001-38735
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81-3015061
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(Commission File Number)
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(IRS Employer Identification No.)
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340 Martin Luther King Jr. Blvd.
Bristol, Tennessee 37620
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(Address of Principal Executive Offices, zip code)
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(423) 573-0300
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(Registrant’s telephone number, including area code)
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Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock
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CTRA
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New York Stock Exchange
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Exhibit 10.1
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Commitment Letter, dated as of May 15, 2019, by and among Contura Energy, Inc. and certain of its existing shareholders
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Exhibit 10.2
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Amended and Restated Commitment Letter, dated as of May 21, 2019, by and among Contura Energy, Inc. and certain of its existing shareholders
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Contura Energy, Inc.
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Date: May 21, 2019
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By:
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/s/ Mark M. Manno
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Name: Mark M. Manno
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Title: Interim Co-Chief Executive Officer, Executive Vice President, Chief Administrative & Legal Officer and Secretary
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Exhibit No.
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Description
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Exhibit 10.1
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Exhibit 10.2
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Re:
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Financing Commitment
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[SIGNATURE PAGE TO COMMITMENT LETTER]
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Borrower
:
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The Company (the “
Borrower
”).
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Guarantors
:
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Consistent with the Documentation Principles. Initially, each entity that, as of the date hereof, guarantees the Amended and Restated Credit Agreement, dated as of November 9, 2018 (as amended and in effect on the date hereof, the “
Existing Term Loan Credit Agreement
”), among the Borrower, as initial borrower, the lenders party thereto, and Jefferies Finance LLC, as administrative agent and collateral agent (the “
Guarantors
” and, together with the Borrower, each a “
Loan Party
” and collectively, the “
Loan Parties
”).
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Agent:
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A financial institution determined by the Lenders and reasonably acceptable to the Borrower will act as administrative agent and collateral agent for the Lenders (in such capacity, together with its successors and assigns, the “
Agent
”).
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Lenders:
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A syndicate of lenders (each a “
Lender
” and collectively, the “
Lenders
”) arranged by the Commitment Parties;
provided
that prior to the Closing Date up to $100 million of the Term Loan Facility may, at the option of the Borrower and subject to applicable laws, be allocated to existing shareholders of the Borrower that are not the Commitment Parties, with the respective amounts of the Term Loan Facility allocated thereto acceptable to the Borrower after consultation with the Commitment Parties.
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Term Loan Facility
:
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A Term Loan Facility in an aggregate principal amount of $555,000,000 (the “
Loan
”).
The Loan shall be made in a single drawing on the Closing Date. Any portion of the Loan that is repaid or prepaid may not be reborrowed.
The borrowing of the Loans on the Closing Date shall be subject to the conditions precedent referred to in the Section entitled “Conditions Precedent” below.
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Closing Date
:
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The first date on which all definitive loan documentation satisfactory to the Lenders (the “
Loan Documents
”) is executed by the Loan Parties, the Lenders, the Agent and the other persons parties thereto, and all conditions precedent set forth in such Loan Documents shall have been satisfied (the “
Closing Date
”).
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Use of Proceeds
:
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The Loan under the Term Loan Facility shall be used to (a)
to repay in full all outstanding amounts under the Existing Term Loan Credit Agreement and (b) to pay fees and expenses relating to the Term Loan Facility and the transactions contemplated thereby.
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Original Issue Discount
(
“OID”
):
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The Loan under the Term Loan Facility will be issued on the Closing Date to the Lenders participating in the Term Loan Facility at a price of 97.0% of their principal amount.
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Interest
:
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The Loan shall bear interest at a rate per annum equal to (a) on or prior to the second (2
nd
) anniversary of the Closing Date, LIBOR
plus
7.00%, and (b) thereafter, LIBOR
plus
8.00%, in each case payable in arrears in cash at the end of each interest period (but not less frequently than quarterly).
“LIBOR” means the rate of interest determined by the Agent in accordance with its customary procedures, to be the rate at which dollar deposits are offered to major banks in the London interbank market for interest periods of 1, 2, or 3 months, as selected by the Borrower, adjusted by the reserve percentage prescribed by governmental authorities as determined by the Agent,
provided
that at no time shall LIBOR be less than 2.00%.
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All interest and fees shall be computed on the basis of a year of 360 days for the actual days elapsed. All interest shall accrue from the Closing Date and shall be payable in cash at the end of each interest period. LIBOR shall be subject to customary provisions and shall contain “LIBOR fallback” provisions to be agreed upon.
If any event of default shall occur and be continuing, interest shall accrue at a rate per annum equal to 2.00% in excess of the rate of interest otherwise in effect and shall be payable on demand.
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Maturity / Term
:
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The Term Loan Facility shall terminate and the Loan and all other obligations outstanding under the Term Loan Facility shall be payable in full on the fifth (5
th
) anniversary of the Closing Date (the “
Maturity Date
”).
