantee and Collateral Agreement.

Specified Representations”: the representations and warranties made by the Borrower and the other Loan Parties, as applicable, set forth in Section 5.3(a) (solely with respect to the Loan Parties), Section 5.4, Section 5.5 (solely with respect to Organizational Documents of the Loan Parties), Section 5.11, Section 5.14, Section 5.19, Section 5.20, Section 5.22 and Section 5.23.

Statutory Reserve Rate”:  a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for “Eurocurrency” funding (currently referred to as “Eurocurrency Liabilities” in Regulation D).  Such reserve percentages shall include those imposed pursuant to such Regulation D.  Eurocurrency Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit

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for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

Subsidiary”:  as to any Person, mean any corporation, trust, partnership, limited liability company or other business entity of which more than 50% of the outstanding voting securities or other interests normally entitled to vote for the election of one or more directors or trustees (regardless of any contingency which does or may suspend or dilute the voting rights) is at such time owned directly or indirectly by such Person or one or more of such Person’s Subsidiaries.  Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

Subsidiary Guarantor”:  each Wholly Owned Subsidiary of the Borrower that is a Material Domestic Subsidiary (or any other Restricted Subsidiary designated by the Borrower as a Subsidiary Guarantor) and party to the Guarantee and Collateral Agreement from time to time.  Notwithstanding anything herein or in any other Loan Document to the contrary, no Excluded Subsidiary shall be required to be a Subsidiary Guarantor.

Swingline Commitment”: $50,000,000.

Swingline Exposure”:  at any time the aggregate principal amount at such time of all outstanding Swingline Loans.  The Swingline Exposure of any Revolving Lender at any time shall equal its Revolving Percentage of the aggregate Swingline Exposure at such time.

Swingline Lender”:  Barclays Bank PLC, in its capacity as the lender of Swingline Loans.

Swingline Loans”:  as defined in Section 3.3(a).

Swingline Participation Amount”:  as defined in Section 3.4(c).

Syndication Agents”: Barclays Bank PLC and Morgan Stanley Senior Funding, Inc.

Syndication and Fee Letter”: the Syndication and Fee Letter, dated as of the date hereof, among Barclays Bank PLC, Morgan Stanley Senior Funding, Inc. and the Borrower.

Target”: Infiltrator Water Technologies Ultimate Holdings, Inc., a Delaware corporation.

Target Historical Financial Statements”:  as defined in Section 5.1(b).

Target Material Adverse Effect”: a “Material Adverse Change”, as defined in the Acquisition Agreement as of the date hereof.

Target Person”: as defined in Section 8.7.

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Taxes:  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.

Term Commitment”: as to any Lender, the obligations of such Lender, if any, to make the Term Loans to the Borrower in an amount not to exceed the amount set forth opposite such Lender’s name on Schedule 1.1(d) hereto.

Term Facility”:  the Initial Term Facility or any Incremental Term Facility, and “Term Facilities” means all of them, collectively.

Term Lender”:  (a) on the Closing Date, any Lender that has a Term Commitment at such time, and (b) at any time after the Closing Date, any Lender that holds Term Loans (or Term Commitments under any Incremental Term Loan Facility) at such time.

Term Loans”:  an advance made by any Term Lender under any Term Facility.

Term Percentage”:  as to any Term Lender at any time, the percentage which the aggregate principal amount of such Lender’s Term Loans then outstanding constitutes of the aggregate principal amount of the Term Loans then outstanding.

Term SOFR” means the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

Test Date”:  at any time, the last day of the most recently ended fiscal quarter for which the Borrower’s consolidated annual or quarterly financial statements are then available.

Total L/C Commitments”: $50,000,000.

Total Revolving Commitments”:  at any time, the aggregate amount of the Revolving Commitments then in effect.

Total Revolving Extensions of Credit”:  at any time, the aggregate amount of the Revolving Extensions of Credit outstanding at such time.

Tranche”:  each tranche of Loans and/or Commitments available hereunder.  On the Closing Date there shall be two tranches comprising (i) the Initial Term Facility and (ii) the Revolving Facility.

Transaction Costs”:  the fees, costs and expenses payable by the Borrower or any of its Restricted Subsidiaries in connection with the Transactions and any other transactions entered into in connection therewith.

Transactions”:  collectively, the Acquisition, the Refinancing and the Borrower’s obtaining of the Initial Term Facility and the Revolving Facility.

Transferee”:  any Assignee or Participant.

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Transformative Acquisition”: any acquisition or Investment by the Borrower or any Restricted Subsidiary that either (a) is not permitted by the terms of this Agreement immediately prior to the consummation of such acquisition or Investment or (b) if permitted by the terms of this Agreement immediately prior to the consummation of such acquisition or Investment, would not provide the Borrower and its Restricted Subsidiaries with adequate flexibility under this Agreement for the continuation and/or expansion of their combined operations following such consummation, as reasonably determined by the Borrower acting in good faith.

Type”:  as to any Loan, its nature as a Base Rate Loan or a Eurocurrency Loan.

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

United States”:  the United States of America.

Unrestricted Cash”:  cash or Cash Equivalents of the Borrower or any of its Restricted Subsidiaries that would not appear as “restricted” on a consolidated balance sheet of the Borrower in accordance with GAAP; provided that cash and Cash Equivalents that are restricted or secured (i) in favor of the Indebtedness under this Agreement shall be deemed to be Unrestricted Cash and (ii) in favor of other Indebtedness secured by a pari passu or junior Lien on the Collateral as permitted under this Agreement shall be deemed to be Unrestricted Cash (only if such cash and Cash Equivalents are also restricted or secured in favor of the Indebtedness under this Agreement on a pari passu or senior basis to the Lien of such other Indebtedness).

Unrestricted Subsidiary”:  (i) each Subsidiary, if any, listed on Schedule 1.1(b), (ii) any Subsidiary of the Borrower that at the time of determination is an Unrestricted Subsidiary, as designated by the Borrower in the manner provided below, and (iii) any Subsidiary of an Unrestricted Subsidiary.  The Borrower may designate any Subsidiary of the Borrower (including any newly acquired or newly formed Subsidiary of the Borrower) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any Lien on any property of, the Borrower or any other Restricted Subsidiary of the Borrower that is not a Subsidiary of the Subsidiary to be so designated; provided, that (i)(A) such designation was made at or prior to the Closing Date (and any such Subsidiary so designated is set forth on Schedule 1.1(b) hereto), or (B) the Subsidiary to be so designated has total consolidated assets of $1,000 or less or (C) if such Subsidiary has consolidated assets greater than $1,000, then the fair market value of such designation would be permitted under Section 8.7 and (ii) any Unrestricted Subsidiary that has been designated as a Restricted Subsidiary may not subsequently be re-designated as an Unrestricted Subsidiary without the prior consent of the Administrative Agent and in compliance with the definition of Restricted Subsidiary; provided, further, that immediately prior and immediately after giving effect to such designation as an Unrestricted Subsidiary (x) the Borrower would have been in compliance with Section 8.1 on the Test Date (assuming compliance with Section 8.1 was required on the Test Date) on a pro forma basis after giving effect to such designation and all related transactions at any time completed as if completed on the first day of the 12-month period ending on the most recent Test Date and (y) no Default or Event of Default shall have occurred and be continuing.  Any such designation by the Borrower

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shall be evidenced to the Administrative Agent by promptly delivering to the Administrative Agent a certificate signed by a Responsible Officer of the Borrower certifying that such designation complied with the foregoing provisions.

Valuation Date” means (i) the date two Business Days prior to the making, continuing or converting of any Revolving Loan or any other extension of credit under the Revolving Commitments and (ii) any other date designated by the Administrative Agent.

Weighted Average Life to Maturity”:  when applied to any Indebtedness at any date, the number of years obtained by dividing:  (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness.

Wholly Owned Foreign Subsidiary”:  any Wholly Owned Subsidiary that is a Foreign Subsidiary.

Wholly Owned Subsidiary”:  as to any Person, any other Person all of the Capital Stock of which (other than directors’ qualifying shares required by law or de minimis shares held by nominees or others as required by law) is owned by such Person directly and/or through other Wholly Owned Subsidiaries.  Unless otherwise qualified, all references to a “Wholly Owned Subsidiary” or to “Wholly Owned Subsidiaries” in this Agreement shall refer to a Wholly Owned Subsidiary or Wholly Owned Subsidiaries of the Borrower.

Withholding Agent”: the Borrower and the Administrative Agent.

Write-Down and Conversion Powers”:  with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

Other Definitional Provisions

. (a)  Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.

(b)As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) accounting terms relating to any Group Member not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii) 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 of every type and nature, and (iv) references to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended,

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supplemented, restated or otherwise modified from time to time (subject to any applicable restrictions hereunder).

(c)For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., “Term Loans”) or by Type (e.g., “Eurocurrency Rate Term Loans”).

(d)The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

(e)The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

(f)The expressions “payment in full,” “paid in full” and any other similar terms or phrases when used herein with respect to any Obligation shall mean the payment in full in cash in immediately available funds of such Obligation (other than contingent surviving indemnity obligations in respect of which no claim or demand has been made and obligations and Letters of Credit which have been Cash Collateralized or as to which other arrangements satisfactory to the applicable Issuing Lender shall have been made).

Certain Calculations and Tests

.  (a)  Notwithstanding anything to the contrary herein, to the extent that the terms of this Agreement require (x) compliance with any financial ratio or test (including Section 8.1 hereof, any Consolidated Coverage Ratio test, any Consolidated Net Leverage Ratio test, any Consolidated Senior Secured Net Leverage Ratio test, the amount of Consolidated Total Assets or any cap expressed as a percentage of Consolidated Total Assets) or (y) the absence of a Default or Event of Default as a condition to (A) the making of any Limited Condition Acquisition or (B) the consummation of any transaction in connection with any Limited Condition Acquisition (including the assumption or incurrence of Indebtedness or Liens in connection therewith), the determination of whether the relevant condition is satisfied may be made, at the election of the Borrower, at the time of (or on the basis of the financial statements for the most recently ended Test Date at the time of) either (I) the execution of the definitive agreement with respect to such Limited Condition Acquisition or (II) the consummation of such Limited Condition Acquisition, in each case, after giving effect to the relevant Limited Condition Acquisition or other transaction and any related Indebtedness or Liens on a pro forma basis.

(b)Notwithstanding the foregoing, if the Borrower has made an election to test at the time of the execution of the definitive agreement with respect to a Limited Condition Acquisition or the consummation of any transaction in connection with any Limited Condition Acquisition, then, in connection with any subsequent calculation of any ratio or test on or following the relevant determination date, and prior to the earlier of (x) the date on which such Limited Condition Acquisition is consummated or (y) the date that the definitive agreement for such Limited Condition Acquisition is terminated or expires without consummation of such Limited Condition Acquisition, any such ratio or test shall be calculated on (A) a pro forma basis assuming such Limited Condition Acquisition or any transactions in connection therewith (including any

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incurrence of Indebtedness, Liens and the use of proceeds thereof) has been consummated, and also on (B) a standalone basis without giving effect to such Limited Condition Acquisition and any such transactions in connection therewith.

(c)Notwithstanding anything to the contrary herein, with respect to any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement under Section 4.17 or any covenant that does not require compliance with a financial ratio (any such amounts, the “Fixed Amounts”) substantially concurrently with any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement under Section 4.17 or the same covenant as such Fixed Amount that requires compliance with a financial ratio (including Section 8.1 hereof, any Consolidated Net Leverage Ratio test or any Consolidated Senior Secured Net Leverage Ratio test) (any such amounts, the “Incurrence-Based Amounts”), it is understood and agreed that the Fixed Amounts being substantially concurrently incurred shall be disregarded in the calculation of the financial ratio or test applicable to such substantially concurrent utilization of the Incurrence-Based Amounts under Section 4.17 or the same covenant as such Fixed Amount.

(d)Notwithstanding anything to the contrary herein, Consolidated EBITDA, Consolidated Net Income and any financial ratios or tests, including the Consolidated Coverage Ratio, Consolidated Net Leverage Ratio and the Consolidated Senior Secured Net Leverage Ratio, shall be calculated in the manner prescribed by this Section 1.3(d) or (e), as applicable; provided that notwithstanding anything to the contrary in clauses (i), (ii), (iii) or (iv) of this Section 1.3(d) or Section 1.3(e), as applicable, when calculating the Consolidated Senior Secured Net Leverage Ratio for purposes of determining actual compliance (and not compliance on a pro forma basis or determining compliance giving pro forma effect to a transaction) with Section 8.1, the events described in this Section 1.3(d) or Section 1.3(e) that occurred subsequent to the end of the period of four consecutive fiscal quarters ended on the most recent Test Date shall not be given pro forma effect:

(i)if since the beginning of such period the Borrower or any Restricted Subsidiary has Incurred any Indebtedness that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate Consolidated EBITDA, Consolidated Interest Expense or any financial ratio or test is an Incurrence of Indebtedness, Consolidated EBITDA, Consolidated Interest Expense or such ratio or test for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period (except that in making such computation, the amount of Indebtedness under any revolving credit facility outstanding on the date of such calculation shall be computed based on (A) the average daily balance of such Indebtedness during such four fiscal quarters or such shorter period for which such facility was outstanding or (B) if such facility was created after the end of such four fiscal quarters, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation);

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(ii)if since the beginning of such period the Borrower or any Restricted Subsidiary has repaid, repurchased, redeemed, defeased or otherwise acquired, retired or discharged any Indebtedness that is no longer outstanding on such date of determination (each, a Discharge) or if the transaction giving rise to the need to calculate Consolidated EBITDA, Consolidated Interest Expense or any financial ratio or test involves a Discharge of Indebtedness (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid), then Consolidated EBITDA, Consolidated Interest Expense or such financial ratio or test for such period shall be calculated after giving effect on a pro forma basis to such Discharge of such Indebtedness, including with the proceeds of such new Indebtedness, as if such Discharge had occurred on the first day of such period;

(iii)if since the beginning of such period the Borrower or any Restricted Subsidiary shall have disposed of any company, any business or any group of assets constituting an operating unit of a business (any such disposition, a “Sale”), the Consolidated EBITDA for such period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the assets that are the subject of such Sale for such period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to (A) the Consolidated Interest Expense attributable to any Indebtedness of the Borrower or any Restricted Subsidiary repaid, repurchased, redeemed, defeased or otherwise acquired, retired or discharged with respect to the Borrower and its continuing Restricted Subsidiaries in connection with such Sale for such period (including but not limited to through the assumption of such Indebtedness by another Person) plus (B) if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period attributable to the Indebtedness of such Restricted Subsidiary to the extent the Borrower and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such Sale, and any financial ratio or test shall be calculated after giving pro forma effect to such Sale as if such Sale had occurred on the first day of such period;

(iv)if since the beginning of such period the Borrower or any Restricted Subsidiary (by merger, consolidation or otherwise) shall have made an Investment in any Person that thereby becomes a Restricted Subsidiary, or otherwise acquired any company, any business or any group of assets constituting an operating unit of a business in a Permitted Acquisition, including any such Investment or acquisition occurring in connection with a transaction causing a calculation to be made hereunder (any such Investment or acquisition, a “Purchase”), Consolidated EBITDA, Consolidated Interest Expense or any financial ratio or test for such period shall be calculated after giving pro forma effect thereto (including the

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Incurrence of any related Indebtedness) as if such Purchase occurred on the first day of such period;

(v)if since the beginning of such period any Person became a Restricted Subsidiary or was merged or consolidated with or into the Borrower or any Restricted Subsidiary, and since the beginning of such period such Person shall have Discharged any Indebtedness or made any Sale or Purchase that would have required an adjustment pursuant to clause (ii), (iii) or (iv) of Section 1.3(d) if made by the Borrower or a Restricted Subsidiary since the beginning of such period, Consolidated EBITDA, Consolidated Interest Expense or any financial ratio or test  for such period shall be calculated after giving pro forma effect thereto as if such Discharge, Sale or Purchase occurred on the first day of such period; and

(vi)whenever pro forma effect is to be given to any Sale, Purchase or other transaction, or the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred or repaid, repurchased, redeemed, defeased or otherwise acquired, retired or discharged in connection therewith, the pro forma calculations in respect thereof (including without limitation in respect of anticipated cost savings, synergies or annualized impact of buyer fee increases relating to any such Sale, Purchase or other transaction) shall be as determined in good faith by the Chief Financial Officer or a Responsible Officer of the Borrower.  If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Hedge Agreement applicable to such Indebtedness).  If any Indebtedness bears, at the option of the Borrower or a Restricted Subsidiary, a rate of interest based on a prime or similar rate, a eurocurrency interbank offered rate or other fixed or floating rate, and such Indebtedness is being given pro forma effect, the interest expense on such Indebtedness shall be calculated by applying such optional rate as the Borrower or such Restricted Subsidiary may designate.  If any Indebtedness that is being given pro forma effect was Incurred under a revolving credit facility, the interest expense on such Indebtedness shall be computed based upon the average daily balance of such Indebtedness during the applicable period.  Interest on a Capital Lease Obligation shall be deemed to accrue at an interest rate determined in good faith by a responsible financial or accounting officer of the Borrower to be the rate of interest implicit in such Capital Lease Obligation in accordance with GAAP.

(e)For the purposes of calculating Consolidated EBITDA, Consolidated Interest Expense or any financial ratio or test for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if at any time during such Reference Period the Borrower or any Restricted Subsidiary shall have made any Material Disposition or designated any

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Restricted Subsidiary as an Unrestricted Subsidiary, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition or designation for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period and (ii) if during such Reference Period the Borrower or any Restricted Subsidiary shall have made a Material Acquisition or designated any Unrestricted Subsidiary as a Restricted Subsidiary, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto, as if such Material Acquisition or designation occurred on the first day of such Reference Period; provided that, notwithstanding anything to the contrary contained herein, with respect to the Acquisition (a) Consolidated EBITDA for the fiscal quarters ended June 30, 2019, March 31, 2019 and December 31, 2018 shall be as set forth in the definition of Consolidated EBITDA and (b) Consolidated Interest Expense for the fiscal quarter periods ending on September 30, 2019, December 31, 2019 and March 31, 2020 shall be calculated as set forth in the definition of Consolidated Interest Expense. As used herein, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes assets comprising all or substantially all of an operating unit of a business or constitutes all or substantially all of the common stock of a Person and (b) involves the payment of consideration by the Borrower and its Restricted Subsidiaries in excess of $10,000,000; and “Material Disposition” means any Disposition of property or series of related Dispositions of property that yields gross proceeds to the Borrower or any of its Restricted Subsidiaries in excess of $10,000,000.

Divisions

.  For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) any reference to a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a division of or by a limited liability company, or an allocation of assets to a series of a limited liability company (or the unwinding of such a division or allocation), as if it were a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person and (b) any division of a limited liability company shall constitute a separate Person hereunder (and each division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).

Interest Rates; LIBOR Notification

.  As of the Closing Date, the interest rate on Eurocurrency Loans is determined by reference to the LIBO Rate, which is derived from the London interbank offered rate. The Administrative Agent will notify the Borrower, pursuant Section 4.7(b), in advance of any change to the reference rate upon which the interest rate on Eurocurrency Loans is based.  However, the Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to the London interbank offered rate or the rate in the definition of “LIBO Rate” or with respect to any alternative or successor rate thereto, or replacement rate thereof, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate, as it may or may not be adjusted pursuant to Section 4.7(b), will be similar to, or produce the same value or economic equivalence of, the LIBO

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Rate or have the same volume or liquidity as did the London interbank offered rate prior to its discontinuance or unavailability.

Cashless Rollovers

.  Notwithstanding anything to the contrary contained in this Agreement or in any other Loan Document, to the extent that any Lender extends the maturity date of, or replaces, renews or refinances, any of its then-existing Loans with Incremental Loans, Refinancing Term Loans, Refinancing Revolving Loans, Extended Loans or loans incurred under a new credit facility, in each case, to the extent such extension, replacement, renewal or refinancing is effected by means of a “cashless roll” by such Lender, such extension, replacement, renewal or refinancing shall be deemed to comply with any requirement hereunder or any other Loan Document that such payment be made “in immediately available funds”, “in cash” or any other similar requirement.

Compliance with Certain Sections

. For purposes of determining compliance with Section 8, in the event that any Lien, Investment, Indebtedness (whether at the time of incurrence or upon application of all or a portion of the proceeds thereof), Disposition, Restricted Payment, Affiliate transaction, Contractual Obligation, prepayment of Indebtedness or other transaction meets the criteria of one, or more than one, of the “baskets” or categories of transactions then permitted pursuant to any clause or subsection of a particular covenant under Section 8, such transaction (or portion thereof) at any time shall be permitted under one or more of such clauses at the time of such transaction or any later time from time to time, in each case, as determined by the Borrower in its sole discretion at such time and thereafter may be reclassified by the Borrower in any manner not expressly prohibited by this Agreement.

Exchange Rates; Currency Equivalents; Basket Calculations

.  

(a)The Administrative Agent shall determine the Exchange Rates as of each Valuation Date to be used for calculating Dollar Equivalent amounts of extensions of credit and amounts outstanding hereunder denominated in other Approved Currencies.  Such Exchange Rates shall become effective as of such Valuation Date and shall be the Exchange Rates employed in converting any amounts between the applicable currencies until the next Valuation Date to occur.  Except for purposes of financial statements delivered by the Borrower hereunder or except as otherwise provided herein, the applicable amount of any currency (other than Dollars) for purposes of the Loan Documents shall be the Dollar Equivalent of such currency as so determined by the Administrative Agent.

(b)Whenever in this Agreement in connection with a borrowing, conversion, continuation or prepayment of a Eurocurrency Loan, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such borrowing, Eurocurrency Loan is denominated in another Approved Currency, such amount shall be the relevant Foreign Currency Equivalent of such Dollar amount (rounded to the nearest unit of such other Approved Currency, with 0.5 or a unit being rounded upward), as determined by the Administrative Agent.

(c)For purposes of determining compliance with the Consolidated Coverage Ratio, Consolidated Net Leverage Ratio and Consolidated Senior Secured Net Leverage Ratio, the amount of any Indebtedness denominated in any currency other than Dollars

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will be converted into Dollars based on the relevant currency exchange rate in effect on the date of the financial statements on which the applicable Consolidated EBITDA is calculated.

(d)For the avoidance of doubt, in the case of a Loan denominated in an Approved Currency other than Dollars, except as expressly provided herein, all interest and fees shall accrue and be payable thereon based on the actual amount outstanding in such Approved Currency (without any translation into the Dollar Equivalent thereof).

Section 2.AMOUNT AND TERMS OF TERM LOANS

Term Loans

.  Subject to the terms and conditions hereof, (a) each Initial Term Lender severally agrees to make a Term Loan denominated in Dollars to the Borrower on the Closing Date in an amount not to exceed the amount of such Initial Term Lender’s Initial Term Commitment as of the Closing Date and (b) each Term Lender that holds Term Commitments under any Incremental Term Loan Facility agrees to make a Term Loan to the Borrower as and when set forth in the applicable Incremental Commitment Agreement.  Term Loans shall be either Eurocurrency Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 4.3.  The Initial Term Commitments shall automatically terminate upon funding of the Initial Term Loans on the Closing Date.

Procedure for the Initial Term Loan Borrowing

.  (a)  The Borrower shall give the Administrative Agent irrevocable notice, which must be received by the Administrative Agent prior to 5:00 p.m., New York City time, one Business Day prior to the anticipated Closing Date, requesting that the Initial Term Lenders make Initial Term Loans on the Closing Date and specifying the amount to be borrowed.  Upon receipt of such notice, the Administrative Agent shall promptly notify each Initial Term Lender thereof.  Not later than 1:00 p.m., New York City time, on the Closing Date, each Initial Term Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the Initial Term Loans to be made by such Initial Term Lender.

(b)The Administrative Agent shall credit the account of the Borrower on the books of such office of the Administrative Agent with the aggregate amounts made available to the Administrative Agent by the Initial Term Lenders in immediately available funds.

Repayment of Initial Term Loans

.  The Initial Term Loans shall mature and be payable in full on the date that is seven (7) years after the Closing Date, and shall also be repayable prior to that date in consecutive quarterly installments, each of which shall be in an amount equal to such Lender’s Term Percentage of 0.25% of the original aggregate principal amount of the Initial Term Loans outstanding on the Closing Date after giving effect to Section 2.1 hereof, due commencing on January 1, 2020 and continuing on the first day of each consecutive April, July, October and January thereafter.

Section 3.AMOUNT AND TERMS OF REVOLVING COMMITMENTS

Revolving Commitments

. (a)  Subject to the terms and conditions hereof, each Revolving Lender severally agrees to make revolving credit loans (“Revolving Loans”)

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denominated in Dollars or any other Approved Currency to the Borrower from time to time during the Revolving Commitment Period in an aggregate principal amount at any one time outstanding which, when added to such Lenders Revolving Extensions of Credit then outstanding, does not exceed the amount of such Lenders Revolving Commitment.  Revolving Loans that are repaid may be reborrowed during the Revolving Commitment Period, subject to the terms and conditions hereof.  The Revolving Loans may from time to time be Eurocurrency Loans or, in the case of Loans denominated in Dollars, Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 3.2 and 4.3.

(b)The Borrower shall repay all outstanding Revolving Loans on the Revolving Termination Date.

Procedure for Revolving Loan Borrowing

.  The Borrower may borrow under the Revolving Commitments during the Revolving Commitment Period on any Business Day; provided, that the Borrower shall give the Administrative Agent irrevocable notice, which must be received by the Administrative Agent prior to (a) 1:00 p.m., New York City time, three Business Days prior to the requested Borrowing Date, in the case of Eurocurrency Loans, or (b) 11:00 a.m., New York City time, on the requested Borrowing Date, in the case of Base Rate Loans and which shall specify (i) the amount and Type of Revolving Loans to be borrowed, (ii) the requested Borrowing Date and (iii) in the case of Eurocurrency Loans, the respective amounts of each such Type of Loan, the respective lengths of the initial Interest Period therefor and the currency thereof.  Each borrowing under the Revolving Commitments shall be in an amount equal to (x) in the case of Base Rate Loans, $500,000 or a whole multiple of $100,000 in excess thereof and (y) in the case of Eurocurrency Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof.  Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Revolving Lender thereof.  Each Revolving Lender will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Borrower at the Funding Office prior to (i) in the case of Eurocurrency Loans, 12:00 Noon, New York City time, or (ii) in the case of Base Rate Loans, 1:00 p.m., New York City time, and, in each case, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent.  Such amounts will then be made available to the Borrower by the Administrative Agent crediting an account of the Borrower maintained by the Administrative Agent, in like amounts and funds as received by the Administrative Agent.

Swingline Commitment

.  (a)  Subject to the terms and conditions hereof, the Swingline Lender may in its sole discretion make a portion of the credit otherwise available to the Borrower under the Revolving Commitments from time to time during the Revolving Commitment Period by making swing line loans in Dollars (“Swingline Loans”) to the Borrower notwithstanding that after making a requested Swingline Loan, the sum of (i) the Swingline Lender’s aggregate principal amount of all Revolving Loans, (ii) the Revolving Percentage of the L/C Obligations and (iii) all outstanding Swingline Loans may exceed the Swingline Lender’s Revolving Commitment; provided, that (i) the aggregate principal amount of Swingline Loans outstanding at any time shall not exceed the Swingline Commitment, (ii) the Borrower shall not request any Swingline Loan if, after giving effect to the making of such Swingline Loan, the aggregate amount of the Available Revolving Commitments would be less than zero, and (iii) the Swingline Lender shall not be required to make any Swingline Loans under this Section 3.3 at any

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time when an Event of Default has occurred and is continuing.  Subject to the foregoing, Swingline Loans may be repaid and reborrowed from time to time.

(b)Swingline Loans shall be Base Rate Loans only.

(c)The Borrower shall repay all outstanding Swingline Loans (i) on each Borrowing Date for Revolving Loans, (ii) on the Revolving Termination Date, (iii) on a weekly basis as determined by the Swingline Lender and (iv) on demand by the Swingline Lender at any time when an Event of Default has occurred and is continuing.

Procedure for Swingline Borrowing; Refunding of Swingline Loans; Successor Swingline Lenders

.  (a)  Whenever the Borrower desires that the Swingline Lender make Swingline Loans it shall give the Swingline Lender irrevocable notice not later than 1:00 p.m., New York City time, on the proposed Borrowing Date, specifying (i) the amount to be borrowed and (ii) the requested Borrowing Date (which shall be a Business Day during the Revolving Commitment Period) and such notice shall constitute certification by the Borrower to the Swingline Lender that the unused portion of the Revolving Facility is greater than or equal to the Swingline Loans and the Swingline Lender shall be entitled to rely conclusively on such certification.  Each borrowing of Swingline Loans shall be in an amount equal to $100,000 or a whole multiple of $100,000 in excess thereof.  Not later than 3:00 p.m., New York City time, on the Borrowing Date specified in a notice in respect of Swingline Loans, the Swingline Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the amount of the Swingline Loan to be made by the Swingline Lender.  The Administrative Agent shall make the proceeds of such Swingline Loan available to the Borrower on such Borrowing Date by depositing such proceeds in the account of the Borrower with the Administrative Agent on such Borrowing Date in immediately available funds.

(b)The Swingline Lender may at any time, on behalf of the Borrower (which hereby irrevocably authorizes the Swingline Lender to do so), request a borrowing of Revolving Loans in an amount equal to the aggregate outstanding Swingline Loans and apply the proceeds of such borrowing to the repayment of the Swingline Loans.  Each Revolving Lender agrees to fund its Revolving Percentage of any such borrowing so requested in immediately available funds, not later than 10:00 a.m., New York City time, on the first Business Day after the date of such borrowing is requested.  The proceeds of such Revolving Loans shall immediately be made available by the Administrative Agent to the Swingline Lender for application to the repayment of Swingline Loans.  The Borrower agrees to pay, and irrevocably authorizes the Swingline Lender and Administrative Agent to charge the Borrower’s accounts with the Swingline Lender or Administrative Agent as necessary to pay, all outstanding Swingline Loans to the extent amounts received from the Revolving Lenders upon any such request are not sufficient to repay the outstanding Swingline Loans.

(c)If the Swingline Lender at any time determines that it is precluded from making a request for a borrowing of Revolving Loans pursuant to Section 3.4(b), whether by reason of the occurrence of a Default described in Section 9(f) or otherwise for any reason, each Revolving Lender hereby purchases from the Swingline Lender an undivided participating interest in the then outstanding Swingline Loans (a “Swingline Participation Amount”) and shall promptly

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upon demand of the Swingline Lender complete such purchase at par by paying to the Swingline Lender an amount equal to such Revolving Lenders Revolving Percentage of the aggregate outstanding Swingline Loans.

(d)Whenever, at any time after the Swingline Lender has received from any Revolving Lender such Lender’s Swingline Participation Amount, the Swingline Lender receives any payment on account of the Swingline Loans, the Swingline Lender will distribute to such Lender its Swingline Participation Amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s participating interest was outstanding and funded and, in the case of principal and interest payments, to reflect such Lender’s pro rata portion of such payment if such payment is not sufficient to pay the principal of and interest on all Swingline Loans then due); provided, that if any such payment is required to be returned, such Revolving Lender will return to the Swingline Lender any portion thereof previously distributed to it by the Swingline Lender.

(e)Each Revolving Lender’s obligation to make the Loans referred to in Section 3.4(b) and to purchase participating interests pursuant to Section 3.4(c) shall be absolute and unconditional and shall not be affected by any circumstance, including: (i) any setoff, counterclaim, recoupment, defense or other right that such Revolving Lender or the Borrower may have against the Swingline Lender, the Borrower or any other Person for any reason whatsoever; (ii) the occurrence or continuance of any Default or the failure to satisfy any of the conditions specified in Section 6; (iii) any adverse change in the condition (financial or otherwise) of the Borrower; (iv) any breach of this Agreement or any other Loan Document by the Borrower, any other Loan Party or any other Revolving Lender; or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.

(f)The Swingline Lender may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Swingline Lender and the successor Swingline Lender.  The Administrative Agent shall notify the Lenders of any such replacement of a Swingline Lender.  At the time any such replacement shall become effective, the Borrower shall pay all unpaid interest accrued for the account of the replaced Swingline Lender pursuant to Section 4.5(b).  From and after the effective date of any such replacement, (x) the successor Swingline Lender shall have all the rights and obligations of the replaced Swingline Lender under this Agreement with respect to Swingline Loans made thereafter and (y) references herein to the term “Swingline Lender” shall be deemed to refer to such successor or to any previous Swingline Lender, or to such successor and all previous Swingline Lenders, as the context shall require.  After the replacement of a Swingline Lender hereunder, the replaced Swingline Lender shall remain a party hereto and shall continue to have all the rights and obligations of a Swingline Lender under this Agreement with respect to Swingline Loans made by it prior to its replacement, but shall not be required to make additional Swingline Loans.

(g)Subject to the appointment and acceptance of a successor Swingline Lender, any Swingline Lender may resign as a Swingline Lender at any time upon thirty days’ prior written notice to the Administrative Agent, the Borrower and the Lenders, in which case, such Swingline Lender shall be replaced in accordance with Section 3.4(f) above.

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Commitment Fees, etc.

  (a)  The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment fee for the period from and including the Closing Date to the last day of the Revolving Commitment Period, computed at the Commitment Fee Rate on the average daily amount of the Available Revolving Commitment of such Lender during the period for which payment is made, payable quarterly in arrears on the first day of each April, July, October and January and on the Revolving Termination Date, commencing on the first of such dates to occur after the Closing Date.

(b)The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the dates agreed to in writing by the Borrower and the Administrative Agent.

Termination or Reduction of Revolving Commitments

.  The Borrower shall have the right, upon not less than three Business Days’ notice to the Administrative Agent, to terminate the Revolving Commitments or, from time to time, to reduce the amount of the Revolving Commitments, which notice may be conditioned upon the occurrence of any other transaction and, if such condition is not satisfied on or prior to the date specified in such notice, may be revoked by the Borrower; provided, that no such termination or reduction of Revolving Commitments shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Loans and Swingline Loans made on the effective date thereof, the Total Revolving Extensions of Credit would exceed the Total Revolving Commitments.  Any such reduction shall be in an amount equal to $500,000, or a whole multiple thereof or the Total Revolving Commitment, and shall reduce permanently the Revolving Commitments then in effect.  Unless previously terminated in accordance with the terms hereof, the Revolving Commitments shall automatically terminate on the Revolving Termination Date.

Letter of Credit Commitment

.  (a)  Subject to the terms and conditions hereof, each Issuing Lender (other than any Issuing Lender referred to in clause (b) of the definition of “Issuing Lender”), in reliance on the agreements of the other Revolving Lenders set forth in Section 3.10(a), agrees to issue, on a sight basis, letters of credit (“Letters of Credit”) for the account of the Borrower (or for the account of any Subsidiary of the Borrower if the Borrower requests a Letter of Credit for such Subsidiary’s account; provided, that notwithstanding that a Letter of Credit may be issued or outstanding hereunder in support of any obligations of, or for the account of, a Subsidiary of the Borrower, the Borrower shall be obligated to reimburse each Issuing Lender hereunder for any and all drawings under such Letter of Credit; provided, further, that the Borrower shall act as the applicant of each Letter of Credit on behalf of a Subsidiary) on any Business Day at any time and from time to time until the date that is ten days prior to the Revolving Termination Date, in such form as may be approved from time to time by such Issuing Lender; provided, that the applicable Issuing Lender shall have no obligation to cause any Letter of Credit to be issued if, after giving effect to such issuance, (i) the L/C Obligations would exceed the Total L/C Commitments, (ii) the aggregate amount of the Available Revolving Commitments would be less than zero, (iii) [reserved] or (iv) the available balance of all outstanding Letters of Credit issued by such Issuing Lender would exceed such Issuing Lender’s L/C Commitment; provided, that each Issuing Lender, may at its sole discretion issue a Letter of Credit although after giving effect to such issuance the stated amount of all outstanding Letters of Credit issued by such Issuing Lender would exceed its L/C Commitment, so long as after giving effect to such issuance the L/C Obligations would not exceed the Total L/C Commitments; provided, further, that Barclays Bank

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PLC shall be under no obligation to issue commercial or trade Letters of Credit.  In the event of any conflict between the terms and conditions of this Agreement and the terms and conditions of any Application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the applicable Issuing Lender relating to any Letter of Credit, the terms and conditions of this Agreement shall control.  Each Letter of Credit shall be denominated in Dollars and expire no later than the earlier of (i) the first anniversary of its date of issuance and (ii) the date that is five days prior to the Revolving Termination Date; provided, that any Letter of Credit with a one-year term may provide, with the consent of the applicable Issuing Lender, for the automatic extension thereof for additional periods of up to one year (which shall in no event extend beyond the date referred to in clause (ii) above).  If, as of the Revolving Termination Date, any Letter of Credit for any reason remains outstanding, the Borrower shall, in each case, immediately Cash Collateralize the then undrawn amount of all outstanding Letters of Credit with all such Cash Collateral or Backstop L/Cs denominated in Dollars.  Cash Collateralize shall mean to (i) pledge and deposit with or deliver to the Administrative Agent, for the benefit of the applicable Issuing Lender and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances of deposit accounts under the sole dominion and control of the Administrative Agent on terms reasonably satisfactory to the Administrative Agent in an amount equal to 100% of the total amount then available under the applicable Letters of Credit pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and such Issuing Lender (which documents are hereby consented to by the Lenders) (Cash Collateral) or (ii) deliver to the applicable Issuing Lender one or more backstop letters of credit in form and substance reasonably acceptable to, and issued by financial institutions reasonably acceptable to the applicable Issuing Lender that has issued such Letter of Credit and the Administrative Agent (each such letter of credit, a Backstop L/C).  Derivatives of such above defined terms shall have corresponding meanings.

(b)No Issuing Lender shall at any time be obligated to cause any Letter of Credit to be issued hereunder if such issuance would conflict with, or cause such Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law or such Issuing Lender’s internal policies relating to the issuance of Letters of Credit.

(c)The Borrower may, at any time and from time to time with the consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed) and such Lender being so designated, designate one or more additional Lenders to act as an issuing lender under the terms of this Agreement.  Any Lender designated as an issuing lender pursuant to this Section 3.7(c) shall be deemed to be an “Issuing Lender” (in addition to being a Lender) in respect of Letters of Credit issued or to be issued by such Lender, and, with respect to such Letters of Credit, such term shall thereafter apply to the other Issuing Lender or Issuing Lenders and such Lender.

(d) The Borrower hereby agrees that each Existing Letter of Credit shall be deemed to be a Letter of Credit under this Agreement as of the date on which the Lender that issued such Existing Letter of Credit becomes a Revolving Lender hereunder.

(e)Any Issuing Lender may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Lender and the successor Issuing Lender.  The Administrative Agent shall notify the Lenders of any such

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replacement of an Issuing Lender.  At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Lender pursuant to Section 3.9.  From and after the effective date of any such replacement, (x) the successor Issuing Lender shall have all the rights and obligations of the replaced Issuing Lender under this Agreement with respect to Letters of Credit to be issued thereafter and (y) references herein to the term Issuing Lender shall be deemed to refer to such successor or to any previous Issuing Lender, or to such successor and all previous Issuing Lenders, as the context shall require.  After the replacement of an Issuing Lender hereunder, the replaced Issuing Lender shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Lender under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit or amend or extend any outstanding Letter of Credit issued by it.

(f)Any Issuing Lender may resign as an Issuing Lender at any time upon thirty days’ prior written notice to the Administrative Agent and the Borrower, in which case, such Issuing Lender may be replaced in accordance with Section 3.7(e).

Procedure for Issuance of Letters of Credit

.  (a)  The Borrower may from time to time request that any Issuing Lender (other than any Issuing Lender referred to in clause (b) of the definition of “Issuing Lender”) issue a Letter of Credit by delivering to such Issuing Lender at its address for notices specified herein an Application therefor, completed to the reasonable satisfaction of such Issuing Lender, and such other certificates, documents and other papers and information as such Issuing Lender may reasonably request.  Upon receipt of any Application, such Issuing Lender will notify the Administrative Agent of the amount, the beneficiary and the requested expiration of the requested Letter of Credit, and upon receipt of written confirmation from the Administrative Agent that after giving effect to the requested issuance, none of the statements specified in clauses (i) through (iv) of the first sentence of Section 3.7(a) would be true, such Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith to be processed in accordance with its customary policies and procedures and shall promptly issue the Letter of Credit requested thereby (but in no event shall any Issuing Lender be required to issue any Letter of Credit earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed to by such Issuing Lender and the Borrower.  Such Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower (with a copy to the Administrative Agent) promptly following the issuance thereof.  Such Issuing Lender shall promptly furnish to the Administrative Agent, which shall in turn promptly furnish to the Lenders, notice of the issuance of each Letter of Credit (including the amount thereof).

(b)The making of each request for a Letter of Credit by the Borrower shall be deemed to be a representation and warranty by the Borrower that such Letter of Credit may be issued in accordance with, and will not violate the requirements of, Section 3.7(a) or any Requirement of Law applicable to the Loan Parties.  Unless each Issuing Lender has received notice from the Administrative Agent before it issues a Letter of Credit that one or more of the applicable conditions specified in Section 6.2 are not satisfied, or that the issuance of such Letter

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of Credit would violate Section 3.7, then such Issuing Lender may issue the requested Letter of Credit for the account of the Borrower in accordance with its customary policies and procedures.

Fees and Other Charges

.  (a)  The Borrower will pay a fee on the undrawn and unexpired amount of each Letter of Credit at a per annum rate equal to the Applicable Margin then in effect with respect to Eurocurrency Loans under the Revolving Facility, shared ratably among the Revolving Lenders and payable quarterly in arrears on each L/C Fee Payment Date after the issuance date.  In addition, the Borrower shall pay to each Issuing Lender for its own account a fronting fee on the undrawn and unexpired amount of each Letter of Credit issued by such Issuing Lender computed at the rate of 0.125% per annum and payable quarterly in arrears on each L/C Fee Payment Date.

(b)In addition to the foregoing fees, the Borrower shall pay or reimburse each Issuing Lender for such normal and customary costs and expenses as are incurred or charged by such Issuing Lender in issuing, negotiating, effecting payment under, amending or otherwise administering any Letter of Credit.

Letter of Credit Participations

.  (a)  Each Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce such Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from such Issuing Lender, on the terms and conditions set forth below, for such L/C Participant’s own account and risk an undivided interest equal to such L/C Participant’s Revolving Percentage in such Issuing Lender’s obligations and rights under and in respect of each Letter of Credit issued hereunder and the amount of each drawing paid by such Issuing Lender thereunder.  Each L/C Participant unconditionally and irrevocably agrees with each Issuing Lender that, if a drawing is paid under any Letter of Credit for which such Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to the Administrative Agent for the account of such Issuing Lender upon demand of such Issuing Lender an amount equal to such L/C Participant’s Revolving Percentage of the amount of such drawing, or any part thereof, that is not so reimbursed and the Administrative Agent shall promptly forward such amounts to such Issuing Lender.

(b)If any amount required to be paid by any L/C Participant to the Administrative Agent for the account of any Issuing Lender pursuant to Section 3.10(a) in respect of any unreimbursed portion of any payment made by such Issuing Lender under any Letter of Credit is paid to the Administrative Agent for the account of such Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to the Administrative Agent for the account of such Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Effective Rate during the period from and including the date such payment is required to the date on which such payment is immediately available to such Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360.  If any such amount required to be paid by any L/C Participant pursuant to Section 3.10(a) is not made available to the Administrative Agent for the account of any Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, such Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from

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such due date at the rate per annum applicable to Base Rate Loans under the Revolving Facility.  A certificate of any Issuing Lender submitted to any L/C Participant with respect to any amounts owing under this Section 3.10 shall be conclusive in the absence of manifest error.

(c)Whenever, at any time after any Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with Section 3.10(a), the Administrative Agent or any Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by such Issuing Lender), or any payment of interest on account thereof, the Administrative Agent or such Issuing Lender, as the case may be, will distribute to such L/C Participant its pro rata share thereof; provided, that if any such payment received by Administrative Agent or such Issuing Lender, as the case may be, shall be required to be returned by the Administrative Agent or such Issuing Lender, such L/C Participant shall return to the Administrative Agent for the account of such Issuing Lender the portion thereof previously distributed to such L/C Participant.

Reimbursement Obligation of the Borrower

.  The Borrower agrees to reimburse each Issuing Lender within one Business Day after such Issuing Lender notifies the Borrower of the date and amount of a drawing presented under any Letter of Credit paid by such Issuing Lender (or on the next Business Day, if such notice is received any time after 11:00 a.m., New York time, on such day) for the amount of such drawing so paid.  Each such payment shall be made to such Issuing Lender at its address for notices referred to herein in Dollars and in immediately available funds.  Interest shall be payable on any such amounts from the date on which the relevant drawing is paid until payment in full at the rate set forth in (i) until the Business Day next succeeding the date of the relevant notice, Section 4.5(b) and (ii) thereafter, Section 4.5(c).

Obligations Absolute

.  The Borrower’s obligations under Section 3.11 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Borrower may have or have had against any Issuing Lender, any beneficiary of a Letter of Credit or any other Person.  The Borrower also agrees with each Issuing Lender that such Issuing Lender shall not be responsible for, and the Borrower’s Reimbursement Obligations under Section 3.11 shall not be affected by, among other things, (i) the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or purportedly transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee or purported transferee, (ii) payment by each Issuing Lender under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iii) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 3.12, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder.  No Issuing Lender shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions found by a final and non-appealable decision of a court of competent jurisdiction to have resulted

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from the gross negligence or willful misconduct of such Issuing Lender or any Related Person of such Issuing Lender.  The Borrower agrees that any action taken by any Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the Uniform Commercial Code of the State of New York, shall be binding on the Borrower and shall not result in any liability of such Issuing Lender to the Borrower.

Letter of Credit Payments

.  If a compliant drawing shall be presented for payment under any Letter of Credit, the applicable Issuing Lender that issued such Letter of Credit shall promptly notify the Administrative Agent who in turn shall promptly notify the Borrower of the date and amount thereof.  The responsibility of each Issuing Lender to the Borrower in connection with any drawing presented for payment under any Letter of Credit issued by such Issuing Lender shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to causing the applicable Issuing Lender that has issued such Letter of Credit to determine that the documents (including each drawing, if any) delivered under such Letter of Credit in connection with such presentment are substantially in conformity with such Letter of Credit.

Section 4.GENERAL PROVISIONS APPLICABLE TO LOANS AND
LETTERS OF CREDIT

Optional Prepayments

.  (a)  The Borrower may at any time and from time to time prepay the Loans, in whole or in part, without premium or penalty, upon irrevocable notice delivered to the Administrative Agent (i) no later than 1:00 p.m., New York City time (or such later time as the Administrative Agent may agree in its sole discretion), three Business Days prior thereto in the case of Eurocurrency Loans and (ii) and no later than 1:00 p.m., New York City time (or such later time as the Administrative Agent may agree in its sole discretion), one Business Day prior thereto in the case of Loans that are Base Rate Loans, in each case which notice shall specify the date and amount of prepayment and whether the prepayment is of Eurocurrency Loans or Base Rate Loans and the currency of the Loan being repaid; provided, that if a Eurocurrency Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 4.11.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.  If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein (provided, that a notice of prepayment may state that such notice is conditioned upon the effectiveness of other credit facilities or other financing or events, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified date) if such condition is not satisfied), together with (except in the case of Revolving Loans that are Base Rate Loans and Swingline Loans) accrued interest to such date on the amount prepaid.  Partial prepayments of Term Loans and Revolving Loans shall be in an aggregate principal amount of $500,000 or a whole multiple thereof.  Partial prepayments of Swingline Loans shall be in an aggregate principal amount of $100,000 or a whole multiple thereof.

(b)Any optional prepayments of the Term Facilities shall be credited to the remaining scheduled installments of the Term Facilities thereof as specified by the Borrower

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or, if not specified, pro rata to the remaining installments of each of the Facilities on a pro rata basis.

(c)Notwithstanding the foregoing, a prepayment premium shall apply to any prepayment of Initial Term Loans occurring on or prior to the six month anniversary of the Closing Date from the proceeds of a Repricing Transaction in an amount equal to 1.00% of the principal amount of any Term Loans subject to such prepayment or, in the case of any Repricing Transaction effected through an amendment, the principal amount of Initial Term Loans outstanding immediately prior to such amendment of any Term Lender that is replaced in connection with such amendment pursuant to the Borrower’s exercise of its mandatory assignment rights to replace a Lender under Section 4.13.

Mandatory Prepayments

.  (a)  If at any time after the Closing Date any Group Member receives any Net Cash Proceeds from the Incurrence of any Indebtedness (other than Excluded Indebtedness), the Borrower shall prepay the Term Loans on a pro rata basis on the date of such receipt in an amount equal to 100% of such Net Cash Proceeds; provided, that if at the time of such prepayment such Group Member is required to prepay any Other Applicable Indebtedness (to the extent and if required by the terms of the definitive documentation governing such other Indebtedness), then the Borrower may apply 100% of such Net Cash Proceeds to prepay the Term Loans and prepay, redeem or repurchase such Other Applicable Indebtedness on a pro rata basis on the date of such receipt; provided, further, that (A) any prepayment, redemption or repurchase of such Other Applicable Indebtedness shall be at par (or less than par), (B) the portion of such prepayment amount allocated to such Other Applicable Indebtedness shall not exceed the amount required to be allocated to such Other Applicable Indebtedness pursuant to the terms thereof, (C) the amount of prepayment of the Term Loans that would otherwise have been required pursuant to this Section 4.2(a) shall be reduced accordingly and (D) to the extent the holders of such Other Applicable Indebtedness decline to have such Indebtedness prepaid, redeemed or repurchased, the declined amount shall promptly (and in any event within 10 Business Days after the date of such rejection) be applied to prepay the Term Loans in accordance with the terms hereof.

(b)If at any time after the Closing Date any Group Member receives any Net Cash Proceeds from any Asset Sale or Recovery Event in an amount exceeding $25,000,000 in any fiscal year, then, the Borrower shall (i) if no Reinvestment Notice shall have been delivered in respect thereof, prepay the Term Loans on a pro rata basis on the fifth Business Day following the date of such receipt in an amount equal to 100% of such excess Net Cash Proceeds or (ii) if a Reinvestment Notice has been delivered in respect thereof, prepay the Term Loans in an amount equal to the Reinvestment Prepayment Amount, if any, on a pro rata basis on the Reinvestment Prepayment Date; provided, that if at the time of such prepayment the Borrower or such Group Member is required to prepay any Other Applicable Indebtedness (to the extent and if required by the terms of the definitive documentation governing such other Indebtedness), then the Borrower may apply 100% of such excess Net Cash Proceeds (or the Reinvestment Prepayment Amount, as applicable) to prepay the Term Loans and prepay, redeem or repurchase such Other Applicable Indebtedness on a pro rata basis on the date of such receipt; provided, further, that (A) any prepayment, redemption or repurchase of such Other Applicable Indebtedness shall be at par (or less than par), (B) the portion of such prepayment amount allocated to such Other Applicable

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Indebtedness shall not exceed the amount required to be allocated to such Other Applicable Indebtedness pursuant to the terms thereof, (C) the amount of prepayment of the Term Loans that would otherwise have been required pursuant to this Section 4.2(b) shall be reduced accordingly, and (D) to the extent the holders of such Other Applicable Indebtedness decline to have such Indebtedness prepaid, redeemed or repurchased, the declined amount shall promptly (and in any event within 10 Business Days after the date of such rejection) be applied to prepay the Term Loans in accordance with the terms hereof.  

(c)Within 5 Business Days after the date the Borrower is required to deliver financial statements pursuant to Section 7.1(a)(i) starting with the fiscal year ending on March 31, 2021, and the related Compliance Certificate pursuant to Section 7.2(a), the Borrowers shall prepay outstanding Term Loans in an aggregate principal amount equal to the Required Prepayment Percentage of Excess Cash Flow for the fiscal year then ended less the aggregate amount of all voluntary prepayment of principal of Term Loans pursuant to Section 4.1 during such fiscal year to the extent such payments were not and have not been funded with additional long-term Indebtedness (other than Revolving Loans) or the use of the Available Amount; provided that such prepayment shall only be required under this Section 4.2(c) if the net amount required to be prepaid in any fiscal year is greater than or equal to $25,000,000; provided, that if at the time of such prepayment the Borrower or such Group Member is required to prepay any Other Applicable Indebtedness (to the extent and if required by the terms of the definitive documentation governing such other Indebtedness), then the Borrower may apply such amount otherwise required to be applied as a prepayment pursuant to this Section 4.2(c) on a pro rata basis to the prepayment of the Term Loans to the repurchase or prepayment of the Other Applicable Indebtedness (determined on the basis of the aggregate outstanding principal amount of the Term Loans and Other Applicable Indebtedness (or accreted amount if such Other Applicable Indebtedness is issued with original issue discount) at such time; provided, further, that (A) any prepayment, redemption or repurchase of such Other Applicable Indebtedness shall be at par (or less than par), (B) the portion of such prepayment amount allocated to such Other Applicable Indebtedness shall not exceed the amount required to be allocated to such Other Applicable Indebtedness pursuant to the terms thereof, (C) the amount of prepayment of the Term Loans that would otherwise have been required pursuant to this Section 4.2(c) shall be reduced accordingly, and (D) to the extent the holders of such Other Applicable Indebtedness decline to have such Indebtedness prepaid, redeemed or repurchased, the declined amount shall promptly (and in any event within 10 Business Days after the date of such rejection) be applied to prepay the Term Loans in accordance with the terms hereof.

(d)If at any time after the Closing Date, the aggregate Revolving Extensions of Credit then outstanding exceed the Revolving Commitments then in effect, the Borrower (without notice or demand) shall immediately prepay outstanding Swingline Loans or Revolving Loans and pay any unpaid Reimbursement Obligations (or, if no Swingline Loans or Revolving Loans are outstanding, Cash Collateralize outstanding Letters of Credit) in an amount sufficient to eliminate any such excess.

(e)Mandatory prepayments of Term Loans (i) shall be applied to Base Rate Loans and Eurocurrency Loans on a pro rata basis and (ii) shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid.  Each such prepayment shall be

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credited to the remaining scheduled installments of the Term Facilities thereof as specified by the Borrower or, if not specified, to the next eight scheduled quarterly installments of the Term Loans in direct order of maturity and thereafter to the remaining scheduled quarterly installments of the Term Loans on a pro rata basis.

(f)Other than with respect to mandatory prepayments upon the Incurrence of any Permitted Pari Passu Refinancing Debt, Permitted Junior Refinancing Debt or other Credit Agreement Refinancing Indebtedness pursuant to Section 4.2(a), the applicable Lenders may elect not to accept any mandatory prepayment by giving written notice of such election to the Administrative Agent no later than 12:00 p.m, New York Time, one Business Day prior to such mandatory prepayment date; provided that such election must be for the full (and not partial) amount of such mandatory prepayment (each such Lender, a “Declining Lender”).  Any prepayment amount declined by the Declining Lenders (the “Declined Amount”) shall be retained by the Borrower.

(g)Notwithstanding any other provisions of this Section 4.2 to the contrary, with respect to any prepayment required pursuant to Section 4.2(a), (b) or (c), if at the time of such prepayment, the Group Member receiving the Net Cash Proceeds (i) is prohibited, restricted or delayed by applicable local law from repatriating such Net Cash Proceeds or Excess Cash Flow to the Borrower, the portion of such Net Cash Proceeds or Excess Cash Flow so affected will not be required to be applied to repay Term Loans at the times provided in Section 4.2(a), (b) or (c) but may be retained by the applicable Group Member so long, but only so long, as the applicable local law will not permit repatriation to the Borrower, and once such repatriation of any of such affected Net Cash Proceeds or Excess Cash Flow is permitted under the applicable local law, such repatriation will be effected and such repatriated Net Cash Proceeds or Excess Cash Flow will be promptly applied (net of additional taxes payable or reserved against as a result thereof) to the repayment of the Term Loans pursuant to Section 4.2(a), (b) or (c) to the extent provided therein or (ii) cannot repatriate such funds to the Borrower without (in the good faith determination of the Borrower) incurring material adverse tax consequences with respect to such repatriated amount, the Net Cash Proceeds or Excess Cash Flow (or portion thereof) so affected may be retained by the applicable Group Member (the Borrower hereby agrees to cause the applicable Group Member to promptly use commercially reasonable efforts to take all actions within the reasonable control of the Borrower that are reasonably required to eliminate such tax effects) until such time as such material adverse costs would not apply to the repatriation thereof, at which time the mandatory prepayments otherwise required by Section 4.2(a), (b) or (c) with respect to such Net Cash Proceeds or Excess Cash Flow shall be made.

Conversion and Continuation Options

.  (a)  The Borrower may elect from time to time to convert Eurocurrency Loans denominated in Dollars to Base Rate Loans by giving the Administrative Agent prior irrevocable notice of such election no later than 12:00 noon, New York City time, on the Business Day preceding the proposed conversion date; provided, that any such conversion of Eurocurrency Loans may only be made on the last day of an Interest Period with respect thereto.  The Borrower may elect from time to time to convert Base Rate Loans to Eurocurrency Loans by giving the Administrative Agent prior irrevocable notice of such election no later than 1:00 p.m., New York City time, on the third Business Day preceding the proposed conversion date (which notice shall specify the length of the initial Interest Period therefore);

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provided, that no Base Rate Loan under a particular Facility may be converted into a Eurocurrency Loan when any Event of Default has occurred and is continuing and the Administrative Agent or the Majority Facility Lenders in respect of such Facility have determined in its or their sole discretion not to permit such conversions.  If the Borrower requests a conversion to Eurocurrency Loans in any such notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

(b)Any Eurocurrency Loan may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving irrevocable notice to the Administrative Agent, in accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Loans; provided, that no Eurocurrency Loan denominated in Dollars under a particular Facility may be continued as such when any Event of Default has occurred and is continuing and the Administrative Agent has, or the Majority Facility Lenders in respect of such Facility have, determined in its or their sole discretion not to permit such continuations; provided, further, that if such continuation is not permitted pursuant to the preceding proviso such Dollar denominated Loans shall be automatically converted to Base Rate Loans on the last day of such then expiring Interest Period; provided, further, that if the Borrower shall fail to give any required notice as described in this Section 4.3(b) such Loans shall be automatically converted, on the last day of such then expiring Interest Period, to Eurocurrency Loans having an Interest Period of one month.  So long as no Event of Default has occurred and is continuing, if the Borrower requests a continuation of Eurocurrency Loans in any such notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

Limitations on Eurocurrency Tranches

.  Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions and continuations of Eurocurrency Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, (a) after giving effect thereto, the aggregate principal amount of the Eurocurrency Loans comprising each Eurocurrency Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) no more than fifteen Eurocurrency Tranches shall be outstanding at any one time.

Interest Rates and Payment Dates; Administrative Agent Fees; Other Fees

.  (a)  Each Eurocurrency Loan shall bear interest on the outstanding principal amount thereof for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurocurrency Rate determined for such day plus the Applicable Margin.

(b)Each Base Rate Loan shall bear interest on the outstanding principal amount thereof at a rate per annum equal to the Base Rate plus the Applicable Margin.

(c) (i) If any portion of the principal of any Loan or Reimbursement Obligation is not paid when due (whether at the stated maturity, by acceleration or otherwise), such portion of such principal shall bear interest at a rate per annum equal to (x) in the case of the Loans, the rate that would otherwise be applicable thereto pursuant to Section 4.5(a) or 4.5(b) plus

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2.00% per annum or (y) in the case of Reimbursement Obligations, the rate applicable to Base Rate Loans under the Revolving Facility plus 2.00% per annum and (ii) if all or a portion of any interest payable on any Loan or Reimbursement Obligation or any commitment fee or other amount payable hereunder is not paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to Base Rate Loans under the relevant Facility plus 2.00% per annum (or, in the case of any such other amounts that do not relate to a particular Facility, the rate then applicable to Base Rate Loans under the Revolving Facility plus 2.00% per annum), in each case, with respect to both clause (i) and clause (ii) above, from the date of such non-payment until such amount is paid in full (as well after as before judgment).

(d)Interest shall be payable in arrears on each Interest Payment Date; provided, that interest accruing pursuant to Section 4.5(c) shall be payable from time to time on demand.

(e)The Borrower agrees to pay to the Administrative Agent and the Other Representatives any fees in the amounts and on the dates previously agreed to in writing by the Borrower, the Other Representatives and the Administrative Agent in connection with this Agreement.

Computation of Interest and Fees

.  (a)  Interest and fees payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that, with respect to Base Rate Loans the rate of interest on which is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed.  The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of each determination of a Eurocurrency Rate.  Any change in the interest rate on a Loan resulting from a change in the Base Rate or the Statutory Reserve Rate shall become effective as of the opening of business on the day on which such change becomes effective.  The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of the effective date and the amount of each such change in interest rate.  Interest shall accrue on each Loan for each day on which it is made or outstanding, except the day on which it is repaid unless it is repaid on the same day that it was made.

(b)Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error.  The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 4.5(a).

(c)In the event that any financial statement or compliance certificate delivered pursuant to Sections 7.1 or 7.2 respectively is inaccurate, and such inaccuracy, if corrected, would have led to the application of a higher Commitment Fee Rate for any period (an “Applicable Period”) than the Commitment Fee Rate applied for such Applicable Period, then (i) the Borrower shall promptly deliver to the Administrative Agent a corrected financial statement and a corrected compliance certificate for such Applicable Period, (ii) the Commitment Fee Rate shall be determined based on the corrected compliance certificate for such Applicable Period, and

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(iii) the Borrower shall promptly pay to the Administrative Agent (for the account of the Lenders and the Issuing Lenders during the Applicable Period or their successors and assigns) the accrued additional interest owing as a result of such increased Commitment Fee Rate for such Applicable Period.  This Section 4.6(c) shall not limit the rights of the Administrative Agent or the Lenders with respect to Section 4.5(b) and Section 9 hereof, and shall survive the termination of this Agreement.

4.7Inability to Determine Interest Rate; Benchmark Replacement.

(a)If prior to the first day of any Interest Period:

(i)the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower absent manifest error) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurocurrency Rate or the Eurodollar Base Rate, as applicable (including, without limitation, because the LIBO Rate is not available or published on a current basis), for the applicable currency and such Interest Period, or

(ii)the Administrative Agent shall have received notice from the Majority Facility Lenders in respect of the relevant Facility that the Eurocurrency Rate or the Eurodollar Base Rate, as applicable, determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period,

then the Administrative Agent shall give written notice thereof to the Borrower and the relevant Lenders as soon as practicable thereafter.  If such notice is given (x) any Eurocurrency Loans under the relevant Facility requested to be made on the first day of such Interest Period shall be made as Base Rate Loans (provided, that the Borrower may rescind such request promptly after receipt of such notice), (y) any Loans under the relevant Facility that were to have been converted on the first day of such Interest Period to Eurocurrency Loans shall be continued as Base Rate Loans and (z) any outstanding Eurocurrency Loans under the relevant Facility shall be converted, on the last day of the then-current Interest Period, to Base Rate Loans.  Until such notice has been withdrawn by the Administrative Agent, no further Eurocurrency Loans under the relevant Facility shall be made or continued as such, nor shall the Borrower have the right to convert Loans under the relevant Facility to Eurocurrency Loans.

(b)Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, the Administrative Agent and the Borrower may amend this Agreement to replace the LIBO Rate with a Benchmark Replacement. Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m., New York time, on the fifth Business Day after the Administrative Agent has posted such proposed amendment to all Lenders and the Borrower so long as the Administrative Agent has not received, by such time, written notice of objection to such amendment from Lenders comprising the Required Lenders.

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Any such amendment with respect to an Early Opt-in Election will become effective on the date that Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders accept such amendment. No replacement of the LIBO Rate with a Benchmark Replacement pursuant to this clause (b) will occur prior to the applicable Benchmark Transition Start Date.

(c)Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement.

(d)Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date and Benchmark Transition Start Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, and (iv) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or Lenders pursuant to this Section 4.7, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 4.7.

(e)Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Eurocurrency Loan of, conversion to or continuation of Eurocurrency Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Loan of or conversion to Base Rate Loans. During any Benchmark Unavailability Period, the component of Base Rate based upon LIBO Rate will not be used in any determination of Base Rate.

Pro Rata Treatment and Payments

.  (a)  Each borrowing by the Borrower from the Lenders hereunder, each payment by the Borrower on account of any commitment fee and any reduction of the Commitments of the Lenders shall be made pro rata according to the respective Term Percentages or Revolving Percentages, as the case may be of the relevant Lenders.

(b)Each payment (including each prepayment but excluding any purchase of Loans pursuant to Section 11.6(g)) by the Borrower on account of principal of and interest on the Term Loans shall be made, pro rata according to the respective outstanding principal amounts of the Term Loans then held by the Term Lenders.  Amounts prepaid on account of the Term Loans may not be reborrowed.

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(c)Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Revolving Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Loans then held by the Revolving Lenders.

(d)All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 1:00 p.m., New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Funding Office, in Dollars and in immediately available funds.  The Administrative Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received.  If any payment hereunder (other than payments on the Eurocurrency Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day.  If any payment on a Eurocurrency Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day.  In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension.

(e)Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation for the period until such Lender makes such amount immediately available to the Administrative Agent.  A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this Section 4.8(e) shall be conclusive in the absence of manifest error.  If such Lender’s share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to Base Rate Loans under the relevant Facility, on demand, from the Borrower.

(f)Unless the Administrative Agent shall have been notified in writing by the Borrower prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption, make available to the Lenders their respective pro rata shares of a corresponding amount.  If such payment is not made to the Administrative Agent by the Borrower within three Business Days after such due date, the Administrative Agent shall be entitled to recover, on demand, from each Lender to which any

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amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate.  Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Borrower.

Requirements of Law

.  (a)  If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof, or compliance by any Lender or the Administrative Agent with any request or directive whether or not having the force of law from any central bank or other Governmental Authority made subsequent to the date such Lender or the Administrative Agent, as applicable, becomes a party hereto:

(i)shall subject any Lender or the Administrative Agent to any Tax of any kind whatsoever with respect to this Agreement, or any other Loan Documents, and Commitment or Obligation, any Letter of Credit, any Application or any Eurocurrency Loan made by it, or its deposits, reserves, other liabilities or capital attributable thereto, or change the basis of taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes imposed on amounts payable hereunder, Other Taxes and Excluded Taxes; provided, that this provision shall not affect any obligation of the Borrower under Section 4.10);

(ii)shall impose, modify or hold applicable any reserve, liquidity requirements, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the Eurocurrency Rate hereunder; or

(iii)shall impose on such Lender any other condition; and

the result of any of the foregoing is to increase the cost to such Lender or the Administrative Agent, by an amount that such Lender or the Administrative Agent, as applicable, reasonably deems to be material, of making, converting into, continuing or maintaining Eurocurrency Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender or the Administrative Agent, upon its written demand (accompanied by a certificate of the type described in Section 4.9(c)), any additional amounts necessary to compensate such Lender or the Administrative Agent for such increased cost or reduced amount receivable.  If any Lender or the Administrative Agent becomes entitled to claim any additional amounts pursuant to this Section 4.9(a), it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled.

(b)If any Lender shall have reasonably determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or liquidity requirements or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy or liquidity

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requirements whether or not having the force of law from any Governmental Authority made subsequent to the date such Lender becomes a party hereto shall have the effect of reducing the rate of return on such Lenders or such corporations capital as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lenders or such corporations policies with respect to capital adequacy or liquidity requirements and such Lenders desired return on capital) by an amount reasonably deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written request (accompanied by a certificate of the type described in clause (c) below) therefor, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such corporation for such reduction.  For purposes of this Agreement, and notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, 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 be deemed to be have been enacted, adopted or issued after the date each Lender has become a party hereto, regardless of the date such act, requests, rules, regulations, guidelines or directives enacted, adopted or issued.

(c)A certificate as to any additional amounts payable pursuant to this Section 4.9 submitted by any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error.  Notwithstanding anything to the contrary in this Section 4.9, the Borrower shall not be required to compensate a Lender pursuant to this Section 4.9 for any amounts Incurred more than six months prior to the date that such Lender notifies the Borrower of such Lender’s intention to claim compensation therefor; provided, that, if the circumstances giving rise to such claim have a retroactive effect, then such six-month period shall be extended to include the period of such retroactive effect. The obligations of the Borrower pursuant to this Section 4.9 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

Taxes

.  (a)  Except to the extent required under applicable law, all payments made under this Agreement or any other Loan Document shall be made free and clear of, and without deduction or withholding for any Taxes.  If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is a Non-Excluded Tax (as defined below), then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 4.10) the Administrative Agent or Lender receives an amount equal to the sum it would have received had no such deduction or withholding been made; provided, however, that, for the avoidance of doubt, the Borrower shall not be required to increase any such amounts payable to any Lender or the Administrative Agent with respect to any Excluded Taxes.

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(b)Non-Excluded Taxes” shall mean all Taxes other than Excluded Taxes.  “Excluded Taxes” shall mean Taxes (i) measured by net income (however denominated), branch profits Taxes and franchise Taxes imposed on the Administrative Agent or any Lender or its applicable lending office or any branch, in each case as a result of a present or former connection between the Administrative Agent or such Lender and the jurisdiction of the Governmental Authority imposing such Tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising from the Administrative  Agent or such Lender having executed, delivered or performed its obligations or received a payment under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced, this Agreement or any other Loan Document, or sold or assigned an interest in any Loan or Loan Document), (ii) that are attributable to such Lender’s or the Administrative Agent’s failure to comply (other than as a result of any change in any Requirement of Law) with the requirements of Sections 4.10(e) or (f), (iii) that are United States federal withholding taxes imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement (other than pursuant to a replacement by the Borrower under Section 4.13), except to the extent that such Lender’s assignor (if any) was entitled, at the time of assignment to receive additional amounts from the Borrower with respect to the Taxes pursuant to this Section 4.10 and (iv) any withholding taxes imposed under FATCA.

(c)In addition, but without duplication of Section 4.10(a), the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(d)Whenever any Non-Excluded Taxes or Other Taxes are payable by or on account of a Loan Party, as promptly as possible thereafter the Borrower shall send to the Administrative Agent for its own account or for the account of the relevant Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof.  If the Borrower fails to pay or cause to be paid any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit or cause to be remitted to the Administrative Agent the required receipts or other required documentary evidence, the Loan Parties shall indemnify the Administrative Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure.

(e)Each Lender or the Administrative Agent (or Transferee) that is not a “United States person” as defined in Section 7701(a)(30) of the Code (a “Non-U.S. Lender”) shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form W-8IMY (together with any required attachments), Form W-8EXP and/or Form W-8BEN or W-8BEN-E (claiming benefits of an applicable tax treaty) or Form W-8ECI, as applicable (or successor form) or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement substantially in the form of Exhibit F and a Form W-8BEN or W-8BEN-E, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrower under this

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Agreement and the other Loan Documents.  Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation).  In addition, each Non-U.S. Lender shall deliver properly updated forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender.  Each Non-U.S. Lender shall promptly notify the Borrower and the Administrative Agent at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower or the Administrative Agent (or any other form of certification adopted by the U.S. taxing authorities for such purpose).  Notwithstanding any other provision of this Section 4.10(e), a Non-U.S. Lender shall not be required to deliver any form pursuant to this Section 4.10(e) that such Non-U.S. Lender is not legally able to deliver.  Each Lender or the Administrative Agent that is not a Non-U.S. Lender shall furnish an accurate and complete U.S. Internal Revenue Service Form W-9 (or successor form) establishing that such Lender or the Administrative Agent is not subject to U.S. backup withholding, and to the extent it may lawfully do so at such times, provide a new Form W-9 (or successor form) upon the expiration or obsolescence of any previously delivered form.

(f)A Lender or the Administrative Agent that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law and upon reasonable request in writing by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup 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 4.10(d)) shall not be required if in such Lender’s or the Administrative Agent’s reasonable judgment such completion, execution or submission would subject such Lender or the Administrative Agent to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender or the Administrative Agent.

(g)If any Lender or the Administrative Agent determines, in its reasonable discretion, that it has received a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 4.10, it shall promptly pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 4.10 with respect to the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund

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to such Governmental Authority.  Notwithstanding anything to the contrary in this Section 4.10(g), in no event will any Lender or the Administrative Agent be required to pay any amount to any Loan Party under this Section 4.10(g) the payment of which would place such Lender or the Administrative Agent in a materially less favorable net after-Tax position than such Lender or the Administrative Agent 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 Section 4.10(g) shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.

(h)The Borrower and each Loan Party shall indemnify each Lender and the Administrative Agent within twenty (20) days after written demand therefor, for the full amount of any Non-Excluded Taxes or Other Taxes paid or payable by such Lender or the Administrative Agent or any of their respective Affiliates, as applicable, on or with respect to any payment by or on account of any obligation of the Borrower or such Loan Party hereunder (including Non-Excluded Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 4.10) or otherwise arising in connection with this Agreement or any other Loan Document and any reasonable expenses arising therefrom or with respect thereto, whether or not such Non-Excluded Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority; provided, however, that neither the Borrower nor any Loan Party shall be obligated to make payment to any Lender or the Administrative Agent, as applicable, pursuant to this Section 4.10(h) in respect of penalties, interest or other similar liabilities attributable to such Non-Excluded Taxes or Other Taxes if such penalties, interest or other similar liabilities are attributable to the gross negligence or willful misconduct of such Lender or the Administrative Agent, as the case may be, seeking indemnification as determined in a final, non-appealable judgment of a court of competent jurisdiction.  An original official receipt, or certified copy thereof, as to the amount of such payment, delivered to the Borrower by a Lender or by the Administrative Agent on its own behalf or on behalf of any such Person, shall be conclusive absent manifest error.

(i)The agreements in this Section 4.10 shall survive resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments or this Agreement and the repayment, satisfaction or discharge of the Loans, Obligations and all other amounts payable under any Loan Document.

(j)If a Lender changes its applicable lending office (other than with respect to the designation of a new lending office pursuant to a request by the Borrower under Section 4.12) or assigns its rights or sells participations therein and the effect of the change, assignment or participation, as of the date of the change, would be to cause the Borrower to become obligated to pay any additional amount under Section 4.9(a)(i) or 4.10, the Borrower shall not be obligated to pay such additional amount in excess of amounts the Borrower was obligated to pay prior to such change, assignment or participation.

(k)If a payment made to a Lender or the Administrative Agent under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such

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Lender or the Administrative Agent 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 or the Administrative Agent shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender or the Administrative Agent has complied with such Lenders or the Administrative Agents obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this 4.10(k), FATCA shall include any amendments made to FATCA after the date of this Agreement.

Indemnity

.  The Borrower agrees to indemnify each Lender, upon its written request (which request shall set forth in reasonable detail the basis for requesting such compensation and the calculation of the amount of such compensation), for all losses, expenses and liabilities (including any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its Eurocurrency Loans but excluding loss of anticipated profits) that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurocurrency Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment of or conversion from Eurocurrency Loans after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment of Eurocurrency Loans on a day that is not the last day of an Interest Period with respect thereto.  Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest that would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein (excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) that would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market.  A certificate as to any amounts payable pursuant to this Section 4.11 submitted to the Borrower by any Lender shall be conclusive in the absence of manifest error.  This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

Change of Lending Office

.  Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 4.9, 4.10(a) or 4.15 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans or Letters of Credit affected by such event with the object of avoiding the consequences of such event; provided, that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage; provided, further, that nothing in this Section 4.12 shall affect or postpone any of the obligations of the Borrower or the

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rights of any Lender pursuant to Section 4.9, 4.10(a) or 4.15.  Subject to the terms and conditions set forth in Section 10.7, the Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

Replacement of Lenders

.  (a)The Borrower may replace (at its sole expense and effort), with a replacement lender reasonably satisfactory to the Administrative Agent, any Lender that (a) requests payment of any amounts payable under Section 4.9, 4.10(a) or 4.15, (b) is a Defaulting Lender hereunder or (c) declines to deliver any requested consent to a waiver, amendment or other modification of any provision of the Loan Documents that has been consented to by the Borrower, the Administrative Agent, the Required Lenders and, if otherwise required, the Majority Facility Lenders (any such Lender who does not agree to such consent, waiver or other modification, a “Non-Consenting Lender”), but only if (i) such replacement does not conflict with any Requirement of Law, (ii) [reserved], (iii) prior to any such replacement, such Lender has taken no action under Section 4.12 so as to eliminate the demand or condition giving rise to the Borrower’s replacement right, (iv) the replacement lender purchases, at par, all Loans and other amounts owing to the replaced Lender on or prior to the date of replacement and assumes all obligations of the replaced Lender under the Loan Documents in accordance with Section 11.6 (except that the Borrower shall pay the registration and processing fee referred to therein), (v) the Borrower compensates the replaced Lender under Section 4.11 if any Eurocurrency Loan outstanding to the replaced Lender is purchased other than on the last day of the Interest Period relating thereto, (vi) in the case of any such replacement resulting from a claim for compensation under Section 4.9 or Section 4.10, such replacement will result in a reduction in such compensation or payments thereafter, and (vii) the Borrower shall pay the replaced Lender all amounts payable under Section 4.9 or Section 4.10.  Notwithstanding the foregoing, all rights and claims of the Borrower, the Administrative Agent and the Lenders against any replaced Lender that has defaulted in its obligation to make Loans hereunder shall be in all respects  and unaffected by the replacement of such Lender.

(b)If the Borrower is unable to find a replacement for any Non-Consenting Lender, the Borrower may purchase the outstanding principal of such Non-Consenting Lender’s Loans (and terminate its undrawn Commitments), in each case, subject to the terms and conditions set forth in Section 11.6(g).

Evidence of Debt

.  (a)  Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing Indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

(b)The Administrative Agent, on behalf of the Borrower, shall maintain the Register pursuant to Section 11.6(b), and a sub-account therein for each Lender, in which shall be recorded (i) the amount of each Loan made hereunder and any Note evidencing such Loan, the Type of such Loan and each Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) both the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

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(c)The entries made in the Register and the accounts of each Lender maintained pursuant to Section 4.14(a) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded, but the failure of any Lender or the Administrative Agent to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement.

(d)The Borrower agrees that, upon the request to the Administrative Agent by any Lender, the Borrower will execute and deliver to such Lender a promissory note of the Borrower evidencing any Term Loans, Revolving Loans or Swingline Loans, as the case may be, of such Lender, substantially in the forms of Exhibit G-1, G-2 or G-3, respectively, with appropriate insertions as to date and principal amount.

Illegality

.  Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain Eurocurrency Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make Eurocurrency Loans, continue Eurocurrency Loans as such and convert Base Rate Loans to Eurocurrency Loans shall forthwith be canceled and (b) such Lender’s Loans then outstanding as Eurocurrency Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law.  If any such conversion of a Eurocurrency Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section 4.11.

Defaulting Lenders

.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender, to the extent permitted by applicable Requirement of Law:

(a)fees shall cease to accrue on the unfunded portion of the Revolving Commitment of such Defaulting Lender pursuant to Section 3.5 (and Borrower shall not be required to pay any such fee that would have otherwise been required to such Defaulting Lender);

(b)the Aggregate Exposure of such Defaulting Lender shall not be included in determining whether all Lenders, the Required Lenders or the Majority Facility Lenders under any Facility have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 11.1); provided, that this clause (b)  shall not apply to the vote of a Defaulting Lender in the case of any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender which affects such Defaulting Lender differently than other affected Lenders under Section 11.1;

(c)if any Swingline Exposure or any L/C Obligations exists at the time a Lender becomes a Defaulting Lender then:

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(i)all or any part of such Defaulting Lenders Swingline Exposure and L/C Obligations shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Revolving Percentages but only to the extent (x) the sum of all Non-Defaulting Lenders Revolving Extensions of Credit plus such Defaulting Lenders Swingline Exposure and L/C Obligations does not exceed the total of all Non-Defaulting Lenders Revolving Commitments and (y) the sum of the Revolving Extensions of Credit, Swingline Exposure and L/C Obligations of any Non-Defaulting Lender does not exceed such Non-Defaulting Lender’s Revolving Commitment;

(ii)if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within two (2) Business Days following notice by the Administrative Agent (x) first, prepay such Swingline Exposure and any unpaid Reimbursement Obligations and (y) second, Cash Collateralize such Defaulting Lender’s remaining L/C Obligations (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 3.7(a) for so long as such L/C Obligations are outstanding;

(iii)if the Borrower Cash Collateralizes any portion of such Defaulting Lender’s L/C Obligations pursuant to Section 4.16(c)(ii) and Section 3.7(a), the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 3.9(a) or (b) with respect to such Defaulting Lender’s L/C Obligations during the period such Defaulting Lender’s L/C Obligations are cash collateralized;

(iv)if the L/C Obligations of the Non-Defaulting Lenders is reallocated pursuant to Section 4.16(c)(i), then the fees payable to the Lenders pursuant to Section 3.9(a) shall be adjusted in accordance with such Non-Defaulting Lenders’ Revolving Percentages; or

(v)if any Defaulting Lender’s L/C Obligations are neither cash collateralized nor reallocated pursuant to Section 4.16(c)(i) or (ii), then, without prejudice to any rights or remedies of any Issuing Lender or any Lender hereunder, all facility fees that otherwise would have been payable to such Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s Commitment that was utilized by such L/C Obligations) and letter of credit fees payable under Section 3.9(a) with respect to such Defaulting Lender’s L/C Obligations shall be payable to the applicable Issuing Lenders until such L/C Obligations are cash collateralized and/or reallocated;

(d)so long as such Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan and each Issuing Lender shall not be required to issue, amend, extend or increase any Letter of Credit, unless it is satisfied that the related exposure

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will be 100% covered by the Commitments of the Non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 4.16(c) and Section 3.7(a), and participating interests in any such newly issued or increased Letter of Credit or newly made Swingline Loan shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 4.16(c)(i) (and Defaulting Lenders shall not participate therein); and

(e)in the event and on the date that each of the Administrative Agent, the Borrower, the Issuing Lenders and the Swingline Lender agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swingline Exposure and L/C Obligations of the other Lenders shall be readjusted to reflect the inclusion of such Lender’s Revolving Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swingline Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Revolving Percentage; provided, that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; provided, further, that, subject to Section 11.23, 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.

Incremental Facilities

.  (a)  So long as no Event of Default exists or would arise therefrom, the Borrower shall have the right, at any time and from time to time after the Closing Date to (i) request new term loan commitments under one or more new term loan credit facilities to be included in this Agreement and/or increase the principal amount of any class of Term Loans (each, an “Incremental Term Facility” and, collectively, the “Incremental Term Loan Commitments”) and/or (ii) increase the Total Revolving Commitment (each, an “Incremental Revolving Facility” and, such commitments, the “Incremental Revolving Commitments”; together with the Incremental Term Loan Commitments, the “Incremental Commitments” and, together with any Incremental Term Facility, “Incremental Facilities”; and the loans thereunder, “Incremental Revolving Loans” and, together with any Incremental Term Loans, “Incremental Loans”) so long as the aggregate outstanding principal amount of all unutilized Incremental Commitments and Incremental Loans does not exceed the Incremental Amount (and the Borrower shall deliver a certificate, on or prior to the date on which such Incremental Commitment shall become effective to the Administrative Agent certifying that the Borrower is in compliance with this Section 4.17).  Any Incremental Term Loan Commitment Incurred in the form of increases to any Class of existing Term Loans shall be identical to and form part of such Term Loans. Any Incremental Revolving Commitments shall be Incurred in the form of increases to the Revolving Commitments and shall be identical to and form part of such Revolving Facility.

(b)Each request from the Borrower pursuant to this Section 4.17 shall set forth the requested amount and proposed terms of the relevant Incremental Commitments.  The Incremental Commitments (or any portion thereof) may be made by any existing Lender or by any other bank or financial institution (any such bank or other financial institution, an “Additional Lender”) subject, in respect of any Additional Lender not already a Lender hereunder, to the same consent requirements that would apply to such Lender as an assignee pursuant to Section 11.6.  

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Any allocation of any Incremental Commitments to any Affiliated Lender shall be subject to the terms of Section 11.6(g).

(c)No Incremental Commitment or Incremental Loans shall be effective unless the Borrower delivers to the Administrative Agent an Incremental Commitment Agreement executed and delivered by the Borrower and the proposed Additional Lenders and such other documentation relating thereto as the Administrative Agent may reasonably request.  Notwithstanding anything in Section 11.1 to the contrary, an Incremental Commitment Agreement may, without the consent of any other Lender, effect such amendments to any Loan Documents as may be necessary or appropriate, in the opinion of the Borrower and the Administrative Agent, to effect the provisions of this Section 4.17; provided, however, that (i) (A) the Incremental Term Loan Commitments will not be guaranteed by any Subsidiary of the Borrower other than the Subsidiary Guarantors, and will be secured on a pari passu or (at the Borrower’s option) junior basis by the same Collateral securing the Loans, (B) the Incremental Term Loan Commitments and any incremental loans drawn thereunder (the “Incremental Term Loans”) shall rank pari passu in right of payment with or (at the Borrower’s option) junior to the Loans hereunder and (C) no Incremental Commitment Agreement may provide for any Incremental Commitment or any Incremental Term Loans to be secured by any Collateral or other assets of any Loan Party that do not also secure the Loans; (ii) no Lender will be required to provide any such Incremental Commitment unless it so agrees; (iii) the interest rate margins, upfront fees, original issue discount, any interest rate floors and any customary arrangement or commitment fees applicable to the loans made pursuant to the Incremental Commitments shall be determined by the Borrower and the applicable Additional Lenders; provided, that in the event that the All-In Yield for any Incremental Term Facility incurred by the Borrower on or prior to the date that is twelve (12) months after the Closing Date is higher than the All-In Yield for any existing Term Loans hereunder by more than 50 basis points, then the Applicable Margin for such Term Loans shall be increased to the extent necessary so that the All-In Yield for such Term Loans is equal to the All-In Yield for such Incremental Term Facility minus 50 basis points; (iv) such Incremental Commitment Agreement may provide for the inclusion, as appropriate, of Additional Lenders in any required vote or action of the Required Lenders or of the Lenders of each Tranche hereunder and may provide class protection for any additional credit facilities in a manner consistent with those provided the Facilities pursuant to the provisions of Section 11.1 as in effect on the Closing Date; (v) the final maturity date of any Incremental Loans or Incremental Commitments shall be no earlier than the Latest Maturity Date and the Weighted Average Life to Maturity of any Incremental Loans made pursuant to Incremental Term Loan Commitments shall be no shorter than the remaining Weighted Average Life to Maturity of the Term Loans; (vi) the prepayment provisions shall be determined by the Borrower and the applicable Additional Lenders; provided that they shall not be more favorable than the prepayment provisions applicable to the Term Loans; (vii) if such Incremental Loans or Incremental Commitment shall be secured on a junior basis, a Senior Representative validly acting on behalf of the holders of such Indebtedness shall have become party to the Intercreditor Agreement or  if such agreement has been previously entered into in connection with any other permitted Indebtedness secured on a junior basis, execute a joinder to such then existing agreement in substantially the form provided therein; and (viii) the other terms and documentation in respect thereof, to the extent not consistent with this Agreement as in effect prior to giving effect to the Incremental Commitment Agreement, shall otherwise be reasonably satisfactory to the Administrative Agent.

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(d)The Administrative Agent shall promptly notify each Lender whenever any Incremental Commitment becomes effective.

(e)No Incremental Commitment Agreement shall become effective unless the Administrative Agent has received (i) a certificate executed by a Responsible Officer of the Borrower to the effect that no Event of Default has occurred and is continuing (subject to Section 1.3), and (ii) such additional Security Documents, legal opinions, board resolutions, certificates and other documentation as may be required by such Incremental Commitment Agreement or reasonably requested by the Administrative Agent.

(f)Upon the implementation of any Incremental Revolving Facility pursuant to this Section 4.17, (i) each Revolving Lender immediately prior to such increase will automatically and without further act be deemed to have assigned to each relevant Incremental Revolving Facility Lender, and each relevant Incremental Revolving Facility Lender will automatically and without further act be deemed to have assumed a portion of such Revolving Lender’s participations hereunder in outstanding Letters of Credit and Swingline Loans such that, after giving effect to each deemed assignment and assumption of participations, all of the Revolving Lenders’ (including each Incremental Revolving Facility Lender) (A) participations hereunder in Letters of Credit and (B) participations hereunder in Swingline Loans shall be held on a pro rata basis on the basis of their respective Revolving Commitments (after giving effect to any increase in the Revolving Commitment pursuant to this Section 4.17) and (ii) the existing Revolving Lenders shall assign Revolving Loans to certain other Revolving Lenders (including the Revolving Lenders providing the relevant Incremental Revolving Facility), and such other Revolving Lenders (including the Revolving Lenders providing the relevant Incremental Revolving Facility) shall purchase such Revolving Loans, in each case to the extent necessary so that all of the Revolving Lenders participate in each outstanding borrowing of Revolving Loans pro rata on the basis of their respective Revolving Commitments (after giving effect to any increase in the Revolving Commitment pursuant to this Section 4.17); it being understood and agreed that the minimum borrowing, pro rata borrowing and pro rata payment requirements contained elsewhere in this Agreement shall not apply to the transactions effected pursuant to the immediately preceding sentence.

(g)Subject to clause (i) below, each Incremental Commitment Agreement shall contain representations and warranties by the Borrower substantially in the form of those made by the Borrower in this Agreement, except for any exceptions, disclosures or modifications reasonably acceptable to the Administrative Agent, the Borrower and the Additional Lender(s) making an Incremental Commitment pursuant to such Incremental Commitment Agreement; provided that in connection with any Permitted Acquisition or similar committed investment that constitutes a Limited Condition Acquisition, such representations and warranties will be limited to Specified Representations and the Additional Lender(s) making such Incremental Commitment may elect to waive the requirement to make any other representations and warranties.

(h)In connection with any Incremental Commitment Agreement pursuant to this Section 4.17, at the direction and as reasonably requested by Administrative Agent to ensure the continuing priority of the Lien of the Mortgages as security for the Loans, (A) the Borrower or Loan Party to the Mortgages shall enter into, and deliver to the Administrative Agent

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a Modification and (B) Borrower shall deliver, or cause the title company or local counsel, as applicable, to deliver, to the Administrative Agent local counsel opinions, an endorsement to the relevant title policies, date down(s) or other documents, instruments or evidence of the priority of the Lien of the Mortgages as security for the Loans, each in form and substance reasonably satisfactory to Administrative Agent.  In addition, as reasonably requested by the Administrative Agent, the Borrower shall deliver an updated flood hazard certificate for each of the Mortgaged Properties.

(i)Notwithstanding anything to the contrary in this Section 4.17 or in any other provision of any Loan Document, if the proceeds of any Incremental Facility are intended to be applied to finance a Limited Condition Acquisition, the conditions to entering into and availability of such Incremental Facility (including applicability of customary “SunGard” or other “certain funds” conditionality), and the timing of satisfaction or waiver of any such conditions (as between being satisfied or waived upon execution of an amendment evidencing such Incremental Facility or upon the making of any Incremental Loans thereunder), shall be as agreed to among the Borrower and the Incremental Lenders.

Extension Amendments

.  (a)  The Borrower may at any time and from time to time request that all or a portion, including one or more Tranches, of any commitments or the Loans (including any Extended Loans), each existing at the time of such request (each, an “Existing Tranche” and the Loans of such Tranche, the “Existing Loans”) be converted to extend the termination date thereof and the scheduled maturity date(s) of any payment of principal with respect to all or a portion of any principal amount of any Existing Tranche (any such Existing Tranche which has been so extended, “Extended Tranche” and the Loans of such Tranche, the “Extended Loans”) and to provide for other terms consistent with this Section 4.18.  In order to establish any Extended Tranche, the Borrower shall provide a notice to the Administrative Agent (who shall provide a copy of such notice to each of the Lenders of the applicable Existing Tranche) (an “Extension Request”) setting forth the proposed terms of the Extended Tranche to be established, which terms (other than provided in Section 4.18(c) below) shall be identical to those applicable to the Existing Tranche from which they are to be extended (the “Specified Existing Tranche”) except (x) all or any of the final maturity dates of such Extended Tranches may be delayed to later dates than the final maturity dates of the Specified Existing Tranche, (y) (A) the interest margins with respect to the Extended Tranche may be higher or lower than the interest margins for the Specified Existing Tranche and/or (B) additional fees may be payable to the Lenders providing such Extended Tranche in addition to or in lieu of any increased margins contemplated by the preceding clause (A) and (z) the commitment fee, if any, with respect to the Extended Tranche may be higher or lower than the commitment fee, if any, for the Specified Existing Tranche, in each case to the extent provided in the applicable Extension Amendment; provided, that, notwithstanding anything to the contrary in this Section 4.18 or otherwise, (1) such Extended Tranche shall not be, (x) in the case of any Extended Tranche relating to Loans under any of the Term Facilities hereunder, in an amount less than $100,000,000 and shall be in integral multiples of $50,000,000 in excess thereof and (y) in the case of any Extended Tranche relating to Loans under the Revolving Facility hereunder, in an amount less than $50,000,000 and shall be in integral multiples of $25,000,000 in excess thereof, (2) no Extended Tranche shall be secured by or receive the benefit of any collateral, credit support or security that does not secure or support the Existing Tranches, (3) the repayment (other than in connection with a permanent repayment

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and, if applicable, termination of commitments), the mandatory prepayment and the commitment reduction of any of Loans or Commitments under the Extended Tranches shall be made on a pro rata basis with all other outstanding Loans or Commitments (including all Extended Tranches) respectively; provided, that, Extended Loans may, if the Extending Lenders making such Extended Loans so agree, participate on a less than pro rata basis in any voluntary or mandatory repayment or prepayment or commitment reductions hereunder, (4) the final maturity of any Extended Tranche shall not be earlier than, and if such Extended Tranche is a term facility, shall not have a Weighted Average Life to Maturity shorter than the applicable Specified Existing Tranche, (5) each Lender in the Specified Existing Tranche shall be permitted to participate in the Extended Tranche in accordance with its pro rata share of the Specified Existing Tranche and (6) assignments and participations of Extended Tranches shall be governed by the same assignment and participation provisions applicable to Loans and Commitments hereunder as set forth in Section 11.6.  No Lender shall have any obligation to agree to have any of its Existing Loans or, if applicable, commitments of any Existing Tranche converted into an Extended Tranche pursuant to any Extension Request.  Any Extended Tranche shall constitute a separate Tranche of Loans (and, if applicable, commitments) from the Specified Existing Tranches and from any other Existing Tranches (together with any other Extended Tranches so established on such date).

(b)The Borrower shall provide the applicable Extension Request at least five (5) Business Days prior to the date on which Lenders under the applicable Existing Tranche or Existing Tranches are requested to respond.  Any Lender (an “Extending Lender” and with respect to Term Loans an “Extending Term Loan Lender” and with respect to Revolving Commitments an “Extending Revolving Lender”) wishing to have all or a portion of its Specified Existing Tranche converted into an Extended Tranche shall notify the Administrative Agent (an “Extension Election”) on or prior to the date specified in such Extension Request of the amount of its Specified Existing Tranche that it has elected to convert into an Extended Tranche.  In the event that the aggregate amount of the Specified Existing Tranche subject to Extension Elections exceeds the amount of Extended Tranches requested pursuant to the Extension Request, the Specified Existing Tranches subject to Extension Elections shall be converted to Extended Tranches on a pro rata basis based on the amount of Specified Existing Tranches included in each such Extension Election.

(c)Extended Tranches shall be established pursuant to an amendment (an “Extension Amendment”) to this Agreement (which may include amendments to provisions related to maturity, interest margins, fees or prepayments referenced in Section 4.18(a) and which, except to the extent expressly contemplated by the penultimate sentence of this Section 4.18(c) and notwithstanding anything to the contrary set forth in Section 11.1, shall not require the consent of any Lender other than the Extending Lenders with respect to the Extended Tranches established thereby) executed by the Borrower the Administrative Agent and the Extending Lenders.  No Extension Amendment shall provide for any Extended Tranche in an aggregate principal amount that is less than (x) in the case of any Extended Tranche relating to Loans under either of the Term Facilities hereunder, in an amount less than $100,000,000 and shall be in integral multiples of $50,000,000 in excess thereof and (y) in the case of any Extended Tranche relating to Loans under the Revolving Facility hereunder, in an amount less than $50,000,000 and shall be in integral multiples of $25,000,000 in excess thereof; provided, that no Extension Amendment may provide for any Extended Tranche to be secured by any Collateral or other assets of any Loan Party that

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does not also secure the Existing Tranches.  It is understood and agreed that each Lender has consented to each amendment to this Agreement and the other Loan Documents authorized by this Section 4.18 and the arrangements described above in connection therewith for all purposes requiring its consent, and shall at the effective time thereof be deemed to consent to each amendment to this Agreement and the other Loan Documents authorized by this Section 4.18 and the arrangements described above in connection therewith.  In connection with any Extension Amendment, the Borrower shall, if requested by the Administrative Agent, deliver an opinion of counsel reasonably acceptable to the Administrative Agent as to the enforceability of such Extension Amendment, this Agreement as amended thereby, and such of the other Loan Documents (if any) as may be amended or affected thereby.

(d)Notwithstanding anything to the contrary contained in this Agreement, (A) on any date on which any Existing Tranche is converted to extend the related scheduled maturity date(s) in accordance with Section 4.18(a) (an “Extension Date”), in the case of the Specified Existing Tranche of each Extending Lender, the aggregate principal amount of such Specified Existing Tranche shall be deemed reduced by an amount equal to the aggregate principal amount of Extended Tranche so converted by such Lender on such date, and such Extended Tranches shall be established as a separate Tranche from the Specified Existing Tranche and from any other Existing Tranches (together with any other Extended Tranches so established on such date) and (B) if, on any Extension Date, any Revolving Loans of any Extending Lender are outstanding under the applicable Specified Existing Tranches, such loans (and any related participations) shall be deemed to be allocated as Extended Loans (and related participations) and Existing Loans (and related participations) in the same proportion as such Extending Lender’s applicable Specified Existing Tranches to the applicable Extended Tranches so converted by such Lender on such date.

(e)If, in connection with any proposed Extension Amendment, any Lender declines to consent to the applicable extension on the terms and by the deadline set forth in the applicable Extension Request (each such Lender, a “Non-Extending Lender”) then the Borrower may, on notice to the Administrative Agent and the Non-Extending Lender, (A) replace such Non-Extending Lender by causing such Lender to (and such Lender shall be obligated to) assign pursuant to Section 11.6 (with the assignment fee and any other costs and expenses to be paid by the Borrower in such instance) all of its rights and obligations under this Agreement to one or more assignees; provided, that neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to obtain a replacement Lender; provided, further, that the applicable assignee shall have agreed to provide Loans and/or a commitment on the terms set forth in such Extension Amendment; provided, further, that all obligations of the Borrower owing to the Non-Extending Lender relating to the Loans and participations so assigned shall be paid in full at par by the assignee Lender to such Non-Extending Lender concurrently with such Assignment and Assumption or (B) prepay the Loans and, at the Borrower’s option, if applicable, terminate the Commitments of such Non-Extending Lender, in whole or in part, subject to Section 4.11, without premium or penalty.  In connection with any such replacement under this Section 4.18, if the Non-Extending Lender does not execute and deliver to the Administrative Agent a duly completed Assignment and Assumption and/or any other documentation necessary to reflect such replacement by the later of (a) the date on which the replacement Lender executes and delivers such Assignment and Assumption and/or such other documentation and (b) the date as of which

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all obligations of the Borrower owing to the Non-Extending Lender relating to the Loans and participations so assigned shall be paid in full in cash by the assignee Lender to such Non-Extending Lender, then such Non-Extending Lender shall be deemed to have executed and delivered such Assignment and Assumption and/or such other documentation as of such date without any action on the part of such Non-Extending Lender and the Assignment and Assumption executed by the replacement Lender shall be effective for the purposes of this Section 4.18.

(f)This Section 4.18 shall supersede any provisions in Section 4.8 or Section 11.1 to the contrary.

(g)No amendment, conversion or exchange of Loans pursuant to any Extension Amendment in accordance with Section 4.18 shall constitute a voluntary or mandatory payment or prepayment for purposes of this Agreement.

Refinancing Facilities

(a).  (a)  At any time after the Closing Date, the Borrower may obtain, from any Lender or any Additional Lender, Credit Agreement Refinancing Indebtedness in respect of (A) all or any portion of the Term Loans then outstanding under this Agreement (which for purposes of this clause (A) will be deemed to include any then outstanding Incremental Loans under any Incremental Term Loan Commitments) and any then outstanding Refinancing Term Loans or (B) all or any portion of the Revolving Loans (or unused Revolving Commitments or any Incremental Loans or unused Incremental Revolving Commitments or any unused Refinancing Revolving Commitment of Refinancing Revolving Loans) under this Agreement, in the form of (x) Refinancing Term Loans or Refinancing Term Commitments or (y) Refinancing Revolving Loans or Refinancing Revolving Commitments, as the case may be, in each case pursuant to a Refinancing Amendment; provided, that such Credit Agreement Refinancing Indebtedness (i) will rank pari passu or junior in right of payment and of security with the other Loans and Commitments hereunder, (ii) will have such pricing and optional prepayment terms as may be agreed by the Borrower and the Lenders thereof, (iii) (x) with respect to any Refinancing Revolving Loans or Refinancing Revolving Commitments, will have a maturity date that is not prior to the maturity date of Revolving Loans (or unused Revolving Commitments) being refinanced and (y) with respect to any Refinancing Term Loans or Refinancing Term Commitments, will have a maturity date that is not prior to the maturity date of, and will have a Weighted Average Life to Maturity that is not shorter than, the Term Loans being refinanced, (iv) will have such pricing, premiums, optional prepayment terms and financial covenants as may be agreed by the Borrower and the Lenders thereof, and (v) will have other terms and conditions that are substantially identical to (or in the case of any Credit Agreement Refinancing Indebtedness in the form of notes, are on market terms or are substantially identical to), or (taken as a whole) are no more favorable to the investors providing such Credit Agreement Refinancing Indebtedness than the Refinanced Debt; provided, further, that the terms and conditions applicable to such Credit Agreement Refinancing Indebtedness may provide for any additional or different financial or other covenants or other provisions that are agreed between the Borrower and the Lenders thereof and applicable only during periods after the Latest Maturity Date that is in effect on the date such Credit Agreement Refinancing Indebtedness is issued, Incurred or obtained.  The effectiveness of any Refinancing Amendment shall be subject to the satisfaction on the date thereof of each of the conditions set forth in Section 6.2 and, to the extent reasonably requested by the Administrative Agent, receipt by the Administrative Agent of legal opinions, board resolutions, officers’

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certificates and/or reaffirmation agreements consistent with those delivered on the Closing Date (other than changes to such legal opinions resulting from a change in law, change in fact or change to counsels form of opinion reasonably satisfactory to the Administrative Agent).  Each Tranche of Credit Agreement Refinancing Indebtedness Incurred under this Section 4.19 shall be in an aggregate principal amount that is (x) not less than $100,000,000 in the case of Refinancing Term Loans or $50,000,000 in the case of Refinancing Revolving Loans and (y) an integral multiple of $50,000,000 in excess thereof in the case of Refinancing Term Loans or $25,000,000 in excess thereof in the case of Refinancing Revolving Loans.  Any Refinancing Amendment may provide for the issuance of Letters of Credit for the account of the Borrower, or the provision to the Borrower of Swingline Loans, pursuant to any Refinancing Revolving Commitments established thereby, in each case on terms substantially equivalent to the terms applicable to Letters of Credit and Swingline Loans under the Revolving Commitments and in each case with the consent of the applicable Issuing Lenders and Swingline Lenders.  The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Refinancing Amendment.  Each of the parties hereto hereby agrees that, upon the effectiveness of any Refinancing Amendment, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Credit Agreement Refinancing Indebtedness Incurred pursuant thereto (including any amendments necessary to treat the Loans and Commitments subject thereto as Refinancing Term Loans, Refinancing Revolving Loans, Refinancing Revolving Commitments and/or Refinancing Term Commitments).  Any Refinancing Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent, to effect the provisions of this Section.  In addition, if so provided in the relevant Refinancing Amendment and with the consent of each Issuing Lender, participations in Letters of Credit expiring on or after the Revolving Termination Date shall be reallocated from Lenders holding Revolving Commitments to Lenders holding extended revolving commitments in accordance with the terms of such Refinancing Amendment; provided, however, that such participation interests shall, upon receipt thereof by the relevant Lenders holding Revolving Commitments, be deemed to be participation interests in respect of such Revolving Commitments and the terms of such participation interests (including, without limitation, the commission applicable thereto) shall be adjusted accordingly.

(b)This Section 4.19 shall supersede any provisions in Section 4.8 or Section 11.1 to the contrary.

Section 5.REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Loans and issue or participate in the Letters of Credit, the Borrower hereby represents and warrants to the Administrative Agent and each Lender that, on and as of the Closing Date and on and as of each date as required by Section 6.2(b):

Financial Condition

.  

(a)The (i) audited consolidated balance sheets and the related consolidated statements of income and of cash flows of the Borrower and its consolidated Subsidiaries for the fiscal year ended March 31, 2018, reported on by Deloitte & Touche LLP,

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and for the fiscal year ended March 31, 2019, reported on by Deloitte & Touche LLP, and (ii) the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as of June 30, 2019 and the related consolidated statements of income or operations, changes in stockholders’ equity and cash flows as of and for the three-month period ended June 30, 2019 and for the comparable period of the preceding fiscal year certified by a Responsible Officer of the Borrower, in each case, present fairly in all material respects the consolidated financial condition of the Borrower and its consolidated Subsidiaries, as of such dates and their consolidated results of operations and consolidated cash flows for the periods to which they relate (subject to normal year-end audit adjustments and the absence of footnotes) (such financial statements, the “Borrower Historical Financial Statements”).  All such financial statements, including the related schedules and notes (if any) thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as disclosed therein).  