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Amortization
:
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The Term Loan Facility shall amortize by 0.25% of the original principal amount of the Loan, each quarter commencing with the first full quarter after the Closing Date, and continuing each quarter thereafter;
provided
, that, the final installment shall be equal to the principal balance of the Loan then outstanding.
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Optional Prepayments:
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The Borrower shall not be permitted to optionally prepay the Loan on or prior to the date that is six (6) months after the Closing Date except in connection with a Fundamental Change. Thereafter, the Borrower may prepay the Loan in whole or in part without premium or penalty, subject to customary notice requirements and breakage fees. As used herein the term “
Fundamental Change
” means any merger or consolidation of the Borrower with or into another entity or person, or disposition of all or substantially all of the assets (whether now owned or hereafter acquired) of the Borrower and its subsidiaries, taken as a whole, to or in favor of any entity or person, in each case, as part of a change of control transaction.
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Mandatory Prepayments:
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All principal and interest on the Loan will be immediately repayable upon the occurrence of a Fundamental Change. In addition, (i) asset sale proceeds (subject to exceptions to be agreed upon which shall be more restrictive that the existing credit facility and subject to a 6 month re-investment right capped at $50,000,000 for the life of the facility); and (ii) extraordinary receipts (to be defined in the Loan Documents and to exclude up to $100 million of a tax refund and $130 million restricted cash release previously identified by the Borrower to the Commitment Parties), in each case, will be applied first to all accrued and unpaid interest as of such date and thereafter as a mandatory prepayment of the then outstanding principal amount of the Loan.
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Ranking:
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Consistent with the Documentation Principles, the Loan will rank
pari passu
with all senior indebtedness of the Loan Parties, senior to all subordinated indebtedness of the Loan Parties, and effectively senior to (i) all unsecured indebtedness of the Loan Parties, and (ii) subject to permitted liens that are permitted to have priority over the liens securing the obligations under the Term Loan Facility pursuant to the terms of the Loan Documents, all other secured indebtedness of the Loan Parties.
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Security / Collateral
:
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All obligations of the Loan Parties to the Lenders shall be secured by the following (the “
Collateral
”): (a) a perfected, first priority lien on and security interest in all of the Loan Parties now owned and hereafter acquired assets (other than the Working Capital Assets (as defined below)), including, without limitation, all real property, fixtures, equipment, documents, general intangibles, payment intangibles, contract rights, chattel paper, instruments, investment property, commercial tort claims, trademarks, copyrights, patents and other intellectual property, deposit accounts, cash and cash equivalents and all other assets and property of the Loan Parties, real and personal, tangible and intangible, including, without limitation, all of the capital stock or other equity interests of each subsidiary of the Borrower, and all products and proceeds thereof, and (b) a perfected, second priority lien on and security interest in (subject solely to a first priority lien in favor of the collateral agent for that certain Amended And Restated Asset-Based Revolving Credit Agreement, dated as of November 9, 2018 (as amended prior to the date hereof, the “
Existing ABL Credit Agreement
”)) all of the Loan Parties’ now owned and hereafter acquired, and wherever located, accounts, inventory, and other working capital assets and all products and proceeds thereof (the “
Working Capital Assets
”). The scope of the Collateral and the granting and perfection of the Lenders’ security interest therein shall be subject to the exceptions and thresholds consistent with the Existing Term Loan Credit Agreement.
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Definitive Documentation
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The definitive documentation for the Term Loan Facility (the “
Documentation
”) will contain representations, warranties, covenants and events of default which will be consistent with the Existing Term Loan Credit Agreement (and related security, collateral and guarantee agreements executed and/or delivered in connection therewith, in each case, as in effect on the date hereof) with changes and modifications that reflect the terms of this Term Sheet and other changes and modifications mutually agreed and other consequential changes to be negotiated in good faith (collectively, the “
Documentation Principles
”).
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Conditions Precedent
:
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The obligation of the Lenders to make the Loan or other financial accommodations under the Term Loan Facility will be subject solely to the following conditions precedent:
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(a) Negotiation, execution and delivery of the Loan Documents and the satisfaction of the conditions precedent contained therein, which Loan Documents shall be prepared by counsel to Commitment Parties and shall be in form and substance reasonably satisfactory to the Commitment Parties, the Agent and the Loan Parties.
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(b) No material adverse change since the date of the Commitment Letter with respect to the condition, financial or otherwise, business, operations, assets, liabilities or prospects of the Borrower and its subsidiaries shall have occurred.
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(c) The Agent shall have been granted a perfected lien on all Collateral, with the priority set forth under the heading “Security/Collateral,” and shall have received UCC, tax and judgment lien searches and other appropriate evidence, evidencing the absence of (i) any other liens on the Collateral, other than Permitted Liens (as defined in the Loan Documents), and (ii) any secured indebtedness, other than indebtedness in respect of the Existing ABL Credit Agreement.
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(d) Customary opinions from the Loan Parties’ counsel (including, without limitation, local counsel) as to such matters as the Commitment Parties and their counsel may reasonably request.
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(e) Each Loan Party shall be in good standing in its respective jurisdiction of organization and duly qualified to do business in each other jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification.
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(f) The Agent shall have received customary insurance certificates; such insurance certificates to include liability insurance for which the Agent will be named as an additional insured and property insurance with respect to the Collateral for which the Agent will be named as a lender’s loss payee.
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(g) All material required governmental, shareholder and third party approvals, consents, licenses, franchises and permits in connection with the Term Loan Facility shall have been obtained and remain in full force and effect.
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(h) There shall exist no claim, action, suit, investigation, litigation or proceeding, pending or threatened in any court or before any arbitrator or governmental instrumentality which relates to the Term Loan Facility or which, in the opinion of the Commitment Parties, has any reasonable likelihood of having a material adverse effect on (i) the condition (financial or otherwise), operations, performance, properties, assets, liabilities or business of the Loan Parties, (ii) the ability of the Loan Parties to perform their obligations under the Loan Documents or (iii) the ability of the Lenders to enforce the Loan Documents.
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(i) The Existing Term Loan Credit Agreement shall be terminated, all amounts owed thereunder repaid in full and all liens and security interests thereunder shall be released concurrently with the funding of the Loan (or arrangements in respect thereof mutually satisfactory to the Borrower and the Commitment Parties shall have been made).
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(j) The Agent shall have received (i) a solvency certificate, in form and substance reasonably satisfactory to the Commitment Parties, from an authorized financial officer of Borrower, confirming the solvency of the Loan Parties after giving effect to the transactions contemplated by the Commitment Letter and this Term Sheet and (ii) customary payoff letters, evidence of authority, officers’ certificates, good standing certificates and a borrowing request.
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(k) The Loan Parties shall have paid all fees and expenses then owing to the Agent, Commitment Parties and the Lenders, including, without limitation, all OID, commitment fees, audit fees, attorneys’ fees, search fees, title fees and documentation and filing fees.
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(l) [reserved]
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(m) The Agent will have entered into a intercreditor agreement with the collateral agent for the Existing ABL Credit Agreement in form and substance reasonably acceptable to the Commitment Parties and the Agent.
(n) The Borrower shall have used its commercially reasonable efforts to procure public ratings for the Term Loan Facility (but no specific ratings) from each of Standard & Poor’s Ratings Services (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”).
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(o) The Agent shall have received at least three (3) business days prior to the Closing Date all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act, that has been reasonably requested by the Agent, the Commitment Parties and the Lenders at least ten (10) business days prior to the Closing Date.
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(p)
The accuracy in all material respects (and in all respects if qualified by materiality) of the representations and warranties in the Loan Documents (other than the “10b-5” or disclosure representations and warranties, in each case, to the extent relating to the Projections).
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(q) There being no default or event of default in existence at the time of, or after giving effect to, the extension of credit on the Closing Date.
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Representations
And Warranties : |
The Loan Documents will contain such representations and warranties by Borrower and its subsidiaries consistent with the Documentation Principles.
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Affirmative Covenants
:
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The Loan Documents will contain affirmative covenants consistent with the Documentation Principles.
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Negative Covenants
:
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The Loan Documents will contain such negative covenants consistent with the Documentation Principles;
provided
that (i) dividends and equity repurchases by the Borrower will be permitted if (a) no default or event of default then exists, and (b) total leverage after giving effect to such dividend or equity repurchase is less than 3x, and (ii) the debt incurrence covenant will not allow more than $50 million of incremental indebtedness.
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Events of Default
:
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The Loan Documents will contain such events of default (with customary exceptions, materiality, notice and grace provisions and other qualifications to be agreed) as are consistent with the Documentation Principles.
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Yield Protection and Taxes:
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Consistent with the Documentation Principles, the Loan Documents shall contain customary provisions (a) protecting the Lenders against increased costs or loss of yield resulting from changes in reserve, capital adequacy and other requirements of law (provided that (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives thereunder or issued in connection therewith or in implementation thereof and (ii) all
requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or United States regulatory authorities, shall in the case of each of clauses (i) and (ii), be deemed to constitute a change in requirements of law, regardless of the date enacted, adopted, issued, or implemented), in each case, subject to customary limitations and exceptions and (b) indemnifying the Lenders for “breakage costs” incurred in connection with, among other things, any prepayment of a Loan on a day other than the last day of an interest period with respect thereto.
Consistent with the Documentation Principles, the Loan Documents shall contain a tax gross up to afford the Lenders change of law protection.
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Indemnity and Expenses:
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Consistent with the Documentation Principles, the Borrower shall pay (a) the expense and indemnification obligations as set forth in the Commitment Letter, and (b) all other reasonable and documented out-of-pocket expenses of the Agent and the Lenders within 10 days of a written demand therefor (but limited, in the case of legal fees and expenses, to the reasonable out-of-pocket fees, disbursements and other charges of
one counsel to the Agent and one counsel to the Lenders, taken as a whole, and, solely in the event of any actual or potential conflict of interests, one additional counsel for each group of similarly-situated Lenders, and, if necessary, of one local counsel in any relevant jurisdiction to all such persons, taken as a whole) in connection with the enforcement of the Loan Documents.