(b)The (i) audited consolidated balance sheets and the related consolidated statements of income, stockholders’ equity and of cash flows of the Target and its consolidated Subsidiaries for the fiscal year ended December 31, 2017, reported on by Deloitte & Touche LLP, and for the fiscal year ended December 31, 2018, reported on by Deloitte & Touche LLP, and (ii) the unaudited consolidated balance sheet of the Target and its consolidated Subsidiaries as of May 31, 2019 and the related consolidated statement of income, stockholders’ equity and cash flows as of and for the five-month period ended May 31, 2019, in each case, present fairly in all material respects the consolidated financial condition of the Target and its consolidated Subsidiaries, as of such dates and their consolidated results of operations and consolidated cash flows for the periods to which they relate (subject to normal year-end audit adjustments and the absence of footnotes) (such financial statements, the “Target Historical Financial Statements”).  All such financial statements, including the related schedules and notes (if any) thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firms of accountants and disclosed therein).

(c)As of the Closing Date, no Group Member has any material Guarantee Obligations, contingent liabilities or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the most recent financial statements referred to in this Section 5.1 other than as contemplated by the Loan Documents.

No Change

.  There has not been since the Closing Date, any development or event that has had or would reasonably be expected to have a Material Adverse Effect.

Corporate Existence; Compliance with Law

.  Each of the Borrower and its Material Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the organizational power and authority, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation or other organization and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification except to the extent the failure to be so qualified would not, in the aggregate, reasonably be expected to have a Material Adverse

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Effect and (d) is in compliance with all Requirements of Law and Organizational Documents, except to the extent that the failure to comply therewith would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

Power; Authorization; Enforceable Obligations

.  Each Loan Party has the organizational power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party and, in the case of the Borrower, to obtain extensions of credit under this Agreement.  Each Loan Party has taken all necessary organizational action to authorize the execution, delivery and performance of the Loan Documents to which it is a party and, in the case of the Borrower, to authorize the borrowings under this Agreement.  No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the Transactions, the borrowings under this Agreement or the execution, delivery, performance, validity or enforceability of the Loan Documents except (i) consents, authorizations, filings and notices described in Schedule 5.4, which consents, authorizations, filings and notices have been obtained or made and are in full force and effect except as specifically described in Schedule 5.4 and (ii) the filings referred to in Section 5.19.  Each Loan Document has been duly executed and delivered on behalf of each Loan Party party thereto.  This Agreement constitutes, each other Loan Document upon execution will constitute the legal, valid and binding obligation of each Loan Party party thereto, enforceable against such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

No Legal Bar

.  The execution, delivery and performance of the Loan Documents and the issuance of Letters of Credit and the borrowings hereunder do not and will not violate in any material respect any Requirement of Law, Organizational Documents or any material Contractual Obligation of the Borrower or any Material Subsidiary or result in or require the creation or imposition of any Lien on any property or revenues of the Borrower or any Material Subsidiary in any material respect pursuant to any Requirement of Law, Organizational Documents or material Contractual Obligation (other than the Liens created by the Security Documents). No Group Member is subject to any Requirement of Law, Organizational Documents or Contractual Obligation that has had or would reasonably be expected to have a Material Adverse Effect.

Litigation

.  Except as set forth on Schedule 5.6, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, threatened by or against any Group Member or against any of their respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) that would reasonably be expected to have a Material Adverse Effect.

No Default

.  No Default or Event of Default has occurred and is continuing.

Ownership of Property; Liens

.  Each of the Borrower and its Material Subsidiaries has good and marketable title to the Mortgaged Properties, and to the knowledge of

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the Borrower, has good and valid title to, or a valid leasehold interest in, all its other material property and none of such property is subject to any Lien except Permitted Liens.

Intellectual Property

.  Each Group Member owns, or is licensed to use, all material Intellectual Property necessary for the conduct of its business as currently conducted, except to the extent such failure to own or possess the right to use, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect, (a) no claim has been asserted and is pending before a governmental authority against any Group Member by any Person challenging or questioning the use of any Intellectual Property, or the validity or enforceability of any Intellectual Property owned by any Group Member, and (b) the use of Intellectual Property by each Group Member does not infringe on the rights of any Person in any material respect.

Taxes

.  Each Group Member has filed or caused to be filed all Federal and state income and other material Tax returns that are required to be filed and has paid all material Taxes due and payable by such Group Member or any assessments made against it or any of its property and all other material Taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (except that are being contested in good faith by appropriate proceedings diligently conducted and for which such Person, as applicable, has set aside on its books adequate reserves in conformity with GAAP); as of the Closing Date, no tax Lien has been filed (other than Liens for taxes not yet delinquent or that are being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the relevant Group Member), and, to the knowledge of the Borrower, no claim is being asserted, with respect to any material Tax, fee or other charge.  No Group Member intends to treat the Loan, the Transactions, or any other transaction contemplated hereby as being a “reportable transaction” (within the meaning of Treasury Regulation section 1.6011-4).

Federal Regulations

.  No part of the proceeds of any Loans or Revolving Extensions of Credit will be used for “buying” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect or for any purpose that violates the provisions of the Regulations of the Board, including, without limitation, Regulation T, Regulation U or Regulation X of the Board.  

Labor Matters

.  Except as, in the aggregate, there has not had and would not reasonably be expected to have a Material Adverse Effect:  (a) there are no strikes or other labor disputes against any Group Member pending or, to the knowledge of the Borrower, threatened; (b) to the knowledge of the Borrower, hours worked by and payment made to employees of each Group Member have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law regarding minimum wages or overtime payments; and (c) all payments due from any Group Member on account of employee health and welfare insurance have been paid or accrued as a liability on the books of the relevant Group Member.

ERISA

.  Neither a Reportable Event nor a failure to satisfy the minimum funding standard (within the meaning of Sections 412 and 430 of the Code or Sections 302 and 303 of ERISA) has occurred during the five-year period prior to the date on which this

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representation is made or deemed made with respect to any Single Employer Plan, whether or not waived, which resulted in any material liability to any Group Member or Commonly Controlled Entity, and each Single Employer Plan has complied in all material respects with the applicable provisions of ERISA and the Code.  No termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such five-year period. The present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits by a material amount. No Group Member or Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan that has resulted or would reasonably be expected to result in a material liability under ERISA. No such Multiemployer Plan is Insolvent, or was determined to or expected to be in “critical” or “endangered” status under Section 432 of the Code or Section 305 of ERISA, and no Single Employer Plan was determined to or expected to be in “at risk” status as defined in Section 430 of the Code or Section 303 of ERISA, and no Group Member or Commonly Controlled Entity would become subject to any material liability under ERISA if any Group Member or Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made.  No Group Member has any liability with respect to any employee benefit plan that is not subject to the laws of the United States or a political subdivision thereof that would reasonably be expected to result in a Material Adverse Effect.

Investment Company Act

.  No Group Member is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.  

Restricted Subsidiaries

.  As of the Closing Date, (a) Schedule 5.15 sets forth the name and jurisdiction of organization of each Restricted Subsidiary and, as to each such Restricted Subsidiary, the percentage of each class of Capital Stock owned by any Group Member and (b) there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments of any nature relating to any Capital Stock of the Group Member (other than the Borrower), except as created by the Loan Documents.

Use of Proceeds

.  (a)  The proceeds of the Initial Term Loans made on the Closing Date shall be used to finance the Transactions and any amounts that remain unutilized after the consummation of the Transactions may be used by the Borrower and its Subsidiaries after the Closing Date for ongoing working capital needs and general corporate purposes and (b) on or after the Closing Date, the Borrower and its Subsidiaries may use proceeds from Revolving Loans, Letters of Credit, Swingline Loans and proceeds of any Incremental Loans for working capital, Permitted Acquisitions or other general corporate purposes.

Environmental Matters

.  Except as has not had and would not reasonably be expected to have a Material Adverse Effect:

(a)the facilities and properties currently owned, leased or operated by any Group Member (the “Properties”) do not contain either (i) any Materials of Environmental

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Concern or (ii) contamination in amounts or concentrations or under circumstances, in either case that constitute, or would reasonably be expected to give rise to liability of any Group Member under, any Environmental Law;

(b)no Group Member has received any written notice of violation, alleged violation, non-compliance or liability or potential liability, under Environmental Laws with regard to any of the Properties or any Group Member’s operation of any of the Properties or the business operated by any Group Member (the “Business”), nor does the Borrower have knowledge that any such notice is likely to be received or is being threatened;

(c)the Group Members (i) conduct the Business in compliance with Environmental Law, (ii) hold all Environmental Permits (each of which is in full force and effect) required pursuant to Environmental Law for the conduct of the Business, and (iii) are in compliance with all such Environmental Permits;

(d)Materials of Environmental Concern have not been transported or disposed of by or on behalf of any Group Member from the Properties in violation of, or in a manner or to a location that would give rise to liability under, any Environmental Law, nor during any Group Member’s ownership or operation of the Properties or, to the knowledge of the Borrower, at any formerly owned, leased or operated facilities or properties (“Former Properties”) have any material quantity of Materials of Environmental Concern been generated, treated, stored or disposed of, released or threatened to be released at, on or under any of the Properties or Former Properties or otherwise in connection with the Business in violation of Environmental Law, or in a manner that could give rise to liability under, any Environmental Law; and

(e)No judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Borrower, threatened, under any Environmental Law to which any Group Member is or is reasonably likely to be named as a party with respect to the Properties or the Business or, to the knowledge of the Borrower, any Former Properties, nor are there any consent decrees, consent orders, administrative orders or other orders, or other binding administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business or, to the knowledge of the Borrower, any Former Properties.

Accuracy of Information, etc.

  No statement or information (other than any projections and information of a general economic or general industry nature) contained in this Agreement, any other Loan Document, or any other material document, certificate or written statement furnished by or on behalf of any Group Member to the Administrative Agent or the Lenders, or any of them, for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, taken as a whole, contained as of the date such statement, information, document or certificate was so furnished, any untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained herein or therein not materially misleading, in the light of the circumstances under which they were made (after giving effect to all supplements).  The forecasts, projections and pro forma financial information contained in the materials referenced above are based upon good faith estimates and assumptions believed by management of the Borrower to be reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as

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fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount.

Security Documents

.  (a)  The Guarantee and Collateral Agreement is effective to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral described therein and proceeds and products thereof, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally.  In the case of the Pledged Stock consisting of certificated securities described in the Guarantee and Collateral Agreement, when stock certificates representing such Pledged Stock are delivered to the Administrative Agent, and in the case of the other Collateral described in the Guarantee and Collateral Agreement, to the extent provided therein, when financing statements, other filings specified on Schedule 4 to the Guarantee and Collateral Agreement in appropriate form are filed in the offices specified on Schedule 4 to the Guarantee and Collateral Agreement and the other actions described in Section 4.3 of the Guarantee and Collateral Agreement are completed, the Guarantee and Collateral Agreement shall be effective to create a perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and the proceeds thereof, as security for the Obligations (as defined in the Guarantee and Collateral Agreement), in each case (to the extent provided therein) prior and superior in right to any other Person (except for Permitted Liens), to the extent that a Lien in such Collateral can be perfected by the filing of the UCC-1 financing statement or other filing specified on Schedule 4 to the Guarantee and Collateral Agreement;

(b)Upon execution thereof, each of the Mortgages shall be effective to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable Lien on the Mortgaged Properties described therein and proceeds and products thereof, and when the Mortgages are appropriately filed or recorded and indexed in the appropriate offices as may be required under applicable Requirements of Law (to the extent required hereunder and thereunder), together with payment of appropriate filing or recording fees and applicable taxes, if any, in the offices specified therein, each such Mortgage shall constitute, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally (to the extent provided therein), a perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the Mortgaged Properties and the proceeds thereof, as security for the Obligations (as defined in the relevant Mortgage), in each case (except as expressly set forth therein) prior and superior in right to any other Person (except for Permitted Liens).  

(c)When delivered and at all times thereafter, each Intellectual Property Security Agreement, together with the Guarantee and Collateral Agreement, is effective to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Intellectual Property Collateral described therein and the proceeds and products thereof, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally.  Upon the filing of (i) each Intellectual Property Security Agreement in the appropriate indexes of the United States Patent and Trademark Office (the “PTO”) relative to United States patents and United States trademarks, and the United States Copyright Office

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relative to United States copyrights, if any, together with provision for payment of all requisite fees, and (ii) financing statements in appropriate form for filing in the offices specified on Schedule 4 of the Guarantee and Collateral Agreement, each Intellectual Property Security Agreement shall constitute (to the extent provided in the Guarantee and Collateral Agreement) a perfected Lien on, and security interests in, all right, title and interest of the Loan Parties in such Intellectual Property Collateral and the proceeds and products thereof, as security for the Obligations (as defined in the Guarantee and Collateral Agreement), in each case (except as expressly set forth therein) prior and superior in right to any other Person (except for Permitted Liens); provided, that, notwithstanding anything to the contrary in any of the Loan Documents, the Loan Parties shall not have any obligation to perfect any security interest or lien, or record any notice thereof, in any Intellectual Property Collateral in any jurisdiction other than the United States of America, and subsequent filings in the PTO and United States Copyright Office and actions and filings under applicable law to obtain the equivalent perfection may be necessary with respect to registrations for Intellectual Property acquired by any Loan Party after the date hereof.

Solvency

.  The Borrower and its Subsidiaries, on a consolidated basis, are, and after giving effect to the Transactions and the Incurrence of all Indebtedness and the obligations being Incurred in connection herewith and therewith will be, Solvent.

Regulation H

.  No Mortgage encumbers improved real property that is located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards and in respect of which the procurement of flood insurance is required by any Requirement of Law, unless such flood insurance has been obtained and is in full force and effect.

Anti-Terrorism Laws

.  (a) No Group Member or any Subsidiary of any Group Member is in violation of (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, (ii) the PATRIOT Act or (iii) or any other similar anti-terrorism laws.  No part of the proceeds of the Loans or the Revolving Extensions of Credit will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

(b)No Group Member or Subsidiary of any Group Member is any of the following (each a “Blocked Person”):

(i)a Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224;

(ii)a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224;

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(iii)a Person or entity with which any bank or other financial institution is prohibited from dealing or otherwise engaging in any transaction by any applicable anti-terrorism law;

(iv)a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224;

(v)a Person or entity that is named as a “specially designated national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list; or

(vi)a Person or entity who is affiliated with a Person or entity listed above.

(c)No Group Member knowingly (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224.

Anti-Corruption Laws and Sanctions

.  The Borrower has implemented and maintains in effect policies and procedures reasonably designed to promote compliance by the Borrower, its Subsidiaries and their respective directors, officers and employees with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and their respective officers, and, to the knowledge of the Borrower, its directors, employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.  None of (a) the Borrower, any of its Subsidiaries or any of their respective officers, or (b) to the knowledge of the Borrower, any director, employee or agent of the Borrower or any of its Subsidiaries that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.  No borrowing or Letter of Credit, use of proceeds or other transaction contemplated by this Agreement will directly or knowingly indirectly violate Anti-Corruption Laws or applicable Sanctions.  

EEA Financial Institutions

.  No Loan Party is an EEA Financial Institution.

Beneficial Ownership Certificate

.  The information included in the Beneficial Ownership Certificate last delivered with respect to the Borrower, if applicable, is true and correct in all material respects.

Section 6.CONDITIONS PRECEDENT

Conditions to Initial Extension of Credit

.  The agreement of each Lender to make the initial extension of credit requested to be made by it on the Closing Date is subject to the satisfaction (or waiver), prior to the making of such extension of credit, of the following conditions precedent:

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(a)Credit Agreement; Guarantee and Collateral Agreement.  The Administrative Agent shall have received (i) this Agreement, executed and delivered by the Borrower, the Administrative Agent and each Person identified herein as a Lender signatory hereto, and (ii) the Guarantee and Collateral Agreement, executed and delivered by the Borrower and each Subsidiary Guarantor.

(b)Closing Certificate of the Borrower.  The Administrative Agent shall have received (i) a certificate executed on behalf of the Borrower by a Responsible Officer of the Borrower dated as of the Closing Date, substantially in the form of Exhibit J, and (ii) a good standing certificate for the Borrower from its jurisdiction of organization.

(c)Financial Statements.  The Administrative Agent shall have received the Borrower Historical Financial Statements and the Target Historical Financial Statements.

(d)Fees.  The Administrative Agent shall have received confirmation reasonably satisfactory to it that all fees required to be paid and all reasonable and documented invoiced expense reimbursements (to the extent invoiced at least 2 Business Days prior to the Closing Date) payable by any Loan Party for account of any of the Other Representatives, Administrative Agent or Lenders on or before the Closing Date will be paid concurrently with the funding of the Term Loans on the Closing Date (which amounts may be offset against the proceeds of the Facilities).

(e)Closing Certificate of the Guarantors, Certificate of Incorporation; Good Standing.  The Administrative Agent shall have received (i) a certificate of each Subsidiary Guarantor, dated the Closing Date, substantially in the form of Exhibit C, and (ii) a good standing certificate for each Subsidiary Guarantor from its jurisdiction of organization.

(f)Legal Opinions.  The Administrative Agent shall have received a customary legal opinion of Squire Patton Boggs (US) LLP, counsel to the Loan Parties.

(g)Pledged Stock; Stock Powers; Pledged Notes.  Except as set forth on Schedule 7.13, arrangements consistent with the applicable payoff letters or otherwise reasonably satisfactory to the Administrative Agent shall have been made for the delivery of all (i) certificates representing the shares of Capital Stock listed on Schedule 2 to the Guarantee and Collateral Agreement, together with an undated stock power or equivalent for each such certificate executed in blank by the pledgor thereof and (ii) each promissory note (if any) listed on Schedule 2 to the Guarantee and Collateral Agreement endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof.

(h)Solvency Certificate.  The Administrative Agent shall have received a solvency certificate of the chief financial officer of the Borrower, substantially in the form of Exhibit I, which shall document the solvency of the Borrower and its Subsidiaries, on a consolidated basis, as of the Closing Date after giving effect to the Transactions and other transactions contemplated hereby.

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(i)Existing Indebtedness.  Arrangements reasonably satisfactory to the Administrative Agent shall have been made for the delivery of all documents or instruments necessary to release all Liens securing all obligations of the Borrower, the Target and their respective Subsidiaries under the Existing Debt Agreements and all Guarantee Obligations of the Borrower, the Target and their respective Subsidiaries in respect of the obligations under the Existing Debt Agreements.

(j)Filings, Registrations and Recordings.  Any Uniform Commercial Code financing statement required by the Guarantee and Collateral Agreement or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a perfected Lien on the Collateral described therein (to the extent such Lien may be perfected by the filing of  UCC financing statement), prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 8.3), shall be in proper form for filing, registration or recordation.

(k)Lien Searches.  The Administrative Agent shall have received the results of a recent lien search with respect to each Loan Party in the jurisdiction where each such Loan Party is located, and such search shall reveal no liens on any of the assets of the Loan Parties except for liens permitted by Section 8.3 or discharged substantially concurrently with or prior to the Closing Date pursuant to documentation reasonably satisfactory to the Administrative Agent.

(l)Perfection Certificate.  The Administrative Agent shall have received a perfection certificate executed by the Borrower, dated as of the Closing Date, in form and substance reasonably acceptable to the Administrative Agent.

(m)Patriot Act.  The Lenders shall have received from the Loan Parties, at least three Business Days prior to the Closing Date, (i) to the extent reasonably requested by the Administrative Agent or any Lender at least ten (10) Business Days prior to the Closing Date, all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation and (ii) if the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, a Beneficial Ownership Certificate in relation to the Borrower.

(n)Specified Acquisition Representation and Specified Representations. (i) The Specified Acquisition Agreement Representations shall be true and correct as of the Closing Date and (ii) the Specified Representations shall be true and correct in all material respects as of the Closing Date, except, in each case, to the extent that such representations and warranties refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date; provided that, in case of subclause (i) hereof, such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof.

(o)Target Material Adverse Effect.  Since December 31, 2018, no Target Material Adverse Effect shall have occurred.

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(p)Concurrent Acquisition.  Substantially concurrently with the initial funding of the Facilities, the Acquisition shall be consummated, in all material respects, in accordance with the terms of the Acquisition Agreement.

(q)Borrowing Notices.  The Administrative Agent shall have received a notice of borrowing pursuant to Section 2.2.

Conditions to Each Extension of Credit after the Closing Date

.  Subject to Section 1.3 and Section 4.17(i), the agreement of each Lender to make any extension of credit requested to be made by it on the date of this Agreement or any other date is subject to the satisfaction (or waiver) of the following conditions precedent:

(a)No Default.  No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date.

(b)Representations and Warranties.  Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of such date as if made on and as of such date, except to the extent that such representations and warranties refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date; provided that, in each case, such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof.

(c)Borrowing Notices.  The Administrative Agent shall have received (i) a notice of borrowing pursuant to Section 3.2 or 3.4, as the case may be, in connection with any borrowing under the Revolving Commitments or Swingline Loans or (ii) an Application pursuant to Section 3.8 for issuance of a Letter of Credit on behalf of the Borrower.

Each borrowing by and issuance or increase of a Letter of Credit on behalf of the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the date of such extension of credit that the conditions contained in this Section 6.2 have been satisfied.

Section 7.AFFIRMATIVE COVENANTS

The Borrower hereby agrees that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding (other than Letters of Credit which have been Cash Collateralized or as to which other arrangements satisfactory to the applicable Issuing Lender shall have been made) or any Loan or other amount (other than contingent surviving indemnity obligations in respect of which no claim or demand has been made) is owing to any Lender or the Administrative Agent hereunder, the Borrower shall and shall cause each of its Restricted Subsidiaries to:

Financial Statements

.  

(a)Furnish to the Administrative Agent on behalf of each Lender:

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(i)as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, a copy of the audited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such year and the related audited consolidated statements of income and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without any material qualification or exception including a “going concern” or like qualification or exception, or qualification arising out of the scope of the audit (except to the extent solely due to the scheduled occurrence of a maturity date within one year from the date of such audit or the potential inability to satisfy the financial covenant set forth in Section 8.1), by Deloitte & Touche LLP or other independent certified public accountants of nationally recognized standing; and

(ii)as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower (or, in the case of the first fiscal quarter ending after the Closing Date, 60 days after the end of such fiscal quarter), the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments and the absence of footnotes).

(b)All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein).

(c)Notwithstanding the foregoing such financial statements may be delivered in the form and with the accompanying certifications required by applicable Requirements of Law for filing Forms 10-K and Forms 10-Q with the SEC.

Documents required to be delivered pursuant to Section 7.1 (to the extent any such documents are included in materials otherwise filed with the SEC) shall be deemed to have been delivered on the date on which such report or other information is posted on the SEC’s website at www.sec.gov, and such posting shall be deemed to satisfy the reporting and delivery requirements of such Section.  

Certificates; Other Information

.  Furnish to the Administrative Agent on behalf of each Lender (or, in the case of clause (g), to the relevant Lender):

(a)concurrently with the delivery of any financial statements pursuant to Section 7.1, (i) a certificate of a Responsible Officer stating that such Responsible Officer has obtained no knowledge of any Default or Event of Default, in each case except as specified in such certificate and (ii)(x) a Compliance Certificate containing all information and calculations reasonably necessary for determining compliance by each Group Member with the provisions of this Agreement referred to therein as of the last day of the fiscal quarter or fiscal year of the Borrower, as the case may be, and, if applicable, for determining the Commitment Fee Rate and

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Excess Cash Flow, and (y) to the extent not previously disclosed to the Administrative Agent, a description of any change in the jurisdiction of organization of any Loan Party and, concurrently with the delivery of any financial statements pursuant to Section 7.1(a)(i) only, a listing of any registered or applied-for material Intellectual Property in the United States acquired by any Loan Party since the date of the most recent list delivered pursuant to this clause (y) (or, in the case of the first such list so delivered pursuant to Section 7.13);

(b)as soon as available, and in any event no later than 90 days after the end of each fiscal year of the Borrower, a detailed consolidated budget for the following fiscal year (including a projected consolidated balance sheet of the Borrower and its Subsidiaries as of the end of the following fiscal year, the related consolidated statements of projected cash flow, projected changes in financial position and projected income and a description of the underlying assumptions applicable thereto) (collectively, the “Projections”);

(c)if the Borrower is not then a reporting company under the Exchange Act within 45 days after the end of each fiscal quarter of the Borrower (90 days, in the case of the fourth fiscal quarter of any fiscal year, and 60 days, in the case of the first fiscal quarter ending after the Closing Date), a narrative discussion and analysis of the financial condition and results of operations of the Borrower and its Subsidiaries for such fiscal quarter and for the period from the beginning of the then current fiscal year to the end of such fiscal quarter, as compared to the portion of the Projections covering such periods and to the comparable periods of the previous year;

(d)[reserved];

(e)within five Business Days after the same are sent, copies of all financial statements and reports that the Borrower sends to the holders of any class of its debt securities or public equity securities and, within five Business Days after the same are filed, copies of all financial statements and reports that the Borrower may make to, or file with, the SEC;

(f)concurrently with the delivery of any document or notice required to be delivered pursuant to Section 7.1 or 7.2, Borrower shall indicate in writing whether such document or notice contains Non-public Information.  Borrower and each Lender acknowledge that certain of the Lenders may be “public-side” Lenders (Lenders that do not wish to receive material non-public information with respect to any Group Member or their securities) and, if documents or notices required to be delivered pursuant to Section 7.1 or 7.2 or otherwise are being distributed through IntraLinks/IntraAgency, SyndTrak or another relevant website or other information platform (the “Platform”), any document or notice that Borrower has indicated contains Non-public Information shall not be posted on that portion of the Platform designated for such public-side Lenders.  If Borrower has not indicated whether a document or notice delivered pursuant to Section 7.1 or 7.2 contains Non-public Information, Administrative Agent reserves the right to post such document or notice solely on that portion of the Platform designated for Lenders who wish to receive material nonpublic information with respect to the Group Members and their securities.  Notwithstanding anything herein to the contrary, in no event shall the Borrower request that the Administrative Agent make available to “public-side” Lenders budgets or any certificates,

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reports or calculations with respect to the Borrowers compliance with the covenants contained herein; and

(g)promptly, such additional financial and other information (including, without limitation, information regarding any Single Employer Plan or Multiemployer Plan and any reports or other information required to be filed under ERISA) as the Administrative Agent or any Lender may from time to time reasonably request (including any information that any Lender reasonably requests in order to comply with its obligations under any “know-your-customer” or anti-money laundering laws or regulations, including Patriot Act and the Beneficial Ownership Regulation).

Documents required to be delivered pursuant to Section 7.2 (to the extent any such documents are included in materials otherwise filed with the SEC) shall be deemed to have been delivered on the date on which such report or other information is posted on the SEC’s website at www.sec.gov, and such posting shall be deemed to satisfy the reporting and delivery requirements of such Section.  

Payment of Obligations; Payment of Taxes

.  (a)  Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the relevant Group Member or where failure to pay, discharge or otherwise satisfy such material obligations, in the aggregate, has not had and would not reasonably be expected to result in a Material Adverse Effect; and

(b)pay all material Taxes imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises when due and payable, and all claims (including claims for labor, services, materials and supplies) for sums that have become due and payable and that by law have or may become a Lien upon any of its properties or assets; provided, no such Tax need be paid if it is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as (a) adequate reserve or other appropriate provision, as shall be required in conformity with GAAP, shall have been made therefore and for any accrued interest and potential penalties or other costs relating thereto, (b) in the case of a Tax or claim which has or may become a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale of any material portion of the Collateral to satisfy such Tax or claim and (c) any Tax or claim determined to be due, together with any interest or penalties thereon is promptly paid after final resolution of such contest.

Maintenance of Existence; Compliance

.  (a) (i) Preserve, renew and keep in full force and effect its organizational existence and (ii) take all reasonable action to maintain all rights, privileges and franchises necessary to conduct its business, except, in each case, as otherwise permitted by Section 8.4 and except to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect; and (b) comply with all Contractual Obligations and Requirements of Law except to the extent that failure to comply therewith would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.  The Borrower will maintain in effect and enforce policies and procedures reasonably designed to promote

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compliance by the Borrower, its Subsidiaries and their respective directors, officers and employees with  Anti-Corruption Laws and applicable Sanctions.

Maintenance of Property; Insurance

.  (a) Keep all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted, except to the extent the failure to do so could not reasonably be expected to have a Material Adverse Effect and (b) maintain with reputable insurance companies insurance on all its property in at least such amounts and against such risks (but including in any event public liability) as are usually insured against in the same general area by companies engaged in the same or a similar business.

Inspection of Property; Books and Records; Discussions

.  (a) Keep proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities and (b) permit, upon reasonable prior notice, any persons designated by the Administrative Agent, or upon the occurrence and during the continuance of an Event of Default, any Lender, to visit and inspect any of its properties and examine and make abstracts from any of its books and records at such reasonable times and upon reasonable intervals and to discuss the business, operations, properties and financial and other condition of the Group Members with officers of the Group Members and with their independent certified public accountants at such reasonable times and upon reasonable intervals, in each case as any Administrative Agent or, upon the occurrence of and during the continuance of an Event of Default, any Lender may reasonably request; provided, that, unless an Event of Default has occurred and is continuing, such visitation and inspection rights may only be exercised by the Administrative Agent once per calendar year. Notwithstanding anything to the contrary in this Section 7.6, none of the Group Members will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that is subject to attorney-client or similar privilege or constitutes attorney work product; provided that such Group Member shall have notified the Administrative Agent that such document, information or other matter is being withheld on the basis of the foregoing.

Notices

.  Promptly (but in any event within any time period that may be specified below) upon any Responsible Officer of any Group Member acquiring knowledge thereof, give notice to the Administrative Agent and each Lender of the following:

(a)the occurrence of any Default or Event of Default;

(b)any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified therein;

(c)any litigation or proceeding affecting any Group Member (i) which is reasonably expected to be determined adversely and, if so determined, would have or would reasonably be expected to have a Material Adverse Effect, (ii) in which injunctive or other temporary or specific relief is sought which, if granted, would reasonably be expected to have a Material Adverse Effect or (iii) which relates to any Loan Document;

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(d)the following events, as soon as possible and in any event within 30 days after a Responsible Officer of the Borrower knows or has reason to know thereof:  (i) the occurrence of any Reportable Event with respect to any Single Employer Plan, the incurrence of a failure to satisfy the minimum funding standard (as defined in Sections 412 and 430 of the Code and Sections 302 and 303 of ERISA) (whether or not waived) with respect to a Single Employer Plan, the creation of any Lien in favor of the PBGC or a Single Employer Plan or any withdrawal from, or the termination or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the termination or Insolvency of, any Plan; and

(e)any other development or event that has had or would reasonably be expected to have a Material Adverse Effect.

Each notice pursuant to this Section 7.7 shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action, if any, the relevant Group Member has taken or proposes to take with respect thereto.

Environmental Laws

.  (a)  Comply in all material respects and conduct the Business in compliance with, and make all commercially reasonable efforts to ensure compliance in all material respects by all tenants and subtenants, if any, with, all Environmental Laws, and obtain and comply in all material respects with and maintain, and make all commercially reasonable efforts to ensure that all tenants and subtenants, if any, obtain and comply in all material respects with and maintain, any and all Environmental Permits required pursuant to Environmental Law for the conduct of the Business or their respective operations, in each case except for any such non-compliance or failure to obtain that, individually or in the aggregate, would not be expected to result in a Material Adverse Effect.

(b)(b)Except as would not be expected to result in a Material Adverse Effect, (i) unless being contested in good faith, conduct and complete in all material respects all investigations, studies, sampling and testing, and all remedial, removal and other actions required in writing by a Governmental Authority under Environmental Laws and (ii) promptly comply, to the extent practicable, in all material respects with all other lawful orders and directives of all Governmental Authorities regarding Environmental Laws unless the order or directive in being contested in good faith; provided, that compliance within deadlines set by such orders or authorities shall be deemed to be prompt.

Additional Collateral, etc.

  (a)  With respect to any property (other than fee-owned property) constituting Collateral acquired after the Closing Date by the Borrower or any Subsidiary Guarantor as to which the Administrative Agent, for the benefit of the Secured Parties, does not have a perfected Lien (except as expressly set forth in the applicable Security Document), within 30 days of such acquisition (or within such longer period of time as reasonably consented to by the Administrative Agent) (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Administrative Agent reasonably deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a security interest in such property and (ii) take all

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actions reasonably necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a (except as expressly set forth in the applicable Security Document) perfected security interest in such property, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be reasonably requested by the Administrative Agent.

(b)Subject to the last sentence of this Section 7.9(b), with respect to any fee simple interest in any real property having, in the reasonable opinion of the Borrower, a fair market value of at least $10,000,000 acquired after the Closing Date by the Borrower or any Subsidiary Guarantor within ninety (90) days of such acquisition (or within such longer period of time as reasonably consented to by the Administrative Agent) (A) execute, acknowledge and deliver a Mortgage in favor of the Administrative Agent, for the benefit of the Secured Parties, in an amount no greater than 125% of the purchase price thereof if the property is located in a state with mortgage recording tax covering such real property, (B) if requested by the Administrative Agent, provide the Secured Parties with (1) title and extended coverage insurance covering such real property in an amount at least equal to the purchase price of such real property (and endorsements thereto) together with a current ALTA survey thereof, together with a surveyor’s certificate, provided that, if the Borrower is able to obtain a “no change” affidavit acceptable to the title company and does deliver such certificate to the title company to enable it to issue a title policy (x) removing all exceptions which would otherwise have been raised by the title company as a result of the absence of a current survey for such real property and (y) including all endorsements that would otherwise have been included had a current survey been obtained, then a current survey shall not be required; and (2) use commercially reasonable efforts to obtain any consents or estoppels reasonably deemed necessary or advisable by the Administrative Agent in connection with such Mortgage, each of the foregoing in form and substance reasonably satisfactory to the Administrative Agent, (C) a flood hazard certificate, certified to the Administrative Agent, specifying whether such real property is located in a special flood hazard zone and if so, evidence of flood insurance as required by any Requirement of Law and (D) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.  Notwithstanding the foregoing, the Administrative Agent shall not enter into any Mortgage in respect of any real property acquired by any Loan Party after the Closing Date unless and until (a) if such Mortgaged Property relates to a property not located in a flood zone, the date that is five (5) Business Days or (b) if such Mortgaged Property relates to a property located in a flood zone, the date that is fourteen (14) days, after the Administrative Agent has delivered to the Lenders the following documents in respect of such real property: (i) a completed flood hazard determination from a third party vendor; (ii) if such real property is located in a “special flood hazard area”, (A) a notification to the applicable Loan Parties of that fact and (if applicable) notification to the applicable Loan Parties that flood insurance coverage is not available and (B) evidence of the receipt by the applicable Loan Parties of such notice; and (iii) if required by Flood Insurance Laws, evidence of required flood insurance.

(c)With respect to any new Restricted Subsidiary that is not an Excluded Subsidiary (or such other Restricted Subsidiary designated by the Borrower as a Subsidiary Guarantor) created or acquired after the Closing Date by any Group Member (which,

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for the purposes of this Section 7.9(c), shall include any existing Restricted Subsidiary that ceases to be a Foreign Subsidiary or an Excluded Subsidiary), promptly (or within such period of time as reasonably consented to by the Administrative Agent) (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent reasonably deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a perfected security interest in the Capital Stock of such new Restricted Subsidiary (to the extent constituting Collateral) that is owned by any Loan Party, (ii) to the extent constituting Collateral, deliver to the Administrative Agent the certificates, if any, representing such Capital Stock, together with undated stock powers or equivalents, in blank, executed and delivered by a duly authorized officer of the relevant Loan Party, (iii) cause such new Restricted Subsidiary (A) to become a party to the Guarantee and Collateral Agreement, (B) to take such actions reasonably necessary or reasonably advisable to grant to the Administrative Agent for the benefit of the Secured Parties a (to the extent provided in the Guarantee and Collateral Agreement) perfected security interest in the Collateral described in the Guarantee and Collateral Agreement with respect to such new Restricted Subsidiary, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be reasonably requested by the Administrative Agent and (C) to deliver to the Administrative Agent a certificate of such Restricted Subsidiary, substantially in the form of Exhibit C, with appropriate insertions and attachments, and (iv) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

(d)With respect to (i) any new Foreign Subsidiary created or acquired after the Closing Date by any Group Member (other than by any Group Member that is a Foreign Subsidiary) that is a Material Foreign Subsidiary or a direct or indirect parent of any Material Subsidiaries or (ii) any Foreign Subsidiary owned by any Group Member (other than by any Group Member that is a Foreign Subsidiary) that (x) becomes a Material Foreign Subsidiary or (y) is a direct or indirect parent of any Subsidiary that becomes a Material Foreign Subsidiary, promptly (or within such period of time as reasonably consented to by the Administrative Agent) (A) execute and deliver to the Administrative Agent such amendments or supplements to the Guarantee and Collateral Agreement as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a (except as expressly set forth in the Guarantee and Collateral Agreement) perfected security interest in the Capital Stock of such new Foreign Subsidiary (to the extent constituting Collateral) that is owned by any such Group Member, (B) deliver to the Administrative Agent the certificates, if any, representing such Capital Stock, together with undated stock powers or equivalents, in blank, executed and delivered by a duly authorized officer of the relevant Group Member, as the case may be, and take such other action as may be reasonably necessary or, in the reasonable opinion of the Administrative Agent, desirable to perfect the Administrative Agent’s security interest therein, and (C) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

(e)If  the aggregate amount of Consolidated Total Assets as of the end of the most recently ended fiscal period for which financial statements have been delivered

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pursuant to Section 7.1 attributable to all Restricted Subsidiaries that are not Material Subsidiaries exceeds ten percent (10.0%) of Consolidated Total Assets of the Borrower and its Restricted Subsidiaries as of the end of such period, the Borrower (or, in the event the Borrower has failed to do so within sixty (60) days of delivery of such financial statements, the Administrative Agent) shall designate sufficient Domestic Subsidiaries as “Material Domestic Subsidiaries” or sufficient Foreign Subsidiaries as “Material Foreign Subsidiaries” to eliminate such excess, and such designated Restricted Subsidiaries shall for all purposes of this Agreement constitute Material Domestic Subsidiaries or Material Foreign Subsidiaries, respectively.

(f)Notwithstanding anything to the contrary herein or in any other Loan Document, it is understood and agreed that:

(i)no Loan Party shall be required to seek any landlord waiver, bailee letter, estoppel, warehouseman waiver or other collateral access, lien waiver or similar letter or agreement;

(ii)no Loan Party shall be required to perfect a security interest in any asset to the extent perfection of a security interest in such asset would be prohibited under any applicable Law;

(iii)the Administrative Agent shall not require the taking of a Lien on, or require the perfection of any Lien granted in, those assets as to which the cost of obtaining or perfecting such Lien (including any Taxes or expenses payable relating to such Lien) is excessive in relation to the benefit to the Lenders of the security afforded thereby as reasonably determined by the Borrower and the Administrative Agent;

(iv)no actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required in order to create any security interests in any assets or to perfect or make enforceable such security interests (including any Intellectual Property registered in any non-U.S. jurisdiction or the Capital Stock of Foreign Subsidiaries) (it being understood that there shall be no security agreements or pledge agreements governed under the laws of any non-U.S. jurisdiction or any requirement to make any filings in any foreign jurisdiction including with respect to foreign Intellectual Property or the Capital Stock of Foreign Subsidiaries); and

(v)no actions shall be required with respect to assets requiring perfection through control agreements or perfection by “control” (as defined in the UCC) (other than in respect of Indebtedness for borrowed money (other than intercompany Indebtedness) owing to the Loan Parties evidenced by a note in excess of $10,000,000, Indebtedness of any non-Loan Party that is owing to any Loan Party in excess of $10,000,000 (which shall be evidenced by an intercompany note and pledged to the Administrative Agent)) and certificated Capital Stock of Wholly Owned Restricted Subsidiaries that are Material Subsidiaries otherwise required to

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be pledged pursuant to the Guarantee and Collateral Agreement to the extent otherwise required by Section 7.9(a).  Notwithstanding the foregoing, in each case subject to the terms and conditions set forth in (and to the extent required by) the Guarantee and Collateral Agreement, in the case of any Collateral consisting of uncertificated securities in excess of $10,000,000, the applicable Loan Party shall have caused the issuer thereof to either (x) register the Administrative Agent as the owners of such uncertificated securities or (y) promptly agree in writing that such issuer will comply with instructions issued or originated by the Administrative Agent without further consent of such Loan Party.

Use of Proceeds

.  Use the proceeds of the Loans only for the purposes specified in Section 5.16.

Further Assurances

.  From time to time execute and deliver, or cause to be executed and delivered, such additional instruments, certificates or documents, and take all such actions, as the Administrative Agent may reasonably request for the purposes of implementing or effectuating the provisions of this Agreement and the other Loan Documents, or of perfecting or renewing the rights of the Administrative Agent and the Lenders with respect to the Collateral (or with respect to any additions thereto or replacements or proceeds thereof or with respect to any other property or assets hereafter acquired by the borrower or any Restricted Subsidiary which may be deemed to be part of the Collateral) pursuant hereto or thereto.  Upon the exercise by the Administrative Agent or any Lender of any power, right, privilege or remedy pursuant to this Agreement or the other Loan Documents which requires any consent, approval, recording, qualification or authorization of any Governmental Authority, the Borrower will, if reasonably requested by the Administrative Agent, use commercially reasonable efforts to execute and deliver, or to cause the execution and delivery of, all applications, certifications, instruments and other documents and papers that the Administrative Agent or such Lenders may be required to obtain from the Borrower or any of its Restricted Subsidiaries for such governmental consent, approval, recording, qualification or authorization.

Ratings

.  The Borrower will use commercially reasonable efforts to obtain and maintain (but not maintain any specific rating) a public corporate family and/or corporate credit rating, as applicable, and public ratings in respect of the Term Loans provided pursuant to this Agreement, in each case, from at least two of S&P, Moody’s and Fitch.

Post-Closing Items

.  The Borrower will deliver the items described on Schedule 7.13 within the period or by the date specified therein or, within such longer period of time or by such later date as reasonably consented to by the Administrative Agent.

Section 8.NEGATIVE COVENANTS

The Borrower hereby agrees that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding (other than Letters of Credit which have been Cash Collateralized or as to which other arrangements satisfactory to the applicable Issuing Lender shall have been made) or any Loan or other amount (other than contingent surviving indemnity

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obligations in respect of which no claim or demand has been made) is owing to any Lender or the Administrative Agent hereunder, the Borrower shall not and shall not permit any of its Restricted Subsidiaries to, directly or indirectly:

Financial Condition Covenant

.  Permit the Consolidated Senior Secured Net Leverage Ratio, as of the last day of any fiscal quarter (commencing with the fiscal quarter ending March 31, 2020) to exceed 4.25:1.00; provided that the covenant contained in this Section 8.1 shall not apply unless on such last day, the Total Revolving Extensions of Credit (including any L/C Obligations which are not Cash Collateralized) exceed $122,500,000 (a “Covenant Triggering Event”)).  

Indebtedness

.  Create, issue, assume, become liable in respect of or otherwise Incur, or suffer to exist, any Indebtedness, except:

(a)Indebtedness of any Loan Party pursuant to any Loan Document;

(b)Indebtedness (i) of the Borrower to any Restricted Subsidiary, (ii) of any Subsidiary Guarantor to the Borrower or any Restricted Subsidiary, (iii) of any Restricted Subsidiary that is not a Subsidiary Guarantor to any other Restricted Subsidiary that is not a Subsidiary Guarantor, and (iv) to the extent permitted pursuant to Section 8.7, of any Restricted Subsidiary that is not a Subsidiary Guarantor to the Borrower or any Subsidiary Guarantor;

(c)Guarantee Obligations Incurred in the ordinary course of business by the Borrower or any of its Restricted Subsidiaries of obligations of the Borrower, any Subsidiary Guarantor and, to the extent permitted pursuant to Section 8.7, of any Restricted Subsidiary that is not a Subsidiary Guarantor; and Guarantee Obligations Incurred by any Restricted Subsidiary that is not a Subsidiary Guarantor of obligations of any other Restricted Subsidiary that is not a Subsidiary Guarantor;

(d)Indebtedness of the Borrower and its Restricted Subsidiaries outstanding on the Closing Date and listed on Schedule 8.2(d) and any Permitted Refinancing thereof;

(e)Indebtedness (including Capital Lease Obligations) secured by Liens permitted by Section 8.3(g) in an aggregate principal amount not to exceed, immediately after giving effect to the issuance or Incurrence of such Indebtedness and taken together with all such Indebtedness Incurred and then outstanding under this Section 8.2(e), the greater of (i) $150,000,000 and (ii) 10% of Consolidated Total Assets as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 7.1 and any Permitted Refinancing of such Indebtedness;

(f)Hedge Agreements permitted under Section 8.11;

(g)Indebtedness of Foreign Subsidiaries, and guarantees thereof by Foreign Subsidiaries, in an aggregate principal amount not to exceed at any time the greater of (i) $100,000,000 and (ii) 5% of Consolidated Total Assets as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 7.1;

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(h)unsecured Indebtedness of the Borrower in respect of Management Advances in an aggregate principal amount not to exceed $10,000,000 Incurred in any fiscal year;

(i)guarantees of Indebtedness of directors, officers and employees of Borrower or any of its Restricted Subsidiaries in respect of expenses of such Persons in connection with relocations and other ordinary course of business purposes, if the aggregate amount of Indebtedness so guaranteed, when added to the aggregate amount of unreimbursed payments theretofore made in respect of such guarantees and the amount of Investments then outstanding under Section 8.7(f), shall not at any time exceed $10,000,000;

(j)(i) Indebtedness of a Restricted Subsidiary of the Borrower acquired in a Permitted Acquisition and outstanding at the time of such Permitted Acquisition, (ii) Indebtedness assumed at the time of a Permitted Acquisition of an asset securing such Indebtedness so long as, in the case of each of clauses (i) and (ii), (x) such Indebtedness was not Incurred in connection with, or in anticipation or contemplation of, such Permitted Acquisition and (y) the aggregate principal amount of such Indebtedness does not at any time exceed $50,000,000, and (iii) any Permitted Refinancing of such Indebtedness under clause (i) or (ii);

(k)guarantees of Indebtedness of a Person which is not a Restricted Subsidiary of the Borrower and in which the Borrower or a Restricted Subsidiary made an investment permitted by Section 8.7(m) or preferred Capital Stock of a Foreign Subsidiary which such Foreign Subsidiary is obligated to purchase, redeem, retire or otherwise acquire, if the aggregate outstanding principal amount so guaranteed and the aggregate outstanding redemption value of such Capital Stock, when added to (i) unreimbursed payments theretofore made in respect of such guarantees and (ii) Investments then outstanding under Section 8.7(m), does not at any time exceed $10,000,000;

(l)[reserved];

(m)Indebtedness which may be deemed to exist pursuant to any guaranties, performance, surety, statutory, appeal or similar obligations (including in connection with workers’ compensation), or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case Incurred in the ordinary course of business;

(n)Indebtedness in respect of Specified Cash Management Obligations, netting services, overdraft protections and otherwise in connection with deposit accounts;

(o)Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from guaranties, surety bonds or performance bonds securing the performance of the Borrower or any of its Restricted Subsidiaries pursuant to such agreements, in connection with permitted Investments or permitted Dispositions;

(p)Indebtedness consisting of promissory notes issued to present or former officers, directors or employees of any Group Member upon the death, disability, retirement or termination of employment or service of such officer, director or employee or

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otherwise to finance the purchase or redemption of Capital Stock of Borrower, to the extent the applicable Restricted Payment is permitted by Section 8.6;

(q)Indebtedness representing insurance premiums owing in the ordinary course of business;

(r)unsecured Indebtedness of any Borrower or any Restricted Subsidiary in an aggregate outstanding principal amount not to exceed 100% of the amount of Net Cash Proceeds received by the Borrower from capital contributions or the issuance or sale of Capital Stock (other than Disqualified Capital Stock) to the extent such Net Cash Proceeds have not been otherwise applied to build the Available Amount or any other basket for the incurrence of Indebtedness or the making of any Investment or Restricted Payment and (ii) any Permitted Refinancing Indebtedness thereof;

(s)(i) Indebtedness of the Borrower or any Subsidiary Guarantor Incurred in connection with a Permitted Acquisition; provided that (A) (x) in the case of Indebtedness secured by a Lien on the Collateral that is pari passu with, or junior to, Liens securing the Secured Obligations, the Consolidated Senior Secured Net Leverage Ratio after giving effect to the Incurrence thereof (subject to Section 1.3) is less than or equal to 3.50:1.00, and (y) in the case of any unsecured Indebtedness, the Consolidated Net Leverage Ratio is less than or equal to 3.75:1.00, in each case assuming for the purposes of this Section 8.2(s) that any revolving commitments being incurred pursuant to this Section 8.2(s) at the time of such calculation are fully drawn), (B) such Indebtedness is not scheduled to mature prior to (x) in the case of such Indebtedness secured on a pari passu basis, the Latest Maturity Date and (y) in the case of such Indebtedness secured on a junior basis or unsecured, the date that is 91 days after the Latest Maturity Date (provided that, this clause (B) shall not apply to any bridge loans permitted under this Section 8.2(s) prior to its conversion), (C) such Indebtedness is not guaranteed by any Restricted Subsidiaries other than the Subsidiary Guarantors, (D) if such Indebtedness is secured, the obligations in respect thereof shall not be secured by any property or assets of the Borrower or any Restricted Subsidiary other than the Collateral and the security agreements relating to such Indebtedness are substantially the same as the Security Documents (with such differences as are reasonably satisfactory to the Administrative Agent), (E) if such Indebtedness is secured on a pari passu basis, such Indebtedness must be in the form of senior secured notes, and (F) if such Indebtedness is secured, a Senior Representative validly acting on behalf of the holders of such Indebtedness shall have become party to, if secured on a pari passu basis, a Pari Debt Intercreditor Agreement and, as applicable, the Intercreditor Agreement and, if secured on a junior basis, an Intercreditor Agreement  or if such agreement has been previously entered into in connection with any other permitted Indebtedness, execute a joinder to such then existing agreement in substantially the form provided therein, and (ii) any Permitted Refinancing thereof;

(t)Indebtedness in respect of bid, workers’ compensation claims, self-insurance obligations, bankers’ acceptances, performance or surety, appeal or similar bonds issued for the account of and completion guarantees and other similar obligations provided by any Group Member in each case in the ordinary course of business and consistent with past practices, including guarantees or obligations with respect to letters of credit supporting such bid bonds, performance bonds, surety bonds and similar obligations;

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(u)Indebtedness representing deferred compensation to employees of the Borrower and its Restricted Subsidiaries permitted by the terms of this Agreement and Incurred in the ordinary course of business;

(v)Permitted Pari Passu Refinancing Debt, Permitted Junior Refinancing Debt, Permitted Unsecured Refinancing Indebtedness and any Permitted Refinancing thereof;

(w)(i) Indebtedness of the Borrower or any Subsidiary Guarantor in respect of one or more series of notes or loans that are either senior or subordinated and unsecured or secured by Liens on the Collateral ranking junior to or pari passu with the Liens securing the Obligations (or any bridge loans to the extent that the long-term indebtedness into which such bridge loans convert into otherwise satisfies the requirements of this Section 8.2(w)) that are issued or made in lieu of Incremental Loans (any such Indebtedness, “Incremental Equivalent Debt”); provided that (A) such Indebtedness is not scheduled to mature prior to (x) in the case of such Indebtedness secured on a pari passu basis, the Latest Maturity Date and (y) in the case of such Indebtedness secured on a junior basis or unsecured, the date that is 91 days after the Latest Maturity Date (provided that, this clause (A) shall not apply to any bridge loans permitted under this Section 8.2(w) prior to its conversion), (B) the aggregate principal amount of all such Indebtedness Incurred pursuant to this Section 8.2(w) shall not exceed the Incremental Amount, (C) such Indebtedness is not guaranteed by any Restricted Subsidiaries other than the Subsidiary Guarantors, (D) in the case of such Indebtedness that is secured, the obligations in respect thereof shall not be secured by any property or assets of the Borrower or any Restricted Subsidiary other than the Collateral and the security agreements relating to such Indebtedness are substantially the same as the Security Documents (with such differences as are reasonably satisfactory to the Administrative Agent), (E) such unsecured or senior Incremental Equivalent Debt shall not provide for any scheduled prepayments of principal prior to the final maturity date of such debt, (F) if such Indebtedness is secured on a pari passu basis, such Indebtedness must be in the form of senior secured notes and (G) if such Indebtedness is secured, a Senior Representative validly acting on behalf of the holders of such Indebtedness shall have become party to, if secured on a pari passu basis, a Pari Debt Intercreditor Agreement and, if secured on a junior basis, an Intercreditor Agreement or if such agreement has been previously entered into in connection with any other permitted Indebtedness, execute a joinder to such then existing agreement in substantially the form provided therein, and (ii) any Permitted Refinancing thereof;

(x)unsecured Indebtedness of the Borrower or any Subsidiary Guarantor so long as (i) such Indebtedness (A) matures no earlier than the date that is 91 days after the Latest Maturity Date (provided that, this clause (A) shall not apply to any bridge loans to the extent that the long-term indebtedness into which such bridge loans convert into otherwise satisfies the requirements of this clause (A)) and (B) does not require any mandatory prepayments, redemptions, sinking fund payments or purchase offers prior to maturity, except in case of certain customary asset sales or changes of control (provided that, this clause (B) shall not apply with respect to any mandatory prepayments of bridge loans permitted under this Section 8.2(x) with the proceeds of other unsecured Indebtedness, including senior unsecured notes) and (ii) subject to Section 1.3, on the date of the Incurrence of such Indebtedness, and any Permitted Refinancing in

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respect thereof, as the case may be, after giving effect to the Incurrence thereof, the Consolidated Coverage Ratio would be greater than 2.00:1.00;

(y)Indebtedness for employer contributions to the ESOP not in excess of limitations set forth in Section 404 of the Code and Indebtedness arising under Borrower’s stock repurchase liability under the ESOP; and

(z)additional Indebtedness of the Group Members in an aggregate principal amount not to exceed at any one time outstanding the greater of (i) $100,000,000 and (ii) 5% of Consolidated Total Assets as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 7.1.