Consistent with the Documentation Principles, the Agent and the Lenders (and their affiliates, management companies and managed funds and each of their respective shareholders, directors, partners, members, officers, employees, agents, advisors and other representatives) (each, an “
indemnified person
”) will be indemnified for and held harmless against, any losses, claims, damages and liabilities (but limited, in the case of legal fees and expenses, to the reasonable, documented and invoiced out-of-pocket fees and expenses of one counsel, representing all of the indemnified persons, taken as a whole, and of a single local counsel in each appropriate jurisdiction (and, in the case of a potential or actual conflict of interest, one additional conflicts counsel for the affected indemnified persons)) incurred in respect of the Term Loan Facility or the use or the proposed use of proceeds thereof, except to the extent they are determined in a final, non-appealable decision of a court of competent jurisdiction to (x) have resulted from the bad faith, gross negligence or willful misconduct of such indemnified person (or such indemnified person’s assignees, affiliates, management companies and managed funds, and any of their respective shareholders, directors, partners, members, officers, employees, agents, advisors and other representatives), (y) result from a material breach of such indemnified person’s obligations hereunder or under any other Loan Document or (z) have arisen out of or in connection with any claim, litigation, loss or proceeding not involving an act or omission of the Borrower or any other Loan Party and that is brought by an indemnified person against another indemnified person (other than any claims against an indemnified person in its capacity or in fulfilling its role as an administrative agent or arranger or any similar role under this Commitment Letter or any claims arising out of any act or omission of the Borrower or any of other Loan Party). None of the Loan Parties, indemnified persons or any of their respective affiliates, management companies and managed funds and each of their respective shareholders, directors, partners, members, officers, employees, agents, advisors and other representatives shall be liable for any special, indirect, consequential or punitive damages in connection with the Term Loan Facility (including the use or intended use of the proceeds of the Term Loan Facility).
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Confidentiality:
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Consistent with the Documentation Principles, the Loan Documents will contain customary provisions limiting the disclosure by the Lender of confidential information of the Loan Parties.
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Governing Law; Jurisdiction
:
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All documentation in connection with the Term Loan Facility shall be governed by the laws of the State of New York. The Loan Parties will submit to the non-exclusive jurisdiction and venue of the federal and state courts of the State of New York sitting in New York county, and shall waive any right to trial by jury.
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Assignments, Participations
:
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Consistent with the Documentation Principles, the Lenders may assign all or, in amounts to be mutually agreed, any part of their respective shares of the Term Loan Facility to their affiliates, related funds or managed accounts, or one or more banks, financial institutions or other persons (but not to any natural person) that are “
eligible assignees
” (to be defined in the Loan Documents and to exclude any Disqualified Institution) which are acceptable to the Agent and the Borrower, each such consent not to be unreasonably withheld, conditioned or delayed;
provided
such consent of the Agent shall not be required if such assignment is made to another Lender or an affiliate, related fund or managed account of a Lender;
provided
further
, (x) no consent of the Borrower will be required (a) if such assignment is made to another Lender or an affiliate, related fund or managed account of a Lender or (b) after the occurrence and during the continuance of an event of default and (y) the Borrower shall be deemed to have consented to any such assignment unless they shall object thereto by written notice to the Agent within ten (10) business days after having received notice thereof. Upon such assignment, such affiliate, bank, financial institution or entity will become a Lender for all purposes under the Loan Documents. Assignments made to another Lender or an affiliate, related fund or managed account of a Lender will not be subject to a minimum assignment amount. Assignor will pay a $3,500 fee to the Agent upon each assignment, subject to exceptions as may be agreed upon with the Agent in the Loan Documents.
Consistent with the Documentation Principles, the Lenders will be permitted to sell participations in the Loan and commitments without restriction (provided that no participation may be sold to any Disqualified Institution). Voting rights of participants will be limited to matters in respect of (a) any increase in commitments of such participant, (b) any reduction of principal, interest (but not default interest) or fees payable to such participant, (c) any extension of final maturity or scheduled amortization of the Loan or commitments in which such participant participates and (d) any release of all or substantially all of the Collateral or the value of the guarantees provided by the Guarantors taken as a whole (other than in connection with permitted asset sales).
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Amendments and Waivers
:
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Amendments and waivers of the provisions of the Loan Documents will require the approval of the Required Lenders.
“
Required Lenders
” shall mean Lenders holding commitments and/or outstandings (as appropriate) representing more than 50% of the aggregate commitments and outstandings under the Term Loan Facility.
Notwithstanding the foregoing, (a) the consent of each Lender directly affected thereby will be required with respect to (i) any increase in commitment amounts, (ii) any reduction of principal, interest (other than default interest) or fees, (iii) any extension of scheduled payments of the Loan (including at final maturity) or times for payment of interest (other than default interest) or fees, and (iv) any modification to the pro rata sharing or payment provisions, assignment provisions or the voting percentages; and (b) the consent of all of the Lenders will be required with respect to any release of all or substantially all of the Collateral or the value of the guarantees provided by the Guarantors taken as a whole.
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Re:
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Amended and Restated Financing Commitment
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Borrower
:
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The Company (the “
Borrower
”).
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Guarantors
:
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Consistent with the Documentation Principles. Initially, each entity that, as of May 15, 2019, guarantees the Amended and Restated Credit Agreement, dated as of November 9, 2018 (as amended and in effect on May 15, 2019, the “
Existing Term Loan Credit Agreement
”), among the Borrower, as initial borrower, the lenders party thereto, and Jefferies Finance LLC, as administrative agent and collateral agent (the “
Guarantors
” and, together with the Borrower, each a “
Loan Party
” and collectively, the “
Loan Parties
”).
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Agent:
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A financial institution determined by the Lenders and reasonably acceptable to the Borrower will act as administrative agent and collateral agent for the Lenders (in such capacity, together with its successors and assigns, the “
Agent
”).
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Lenders:
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A syndicate of lenders (each a “
Lender
” and collectively, the “
Lenders
”) arranged by the Commitment Parties;
provided
that on or prior to May 31, 2019, up to $51.8 million of the Term Loan Facility may, at the option of the Borrower and subject to applicable laws, be allocated to existing shareholders of the Borrower that are not Commitment Parties as of the date of this Commitment Letter (such shareholders, the “
New Commitment Parties
”), with the respective amounts of the Term Loan Facility allocated thereto acceptable to the Borrower after consultation with the Commitment Parties that are party to the Original Commitment Letter (such Commitment Parties, the “
Original Commitment Parties
”).
Unless otherwise agreed by the Original Commitment Parties, any allocation to New Commitment Parties shall reduce the portion of the Term Loan Facility allocated to each of the Commitment Parties as of the date hereof on a pro rata basis, based on the allocation of the Term Loan Facility to the Commitment Parties as set forth on
Schedule 1
of the Commitment Letter.
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Term Loan Facility
:
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A Term Loan Facility in an aggregate principal amount of $561,800,000 (the “
Loan
”).
The Loan shall be made in a single drawing on the Closing Date. Any portion of the Loan that is repaid or prepaid may not be reborrowed.
The borrowing of the Loans on the Closing Date shall be subject to the conditions precedent referred to in the Section entitled “Conditions Precedent” below.
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Closing Date
:
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The first date on which all definitive loan documentation satisfactory to the Lenders (the “
Loan Documents
”) is executed by the Loan Parties, the Lenders, the Agent and the other persons parties thereto, and all conditions precedent set forth in such Loan Documents shall have been satisfied (the “
Closing Date
”).
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Use of Proceeds
:
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The Loan under the Term Loan Facility shall be used to (a)
to repay in full all outstanding amounts under the Existing Term Loan Credit Agreement and (b) to pay fees and expenses relating to the Term Loan Facility and the transactions contemplated thereby.
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Original Issue Discount
(
“OID”
):
|
The Loan under the Term Loan Facility will be issued on the Closing Date to the Lenders participating in the Term Loan Facility at a price of 97.0% of their principal amount.
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Interest
:
|
The Loan shall bear interest at a rate per annum equal to (a) on or prior to the second (2
nd
) anniversary of the Closing Date, LIBOR
plus
7.00%, and (b) thereafter, LIBOR
plus
8.00%, in each case payable in arrears in cash at the end of each interest period (but not less frequently than quarterly).
“LIBOR” means the rate of interest determined by the Agent in accordance with its customary procedures, to be the rate at which dollar deposits are offered to major banks in the London interbank market for interest periods of 1, 2, or 3 months, as selected by the Borrower, adjusted by the reserve percentage prescribed by governmental authorities as determined by the Agent,
provided
that at no time shall LIBOR be less than 2.00%.
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All interest and fees shall be computed on the basis of a year of 360 days for the actual days elapsed. All interest shall accrue from the Closing Date and shall be payable in cash at the end of each interest period. LIBOR shall be subject to customary provisions and shall contain “LIBOR fallback” provisions to be agreed upon.
If any event of default shall occur and be continuing, interest shall accrue at a rate per annum equal to 2.00% in excess of the rate of interest otherwise in effect and shall be payable on demand.
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Maturity / Term
:
|
The Term Loan Facility shall terminate and the Loan and all other obligations outstanding under the Term Loan Facility shall be payable in full on the fifth (5
th
) anniversary of the Closing Date (the “
Maturity Date
”).