The principal amount of any non-interest bearing Indebtedness or other discount security constituting Indebtedness at any date shall be the principal amount thereof that would be shown on a balance sheet of the Borrower dated such date prepared in accordance with GAAP.

Liens

.  Create, become subject to, assume or otherwise incur, or suffer to exist, any Lien upon any of its property, whether now owned or hereafter acquired, except for:

(a)Liens for taxes, assessments or government charges not yet due or that are being contested in good faith by appropriate proceedings and for which the relevant Group Member has set aside reserves with respect on its books in conformity with GAAP;

(b)carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business that are not overdue for a period of more than 60 days or that are being contested in good faith by appropriate proceedings;

(c)pledges or deposits in connection with workers’ compensation, unemployment insurance, old age pensions, or other social security or retirement benefits or similar legislation;

(d)(i) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business or (ii) arising by virtue of deposits made in the ordinary course of business to secure liability for premiums to insurance carriers;

(e)easements, rights-of-way, restrictions (including zoning restrictions) and other similar encumbrances and minor title defects or matters that would be disclosed in an accurate survey affecting real property incurred in the ordinary course of business that, in the aggregate, do not in any case materially interfere with the ordinary conduct of the business of any Group Member or materially detract from the value of the real property subject thereto;

(f)Liens created pursuant to the Loan Documents;

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(g)Liens securing Indebtedness permitted by Section 8.2(e) if (i) such Liens are created substantially simultaneously with the Incurrence of such Indebtedness (for the acquisition of certain property) or within 270 days thereafter and (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness (except for additions and accessions to such assets, replacements and products thereof and customary deposits); provided, that individual financings of equipment provided by one lender may be cross-collateralized to other financings of equipment provided by such lender;

(h)any interest or title of a lessor under any lease entered into by a Group Member in the ordinary course of its business and covering only the assets so leased and other statutory and common law landlords’ liens under leases;

(i)Liens in existence on the Closing Date listed on Schedule 8.3(i) and modifications, replacements, renewals or extensions thereof; provided, that no such Lien is spread to cover any additional property after the Closing Date and the amount of the aggregate obligations, if any, secured by any such Lien are not increased;

(j)attachment and judgment Liens, to the extent and for so long as the underlying judgments and decrees do not constitute an Event of Default pursuant to Section 9;

(k)Liens on property or assets acquired pursuant to a Permitted Acquisition, or on property or assets of a Restricted Subsidiary in existence at the time such Restricted Subsidiary is acquired pursuant to a Permitted Acquisition, if (i) any Indebtedness secured by such Liens is permitted by Section 8.2(j), and (ii) such Liens are not incurred in connection with, or in contemplation or anticipation of, such Permitted Acquisition and do not attach to any other asset of any Group Member; and Liens on such property or assets securing refinancings, renewals and extensions of such Indebtedness permitted under Section 8.2(j);

(l)Liens on assets of Foreign Subsidiaries securing Indebtedness permitted pursuant to Section 8.2(g);

(m)Liens on property subject to sale-leaseback transactions;

(n)licenses, sublicenses, leases or subleases granted to other Persons in the ordinary course of business that do not, individually or in the aggregate, materially interfere with the conduct of the business of the Borrower or any of its Restricted Subsidiaries taken as a whole;

(o)(i) any encumbrances or restrictions with respect to the Capital Stock of any Unrestricted Subsidiary, (ii) consisting of customary rights of first refusal and tag, drag and similar rights in joint venture agreements and agreements with respect to non-Wholly Owned Subsidiaries and (iii) any encumbrance or restriction (including put and call arrangements) in favor of a joint venture party with respect to the Capital Stock of, or assets owned by, any joint venture or similar arrangement pursuant to any joint venture or similar agreement;

(p)[reserved];

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(q)Liens securing Indebtedness permitted by Section 8.2(s);

(r)Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection or (ii) in favor of a banking institution arising as a matter of law encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking industry;

(s)Liens (i) on earnest money deposits of cash or Cash Equivalents in connection with any Investments made pursuant to Section 8.7(h) or 8.7(z) or (ii) consisting of an agreement to Dispose of any property in a Disposition permitted under Section 8.5;

(t)Liens in the nature of the right of setoff in favor of counterparties to contractual agreements with the Loan Parties in the ordinary course of business;

(u)the filing of UCC financing statements solely as a precautionary measure in connection with operating leases or consignment of goods and similar arrangements;

(v)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;

(w)Liens deemed to exist in connection with Investments in repurchase agreements permitted under Section 8.7;

(x)Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto to the extent permitted under Section 8.2(q);

(y)Liens in connection with the sale or transfer of any assets in a transaction permitted under Section 8.5, customary rights and restrictions contained in agreements relating to such sale or transfer pending the completion thereof solely relating to such assets so sold or transferred;

(z)Liens in favor of a Loan Party on assets of a Subsidiary that is not required to be a Subsidiary Guarantor;

(aa)Liens on Collateral securing Permitted Pari Passu Refinancing Debt, Permitted Junior Refinancing Debt, secured Indebtedness Incurred pursuant to Section 8.2(v) (provided that, if secured on a pari passu basis, a Senior Representative validly acting on behalf of the holders of such Indebtedness shall have become party to a Pari Debt Intercreditor Agreement and, if applicable, the Intercreditor Agreement, and if secured on a junior basis, a Senior Representative validly acting on behalf of the holders of such Indebtedness shall have become party to an Intercreditor Agreement or if such agreement has been previously entered into in connection with any other permitted Indebtedness, execute a joinder to such then existing agreement in substantially the form provided therein) and any Permitted Refinancing thereof;

(bb)Permitted Encumbrances;

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(cc)Liens solely on the proceeds of Escrow Debt and any interest thereof, securing the applicable Escrow Debt;

(dd)non-exclusive outbound licenses of patents, copyrights, trademarks and other intellectual property rights granted by any Group Member in the ordinary course of business and not interfering in any respect with the ordinary conduct of or materially detracting from the value of the business of such Group Member; and

(ee)Liens not otherwise permitted by this Section 8.3 so long as neither (i) the aggregate outstanding principal amount of the obligations secured thereby nor (ii) the aggregate fair market value (determined as of the date such Lien is incurred) of the assets subject thereto exceeds at any one time the greater of (x) $60,000,000 and (y) 3% of Consolidated Total Assets as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 7.1.

Fundamental Changes

.  Merge into, consolidate or amalgamate with any other Person, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all or substantially all of its property or business or (solely with respect to the Borrower) change its jurisdiction of organization to any jurisdiction outside of the United States, except:

(a)(1) any Restricted Subsidiary of the Borrower may be merged, amalgamated, consolidated or liquidated (i) with or into the Borrower if the Borrower is the continuing or surviving corporation, (ii) with or into any Subsidiary Guarantor if the Subsidiary Guarantor is the continuing or surviving corporation or (iii) subject to Section 8.7(j), with or into any Foreign Subsidiary; and (2) any Restricted Subsidiary that is not a Loan Party may be merged, amalgamated or consolidated with or into any other Restricted Subsidiary that is not a Loan Party;

(b)any Restricted Subsidiary of the Borrower may Dispose of any or all of its assets (upon voluntary liquidation, winding up, dissolution or otherwise) as permitted by Section 8.5 (other than Section 8.5(c)), or to the Borrower or any Subsidiary Guarantor or, subject to Section 8.7(j), any Foreign Subsidiary; and any Restricted Subsidiary that is not a Loan Party may Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to any other Restricted Subsidiary that is not a Loan Party;

(c)any Restricted Subsidiary may merge into or consolidate with any Person in order to consummate a Disposition made in compliance with Section 8.5 (other than Section 8.5(c)) in which the surviving entity is not a Subsidiary;

(d)any Restricted Subsidiary may dissolve, liquidate or wind up its affairs at any time; provided that such dissolution, liquidation or winding up, as applicable, could not reasonably be expected to have a Material Adverse Effect; provided, further, that, if the other party is not a Loan Party, no Default exists after giving effect to such transaction;

(e)any merger, consolidation or amalgamation between the Borrower or a Subsidiary Guarantor, on the one hand, and any other Person, on the other hand; provided,

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that the Borrower or such Subsidiary Guarantor, as the case may be, is the surviving entity of any such merger, consolidation or amalgamation;

(f)any merger, consolidation or amalgamation between a Restricted Party that is not a Loan Party, on the one hand, and any other Person, on the other hand; provided, that such Restricted Subsidiary is the surviving entity of any such merger, consolidation or amalgamation; and

(g)upon consummation of the Acquisition, Ocean Sub, Inc. may merge with and into Target, with Target as the surviving entity.

Disposition of Property

.  Dispose of any of its property (which, for the avoidance of doubt, shall not include any stock of the Borrower), whether now owned or hereafter acquired, or, in the case of any Restricted Subsidiary, issue or sell any shares of such Restricted Subsidiary’s Capital Stock to any Person, except:

(a)the Disposition of (i) obsolete, used, surplus or worn out property in the ordinary course of business (including the abandonment or other Disposition of Intellectual Property that is in the reasonable judgment of the Borrower, no longer economically practicable to maintain or used or useful in the conduct of the business of the Borrower and its Restricted Subsidiaries taken as a whole), (ii) Dispositions of property no longer used or useful in the conduct of the business of the Borrower and its Restricted Subsidiaries and (iii) cash and Cash Equivalents;

(b)the sale of inventory or the licensing, sublicensing or other disposition of Intellectual Property in the ordinary course of business;

(c)Dispositions expressly permitted by Sections 8.4(a), 8.4(b) and 8.4(e);

(d)the sale or issuance of (i) Capital Stock of any Restricted Subsidiary to the Borrower or any Subsidiary Guarantor and (ii) Capital Stock of any Subsidiary that is not a Subsidiary Guarantor to any other Subsidiary that is not a Subsidiary Guarantor;

(e)sale-leaseback transactions;

(f)sales, transfers or dispositions by the Borrower or any of its Restricted Subsidiaries of non-strategic assets purchased as part of a Permitted Acquisition, so long as (i) no Default then exists or would result therefrom, (ii) the Borrower or such Restricted Subsidiary receives at least fair market value (as determined in good faith by the Borrower), (iii) the aggregate proceeds received by the Borrower or such Restricted Subsidiary from all such sales, transfers or dispositions relating to a given Permitted Acquisition do not exceed 40% of the aggregate consideration paid for such Permitted Acquisition and (iv) such non-strategic assets are sold, transferred or disposed of on or prior to the first anniversary of such Permitted Acquisition;

(g)Asset Swaps;

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(h)Dispositions of property from (a) the Borrower to any Subsidiary Guarantor, (b) any Subsidiary Guarantor to any other Subsidiary Guarantor or the Borrower, (c) any Restricted Subsidiary that is not a Subsidiary Guarantor to any other Restricted Subsidiary that is not a Subsidiary Guarantor or to any Loan Party and (d) the Borrower or any Subsidiary Guarantor to any Restricted Subsidiary; provided that the amount of Dispositions made in reliance on this sub-clause (d) shall not exceed $25,000,000 per fiscal year;

(i)Dispositions expressly permitted by Section 8.3, Section 8.6 and Section 8.7;

(j)leases or subleases of property in the ordinary course of business which do not materially interfere with the conduct of the business of the Borrower or any of its Restricted Subsidiaries taken as a whole;

(k)Dispositions of property in connection with Recovery Events;

(l)Dispositions of past due accounts receivable in connection with the collection, write down or compromise thereof in the ordinary course of business;

(m)other Dispositions of property having an aggregate fair market value not in excess of $25,000,000 (as determined by the Borrower in good faith);

(n)sales, transfers, leases and other dispositions to a Foreign Subsidiary; provided, that any such sales, transfers, leases or other dispositions from the Borrower or any Subsidiary Guarantor shall be made (i) in compliance with Section 8.9 and (ii) to the extent not made in compliance with Section 8.9, shall be treated as an Investment in such Foreign Subsidiary and shall be permitted only to the extent permitted pursuant to Section 8.7;

(o)Dispositions of Investments in joint ventures, to the extent required by, or made pursuant to buy/sell arrangements between the joint venture parties set forth in joint venture arrangements and similar binding arrangements; provided that the consideration received shall be in an amount at least equal to the fair market value thereof (determined in good faith by the Borrower);

(p)sales, forgiveness or other dispositions of accounts receivable in the ordinary course of business in connection with the collection or compromise thereof;

(q)any issuance or sale of Capital Stock in, or sale of Indebtedness or other securities of, an Unrestricted Subsidiary;

(r)the issuance of Capital Stock by a Restricted Subsidiary that represents all or a portion of the consideration paid by the Borrower or a Restricted Subsidiary in connection with any Investment permitted by Section 8.7, including in connection with the formation of a joint venture with a Person other than a Restricted Subsidiary;

(s)Dispositions of other property; provided that (i) at the time of such Disposition, no Default or Event of Default shall have occurred and been continuing or would

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result from such Disposition, (ii) with respect to any Disposition pursuant to this Section 8.5(s) of property having an aggregate fair market value (determined as of the closing of such Disposition) not to exceed $25,000,000, the Borrower or any of its Restricted Subsidiaries shall receive not less than 75% of such consideration in the form of cash or Cash Equivalents; provided, however, that for the purposes of this clause (ii), the following shall be deemed to be cash:  (A) any liabilities (as shown on the Borrowers most recent balance sheet provided hereunder or in the footnotes thereto) of the Borrower or such Restricted Subsidiary, other than liabilities that are by their terms subordinated to the payment in cash of the Obligations, that are assumed by the transferee with respect to the applicable Disposition and for which the Borrower and all of its Restricted Subsidiaries shall have been validly released by all applicable creditors in writing, (B) any securities received by the Borrower or the applicable Restricted Subsidiary from such transferee that are converted by the Borrower or such Restricted Subsidiary into cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received) within 120 days following the closing of the applicable Disposition, and (C) aggregate non-cash consideration received by the Borrower or the applicable Restricted Subsidiary having an aggregate fair market value (determined as of the closing of the applicable Disposition for which such non-cash consideration is received) not to exceed $25,000,000 and (iii) such Disposition is for fair market value as reasonably determined by the Borrower in good faith;

(t)[reserved];

(u)the Disposition of Capital Stock of the Borrower’s Canadian Subsidiaries from the Borrower to ADS Worldwide, Inc.; and

(v)Dispositions of Capital Stock deemed to occur upon the exercise of stock options, warrants or other equity derivatives or settlement of convertible securities if such Capital Stock represent (i) a portion of the exercise price thereof or (ii) withholding incurred in connection with such exercise.

Restricted Payments

.  Declare or pay any dividend (other than dividends payable solely in Capital Stock (other than Disqualified Capital Stock) of the Person making such dividend) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of any Group Member, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of any Group Member (collectively, “Restricted Payments”), except that:

(a)(i) any Restricted Subsidiary may make Restricted Payments to the Borrower or any Subsidiary Guarantor (and, in the case of a Restricted Payment by a non-Wholly Owned Subsidiary, to (x) the Borrower or any Subsidiary Guarantor and (y) to each other owner of Capital Stock of such Restricted Subsidiary based on their relative ownership interests); and (ii) any Restricted Subsidiary that is not a Loan Party may make Restricted Payments to any Restricted Subsidiary;

(b)so long as no Event of Default has occurred and is continuing or would result therefrom, the Borrower may purchase the Borrower’s Capital Stock from present or

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former officers, directors or employees of any Group Member upon the death, disability, retirement or termination of employment or service of such officer, director or employee or otherwise under any stock option or employee stock ownership plan approved by the board of directors of the Borrower, in an aggregate amount (net of any proceeds received by the Borrower in connection with resales of any Capital Stock so purchased) not exceeding $5,000,000 in any fiscal year (with unused amounts carried over to the succeeding fiscal year);

(c)[Reserved];

(d)Restricted Payments by the Borrower to redeem in whole or in part any of its Capital Stock for another class of its Capital Stock or rights to acquire its Capital Stock or with proceeds from substantially concurrent equity contributions or issuances of new Capital Stock; provided that any terms and provisions material to the interests of the Lenders, when taken as a whole, contained in such other class of Capital Stock are at least as advantageous to the Lenders as those contained in the Capital Stock redeemed thereby; provided, further, that the only consideration paid for any such redemption is Capital Stock of the Borrower or the proceeds of any substantially concurrent equity contribution or issuance of Capital Stock;

(e)So long as no Event of Default has occurred and is continuing or would result therefrom (i) the Borrower may make Restricted Payments in an aggregate amount not to exceed (x) the Fixed Restricted Payment Basket Amount in any fiscal year, less (y) any Restricted Payments made pursuant to this Section 8.6(e), any Investments made pursuant to Section 8.7(z) and any repayments, repurchases, redemptions, defeasances or other acquisitions, retirements or discharges of Junior Debt pursuant to Section 8.8, in each case, made in reliance on the Fixed Restricted Payment Basket Amount during such fiscal year, plus (z) the Available Amount, and (ii) the Borrower shall be permitted to make unlimited Restricted Payments so long as the Consolidated Net Leverage Ratio is less than 3.25:1.00 after giving pro forma effect to such Restricted Payment;

(f)any dividends required by the terms of Capital Stock held by the ESOP may be paid;

(g)the Borrower may repurchase its Capital Stock upon the exercise of stock options, warrants or other equity derivatives or settlement of convertible securities if such Capital Stock represents a portion of the exercise price of such options, warrants or other equity derivatives or the settlement price of such convertible securities; provided that such repurchase shall not be paid in cash;

(h) the Borrower 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 in the Borrower;

(i)the Borrower may make Restricted Payments in an aggregate amount not to exceed the aggregate amount of net cash proceeds received from sales or issuances of the Capital Stock of the Borrower (other than Disqualified Capital Stock) after the Closing Date to the extent such net cash proceeds have not been otherwise applied to build the Available Amount

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or any other basket for the incurrence of Indebtedness or the making of any Investment or Restricted Payment;

(j)any repurchase of Capital Stock deemed to occur upon the non-cash exercise of Capital Stock to pay Taxes shall be permitted; and

(k)the payment of any dividend or distribution, or the consummation of any irrevocable redemption, within 60 days after the date of declaration of the dividend or distribution or giving of the redemption notice, as the case may be, if at such date of declaration or redemption notice such dividend, distribution or redemption, as the case may be, would have complied with this Section 8.6 shall be permitted.

Investments

.  Make any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of any Person (all of the foregoing, “Investments”), except:

(a)extensions of trade credit in the ordinary course of business;

(b)Investments in Cash Equivalents;

(c)Guarantee Obligations permitted by Section 8.2;

(d)Guarantee Obligations to insurers required in connection with worker’s compensation and other insurance coverage arranged in the ordinary course of business;

(e)Investments held by the Borrower or any Restricted Subsidiary on the Closing Date and described on Schedule 8.7(e);

(f)loans and advances to directors, officers and employees of any Group Member of the Borrower in the ordinary course of business (including for travel, entertainment and relocation expenses) in an aggregate amount for all Group Members, together with the aggregate amount of Indebtedness outstanding under Section 8.2(i), not to exceed $10,000,000 at any one time outstanding;

(g)non-cash consideration received in any Disposition permitted by Section 8.5;

(h)any Permitted Acquisition; provided that the aggregate amount of consideration paid in respect of all Permitted Acquisitions of (x) Persons that do not become Subsidiary Guarantors and/or (y) assets that do not become Collateral shall not exceed 10.0% of Consolidated EBITDA of the Borrower and its Restricted Subsidiaries for the most recently ended period of four consecutive fiscal quarters for which financial statements have been delivered pursuant to Section 7.1;

(i)intercompany Investments by any Group Member in the Borrower or any Person that, prior to such Investment, is a Subsidiary Guarantor;

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(j)Investments (x) in Restricted Subsidiaries that are not Subsidiary Guarantors (including Permitted Acquisitions of Persons which become Foreign Subsidiaries, Incurrence of Guarantee Obligations with respect to obligations of Foreign Subsidiaries, loans made to Foreign Subsidiaries and Investments resulting from mergers with or sales of assets to any such Foreign Subsidiaries) or (y) in joint ventures or other similar agreements or partnerships, in each case so long as the aggregate amount of all such Investments made by the Borrower or any of its Restricted Subsidiaries pursuant to this Section 8.7(j) does not, immediately after giving effect to such Investments (subject to Section 1.3), exceed the greater of (i) $75,000,000 and (ii) 5% of Consolidated Total Assets as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 7.1;

(k)Investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in good faith settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;

(l)Hedge Agreements permitted under Section 8.11;

(m)intercompany Investments by any Restricted Subsidiary that is not a Loan Party in any other Restricted Subsidiary that is not a Loan Party;

(n)Investments expressly permitted by Sections 8.3, 8.4 and 8.6(c);

(o)Asset Swaps consummated in compliance with Section 8.5;

(p)any indemnity obligations in connection with the Acquisition;

(q)intercompany loans permitted by Section 8.2;

(r)advances of payroll payments to employees in the ordinary course of business;

(s)lease, utility and other similar deposits in the ordinary course of business;

(t)Investments to the extent financed by the issuance of Capital Stock of the Borrower;

(u)Investments of any Person in existence at the time such Person becomes a Restricted Subsidiary; provided such Investment was not made in connection with or anticipation of such Person becoming a Restricted Subsidiary and any modification, replacement, renewal or extension thereof;

(v)any Investment in an aggregate amount not to exceed at any time the aggregate amount of Net Cash Proceeds received from sales or issuances of Capital Stock of the Borrower after the Closing Date to the extent such Net Cash Proceeds have not been otherwise

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applied to build the Available Amount, or to build any other basket for the incurrence of Indebtedness or the making of any Investment or Restricted Payment;

(w)[reserved];

(x)Investments (i) in Restricted Subsidiaries in connection with reorganizations or other activities related to tax planning; provided that, after giving effect to any such reorganization or other activity related to tax planning, the security interest of the Administrative Agent (for the benefit of the Secured Parties) in the Collateral, taken as a whole, is not materially impaired and (ii) by any Loan Party in any Restricted Subsidiary that is not a Loan Party consisting of the contribution of Capital Stock of any Person that is not a Loan Party (other than Capital Stock constituting Collateral);

(y)any Investments in any Subsidiary or joint venture in connection with intercompany cash management arrangements or related activities arising in the ordinary course of business; provided that any entity that serves to hold cash balances for the purposes of making such advances to Subsidiaries or joint ventures is a Loan Party;

(z)guarantees of leases (other than Capital Lease Obligations), contracts, or of other obligations that do not constitute Indebtedness, in each case entered into in the ordinary course of business;

(aa)Permitted Foreign Investments;

(bb)subject to Section 1.3, so long as no Event of Default has occurred and is continuing or would result therefrom (i) the Borrower may make Investments in an aggregate amount not to exceed (x) the Fixed Restricted Payment Basket Amount in any fiscal year, less (y) any Investments made pursuant to this Section 8.7(bb), any Restricted Payments made pursuant to Section 8.6(e), and any repayments, repurchases, redemptions, defeasances or other acquisitions, retirements or discharges of Junior Debt pursuant to Section 8.8, in each case made in reliance on the Fixed Restricted Payment Basket Amount during such fiscal year, plus (z) the Available Amount and (ii) the Borrower shall be permitted to make unlimited Investments so long as the Consolidated Net Leverage Ratio is less than 3.50:1.00 after giving pro forma effect to such Investment;

(cc)in addition to Investments otherwise expressly permitted by this Section, Investments by the Borrower or any of its Restricted Subsidiaries in an aggregate amount at any time outstanding, not exceeding the greater of (i) $100,000,000 and (ii) 5% of Consolidated Total Assets as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 7.1; and

(dd)Guarantee Obligations of the Borrower in connection with obligations of the Restricted Subsidiaries party to Specified Hedge Agreements and Specified Cash Management Arrangements.

For purposes of covenant compliance with this Section 8.7, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or

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decreases in the value of such Investment, less any amount paid, repaid, returned, distributed or otherwise received in cash in respect of such Investment.  In addition, to the extent an Investment is permitted to be made by any Group Member directly in any other Person (each such person, a “Target Person”) under any provision of this Section 8.7, such Investment may be advanced or contributed by the Group Member to a Restricted Subsidiary that is not a Loan Party for purposes of ultimately making the relevant Investment in the Target Person without such advancement or contribution constituting an Investment for purposes of Section 8.7 (it being understood that such Investment must satisfy the requirements of, and shall count toward any thresholds or baskets in, the applicable clause under Section 8.7 as if made by the applicable Group Member directly in the Target Person).

Optional Payments and Modifications of Certain Debt Instruments; Certain Modifications

.  (a)  Make or offer to make any optional or voluntary payment, prepayment, repurchase or redemption of or otherwise optionally or voluntarily defease or segregate funds with respect to any unsecured Indebtedness (other than any intercompany Indebtedness) or subordinated or junior lien Indebtedness of the Borrower or any of its Restricted Subsidiaries in an aggregate outstanding principal amount in excess of $25,000,000 (including in such principal amount all indebtedness issued under the same instrument) (collectively, “Junior Debt”) (other than in connection with Junior Debt, a Permitted Refinancing therefor or the conversion of any Junior Debt to Capital Stock of the Borrower (other than Disqualified Capital Stock)); provided, that on any date after the Closing Date, the Borrower may (i) so long as no Event of Default has occurred and is continuing or would result therefrom, redeem, repurchase, defease or otherwise prepay Junior Debt in an aggregate amount not to exceed (x) the Fixed Restricted Payment Basket Amount in any fiscal year, less (y) any Restricted Payments made pursuant to Section 8.6(e), any Investments made pursuant to Section 8.7(z) and any repayments, repurchases, redemptions, defeasances or other acquisitions, retirements or discharges of Junior Debt pursuant to this Section 8.8, in each case made in reliance on the Fixed Restricted Payment Basket Amount during such fiscal year, plus (z) the Available Amount, (ii) redeem, repurchase, defease or otherwise prepay Junior Debt in an unlimited amount, so long as no Event of Default has occurred and is continuing or would result therefrom and the Consolidated Senior Secured Net Leverage Ratio is less than 2.25:1.00, (iii) convert any Junior Debt to Capital Stock (other than Disqualified Capital Stock) and (iv) prepay, redeem, purchase or defease any Junior Debt with any Permitted Refinancing thereof permitted pursuant to Section 8.2, or (b) amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the terms of any of the Junior Debt (other than technical corrections or modifications) (i) which shortens the fixed maturity or increases the principal amount of, or increases the rate or shortens the time of payment of interest on, or increases the amount or shortens the time of payment of any principal or premium payable whether at maturity, at a date fixed for prepayment or by acceleration or otherwise of the Indebtedness evidenced by any Junior Debt, or increases the amount of, or accelerates the time of payment of, any fees or other amounts payable in connection therewith; (ii) which adds or relates to any material affirmative or negative covenants or any events of default or remedies thereunder and the effect of which is to subject the Borrower or any of its Restricted Subsidiaries to any more onerous or more restrictive provisions; or (iii) which otherwise materially and adversely affects the interests of the Lenders, taken as a whole, under this Agreement or any other Loan Document in without the prior consent of the Administrative Agent (such consent not to be unreasonably withheld); provided that it is understood and agreed that the foregoing

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limitation shall not prohibit any Permitted Refinancing Indebtedness in respect thereof that is otherwise permitted by Section 8.2.

Transactions with Affiliates

.  Enter into any transaction with a value in excess of $10,000,000, including any purchase, sale, lease or exchange of property, the rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate (other than the Borrower or its Restricted Subsidiaries), unless such transaction is (i) otherwise permitted under this Agreement and (ii) upon fair and reasonable terms not materially less favorable to the relevant Group Member, than it would obtain in an arm’s length transaction with a Person that is not an Affiliate.  Notwithstanding the foregoing, the Borrower and its Restricted Subsidiaries may do the following:

(a)Restricted Payments may be made to the extent permitted by Section 8.6;

(b)loans may be made and other transactions may be entered into by the Borrower and its Restricted Subsidiaries to the extent expressly permitted by Sections 8.2, 8.4, 8.5 and 8.7;

(c)customary fees and indemnifications may be paid to directors of the Borrower and its Restricted Subsidiaries;

(d)the Borrower and its Restricted Subsidiaries may in the ordinary course of business (i) enter into, and may make payments under, employment agreements, employee benefits plans, stock option plans, indemnification provisions and other similar compensatory arrangements with officers, employees and directors of the Borrower and its Restricted Subsidiaries and (ii) establish Benefit Plans and make amendments and contributions thereto;

(e)the execution, delivery and performance of a tax sharing agreement with respect to any of the charges, taxes or assessments described in clause (B) of Section 8.6(c)(ii), to the extent that payments in connection with such tax sharing agreement are permitted by Section 8.6(c)(ii);

(f)[reserved];

(g)sales of Capital Stock (other than Disqualified Capital Stock) of the Borrower to its Affiliates and options and warrants exercisable therefore and the granting of registration and other customary rights in connection therewith;

(h)any transaction with an Affiliate where the only consideration paid is Capital Stock of the Borrower (other than Disqualified Capital Stock);

(i)any transaction with an Affiliate existing on the Closing Date and listed on Schedule 8.9(i);

(j)[reserved];

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(k)leases or subleases of property in the ordinary course of business not materially interfering with the business of the Borrower and the Restricted Subsidiaries taken as a whole;

(l)transactions between or among the Borrower and/or any Restricted Subsidiary and any entity that becomes a Restricted Subsidiary as a result of such transaction;

(m)any agreement between any Person and an Affiliate of such Person existing at the time such Person is acquired by or merged into the Borrower or any of its Restricted Subsidiaries pursuant to the terms of this Agreement; provided that such agreement was not entered into in contemplation of such acquisition or merger, or any amendment thereto (so long as any such amendment is not disadvantageous to the Lenders in any material respect in the good faith judgment of the Borrower when taken as a whole as compared to such agreement as in effect on the date of such acquisition or merger); and

(n)any other transactions with an Affiliate, which is approved by a majority of Disinterested Directors of the Borrower in good faith.

[Reserved]

.

Hedge Agreements

.  Enter into any Hedge Agreement, except (a) Hedge Agreements entered into to hedge or mitigate risks to which the Borrower or any Restricted Subsidiary has actual or anticipated exposure (other than those in respect of Capital Stock) and (b) Hedge Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of the Borrower or any Restricted Subsidiary.

Changes in Fiscal Periods

.  Permit the fiscal year of the Borrower to end on or about a day other than March 31 or change the Borrower’s method of determining fiscal quarters without the prior consent of the Administrative Agent (not to be unreasonably withheld).

Negative Pledge Clauses

.  Enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of any Group Member to create, become subject to, assume or otherwise incur, or suffer to exist, any Lien upon any of its assets, whether now owned or hereafter acquired, to secure its obligations under the Loan Documents to which it is or may become a party other than (a) this Agreement, the other Loan Documents and under any Hedge Agreement permitted under Section 8.11, (b) any agreements governing any purchase money Liens or Capital Lease Obligations otherwise permitted hereby, if the prohibition or limitation therein is only effective against the assets financed thereby, (c) agreements for the benefit of the holders of Liens described in Section 8.3(k) or 8.3(l) and applicable solely to the property subject to such Lien, (d) any agreement existing on the Closing Date and listed on Schedule 8.13(d), (e) covenants in documents creating Liens permitted by Section 8.3(k) prohibiting further Liens on the properties encumbered thereby, (f) any other agreement that does not restrict in any manner (directly or indirectly) Liens created pursuant to the Loan Documents on any Collateral securing the Secured Obligations or securing any Credit Agreement Refinancing Indebtedness and does not require the direct or indirect granting of any Lien securing any

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Indebtedness or other obligation by virtue of the granting of Liens on or pledge of property of any Loan Party to secure the Secured Obligations, (g) covenants in any Indebtedness permitted pursuant to Section 8.2 to the extent such restrictions or conditions are no more restrictive, taken as a whole, than the restrictions and conditions in the Loan Documents or, in the case of subordinated Indebtedness, are market terms at the time of issuance or, in the case of Indebtedness of any Restricted Subsidiary that is not a Loan Party, are imposed solely on any Restricted Subsidiary that is not a Loan Party, (h) any prohibition or limitation that (1) exists pursuant to Requirements of Law or any request of any Governmental Authority having regulatory authority over the Borrower or any of its Subsidiaries, (2) consists of customary restrictions and conditions contained in any agreement relating to the sale of any property permitted under Section 8.5 pending the consummation of such sale, solely with respect to such property subject to such sale, (3) is contained in leases, subleases, licenses, sublicenses or similar agreements, in each case, so long as such provisions are customary and such leases, subleases, licenses or similar agreements were entered into in the ordinary course of business, (4) exists in any agreement or other instrument of a Person acquired by or merged or consolidated with or into the Borrower or any Restricted Subsidiary, or of an Unrestricted Subsidiary that is designated a Restricted Subsidiary, or that is assumed in connection with the acquisition of assets from such Person, in each case that is in existence at the time of such transaction (but not created in contemplation thereof), (5) is imposed by any amendments or refinancings that are otherwise permitted by the Loan Documents of the contracts, instruments or obligations referred to in clauses (b), (f), (g) or (h)(4); provided that such amendments and refinancings are, taken as a whole, no more materially restrictive with respect to such prohibitions and limitations than those prior to such amendment or refinancing, (i) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business, (j) customary restrictions that arise in connection with any Lien permitted by Section 8.3 on any asset or property that is not, and is not required to be, Collateral that relates to the asset or property subject to such Lien, (k) any restrictions and conditions imposed by any amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing of any contract, instrument or obligation referred to in clauses (a) through (i) above; provided that such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing is, in the good faith judgment of the Borrower, no more restrictive with respect to such restrictions taken as a whole than those in existence prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing, and (l) customary provisions in joint venture agreements, partnership agreements or limited liability company governance documents and other similar agreements applicable to joint ventures or non-Wholly Owned Subsidiaries and applicable solely to such joint venture or non-Wholly Owned Subsidiary.

Clauses Restricting Subsidiary Distributions

.  Enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary of any Group Member to (a) make Restricted Payments in respect of any Capital Stock of such Restricted Subsidiary held by, or pay any Indebtedness owed to, any Group Member, (b) make loans or advances to, or other Investments in, any Group Member, or (c) transfer any of its assets to any Group Member, except, in each case, for such encumbrances or restrictions existing under or by reason of (i) any restrictions existing under the Loan Documents, (ii) any encumbrance or restriction pursuant to applicable law or an agreement in effect at or entered into on the Closing Date (including any indenture in connection with the Transactions and any other transactions

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expected to be entered into in connection therewith) or in connection with the Transactions and any other transactions expected to be entered into in connection therewith, (iii) any encumbrance or restriction with respect to a Restricted Subsidiary or any of its Restricted Subsidiaries pursuant to an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary prior to the date on which it became a Restricted Subsidiary (other than Indebtedness Incurred as consideration in, in contemplation of, or to provide all or any portion of the funds or credit support utilized to consummate the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary) and outstanding on such date, which encumbrance or restriction is not applicable to the any other Group Member or the properties or assets of any other Group Member, (iv) any encumbrance or restriction pursuant to an agreement effecting a refinancing of Indebtedness Incurred pursuant to an agreement referred to in clause (i), (ii) or (iii) of this covenant or this clause (iv) or contained in any amendment to an agreement referred to in clause (i), (ii) or (iii) of this covenant or this clause (iv); provided, however, that the encumbrances and restrictions contained in any such refinancing agreement or amendment are not materially less favorable, taken as a whole, as determined by the Borrower in good faith, to the Lenders than the encumbrances and restrictions contained in such predecessor agreement, (v) with respect to clause (c), any encumbrance or restriction (A) that restricts the subletting, assignment or transfer of any property or asset or right and is contained in any lease, license or other contract entered into in the ordinary course of business or (B) contained in security agreements securing Indebtedness of a Restricted Subsidiary to the extent such encumbrance or restriction restricts the transfer of the property subject to such security agreements, (vi) any restrictions with respect to a Restricted Subsidiary imposed pursuant to an agreement that has been entered into in connection with the Disposition of all or substantially all of the Capital Stock or assets of such Restricted Subsidiary, (vii) any encumbrances or restrictions applicable solely to a Restricted Subsidiary that is not a Loan Party and contained in any credit facility extended to such Restricted Subsidiary, (viii) restrictions in the transfers of assets encumbered by a Lien permitted by Section 8.3, (ix) any encumbrance or restriction arising under or in connection with any agreement or instrument relating to any Indebtedness permitted by Section 8.2 if the encumbrance or restriction is not materially more disadvantageous to the Lenders, taken as a whole, than is customary in comparable financings (as determined in good faith by the Borrower), (x) any encumbrance or restriction arising under or in connection with any agreement or instrument governing Capital Stock of any Person other than a Wholly Owned Subsidiary that is acquired after the Closing Date, (xi) customary restrictions and conditions contained in any agreement relating to the Disposition of any property permitted by Section 8.5 pending the consummation of such Disposition, (xii) customary provisions in joint venture agreements and other similar agreements applicable to joint ventures, (xiii) any holder of a Lien permitted by Section 8.3(k) restricting the transfer of the property subject thereto, (xiv) customary restrictions and conditions contained in any agreement relating to the sale of any property permitted under Section 8.5 pending the consummation of such sale, (xv) customary provisions in partnership agreements, limited liability company organizational governance documents, asset sale and stock sale agreements and other similar agreements entered into in the ordinary course of business that restrict the transfer of ownership interests in such partnership, limited liability company or similar person, (xvi) provisions in agreements or instruments which prohibit the payment of dividends or the making of other distributions with respect to any class of Capital Stock of a Person other than on a pro rata basis, and (xvii)  any restrictions and conditions imposed by any amendment, modification, restatement,

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renewal, increase, supplement, refunding, replacement or refinancing of any contract, instrument or obligation referred to in clauses (i) through (xviii) above; provided that such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing is, in the good faith judgment of the Borrower, no more restrictive with respect to such restrictions taken as a whole than those in existence prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

Lines of Business

.  Enter into any business, either directly or through any Restricted Subsidiary, except for those businesses in which the Borrower and its Restricted Subsidiaries are engaged on the Closing Date or that are reasonably related thereto or similar or complementary thereto or are reasonable extensions thereof, including without limitation the processing, sale and distribution of recycled plastic resin.

Section 9.EVENTS OF DEFAULT

If any of the following events shall occur and be continuing:

(a)the Borrower shall fail to pay (i) any principal of any Loan or Reimbursement Obligation when due in accordance with the terms hereof or (ii) any interest on any Loan or Reimbursement Obligation, or any other amount payable hereunder or under any other Loan Document or the Syndication and Fee Letter, within 5 Business Days after any such interest or other amount becomes due in accordance with the terms hereof; or

(b)any representation or warranty made or deemed made by any Loan Party herein or in any other Loan Document shall prove to have been inaccurate in any material respect on or as of the date made or deemed made; or

(c)any Loan Party shall fail to observe or perform any agreement contained in clause (i) or (ii) of Section 7.4(a) (with respect to the Borrower only), Section 7.7(a) or Section 8 of this Agreement; provided, that any failure by the Borrower to observe any term, covenant or agreement under Section 8.1 shall not constitute an Event of Default with respect to the Term Loans until the earlier of (i) the date that the Revolving Lenders declare all outstanding obligations under the Revolving Loans and Revolving Commitments to be immediately due and payable as a result of the Borrower’s failure to observe such term, covenant or agreement in Section 8.1 and (ii) the date on which the Administrative Agent or the Revolving Lenders exercise any remedies with respect to the Revolving Loans in accordance with Section 9; provided, further, that any failure by the Borrower to observe any term, covenant or agreement under Section 8.1 may be waived from time to time pursuant to clause (xiii) of Section 11.1; or

(d)any Loan Party shall fail to observe or perform any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) or paragraph (l) of this Section 9), and such failure shall continue unremedied for a period of 30 days after written notice thereof is given to the Borrower by the Administrative Agent or any Lender; or

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(e)the Borrower or any Material Subsidiary shall (i) default in making any payment of any principal of any Indebtedness (including any Hedge Agreement or Guarantee Obligation, but excluding the Loans) on the scheduled or original due date with respect thereto; (ii) default in making any payment of any interest on any such Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created; or (iii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist beyond the period of grace provided in such instrument or agreement, if any, the effect of which default or other event or condition is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or to become subject to a mandatory offer to purchase by the obligor thereunder or (in the case of any such Indebtedness constituting a Guarantee Obligation) to become payable; provided, that a default, event or condition described in clause (i), (ii) or (iii) of this paragraph (e) shall not at any time constitute an Event of Default unless, at such time, one or more defaults, events or conditions of the type described in clauses (i), (ii) or (iii) of this paragraph (e) shall have occurred and be continuing with respect to Indebtedness the outstanding principal amount of which exceeds in the aggregate $50,000,000; provided, further, that this paragraph (e) shall not apply to (A) secured Indebtedness that becomes due as a result of the Disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness unless such secured Indebtedness is not paid on such due date or (B) with respect to Indebtedness incurred under any Hedge Agreement, termination events or equivalent events pursuant to the terms of the relevant Hedge Agreement which are not the result of any default thereunder by any Loan Party or any Subsidiary; or

(f)(i) the Borrower or any Material Subsidiary shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or any Material Subsidiary shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Borrower or any Material Subsidiary any case, proceeding or other action of a nature referred to in clause (i) above that (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Borrower or any Material Subsidiary any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Borrower or any Material Subsidiary shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any Material Subsidiary shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or

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(g)(i) any Person shall engage in any non-exempt “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any failure to satisfy the minimum funding standard (as defined in Sections 412 and 430 of the Code and Sections 302 and 303 of ERISA), whether or not waived, shall exist with respect to any Single Employer Plan or any Lien in favor of the PBGC or a Single Employer Plan shall arise on the assets of any Group Member or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate in a distress termination under Section 4041(c) of ERISA or in an involuntary termination by the PBGC under Section 4042 of ERISA, (v) any Group Member or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders is likely to, incur any liability in connection with a withdrawal from, or the Insolvency of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i), (iii), (iv), (v) and (vi) above, such event or condition, together with all other such events or conditions, if any, would, in the aggregate, reasonably be expected to have a Material Adverse Effect; or

(h)one or more judgments or decrees for the payment of money shall be entered against the Borrower or any Material Subsidiary involving in the aggregate a liability (not paid or fully covered by insurance) of $50,000,000 or more, and all such judgments or decrees shall not have been vacated, paid, discharged, stayed or bonded pending appeal within 60 days from the entry thereof; or

(i)any of the Security Documents shall cease, for any reason other than as set forth in Section 11.14, to be in full force and effect, or any Loan Party shall so assert, or any Lien created by any of the Security Documents shall cease to be enforceable or (except as expressly set forth therein or as a result of the actions, or lack thereof, by the Administrative Agent) perfected as to any property of the Loan Parties having an aggregate value exceeding $50,000,000; or

(j)the guarantee contained in Section 2 of the Guarantee and Collateral Agreement shall cease, for any reason, to be in full force and effect or any Loan Party shall so assert, in each case, other than in connection with a release of any Subsidiary Guarantor in accordance with the terms of this Agreement; or

(k)Change of Control shall occur; or

(l)the Borrower or any other applicable Loan Party shall fail to execute an amendment to this Agreement as required by, and in accordance with, Section 6 of the Syndication and Fee Letter,

then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including all amounts of

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L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) shall immediately become due and payable, (B) if such event is any other Event of Default, either or both of the following actions may be taken:  (i) the Administrative Agent may, or upon the request of the Required Lenders shall, by notice to the Borrower declare the Revolving Commitments to be terminated forthwith, whereupon the Revolving Commitments shall immediately terminate; and (ii) the Administrative Agent may, or upon the request of the Required Lenders shall, by notice to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable, and (C) if such event is the failure by the Borrower to observe any term, covenant or agreement under Section 8.1 and exists solely with respect to the Revolving Loans and/or the Revolving Commitments, the Administrative Agent may, and at the request of the Majority Facility Lenders under the Revolving Facility, shall, take any of the following actions solely as they relate to Revolving Loans and/or the Revolving Commitments:  (i) by notice to the Borrower declare the Revolving Commitments to be terminated forthwith, whereupon the Revolving Commitments shall immediately terminate; and (ii) by notice to the Borrower, declare the Revolving Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable.  The Borrower shall, at the time of acceleration pursuant to this paragraph, Cash Collateralize the aggregate then undrawn and unexpired amount of all Letters of Credit then outstanding.  Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been terminated, if any, shall be applied to repay any of the other Secured Obligations pursuant to the requirements of the Guarantee and Collateral Agreement.  After all such Letters of Credit shall have expired or been terminated, all Reimbursement Obligations shall have been satisfied and all other Secured Obligations shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto).

Except as expressly provided above in this Section 9, presentment, demand, protest and all other notices of any kind are hereby expressly waived by the Borrower.

Section 10.THE ADMINISTRATIVE AGENT AND OTHER REPRESENTATIVES

Appointment

.   Each Lender (and, if applicable, each other Secured Party) hereby irrevocably designates and appoints Barclays Bank PLC (Barclays Bank PLC hereby accepts such appointment)  as the agent of such Lender (and, if applicable, each other Secured Party) under this Agreement and the other Loan Documents, and each such Lender (and, if applicable, each other Secured Party) irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents,

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together with such other powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary elsewhere in this Agreement, none of the Other Representatives or the Administrative Agent shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender or other Secured Party, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent or any Other Representative.

Delegation of Duties

.  The Administrative Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such agents or attorneys-in-fact.

Exculpatory Provisions

.  Neither  the Administrative Agent, any Other Representative nor any of their respective officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and non-appealable decision of a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders or any other Secured Party for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or any Specified Hedge Agreement or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent or the Other Representatives under or in connection with, this Agreement or any other Loan Document or any Specified Hedge Agreement or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or any Specified Hedge Agreement or for any failure of any Loan Party a party thereto to perform its obligations hereunder or thereunder.  The Administrative Agent and the Other Representatives shall not be under any obligation to any Lender or any other Secured Party to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document or any Specified Hedge Agreement, or to inspect the properties, books or records of any Loan Party. The Administrative Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to Disqualified Institutions. Without limiting the generality of the foregoing, the Administrative Agent shall not ‎(i) be obligated to ascertain, monitor or inquire as to whether any Lender or Participant or prospective Lender or Participant is a Disqualified ‎Institution or (ii) have any liability with respect to or arising out of any assignment or participation of Loans, or disclosure of confidential information, to any ‎Disqualified Institution.

Reliance by the Administrative Agent

.  The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order

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or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent.  The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent.  The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.  The Administrative Agent shall in all cases be fully exculpated from and protected against any action or claim by any Lender or affiliate thereof, in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans and all other Secured Parties.

Notice of Default

.  The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender, or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”.  In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders.  The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement); provided, that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders and the Secured Parties.

Non-Reliance on Administrative Agent and Other Lenders

.  Each Lender (and, if applicable, each other Secured Party) expressly acknowledges that neither the Administrative Agent nor the Other Representatives or any of their respective officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent or any Other Representative hereafter taken, including any review of the affairs of a Loan Party or any Affiliate of a Loan Party, shall be deemed to constitute any representation or warranty by the Administrative Agent or any Other Representative to any Lender or any other Secured Party.  Each Lender (and, if applicable, each other Secured Party) represents to the Administrative Agent and the Other Representatives that it has, independently and without reliance upon the Administrative Agent, the Other Representatives or any other Lender or any other Secured Party, and based on such documents and information as it has deemed appropriate, made its own appraisal of, and investigation into, the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their Affiliates and made its own decision to make its Loans hereunder and enter into this Agreement.  Each Lender (and, if applicable, each other Secured Party) also represents that it will, independently and

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without reliance upon the Administrative Agent, the Other Representative or any other Lender or any other Secured Party, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents or any Specified Hedge Agreement, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their Affiliates.  Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender or any other Secured Party with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or any Affiliate of a Loan Party that may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.

Indemnification

.  The Lenders agree to indemnify the Administrative Agent and each Other Representative in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Aggregate Exposure Percentages in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure Percentages immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against the Administrative Agent or Other Representative in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents, any Specified Hedge Agreements or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent or Other Representative under or in connection with any of the foregoing; provided, that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and non-appealable decision of a court of competent jurisdiction to have resulted from the Administrative Agent’s or such Other Representative’s gross negligence or willful misconduct.  The agreements in this Section 10.7 shall survive the payment of the Loans and all other amounts payable hereunder.

Agent in Its Individual Capacity

.  The Administrative Agent, each Other Representative and their respective Affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Loan Party as though the Administrative Agent were not the Administrative Agent or an Other Representative.  With respect to its Loans made or renewed by it and with respect to any Letter of Credit issued or participated in by it, the Administrative Agent and each Other Representative in its individual capacity as a Lender shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not the Administrative Agent or Other Representative, and the terms “Lender”, “Lenders”, “Secured Party” and “Secured Parties” shall include the Administrative Agent and each Other Representative in its individual capacity as such.

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Successor Administrative Agent

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(a)Subject to the appointment and acceptance of a successor Administrative Agent as provided below, the Administrative Agent may resign as Administrative Agent.  If the Administrative Agent shall have given notice of its resignation as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 9(a) or Section 9(f) with respect to the Borrower shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans; provided that in no event shall any such successor Administrative Agent be a Defaulting Lender or a Disqualified Institution. If no successor agent has accepted appointment as Administrative Agent by the date that is 30 days following a retiring Administrative Agent’s notice of resignation, then the resigning Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank; provided that in no event shall any such successor Administrative Agent be a Defaulting Lender or a Disqualified Institution.  After any retiring Administrative Agent’s resignation as Administrative Agent, the provisions of this Section 10 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents.

(b)If the Person serving as Administrative Agent is no longer a Lender or Issuing Lender hereunder, the Borrower may request, and if agreed to by the Required Lenders, the Required Lenders may, by 30 days’ prior written notice to such Person, remove such Person as Administrative Agent and, subject to the approval by the Borrower (unless an Event of Default under Section 9(a) or Section 9(f) with respect to the Borrower shall have occurred and be continuing), appoint a successor, whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans; provided that in no event shall any such successor Administrative Agent be a Defaulting Lender or a Disqualified Institution. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within such 30 days (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date and the Required Lenders may, on behalf of the Lenders, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank; provided that in no event shall any such successor Administrative Agent be a Defaulting Lender or a Disqualified Institution. After any such Person’s replacement as Administrative Agent hereunder, the provisions of this Section 10 shall inure to its benefit as

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to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents.

Administrative Agent Generally

.  Except as expressly set forth herein, the Administrative Agent shall not have any duties or responsibilities hereunder in its capacity as such.

Other Representatives

.  Each of the Lead Arrangers and the Joint Bookrunners, the Syndication Agents and the Documentation Agents, in its several capacity as such, shall have no duties or responsibilities, and shall incur no liability, under this Agreement or any other Loan Document.

Withholding Tax

.  To the extent required by any applicable law, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding tax.  Without limiting the provisions of Section 4.10, if any Governmental Authority asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was not properly executed or because such Lender failed to notify the Administrative Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding tax ineffective or for any other reason, or the Administrative Agent has paid over to a Governmental Authority applicable withholding tax relating to a payment to a Lender but no deduction has been made from such payment, each Lender shall indemnify the Administrative Agent, within 10 days demand therefor, fully for all amounts paid, directly or indirectly, by the Administrative Agent as Tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred, whether or not such amounts were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document against any amount due to the Administrative Agent under this Section 10.12.  The agreements in this Section 10.12 shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.

Administrative Agent May File Proofs of Claim

.  In case of the pendency of any proceeding under the Bankruptcy Code of the United States of America, 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 or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

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(a)to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, any Issuing Lender and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, such Issuing Lender and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, such Issuing Lender and the Administrative Agent under Sections 3.5, 3.13, 4.5 and 11.5) 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 each Issuing Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the applicable Issuing Lender, 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 3.5, 3.13, 4.5 and 11.5.

Certain ERISA Matters

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(a)Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and the Other Representatives and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:

(i)such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments,

(ii)the prohibited transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable so as to exempt from the prohibitions of Section 406 of ERISA and Section 4975 of the Code such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,

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(iii)(A) such Lender is an investment fund managed by a Qualified Professional Asset Manager (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lenders entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or

(iv)such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

(b)In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and the Other Representatives and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that none of the Administrative Agent or any Other Representative or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender involved in the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related to hereto or thereto).