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Amortization
:
|
The Term Loan Facility shall amortize by 0.25% of the original principal amount of the Loan, each quarter commencing with the first full quarter after the Closing Date, and continuing each quarter thereafter;
provided
, that, the final installment shall be equal to the principal balance of the Loan then outstanding.
|
Optional Prepayments:
|
The Borrower shall not be permitted to optionally prepay the Loan on or prior to the date that is six (6) months after the Closing Date except in connection with a Fundamental Change. Thereafter, the Borrower may prepay the Loan in whole or in part without premium or penalty, subject to customary notice requirements and breakage fees. As used herein the term “
Fundamental Change
” means any merger or consolidation of the Borrower with or into another entity or person, or disposition of all or substantially all of the assets (whether now owned or hereafter acquired) of the Borrower and its subsidiaries, taken as a whole, to or in favor of any entity or person, in each case, as part of a change of control transaction.
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Mandatory Prepayments:
|
All principal and interest on the Loan will be immediately repayable upon the occurrence of a Fundamental Change. In addition, (i) asset sale proceeds (subject to exceptions to be agreed upon which shall be more restrictive that the existing credit facility and subject to a 6 month re-investment right capped at $50,000,000 for the life of the facility); and (ii) extraordinary receipts (to be defined in the Loan Documents and to exclude up to $100 million of a tax refund and $130 million restricted cash release previously identified by the Borrower to the Commitment Parties), in each case, will be applied first to all accrued and unpaid interest as of such date and thereafter as a mandatory prepayment of the then outstanding principal amount of the Loan.
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Ranking:
|
Consistent with the Documentation Principles, the Loan will rank
pari passu
with all senior indebtedness of the Loan Parties, senior to all subordinated indebtedness of the Loan Parties, and effectively senior to (i) all unsecured indebtedness of the Loan Parties, and (ii) subject to permitted liens that are permitted to have priority over the liens securing the obligations under the Term Loan Facility pursuant to the terms of the Loan Documents, all other secured indebtedness of the Loan Parties.
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Security / Collateral
:
|
All obligations of the Loan Parties to the Lenders shall be secured by the following (the “
Collateral
”): (a) a perfected, first priority lien on and security interest in all of the Loan Parties now owned and hereafter acquired assets (other than the Working Capital Assets (as defined below)), including, without limitation, all real property, fixtures, equipment, documents, general intangibles, payment intangibles, contract rights, chattel paper, instruments, investment property, commercial tort claims, trademarks, copyrights, patents and other intellectual property, deposit accounts, cash and cash equivalents and all other assets and property of the Loan Parties, real and personal, tangible and intangible, including, without limitation, all of the capital stock or other equity interests of each subsidiary of the Borrower, and all products and proceeds thereof, and (b) a perfected, second priority lien on and security interest in (subject solely to a first priority lien in favor of the collateral agent for that certain Amended And Restated Asset-Based Revolving Credit Agreement, dated as of November 9, 2018 (as amended prior to May 15, 2019, the “
Existing ABL Credit Agreement
”)) all of the Loan Parties’ now owned and hereafter acquired, and wherever located, accounts, inventory, and other working capital assets and all products and proceeds thereof (the “
Working Capital Assets
”). The scope of the Collateral and the granting and perfection of the Lenders’ security interest therein shall be subject to the exceptions and thresholds consistent with the Existing Term Loan Credit Agreement.
|
Definitive Documentation
|
The definitive documentation for the Term Loan Facility (the “
Documentation
”) will contain representations, warranties, covenants and events of default which will be consistent with the Existing Term Loan Credit Agreement (and related security, collateral and guarantee agreements executed and/or delivered in connection therewith, in each case, as in effect on May 15, 2019) with changes and modifications that reflect the terms of this Term Sheet and other changes and modifications mutually agreed and other consequential changes to be negotiated in good faith (collectively, the “
Documentation Principles
”).
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Conditions Precedent
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The obligation of the Lenders to make the Loan or other financial accommodations under the Term Loan Facility will be subject solely to the following conditions precedent:
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(a) Negotiation, execution and delivery of the Loan Documents and the satisfaction of the conditions precedent contained therein, which Loan Documents shall be prepared by counsel to Commitment Parties and shall be in form and substance reasonably satisfactory to the Commitment Parties, the Agent and the Loan Parties.
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(b) No material adverse change since the date of the Commitment Letter with respect to the condition, financial or otherwise, business, operations, assets, liabilities or prospects of the Borrower and its subsidiaries shall have occurred.
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(c) The Agent shall have been granted a perfected lien on all Collateral, with the priority set forth under the heading “Security/Collateral,” and shall have received UCC, tax and judgment lien searches and other appropriate evidence, evidencing the absence of (i) any other liens on the Collateral, other than Permitted Liens (as defined in the Loan Documents), and (ii) any secured indebtedness, other than indebtedness in respect of the Existing ABL Credit Agreement.
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(d) Customary opinions from the Loan Parties’ counsel (including, without limitation, local counsel) as to such matters as the Commitment Parties and their counsel may reasonably request.
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(e) Each Loan Party shall be in good standing in its respective jurisdiction of organization and duly qualified to do business in each other jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification.
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(f) The Agent shall have received customary insurance certificates; such insurance certificates to include liability insurance for which the Agent will be named as an additional insured and property insurance with respect to the Collateral for which the Agent will be named as a lender’s loss payee.