10.15Intercreditor Agreements. The Administrative Agent is authorized to enter into the Intercreditor Agreement and the Pari Debt Intercreditor Agreement (and any amendments, amendments and restatements, restatements or waivers of or supplements or joinders to or other modifications to, and extensions, restructuring, renewals, replacements of, such agreements) in connection with the incurrence of any Incremental Equivalent Debt, Credit Agreement Refinancing Indebtedness or any other Indebtedness permitted by the terms of this Agreement to be secured by the Collateral on a pari passu or junior priority secured basis, and the parties hereto acknowledge that each of the Intercreditor Agreement and the Pari Debt Intercreditor Agreement is (if entered into) binding upon them. Each Lender (a) understands, acknowledges and agrees that Liens may be created on the Collateral pursuant to the documentation relating to any Indebtedness incurred as permitted by this Agreement which is (in accordance with the terms hereof) to be secured thereby, on a pari passu, or junior secured basis to the Liens securing the Secured Obligations, which Liens securing any such other Indebtedness shall be subject to the terms and conditions of the Intercreditor Agreement and/or the Pari Debt Intercreditor Agreement

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executed and delivered as required hereby, (b) hereby agrees that it will be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement and/or the Pari Debt Intercreditor Agreement (if entered into), and (c) hereby authorizes and instructs the Administrative Agent to enter into the Intercreditor Agreement and the Pari Debt Intercreditor Agreement (and any amendments, amendments and restatements, restatements or waivers of or supplements to or other modifications to, such agreements) in connection with the incurrence of any secured Indebtedness as contemplated above.

Section 11.MISCELLANEOUS

Amendments and Waivers

.  Except as provided in Section 4.17, 4.18 and 4.19 and subject to Section 4.7(b) and Section 11.21, none of this Agreement, any other Loan Document, or any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 11.1.  Subject to the provisions of the proviso in this Section 11.1, the Required Lenders and each Loan Party to the relevant Loan Document may, or, with the written consent of the Required Lenders, the Administrative Agent and each Loan Party to the relevant Loan Document may, from time to time, (a) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall: (i) forgive or reduce the principal amount or extend the final scheduled date of maturity of any Loan, reduce the stated rate of any interest or fee payable hereunder  or extend the scheduled date of any payment thereof (except (x) in connection with the waiver of applicability of any post-default increase in interest rates, which waiver shall be effective with the consent of the Majority Facility Lenders of each adversely affected Facility and not the Required Lenders, (y) that any amendment or modification of defined terms used in the financial covenants in this Agreement shall not constitute a reduction in the rate of interest or fees for purposes of this clause (i) even if the effect of such amendment would be to reduce the rate of interest on any Loan or any L/C Obligations or to reduce any fee payable hereunder, and (z) any reduction of the amount of, or any extension of the payment date for, the mandatory prepayments required under Section 4.2 which shall only require the approval of the Majority Facility Lenders of each Facility adversely affected thereby and not the Required Lenders), or increase the amount or extend the expiration date of any Lender’s Commitment, in each case, without the written consent of each Lender directly affected thereby (but not, for the avoidance of doubt, the consent of the Required Lenders); (ii) eliminate or reduce the voting rights of any Lender under this Section 11.1 without the written consent of such Lender; (iii) reduce any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents or, except as set forth in Section 11.14, release all or substantially all of the Collateral or release all or substantially all of the Subsidiary Guarantors from their obligations under the Guarantee and Collateral Agreement, in each case without the written consent of all Lenders; provided, further that, any amendment to Section 11.14 to permit the release of all or substantially all of the Collateral or release all or substantially all of the Subsidiary Guarantors from their

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obligations under the Guarantee and Collateral Agreement shall also require the written consent of all Lenders; (iv) extend the scheduled date or reduce the amount of any amortization payment in respect of any Term Loan, in each case, without the written consent of each Lender directly affected thereby; (v) amend, modify or waive any condition precedent to any extension of credit under the Revolving Facility set forth in Section 6.2 without the written consent of the Majority Facility Lenders under the Revolving Facility; (vi) amend, modify or waive any provision of Section 4.8 without the written consent of the Majority Facility Lenders under each Facility affected thereby, except that the additional written consent of each Lender directly and adversely affected thereby shall be required in the case of Section 4.8(a), 4.8(c) and the first sentence of Section 4.8(b); (vii) reduce the percentage specified in the definition of Majority Facility Lenders with respect to any Facility without the written consent of all Lenders under such Facility; (viii) amend, modify or waive any provision of Section 10 without the written consent of the Administrative Agent or Other Representative adversely affected thereby; (ix) amend, modify or waive any provision of Section 3.3 or 3.4 without the written consent of the Swingline Lender; (x) amend, modify or waive any provision of Sections 3.7 to 3.14 without the written consent of each Issuing Lender; (xi) [reserved]; (xii) any terms of Section 4.16 without the consent of each Lender (other than any Defaulting Lender); (xiii) amend, modify or waive any of the terms and provisions (and related definitions) of Section 8.1 (even if the effect of such amendment would be to reduce the rate of interest on any Loan or L/C Obligations or to reduce any fee payable hereunder) or any of the terms and provisions of the proviso set forth in clause (c) of Section 9, without the written consent of the Majority Facility Lenders under the Revolving Facility; provided, further, that, notwithstanding anything else in this Agreement to the contrary, any such amendment, waiver or other modification pursuant to this clause (xiii) shall be effective for all purposes of this Agreement with the written consent of only the Majority Facility Lenders under the Revolving Facility (or the Administrative Agent with the prior written consent thereof) and the Borrower; (xiv) modify or extend the maturity date of any Letter of Credit to a date that is later than the maturity date applicable to the Revolving Commitments, without the consent of each Revolving Lender; or (xv) amend, modify or waive any provision of Section 11.7 hereof or Section 6.5 of the Guarantee and Collateral Agreement, in each case, without the written consent of each Lender directly and adversely affected thereby.  Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Loan Parties, the Lenders, the Administrative Agent and all future holders of the Loans.  In the case of any waiver, the Loan Parties, the Lenders and the Administrative Agent shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon.

Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) solely with the written consent of the Required Lenders, the Administrative Agent and the Borrower (a) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof  to share ratably in the benefits of this Agreement and the other Loan Documents with the Term Loans and Revolving Extensions of Credit and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders and Majority Facility Lenders.

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Notwithstanding anything to the contrary herein the Administrative Agent may, with the consent of the Borrower only, amend, modify or supplement this Agreement or any of the other Loan Documents to cure any technical ambiguity, omission, mistake, defect or inconsistency.

Notices

.  (a)  All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy or electronic transmission (including email)), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the case of the Borrower and the Administrative Agent, and as set forth in an administrative questionnaire delivered to the Administrative Agent in the case of the Lenders, or to such other address as may be hereafter notified by the respective parties hereto:

The Borrower:

Advanced Drainage Systems, Inc.

4640 Trueman Boulevard

Hilliard, Ohio 43026

Attention:  Scott Cottrill
Telecopy:  (614) 658-0052
Email:  Scott.Cottrill@ads-pipe.com

with copies, which shall not constitute notice, to each of:

 Advanced Drainage Systems, Inc.

4640 Trueman Boulevard

Hilliard, Ohio 43026

Attention:  Dean Bruno
Telecopy:  (614) 658-0286
Email:  dean.bruno@ads-pipe.com

and

Squire Patton Boggs (US) LLP

2000 Huntington Center

41 South High Street

Columbus, Ohio 43215

 

Attention: Matthew Bailey

Telecopy: (614) 365-2499

Email: Matthew.Bailey@squirepb.com

 

The Administrative Agent:

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Barclays Bank PLC
745 Seventh Avenue

New York, NY 10019
Attention:  Peter Oberrender
Telephone:  +1 212 526 6687
Facsimile:  +1 212 526 5115
Email: peter.oberrender@barclays.com

(b)No notice, request or demand to or upon the Administrative Agent, any Issuing Lender, the Lenders, or the Borrower shall be effective until received.  The Borrower shall be conclusively deemed to have received any notice, request or demand if such notice, request or demand is sent by courier service and delivery thereof is confirmed by the courier, if it is sent by fax or electronic transmission and receipt thereof is confirmed orally, if it is sent by certified mail or if it is served by any manner of service of process permitted by law.  Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent.  Approval of such procedures may be limited to particular notices or communications;

(c)(i)  Notices and other communications to the Lenders and the Issuing Lenders hereunder may be delivered or furnished by electronic communication (including email 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 any Issuing Lender pursuant to Sections 2 and 3 if such Lender or such Issuing Lender, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.  The Administrative Agent or the Borrower may, in their discretion, agree to accept notices and other communications to each of them hereunder by electronic communications pursuant to procedures approved by it; provided, that approval of such procedures may be limited to particular notices or communications.

(ii)Unless the Administrative Agent otherwise prescribes, (a) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided, that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (b) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (a) of notification that such notice or communication is available and identifying the website address therefore.

No Waiver; Cumulative Remedies

.  No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or

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privilege hereunder or under the other Loan Documents 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 are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Survival of Representations and Warranties

.  All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder.

Payment of Expenses; Indemnity

.  The Borrower agrees (a) to pay or reimburse each Lender, each Issuing Lender, each Other Representative and the Administrative Agent for all its reasonable and documented out-of-pocket costs and expenses incurred in connection with the syndication (including syndication expenses and travel expenses) of the Facilities and the development, preparation and execution of, and any amendment, supplement or modification to this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including the reasonable fees and disbursements of one primary counsel to the Lenders, the Issuing Lenders, the Other Representatives and the Administrative Agent and, to the extent reasonably determined by the Administrative Agent to be necessary, one local counsel in each applicable jurisdiction (exclusive of any reasonably necessary special counsel) and, in the case of an actual or reasonably perceived conflict of interest, one additional counsel in each applicable jurisdiction per affected party and filing and recording fees and expenses, with statements with respect to the foregoing to be submitted to the Borrower 3 Business Days prior to the Closing Date (in the case of amounts to be paid on the Closing Date) and from time to time thereafter on a quarterly basis or such other periodic basis as such Agent shall deem appropriate, (b) to pay or reimburse each Lender, each Issuing Lender, each Other Representative and the Administrative Agent for all its documented and out-of-pocket costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents, or in connection with the 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 and including the fees and disbursements of one primary counsel to the Lenders, the Issuing Lenders, the Other Representatives and the Administrative Agent and, to the extent reasonably determined by the Administrative Agent to be necessary, one local counsel in each applicable jurisdiction (exclusive of any reasonably necessary special counsel) and, in the case of an actual or reasonably perceived conflict of interest, one additional counsel in each applicable jurisdiction per affected party, (c) to pay, indemnify, and hold each Lender, each Issuing Lender, each Other Representative and the Administrative Agent harmless from, any and all recording and filing fees that may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (d) to pay, indemnify, and hold each Lender, each Issuing Lender, each Other Representative and the Administrative Agent and each of their and their affiliates’ respective officers, directors, employees, attorneys, affiliates, agents, members,

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partners and advisors (each, including each Lender and the Administrative Agent, an Indemnitee) harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the syndication of the Facilities and the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents and any such other documents, including any of the foregoing relating to the use of proceeds of the Loans or any related transaction or the violation of, noncompliance with or liability under, any Environmental Law or related to any Materials of Environmental Concern applicable to the operations of any Group Member or any of the Properties or the unauthorized use by Persons of information or other materials sent through electronic, telecommunications or other information transmission systems that are intercepted by such Persons or any claim, litigation, investigation or proceeding relating to any of the foregoing, or preparation of a defense in connection therewith, regardless of whether such claim, litigation, investigation or proceeding is brought by the Borrower, the Borrowers equity holders or creditors, an Indemnitee or any other person or entity, whether any Indemnitee is a party thereto, including in each case the reasonable and documented fees and disbursements of one primary counsel to the Lenders, the Issuing Lenders, the Other Representatives, the Administrative Agent and Indemnitees and, to the extent reasonably determined by the Administrative Agent to be necessary, one local counsel in each applicable jurisdiction (exclusive of any reasonably necessary special counsel) and, in the case of an actual or reasonably perceived conflict of interest, one additional counsel in each applicable jurisdiction per affected party (all the foregoing in this clause (d), collectively, the Indemnified Liabilities); provided, that the Borrower shall have no obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are found by a final, non-appealable judgment of a court of competent jurisdiction to have resulted primarily from (x) the willful misconduct, bad faith or gross negligence of such Indemnitee or its Related Persons, (y) a material breach by such Indemnitee of its express and material contractual obligations under this Agreement or the Loan Documents pursuant to a claim made by the Borrower, or (z) disputes between and among the Indemnitees (other than disputes involving the Administrative Agent or the Other Representatives in their respective capacities as such) other than any dispute related to any act or omission by the Borrower or any of its Subsidiaries. All amounts due under this Section 11.5 shall be payable not later than 10 days after written demand therefor.  Statements payable by the Borrower pursuant to this Section 11.5 shall be submitted pursuant to the notice information for the Borrower set forth in Section 11.2, or to such other Person or address as may be hereafter designated by the Borrower in a written notice to the Administrative Agent.  To the fullest extent permitted by applicable law, none of the Borrower, the Loan Parties and the Indemnitees shall assert, and each of the Borrower, the Loan Parties and the Indemnitees hereby waives, 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; provided, that the foregoing will not limit the Borrowers indemnity obligations set forth above.  No Indemnitee referred to in clause (d) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated

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hereby or thereby other than for direct or actual damages determined in a final, non-appealable judgment by a court of competent jurisdiction to have resulted primarily from the gross negligence, bad faith or willful misconduct of such Indemnitee.  The agreements in this Section 11.5 shall survive repayment of the Loans and all other amounts payable hereunder. This Section 11.5 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, or other costs and expenses arising from any non-Tax claim.

Successors and Assigns; Participations and Assignments

.  (a)  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of any Issuing Lender that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its respective rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void), and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 11.6.

(b)(i)  Subject to the conditions set forth in Section 11.6(c) below, any Lender may assign to one or more assignees (each, an “Assignee”) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:

(A)the Borrower; provided, that no consent of the Borrower shall be required (1) for an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, (2) for an assignment to any Person if an Event of Default under Section 9(a) or Section 9(f) has occurred and is continuing, or (3) during the primary syndication of the Facilities, subject to the Syndication and Fee Letter; provided, further, that the Borrower 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 written notice thereof;

(B)the Administrative Agent; provided, that no consent of the Administrative Agent shall be required for an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, except in the case of an assignment of a Revolving Commitment to an Assignee that does not already have a Revolving Commitment; and

(C)each Issuing Lender and the Swingline Lender, in case of an assignment of a Revolving Commitment.

(ii)Assignments shall be subject to the following additional conditions:

(A)except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire

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remaining amount of the assigning Lenders Commitments or Loans under any Facility, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 (or, in the case of any of the Term Loans, $500,000) unless each of the Borrower and the Administrative Agent otherwise consent; provided, that (1) no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its Affiliates or Approved Funds, if any;

(B)the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided that such processing and recordation fee may be waived by the Administrative Agent in its sole discretion;

(C)the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire;

(D)the Assignee, if it shall not be a Lender, shall deliver to the Borrower and the Administrative Agent the forms and documentation required pursuant to Section 4.10 (e), (f) and (k);

(E)no such assignment shall be made to an assignee that is a Defaulting Lender or any subsidiary of a Defaulting Lender at the time of such assignment and any such purported assignment thereto shall be deemed null and void and no such assignment shall be made to a Disqualified Institution, as further set forth in Section 11.6(f);

(F)notwithstanding anything to the contrary herein, no such assignment shall be made to any Affiliated Lender unless made in compliance with the additional terms and conditions set forth in Section 11.6(g); and

(G)notwithstanding anything to the contrary herein, no such assignment shall be made 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).

(iii)Subject to acceptance and recording thereof pursuant to Section 11.6(b)(iv) below, from and after the effective date specified in each Assignment and Assumption the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and

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Assumption covering all of the assigning Lenders 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 4.9, 4.10, 4.11 and 11.5).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 11.6 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, and subject to the limitations of Section 11.6(c).

(iv)The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount and stated interest of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent, each Issuing Lender and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower, each Issuing Lender and any Lender (solely with respect to any entry relating to such Lender’s Commitment or Loans), at any reasonable time and from time to time upon reasonable prior notice.

(v)Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an Assignee, the Assignee’s completed administrative questionnaire (unless the Assignee shall already be a Lender hereunder), and any written consent to such assignment required by Section 11.6(b), the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(c)(i)  Any Lender may, without the consent of the Borrower, the Administrative Agent or any other Person, sell participations to one or more banks or other entities (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 a Disqualified Institution or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided, that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (C) the Borrower, the Administrative Agent, each Issuing Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this

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Agreement.  Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided, that such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (1) requires the consent of each Lender directly affected thereby pursuant to the proviso to the second sentence of Section 11.1 and (2) directly affects such Participant.  Subject to Section 11.6(c)(ii), the Borrower agrees that each Participant shall be entitled to the benefits of Sections 4.9, 4.10 or 4.11 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 11.6(b); provided, that such Participant shall be subject to the provisions of Section 4.13 as if it were a Lender and had acquired its interest by assignment pursuant to Section 11.6(b).  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.7(b) as though it were a Lender; provided, that such Participant shall be subject to Section 11.7(a) as though it were a Lender.

(ii)A Participant shall not be entitled to receive any greater payment under Section 4.9 or 4.10 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant (except to the extent such entitlement to receive a greater payment results from change in a Requirement of Law that occurs after the Participant acquired the applicable participation).  Any Participant that is a Non-U.S. Lender shall not be entitled to the benefits of Section 4.10 unless such Participant complies with Section 4.10(e) and (f).  Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 4.13 with respect to any Participant.

(iii)Each Lender that sells a participation shall, acting for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts and stated interest of each Participant’s interest in the Loans (or other rights or obligations) held by it (the “Participant Register”).  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such Loan (or other right or obligation) hereunder as the owner thereof for all purposes of this Agreement notwithstanding any notice to the contrary.  No Lender shall have any obligation to disclose any portion of its Participant Register to any Person except to the extent such disclosure is necessary to establish that the Loans (or other rights or obligations) hereunder are in registered form under Section 5f.103-1(c) or Proposed Section 1.163-5(b) (or any successor sections) of the United States Treasury Regulations.  For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(d)Any Lender may at any time pledge or assign a security interest in all or any portion of its rights and/or obligations under this Agreement to secure obligations of

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such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or central bank having jurisdiction over it, and this Section 11.6 shall not apply to any such pledge or assignment of a security interest; provided, that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee for such Lender as a party hereto.

(e)The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in Section 11.6(d).

(f)(i) No assignment or participation shall be made to, and no Incremental Commitment shall be provided by, any Person that was a Disqualified Institution as of the date (the “Trade Date”) on which the assigning Lender entered into a binding agreement to sell and assign all or a portion of its rights and obligations under this Agreement to such Person or the date of the Incremental Commitment Agreement, as the case may be (unless the Borrower has consented to such assignment or Incremental Commitment in writing in its sole and absolute discretion, in which case such Person will not be considered a Disqualified Institution for the purpose of such assignment, participation or Incremental Commitment). For the avoidance of doubt, with respect to any assignee or Incremental Lender that becomes a Disqualified Institution after the applicable Trade Date (including as a result of the delivery of a notice pursuant to, and/or the expiration of the notice period referred to in, the definition of “Disqualified Institution”), (x) such assignee or Incremental Lender shall not retroactively be disqualified from becoming a Lender and (y) the execution by the Borrower of an Assignment and Assumption or joinder with respect to such assignee will not by itself result in such assignee no longer being considered a Disqualified Institution. Any assignment or Incremental Commitment in violation of this clause (f)(i) shall not be void, but the other provisions of this clause (f) shall apply.

(ii)If any assignment or participation is made to, or any Incremental Commitment is provided by, any Disqualified Institution without the Borrower’s prior written consent in violation of clause (i) above, or if any Person becomes a Disqualified Institution after the applicable Trade Date, the Borrower may, at its sole expense and effort, upon notice to the applicable Disqualified Institution and the Administrative Agent, (A) terminate the Commitment of such Disqualified Institution and repay all obligations of the Borrower owing to such Disqualified Institution in connection with such Commitment and/or (B) require such Disqualified Institution to assign, without recourse (in accordance with and subject to the restrictions contained in this Section), all of its interest, rights and obligations under this Agreement to one or more Eligible Assignees at the lesser of (x) the principal amount thereof and (y) the amount that such Disqualified Institution paid to acquire such interests, rights and obligations, in each case plus accrued interest, accrued fees and all other amounts (other than principal amounts) payable to it hereunder.

(iii)Notwithstanding anything to the contrary contained in this Agreement, Disqualified Institutions (A) will not (x) have the right to

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receive information, reports or other materials provided to Lenders by the Borrower, the Administrative Agent or any other Lender, (y) attend or participate in meetings attended by the Lenders and the Administrative Agent, or (z) access any electronic site established for the Lenders or confidential communications from counsel to or financial advisors of the Administrative Agent or the Lenders and (B) (x) for purposes of any consent to any amendment, waiver or modification of, or any action under, and for the purpose of any direction to the Administrative Agent or any Lender to undertake any action (or refrain from taking any action) under this Agreement or any other Loan Document, each Disqualified Institution will be deemed to have consented in the same proportion as the Lenders that are not Disqualified Institutions consented to such matter, and (y) for purposes of voting on any Debtor Relief Plan, each Disqualified Institution party hereto hereby agrees (1) not to vote on such Debtor Relief Plan, (2) if such Disqualified Institution does vote on such Debtor Relief Plan notwithstanding the restriction in the foregoing clause (1), such vote will be deemed not to be in good faith and shall be “designated” pursuant to Section 1126(e) of the Bankruptcy Code (or any similar provision in any other Debtor Relief Laws), and such vote shall not be counted in determining whether the applicable class has accepted or rejected such Debtor Relief Plan in accordance with Section 1126(c) of the Bankruptcy Code (or any similar provision in any other Debtor Relief Laws) and (3) not to contest any request by any party for a determination by the Bankruptcy Court (or other applicable court of competent jurisdiction) effectuating the foregoing clause (2).

(iv)The Administrative Agent shall have the right, and the Borrower hereby expressly authorizes the Administrative Agent, to (A) post the list of Disqualified Institutions provided by the Borrower and any updates thereto from time to time (collectively, the “DQ List”) on the Platform, including that portion of the Platform that is designated for public- side Lenders and/or (B) provide the DQ List to each Lender requesting the same.

(g)Subject to the other provisions of this Section 11.6 and Section 11.19, any Affiliated Lender may make Loans or Commitments or purchase an assignment of outstanding Loans or Commitments (including Incremental Loans and Incremental Commitments) from one or more Lenders and any such purchases of Loans and/or Commitments may be made through (a) open market purchases on a non-pro rata basis and/or (b) Dutch auction procedures open to all applicable Lenders on a pro rata basis in accordance with customary procedures with procedures determined by such Affiliated Lender in its sole discretion, in each case, on the following basis and subject to the following terms and conditions:

(i)any such purchase of Loans (other than any commitment to provide Incremental Loans or any Incremental Commitments) shall be consummated as an assignment otherwise in accordance with the provisions

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of this Section 11.6 and pursuant to an Assignment and Assumption (it being understood and agreed that any such purchase of Loans that does not comply with this Section 11.6 and Section 11.19 shall not be effective as an assignment hereunder);

(ii)[reserved];

(iii)the aggregate principal amount of the Term Loans and Commitments (including Incremental Term Loans and Incremental Term Loan Commitments) held by all Affiliated Lenders shall not exceed 25% of the total principal amount outstanding under the Term Facilities and any Incremental Term Loans at the time of such purported assignment;

(iv)no Affiliated Lender may purchase Revolving Commitments or Incremental Revolving Commitments hereunder and no Affiliated Lender may purchase any Revolving Loans or any Incremental Revolving Loans from any Lender, except from a Defaulting Lender (in which case, such Affiliated Lender shall purchase such Defaulting Lender’s Loans and shall purchase all such Loans and other amounts owing to the replaced Lender on or prior to the date of replacement and assume all obligations of the replaced Lender under the Loan Documents in connection with the purchased Revolving Loans in accordance with this Section 11.6 (except that the Borrower shall pay the registration and processing fee referred to therein and for the avoidance of doubt such purchase shall not include its Commitments));

(v)in the case of a purchase of Loans by the Borrower or any of its Subsidiaries, no proceeds of the Revolving Facility and no proceeds of any Incremental Loans drawn under any Incremental Revolving Commitments shall be used for any purchases hereunder;

(vi)any Loans purchased by the Borrower or any of its Subsidiaries shall be automatically and permanently cancelled upon the effectiveness of such assignment and will thereafter no longer be outstanding for any purpose hereunder;

(vii)no Affiliated Lender may purchase any loans while such Affiliated Lender is in the possession of material non-public information with respect to the Borrower or its subsidiaries that is material to the assigning lender’s decision to assign any loans and that has not been disclosed to the Lenders (except to the extent that any Lender expressly waives its right to receive such information);

(viii)notwithstanding anything to the contrary in this Agreement, the purchase of Loans made by an Affiliated Lender under this Section 11.6 shall not constitute a voluntary or mandatory prepayment of the Loans; and

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(ix)in the case of a purchase by any Affiliated Lender, the assigning Lender and such assignee shall execute and deliver to the Administrative Agent an Affiliated Lender Assignment and Assumption in lieu of an Assignment and Assumption.

Adjustments; Set-off

.  (a)  Except as expressly provided in Section 11.6 and otherwise to the extent that this Agreement expressly provides for payments to be allocated to a particular Lender or to the Lenders under a particular Facility, if any Lender (a “Benefited Lender”) shall, at any time after the Loans and other amounts payable hereunder shall immediately become due and payable pursuant to Section 9, receive any payment of all or part of the Obligations owing to it, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 9(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of the Obligations owing to such other Lender, such Benefited Lender shall purchase for cash from the other Lenders a participating interest in such portion of the Obligations owing to each such other Lender, or shall provide such other Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such collateral ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.

(b)In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right upon the occurrence and during the continuance of an Event of Default, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise), to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower, as the case may be.  Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender; provided, that the failure to give such notice shall not affect the validity of such setoff and application.

Counterparts

.  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page of this Agreement by facsimile or electronic transmission shall be effective as delivery of a manually executed counterpart hereof.  A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent.

Severability

.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such

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prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Integration

.  This Agreement and the other Loan Documents represent the entire agreement of the Borrower, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof.  This Agreement supersedes all prior commitments and undertakings of any or all of the Administrative Agent and Lenders relating to the financing contemplated hereby.  There are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.

GOVERNING LAW

.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Submission To Jurisdiction; Waivers

.  Each of the Borrower, the Administrative Agent and the Lenders hereby irrevocably and unconditionally:

(a)submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the exclusive jurisdiction of the courts of the State of New York, the courts of the United States for the Southern District of New York, and appellate courts from any thereof;

(b)consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

(c)agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Borrower, as the case may be at its address set forth in Section 11.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;

(d)agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

(e)waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

Acknowledgments

.  The Borrower hereby acknowledges that:

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(a)it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;

(b)none of the Administrative Agent, any Other Representative or Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Administrative Agent and Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

(c)no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower and the Lenders.

Releases of Guarantees and Liens

.  (a)  Notwithstanding anything to the contrary contained herein or in any other Loan Document, the Administrative Agent is hereby irrevocably authorized by each Lender and other Secured Parties (without requirement of notice to or consent of any Lender or other Secured Party except as expressly required by Section 11.1) to take any action requested by the Borrower having the effect of releasing any Collateral or guarantee obligations (i) to the extent necessary to permit consummation of any transaction not prohibited by any Loan Document or that has been consented to in accordance with Section 11.1 or (ii) under the circumstances described in Section 11.14(b).

(b)At such time as the Loans, the Reimbursement Obligations and the other obligations under the Loan Documents (other than contingent surviving indemnity obligations in respect of which no claim or demand has been made and obligations under or in respect of Hedge Agreements or Specified Cash Management Arrangements) shall have been paid in full, the Commitments have been terminated and no Letters of Credit shall be outstanding (other than Letters of Credit which have been Cash Collateralized or as to which other arrangements satisfactory to the applicable Issuing Lender shall have been made), the Collateral shall automatically be released from the Liens created by the Security Documents, and the Security Documents and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Loan Party under the Security Documents shall automatically terminate, all without delivery of any instrument or performance of any act by any Person.  Additionally, the Administrative Agent shall deliver such other documentation reasonably requested by the Borrower to evidence the termination of this Agreement and the other Loan Documents and/or the termination of the Liens on the Collateral, in favor of the Administrative Agent for the benefit of the Secured Parties, all in form reasonably satisfactory to the Administrative Agent and the Borrower.  Any such documentation shall be made without recourse, representation or warranty.  The Borrower shall pay all costs and expenses (including, but not limited to, reasonable attorney’s fees), that the Administrative Agent incurs in preparing and delivering the foregoing documents (or reviewing forms of such documents prepared by the Borrower or its counsel).

Confidentiality

.  The Administrative Agent, each Other Representative and Lender agrees to keep confidential all non-public information provided to it by any Loan Party pursuant to or in connection with  this Agreement; provided, that nothing herein shall prevent the

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Administrative Agent, Other Representative or any Lender from disclosing any such information (a) any Lender or any Affiliate of any Lender (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) (i) to any actual or prospective Transferee, (ii) any direct or indirect actual or prospective counterparty (or any professional advisor to such counterparty) to any Hedge Agreement or any other swap, derivative or securitization transaction relating to the Borrower and its Obligations or (iii) to any credit insurance provider relating to the Borrower and its Obligations, in each case, if such person is required to maintain confidentiality on terms at least as restrictive as those contained in this Section 11.15, (c) to its employees, directors, agents, members, partners, attorneys, accountants and other professional advisors or those of any of its affiliates if such person is required to maintain confidentiality, (d) upon the request or demand of any Governmental Authority, (e) in response to any order of any court or other Governmental Authority, or as may otherwise be required pursuant to any Requirement of Law, or if requested or required to do so in connection with any litigation or similar proceeding; provided, that the Administrative Agent, Other Representative or Lender, unless prohibited by any Requirement of Law, shall use reasonable efforts to notify the Borrower in advance of any disclosure pursuant to this clause (e) but only to the extent reasonably practicable under the circumstances and on the understanding that none of the Administrative Agent, Other Representative or Lender shall incur any liability for failure to give such notice, (f) that has been publicly disclosed, (g) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lenders investment portfolio in connection with ratings issued with respect to such Lender, (h) in connection with the exercise of any remedy hereunder or under any other Loan Document, (i) to any rating agency when required by it; provided, that, prior to any disclosure, such rating agency is required to maintain confidentiality or (j) with the consent of the Borrower.  In addition, the Administrative Agent and each Lender may disclose the existence of this Agreement and the information about this Agreement to market data collectors, similar services providers to the lending industry, and service providers to the Administrative Agent and the Lenders in connection with the administration and management of this Agreement and the other Loan Documents.

WAIVERS OF JURY TRIAL

.  THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

USA PATRIOT Act

.  Each Lender hereby notifies each Loan Party that pursuant to the requirements of the USA PATRIOT Act (Title III of Publ. L. 107-56 (signed into law October 26, 2001)), (the “Patriot Act”), it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of the each Loan Party and other information that will allow such Lender to identify each Loan Party in accordance with the Patriot Act.

Lender Action

.  Each Lender and each other Secured Party agrees that it shall not take or institute any actions or proceedings, judicial or otherwise, for any right or remedy against any Loan Party or any other obligor under any of the Loan Documents (including the

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exercise of any right of setoff, rights on account of any bankers lien or similar claim or other rights of self-help), or institute any actions or proceedings, or otherwise commence any remedial procedures, with respect to any Collateral or any other property of any such Loan Party, unless expressly provided for herein or in any other Loan Document, without the prior written consent of the Administrative Agent.  The provisions of this Section 11.19 are for the sole benefit of the Lenders and the other Secured Parties and shall not afford any right to, or constitute a defense available to, any Loan Party.

Certain Undertakings with Respect to Certain Affiliate Lenders

.

(a)Notwithstanding anything in this Agreement or any other Loan Document to the contrary, Affiliated Lenders shall not be permitted to attend any meeting (live or by any electronic means) in such Affiliated Lender’s capacity as a Lender with the Administrative Agent or other Lender or receive any information from the Administrative Agent or other Lender, except to the extent such information is made available to any Loan Party (or its representatives) and other than administrative notices given to all Lenders hereunder (including information delivered by the Borrower in accordance with Section 7.1 and Section 7.2), or have access to the Platform; and

(b)Notwithstanding anything in this Agreement or any other Loan Document to the contrary, with respect to any Loans at any time held by an Affiliated Lender, such Affiliated Lender shall have no right whatsoever, in its capacity as a Lender with respect to such Loans then held by such Affiliated Lender, whether or not the Borrower or any other Loan Party is subject to a bankruptcy or other insolvency proceeding or otherwise, so long as such Lender is an Affiliated Lender, to (i) consent to any amendment, modification, waiver, consent or other such action with respect to, or otherwise vote on any matter related to, or vote in connection with any direction delivered to the Administrative Agent by the Required Lenders or Majority Facility Lenders under any Facility pursuant to, any of the terms of the Agreement or any other Loan Document, in each case to the extent such amendment, modification, waiver, consent, other action, vote or direction is effective with only the consent of or action by the Required Lenders or the Majority Facility Lenders under any Facility (each, a “Lender Vote/Directive”) and, if applicable, the Borrower; provided, that for purposes of any Lender Vote/Directive the Administrative Agent shall automatically deem any Loans held by such Affiliated Lender to be voted on a pro rata basis in accordance with the votes cast in respect of the Loans of all other Lenders in the aggregate (other than any Affiliated Lenders) in connection with any such Lender Vote/Directive (including all voting and consent rights arising out of any bankruptcy or other insolvency proceedings (except for voting on any plan of reorganization or refraining from voting on any plan of reorganization, in which case the Administrative Agent shall vote or refrain from voting such Loans of such Affiliated Lender in its sole discretion)); provided, further, that no such Lender Vote/Directive shall deprive such Affiliated Lender of its share of any payments or other recoveries which the Lenders are entitled to share on a pro rata basis under the Loan Documents and such Affiliated Lender’s vote shall be counted to the extent any such plan of reorganization or other amendment, waiver, modification or consent proposes to treat the Obligations of the Affiliated Lender in a manner less favorable in any material respect to such Affiliated Lender than the proposed treatment of Obligations held by Lenders that are not Affiliates of the Borrower.

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No Fiduciary Duty

.  The Administrative Agent, each Other Representative, each Lender and their Affiliates (collectively, solely for purposes of this Section 11.22, the “Lenders”), may have economic interests that conflict with those of the Loan Parties, their stockholders and/or their affiliates.  The Borrower, on behalf of itself and each other Loan Party, agrees that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender or Other Representative, on the one hand, and the Borrower and such other Loan Party, its stockholders or its affiliates, on the other.  The Borrower, on behalf of itself and each other Loan Party, acknowledges and agrees that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders or Other Representatives, on the one hand, and the Loan Parties, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender or Other Representative has assumed an advisory or fiduciary responsibility in favor of any Loan Party, their stockholders or their Affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender or Other Representative has advised, is currently advising or will advise any Loan Party, its stockholders or its Affiliates on other matters) or any other obligation to any Loan Party except the obligations expressly set forth in the Loan Documents and (y) each Lender or Other Representative is acting solely as principal and not as the agent or fiduciary of any Loan Party, its management, stockholders, creditors or any other Person.  The Borrower, on behalf of itself and each other Loan Party, acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto.  The Borrower, on behalf of itself and each other Loan Party, agrees that it will not claim that any Lender or Other Representative has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Borrower or such other Loan Party, in connection with such transaction or the process leading thereto.

Acknowledgment 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 of the parties hereto, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:  

(a)the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(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;

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(ii)a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent 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.

Judgment Currency

(i).  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 in given.  The obligation of any Loan Party in respect of such sum due from it to the Administrative Agent or the Lenders hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency.  If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent from the applicable Borrower or Guarantor in the Agreement Currency, such Borrower or Guarantor agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or the Person to whom such obligation was owing against such loss.  If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent in such currency, the Administrative Agent agrees to return the amount of any excess to such Borrower or Guarantor (or to any other Person who may be entitled thereto under applicable law).

 

Acknowledgment Regarding Any Supported QFCs

.  To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Hedge Agreements or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and, each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):

(a)In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the

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transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States.  In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support; and

(b)As used in this Section 11.23, the following terms have the following meanings:

BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

Covered Entity” means any of the following:

(i)a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);

(ii)a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or

(iii)a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

[Remainder of Page Intentionally Left Blank]

 

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

ADVANCED DRAINAGE SYSTEMS, INC., as Borrower

By:  /s/ D. Scott Barbour
Name: D. Scott Barbour
Title: President and Chief Executive Officer

 

 

 

[Signature Page to Project Ocean Credit Agreement]

 

 


 

BARCLAYS BANK PLC,
as Administrative Agent, Term Lender, Revolving Lender, Swingline Lender and Issuing Lender

By: /s/ Sean Duggan
Name: Sean Duggan
Title: Vice President

 

 

 

[Signature Page to Project Ocean Credit Agreement]

 

 


 

MORGAN STANLEY BANK, N.A., as Term Lender, Revolving Lender and Issuing Lender

By: /s/ Jordan Ransom
Name: Jordan Ransom
Title: Authorized Signatory

 

 

 

[Signature Page to Project Ocean Credit Agreement]

 

 

Exhibit 10.2

 

Execution Version

 

 

 

 

 

 

 

GUARANTEE AND COLLATERAL AGREEMENT

 

made by

 

ADVANCED DRAINAGE SYSTEMS, INC.,
and certain of its Subsidiaries

 

in favor of

BARCLAYS BANK PLC,
as Administrative Agent

 

Dated as of July 31, 2019

 

 

 

 

 

 

 

 

 

 


TABLE OF CONTENTS

 

 

 

Page Number

SECTION 1.

DEFINED TERMS

1

1.1

Definitions

1

1.2

Other Definitional Provisions

6

SECTION 2.

GUARANTEE

6

2.1

Guarantee

6

2.2

Reimbursement, Contribution and Subrogation

7

2.3

Amendments, Etc., With Respect to the Obligations

9

2.4

Guarantee Absolute and Unconditional

9

2.5

Reinstatement

10

2.6

Payments

10

2.7

Bankruptcy, Etc.

10

2.8

Keepwell

10

SECTION 3.

GRANT OF SECURITY INTEREST

11

SECTION 4.

REPRESENTATIONS AND WARRANTIES

12

4.1

Representations in Credit Agreement

12

4.2

Title; No Other Liens

13

4.3

Perfected First Priority Liens

13

4.4

Jurisdiction of Organization; Chief Executive Office

13

4.5

[Reserved]

14

4.6

Farm Products

14

4.7

Pledged Stock and Pledged Notes

14

4.8

Receivables and Chattel Paper

14

4.9

Intellectual Property

14

SECTION 5.

COVENANTS

16

5.1

Covenants in Credit Agreement

16

5.2

Delivery of Instruments, Certificated Securities, Chattel Paper, Negotiable Documents, Investment Property and Letter-of-Credit Rights

16

5.3

Maintenance of Insurance

17

5.4

Maintenance of Perfected Security Interest; Further Documentation

17

5.5

Changes in Locations, Names, etc.

17

5.6

[Reserved]

17

5.7

Investment Property

17

5.8

Receivables

18

5.9

Intellectual Property

18

SECTION 6.

REMEDIAL PROVISIONS

21

6.1

Certain Matters Relating to Receivables

21

6.2

Communications with Obligors; Grantors Remain Liable

22

6.3

Investment Property

22

6.4

Proceeds to be Turned Over to Administrative Agent

23

 


 

 

 

Page Number

6.5

Application of Proceeds

23

6.6

Code and Other Remedies

25

6.7

[Reserved].

26

6.8

Deficiency

26

SECTION 7.

THE ADMINISTRATIVE AGENT

26

7.1

Administrative Agent’s Appointment as Attorney-in-Fact, etc.

26

7.2

Duty of Administrative Agent

27

7.3

Financing Statements

27

7.4

Authority, Immunities and Indemnities of Administrative Agent

28

SECTION 8.

MISCELLANEOUS

28

8.1

Amendments in Writing

28

8.2

Notices

28

8.3

No Waiver by Course of Conduct; Cumulative Remedies

28

8.4

Enforcement Expenses; Indemnification

28

8.5

Successors and Assigns

29

8.6

Set-Off

29

8.7

Counterparts

30

8.8

Severability

30

8.9

Section Headings

30

8.10

Integration

30

8.11

GOVERNING LAW

30

8.128.1212

Submission To Jurisdiction; Waivers

30

8.13

Acknowledgements

30

8.14

Additional Grantors

31

8.15

Releases

31

8.16

WAIVER OF JURY TRIAL

31

 

 

 

 

 

 

 

 

 

 

 

ii

 

 


 

SCHEDULES

Schedule 1Notice Addresses

Schedule 2Investment Property

Schedule 3Jurisdictions of Organization and Chief Executive Offices

Schedule 4Filings and Other Actions required for Perfection

Schedule 5[Reserved]

Schedule 6Intellectual Property

Schedule 7Commercial Tort Claims

ANNEXES

Annex I Form of Assumption Agreement

Annex IIForm of Intellectual Property Security Agreement

 

 

 

iii

 

 


 

This GUARANTEE AND COLLATERAL AGREEMENT, dated as of July 31, 2019, made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the “Grantors”, and each individually, a “Grantor”), in favor of Barclays Bank PLC, as administrative agent (in such capacity and together with its successors and assigns in such capacity, the “Administrative Agent”) for (i) the banks, financial institutions and other entities (the “Lenders”) from time to time party as lenders or letter of credit issuers to the Credit Agreement, dated as of the date hereof, by and among Advanced Drainage Systems, Inc., a Delaware corporation (the “Borrower”), the Lenders and the Administrative Agent (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) and (ii) the other Secured Parties (as defined below).

RECITALS

A.Pursuant to the Credit Agreement, the Lenders have severally agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein;

B.The Borrower is a member of an affiliated group of companies that includes each other Grantor;

C.The Borrower and the other Grantors are engaged in related businesses, and each Grantor will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement; and

D.The execution and delivery to the Administrative Agent of this Agreement by the Grantors on the date hereof is a condition precedent to the obligation of the Lenders to make the respective extensions of credit to the Borrower under the Credit Agreement.

NOW, THEREFORE, in consideration of the premises and to induce the Lenders to make their respective extensions of credit to the Borrower under the Credit Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Grantor hereby agrees with the Administrative Agent, for the benefit of the Secured Parties, as follows:

SECTION 1.  
DEFINED TERMS

Definitions

.

(a)Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the following terms are used herein as defined in the New York UCC (and if defined in more than one Article of the New York UCC, shall have the meaning given in Article 8 or 9 thereof, as applicable):  Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Commodity Accounts, Deposit Account, Documents, Electronic Chattel Paper, Equipment, Farm Products, Fixtures, General Intangibles, Goods, Instruments, Inventory, Letter-of-Credit Rights, Money, Negotiable Documents, Securities Accounts, Securities Entitlements, Supporting Obligations, Tangible Chattel Paper and Uncertificated Securities.

(b)The following terms shall have the following meanings:

Agreement”:  this Guarantee and Collateral Agreement, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.

Borrower”:  as defined in the preamble of this Agreement.

 


 

Collateral”:  as defined in Section 3.

Collateral Account”:  any collateral account established by the Administrative Agent as provided in Section 6.1 or 6.4.

Commodity Exchange Act”: the Commodity Exchange Act (7 U.S.C. §1 et seq.), as amended from time to time, and any successor statute.

Copyrights”:  (i) all United States copyrights, whether or not the underlying works of authorship have been published, and all copyright registrations and copyright applications, and any renewals or extensions thereof, including each registration identified on Schedule 6, (ii) the right to sue or otherwise recover for any and all past, present and future infringements and other violations thereof, (iii) all income, royalties, damages and other payments now and hereafter due and/or payable with respect thereto (including, without limitation, payments under all licenses entered into in connection therewith, and damages and payments for past, present or future infringements thereof), and (iv) all other rights of any kind whatsoever accruing thereunder or pertaining thereto.

Copyright Licenses”:  with respect to any Grantor, all written agreements (whether or not in writing) naming such Grantor as licensor or licensee (including those agreements listed in Schedule 6), granting any right under any Copyright, including the grant of rights to print, publish, copy, distribute, exploit and sell materials derived from any Copyright, subject in each case, to the terms of such agreements, and the right to prepare for sale, sell and advertise for sale, all Inventory now or hereafter covered by such agreements.

Credit Agreement Obligations”: the unpaid principal of and interest on the Loans and Reimbursement Obligations and all other obligations and liabilities of the Borrower or any Grantor to the Administrative Agent, Lender or Indemnitee, whether direct or indirect, absolute or contingent, due or to become due or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, this Agreement or the other Loan Documents or any Letter of Credit, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Loans and Reimbursement Obligations and interest accruing at the then applicable rate provided in the Credit Agreement after the commencement of any bankruptcy case or insolvency, reorganization, liquidation or like proceeding relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding and all expense reimbursement and indemnity obligations arising or incurred as provided in the Loan Documents after the commencement of any such case or proceeding, whether or not a claim for such obligations is allowed in such case or proceeding).  For the avoidance of doubt, Credit Agreement Obligations shall not include any Secured Obligations owing to any Qualified Counterparty in its capacity as such with respect to any Specified Hedge Agreement or Specified Cash Management Agreement.

Discharge of the Obligations”: the occurrence of all of the following: (i) the Loans, the Reimbursement Obligations and the other Obligations under the Loan Documents (other than contingent surviving indemnity obligations in respect of which no claim or demand has been made and obligations under or in respect of Specified Hedge Agreements or Specified Cash Management Agreements) shall have been paid in full in accordance with the terms thereof, (ii) the Commitments have been terminated, and (iii) no Letters of Credit shall be outstanding (other than Letters of Credit which have been Cash Collateralized or backstopped or as to which other arrangements reasonably acceptable to the applicable Issuing Lender shall have been made).

2

 


 

Excluded Account”: a deposit account held by any Grantor (i) consisting solely of withheld income taxes and federal, state or local employment taxes in such amounts as are required in the reasonable judgment of such Grantor in the ordinary course of business to be paid to the relevant Governmental Authority, (ii) which is used for the sole purpose of making payroll for the then current payroll period and withholding Tax payments related thereto and other employee wage and benefit payments and accrued and unpaid employee compensation (including salaries, wages, benefits and expense reimbursements) and (iii) constituting a custodian, trust, fiduciary or other escrow account established for the benefit of third parties in the ordinary course of business in connection with transactions permitted under the Loan Documents.

Excluded Perfection Assets”:  (i) Goods included in Collateral received by any Person for “sale or return” within the meaning of Section 2-326 of the Uniform Commercial Code of the applicable jurisdiction, to the extent of claims of creditors of such Person (except to the extent the filing of a financing statement under the Uniform Commercial Code is effective to perfect the security interest therein); (ii) any Deposit Account (and any Money deposited therein), any Securities Account or any Commodity Account, except to the extent the filing of a financing statement under the Uniform Commercial Code is effective to perfect the security interest therein; (iii) other than (1) any Pledged Stock and (2) any other Collateral that is evidenced or represented by any Instrument, Negotiable Document or Tangible Chattel Paper in excess of $10,000,000 individually, any Collateral the aggregate value of which shall not exceed at any time $20,000,000; (iv) Letter of Credit Rights, except to the extent the filing of a financing statement under the Uniform Commercial Code is effective to perfect the security interest therein, (v) any promissory note in a principal amount not in excess of $10,000,000 individually, evidencing loans or other monetary obligations owing to any Grantor; and (vi) any Collateral for which the perfection of Liens thereon requires filings in or other actions under the laws of jurisdictions outside the United States.

Excluded Swap Obligation”: with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any guarantee thereof) is or becomes illegal or unlawful 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 Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guarantee of such Guarantor or the grant of such security interest would otherwise have become effective with respect to such Swap Obligation.  If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guarantee or security interest is or becomes illegal.

Grantor”: as defined in the preamble hereto.

Guarantors”:  the collective reference to each Grantor and, for the avoidance of doubt, shall include the Borrower (except with respect to its own primary obligations).

Intellectual Property”:  the collective reference to (i) all intellectual property arising under United States, including all Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark Licenses, Trade Secrets, (ii) the right to sue or otherwise recover for any and all past, present and future infringements, misappropriations, dilutions and other violations thereof, (iii) all income, royalties, damages and other payments now and hereafter due and/or payable with respect thereto (including, without limitation, payments under all licenses entered into in connection therewith, and damages and payments for past, present or future infringements thereof), and (iv) all other rights of any kind whatsoever accruing thereunder or pertaining thereto.

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Intercompany Note”:  any promissory note in a principal amount in excess of $10,000,000 individually, evidencing loans or other monetary obligations owing to any Grantor by any Group Member.

Investment Property”:  the collective reference to (i) all “investment property” as such term is defined in Section 9-102(a)(49) of the New York UCC and (ii) whether or not constituting “investment property” as so defined, all Pledged Notes and all Pledged Stock.

Issuers”:  the collective reference to each issuer of any Investment Property purported to be pledged hereunder.

New York UCC”:  the Uniform Commercial Code as from time to time in effect in the State of New York.

Obligations”:  as defined in the Credit Agreement.

Ordinary Course Transferees”:  (i) with respect to Goods only, buyers in the ordinary course of business and lessees in the ordinary course of business to the extent provided in Section 9-320(a) and 9-321 of the Uniform Commercial Code as in effect from time to time in the relevant jurisdiction, and (ii) with respect to General Intangibles only, licensees in the ordinary course of business to the extent provided in Section 9-321 of the Uniform Commercial Code as in effect from time to time in the relevant jurisdiction.

Patents”:  (i) all United States patents and patent applications, including, without limitation, each issued patent and patent application identified on Schedule 6, (ii) all inventions and improvements described and claimed therein, (iii) the right to sue or otherwise recover for any and all past, present and future infringements and other violations thereof, (iv) all income, royalties, damages and other payments now and hereafter due and/or payable with respect thereto (including payments under all licenses entered into in connection therewith, and damages and payments for past, present or future infringements thereof), and (v) all reissues, divisions, continuations, continuations-in-part, substitutes, renewals, and extensions thereof, all improvements thereon and all other rights of any kind whatsoever accruing thereunder or pertaining thereto.

Patent License”:  with respect to any Grantor, all agreements (whether or not in writing) providing for the grant by or to such Grantor of any right to manufacture, use, import, export, distribute, offer for sale or sell any invention covered in whole or in part by a Patent (including those agreements listed on Schedule 6), subject in each case, to the terms of such agreements, and the right to prepare for sale, sell and advertise for sale, all Inventory now or hereafter covered by such agreements.

Pledged Notes”:  all Intercompany Notes at any time issued to any Grantor (including those listed on Schedule 2) and all other promissory notes in a principal amount in excess of $10,000,000 individually at any time issued to or owned, held or acquired by any Grantor (including those listed on Schedule 2), except promissory notes with a maturity date of less than one year issued in connection with extensions of trade credit by any Grantor in the ordinary course of business.

Pledged Stock”:  all shares, stock certificates, options, interests or rights of any nature whatsoever in respect of the Capital Stock of any Person (including those listed on Schedule 2) at any time issued or granted to or owned, held or acquired by any Grantor; provided that in no event shall (i) any Capital Stock of a Foreign Subsidiary that is not a First Tier Foreign Subsidiary, (ii) any Capital Stock of an Unrestricted Subsidiary, (iii) any Capital Stock of any Immaterial Subsidiary, (iv) any Capital Stock in entities where a Grantor holds 50% or less of the outstanding Capital Stock of such entity, to the extent a pledge of such Capital Stock is prohibited by the organizational documents or agreements with the other

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equity holders of such entity, (v) any Capital Stock of a Domestic Subsidiary which is a Subsidiary of a Foreign Subsidiary, or (vi) any Capital Stock of a First Tier Foreign Subsidiary in excess of 65% of the total voting power of all outstanding Capital Stock of such Foreign Subsidiary, in each case, be subject to the security interests granted hereby.

Proceeds”:  all “proceeds” as such term is defined in Section 9-102(a)(64) of the New York UCC, including, in any event, all dividends, returns of capital and other distributions from Investment Property and all collections thereon and payments with respect thereto.

Qualified ECP Guarantor”: in respect of any Swap Obligation, each Guarantor that has total assets exceeding $10,000,000 at the time the relevant guarantee, or grant of the relevant security interest, becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

Receivable”:  any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including all Accounts).

Secured Obligations”: (i) the Obligations and (ii) the obligations of each Grantor under this Agreement. Notwithstanding anything to the contrary in this Agreement, the definition of “Secured Obligations” shall not create or include any guarantee by any Loan Party of (or grant of security interest by any Loan Party to support, as applicable) any Excluded Swap Obligation of such Loan Party for purposes of determining any obligations of any Loan Party.

Secured Parties”:  the Administrative Agent, the Lenders and Indemnitees and, with respect to any Specified Hedge Agreement or Specified Cash Management Agreement, the Qualified Counterparty party thereto and each of their respective successors and permitted transferees.

Securities Act”:  the Securities Act of 1933, as amended.

Swap Obligation”: 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.