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(g) All material required governmental, shareholder and third party approvals, consents, licenses, franchises and permits in connection with the Term Loan Facility shall have been obtained and remain in full force and effect.
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(h) There shall exist no claim, action, suit, investigation, litigation or proceeding, pending or threatened in any court or before any arbitrator or governmental instrumentality which relates to the Term Loan Facility or which, in the opinion of the Commitment Parties, has any reasonable likelihood of having a material adverse effect on (i) the condition (financial or otherwise), operations, performance, properties, assets, liabilities or business of the Loan Parties, (ii) the ability of the Loan Parties to perform their obligations under the Loan Documents or (iii) the ability of the Lenders to enforce the Loan Documents.
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(i) The Existing Term Loan Credit Agreement shall be terminated, all amounts owed thereunder repaid in full and all liens and security interests thereunder shall be released concurrently with the funding of the Loan (or arrangements in respect thereof mutually satisfactory to the Borrower and the Commitment Parties shall have been made).
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(j) The Agent shall have received (i) a solvency certificate, in form and substance reasonably satisfactory to the Commitment Parties, from an authorized financial officer of Borrower, confirming the solvency of the Loan Parties after giving effect to the transactions contemplated by the Commitment Letter and this Term Sheet and (ii) customary payoff letters, evidence of authority, officers’ certificates, good standing certificates and a borrowing request.
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(k) The Loan Parties shall have paid all fees and expenses then owing to the Agent, Commitment Parties and the Lenders, including, without limitation, all OID, commitment fees, audit fees, attorneys’ fees, search fees, title fees and documentation and filing fees.
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(l) [reserved]
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(m) The Agent will have entered into a intercreditor agreement with the collateral agent for the Existing ABL Credit Agreement in form and substance reasonably acceptable to the Commitment Parties and the Agent.
(n) The Borrower shall have used its commercially reasonable efforts to procure public ratings for the Term Loan Facility (but no specific ratings) from each of Standard & Poor’s Ratings Services (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”).
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(o) The Agent shall have received at least three (3) business days prior to the Closing Date all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act, that has been reasonably requested by the Agent, the Commitment Parties and the Lenders at least ten (10) business days prior to the Closing Date.
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(p)
The accuracy in all material respects (and in all respects if qualified by materiality) of the representations and warranties in the Loan Documents (other than the “10b-5” or disclosure representations and warranties, in each case, to the extent relating to the Projections).
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(q) There being no default or event of default in existence at the time of, or after giving effect to, the extension of credit on the Closing Date.
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Representations
And Warranties : |
The Loan Documents will contain such representations and warranties by Borrower and its subsidiaries consistent with the Documentation Principles.
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Affirmative Covenants
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The Loan Documents will contain affirmative covenants consistent with the Documentation Principles.
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Negative Covenants
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The Loan Documents will contain such negative covenants consistent with the Documentation Principles;
provided
that (i) dividends and equity repurchases by the Borrower will be permitted if (a) no default or event of default then exists, and (b) total leverage after giving effect to such dividend or equity repurchase is less than 3x, and (ii) the debt incurrence covenant will not allow more than $50 million of incremental indebtedness.
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Events of Default
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The Loan Documents will contain such events of default (with customary exceptions, materiality, notice and grace provisions and other qualifications to be agreed) as are consistent with the Documentation Principles.
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Yield Protection and Taxes:
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Consistent with the Documentation Principles, the Loan Documents shall contain customary provisions (a) protecting the Lenders against increased costs or loss of yield resulting from changes in reserve, capital adequacy and other requirements of law (provided that (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives thereunder or issued in connection therewith or in implementation thereof and (ii) all
requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or United States regulatory authorities, shall in the case of each of clauses (i) and (ii), be deemed to constitute a change in requirements of law, regardless of the date enacted, adopted, issued, or implemented), in each case, subject to customary limitations and exceptions and (b) indemnifying the Lenders for “breakage costs” incurred in connection with, among other things, any prepayment of a Loan on a day other than the last day of an interest period with respect thereto.
Consistent with the Documentation Principles, the Loan Documents shall contain a tax gross up to afford the Lenders change of law protection.
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Indemnity and Expenses:
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Consistent with the Documentation Principles, the Borrower shall pay (a) the expense and indemnification obligations as set forth in the Commitment Letter, and (b) all other reasonable and documented out-of-pocket expenses of the Agent and the Lenders within 10 days of a written demand therefor (but limited, in the case of legal fees and expenses, to the reasonable out-of-pocket fees, disbursements and other charges of
one counsel to the Agent and one counsel to the Lenders, taken as a whole, and, solely in the event of any actual or potential conflict of interests, one additional counsel for each group of similarly-situated Lenders, and, if necessary, of one local counsel in any relevant jurisdiction to all such persons, taken as a whole) in connection with the enforcement of the Loan Documents.