Trademarks”:  (i) all United States trademarks, service marks, trade names, domain names, corporate names, company names, business names, trade dress, trade styles, or logos, and all registrations of and applications to register the foregoing and any new renewals thereof, including each registration and application identified in Schedule 6, (ii) the right to sue or otherwise recover for any and all past, present and future infringements, misappropriations, dilutions and other violations thereof, (iii) all income, royalties, damages and other payments now and hereafter due and/or payable with respect thereto (including payments under all licenses entered into in connection therewith, and damages and payments for past, present or future infringements and dilutions thereof), and (iv) all other rights of any kind whatsoever accruing thereunder or pertaining thereto, together in each case with the goodwill of the business connected with the use of, and symbolized by, each of the above.

Trademark License”:  with respect to any Grantor, any agreement (whether or not in writing) providing for the grant by or to such Grantor of any right to use any Trademark (including those agreements listed on Schedule 6), subject in each case, to the terms of such agreements, and the right to prepare for sale, sell and advertise for sale, all Inventory now or hereafter covered by such agreements.

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Trade Secrets”: (i) all United States trade secrets (ii) the right to sue or otherwise recover for any and all past, present and future misappropriations and other violations thereof, (iii) all income, royalties, damages and other payments now and hereafter due and/or payable with respect thereto (including payments under all licenses entered into in connection therewith, and damages and payments for past, present or future misappropriations thereof), and (iv) all other rights of any kind whatsoever accruing thereunder or pertaining thereto.

UETA”:  the Uniform Electronic Transaction Act, as in effect in the applicable jurisdiction.

Other Definitional Provisions

.

(a)As used herein and in any certificate or other document made or delivered pursuant hereto, (i) accounting terms relating to any Group Member not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii) the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings), and (iv) 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 of every type and nature, (v) references to agreements or other contractual obligations shall, unless otherwise specified, be deemed to refer to such agreements or contractual obligations as amended, supplemented, restated or otherwise modified from time to time (subject to any applicable restrictions hereunder), (vi) all references to laws or statutes include all related rules, regulations, interpretations, amendments and successor provisions, and (vii) all references to any Person include successors and assigns.

(b)The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified.

(c)The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

(d)Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part thereof.

SECTION 2.  
GUARANTEE

Guarantee

.  

(a)Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Administrative Agent, for the benefit of the Secured Parties, the prompt and complete payment and performance by the Borrower and each other Guarantor when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations and each of the Guarantors hereby acknowledges and agrees that the guarantee provided for in this Section 2 is a guarantee of payment and not of collection.

(b)Each Guarantor shall be liable under its guarantee set forth in Section 2.1(a), without any limitation as to amount, for all present and future Obligations, including specifically all future

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increases in the outstanding amount of the Loans or Reimbursement Obligations and other future increases in the Obligations, whether or not any such increase is committed, contemplated or provided for by the Loan Documents on the date hereof.  Notwithstanding any other provision hereof, the right of recovery against each Guarantor under Section 2 hereof shall not exceed $1.00 less than the lowest amount which would render such Guarantor’s obligations under Section 2 hereof void or voidable under applicable law, including, without limitation, fraudulent conveyance law. To effectuate the foregoing intention, the Administrative Agent and the Guarantors hereby irrevocably agree that the Obligations of each Guarantor under the guarantee set forth in Section 2 hereof at any time shall be limited to the maximum amount as will result in the Obligations of such Guarantor under the guarantee set forth in Section 2 hereof not constituting a fraudulent transfer or conveyance after giving full effect to the liability under the guarantee set forth in Section 2 hereof and its related contribution rights but before taking into account any liabilities under any other guarantee by such Guarantor.  To the extent that any Guarantor shall be required hereunder to pay any portion of any guaranteed obligation exceeding the greater of (a) the amount of the value actually received by such Guarantor and its Subsidiaries (other than the Borrower) from the Loans and such other obligations, and (b) the amount such Guarantor would otherwise have paid if such Guarantor had paid the aggregate amount of the guaranteed obligations (excluding the amount thereof repaid by the Borrower) in the same proportion as such Guarantor’s net worth on the date enforcement is sought hereunder bears to the aggregate net worth of all the Guarantors on such date, then such Guarantor shall be reimbursed by such other Guarantors for the amount of such excess, pro rata, based on the respective net worth of such other Guarantors on such date.  For purposes of determining the net worth of any Guarantor in connection with the foregoing, all guarantees of such Guarantor other than the guarantee under Section 2 hereof will be deemed to be enforceable and payable after the guarantee under Section 2 hereof.  To the fullest extent permitted by applicable law, this Section 2.1(b) shall be for the benefit solely of creditors and representatives of creditors of each Guarantor and not for the benefit of such Guarantor or the holders of any equity interest in such Guarantor.

(c)Except as provided in Section 8.15, the guarantee contained in this Section 2.1 shall remain in full force and effect until the Discharge of the Obligations.

(d)No payment made by the Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by any Secured Party from the Borrower, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder in respect of any other Obligations then outstanding or thereafter incurred, other than as set forth in Section 8.15.

Reimbursement, Contribution and Subrogation

.  In case any payment is made on account of the Obligations by any Guarantor or is received or collected on account of the Obligations from any Guarantor or its property:

(a)[reserved].

(b)If such payment is made by a Guarantor or from its property, such Guarantor shall be entitled, subject to and upon (but not before) the Discharge of the Obligations, (i) to demand and enforce reimbursement for the full amount of such payment from the Borrower, and (ii) to demand and enforce contribution in respect of such payment from each other Guarantor which has not paid its fair share of such payment, as necessary to ensure that (after giving effect to any enforcement of reimbursement rights provided hereby) each Guarantor pays its fair share of the unreimbursed portion of such payment. For this purpose, the fair share of each Guarantor as to any unreimbursed payment shall be determined based on an equitable apportionment of such unreimbursed payment among all Guarantors based on the relative value

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of their assets (net of their liabilities, other than the Obligations) and any other equitable considerations deemed appropriate by the court.

(c)If and whenever any right of reimbursement or contribution becomes enforceable by any Guarantor against any other Guarantor under Section 2.2(b), such Guarantor shall be entitled, subject to and upon (but not before) the Discharge of the Obligations, to be subrogated (equally and ratably with all other Guarantors entitled to reimbursement or contribution from any other Grantor under Section 2.2(b)) to any security interest that may then be held by the Administrative Agent upon any Collateral granted to it in this Agreement.  To the fullest extent permitted under applicable law, such right of subrogation shall be enforceable solely against the Guarantors, and not against the Secured Parties, and neither the Administrative Agent nor any other Secured Party shall have any duty whatsoever to warrant, ensure or protect any such right of subrogation or to obtain, perfect, maintain, hold, enforce or retain any Collateral for any purpose related to any such right of subrogation.  If subrogation is demanded in writing by any Guarantor, then (subject to and upon (but not before) the Discharge of the Obligations) the Administrative Agent shall deliver to the Guarantor making such demand, or to a representative of such Guarantor or of the Guarantors generally, an instrument reasonably satisfactory to the Administrative Agent transferring, on a quitclaim basis without (to the fullest extent permitted under applicable law) any recourse, representation, warranty or obligation whatsoever, whatever security interest the Administrative Agent then may hold in whatever Collateral may then exist that was not previously released or disposed of by the Administrative Agent.

(d)All rights and claims arising under this Section 2.2 or based upon or relating to any other right of reimbursement, indemnification, contribution or subrogation that may at any time arise or exist in favor of any Guarantor as to any payment on account of the Obligations made by it or received or collected from its property shall be fully subordinated in all respects to the Discharge of the Obligations.  Until the Discharge of the Obligations, no Guarantor shall demand or receive any collateral security, payment or distribution whatsoever (whether in cash, property or securities or otherwise) on account of any such right or claim, and no Guarantor shall exercise any right or remedy arising by reason of any performance by it of its guarantee, whether by subrogation or otherwise, against the Borrower or any other Guarantor of any of the Obligations or any security for any of the Obligations.  If any such payment or distribution is made or becomes available to any Guarantor in any bankruptcy case or receivership, insolvency or liquidation proceeding, such payment or distribution shall be delivered by the person making such payment or distribution directly to the Administrative Agent, for application to the payment of the Obligations.  If any such payment or distribution is received by any Guarantor, it shall be held by such Guarantor in trust, as trustee of an express trust for the benefit of the Secured Parties, and shall forthwith be transferred and delivered by such Guarantor to the Administrative Agent, in the exact form received and, if necessary, duly endorsed.

(e)The obligations of the Guarantors under the Loan Documents, including their liability for the Obligations and the enforceability of the security interests granted thereby, are not contingent upon the validity, legality, enforceability, collectability or sufficiency of any right of reimbursement, contribution or subrogation arising under this Section 2.2. To the fullest extent permitted under applicable law, the invalidity, insufficiency, unenforceability or uncollectability of any such right shall not in any respect diminish, affect or impair any such obligation or any other claim, interest, right or remedy at any time held by any Secured Party against any Guarantor or its property.  The Secured Parties make no representations or warranties in respect of any such right and shall, to the fullest extent permitted under applicable law, have no duty to assure, protect, enforce or ensure any such right or otherwise relating to any such right.

(f)Each Guarantor reserves any and all other rights of reimbursement, contribution or subrogation at any time available to it as against any other Guarantor, but (i) the exercise and enforcement

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of such rights shall be subject to this Section 2.2, and (ii) to the fullest extent permitted by applicable law, neither the Administrative Agent nor any other Secured Party shall ever have any duty or liability whatsoever in respect of any such right.

Amendments, Etc., With Respect to the Obligations

.  To the fullest extent permitted by applicable law, each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Obligations made by any Secured Party may be rescinded by such Secured Party and any of the Obligations continued, and the Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Secured Party, and the Credit Agreement and the other Loan Documents and any other documents executed and delivered in connection therewith may be amended, restated, amended and restated, modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the requisite Lenders) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by any Secured Party for the payment of the Obligations may be sold, exchanged, waived, surrendered or released.  No Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Obligations or for the guarantee contained in this Section 2 or any property subject thereto, except to the extent required by applicable law.  

Guarantee Absolute and Unconditional

.  To the fullest extent permitted by applicable law, each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Administrative Agent or any Lender upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2.  The Obligations, and each of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2.  All dealings between the Borrower and the other Guarantors, on the one hand, and the Secured Parties, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2.  To the fullest extent permitted by applicable law, each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrower or any of the other Guarantors with respect to the Obligations.  Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed, to the fullest extent permitted by applicable law, as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of the Credit Agreement or any other Loan Document, any of the Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Secured Party, (b) any defense, set-off or counterclaim (other than a defense that the Discharge of the Obligations has occurred) which may, at any time, be available to or be asserted by the Borrower or any other Person against any Secured Party, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Borrower or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for the Obligations or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance.  When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, any Secured Party may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against the Borrower, any other Guarantor or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by any Secured Party to make any such demand, to pursue such other rights or remedies or to collect any payments from the Borrower, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Borrower, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or

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affect the rights and remedies, whether express, implied or available as a matter of law, of any Secured Party against any Guarantor.  For the purposes hereof ”demand” shall include the commencement and continuance of any legal proceedings.

Reinstatement

.  The guarantee contained in this Section 2 shall be reinstated and shall remain in all respects enforceable to the extent that, at any time, any payment of any of the Obligations is set aside, avoided or rescinded or must otherwise be restored or returned by any Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any other Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any other Guarantor or any substantial part of its property, or otherwise, in whole or in part, and such reinstatement and enforceability shall, to the fullest extent permitted by applicable law, be effective as fully as if such payment had not been made.

Payments

.  Each Guarantor hereby agrees to pay all amounts payable by it under this Section 2 to the Administrative Agent without set-off or counterclaim in Dollars in immediately available funds at the Funding Office specified in the Credit Agreement.

Bankruptcy, Etc.

  (a)  To the fullest extent permitted by applicable law, the obligations of the Guarantors hereunder shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any case or proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of any Borrower or any Guarantor or by any defense which the Borrower or any Guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding.

(b)Each Guarantor acknowledges and agrees that any interest on any portion of the Obligations which accrues after the commencement of any case or proceeding referred to in clause (a) above (or, if interest on any portion of the Obligations ceases to accrue by operation of law by reason of the commencement of such case or proceeding, such interest as would have accrued on such portion of the Secured  Obligations if such case or proceeding had not been commenced) shall be included in the Obligations guaranteed hereby because it is the intention of the Guarantors and Secured Parties that the Obligations which are guaranteed by the Guarantors pursuant hereto should be determined without regard to any rule of law or order which may relieve the Borrower or any other Guarantor of any portion of such Obligations.  The Guarantors will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay the Administrative Agent, or allow the claim of the Administrative Agent in respect of, any such interest accruing after the date on which such case or proceeding is commenced.  

Keepwell

.  Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Loan Party to honor all of its obligations under this Agreement in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 2.8 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 2.8, or otherwise under this Section 2, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount).  The obligations of each Qualified ECP Guarantor under this Section shall remain in full force and effect until the Discharge of the Obligations.  Each Qualified ECP Guarantor intends that this Section 2.8 constitute, and this Section 2.8 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

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SECTION 3.  
GRANT OF SECURITY INTEREST

Each Grantor hereby grants to the Administrative Agent, for the benefit of the Secured Parties, a security interest in all of the following property now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “Collateral”), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of such Grantor’s Secured Obligations:

(a)all Accounts, including all Receivables;

(b)all Chattel Paper;

(c)all  Deposit Accounts;

(d)all Documents;

(e)all Equipment (whether or not constituting Fixtures);

(f)all General Intangibles;

(g)all Instruments, including Pledged Notes;

(h)all Intellectual Property;

(i)all Inventory;

(j)all Investment Property;

(k)all Letter-of-Credit Rights;

(l)all Money;

(m)all Commercial Tort Claims identified on Schedule 7;

(n)all Collateral Accounts;

(o)all Pledged Stock, Goods, insurance and other personal property not otherwise described above;

(p)all Supporting Obligations and products of any and all of the foregoing and all Guarantee Obligations, Liens and claims supporting, securing or in any respect relating to any of the foregoing;

(q)all books and records (regardless of medium) pertaining to any of the foregoing; and

(r)all Proceeds of any of the foregoing;

provided, that (i) this Agreement shall not constitute a grant of a security interest in, and the term “Collateral” shall not include, any property to the extent that and for as long as such grant of a security

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interest (A) is prohibited by any applicable law, (B) requires a filing with or consent from any entity or person pursuant to any applicable law that has not been made or obtained, (C) is in any asset which is subject to a certificate of title law, except to the extent perfection of a security interest therein can be accomplished solely by the filing of a financing statement in appropriate form in the applicable jurisdiction under the Uniform Commercial Code, (D) is in any lease, license or agreement, constitutes a breach or default under or results in the termination of, or requires any consent not obtained under such lease, license or agreement, except to the extent that such applicable provisions of any such lease, license or agreement is ineffective under applicable law or would be ineffective under Sections 9-406, 9-407, 9-408 or 9-409 of the New York UCC to prevent the attachment of the security interest granted hereunder, (E) is in Capital Stock which is specifically excluded from the definition of Pledged Stock by virtue of the proviso to such definition, (F) is in any Grantor’s right, title or interest in any applications for the registration for any Trademarks filed in the United States Patent and Trademark Office pursuant to 15 U.S.C. §1051 Section 1(b), unless and until acceptable evidence of use of the mark in interstate commerce is submitted to the United States Patent and Trademark Office pursuant to Section 1(c) or Section 1(d) of the Lanham Act (15 U.S.C. 1051, et seq.) to the extent, if any, that, and during the period, if any, in which granting a security interest in such Trademark application prior to such filing would adversely affect the enforceability or validity of such Trademark application or of any registration that issues therefrom, (G) is in leaseholds of real property, (H) is in assets subject to a Lien securing Capital Lease Obligations or purchase money debt obligations, in each case permitted under the Credit Agreement, if the contract or other agreement in which such Lien is granted prohibits the creation of any other Lien on such assets, (I) is in Excluded Accounts, (J) is in any Commercial Tort Claim that, in the reasonable determination of the Borrower, is not expected to result in a judgment in excess of $10,000,000 individually, (K) is in any Capital Stock of any Foreign Subsidiary that would reasonably be expected to (x) violate or conflict with any fiduciary duties of officers or directors of such Foreign Subsidiary or (y) result in a risk of personal or criminal liability of any officer or director of such Foreign Subsidiary and (L) is in intellectual property arising under any jurisdiction other than the United States, including all such foreign copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses and trade secrets (the foregoing clauses (A) through (L), collectively, shall be referred to hereafter as the “Excluded Collateral”); and (ii) the security interest granted hereby (A) shall attach at all times to all proceeds of such property to the extent such proceeds do not constitute property described in clause (i) above, (B) shall attach to such property immediately and automatically (without need for any further grant or act) at such time as the condition described in clause (i) ceases to exist, and (C) to the extent severable shall in any event attach to all rights in respect of such property that are not subject to the applicable condition described in clause (i).

SECTION 4.  
REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, and to induce the Qualified Counterparties to enter into Specified Cash Management Agreements and Specified Hedge Agreements, as applicable, each Grantor hereby represents and warrants to each Secured Party that:

Representations in Credit Agreement

.  In the case of each Grantor, the representations and warranties set forth in Section 5 of the Credit Agreement as they relate to such Grantor or to the Loan Documents to which such Grantor is a party, each of which is hereby incorporated herein by reference, are true and correct in all material respects, and each Agent and each Lender shall be entitled to rely on each of them as if they were fully set forth herein; provided that each reference in each such representation and warranty to the Borrower’s knowledge shall, for the purposes of this Section 4.1, be deemed to be a reference to such Grantor’s knowledge.

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Title; No Other Liens

.  Except for the security interest granted to the Administrative Agent for the benefit of the Secured Parties pursuant to this Agreement and the other Permitted Liens, such Grantor owns each item of Collateral granted by it free and clear of any and all Liens.  No effective financing statement, mortgage or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Administrative Agent, for the benefit of the Secured Parties, pursuant to this Agreement or any other Loan Document or in respect of Permitted Liens or for which termination statements will be delivered on the Closing Date.

Perfected First Priority Liens

.  

(a)Upon the completion of the filings and other actions specified on Schedule 4 (which, in the case of all filings and other documents referred to on said Schedule to the extent applicable, have been delivered to or prepared by the Administrative Agent in completed and, where required, duly executed form), the payment of all applicable fees, and the delivery to and continuing possession by the Administrative Agent of all Certificated Securities, all Instruments, all Tangible Chattel Paper and all Documents, in each case constituting Collateral, a security interest in which is perfected by possession (other than any Excluded Perfection Assets), the security interests granted in Section 3 will constitute valid perfected security interests in all of the Collateral (in which a security interest may be perfected by the filing of a financing statement under the Uniform Commercial Code or the filing of an Intellectual Property Security Agreement with the United States Patent and Trademark Office or the United States Copyright Office) in favor of the Administrative Agent, for the benefit of the Secured Parties, as collateral security for such Grantor’s Secured Obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons purporting to purchase any such Collateral from such Grantor other than Ordinary Course Transferees, except as (x) enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law) or by an implied covenant of good faith and fair dealing and (y) to the extent that the recording or an assignment or other transfer of title to the Administrative Agent or the recording of other applicable documents in the United States Patent and Trademark Office or the United States Copyright Office may be necessary for enforceability, and is and will be prior to all other Liens on such Collateral except for Permitted Liens.  Without limiting the foregoing and except as otherwise permitted or provided in Section 5 or with respect to any Excluded Perfection Assets or Excluded Collateral, each Grantor has taken all actions required hereunder to establish the Administrative Agent’s “control” (within the meanings of Sections 8-106 and 9-106 of the UCC) over any portion of the Investment Property constituting Certificated Securities or Uncertificated Securities.

(b)Each Grantor consents to the grant by each other Grantor of the security interests granted hereby and the transfer of any Pledged Stock or Investment Property to the Administrative Agent or its designee upon the occurrence and during the continuance of an Event of Default and to the substitution of the Administrative Agent or its designee or the purchaser upon any foreclosure sale as the holder and beneficial owner of the interest represented thereby, in each case, in accordance with this Agreement and the Credit Agreement.

Jurisdiction of Organization; Chief Executive Office

.  On the date hereof, such Grantor’s exact legal name, jurisdiction of organization, and the location of such Grantor’s chief executive office or sole place of business, as the case may be, are specified on Schedule 3.  On the date hereof, such Grantor is organized solely under the law of the jurisdiction so specified and has not filed any certificates of domestication, transfer or continuance in any other jurisdiction.  On the date hereof, except as specified on Schedule 3, such Grantor has not changed its name, jurisdiction of organization (or formation), chief executive office or sole place of business or its corporate or organizational form in any way (e.g., by merger, consolidation, change in corporate form, or otherwise) within the past five years and has not within

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the last five years become bound (whether as a result of merger or otherwise) as grantor under a security agreement entered into by another person, which (x) has not heretofore been terminated or released as grantor thereunder as of the Closing Date or (y) is in respect of a Lien that is not a Permitted Lien. Such Grantor has furnished to the Administrative Agent its Organizational Documents as in effect as of the Closing Date.

[Reserved]

.  

Farm Products

.  None of the Collateral constitutes, or is the Proceeds of, Farm Products.

Pledged Stock and Pledged Notes

.  

(a)The shares of Pledged Stock pledged by such Grantor hereunder constitute all the issued and outstanding shares of all classes of the Capital Stock of each Issuer owned by such Grantor other than any Capital Stock which is specifically excluded from the definition of Pledged Stock by virtue of the proviso to such definition.

(b)[Reserved.]

(c)To such Grantor’s knowledge, each of the Pledged Notes constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally and general equitable principles (whether considered in a proceeding in equity or at law).

(d)Such Grantor is the record and beneficial owner of, and has good and valid title to, the Pledged Stock and Pledged Notes pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except the security interest created by this Agreement and Permitted Liens.

(e)The Organizational Documents applicable to each interest in any domestic partnership or limited liability company included in the Collateral shall not expressly provide that they are securities governed by Article 8 of the Uniform Commercial Code and any such interests shall not be certificated; provided, that, if any such interests become certificated (other than any Excluded Perfection Assets), such Grantor will ensure that the Organizational Documents applicable to such interest shall expressly provide that they are securities governed by Article 8 of the Uniform Commercial Code and immediately deliver all such certificates, together with related transfer powers, indorsed in blank, to the Administrative Agent for continued possession.

Receivables and Chattel Paper

.  The names and due dates represented by such Grantor to the Administrative Agent or the other Secured Parties from time to time of such Grantor’s Receivables and Chattel Paper will at such time be correct in all material respects, and the amounts represented by such Grantor to the Administrative Agent or the other Secured Parties from time to time as owing to such Grantor in respect of such Grantor’s Receivables and Chattel Paper will at such time be the correct amount, in all material respects, actually owing thereunder, except to the extent that appropriate reserves therefor have been established on the books of such Grantor in accordance with GAAP.

Intellectual Property

.  

(a)When delivered to the Administrative Agent pursuant to Schedule 7.13 of the Credit Agreement (the “IP Schedule Delivery Date”), Schedule 6 shall list all issued Patents and pending

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patent applications, and all registrations and applications to register Trademarks and registered Copyrights owned by such Grantor in its own name on the date hereof.  Except as permitted to exist on such Grantor’s Collateral by the Credit Agreement, as of the IP Schedule Delivery Date, such Grantor is the exclusive owner of the entire right, title and interest in and to such applications, registrations and issuances free and clear of any and all Liens (except Permitted Liens).

(b)On the IP Schedule Delivery Date, all Intellectual Property of such Grantor described on Schedule 6 shall, except as indicated therein, to the knowledge of such Grantor be subsisting and unexpired, not abandoned and valid and enforceable.  Except as would not reasonably be expected to have a Material Adverse Effect, to the knowledge of such Grantor, neither the operation of such Grantor’s business as currently conducted nor the use of any Intellectual Property in connection therewith conflicts with, infringes, misappropriates, dilutes, misuses or otherwise violates the Intellectual Property rights of any other Person.

(c)Except as would not have a Material Adverse Effect, (i) none of the material Patents, Trademarks, Copyrights and Trade Secrets owned by any Grantor is the subject of any licensing or franchise agreement pursuant to which such Grantor is the licensor or franchisor which such licensing or franchise agreement materially restricts the use, exploitation or enforcement of such Intellectual Property by such Grantor and (ii) there are no other material agreements, obligations, orders or judgments to which such Grantor is subject which adversely affect the use of any Intellectual Property owned by such Grantor in any material respect.

(d)Such Grantor is not infringing, misappropriating, diluting or otherwise violating any Intellectual Property of any Person in a manner that would reasonably be expected to have a Material Adverse Effect, and there is currently no infringement or unauthorized use of any item of such Intellectual Property owned by such Grantor that, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

(e)No holding, decision or judgment has been rendered by any Governmental Authority which would limit or cancel or render invalid or unenforceable such Grantor’s rights in, any Patent, Trademark, Copyright or Trade Secret owned by such Grantor in any respect that would reasonably be expected to have a Material Adverse Effect.  Such Grantor is not aware of any uses of any material item of Intellectual Property owned by such Grantor that could reasonably be expected to lead to such item becoming invalid or unenforceable including uses which were not supported by the goodwill of the business connected with Trademarks and Trademark Licenses, which uses, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(f)No action or proceeding is pending, or, to the knowledge of such Grantor, threatened, on the date hereof seeking to limit or cancel or render invalid any material Patent, Trademark, Copyright or Trade Secret owned by such Grantor or such Grantor’s ownership interest therein, which, if adversely determined, would have a Material Adverse Effect.  Except as would not reasonably be expected to have a Material Adverse Effect, the consummation of the transactions contemplated by this Agreement will not result in the termination or impairment of any of the Intellectual Property owned or licensed by such Grantor.

(g)With respect to each Copyright License, Trademark License and Patent License, except as would not reasonably be expected to have a Material Adverse Effect:  (i) such license is valid and binding and in full force and effect and represents the entire agreement between the respective licensor and licensee with respect to the subject matter of such license; (ii) such Grantor has not received any notice of termination or cancellation under such license; (iii) such Grantor has not received any notice of a breach or default under such license, which breach or default has, to the extent any applicable grace period has ended,

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not been cured; and (iv) such Grantor is not in breach or default in any material respect, and no event has occurred that, with notice and/or lapse of time, would constitute such a breach or default or permit termination, modification or acceleration under such license.

(h)To the extent such Grantor has reasonably determined that it is commercially practicable and consistent with such Grantor’s past practices to do so, such Grantor has used proper statutory notice in connection with its use of each material Patent, Trademark and Copyright owned by such Grantor.

(i)Such Grantor has taken commercially reasonable steps to protect the confidentiality of its material Trade Secrets.

(j)As of the Closing Date, such Grantor has made all material filings and recordations and paid all fees necessary in its reasonable business judgment to adequately protect its interest in its material Patents, Trademarks and Copyrights owned by such Grantor.

SECTION 5.  
COVENANTS

Each Grantor covenants and agrees with the Administrative Agent and Lenders that, from and after the date of this Agreement until the Collateral is released pursuant to Section 8.15(a):

Covenants in Credit Agreement

.  Such Grantor shall comply with the covenants set forth in Sections 7 and 8 of the Credit Agreement as they relate to such Grantor or to the Loan Documents to which such Grantor is a party.

Delivery of Instruments, Certificated Securities, Chattel Paper, Negotiable Documents, Investment Property and Letter-of-Credit Rights

.  

(a)If any of the Collateral of such Grantor is or shall become evidenced or represented by any Instrument, Negotiable Document or Tangible Chattel Paper with a value reasonably determined by such Grantor to be in excess of $10,000,000 individually, upon the request of the Administrative Agent and to the extent not constituting Excluded Perfection Assets, such Instrument, Negotiable Documents or Tangible Chattel Paper shall be promptly delivered to the Administrative Agent, duly indorsed in a manner reasonably satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement.

(b)[Reserved].

(c)If any of the Collateral of such Grantor is or shall become evidenced or represented by an Uncertificated Security with a value reasonably determined by such Grantor to be in excess of $10,000,000 individually, such Grantor shall promptly notify the Administrative Agent thereof in writing and, upon the request of the Administrative Agent, such Grantor shall cause the issuer thereof either (i) to register the Administrative Agent as the registered owner of such Uncertificated Security, upon original issue or registration of transfer or (ii) to promptly (but in any event within sixty (60) days of such request or such later date to which the Administrative Agent may consent in writing in its sole discretion) agree in writing with such Grantor and the Administrative Agent that such Issuer will comply with instructions with respect to such Uncertificated Security originated by the Administrative Agent without further consent of such Grantor, such agreement to be in form and substance reasonably satisfactory to the Administrative Agent.

(d)[Reserved].

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(e)If any of the Collateral of such Grantor is or shall become a Certificated Security (other than any Capital Stock which is specifically excluded from the definition of Pledged Stock by virtue of the proviso to such definition, any promissory note that does not qualify as a Pledged Note pursuant to the definition thereof and any Excluded Perfection Asset), such Certificated Security shall be promptly (but in any event within thirty (30) days or such other time period as the Administrative Agent may consent to in writing in its sole discretion) delivered to the Administrative Agent, duly indorsed in a manner reasonably satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement.

Maintenance of Insurance

.  

(a)Such Grantor will maintain, with reputable companies, insurance policies insuring all of its property against loss by fire, explosion, theft or other risks as may be required by the Credit Agreement.

(b)All such insurance shall (i) provide that no cancellation, material reduction in amount or material change in coverage (other than materially proportionate reductions in amounts or coverage to reflect any disposition of property by such Grantor) thereof shall be effective until at least thirty (30) days (or ten (10) days in the event of nonpayment of premiums), or such earlier time with the written consent of the Administrative Agent, after receipt by the Administrative Agent of written notice thereof and (ii) name the Administrative Agent as loss payee in respect of all such property insurance policies and as additional insured under all such liability insurance policies. All proceeds of business and interruption insurance received by the Administrative Agent shall be released by the Administrative Agent to the Borrower for account of the Grantor entitled thereto.

Maintenance of Perfected Security Interest; Further Documentation

.  

(a)Such Grantor shall maintain the security interest created by this Agreement in such Grantor’s Collateral as a security interest having the perfection and priority described in Section 4.3 and shall defend such security interest against all material claims and demands of all Persons whomsoever, subject to the rights of such Grantor under the Loan Documents to dispose of the Collateral.

(b)Subject to Section 7.9(f) of the Credit Agreement, at any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of such Grantor, such Grantor will promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purpose of creating, perfecting, ensuring the priority of, protecting or enforcing the Administrative Agent’s security interest in the Collateral or otherwise conferring or preserving the full benefits of this Agreement and of the interests, rights and powers herein granted.

Changes in Locations, Names, etc.

. Each Grantor will furnish to the Administrative Agent promptly (and in any event no later than sixty (60) days following such change (or such longer period as the Administrative Agent may agree in its sole discretion)) a written notice of any change (i) in its legal name and (ii) in its jurisdiction of organization (or formation) or the location of its chief executive office or sole place of business from that set forth in Schedule 3. Subject to Section 7.9(f) of the Credit Agreement, each Grantor agrees promptly to provide the Administrative Agent with all additional financing statements and other documents (executed where appropriate) reasonably requested by the Administrative Agent to maintain the validity, perfection and priority of the security interests provided for herein.

[Reserved]

.

Investment Property

.

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(a)If such Grantor shall become entitled to receive or shall receive any stock certificate (including any certificate representing a stock dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights in respect of the Capital Stock of any Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares of the Pledged Stock, to the extent constituting Collateral, or otherwise in respect thereof, such Grantor shall accept the same as the agent of the Secured Parties, hold the same in trust for the Secured Parties and deliver the same forthwith (to the extent not constituting Excluded Perfection Assets) to the Administrative Agent in the exact form received, duly indorsed by such Grantor to the Administrative Agent, if required, together with an undated stock power or equivalents covering such certificate duly executed in blank by such Grantor, to be held by the Administrative Agent, subject to the terms hereof, as additional collateral security for the Secured Obligations. Upon the occurrence and during the continuance of an Event of Default under the Credit Agreement, any sums paid upon or in respect of the Investment Property, to the extent constituting Collateral, upon the liquidation or dissolution of any Issuer shall be paid over to the Administrative Agent (unless otherwise agreed in the Credit Agreement) to be held by it hereunder as additional collateral security for the Secured Obligations, and in case any distribution of capital shall be made on or in respect of the Investment Property, to the extent constituting Collateral, or any property shall be distributed upon or with respect to the Investment Property pursuant to the recapitalization or reclassification of the capital of any Issuer or pursuant to the reorganization thereof, the property so distributed shall, unless otherwise subject to a perfected security interest in favor of the Administrative Agent, be delivered to the Administrative Agent to be held by it hereunder as additional collateral security for the Secured Obligations.  If any sums of money or property so paid or distributed in respect of the Investment Property pursuant to the immediately preceding sentence, to the extent constituting Collateral, shall be received by such Grantor, such Grantor shall, until such money or property is paid or delivered to the Administrative Agent and unless otherwise permitted under the Credit Agreement, hold such money or property in trust for the Secured Parties, segregated from other funds of such Grantor, as additional collateral security for the Secured Obligations.

(b)[Reserved].

(c)In the case of each Grantor which is an Issuer, such Grantor agrees that (i) it will be bound by the terms of this Agreement relating to the Investment Property, to the extent constituting Collateral, issued by it and will comply with such terms insofar as such terms are applicable to it, (ii) it will notify the Administrative Agent promptly in writing of the occurrence of any of the events described in Section 5.7(a) with respect to the Investment Property, to the extent constituting Collateral, issued by it, and (iii) it will take all actions required or reasonably requested by the Administrative Agent to enable or permit each Grantor to comply with Sections 6.3(c) as to all Investment Property, to the extent constituting Collateral, issued by it.

Receivables

.  Other than in the ordinary course of business or as permitted by the Loan Documents, after the occurrence and during the continuance of an Event of Default under the Credit Agreement, such Grantor will not (i) grant any extension of the time of payment of any Receivable constituting Collateral, (ii) compromise or settle any Receivable constituting Collateral, for less than the full amount thereof, (iii) release, wholly or partially, any Person liable for the payment of any Receivable constituting Collateral, (iv) allow any credit or discount whatsoever on any Receivable constituting Collateral, or (v) amend, supplement or modify any Receivable in any manner that would materially adversely affect the value of the Receivables constituting Collateral taken as a whole.

Intellectual Property

.  

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(a)Except as permitted in the Credit Agreement or this Agreement and in each case to the extent constituting Collateral:  

(i)With respect to each material Trademark owned by such Grantor, such Grantor (either itself or through licensees) will take all reasonably necessary steps to (i) continue to use such Trademark consistent with its current use of such Trademark or as otherwise determined by such Grantor, in its reasonable business judgment, in connection with such Grantor’s businesses or goods and services offered by such Grantor, in order to maintain such Trademark in full force free from any valid claim of abandonment for non-use, (ii) maintain the quality of products and services offered under such Trademark and take all reasonably necessary steps to ensure that all licensed users of such Trademark maintain such quality in all material respects, and (iii) not (and not permit any licensee or sub-licensee thereof to) do any act or knowingly omit to do any act whereby such Trademark may become invalidated or impaired in any way or forfeited, abandoned or dedicated to the public, except in the ordinary course of business consistent with such Grantor’s past conduct and pursuant to the exercise of its reasonable business judgment.

(ii)Such Grantor (either itself or through licensees) will not forfeit, abandon or dedicate to the public any material Patent, except in the ordinary course of business consistent with such Grantor’s past conduct and pursuant to the exercise of its reasonable business judgment.

(iii)Such Grantor (either itself or through licensees) will not (and will not permit any licensee or sub-licensee thereof to) by any act or omission, forfeit, abandon, or dedicate to the public any material Copyright owned by such Grantor, except in the ordinary course of business, consistent with such Grantor’s past conduct and pursuant to the exercise of its reasonable business judgment.

(iv)Such Grantor (either itself or through licensees) will not do any act to knowingly infringe the intellectual property rights of any other Person in any material respect.

(v)[Reserved].

(vi)Except as would not have a Material Adverse Effect, such Grantor will notify the Administrative Agent promptly if it knows or has reason to believe that any application or registration relating to any Patent, Trademark or Copyright of such Grantor has been or may imminently become forfeited, abandoned or dedicated to the public, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office) regarding such Grantor’s ownership of, or the validity or enforceability of, any Patent, Trademark or Copyright owned by such Grantor or such Grantor’s right to register the same or to own and maintain the same.

(vii)Such Grantor will continue to take reasonable and customary steps, including in any proceeding before the United States Patent and Trademark Office or the United States Copyright Office, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of the material Patents, Trademarks and Copyrights owned by such Grantor, including the payment of required fees and taxes, the filing of responses to office actions issued by the United States Patent and Trademark Office and the United States Copyright Office, the filing of applications for renewal or extension, the filing of affidavits of use and affidavits of incontestability, the filing of divisional, continuation, continuation-in-part, reissue, and renewal applications or extensions, the payment of maintenance fees, and the

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participation in interference, reexamination, opposition, cancellation, infringement and misappropriation proceedings.

(viii)[Reserved].

(ix)In the event that any material Intellectual Property is infringed, misappropriated, diluted or otherwise violated by a third party, such Grantor shall (i) take such actions as such Grantor shall reasonably deem appropriate under the circumstances to protect such Intellectual Property, and (ii) if such Intellectual Property is of material economic value and necessary to the conduct of the Grantors’ business, taken as a whole, promptly notify the Administrative Agent after it learns thereof and, following consultation with the Administrative Agent, shall take such actions as such Grantor shall reasonably deem appropriate under the circumstances to protect such Intellectual Property, which may include suing for infringement, misappropriation or dilution, seeking injunctive relief where appropriate and seeking to recover any and all damages for such infringement, misappropriation or dilution.

(x)Such Grantor shall take all actions as such Grantor shall reasonably deem appropriate under the circumstances to protect the secrecy of all material Trade Secrets of such Grantor.

(b)After the date hereof, whenever such Grantor (i) shall acquire any material Patent, Trademark or Copyright registered with, issued by or applied for with the United States Patent and Trademark Office or the United States Copyright Office (other than any of the foregoing that are excluded from the Collateral pursuant to Section 3), (ii) either by itself or through any agent, employee, licensee or designee, shall file an application for the registration of any material Patent, Trademark or Copyright owned by such Grantor with the United States Patent and Trademark Office or the United States Copyright Office (other than any of the foregoing that are excluded from the Collateral pursuant to Section 3), or (iii) shall file a statement of use or an amendment to allege use in the United States Patent and Trademark Office with respect to any material “intent to use” Trademark application (other than any of the foregoing that are excluded from the Collateral pursuant to Section 3), such Grantor shall report such acquisition or filing to the Administrative Agent at the same time it delivers the financial statements required under Section 7.1(a)(i) of the Credit Agreement.  Such Grantor agrees that the provisions of Section 3 shall automatically apply to such material Intellectual Property.

(c)Such Grantor agrees (i) to execute an Intellectual Property Security Agreement with respect to its applicable Intellectual Property (other than any Excluded Collateral) in substantially the form of Annex II in order to record the security interest granted herein to the Administrative Agent for the benefit of the Secured Parties with the United States Patent and Trademark Office or the United States Copyright Office, and (ii) to provide to the Administrative Agent at the same time it delivers the financial statements required under Section 7.1(a)(i) of the Credit Agreement with respect to any Intellectual Property described in Section 5.9(b) which was acquired, or for which a filing was made during the preceding fiscal year, all documents necessary to record the security interest of the Administrative Agent in such Intellectual Property with such offices.

(d)Solely for the purpose of enabling the Administrative Agent to exercise the rights and remedies under this Agreement at such time as the Administrative Agent shall be lawfully entitled to exercise such rights and remedies pursuant to the terms of this Agreement, each Grantor hereby (i) grants to the Administrative Agent, for the benefit of the Administrative Agent and the Secured Parties, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to any Grantor) to, upon the occurrence and during the continuance of an Event of Default, use, license or sublicense any Intellectual Property rights now owned or hereafter acquired by each Grantor, to the extent

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constituting Collateral, wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof, and (ii) irrevocably agrees that the Administrative Agent may, upon the occurrence and during the continuance of an Event of Default, sell any of each Grantor’s Inventory, to the extent constituting Collateral, directly to any Person, including, without limitation, Persons who have previously purchased each Grantor’s Inventory from any Grantor and in connection with any such sale or other enforcement of the Administrative Agent’s rights under this Agreement, may sell Inventory which bears any Trademark owned by or licensed to any Grantor and any Inventory that is covered by any Copyright owned by or licensed to any Grantor and the Administrative Agent may finish any work in process and affix any Trademark owned by or licensed to any Grantor and sell such Inventory as provided herein, subject, in the case of Trademarks, to sufficient rights to quality control and inspection in favor of such Grantor to avoid the risk of invalidation and maintain the enforceability of such Trademarks; provided that (x) such license shall be subject to the rights of any licensee under any exclusive license granted prior to such Event of Default, to the extent such license is a Permitted Lien, and (y) to the extent the foregoing license is a sublicense of Grantor’s rights as licensee under any third party license, the license to Administrative Agent shall be in accordance with any limitations in such third party license including prohibitions on sublicensing.

SECTION 6.  
REMEDIAL PROVISIONS

Certain Matters Relating to Receivables

.  

(a)The Administrative Agent shall have the right, at reasonable times during normal business hours and upon reasonable prior notice (but not more than once annually if no Event of Default shall exist and be continuing), at its own cost and expense except during the occurrence and continuance of an Event of Default (in which case, such testing shall be at the sole cost and expense of the Borrower), to make test verifications of the Receivables in accordance with Section 6.2, and each Grantor shall furnish all such assistance and information as the Administrative Agent may reasonably require in connection with such test verifications.

(b)The Administrative Agent hereby authorizes each Grantor to collect such Grantor’s Receivables constituting Collateral, and the Administrative Agent may curtail or terminate said authority at any time after the occurrence and during the continuance of an Event of Default. If required by the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, any payments of Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any event, within five (5) Business Days of receipt by such Grantor) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Administrative Agent if required, in a Collateral Account maintained under the sole dominion and control of the Administrative Agent, subject to withdrawal by the Administrative Agent for the account of the Secured Parties only as provided in Section 6.5, and (ii) until so turned over, shall be held by such Grantor in trust for the Administrative Agent and the Secured Parties, segregated from other funds of such Grantor.  If so requested by the Administrative Agent at any time after the occurrence and during the continuation of an Event of Default, each such deposit of Proceeds of Receivables shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit.

(c)At the Administrative Agent’s reasonable request at any time after the occurrence and during the continuation of an Event of Default, each Grantor shall deliver to the Administrative Agent all original (if available) and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Receivables constituting Collateral, including all original (if available) orders, invoices and shipping receipts.

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Communications with Obligors; Grantors Remain Liable

.  

(a)The Administrative Agent in its own name or in the name of others may at any time after the occurrence and during the continuance of an Event of Default communicate with obligors under the Receivables constituting Collateral to verify with them to the Administrative Agent’s satisfaction the existence, amount and terms of any Receivables constituting Collateral after giving reasonable prior notice to the Borrower and any other relevant Grantor.

(b)At any time after the occurrence and during the continuance of an Event of Default, the Administrative Agent may (and each Grantor at the reasonable request of the Administrative Agent shall) notify obligors on the Receivables constituting Collateral that the Receivables have been assigned to the Administrative Agent for the benefit of the Secured Parties and that payments in respect thereof shall be made directly to the Administrative Agent.

(c)Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of such Grantor’s Receivables constituting Collateral to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto.  No Secured Party shall have any obligation or liability under any Receivable (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by any Secured Party of any payment relating thereto, nor shall any Secured Party be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Receivable (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

Investment Property

.  

(a)Unless an Event of Default has occurred and is continuing and the Administrative Agent has given notice to the relevant Grantor of the Administrative Agent’s intent to exercise its rights pursuant to Section 6.3(b), each Grantor shall be entitled to receive all cash dividends paid in respect of the Pledged Stock and all payments made in respect of the Pledged Notes, in each case to the extent permitted in the Credit Agreement, and may exercise all voting and corporate or other organizational rights with respect to Investment Property; provided, that no vote shall be cast or corporate or other organizational right exercised or other action taken (other than in connection with a transaction permitted by the Credit Agreement) which would result in any violation of any provision of any Loan Document.

(b)If an Event of Default shall occur and be continuing and the Administrative Agent shall give prior written notice of its intent to exercise such rights to the relevant Grantor or Grantors, (i) the Administrative Agent shall have the right to receive any and all cash dividends, payments or other Proceeds paid in respect of the Investment Property constituting Collateral and make application thereof to the Secured Obligations in accordance with Section 6.5, and (ii) any or all of the Investment Property constituting Collateral shall be registered in the name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee may thereafter exercise (A) all voting, corporate and other rights pertaining to such Investment Property at any meeting of shareholders of the relevant Issuer or Issuers or otherwise, and (B) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Investment Property as if it were the absolute owner thereof (including the right to exchange at its discretion any and all of the Investment Property upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate or other organizational structure of any Issuer, or upon the exercise by any Grantor or the Administrative Agent of any right, privilege or option pertaining to such Investment Property, and in connection therewith, the right

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to deposit and deliver any and all of the Investment Property with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Administrative Agent may reasonably determine), all without liability except to account for property actually received by it, but the Administrative Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing.

(c)Each Grantor hereby authorizes and instructs each Issuer of any Investment Property pledged by such Grantor hereunder to (i) comply with any instruction received by it from the Administrative Agent in writing that (A) states that an Event of Default has occurred and is continuing and (B) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so complying, and (ii) after receipt by an Issuer or obligor of any instructions pursuant to Section 6.3(c)(i) hereof, pay any dividends or other payments with respect to the Investment Property directly to the Administrative Agent.

Proceeds to be Turned Over to Administrative Agent

.  In addition to the rights of the Administrative Agent and the Secured Parties specified in Section 6.1 hereof with respect to payments of Receivables, if an Event of Default under Sections 9(a), 9(f)(i) or 9(f)(ii) of the Credit Agreement shall occur and be continuing or an exercise of remedies by the Administrative Agent or the Lenders with respect to any existing Event of Default shall occur and the Administrative Agent has instructed any Grantor to do so, all Proceeds received by such Grantor consisting of cash, checks and other near-cash items shall be held by such Grantor in trust for the Administrative Agent and the Secured Parties, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to the Administrative Agent in the exact form received by such Grantor (duly indorsed by such Grantor to the Administrative Agent, if required).  All Proceeds received by the Administrative Agent hereunder shall be held by the Administrative Agent in a Collateral Account maintained under its sole dominion and control.  All Proceeds while held by the Administrative Agent in a Collateral Account (or by such Grantor in trust for the Administrative Agent and the Secured Parties) shall continue to be held as collateral security for all the Secured Obligations and shall be immediately applied as provided in Section 6.5.

Application of Proceeds

.  (a) Subject to Section 6.5(b) below, all cash proceeds received by the Administrative Agent during the continuance of an Event of Default from the enforcement of the Guarantees in Section 2 or as proceeds of Collateral from the exercise of any of the remedies set forth or referred to in Section 6.6 or elsewhere in this Agreement shall be immediately applied, unless otherwise required by the Credit Agreement as follows:

First, (i) to the Administrative Agent to pay incurred and unpaid fees and expenses under the Loan Documents, and (ii) to the Qualified Counterparties to pay incurred and unpaid fees and expenses under the Specified Hedge Agreements and Specified Cash Management Agreements, and, if the amount of such Collateral and/or Proceeds are insufficient to pay the amounts in clauses (i) and (ii) in full, such Collateral and/or Proceeds shall be allocated between the Administrative Agent on the one hand and each of the Qualified Counterparties on the other hand pro rata according to the amounts of the incurred and unpaid fees and expenses owing to the Administrative Agent and the other Secured Parties represented by the Administrative Agent on the one hand and the amounts of the incurred and unpaid fees and expenses owing to each Qualified Counterparty on the other hand;

Second, (i) to the Administrative Agent in respect of Credit Agreement Obligations then due and owing and remaining unpaid for application by the Administrative Agent in accordance with the terms of the Credit Agreement, and (ii) to the Qualified Counterparties in respect of amounts then due and owing and remaining unpaid in respect of  the Specified Hedge Agreements and Specified Cash Management Agreements, including the guaranty thereof pursuant to Section 2 hereof, for application by the Qualified Counterparties in accordance with the terms of their respective

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Specified Hedge Agreements and Specified Cash Management Agreements, and, if the amount of such Collateral and/or Proceeds are insufficient to pay the amounts in clauses (i) and (ii) in full, such Collateral and/or Proceeds shall be allocated between the Administrative Agent on the one hand and each of the Qualified Counterparties on the other hand pro rata according to the amounts of such Secured Obligations owing to the Administrative Agent and the other Secured Parties represented by the Administrative Agent on the one hand and the amounts of such Secured Obligations owing to each Qualified Counterparty on the other hand;

Third, (i) to the Administrative Agent in respect of all Credit Agreement Obligations (other than those under clause second above) for prepayment of such Credit Agreement Obligations in accordance with the terms of the Credit Agreement, and (ii) to the Qualified Counterparties in respect of all Secured Obligations under the Specified Hedge Agreements and Specified Cash Management Agreements, including the guaranty thereof pursuant to Section 2 hereof  (other than those under clause second above) for prepayment of such Secured Obligations in accordance with their respective Specified Hedge Agreements and Specified Cash Management Agreements, and, if the amount of such Collateral and/or Proceeds are insufficient to pay the amounts in clauses (i) and (ii) in full, such Collateral and/or Proceeds shall be allocated between the Administrative Agent on the one hand and each of the Qualified Counterparties on the other hand pro rata according to the amounts of such obligations owing to the Administrative Agent and the other Secured Parties represented by the Administrative Agent on the one hand and the amounts of such obligations owing to each Qualified Counterparty on the other hand.  For purposes of making any such allocation in respect of any Specified Hedge Agreement that has not then terminated, the obligations in respect of such Specified Hedge Agreement shall be calculated as if such Specified Hedge Agreement had terminated on such day with the Qualified Counterparty as the non-defaulting party thereunder; and

Fourth, any balance of such Proceeds remaining after a Discharge of the Obligations shall be paid over to the Borrower or to whomsoever may be lawfully entitled to receive the same and any Collateral remaining after a Discharge of the Obligations shall be returned to the applicable Grantor or to whomsoever may be lawfully entitled to receive the same.

Any cash proceeds not applied shall be held by the Administrative Agent as Collateral.

In addition, with respect to any proceeds of insurance received by the Administrative Agent, (x) if no Event of Default shall have occurred and be continuing, (i) such insurance proceeds shall be returned to the Grantors unless otherwise provided in Credit Agreement, and (y) if an Event of Default shall have occurred and be continuing, then such Insurance Proceeds shall be applied in accordance with this Section 6.5(a).

(b)

Notwithstanding the foregoing, with respect to any Letters of Credit issued by an Issuing Lender, if such Issuing Lender, or the Administrative Agent on behalf of such Issuing Lender, shall have received any Collateral to “cash collateralize” any such Letter of Credit, all such Collateral shall first be applied to satisfy any reimbursement obligations and other obligations owing to the Issuing Lender in respect of such Letter of Credit before it may be applied as set forth in Section 6.5(a).  

(c)

For purposes of this Section 6.5, the Administrative Agent may rely conclusively, and without further inquiry, on its own records as to the amount of the Secured Obligations outstanding to each Secured Party and may suspend payments or seek relief in the form of interpleader or other similar relief as it may determine to be appropriate.  

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Code and Other Remedies

.  If an Event of Default shall occur and be continuing, the Administrative Agent may exercise in addition to all other rights and remedies granted to it in this Agreement and in any other Loan Document, all rights and remedies of a secured party under the New York UCC or any other applicable law or in equity.  Without limiting the generality of the foregoing, to the fullest extent permitted by applicable law, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, license, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Administrative Agent or any Lender or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk.  The Administrative Agent or any Lender shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Grantor, which right or equity is hereby waived and released.  Each Grantor further agrees, at the Administrative Agent’s request, to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at such Grantor’s premises or elsewhere.  The Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this Section 6.6, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Administrative Agent and the Lenders hereunder, including reasonable and documented attorneys’ fees and disbursements, to the payment in whole or in part of the Obligations, in such order as may be required by the Credit Agreement and otherwise as required by Section 6.5 above, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including Section 9-615(a)(3) of the New York UCC, need the Administrative Agent account for the surplus, if any, to any Grantor.  To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against any Secured Party arising out of the exercise of any rights hereunder other than any such claims, damages and demands resulting from the gross negligence, bad faith or willful misconduct of such Secured Party as determined in a final, non-appealable judgment of a court of competent jurisdiction.  If any notice of a proposed sale or other disposition of Collateral is required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition.  The Administrative Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given.  The Administrative Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. At any public (or, to the extent permitted by law, private) sale made pursuant to this Section 6.6, any Secured Party may bid for or purchase for cash, free (to the extent permitted by applicable law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all such rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and may (subject to the Administrative Agent’s consent) make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor.  The Administrative Agent may sell the Collateral without giving any warranties as to the Collateral.  The Administrative Agent may specifically disclaim or modify any warranties of title or the like.  This procedure will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

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[Reserved].

  

Deficiency

.  Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Obligations and the reasonable and documented fees and disbursements of any attorneys employed by the Administrative Agent or any Lender to collect such deficiency.

SECTION 7.  
THE ADMINISTRATIVE AGENT

Administrative Agent’s Appointment as Attorney-in-Fact, etc.

.  

(a)Each Grantor hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be reasonably necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Administrative Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following:

(i)in the name of such Grantor or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Receivable constituting Collateral of such Grantor or with respect to any other Collateral of such Grantor and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due under any Receivable constituting Collateral of such Grantor or with respect to any other Collateral of such Grantor whenever payable;

(ii)in the case of any Intellectual Property constituting Collateral, execute and deliver, and have recorded, any and all agreements, instruments, documents and papers as the Administrative Agent may reasonably request to evidence the Secured Parties’ security interest in such Intellectual Property and the goodwill and general intangibles of such Grantor relating thereto or represented thereby;

(iii)pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof;

(iv)execute, in connection with any sale provided for in Section 6.6, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and

(v) (A) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (B) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral of such Grantor; (C) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of

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the Collateral of such Grantor; (D) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral of such Grantor; (E) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (F) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Administrative Agent may deem appropriate; (G) subject to any permitted licenses and reserved rights permitted under the Loan Documents, assign any Copyright, Patent or Trademark constituting Collateral (along with the goodwill of the business to which any such Copyright, Patent or Trademark pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (H) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral of such Grantor as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent’s option and such Grantor’s expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral of such Grantor and the Secured Parties’ security interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.

The Administrative Agent agrees that it will not exercise any rights under the power of attorney provided for in this Section 7.1(a) unless an Event of Default has occurred and is continuing.

(b)If any Grantor fails to perform or comply with any of its agreements contained herein, the Administrative Agent, at its option, but without any obligation so to do, may perform or comply with, or cause performance or compliance with, such agreement.

(c)[Reserved].

(d)Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof.  All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable as to each Grantor until all security interests created hereby with respect to the Collateral of such Grantor are released.

Duty of Administrative Agent

.  The Administrative Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar property for its own account.  Neither the Administrative Agent, any Secured Party nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof.  The powers conferred on the Secured Parties hereunder are solely to protect the Secured Parties’ interests in the Collateral and shall not impose any duty upon any Secured Parties to exercise any such powers.  The Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except, in the case of the Administrative Agent only to the extent resulting from its own gross negligence, bad faith or willful misconduct as determined in a final, non-appealable judgment of a court of competent jurisdiction, to the extent required by applicable law (subject to Section 11.12(e) of the Credit Agreement and other applicable provisions of the Loan Documents).

Financing Statements

.  Each Grantor hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing statements, or any similar document in

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any jurisdictions and with any filing offices as the Administrative Agent may determine, in its reasonable discretion, are necessary or advisable to perfect or otherwise protect the security interest granted to the Administrative Agent herein.   Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner as the Administrative Agent may determine, in its sole discretion, is necessary, advisable or prudent to ensure the perfection of the security interest in the Collateral granted to the Administrative Agent herein, including describing such property as “all assets” or “all personal property” or words of similar import and may (but need not) add thereto “whether now owned or hereafter acquired.”

Authority, Immunities and Indemnities of Administrative Agent

.  Each Grantor acknowledges, and, by acceptance of the benefits hereof, each Secured Party agrees, that the rights and responsibilities of the Administrative Agent under this Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as among the Secured Parties, be governed by the Credit Agreement and that the Administrative Agent shall have, in respect thereof, all rights, remedies, immunities and indemnities granted to it in the Credit Agreement.  By acceptance of the benefits hereof, each Secured Party that is not a Lender agrees to be bound by the provisions of the Credit Agreement applicable to the Administrative Agent, including Article X thereof, as fully as if such Secured Party were a Lender.  The Administrative Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority.

SECTION 8.  
MISCELLANEOUS

Amendments in Writing

.  None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 11.1 of the Credit Agreement.

Notices

.  All notices, requests and demands to or upon the Administrative Agent or any Grantor hereunder shall be effected in the manner provided for in Section 11.2 of the Credit Agreement; provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 1 or to such other address as such Guarantor may notify the Administrative Agent from time to time in writing.

No Waiver by Course of Conduct; Cumulative Remedies

.  No Secured Party shall by any act (except by a written instrument pursuant to Section 8.1 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default.  No failure to exercise, nor any delay in exercising, on the part of any Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by any Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which such Secured Party would otherwise have on any future occasion.  The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

Enforcement Expenses; Indemnification

.  

(a)Each Guarantor agrees to pay any and all reasonable and documented out-of-pocket expenses (including all reasonable and documented fees and disbursements of counsel) that

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may be paid or incurred by any Secured Party in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Agreement and the other Loan Documents to which such Guarantor is a party, subject to the terms of, and limitations on, reimbursement of costs and expenses set forth in Section 11.5 of the Credit Agreement.

(b)Each Guarantor agrees to pay, and to save the Secured Parties harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement to the extent such Guarantor would be required to do so pursuant to Section 4.10 of the Credit Agreement.

(c)Each Guarantor agrees to pay, and to save the Secured Parties harmless from, any and all liabilities, obligations, losses (other than lost profits), damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement on the terms set forth in Section 11.5 of the Credit Agreement; provided, that each such Guarantor shall have no obligations hereunder to any Secured Party with respect to such liabilities, obligations, losses (other than lost profits), damages, penalties, actions, judgments or suits to the extent they are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from (x) the gross negligence, bad faith or willful misconduct of such Secured Party or any of its Related Persons, (y) a material breach by such Secured Party or its Related Persons of its express and material contractual obligations under this Agreement or the Loan Documents pursuant to a claim made by any Guarantor or (z) disputes between and among the Secured Parties or their Related Persons (other than disputes involving the Administrative Agent or the Other Representatives in their respective capacities as such) other than any dispute related to any act or omission by any Guarantor.

(d)The agreements in this Section 8.4 shall survive repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Loan Documents.

Successors and Assigns

.  This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of the Secured Parties and their successors and assigns; provided that other than in connection with a transaction permitted under the Credit Agreement, no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent and, unless so consented to, each such assignment, transfer or delegation by any Grantor shall be void.

Set-Off

.  Each Grantor hereby irrevocably authorizes the Administrative Agent and each Lender at any time and from time to time while an Event of Default shall have occurred and be continuing, without notice to such Grantor or any other Grantor, any such notice being expressly waived by each Grantor, to set-off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Administrative Agent or such Lender to or for the credit or the account of such Grantor, or any part thereof in such amounts as the Administrative Agent or such Lender may elect, against and on account of the obligations and liabilities of such Grantor to the Administrative Agent or such Lender hereunder and claims of every nature and description of the Administrative Agent or such Lender against such Grantor, in any currency, whether arising hereunder, under the Credit Agreement or any other Loan Document, as the Administrative Agent or such Lender may elect, whether or not the Administrative Agent or any Lender has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. The Administrative Agent or each Lender shall notify such Grantor promptly of any such set-off and the application made by the Administrative Agent or such Lender of the proceeds thereof; provided that the failure to give such notice shall not affect the validity of such set-off and application. The

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rights of the Administrative Agent and each Lender under this Section 8.6 are in addition to other rights and remedies (including other rights of set-off) which the Administrative Agent or such Lender may have.

Counterparts

.  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by fax or electronic transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

Severability

.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section Headings

.  The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

Integration

.  This Agreement and the other Loan Documents represent the agreement of the Grantors and the Secured Parties with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by any Secured Party relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Loan Documents.

GOVERNING LAW

.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Submission To Jurisdiction; Waivers

.  

(a)Each Grantor hereby irrevocably and unconditionally submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the exclusive jurisdiction of the courts of the State of New York, the courts of the United States for the Southern District of New York, and appellate courts from any thereof;

(b)each Grantor hereby irrevocably and unconditionally consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

(c)each party hereto agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address set forth in Section 8.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;

(d)each party hereto agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

(e)each party hereto waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section 8.12 any special, exemplary, punitive or consequential damages.

Acknowledgements

.  Each Grantor hereby acknowledges that:

30

 


 

(a)it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents to which it is a party;

(b)no Secured Party has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Grantors, on the one hand, and the Secured Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

(c)no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Secured Parties or among the Grantors and the Secured Parties.

Additional Grantors

.  Each Restricted Subsidiary of the Borrower that is required to become a party to this Agreement pursuant to Section 7.9 of the Credit Agreement shall become a Grantor for all purposes of this Agreement upon execution and delivery by such Restricted Subsidiary of an Assumption Agreement in the form of Annex 1.

Releases

.  

(a)At such time as the Discharge of the Obligations shall have occurred, the Collateral shall immediately and automatically be released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Grantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Grantors.  At the request and sole expense of any Grantor following any such termination, the Administrative Agent shall deliver to such Grantor any Collateral held by the Administrative Agent hereunder and execute and deliver to such Grantor such documents (in form and substance reasonably satisfactory to such Grantor and the Administrative Agent) as such Grantor may reasonably request to evidence such termination.

(b)If any of the Collateral is sold, transferred or otherwise disposed of by any Grantor in a transaction permitted by the Credit Agreement, then the Lien created pursuant to this Agreement in such Collateral shall be immediately and automatically released, and the Administrative Agent, at the request and sole expense of such Grantor, shall execute and deliver to such Grantor all releases or other documents reasonably necessary or desirable to evidence the release of such Collateral (not including Proceeds thereof) from the security interests created hereby.  At the request and sole expense of the Borrower, a Guarantor shall be released from its obligations hereunder in the event that all the Capital Stock of such Guarantor shall be sold, transferred or otherwise disposed of in a transaction permitted by the Credit Agreement; provided that the Borrower shall have delivered to the Administrative Agent, at least three (3) Business Days (or such lesser time period as the Administrative Agent may agree in its sole discretion) prior to the date of the proposed release, a written request for release identifying the relevant Guarantor, with a general description of such sale, transfer or disposition to the extent not in conflict with any confidentiality obligations arising in connection with such sale, transfer or disposition, together with a certification by the Borrower stating that such transaction is in compliance with the Credit Agreement and the other Loan Documents.

WAIVER OF JURY TRIAL

.  EACH GRANTOR, AND BY ACCEPTANCE OF THE BENEFITS HEREOF, THE ADMINISTRATIVE AGENT AND EACH OTHER SECURED PARTY, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

31

 


 

IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed and delivered as of the date first above written.

GRANTORS:

 

Advanced Drainage Systems, Inc.

 

 

 

4114800233295700By:

/s/ D. Scott Barbour

Name: D. Scott Barbour

Title: President and Chief Executive Officer

 

Stormtech LLC

 

 

 

By:

/s/ D. Scott Barbour

Name: D. Scott Barbour

Title: President and Chief Executive Officer

 

Advanced Drainage of Ohio, Inc.

 

 

 

By:

/s/ D. Scott Barbour

Name: D. Scott Barbour

Title: President and Chief Executive Officer

 

Infiltrator Water Technologies, LLC

(effective upon the consummation of the Acquisition)

 

 

 

4114800587330500By:

/s/ D. Scott Barbour

Name: D. Scott Barbour

Title: President and Chief Executive Officer

 


 

Acknowledged and Agreed:

BARCLAYS BANK PLC,
as Administrative Agent

 

 

1377538201758400By:

/s/ Sean Duggan

Name: Sean Duggan

Title:  Vice President  

 


 

 

 

 

 

Exhibit 23.1

 

 

CONSENT OF INDEPENDENT AUDITORS

 

We consent to the incorporation by reference in Registration Statements No. 333-197732 and No. 333-219664 of Advanced Drainage Systems, Inc. on Form S-8 of our report dated April 25, 2019 (July 24, 2019 as to the accounting for goodwill disclosed in Note 1) related to the consolidated financial statements of Infiltrator Water Technologies Ultimate Holdings, Inc. and subsidiaries as of December 28, 2018 and December 29, 2017 and for the years ended December 28, 2018, December 29, 2017, and December 30, 2016, appearing in this Current Report on Form 8-K of Advanced Drainage Systems, Inc.

 

/s/ Deloitte & Touche LLP

 

Hartford, Connecticut

August 1, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Infiltrator Water Technologies Ultimate Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets as of December 28, 2018 and December 29, 2017, and Consolidated Statements of Operations and Comprehensive Income (Loss),

Stockholders’ Equity, and Cash Flows for the three years ended December 28, 2018, December 29, 2017, and December 30, 2016, and Independent Auditors’ Report

 

 


 

INFILTRATOR WATER TECHNOLOGIES ULTIMATE HOLDINGS, INC. AND SUBSIDIARIES

 

TABLE OF CONTENTS

 

 

Page(s)

INDEPENDENT AUDITORS’ REPORT

1-2

CONSOLIDATED FINANCIAL STATEMENTS:

 

     Balance Sheets

3

     Statements of Operations and Comprehensive Income (Loss)

4

     Statements of Stockholders’ Equity

5

     Statements of Cash Flows

6

     Notes to Consolidated Financial Statements

7-20

 

 

 

 

 

 


 

 

 

 

 

INDEPENDENT AUDITORS’ REPORT

Deloitte & Touche LLP CityPlace I, 33rd Floor 185 Asylum Street

Hartford, CT 06103-3402 USA

Tel:   +1 860 725 3000

Fax:  +1 860 725 3500

www.deloitte.com

 

 

Infiltrator Water Technologies Ultimate Holdings, Inc. Old Saybrook, Connecticut

 

We have audited the accompanying consolidated financial statements of Infiltrator Water Technologies Ultimate Holdings, Inc. and Subsidiaries (the “Company”), which comprise the consolidated balance sheets as of December 28, 2018 and December 29, 2017, and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for the years ended December 28, 2018, December 29, 2017, and December 30, 2016, and the related notes to the consolidated financial statements.

 

Management’s Responsibility for the Consolidated Financial Statements

 

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

 

Auditors’ Responsibility

 

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

 


 

Opinion

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Infiltrator Water Technologies Ultimate  Holdings, Inc. and Subsidiaries as of December 28, 2018 and December 29, 2017, and the results of their operations and their cash flows for each of the three years ended December 28, 2018, December 29, 2017 and December 30, 2016 in accordance with accounting principles generally accepted in the United States of America.

 

/s/ Deloitte & Touche LLP

 

 

April 25, 2019 (July 24, 2019 as to the accounting for goodwill as disclosed in Note 1)

 

- 2 -

 


 

INFILTRATOR WATER TECHNOLOGIES ULTIMATE HOLDINGS, INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 28, 2018 AND DECEMBER 29, 2017

 

 

 

 

2018

 

 

2017

ASSETS

 

 

CURRENT ASSETS:

 

 

Cash and cash equivalents (Note 1f)

$ 101,345,595

$ 57,826,527

Accounts receivable—net of allowance for doubtful accounts

 

 

of $576,000 in 2018 and $422,000 in 2017, respectively

16,343,716

18,911,565

Income tax receivable

225,959

674,990

Inventories (Note 3)

35,017,942

33,784,911

Other current assets

1,579,529

1,205,033

Total current assets

154,512,741

112,403,026

PROPERTY, PLANT, AND EQUIPMENT—Net (Notes 1(h), and 4)

67,887,564

71,495,702

GOODWILL (Notes 1(k) and 5)

172,912,114

172,115,558

OTHER INTANGIBLE ASSETS—Net (Notes 1(j) and 5)

247,370,351

278,550,335

OTHER ASSETS (Note 1 (h))

8,368,594

8,130,957

TOTAL ASSETS

$ 651,051,364

$ 642,695,578

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

CURRENT LIABILITIES:

 

 

Current portion of long-term debt (Note 6)

$2,450,000

$9,650,000

Accounts payable

11,318,861

13,314,652

Income tax payable

4,255,373

Accrued legal settlment (Note 12)

7,500,000

Accrued expenses

4,591,154

4,464,859

Total current liabilities

30,115,388

27,429,511

LONG-TERM DEBT—Less current portion (Note 6)

326,667,913

321,332,219

CONTINGENT CONSIDERATION (Note 1d)

511,444

OTHER LIABILITIES

182,330

698,953

DEFERRED INCOME TAXES (Note 7)

    66,914,154

    76,547,953

Total liabilities

  423,879,785

  426,520,080

COMMITMENTS AND CONTINGENCIES (Notes 1(q), 1(r) 1(u) 6, 7, 8, and 9)

STOCKHOLDERS’ EQUITY:

Common stock, $.01 per share par value, 30,000,101 shares authorized;

18,612,450 shares issued and outstanding at December 28, 2018

 

and 18,603,594 at December 29, 2017, (Note 1(d))

186,126

186,036

Additional paid-in capital

188,842,375

187,656,442

Accumulated earnings

    38,143,078

    28,333,020

Total stockholders’ equity

227,171,579

216,175,498

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 651,051,364

$ 642,695,578

 

 

See accompanying notes to consolidated financial statem-en3ts-.

 


 

INFILTRATOR WATER TECHNOLOGIES ULTIMATE HOLDINGS, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 28, 2018, DECEMBER 29, 2017, AND DECEMBER 30, 2016

 

 

 

2018

2017

2016

NET SALES

$ 275,198,104

$ 255,225,880

$ 233,393,804

COST OF GOODS SOLD

173,252,075

170,398,152

163,049,622

GROSS PROFIT

101,946,029

84,827,728

70,344,182

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

27,999,625

25,835,048

19,761,453

TRANSACTION RELATED EXPENSES (Note 1(d))

252,153

931,164

LEGAL SETTLEMENT (Note 12)

7,500,000

AMORTIZATION EXPENSE RELATED TO INTANGIBLE

 

 

 

ASSETS (Notes 1(j) and 5)

31,179,984

30,565,616

31,241,292

RESEARCH AND DEVELOPMENT

1,938,529

764,032

1,258,486

LOSS ON SALE OF PROPERTY, PLANT AND EQUIPMENT (Note 4)

 

22,505

 

81,836

 

OPERATING INCOME

33,053,233

26,650,032

18,082,951

OTHER INCOME (EXPENSE):

 

 

 

Interest expense—net (Notes 4 and 6)

(19,580,450)

(23,707,036)

(24,260,148)

Other expense—net

(318,628)

(280,454)

(295,166)

INCOME FROM OPERATIONS

 

 

 

BEFORE INCOME TAXES

13,154,155

2,662,542

(6,472,363)

INCOME TAX EXPENSE (BENEFIT) (Note 7)

3,334,097

  (40,141,830)

(86,159)

NET INCOME (COMPREHENSIVE INCOME)

 

$9,820,058

 

$ 42,804,372

 

$ (6,386,204)

 

 

See accompanying notes to consolidated financial statements.

 

- 4 -

 


 

 

INFILTRATOR WATER TECHNOLOGIES ULTIMATE HOLDINGS, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 28, 2018, DECEMBER 29, 2017, AND DECEMBER 30, 2016

 

 

Common Stock

Additional Paid-In Capital

Accumulated Earnings

Total Stockholders’ Equity

BALANCE—January 01, 2016

$ 186,036

$ 186,640,796

$(8,065,148)

$ 178,761,684

Dividends paid

-

-

(10,000)

(10,000)

Stock option compensation expense

-

282,817

-

282,817

Net loss

_______-

_______-    

(6,386,204)

(6,386,204)

BALANCE—December 30, 2016

$ 186,036

$ 186,923,613

$ (14,461,352)

$ 172,648,297

Dividends paid

-

-

(10,000)

(10,000)

Stock option compensation expense

-

732,829

-

 

Net income

_______-

_______-

42,804,372

42,804,372

BALANCE—December 29, 2017

$ 186,036

$ 187,656,442

$ 28,333,020

$ 216,175,498

Dividends paid

-

-

(10,000)

(10,000)

Stock issuance

90

249,910

-

250,000

Stock option compensation expense

-

936,023

-

936,023

Net income

_______-

_______-

9,820,058

9,820,058

BALANCE—December 28, 2018

$ 186,126

$ 188,842,375

$ 38,143,078

$ 227,171,579

 

 

 

See accompanying notes to consolidated financial statements.

 

- 5 -

 


 

INFILTRATOR WATER TECHNOLOGIES ULTIMATE HOLDINGS, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 28, 2018, DECEMBER 29, 2017, AND DECEMBER 30, 2016

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

2018

2017

2016

Net income (loss) from continuing operations

$9,820,058

$ 42,804,372

$ (6,386,204)

Adjustments to reconcile net loss to net cash provided by

 

 

 

operating activities:

 

 

 

Depreciation and amortization

47,198,090

52,023,784

51,554,927

Stock option compensation expense

936,023

732,829

282,817

Contingent consideration

38,556

931,164

Deferred income taxes

(9,633,799)

(53,446,711)

(6,602,118)

Loss on sale of property and equipment

22,505

81,836

Amortization/write-off of financing costs

1,894,726

5,926,460

2,028,756

Change in operating assets—(increase) decrease:

 

 

 

Accounts receivable

2,567,849

(3,289,062)

(2,465,986)

Income tax receivable

449,031

1,525,281

(2,200,271)

Inventories

(1,036,708)

318,822

235,099

Other current assets

(374,496)

280,205

69,933

Other assets

(262,498)

(428,533)

(1,656,395)

Change in operating liabilities—increase (decrease):

 

 

 

Accounts payable

(1,995,791)

2,380,909

(3,799,767)

Other liabilities

(516,623)

473,571

62,804

Income tax payable

4,255,373

Accrued expenses

7,526,295

1,182,280

201,429

Net cash provided by operating activities

60,888,591

51,497,207

31,325,024

CASH FLOWS FROM INVESTING ACTIVITIES:

 

Purchase of property and equipment

(12,360,791)

(10,652,324)

(13,876,625)

Acquisition of Delta Environmental

(1,000,000)

Proceeds from the sale of property and equipment

60,300

  

  

Net cash used for investing activities

(13,300,491)

(10,652,324)

(13,876,625)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Net borrowing on revolving line of credit Borrowing of long-term debt

 

100,000,000

Payoff of long-term debt

(100,000,000)

Payment of contingent consideration for acquisition

(550,000)

(7,419,720)

Deferred financing costs

(2,098,719)

(951,094)

Dividends paid

(10,000)

(10,000)

(10,000)

Proceeds from stock issuance

250,000

Repayments of long-term debt

(3,759,032)

(2,450,000)

(2,450,000)

Net cash used for financing activities

(4,069,032)

  (11,978,439)

(3,411,094)

NET INCREASE IN CASH AND CASH EQUIVALENTS

43,519,068

28,866,444

14,037,305

CASH AND CASH EQUIVALENTS—Beginning of year

57,826,527

   28,960,083

   14,922,778

CASH AND CASH EQUIVALENTS—End of year

$ 101,345,595

$ 57,826,527

$ 28,960,083

CASH PAID DURING THE PERIOD FOR:

 

 

 

Interest

$ 17,924,320

$ 17,970,775

$ 22,117,084

Income tax payment - net

$   8,918,744

$ 11,351,233

$   8,721,121

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 


 

 

INFILTRATOR WATER TECHNOLOGIES ULTIMATE HOLDINGS, INC. AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 28, 2018 AND DECEMBER 29, 2017 AND FOR THE YEARS ENDED DECEMBER 28, 2018, DECEMBER 29, 2017, AND DECEMBER 30, 2016

 

 

 

1.

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

 

(a)Lines of Business and Principles of Consolidation—Infiltrator Water Technologies Ultimate Holdings, Inc. and Subsidiaries including Infiltrator Water Technologies, LLC (the Company) designs, manufactures and sells engineered plastic chambers, synthetic assemblies, tanks, and accessories for the onsite wastewater and storm water industries. The Company is a pioneer in plastic technologies for underground wastewater management having invented the first plastic leach field chamber. The Company maintains a corporate office in Connecticut and operates manufacturing facilities in Kentucky, North Carolina, Texas, Illinois, Alabama, Louisiana and Oregon. Sales are primarily through distributors throughout North America, and to a lesser extent Latin America, Europe, and South Africa.

 

 

(b)

Basis of Presentation

 

The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and include the financial statements of the Company and its wholly owned subsidiaries for the respective periods. All intercompany balances and transactions have been eliminated in consolidation.

 

The Company’s fiscal year ends on the Friday nearest December 31. The fiscal years ended December 28, 2018, December 29, 2017, and December 30, 2016 included 52 weeks of operating results.

 

(c)Acquisition by Infiltrator Water Technologies, LLC – In March 2018, Infiltrator expanded into the advanced wastewater treatment segment of the industry with the acquisition of Delta Environmental assets from Pentair Flow Technologies for $1,000,000. Infiltrator has reestablished the Delta brand under a new wholly owned subsidiary of Infiltrator, Delta Treatment Systems, LLC. Delta Treatment Systems manufactures and sells products for residential and commercial advanced wastewater treatment including custom package treatment plants and ECOPOD and Whitewater models.

 

 

(d)

Acquisition by Ontario Teachers’ Pension Plan

 

As part of the 2015 acquisition by the current owner, the Company recorded an estimate of

$7,900,000 of contingent consideration that would be distributed to the predecessor shareholders when certain income tax assets were realized by the Company.

 

In 2017, the Company revised its estimate to be $8,800,000, the final tax benefits were distributed to predecessor shareholders in 2018 with no significant changes in the previous estimate. No further tax benefits are owed to predecessor shareholders as of December 28, 2018.

 

- 7 -

 


 

(e)Authorized Capital Stock—The aggregate number of shares which the Company is authorized to issue is thirty million one hundred and one (30,000,101) shares, divided into three (3) classes, consisting of thirty million (30,000,000) shares of Class A Common Stock, $0.01 per share par value, one hundred (100) shares of Class B Common Stock,

$0.01 per share par value, and one (1) share of Class C Common Stock, $0.01 per share par value.

 

(f)Cash and Cash Equivalents—Cash represents deposits held at financial institutions and all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. The Company had no cash equivalents at either 2018 or 2017.

 

(g)Inventories—Inventories are stated at the lower of cost or net realizable value determined on the first-in, first-out basis.

 

(h)Property, Plant, and Equipment—Property, plant, and equipment are stated at cost. The Company depreciates property, plant and equipment over the lesser of their estimated useful lives or their remaining lease terms using the straight-line method.

 

The Company maintains a supply of various spare parts integral to its operations. The spare parts have been classified as other assets on the consolidated balance sheets. Spare parts inventory balances included in other assets at December 28, 2018 and December 29, 2017 were $6,716,690 and $6,481,142, respectively.

 

(i)Deferred Financing Costs—The Company has recorded $5,998,055 and $7,892,781 of deferred financing costs as a reduction of debt as of December 28, 2018 and

December 29, 2017, respectively.

 

(j)Intangible Assets—The intangible assets include amounts assigned to the fair values of the identifiable intangibles on the date of acquisition including patents, developed technology, trade names, and customer relationships. The intangibles with definite useful lives are being amortized over their estimated useful lives based on the pattern of economic benefits inherent in the intangible assets. The intangible assets with indefinite useful lives are tested for impairment annually as of the Company’s year end and more often if events or circumstances indicate that the asset may be impaired. During the years ended December 28, 2018, December 29, 2017, and December 30, 2016, no impairment charges were recognized.

 

(k)Goodwill—Goodwill represents the excess of costs over the fair value of assets of businesses acquired. Goodwill is not amortized but is tested for impairment annually and more often if events or circumstances indicate that the asset may be impaired. The operations of the Company consist of a single reporting unit for purposes of its annual goodwill impairment test.

 

The Company performs its annual impairment test on the last day of its fiscal year each December. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair market value of the entity is less than the carrying amount. If the qualitative assessment indicates that it is not more likely than not that the fair market of the entity is less than the carrying amount, then no additional analysis is required. If the qualitative assessment indicates that it is more likely than not that the fair value is less than the carrying amount, the Company would then perform a quantitative analysis to calculate the fair value of the entity and measure it against the entity’s carrying amount, including goodwill. The goodwill impairment loss, if any, represents the excess of the

 

- 8 -

 


 

carrying amount of the entity over its fair value and would not exceed the carrying amount of goodwill. The Company determined at 2016, 2017, and 2018 that it was not more likely than not that the fair value of the entity was less than its carrying value.

 

The consolidated financial statements have been updated to reflect the above accounting policies for goodwill applicable to public business entities.

 

(l)Impairment of Long-Lived Assets—Long-lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairment was indicated in the years ended December 28, 2018, December 29, 2017, and December 30, 2016.

 

(m)Revenue Recognition—The Company recognizes revenue on sales when products are shipped, the customer takes ownership and assumes risk of loss, persuasive evidence of an arrangement exists, and the sales price is fixed or determinable, and collection is probable. Shipping and other transportation costs charged to customers are recorded in both sales and cost of sales. Sales are recorded net of applicable provisions for discounts and allowances, including customer rebates.

 

(n)Research and Development—The Company expenses research and development costs as they are incurred.

 

(o)Income Taxes—Income taxes are provided for the tax effects of transactions reported in the consolidated financial statements and consist of taxes currently due and deferred. Deferred taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate primarily to depreciable assets and identified intangibles. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled.

 

On December 22, 2017, President Donald Trump signed into law the Tax Cuts & Jobs Act (“TCJA” or “H.R. 1”) which introduced comprehensive U.S. tax reform. The federal tax rate decreased from 35% to 21% effective January 1, 2018.

 

(p)Use of Estimates—Management uses estimates and assumptions in preparing the consolidated financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and reported revenues and expenses. Significant items subject to such estimates and assumptions include fair value of assets and liabilities acquired in a business combination; the useful lives of fixed assets; allowances for doubtful accounts, warranties and sales returns; the valuation of deferred tax assets, goodwill and intangibles, stock options, and other contingencies. Actual results could differ from those estimates.

 

(q)Stock Option Plan—All stock-based compensation is recognized as an expense in the consolidated financial statements and such costs are measured at the fair value of the award. For all stock-based awards the Company recognizes compensation expense based on estimated grant date fair value using the Black-Scholes option-pricing model over the related service period.

 

Certain of the Company’s stock awards vest only upon a change in control event (as defined in the Plan). The change in control term is a performance condition and therefore the Company does not accrue or recognize any compensation cost until such event is

 

- 9 -

 


 

considered probable. No compensation cost has been recognized on these awards to date as the event is not considered probable.

 

(r)Deferred Compensation—On March 31, 2016, the board of members approved a long-term Incentive Bonus Plan to retain key senior strategic managers. The availability and offering of incentive bonuses under this Bonus Plan also increases the Company’s ability to attract and retain individuals of exceptional managerial talent upon whom, in large measure, the sustained progress, growth and profitability of the Company depends. The Bonus Plan is payable upon a change in control event (as defined in the Plan) to remaining members of management at the time of such event. The change in control term is considered a performance condition and therefore the Company does not accrue or recognize any compensation cost until such event is considered probable or until cash bonuses are paid to key senior managers. No compensation cost has been recognized for the incentive bonus plan to date as the event is not considered probable.

 

(s)Fair Value Measurements—Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset and liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

 

 

Level 1—Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

 

 

 

Level 2—Inputs to the valuation methodology include:

 

 

Quoted prices for similar assets or liabilities in active markets;

 

 

Quoted prices for identical or similar assets or liabilities in inactive markets;

 

 

Inputs other than quoted prices that are observable for the asset or liability;

 

 

Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

 

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

 

 

Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

 

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

 

(t)Uncertainty in Income Taxes—Uncertain tax positions taken or expected to be taken in a tax return must meet a threshold of more likely than not for recognition of tax benefits in the consolidated financial statements. Uncertain tax positions were not significant as of December 28, 2018 and December 29, 2017. There are no material changes expected within the next twelve months.

 

- 10 -

 


 

(u)Commitments and Contingencies—Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

 

(v)New Accounting Standards—In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which stipulates that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for such goods or services. To achieve this core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract(s); (3) determine the transaction price(s); (4) allocate the transaction price(s) to the performance obligations in the contract(s); and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also requires advanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The ASU is effective for nonpublic entities for annual periods beginning after December 15, 2018. The amendments may be applied retrospectively to each period presented or with the cumulative effect recognized as of the date of initial application. The Company is currently evaluating the impact of this ASU on its Consolidated Financial Statements.

 

In February of 2016, the FASB issued ASU 2016-02, Leases, which changes a lessor’s accounting for operating leases. The ASU requires companies to recognize in their balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. When measuring assets and liabilities arising from a lease, companies would include payments to be made in optional periods only if they are reasonably certain to exercise an option to extend the lease (or not to exercise an option to terminate a lease). For leases with a term of twelve months or less, companies are permitted to make an accounting policy election not to recognize lease assets and liabilities. If this election is made, a company would recognize lease expense on a straight-line basis over the lease term. The ASU is effective for annual periods beginning after December 15, 2019. The Company is currently evaluating the impact of this ASU on its Consolidated Financial Statements.

 

 

2.

INVENTORIES

 

The Company’s inventories at December 28, 2018 and December 29, 2017 consist of the following:

 

 

 

 

 

                   2018

2017

Raw materials and supplies

$ 14,029,833

$ 16,256,705

Finished goods

20,988,109

17,528,206

Total inventory

$ 35,017,942

$ 33,784,911

 

- 11 -

 


 

 

3.

PROPERTY, PLANT, AND EQUIPMENT

 

Property, plant, and equipment consist of the following as of December 28, 2018 and December 29, 2017:

 

 

 

2018

2017

Estimated Lives

Land

$2,754,335

$2,754,335

 

Buildings

6,651,448

6,327,453

40 years

Leasehold improvements

15,797,635

15,304,845

lease term

Equipment

102,311,762

96,665,702

5–15 years

Furniture and fixtures

1,803,125

1,314,094

3–10 years

Vehicles

408,994

368,926

5 years

Construction in progress

7,050,035

1,872,603

 

Total

136,777,334

124,607,958

 

Accumulated depreciation

(68,889,770

  (53,112,256)

 

Property, plant, and

equipment—net

$ 67,887,564

$ 71,495,702

 

 

 

Total depreciation expense for the years ended December 28, 2018, December 29, 2017 and December 30, 2016 was $16,018,105, $21,458,168 and $20,313,635, respectively, of which approximately 99% was recorded in cost of goods sold and approximately 1% was recorded in selling, general and administrative expenses each period. Amounts included in construction in progress relate to the construction of a new manufacturing facility in Winchester, KY with an estimated cost to complete of $17.4 million in 2019. Construction in progress also includes expansion of a new finished goods storage lot, tooling and ancillary equipment with an estimated cost to complete of $2.6 million in 2019.

 

 

4.

GOODWILL AND INTANGIBLE ASSETS

 

Changes in the carrying amount of goodwill are as follows:

 

December 30, 2016

$ 172,115,558

December 30, 2016

$ 172,115,558

No Activity

0

Delta Treatment Acquisition

796,556

December 29, 2017

$ 172,115,558

December 29, 2017

$ 172,115,558

 

 

 

 

 

- 12 -

 


 

Other intangible assets consist of the following:

 

 

 

December 28, 2018

 

 

Amount

Accumulated Amortization

Net Book Value

Average Useful Life

Patents and developed technology

 

$ 95,600,000

 

$   43,026,595

 

$52,573,405

 

9 years

Customer relationships

Trade name and

215,450,000

63,157,233

152,292,767

14 years

trademarks

42,570,000

65,821

42,504,179

5 yrs/Indefinite

$ 353,620,000

$ 106,249,649

$ 247,370,351

 

 

 

 

 

December 29, 2017

 

 

Amount

Accumulated Amortization

Net Book Value

Average Useful Life

Patents and developed technology

 

$95,600,000

 

$32,232,279

 

$ 63,367,721

 

9 years

Customer relationships

Trade name and

215,450,000

42,778,878

172,671,122

14 years

trademarks

  42,570,000

58,508

42,511,492

5 yrs/Indefinite

$ 353,620,000

$75,069,665

$ 278,550,335

 

 

 

Total amortization expense for the years ended December 28, 2018, December 29, 2017 and December 30, 2016, was $31,179,984, $30,565,616 and 31,241,292, respectively. Amortization expense is expected to be $30,819,463 in 2019, $29,650,023 in 2020,

$27,765,323 in 2021, $25,400,233 in 2022, $20,061,381 in 2023, and $57,473,928

thereafter.

 

- 13 -

 


 

 

5.

DEBT

 

 

(a)

Long-Term Debt—Long-term debt at December 28, 2018 and December 29, 2017 consisted of the following:

 

 

 

December 28,

December 29,

2018

2017

Variable rate term loan with a base rate

 

 

option of Prime + 2.0% or LIBOR + 3.0%

 

 

(5.39% at December 28, 2018, 4.33% at

 

 

December 29, 2017), due in quarterly

 

 

installments of $612,500. The remaining

 

 

amount is due at the maturity date

 

 

of May 26, 2022.

$ 335,115,968

$ 338,875,000

Less current installments

2,450,000

9,650,000

Less unamortized debt issuance costs

5,998,055

7,892,781

 

$ 326,667,913

$ 321,332,219

 

 

On February 17, 2017, the Company increased the loan capacity on its first lien term loan by $100,000,000 and used the proceeds to pay off its second lien term loan. The Company incurred pre-payment penalties and other fees totaling approximately $2,300,000 related to the transaction and wrote-off $4,200,000 of deferred financing fees associated with the second lien term loan during the year ended December 31, 2017.

 

As of December 28, 2018, the Company determined that the fair value of its outstanding debt, using Level 2 measurements, approximates carrying value.

 

(b)Excess Cash Flow—The Company is required to make a mandatory prepayment towards the first lien term loan for an amount equal to fifty percent (50%) of Excess Cash Flow as defined by the credit agreement. The amount determined will be paid on the one hundred twenty-fifth (125th) day following the last day of each fiscal year.

 

Per the first lien credit agreement, the Excess Cash Flow percentage could be 25% if the First Lien Senior Secured Leverage Ratio as of the last day of the fiscal year is less than 3.75:1 and greater than or equal to 3.25:1. The Excess Cash Flow Percentage could be 0% if the First Lien Senior Secured Leverage Ratio as of the last day of the fiscal year is less than 3.25:1.

 

No Excess Cash Flow payment is due in 2019 since the First Lien Senior Secured Leverage ratio was less than 3.25:1 as of December 28, 2018.

 

(c)Revolving Line of Credit—The Company has a $40,000,000 revolving line of credit available through its senior credit facility. The current availability of the line of credit is reduced by amounts borrowed and any outstanding letters of credit. The revolving line of

 

- 14 -

 


 

credit accrues interest at the base rate (prime + 2.00%) or a LIBOR-based rate (LIBOR + 3.00%), at the option of the Company. As of December 28, 2018 and December 29, 2017, there were no outstanding balances on the revolving line of credit and the availability on the line of credit was $40,000,000. The interest rate on the revolving line of credit at the base rate as of December 28, 2018 and December 29, 2017, was 7.50% and 6.50%, respectively assuming base rate.

 

The revolving line of credit and term loans require that the Company satisfy certain measures of financial performance as long as the revolving line of credit has at least 30% of its balance outstanding. The revolving line of credit did not have any balance drawn on and outstanding as of December 28, 2018 or December 29, 2017 and therefore there were no financial covenant requirements. If over 30% of the revolving line of credit was outstanding, then the Senior Secured Leverage Ratio is required to be less than 6.6:1.

 

The first lien term loan and $40,000,000 revolving line of credit is secured by the

Company’s assets.

 

The following table presents the minimal contractual maturities of long-term debt and excludes any potential excess cash flow payments that may be required in future years

 

Fiscal Year Ending

 

2019

$2,450,000

2020

2,450,000

2021

2,450,000

2022

327,765,968

 

$ 335,115,968

 


- 15 -

 


 

 

6.

INCOME TAXES

 

Income tax expense (benefit) on continuing operations consists of the following:

 

 

December 28,

December 29,

December 30,

2018

2017

2016

Current income tax expense (benefit):

 

 

 

Federal

$9,833,308

$ 10,727,017

$ 5,175,741

State

3,232,213

1,950,891

1,305,084

Foreign

(97,623)

627,072

-

Total current

   12,967,898

   13,304,980

6,480,825

 

Deferred income tax expense (benefit):

 

 

 

Federal

(7,582,656)

(50,212,053)

(4,307,600)

State

(2,051,145)

(3,234,757)

  (2,259,384)

Total deferred

(9,633,801)

(53,446,810)

(6,566,984)

Total income tax expense (benefit)

$3,334,097

$ (40,141,830)

$(86,159)

 

Total income tax expense (benefit) on continuing operations differed from “expected” income tax expense (benefit), computed by applying the U.S. federal income tax rate of 21% for the years ended December 28, 2018 and December 29, 2017 and 35% for the year ended December 30, 2016, to earnings before income tax, as follows:

 

 

 

December 28, 2017

December 29, 2017

December 30, 2016

Computed “expected” income tax expense

State income tax—net of federal income

$2,748,077

$931,889

$ (2,265,327)

tax benefit

1,077,384

(2,071,585)

(957,059)

Prior year taxes

(41,711)

529,769

(145,262)

Non-deductible reorganization

8,097

325,907

-

Meals and entertainment

105,089

85,734

80,277

Officer’s life insurance

522

872

1,572

Statutory rate change

-

(40,079,870)

3,880,375

Foreign derived intangible deduction

(209,301)

-

-

Domestic production activities

-

(1,078,298)

(678,473)

Other

(267,840)

622,901

(2,262)

Change in valuation allowance

(86,220)

590,851

  

 

$ 3,334,097

$ (40,141,830)

$    (86,159)

 

 

 

 

 

 

- 16 -

 


 

The deferred income tax expense (benefit) results from temporary differences in the book and tax basis of certain assets and liabilities. The components of and changes in the net deferred asset (liability) which give rise to the deferred income tax asset (liability), net, at December 28, 2018 and December 29, 2017 are as follows:

 

 

2018

2017

Deferred tax assets:

 

 

Allowance for doubtful accounts

$148,297

$108,212

Inventories, principally due to additional

 

 

costs inventoried for tax purposes

379,155

305,303

Warranty

150,486

121,183

Stock compensation

706,841

463,973

Acquisition costs

531,775

531,718

Accrued expenses

2,077,086

199,255

State net operating loss carryover

1,037,825

1,252,761

UNICAP

35,904

-

Valuation allowance

(504,631)

(590,851)

Total deferred tax assets

4,562,738

2,391,554

 

Plant and equipment, principally due to

 

 

differences in depreciation

(10,253,347)

(10,559,105)

Intangible and amortizable goodwill

(60,755,082)

(67,419,903)

Long-term debt

(468,463)

(615,988)

UNICAP

-

(344,511)

Total deferred tax liabilities

    (71,476,892)

    (78,939,507)

Net deferred tax liability

$ (66,914,154)

$ (76,547,953)

 

 

 

 

The TCJA reduces the U.S. statutory tax rate from 35% to 21% for years after fiscal 2017. Accordingly, the Company has remeasured its deferred taxes as of December 29, 2017 to reflect the reduced rate which will apply in future periods when these deferred taxes are settled or realized and recognized a deferred tax benefit of $40.0 million to reflect the reduced U.S. tax rate.  The Company believes as of December 28, 2018 all material income tax effects of the TCJA have been accounted for. At December 28, 2018 and December 29, 2017, the Company has state net operating loss carryforwards of $4.7 million and $7.4 million, respectively, some of which is available to offset future state taxable income through 2034. The Company does not believe that it is subject to any significant limitations on the use of net operating losses under Section 382 of the Internal Revenue Code, subsequent to the acquisition of the Company. The Company believes that it is more likely than not that the benefit from certain state NOL carryforwards will not be realized and has recorded a valuation allowance of $504,631 and $590,851 on the deferred tax assets relating to these NOL’s as of December 28, 2018 and December 29, 2017 respectively.

 

Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible and scheduled reversal of deferred tax liabilities, management believes it is more likely than not that the Company will realize the benefits of these deductible differences.

 

- 17 -

 


 

 

7.

STOCK OPTION PLAN

 

In 2015, the Company’s shareholders approved the 2015 Stock Option Plan. The Plan was intended to provide a means whereby the Company may, through the grant of options to key employees and nonemployee Directors, attract and retain such individuals. The Plan provided an incentive for key employees to achieve long-term performance goals and enables them to participate in the growth of the Company. Options may be granted under the Plan to purchase up to a maximum of 2,067,056 shares of the Company’s Common Stock. The Company has granted 1,634,640 options in total with an exercise price range of

$10 to $27.91 and a term of 10 years from the date of grant, which were split between

“time” vesting over 5 years and performance vesting.

 

In 2017, the Company granted 100,000 options with an exercise price of $16.69 and a term of 10 years from the date of grant, which were split between “time” vesting over 5 years and performance vesting.

 

In 2018, the Company granted 49,234 additional options with an exercise price of $27.91 and a term of 10 years from the date of grant, with both “time” vesting over 5 years and performance vesting.

 

At December 28, 2018 and December 29, 2017, there were 432,416 and 520,117, respectively, additional shares available for the Company to grant under the Plan. The stock option compensation will be recognized over the vesting period through 2023 for shares that are “time” based. For the years ended December 28, 2018, December 29, 2017 and December 30, 2016 $936,023 and $732,829 and $282,817 respectively, of compensation expense was recorded related to stock options.

 

Stock options outstanding are as follows:

 

 

 

Weighted

 

Weighted

 

 

   Options

average grant date

fair value

Range of exercise

price

average exercise

price

 

Outstanding at December 29, 2017

 

1,546,939

 

$4.83

 

$10.00 - $16.69

 

$10.42

Outstanding at December 28, 2018

1,634,640

$5.02

$10.00 - $27.91

   $10.95

   

 

There were 1,634,640 outstanding stock options which have a weighted average remaining contractual life of 6.5 years. There were no forfeitures or options exercised during 2017 and 2018.

 

- 18 -

 


 

 

8.

LEASES

 

The Company has several operating leases, primarily for manufacturing facilities, that expire over the next fourteen years. Two leases have an option for the Company to purchase the property at a price which the parties believe approximates fair value. The total rental expense of all operating lease agreements was $3,887,381, $2,834,851 and

$2,669,378 for the years ended December 28, 2018, December 29, 2017 and December 30, 2016, respectively. The following is a schedule of future minimum rentals under operating lease agreements:

 

Fiscal Year Ending

 

2019

$ 3,836,995

2020

3,713,969

2021

3,214,217

2022

1,375,966

2023

1,122,704

Thereafter

5,093,657

 

18,357,508

 

 

9.

401(k) PLAN

 

The Company has a 401(k) Plan covering substantially all employees. The Company’s contribution to this plan is determined annually by the Board of Directors. The Company contributed $225,222, $174,436 and 155,855 to the plan for the years ended December 28, 2018, December 29, 2017 and December 30, 2016, respectively.

 

 

10.

RELATED PARTY TRANSACTIONS

 

The Company had a consulting agreement with Bain & Company, a minority shareholder, to provide market research services during 2017. The Company incurred $936,000 in the year ended December 29, 2017. Such amount was recorded as selling, general, and administrative expenses in the consolidated statement of operations and comprehensive income (loss).

 

 

11.

SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events through April 25, 2019, which represents the date the consolidated financial statements were available to be issued. The Company has updated its evaluation of subsequent events through July 24, 2019, the date the consolidated financial statements were available to be reissued. Other than as described below, there were no subsequent events that would have impacted the Company’s consolidated financial statements.

 

On April 11, 2019, the Company acquired Presby Environmental Inc. (PEI), a provider of advanced treatment wastewater systems, for $60.7 million. The company (PEI) will operate under Presby Environmental Holdings, LLC, as a wholly owned subsidiary of Infiltrator Water Technologies LLC.

 

On April 18, 2019, the Company reached a settlement with a counterparty on a dispute

regarding the Company’s alleged use of the counterparty’s patent.  While the Company

 

- 19 -

 


 

disputes these allegations, the parties have agreed to settle out of court to avoid further costs and uncertainties involved in litigation. The cost of the settlement has been recorded as an accrued expense in the consolidated balance sheet and a legal settlement expense in the consolidated statement of operations as of December 28, 2018.

 

**** **

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- 20 -

 

Exhibit 99.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Infiltrator Water Technologies Ultimate Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets as of July 5, 2019 and December 28, 2018, and Condensed Consolidated Statements of Operations and Comprehensive Income, Stockholders’ Equity, and Cash Flows for the six-months ended July 5, 2019 and June 29, 2018

 

 


 

INFILTRATOR WATER TECHNOLOGIES ULTIMATE HOLDINGS, INC. AND SUBSIDIARIES

 

TABLE OF CONTENTS

 

 

 

 

Page(s)

CONSOLIDATED FINANCIAL STATEMENTS:

 

     Balance Sheets

2

     Statements of Operations and Comprehensive Income

3

     Statements of Stockholders’ Equity

4

     Statements of Cash Flows

5

     Notes to Consolidated Financial Statements

6-10

 

 

 


 

INFILTRATOR WATER TECHNOLOGIES ULTIMATE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF JULY 5, 2019 AND DECEMBER 28, 2018

 

 

ASSETS

2019

2018

CURRENT ASSETS:

 

 

Cash and cash equivalents

Accounts receivable—net of allowance for doubtful accounts

$ 48,489,491

$ 101,345,595

of $355,000 in 2019 and $576,000 in 2018, respectively

28,279,965

16,343,716

Income tax receivable

534,721

225,959

Inventories

37,618,851

35,017,942

Other current assets

2,240,768

1,579,529

Total current assets

117,163,796

154,512,741

PROPERTY, PLANT, AND EQUIPMENT—Net

82,423,765

67,887,564

GOODWILL

205,858,706

172,912,114

OTHER INTANGIBLE ASSETS—Net

248,310,619

247,370,351

OTHER ASSETS

9,532,966

8,368,594

TOTAL ASSETS

$ 663,289,852

$ 651,051,364

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

CURRENT LIABILITIES:

 

 

Current portion of long-term debt

$2,450,000

$2,450,000

Accounts payable

12,555,770

11,318,861

Payable to David Presby Trust

2,712,702

Income tax payable

2,749,841

4,255,373

Accrued expenses

6,710,864

    12,091,154

Total current liabilities

27,179,177

30,115,388

LONG-TERM DEBT—Less current portion

326,390,277

326,667,913

OTHER LIABILITIES

182,330

182,330

DEFERRED INCOME TAXES

    65,207,357

    66,914,154

Total liabilities

  418,959,141

  423,879,785

 

STOCKHOLDERS’ EQUITY:

Common stock, $.01 per share par value, 30,000,101 shares authorized;

18,612,563 shares issued and outstanding at July 5, 2019

 

and 18,612,563 at December 28, 2018,

186,126

186,126

Additional paid-in capital

189,289,180

188,842,375

Accumulated earnings

    54,855,405

    38,143,078

Total stockholders’ equity

  244,330,711

  227,171,579

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 663,289,852

$ 651,051,364

See accompanying notes to consolidated financial statements.

 

 

 

- 2 -

 


 

INFILTRATOR WATER TECHNOLOGIES ULTIMATE HOLDINGS, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

FOR SIX MONTHS ENDED JULY 5, 2019 AND JUNE 29, 2018

 

 

 

 

 

June 2019

June 2018

NET SALES

$160,913,413

$135,902,729

COST OF GOODS SOLD

95,354,603

86,475,105

GROSS PROFIT

65,558,810

49,427,624

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

15,735,814

13,196,487

TRANSACTION RELATED EXPENSES

1,165,298

252,153

AMORTIZATION EXPENSE RELATED TO INTANGIBLE

 

 

ASSETS

15,559,731

15,589,992

RESEARCH AND DEVELOPMENT

1,094,736

968,173

LOSS ON SALE OF PROPERTY, PLANT AND EQUIPMENT

 

 

22,505

OPERATING INCOME

32,003,231

19,398,314

OTHER INCOME (EXPENSE):

 

 

Interest expense—net

(11,073,547)

(9,647,971)

Other expense—net

(199,819)

(159,800)

INCOME FROM OPERATIONS

 

 

BEFORE INCOME TAXES

20,729,865

9,590,543

INCOME TAX EXPENSE

4,017,538

2,670,142

NET INCOME / COMPREHENSIVE INCOME

 

$16,712,327

 

$6,920,401

 

 

See accompanying notes to consolidated financial statements.

 

- 3 -

 


 

 

INFILTRATOR WATER TECHNOLOGIES ULTIMATE HOLDINGS, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 29, 2018 AND JULY 5, 2019

 

 

 

 

Common Stock

Additional Paid-In Capital

 

Accumulated Earnings

Total Stockholders’ Equity

BALANCE—December 29, 2017

$186,036

$ 187,656,442

$28,333,020

$ 216,175,498

Stock issuance

90

249,910

-

250,000

Stock option compensation expense

 

-

 

349,998

 

-

 

349,998

Net income

  

  

6,920,401

6,920,401

BALANCE—June 29, 2018

$186,126

$ 188,256,350

$35,253,421

$ 223,695,897

 

BALANCE—December 28, 2018

 

$186,126

 

$ 188,842,375

 

$38,143,078

 

$ 227,171,579

Stock option compensation expense

 

-

 

446,805

 

-

 

446,805

Net income

  

  

16,712,327

16,712,327

BALANCE—July 5, 2019

$186,126

$ 189,289,180

$54,855,405

$ 244,330,711

 

See accompanying notes to consolidated financial statements.