Consistent with the Documentation Principles, the Agent and the Lenders (and their affiliates, management companies and managed funds and each of their respective shareholders, directors, partners, members, officers, employees, agents, advisors and other representatives) (each, an “
indemnified person
”) will be indemnified for and held harmless against, any losses, claims, damages and liabilities (but limited, in the case of legal fees and expenses, to the reasonable, documented and invoiced out-of-pocket fees and expenses of one counsel, representing all of the indemnified persons, taken as a whole, and of a single local counsel in each appropriate jurisdiction (and, in the case of a potential or actual conflict of interest, one additional conflicts counsel for the affected indemnified persons)) incurred in respect of the Term Loan Facility or the use or the proposed use of proceeds thereof, except to the extent they are determined in a final, non-appealable decision of a court of competent jurisdiction to (x) have resulted from the bad faith, gross negligence or willful misconduct of such indemnified person (or such indemnified person’s assignees, affiliates, management companies and managed funds, and any of their respective shareholders, directors, partners, members, officers, employees, agents, advisors and other representatives), (y) result from a material breach of such indemnified person’s obligations hereunder or under any other Loan Document or (z) have arisen out of or in connection with any claim, litigation, loss or proceeding not involving an act or omission of the Borrower or any other Loan Party and that is brought by an indemnified person against another indemnified person (other than any claims against an indemnified person in its capacity or in fulfilling its role as an administrative agent or arranger or any similar role under this Commitment Letter or any claims arising out of any act or omission of the Borrower or any of other Loan Party). None of the Loan Parties, indemnified persons or any of their respective affiliates, management companies and managed funds and each of their respective shareholders, directors, partners, members, officers, employees, agents, advisors and other representatives shall be liable for any special, indirect, consequential or punitive damages in connection with the Term Loan Facility (including the use or intended use of the proceeds of the Term Loan Facility).
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Confidentiality:
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Consistent with the Documentation Principles, the Loan Documents will contain customary provisions limiting the disclosure by the Lender of confidential information of the Loan Parties.
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Governing Law; Jurisdiction
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All documentation in connection with the Term Loan Facility shall be governed by the laws of the State of New York. The Loan Parties will submit to the non-exclusive jurisdiction and venue of the federal and state courts of the State of New York sitting in New York county, and shall waive any right to trial by jury.
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Assignments, Participations
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Consistent with the Documentation Principles, the Lenders may assign all or, in amounts to be mutually agreed, any part of their respective shares of the Term Loan Facility to their affiliates, related funds or managed accounts, or one or more banks, financial institutions or other persons (but not to any natural person) that are “
eligible assignees
” (to be defined in the Loan Documents and to exclude any Disqualified Institution) which are acceptable to the Agent and the Borrower, each such consent not to be unreasonably withheld, conditioned or delayed;
provided
such consent of the Agent shall not be required if such assignment is made to another Lender or an affiliate, related fund or managed account of a Lender;
provided
further
, (x) no consent of the Borrower will be required (a) if such assignment is made to another Lender or an affiliate, related fund or managed account of a Lender or (b) after the occurrence and during the continuance of an event of default and (y) the Borrower shall be deemed to have consented to any such assignment unless they shall object thereto by written notice to the Agent within ten (10) business days after having received notice thereof. Upon such assignment, such affiliate, bank, financial institution or entity will become a Lender for all purposes under the Loan Documents. Assignments made to another Lender or an affiliate, related fund or managed account of a Lender will not be subject to a minimum assignment amount. Assignor will pay a $3,500 fee to the Agent upon each assignment, subject to exceptions as may be agreed upon with the Agent in the Loan Documents.
Consistent with the Documentation Principles, the Lenders will be permitted to sell participations in the Loan and commitments without restriction (provided that no participation may be sold to any Disqualified Institution). Voting rights of participants will be limited to matters in respect of (a) any increase in commitments of such participant, (b) any reduction of principal, interest (but not default interest) or fees payable to such participant, (c) any extension of final maturity or scheduled amortization of the Loan or commitments in which such participant participates and (d) any release of all or substantially all of the Collateral or the value of the guarantees provided by the Guarantors taken as a whole (other than in connection with permitted asset sales).
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Amendments and Waivers
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Amendments and waivers of the provisions of the Loan Documents will require the approval of the Required Lenders.
“
Required Lenders
” shall mean Lenders holding commitments and/or outstandings (as appropriate) representing more than 50% of the aggregate commitments and outstandings under the Term Loan Facility.
Notwithstanding the foregoing, (a) the consent of each Lender directly affected thereby will be required with respect to (i) any increase in commitment amounts, (ii) any reduction of principal, interest (other than default interest) or fees, (iii) any extension of scheduled payments of the Loan (including at final maturity) or times for payment of interest (other than default interest) or fees, and (iv) any modification to the pro rata sharing or payment provisions, assignment provisions or the voting percentages; and (b) the consent of all of the Lenders will be required with respect to any release of all or substantially all of the Collateral or the value of the guarantees provided by the Guarantors taken as a whole.
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