 

- 4 -

 


 

INFILTRATOR WATER TECHNOLOGIES ULTIMATE HOLDINGS, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR SIX MONTHS ENDED JULY 5, 2019 AND JUNE 29, 2018

 

 

June 2019June 2018

 

 

June 2019

June 2018

CASH FLOWS FROM OPERATING ACTIVITIES:

 

Net income from continuing operations

$16,712,327

$6,920,401

Adjustments to reconcile net loss to net cash provided by

 

 

operating activities:

 

 

Depreciation and amortization

21,946,816

23,361,027

Stock option compensation expense

446,805

349,998

Contingent consideration

38,556

Deferred income taxes

(1,706,797)

(2,479,194)

Loss on sale of property and equipment

22,505

Amortization/write-off of financing costs

947,363

947,363

Change in operating assets—(increase) decrease:

 

 

Accounts receivable

(10,657,104)

(12,075,565)

Income tax receivable

(308,762)

83,675

Inventories

(1,360,782)

1,115,293

Other current assets

(626,862)

(1,067,203)

Other assets

(1,164,373)

(301,545)

Change in operating liabilities—increase (decrease):

 

 

Accounts payable

1,236,909

1,721,304

Income tax payable

(1,505,532)

1,303,551

Accrued expenses

(9,479,619)

592,130

Net cash provided by operating activities

14,480,389

20,532,296

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

Purchase of property and equipment

(11,963,285)

(5,947,629)

Acquisition of Presby Environmental, net of cash acquired

(54,148,208)

Acquisition of Delta Treatment Systems

(1,000,000)

Proceeds from the sale of property and equipment

         —

60,300

Net cash used for investing activities

(66,111,493)

(6,887,329)

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

Net borrowing on revolving line of credit

Payment of contingent consideration for acquisition

(550,000)

Proceeds from stock issuance

250,000

Repayments of long-term debt

(1,225,000)

(2,534,032)

Net cash used for financing activities

(1,225,000)

(2,834,032)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(52,856,104)

10,810,935

CASH AND CASH EQUIVALENTS—Beginning of period

101,345,595

57,826,527

CASH AND CASH EQUIVALENTS—End of period

$48,489,491

$68,637,462

CASH PAID DURING THE PERIOD FOR:

 

 

Interest

$10,126,184

$8,700,608

Income tax payment—net

$3,283,255

$3,825,830

 

See accompanying notes to consolidated financial statements.

 

- 5 -

 


 

 

INFILTRATOR WATER TECHNOLOGIES ULTIMATE HOLDINGS, INC. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

AS OF JULY 5, 2019 AND DECEMBER 28, 2018 AND FOR THE SIX MONTHS ENDED JULY 5, 2019 AND JUNE 29, 2018

 

 

 

1.

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

 

(a)Lines of Business and Principles of Consolidation—Infiltrator Water Technologies Ultimate Holdings, Inc. and Subsidiaries including Infiltrator Water Technologies, LLC (the Company) designs, manufactures and sells engineered plastic chambers, synthetic assemblies, tanks, and accessories for the onsite wastewater and storm water industries. The Company is a pioneer in plastic technologies for underground wastewater management having invented the first plastic leach field chamber. The Company maintains a corporate office in Connecticut and operates manufacturing facilities in Kentucky, North Carolina, Texas, Illinois, Alabama, New Hampshire, Louisiana and Oregon. Sales are primarily through distributors throughout North America, and to a lesser extent Latin America, Europe, and South Africa.

 

(b)Basis of Presentation—The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and include the financial statements of the Company and its wholly owned subsidiaries for the respective periods. All intercompany balances and transactions have been eliminated in consolidation.

 

The interim consolidated financial statements should be read in conjunction with the annual audited financial statements and notes for December 28, 2018.The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, adjustments, all of which are of a normal recurring nature, considered necessary for a fair presentation have been included.

 

(c)New Accounting Standards—In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which stipulates that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for such goods or services. To achieve this core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract(s); (3) determine the transaction price(s); (4) allocate the transaction price(s) to the performance obligations in the contract(s); and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also requires advanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The ASU is effective for nonpublic entities for annual periods beginning after December 15, 2018. The amendments may be applied retrospectively to each period presented or with the

 

- 6 -

 


 

cumulative effect recognized as of the date of initial application. The Company is currently evaluating the impact of this ASU on its Consolidated Financial Statements.

 

In February of 2016, the FASB issued ASU 2016-02, Leases, which changes a lessee’s accounting for operating leases. The ASU requires companies to recognize in their balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. When measuring assets and liabilities arising from a lease, companies would include payments to be made in optional periods only if they are reasonably certain to exercise an option to extend the lease (or not to exercise an option to terminate a lease). For leases with a term of twelve months or less, companies are permitted to make an accounting policy election not to recognize lease assets and liabilities. If this election is made, a company would recognize lease expense on a straight-line basis over the lease term. The ASU is effective for annual periods beginning after December 15, 2019. The Company is currently evaluating the impact of this ASU on its Consolidated Financial Statements.

 

 

2.

ACQUISITIONS

 

On March 7, 2018, the Company expanded into the advanced wastewater treatment segment of the industry with the acquisition of Delta Environmental assets from Pentair Flow Technologies for $1,000,000. The Company has reestablished the Delta brand under a new wholly owned subsidiary of Infiltrator, Delta Treatment Systems, LLC. Delta Treatment Systems manufactures and sells products for residential and commercial advanced wastewater treatment including custom package treatment plants and ECOPOD and Whitewater models.

 

On April 11, 2019, the Company acquired Presby Environmental, Inc. for $57,011,150 in order to expand its product line offering. The Presby Environmental products compliment the Company’s core business and helps strengthen its industry leadership position. The acquisition was structured as part purchase of individual assets and part purchase of stock. The purchase allocation to the identifiable assets acquired and liabilities assumed is preliminary and has not yet been completed as the Company is waiting on additional information to finalize the valuation of identifiable intangible assets, property and equipment, and related deferred taxes. The following table summarizes the in-process estimated fair value of the assets acquired and liabilities assumed at the date of acquisition:

 

Purchase price

$ 57,011,150

Current assets

5,416,590

Property and equipment

8,960,000

Other assets

-

Identifiable intangible assets

16,500,000

Current liabilities

(6,712,032)

Deferred taxes and other liabilities

(100,000)

Net identifiable assets

 

acquired

24,064,558

Goodwill

$ 32,946,592

 

 

The identifiable intangible assets to date represent a tradename valued at $10,500,000 and intellectual property valued at $6,000,000. The Company anticipates that additional identifiable intangible assets will be recognized once valuation work is completed.

 

- 7 -

 


 

In connection with the acquisition, the Company incurred certain transaction related costs in the amount of $1,165,298 for the period ended July 5, 2019 that have been recorded in the condensed consolidated statements of operations and comprehensive income.

Subsequent to the acquisition date, there is $3,689,357 of revenue and $1,641,937 of net income related to the acquisition recorded in the condensed consolidated statement of income and comprehensive income for the six-month period ended July 5, 2019.

 

The following table contains unaudited pro forma information assuming the acquisition occurred on December 30, 2017 and includes adjustments for amortization of intangibles and depreciation of fixed assets. This unaudited pro forma information is presented for illustrative purposes only and is not indicative of what actual results would have been if the acquisition had taken place on the date shown. In addition, the unaudited pro forma consolidated results are not projections of future results of operations of the combined company nor do they reflect the expected realization of any cost savings or synergies associated with the acquisition

 

 

 

----- Proforma -----

 

June 2019

June 2018

Net Sales

162,908,413

140,843,729

Net Income

17,984,624

8,615,401

 

 

 

 

 

3.

INVENTORIES

 

The Company’s inventories at July 5, 2019 and December 28, 2018 consist of the following:

 

 

2019

2018

Raw materials and supplies

$ 10,769,128

$ 14,029,833

Finished goods

  26,849,722

  20,988,109

Total inventory

$ 37,618,851

$ 35,017,942

 

 

 

4.

GOODWILL AND INTANGIBLE ASSETS

 

Changes in the carrying amount of goodwill are as follows:

 

December 29, 2017

$ 172,115,558

December 28, 2018

$ 172,912,114

Delta Treatment Acquisition

796,556

Presby Environmental Acquisition

32,946,592

June 29, 2018

$ 172,912,114

July 5, 2019

$ 205,858,706

 

 

 

 

 

 

- 8 -

 


 

Other intangible assets consist of the following:

 

 

 

July 5, 2019

 

 

Amount

Accumulated Amortization

Net Book Value

Average Useful Life

Patents and developed technology

 

101,600,000

 

48,051,877

 

53,548,123

 

9 years

Customer relationships

Trade name and

215,450,000

73,689,593

141,760,407

14 years

trademarks

53,070,000

67,911

53,002,089

5 yrs/Indefinite

$ 370,120,000

$ 121,809,381

$ 248,310,619

 

 

 

 

 

December 28, 2018

 

 

Amount

Accumulated Amortization

Net Book Value

Average Useful Life

Patents and developed technology

 

$ 95,600,000

 

$   43,026,595

 

$52,573,405

 

9 years

Customer relationships

Trade name and

215,450,000

63,157,233

152,292,767

14 years

trademarks

42,570,000

65,821

42,504,179

5 yrs/Indefinite

$ 353,620,000

$ 106,249,649

$ 247,370,351

 

 

 

 

- 9 -

 


 

 

5.

INCOME TAXES

 

The Company’s effective income tax rate for the six-months ended July 5, 2019 was approximately 19% as compared to approximately 28% for the six-months ended June 29, 2018. The 2019 rate includes the benefit of a reduction in the statutory state income tax rate in one of the Company’s significant states.

 

 

6.

STOCK OPTION PLAN

 

For the periods ended July 5, 2019 and June 29, 2018, $446,805 and $349,998 respectively, of compensation expense was recorded related to stock options.

 

Stock options outstanding as of each balance sheet date are as follows:

 

 

 

Weighted average

 

Range of

Weighted average

 

   Options

grant date

fair value

exercise

price

exercise

price

 

Outstanding at December 28, 2018

 

1,634,640

 

$5.02

 

$10.00 - $27.91

 

$10.95

Outstanding at July 5, 2019

1,634,640

$5.02

$10.00 - $27.91

   $10.95

   

 

There were 1,634,640 outstanding stock options as of July 5, 2019, which have a weighted average remaining contractual life of 6.0 years. There were no forfeitures, grants, or options exercised during the period ended July 5, 2019.

 

 

7.

SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events through July 24, 2019, which represents the date the condensed consolidated financial statements were available to be issued.

There were no subsequent events that would have impacted the Company’s condensed consolidated financial statements.

 

 

******

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- 10 -

 

Exhibit 99.3

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

 

(Dollar amounts presented in thousands, except per share amounts)

 

On July 31, 2019, Advanced Drainage Systems, Inc. (the “Company” or “ADS”), Ocean Sub, Inc., a wholly-owned subsidiary of the Company (the “Merger Sub”), Infiltrator Water Technologies Ultimate Holdings, Inc. (“Infiltrator” or “IWT”) and 2461461 Ontario Limited, entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Merger Sub merged with and into Infiltrator, with Infiltrator continuing as the surviving corporation and a wholly-owned subsidiary of the Company (the “Acquisition”).  The closing of the Merger took place simultaneously upon the execution of the Merger Agreement (the “Closing Date”).  The Company paid an aggregate purchase price of approximately $1,128,489 thousand in cash in connection with the Merger (the “Merger Consideration”), subject to certain post-closing purchase price adjustments as described in the Merger Agreement.

 

On the Closing Date, the Company entered into a credit agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and among the Company, as borrower, Barclays Bank PLC, as administrative agent, the several lenders from time to time party thereto, Barclays Bank PLC and Morgan Stanley Senior Funding, Inc., as joint lead arrangers, joint bookrunners, syndication agents and joint bookrunners.  The Credit Agreement provides for a term loan facility in an initial aggregate principal amount of up to $1.3 billion (the “Term Loan Facility”), a revolving credit facility in an initial aggregate principal amount of up to $350 million (the “Revolving Credit Facility”), a letter of credit sub-facility in the initial aggregate available amount of up to $50 million, as a sublimit of such revolving facility and a swing line sub-facility in the aggregate available amount of up to $50 million, as a sublimit of the revolving facility. On the Closing Date, the Company borrowed under the Credit Agreement which was used to (i) finance the Merger Consideration paid in connection with the closing of the Acquisition, (ii) repay the total outstanding amount as of the Closing Date under the Company’s existing revolving credit facilities, (iii) repay outstanding amounts of existing indebtedness incurred by Infiltrator under its outstanding credit facility in effect prior to the Acquisition, and (iv) pay certain transaction fees and expenses associated with the Acquisition and the Credit Agreement.

 

The following unaudited pro forma combined financial information of the Company, including the explanatory notes (collectively, the “pro forma financial information”) are presented to illustrate the effects of the Acquisition by the Company and its borrowings under the Credit Agreement, (collectively, the “Transactions”).

 

The pro forma financial information was based on, and should be read in conjunction with, the following historical consolidated financial information and accompanying notes:

 

 

Audited historical consolidated financial statements of the Company, and the related notes for the fiscal year ended March 31, 2019, included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019;

 

 

Audited historical consolidated financial statements of Infiltrator, and the related notes for the fiscal year ended December 28, 2018, included in the Company’s Current Report on Form 8-K filed on August 1, 2019;

 

 

Unaudited historical condensed consolidated financial statements of the Company, and the related notes for the fiscal quarter ended June 30, 2019, included in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2019; and

 

 

Unaudited historical condensed consolidated financial statements of Infiltrator, and the related notes for the quarter ended July 5, 2019, included in the Company’s Current Report on Form 8-K filed on August 1, 2019.

 

The unaudited pro forma combined statements of operations for the year ended March 31, 2019 and for the three months ended June 30, 2019 assumes the Transactions occurred on April 1, 2018, the beginning of the Company’s fiscal year ended March 31, 2019. The unaudited pro forma combined balance sheet as of June 30, 2019 assumes the Transactions occurred on June 30, 2019.

 

The historical combined financial information has been adjusted in the pro forma financial information to give effect to pro forma events that are: (i) directly attributable to the Transactions, (ii) factually supportable, and (iii) with respect to the statements of operations, are expected to have a continuing effect on the combined operating results.  In the opinion of management, all adjustments necessary to present fairly the pro forma financial information have been reflected. The assumptions underlying the pro forma adjustments are described fully in the accompanying notes, which should be read in conjunction with the pro forma financial information.

 

The pro forma financial information are unaudited and are not necessarily indicative of the combined financial position or results of operations that would have been realized had the Transactions occurred as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations that the Company will experience after the

 


Transactions. In addition, the accompanying unaudited pro forma combined statements of operations do not include any expected cost savings, operating synergies, or revenue enhancements that may be realized subsequent to the Transactions, or the impact of any non-recurring activity and transaction-related or integration-related costs.

2

 


UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 2019

(In thousands)

 

 

Historical

ADS

 

 

IWT as adjusted

for ADS

 

 

Acquisition

Adjustments

 

 

Reference

 

Financing Adjustments

 

 

Reference

 

Pro Forma

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

9,357

 

 

$

48,489

 

 

$

(1,140,989

)

 

4a

 

$

1,096,931

 

 

5a

 

$

13,788

 

Receivables (less allowance for doubtful accounts)

 

 

231,829

 

 

 

28,860

 

 

 

(8,059

)

 

4b

 

 

 

 

 

 

 

252,630

 

Inventories

 

 

230,284

 

 

 

37,619

 

 

 

 

 

 

 

 

 

 

 

 

 

267,903

 

Other current assets

 

 

9,185

 

 

 

2,196

 

 

 

 

 

 

 

 

 

 

 

 

 

11,381

 

Total current assets

 

 

480,655

 

 

 

117,164

 

 

 

(1,149,048

)

 

 

 

 

1,096,931

 

 

 

 

 

545,702

 

Property, plant and equipment, net

 

 

396,280

 

 

 

82,424

 

 

 

 

 

 

 

 

 

 

 

 

 

478,704

 

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

102,844

 

 

 

205,859

 

 

 

372,850

 

 

4c

 

 

 

 

 

 

 

681,553

 

Intangible assets, net

 

 

35,733

 

 

 

248,311

 

 

 

226,689

 

 

4d

 

 

 

 

 

 

 

510,733

 

Other assets

 

 

52,903

 

 

 

14,410

 

 

 

 

 

 

 

 

 

 

 

 

 

67,313

 

Total assets

 

$

1,068,415

 

 

$

668,168

 

 

$

(549,509

)

 

 

 

$

1,096,931

 

 

 

 

$

2,284,005

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current maturities of debt obligations

 

$

25,939

 

 

$

2,450

 

 

$

(2,450

)

 

4e

 

$

(12,000

)

 

5b

 

$

13,939

 

Current maturities of finance lease obligations

 

 

22,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,695

 

Accounts payable

 

 

106,413

 

 

 

12,556

 

 

 

(8,059

)

 

4b

 

 

 

 

 

 

 

110,910

 

Other accrued liabilities

 

 

76,267

 

 

 

11,608

 

 

 

(419

)

 

4e

 

 

 

 

 

 

 

87,456

 

Accrued income taxes

 

 

12,669

 

 

 

2,750

 

 

 

 

 

 

 

 

 

 

 

 

 

15,419

 

Total current liabilities

 

 

243,983

 

 

 

29,364

 

 

 

(10,928

)

 

 

 

 

(12,000

)

 

 

 

 

250,419

 

Long-term debt obligation (less unamortized debt issuance costs)

 

 

230,337

 

 

 

326,390

 

 

 

(326,390

)

 

4e

 

 

1,111,050

 

 

5b

 

 

1,341,387

 

Long-term finance lease obligations

 

 

56,368

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

56,368

 

Deferred tax liabilities

 

 

48,745

 

 

 

65,207

 

 

 

44,639

 

 

4f

 

 

 

 

 

 

 

158,591

 

Other liabilities

 

 

28,641

 

 

 

2,877

 

 

 

 

 

 

 

 

 

 

 

 

 

31,518

 

Total liabilities

 

 

608,074

 

 

 

423,838

 

 

 

(292,679

)

 

 

 

 

1,099,050

 

 

 

 

 

1,838,283

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mezzanine equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable convertible preferred stock

 

 

279,816

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

279,816

 

Deferred compensation – unearned ESOP shares

 

 

(31,659

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,659

)

Total mezzanine equity

 

 

248,157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

248,157

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

11,439

 

 

 

186

 

 

 

(186

)

 

 

 

 

 

 

 

 

 

11,439

 

Paid-in capital

 

 

501,046

 

 

 

189,289

 

 

 

(189,289

)

 

 

 

 

 

 

 

 

 

501,046

 

Common stock in treasury, at cost

 

 

(10,162

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,162

)

Accumulated other comprehensive loss

 

 

(24,470

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,470

)

Retained (deficit) earnings

 

 

(278,727

)

 

 

54,855

 

 

 

(67,355

)

 

 

 

 

(2,119

)

 

 

 

 

(293,346

)

Total ADS stockholders’ equity

 

 

199,126

 

 

 

244,330

 

 

 

(256,830

)

 

4g

 

 

(2,119

)

 

5b

 

 

184,507

 

Noncontrolling interest in subsidiaries

 

 

13,058

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,058

 

Total stockholders’ equity

 

 

212,184

 

 

 

244,330

 

 

 

(256,830

)

 

 

 

 

(2,119

)

 

 

 

 

197,565

 

Total liabilities, mezzanine equity and stockholders’ equity

 

$

1,068,415

 

 

$

668,168

 

 

$

(549,509

)

 

 

 

$

1,096,931

 

 

 

 

$

2,284,005

 

 

 

 


3

 


UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED MARCH 31, 2019

(In thousands, except per share data)

 

 

Historical

ADS

 

 

IWT as adjusted

for ADS

 

 

Acquisition

Adjustments

 

 

Reference

 

Financing Adjustments

 

 

Reference

 

Pro Forma

 

Net sales

 

$

1,384,733

 

 

$

292,781

 

 

$

(69,064

)

 

6a

 

$

 

 

 

 

$

1,608,450

 

Cost of goods sold

 

 

1,057,766

 

 

 

182,278

 

 

 

(69,064

)

 

6a

 

 

 

 

 

 

 

1,170,980

 

Gross profit

 

 

326,967

 

 

 

110,503

 

 

 

 

 

 

 

 

 

 

 

 

 

437,470

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling

 

 

96,335

 

 

 

11,572

 

 

 

 

 

 

 

 

 

 

 

 

 

107,907

 

General and administrative

 

 

89,692

 

 

 

27,135

 

 

 

(289

)

 

6b

 

 

 

 

 

 

 

116,538

 

Loss on disposal of assets and costs from exit and

   disposal activities

 

 

3,647

 

 

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

3,669

 

Intangible amortization

 

 

7,880

 

 

 

31,090

 

 

 

10,537

 

 

6c

 

 

 

 

 

 

 

49,507

 

Income from operations

 

 

129,413

 

 

 

40,684

 

 

 

(10,248

)

 

 

 

 

 

 

 

 

 

159,849

 

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

18,618

 

 

 

20,812

 

 

 

(20,812

)

 

6d

 

 

69,914

 

 

7a

 

 

88,532

 

Derivative gains and other income, net

 

 

(815

)

 

 

382

 

 

 

 

 

 

 

 

 

 

 

 

 

(433

)

Income before income taxes

 

 

111,610

 

 

 

19,490

 

 

 

10,564

 

 

 

 

 

(69,914

)

 

 

 

 

71,750

 

Income tax expense

 

 

30,049

 

 

 

4,210

 

 

 

2,747

 

 

6e

 

 

(18,178

)

 

7b

 

 

18,828

 

Equity in net loss of unconsolidated affiliates

 

 

95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

95

 

Net income

 

 

81,466

 

 

 

15,280

 

 

 

7,817

 

 

 

 

 

(51,736

)

 

 

 

 

52,827

 

Less: net income attributable to noncontrolling interest

 

 

3,694

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,694

 

Net income attributable to ADS

 

 

77,772

 

 

 

15,280

 

 

 

7,817

 

 

 

 

 

(51,736

)

 

 

 

 

49,133

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

57,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

57,025

 

Diluted

 

 

57,611

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

57,611

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.78

 

Diluted

 

$

1.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.77

 

 

4

 


UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2019

(In thousands, except per share data)

 

 

Historical

ADS

 

 

IWT as adjusted

for ADS

 

 

Acquisition

Adjustments

 

 

Reference

 

Financing Adjustments

 

 

Reference

 

Pro Forma

 

Net sales

 

$

413,708

 

 

$

90,184

 

 

$

(19,948

)

 

6a

 

$

 

 

 

 

$

483,944

 

Cost of goods sold

 

 

307,256

 

 

 

52,162

 

 

 

(19,948

)

 

6a

 

 

 

 

 

 

 

339,470

 

Cost of goods sold - ESOP special dividend compensation

 

 

168,610

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

168,610

 

Gross profit

 

 

(62,158

)

 

 

38,022

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,136

)

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling

 

 

26,365

 

 

 

3,415

 

 

 

 

 

 

 

 

 

 

 

 

 

29,780

 

General and administrative

 

 

31,433

 

 

 

6,979

 

 

 

(4,207

)

 

6b

 

 

 

 

 

 

 

34,205

 

Selling, general and administrative - ESOP special dividend compensation

 

 

78,142

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

78,142

 

Loss on disposal of assets and costs from exit and

   disposal activities

 

 

707

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

707

 

Intangible amortization

 

 

1,542

 

 

 

7,855

 

 

 

3,152

 

 

6c

 

 

 

 

 

 

 

12,549

 

Income from operations

 

 

(200,347

)

 

 

19,773

 

 

 

1,055

 

 

 

 

 

 

 

 

 

 

(179,519

)

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

5,264

 

 

 

5,307

 

 

 

(5,307

)

 

6d

 

 

16,724

 

 

7a

 

 

21,988

 

Derivative (gains) loss and other (income) expense, net

 

 

(96

)

 

 

85

 

 

 

 

 

 

 

 

 

 

 

 

 

(11

)

(Loss) income before income taxes

 

 

(205,515

)

 

 

14,381

 

 

 

6,362

 

 

 

 

 

(16,724

)

 

 

 

 

(201,496

)

Income tax expense

 

 

22,370

 

 

 

2,513

 

 

 

1,654

 

 

6e

 

 

(4,348

)

 

7b

 

 

22,189

 

Equity in net income of unconsolidated affiliates

 

 

(434

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(434

)

Net (loss) income

 

 

(227,451

)

 

 

11,868

 

 

 

4,708

 

 

 

 

 

(12,376

)

 

 

 

 

(223,251

)

Less: net loss attributable to noncontrolling interest

 

 

(1,095

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,095

)

Net (loss) income attributable to ADS

 

 

(226,356

)

 

 

11,868

 

 

 

4,708

 

 

 

 

 

(12,376

)

 

 

 

 

(222,156

)

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

57,576

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

57,576

 

Diluted

 

 

57,576

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

57,576

 

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(4.06

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(3.98

)

Diluted

 

$

(4.06

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(3.98

)

 

 

 

 

 

5

 


ADVANCED DRAINAGE SYSTEMS, INC.

NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

1.

BASIS OF PRESENTATION

The unaudited pro forma combined financial information and related notes were prepared in accordance with Article 11 of Regulation S-X and is based upon ADS’s fiscal year end reporting, which ends on March 31 of each calendar year. IWT’s fiscal year is a 52- or 53-week period, which ends the Friday on or about December 31.  Due to the differing fiscal period ends, and in order to present results for comparable periods, the unaudited pro forma combined statement of operations for the year ended March 31, 2019 derives IWT’s results from its audited consolidated statement of operations for the fiscal year ended December 28, 2018, plus its unaudited consolidated financial data for the three months ended April 5, 2019, less its unaudited consolidated financial data for the three months ended March 30, 2018. For purposes of the unaudited pro forma combined statement of operations for the three months ended June 30, 2019, results for IWT were derived from its unaudited consolidated statement of operations for the six months ended July 5, 2019 less its unaudited consolidated financial data for the three months ended April 5, 2019.

The unaudited pro forma combined balance sheet as of June 30, 2019 and the pro forma combined information of operations for the fiscal year ended March 31, 2019 and the three months ended June 30, 2019 were prepared using the acquisition method of accounting under the provisions of Accounting Standards Codification ("ASC") Topic 805, "Business Combinations" ("ASC 805").  Under ASC 805, all assets acquired and liabilities assumed are recorded at their acquisition date fair value. The Company has not yet completed a detailed valuation analysis necessary to arrive at the required fair value estimates for IWT assets acquired and liabilities assumed. To prepare the unaudited pro forma combined financial information herein, ADS adjusted IWT’s assets and liabilities to their estimated fair values based on a preliminary valuation. Completion of a detailed valuation analysis could have a material impact on the unaudited pro forma combined financial information contained herein and our future results of operations and financial position.

2.

ACCOUTNING POLICY ALIGNMENT AND RECLASSIFICATION ADJUSTMENTS

The Company has performed a preliminary assessment of the accounting policies of IWT for alignment with ADS. In addition, certain balances were reclassified from the IWT historical financial statements so its presentation would be consistent with that of ADS.

On April 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”), and all related amendments using the modified retrospective transition method.  IWT would have applied ASC 606 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019.  Management does not expect the adoption of ASC 606 for IWT to have a material impact on its combined financial position or results of operations. As such, no adjustments to IWT have been made in the unaudited pro forma financial statements of operations for the fiscal year ended March 31, 2019 or the three months ended June 30, 2019.

On April 1, 2019, the Company adopted ASC 842, Leases (“ASC 842”), using the transition method in the July 2018 ASU which does not require adjustments to comparative periods or require modified disclosures for those periods and includes transition relief practical expedients.  IWT would have applied ASC 842 to annual reporting periods beginning after December 15, 2019, and interim reporting periods within annual reporting periods beginning after December 15, 2020. The unaudited pro forma combined financial information for the year ended March 31, 2019 does not reflect adjustments for ASC 842 as this standard was not adopted by the Company at this time, whereas the unaudited pro forma combined financial information for the three months ended June 30, 2019 has been prepared in accordance with ASC 842. Management has completed a preliminary assessment of the financial statement impact of adoption of ASC 842 for IWT and has reflected an adjustment to the unaudited combined pro forma balance sheet as of June 30, 2019. No adjustment was required for the unaudited pro forma combined statement of operations for the three months ended June 30, 2019 to reflect IWT’s adoption of ASC 842.  

These adjustments and reclassifications are based on management’s preliminary analysis. When ADS completes its detailed review of IWT’s accounting policies, including a detailed assessment of ASC 606 and ASC 842, additional differences could be identified that, when conformed, could have a material impact on the combined company’s financial information.  

6

 


Refer to the table below for a summary of accounting policy and reclassification adjustments made to IWT’s consolidated balance sheet as of July 5, 2019 to conform its presentation to that of ADS.

ADS Presentation

 

IWT Presentation

Historical IWT at July 5, 2019

 

 

Accounting policy and reclassification adjustments

 

 

Note

 

IWT as adjusted

for ADS

 

 

IWT as adjusted

for ADS

 

ASSETS

 

 

 

(actuals)

 

 

 

 

 

 

 

 

(actuals)

 

 

(thousands)

 

Cash

 

Cash and cash equivalents

 

$

48,489,491

 

 

$

 

 

 

 

$

48,489,491

 

 

$

48,489

 

Receivables (less allowance for doubtful accounts)

 

Accounts receivable - net of allowance for doubtful accounts

 

 

28,279,965

 

 

 

579,936

 

 

(i)

 

 

28,859,901

 

 

 

28,860

 

 

 

Income tax receivable

 

 

534,721

 

 

 

(534,721

)

 

(i)

 

 

 

 

 

 

Inventories

 

Inventories

 

 

37,618,851

 

 

 

 

 

 

 

 

37,618,851

 

 

 

37,619

 

Other current assets

 

Other current assets

 

 

2,240,768

 

 

 

(45,215

)

 

(i)

 

 

2,195,553

 

 

 

2,196

 

Property, plant and equipment, net

 

Property, plant and equipment, net

 

 

82,423,765

 

 

 

 

 

 

 

 

 

82,423,765

 

 

 

82,424

 

Goodwill

 

Goodwill

 

 

205,858,706

 

 

 

 

 

 

 

 

205,858,706

 

 

 

205,859

 

Intangible assets, net

 

Other intangible assets - net

 

 

248,310,619

 

 

 

 

 

 

 

 

248,310,619

 

 

 

248,311

 

Other assets

 

Other assets

 

 

9,532,966

 

 

 

4,877,198

 

 

(ii)

 

 

14,410,164

 

 

 

14,410

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current maturities of debt obligations

 

Current portion of long-term debt

 

$

2,450,000

 

 

$

 

 

 

 

$

2,450,000

 

 

$

2,450

 

Accounts payable

 

Accounts payable

 

 

12,555,770

 

 

 

 

 

 

 

 

12,555,770

 

 

 

12,556

 

 

 

Payable to David Presby Trust

 

 

2,712,702

 

 

 

(2,712,702

)

 

(iii)

 

 

 

 

 

 

Accrued income taxes

 

Income tax payable

 

 

2,749,841

 

 

 

 

 

 

 

 

2,749,841

 

 

 

2,750

 

Other accrued liabilities

 

Accrued Expenses

 

 

6,710,864

 

 

 

4,896,358

 

 

(ii)(iii)

 

 

11,607,222

 

 

 

11,608

 

Long-term debt obligations (less unamortized debt issuance costs)

 

Long-term debt - less current portion

 

 

326,390,277

 

 

 

 

 

 

 

 

326,390,277

 

 

 

326,390

 

Deferred tax liabilities

 

Deferred income taxes

 

 

65,207,357

 

 

 

 

 

 

 

 

65,207,357

 

 

 

65,207

 

Other liabilities

 

Other liabilities

 

 

182,330

 

 

 

2,693,542

 

 

(ii)

 

 

2,875,872

 

 

 

2,877

 

Common stock

 

Common stock

 

 

186,126

 

 

 

 

 

 

 

 

186,126

 

 

 

186

 

Paid-in capital

 

Additional paid-in capital

 

 

189,289,180

 

 

 

 

 

 

 

 

189,289,180

 

 

 

189,289

 

Retained earnings (deficit)

 

Accumulated deficit

 

 

54,855,405

 

 

 

 

 

 

 

 

54,855,405

 

 

 

54,855

 

 

 

(i)

Represents a reclassification of income tax receivables and miscellaneous receivables to receivables (less allowance for doubtful accounts).

 

(ii)

Represents an adjustment to present IWT in accordance with ASC 842, which includes the recognition of right-of-use assets and corresponding liabilities ($2,184 thousand within other accrued liabilities and $2,694 thousand within other liabilities).

 

(iii)

Represents a reclassification of the David Presby Trust payable to other accrued liabilities.

7

 


Refer to the table below for a summary of accounting policy and reclassification adjustments made to IWT’s statements of operations for the twelve months ended April 5, 2019 and the three months ended July 5, 2019 to conform its presentation to that of ADS.

 

 

 

 

Historical IWT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADS Presentation

 

IWT Presentation

 

Fiscal year ended

December 28, 2018

 

 

Three months ended

April 5, 2019

 

 

Three months ended

March 30, 2018

 

 

Twelve months ended

April 5, 2019

 

 

Accounting policy and reclassification adjustments

 

 

Note

 

IWT as adjusted

for ADS

 

 

IWT as adjusted

for ADS

 

 

 

 

 

(actuals)

 

 

(actuals)

 

 

(actuals)

 

 

(actuals)

 

 

(actuals)

 

 

 

 

(actuals)

 

 

(thousands)

 

Net sales

 

Net sales

 

$

275,198,104

 

 

$

70,728,941

 

 

$

53,146,404

 

 

$

292,780,641

 

 

$

 

 

 

 

$

292,780,641

 

 

$

292,781

 

Cost of goods sold

 

Cost of goods sold

 

 

173,252,075

 

 

 

43,193,040

 

 

 

34,167,470

 

 

 

182,277,645

 

 

 

 

 

 

 

 

182,277,645

 

 

 

182,278

 

 

 

Selling, general and administrative

 

 

27,999,625

 

 

 

7,198,046

 

 

 

6,267,454

 

 

 

28,930,217

 

 

 

(28,930,217

)

 

(i)

 

 

 

 

 

 

Selling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,572,087

 

 

(i)

 

 

11,572,087

 

 

 

11,572

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,135,134

 

 

(i)(ii)

 

 

27,135,134

 

 

 

27,135

 

 

 

Transaction-related expenses

 

 

252,153

 

 

 

109,917

 

 

 

 

 

 

362,070

 

 

 

(362,070

)

 

(ii)

 

 

 

 

 

 

 

 

Legal settlement

 

 

7,500,000

 

 

 

 

 

 

 

 

 

7,500,000

 

 

 

(7,500,000

)

 

(ii)

 

 

 

 

 

 

Intangible amortization

 

Amortization expense related to intangible assets

 

 

31,179,984

 

 

 

7,704,866

 

 

 

7,794,996

 

 

 

31,089,854

 

 

 

 

 

 

 

 

31,089,854

 

 

 

31,090

 

 

 

Research and development

 

 

1,938,529

 

 

 

293,578

 

 

 

317,173

 

 

 

1,914,934

 

 

 

(1,914,934

)

 

(ii)

 

 

 

 

 

 

Loss on disposal of assets and costs from exit and disposal activities

 

Loss on sale of property, plant and equipment

 

 

22,505

 

 

 

 

 

 

71

 

 

 

22,434

 

 

 

 

 

 

 

 

22,434

 

 

 

22

 

Interest expense

 

Interest expense-net

 

 

(19,580,450

)

 

 

(5,766,342

)

 

 

(4,535,287

)

 

 

(20,811,505

)

 

 

 

 

 

 

 

(20,811,505

)

 

 

(20,812

)

Derivative gains and other income, net

 

Other expense-net

 

 

(318,628

)

 

 

(113,881

)

 

 

(50,730

)

 

 

(381,779

)

 

 

 

 

 

 

 

(381,779

)

 

 

(382

)

Income tax expense

 

Income tax expense (benefit)

 

 

3,334,097

 

 

 

1,504,959

 

 

 

628,820

 

 

 

4,210,236

 

 

 

 

 

 

 

 

4,210,236

 

 

 

4,210

 

Net income

 

Net income (loss)

 

 

9,820,058

 

 

 

4,844,312

 

 

 

(615,597

)

 

 

15,279,967

 

 

 

 

 

 

 

 

15,279,967

 

 

 

15,280

 

 

 

 

 

 

Historical IWT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADS Presentation

 

IWT Presentation

 

Six months ended

July 5, 2019

 

 

Three months ended

April 5, 2019

 

 

Three months ended

July 5, 2019

 

 

Accounting policy and reclassification adjustments

 

 

Note

 

IWT as adjusted

for ADS

 

 

IWT as adjusted

for ADS

 

 

 

 

 

(actuals)

 

 

(actuals)

 

 

(actuals)

 

 

(actuals)

 

 

 

 

(actuals)

 

 

(thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

Net sales

 

$

160,913,413

 

 

$

70,728,941

 

 

$

90,184,472

 

 

$

 

 

 

 

$

90,184,472

 

 

$

90,184

 

Cost of goods sold

 

Cost of goods sold

 

 

95,354,603

 

 

 

43,193,040

 

 

 

52,161,563

 

 

 

 

 

 

 

 

52,161,563

 

 

 

52,162

 

 

 

Selling, general and administrative

 

 

15,735,814

 

 

 

7,198,046

 

 

 

8,537,768

 

 

 

(8,537,768

)

 

(i)

 

 

 

 

 

 

Selling

 

 

 

 

 

 

 

 

 

 

 

 

 

3,415,107

 

 

(i)

 

 

3,415,107

 

 

 

3,415

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

6,979,200

 

 

(i)(ii)

 

 

6,979,200

 

 

 

6,979

 

 

 

Transaction-related expenses

 

 

1,165,298

 

 

 

109,917

 

 

 

1,055,381

 

 

 

(1,055,381

)

 

(ii)

 

 

 

 

 

 

Intangible amortization

 

Amortization expense related to intangible assets

 

 

15,559,731

 

 

 

7,704,866

 

 

 

7,854,865

 

 

 

 

 

 

 

 

7,854,865

 

 

 

7,855

 

 

 

Research and development

 

 

1,094,736

 

 

 

293,578

 

 

 

801,158

 

 

 

(801,158

)

 

(ii)

 

 

 

 

 

 

Interest expense

 

Interest expense-net

 

 

(11,073,547

)

 

 

(5,766,342

)

 

 

(5,307,205

)

 

 

 

 

 

 

 

(5,307,205

)

 

 

5,307

 

Derivative gains and other income, net

 

Other expense-net

 

 

(199,819

)

 

 

(113,881

)

 

 

(85,938

)

 

 

 

 

 

 

 

(85,938

)

 

 

85

 

Income tax expense

 

Income tax expense

 

 

4,017,538

 

 

 

1,504,959

 

 

 

2,512,579

 

 

 

 

 

 

 

 

2,512,579

 

 

 

2,513

 

Net income

 

Net income (loss)

 

 

16,712,327

 

 

 

4,844,312

 

 

 

11,868,015

 

 

 

 

 

 

 

 

11,868,015

 

 

 

11,868

 

 

8

 


 

(i)

Represents the bifurcation of IWT’s selling, general, and administrative financial statement line item into selling and into general and administrative.

 

(ii)

Represents a reclassification of certain transaction related expenses, legal settlement fees, and research and development expenses into general and administrative.

3.

PRELIMINARY PURCHASE PRICE ALLOCATION

The preliminary Merger Consideration as shown in the table below is allocated to the tangible and intangible assets acquired and liabilities assumed of IWT based on their preliminary fair values. As mentioned above, ADS has not yet completed a detailed valuation analysis necessary to arrive at the required fair value estimates for IWT assets acquired and liabilities assumed. Accordingly, assets acquired and liabilities assumed are preliminary based on available information and certain assumptions, which ADS believes are reasonable. Actual results may differ materially from the assumptions within the unaudited pro forma combined financial statements.

The following table summarizes the preliminary Merger Consideration paid, net of cash acquired. The amounts below are preliminary and are subject to change.

(in thousands)

 

Amount

 

Total fair value of consideration transferred

 

$

1,128,489

 

Less: Cash acquired

 

 

(48,489

)

Total net consideration paid

 

$

1,080,000

 

The following table sets forth the preliminary allocation of the Merger Consideration transferred to the preliminary fair value of the identifiable tangible and intangible assets acquired and liabilities assumed using IWT’s unaudited condensed consolidated balance sheet as of July 5, 2019, with the excess recorded to goodwill.

(in thousands)

 

Amount

 

Cash

 

 

48,489

 

Total current assets, net of cash

 

 

68,675

 

Property, plant and equipment, net

 

 

82,424

 

Goodwill

 

 

578,709

 

Intangible assets, net

 

 

475,000

 

Other assets

 

 

14,410

 

Total current liabilities

 

 

(26,495

)

Deferred tax liabilities

 

 

(109,846

)

Other liabilities

 

 

(2,877

)

Total fair value of consideration transferred

 

$

1,128,489

 

Total consideration transferred includes cash of $794,179 thousand for the entire outstanding share capital of IWT plus cash of $334,310 thousand to repay outstanding amounts of existing indebtedness incurred by IWT under its outstanding credit facility in effect prior to the Acquisition.  The cash to be paid remains subject to final post-closing adjustments as outlined in the Merger Agreement.

4.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS RELATED TO THE ACQUISITION

 

(a)

Reflects the adjustment to cash as a result of the Acquisition:

(in thousands)

 

Amount

 

 

Note

Cash consideration

 

$

(1,128,489

)

 

 

Payment of Acquisition-related costs

 

 

(12,500

)

 

(i)

Pro forma adjustment to cash

 

$

(1,140,989

)

 

 

 

(i)

These charges include financial advisory fees, legal, accounting, and other professional fees which relate directly to the Acquisition. The impact of these direct, incremental transaction costs are not reflected in the unaudited pro forma combined statement of operations as they are nonrecurring in nature.

9

 


 

(b)

Reflects the elimination of certain balances between ADS and IWT that are included within the historical financial statements. This includes trade receivables and payables as well as certain other assets related to certain manufacturing and distribution agreements.

 

(c)

Reflects the adjustment to remove IWT’s historical goodwill of $205,859 thousand and record goodwill associated with the Acquisition of $578,709 thousand.

 

(d)

Reflects the adjustment to record the preliminary fair value of the identifiable intangible assets:

(in thousands)

 

Preliminary fair value

 

 

Estimated useful lives

Customer relationships

 

$

270,000

 

 

15 years

Patents and developed technology

 

 

140,000

 

 

10 years

Tradename and trademarks

 

 

65,000

 

 

20 years

 

 

 

475,000

 

 

 

Less: IWT historical intangible assets balance

 

 

(248,311

)

 

 

Pro forma net adjustment to intangible assets

 

$

226,689

 

 

 

The fair value estimates for identifiable intangible assets are preliminary and are based upon assumptions that market participants would use in pricing an asset.  The indicated fair value of the customer relationships was estimated using the multi-period excess earnings method, which estimates value based on the expected future excess earnings stream attributable to a particular asset.  The indicated fair values of the patents and developed technology and the tradename and trademarks were estimated using the relief from royalty method, which uses the net present value of hypothetical forecast after-tax royalties to calculate the value of the asset.

 

Some of the more significant inputs and assumptions inherent in the estimation of the identifiable intangible asset valuations include the long-term cash flow projections and profitability, the cash flow period estimated for the particular asset, the discount rate selected in order to estimate the inherent risk in each future cash flow stream, the selected royalty rate (if applicable), the annual obsolescence or attrition rate applicable to the cash flows of the asset, and the net book value of certain tangible assets.  No assurances can be given that the underlying inputs and assumptions used to prepare the preliminary calculations of intangible asset value will not change as ADS completes its detailed valuation analysis.  For these and other reasons, actual results may vary significantly from estimated results.

 

(e)

Reflects the extinguishment of IWT’s historical long-term debt in accordance with the terms of the Merger Agreement, including the current portion and related accrued interest.

 

(f)

Reflects the adjustment to deferred tax liabilities resulting from the Acquisition. The estimated increase in deferred tax liabilities results primarily from the recognition of deferred tax liabilities as a result of the fair value adjustments for non-deductible intangible assets calculated using an estimated combined state and federal statutory tax rate of 26%. The adjustment is partially offset by the recognition of deferred tax assets resulting from acquired tax benefits stemming from certain costs incurred by IWT as a result of the Acquisition.

 

This adjustment to deferred tax liabilities is preliminary and remains subject to management’s final determination of the fair value of assets acquired and liabilities assumed by jurisdiction. Recognition of additional deferred tax assets and liabilities as well as adjustments to established deferred tax assets and liabilities upon a detailed analysis of the acquired assets and assumed liabilities may occur in conjunction with the finalization of the purchase accounting. These items could be material.

 

 

(g)

Reflects the adjustment to equity as a result of the following:

(in thousands)

 

Amount

 

Remove historical equity of IWT

 

$

(244,330

)

Acquisition-related costs

 

 

(12,500

)

Pro forma adjustment to equity

 

$

(256,830

)

10

 


5.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENT RELATED TO FINANCING

 

(a)

Reflects cash proceeds from the Credit Agreement and the repayment of certain outstanding ADS debt as shown in the table below:

(in thousands)

 

Face value

 

 

Original issue discount

 

 

Capitalized debt issuance costs

 

 

Net balance

 

 

Notes

Term Loan Facility

 

$

1,300,000

 

 

$

13,000

 

 

$

26,000

 

 

$

1,261,000

 

 

 

Revolving Credit Facility

 

 

100,000

 

 

 

 

 

 

5,750

 

 

 

94,250

 

 

 

Total debt

 

$

1,400,000

 

 

$

13,000

 

 

$

31,750

 

 

$

1,355,250

 

 

 

Less: Repayment of outstanding ADS debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(258,319

)

 

(i)

Pro forma adjustment to cash

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,096,931

 

 

 

 

 

(i)

As part of the Transactions, ADS repaid certain of its outstanding debt. This repayment included the balance of the Secured Bank Loans as well as the Senior Notes, which had an outstanding balance of $258,319 thousand.

 

(b)

Reflects the increase in maturities of debt obligations from borrowings under the Credit Agreement net of the repayment of certain outstanding ADS debt as shown in the table below:

(in thousands)

 

Amount

 

 

Note

Term Loan Facility

 

$

13,000

 

 

 

Revolving Credit Facility

 

 

 

 

 

Total debt

 

 

13,000

 

 

 

Less: Repayment of outstanding ADS debt

 

 

(25,000

)

 

 

Pro forma adjustment to current maturities of debt obligations

 

$

(12,000

)

 

 

 

 

 

 

 

 

 

Term Loan Facility

 

 

1,248,000

 

 

 

Revolving Credit Facility

 

 

94,250

 

 

 

Total debt

 

 

1,342,250

 

 

 

Less: Repayment of outstanding ADS debt

 

 

(231,200

)

 

(i)

Pro forma adjustment to maturities of long-term debt obligations

 

$

1,111,050

 

 

 

 

(i)

Inclusive of associated unamortized debt issuance costs of $2,119 thousand as of June 30, 2019, which were written off to equity.

6.

UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS ADJUSTMENTS RELATED TO ACQUISITION

 

(a)

Reflects the removal of historical sales and the related cost of goods sold between ADS and IWT related to previously existing contract manufacturing and distribution agreements.

 

(b)

Reflects the removal of transaction-related costs related to the Acquisition incurred by ADS and IWT, which were reflected in the historical statements of operations, as these costs are nonrecurring in nature.

 

(c)

Reflects an adjustment to amortization expense as follows:

 

 

 

 

 

 

Amortization expense

 

 

 

(in thousands)

 

Preliminary fair value

 

 

Fiscal year ended

March 31, 2019

 

 

Three months ended

June 30, 2019

 

 

Notes

Customer relationships

 

$

270,000

 

 

$

25,796

 

 

$

6,694

 

 

 

Patents and developed technology

 

 

140,000

 

 

 

14,000

 

 

 

3,500

 

 

 

Tradename and trademarks

 

 

65,000

 

 

$

3,250

 

 

$

813

 

 

 

Total identifiable intangible assets

 

$

475,000

 

 

$

43,046

 

 

$

11,007

 

 

(i)

Less: Historical IWT amortization

 

 

 

 

 

 

31,090

 

 

 

7,855

 

 

 

Less: Historical amortization related to previously existing ADS/IWT arrangement

 

 

 

 

 

 

1,419

 

 

 

 

 

(ii)

Pro forma adjustment to intangible amortization

 

 

 

 

 

$

10,537

 

 

$

3,152

 

 

 

11

 


 

(i)

Reflects amortization expense resulting from the identifiable intangible assets.  Amortization expense has been calculated on a preliminary basis. Customer relationships is amortized using the 1.5x declining balance method. Patents and developed technology and tradename and trademarks are amortized using the straight-line method over their estimated useful lives.

 

The effect of a 10% increase or decrease in the preliminary estimated fair value of definite-lived intangible assets would result in an increase or decrease of amortization expense of $4,305 thousand and $1,100 thousand for the year ended March 31, 2019 and the three months ended June 30, 2019, respectively.

 

(ii)

Reflects the removal of historical amortization expense related to previously existing ADS and IWT agreements.

 

(d)

Reflects the elimination of interest expense on IWT’s historical long-term debt that was extinguished per the terms of the Merger Agreement.

 

(e)

Reflects the income tax effect of the Acquisition pro forma adjustments using an estimated combined state and federal statutory tax rate of 26%. Because the adjustments contained in the unaudited pro forma combined financial information are based on estimates, the effective tax rate herein will likely vary from the effective rate in periods subsequent to the Acquisition.

7.

UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS ADJUSTMENTS RELATED TO FINANCING

 

(a)

Reflects an adjustment to interest expense as follows:

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

(in thousands)

 

Face value

 

 

Effective interest rate

 

 

Fiscal year ended

March 31, 2019

 

 

Three months ended

March 31, 2019

 

 

Notes

Term Loan Facility

 

$

1,300,000

 

 

5.92%

 

 

$

76,950

 

 

$

19,237

 

 

(i)

Revolving Credit Facility

 

 

100,000

 

 

6.37%

 

 

 

6,367

 

 

 

1,592

 

 

(ii)

Total debt

 

$

1,400,000

 

 

 

 

 

 

$

83,317

 

 

$

20,829

 

 

(iii)

Less: Historical ADS interest expense

 

 

 

 

 

 

 

 

 

 

13,403

 

 

 

4,105

 

 

 

Pro forma adjustment to interest expense

 

 

 

 

 

 

 

 

 

$

69,914

 

 

$

16,724

 

 

 

 

(i)

Interest for the Term Loan Facility was affected using an assumed LIBOR rate as of July 29, 2019 of 2.23% plus a margin of 3.25%. When combined with the additional amortization of original issue discount and debt issuance costs, the effective interest rate of the Term Loan Facility is approximately 5.92%.

 

(ii)

Interest for the Revolving Credit Facility was affected using an assumed LIBOR rate from July 29, 2019 of 2.23% plus a margin of 3.00%. When combined with the additional amortization of debt issuance costs, the effective interest rate of the Revolving Credit Facility is approximately 6.37%.

 

(iii)

A 1/8% increase or decrease in interest rates would result in a change in interest expense of approximately $1,750 thousand and $438 thousand for the fiscal year ended March 31, 2019 and for the three months ended June 30, 2019, respectively.

 

(b)

Reflects the income tax effect of the financing pro forma adjustments using an estimated combined state and federal statutory tax rate of 26%.  Because the adjustments contained in the unaudited pro forma combined financial information are based on estimates, the effective tax rate herein will likely vary from the effective rate in periods subsequent to the Acquisition.

12

 


8.

EARNINGS PER SHARE

The unaudited pro forma combined basic and diluted earnings per share calculations are based on the consolidated basic and diluted weighted average shares of ADS.

(in thousands, except per share amounts)

 

Fiscal year ended March 31, 2019

 

 

Three months ended June 30, 2019

 

Net income per share - Basic:

 

 

 

 

 

 

 

 

Net income attributable to ADS

 

$

49,133

 

 

$

(222,156

)

Adjustment for:

 

 

 

 

 

 

 

 

Dividends paid to redeemable convertible preferred shareholders

 

 

(2,047

)

 

 

(6,841

)

Dividends paid to unvested restricted stockholders

 

 

(69

)

 

 

(328

)

Net income available to common stockholders and participating securities

 

 

47,017

 

 

 

(229,325

)

Undistributed income allocated to participating securities

 

 

(2,743

)

 

 

 

Net income available to common stockholders - Basic

 

 

44,274

 

 

 

(229,325

)

Weighted average number of common shares outstanding - Basic

 

 

57,025

 

 

 

57,576

 

Net income per common share - Basic

 

$

0.78

 

 

$

(3.98

)

 

 

 

 

 

 

 

 

 

Net income per share - Diluted:

 

 

 

 

 

 

 

 

Net income available to common stockholders - Diluted

 

 

44,274

 

 

 

(229,325

)

Weighted average number of common shares outstanding - Basic

 

 

57,025

 

 

 

57,576

 

Assumed restricted stock - nonparticipating

 

 

39

 

 

 

 

Assumed exercise of stock options

 

 

547

 

 

 

 

Weighted average number of common shares outstanding - Diluted

 

 

57,611

 

 

 

57,576

 

Net income per common share - Diluted

 

$

0.77

 

 

$

(3.98

)

Potentially dilutive securities excluded as anti-dilutive

 

 

5,966

 

 

 

10,806

 

 

13